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The People’s Republic of China advertises its political and economic systems as ‘socialism with Chinese characteristics’. Across the world, the business of borrowing and lending, and a great deal of construction, have assumed Chinese characteristics of their own. 

Completing the Belt and Road Initiative (BRI) has been of the governing Chinese Communist Party since 2017. It is the signature economic idea of president Xi Jinping. BRI aims to reshape the global economy and create in its new image a Chinese-led world order.

BRI was long treated almost fancifully in the West. China’s rise was undeniable, but the goals of this programme appeared too large to be conveyed. Instead, the media took to calling BRI the ‘New Silk Road’ (a name that was in official Chinese circulation), likening it to a revival of the transcontinental trade routes which connected imperial China to hungry international markets centuries ago.

Its imagery was of trains of camels rather than BRI’s realities: massive rail junctions in central Asia, regulatory harmonisation, international container ports, and incidental projects from Europe to China and across Africa and the Middle East.

It was taken more seriously in those countries where work swiftly began.  

The fuel for this project is Chinese cash, and more accurately Chinese-held debt. Between 2013 and 2018, and significantly increasing since, the South China Morning Post that around $300 billion of BRI cash was disbursed for work in over fifty countries, hundreds of billions of which was publicly and privately guaranteed debt to Chinese companies and state banks.

In September, it was reported that the 'hidden debts' accumulated by BRI countries were over $385 billion. More than forty poor countries  to as much Chinese debt as 10 percent of their total GDP.

The United States has long China of building “debt traps” with which to ensnare less developed countries via costly Belt and Road projects financed entirely by borrowing. Naturally, China has denied these claims. Since the pandemic began, it has participated, for the first time, in international debt relief summits, only on a “case-by-case basis”, and the $12.1 billion of debt relief that a China-African forum is a fraction of the hundreds of billions of dollars given out in loans.  

The conditions attached to Chinese loans have been variously described as ‘crippling’ and ‘draconian’. Populist politicians, including Malaysia’s former prime minister Mahathir Mohamad, sought to and warn against Chinese loans seen as constraining and overly stringent. 

An example of the “toxic clauses” in these loan agreements was recently found in Uganda, where it was reported at the end of November that China would of Entebbe airport further to Uganda’s inability to repay two hundred or so million dollars in loans taken out in 2015.  

The example was so prescient of China’s apparent “” that Richard Moore, the head of Britain’s Intelligence Service (commonly known as MI6), obliquely referred to the subject in a rare broadcast interview. Chinese have since suggested that both Uganda and China agree that a handover will not take place. 

In Pakistan, a showpiece of Chinese direct investment, a funnel for Chinese capital investment, the China-Pakistan Economic Corridor, is in difficulty. Nominally worth in investments, one of the prestige projects is the development of a major port at Gwadar.

China has stated that it intends to build Pakistani economics up from scratch, from the level of farming. This includes developing new logistics systems, importing novel technology to revolutionise production and broadly reordering Pakistan’s economy on modern, and Chinese, lines.

The scale is staggering. In 'The Dawn of Eurasia', a book by Bruno Maçães published in early 2018, Pakistani locals react equivocally to China’s plans to recreate primary industries in their country, going so far as to import the seeds and pesticides for approved crop varieties from China.

Last month, Pakistani businessmen associated with Gwadar  to the Financial Times that years after the initial announcement of the project, they are yet to see promised rewards from the economic harmonisation. Powered by Chinese loans, and staffed by imported Chinese workers, local businesses see little activity.

“China only procures sand and gravel locally for construction projects. All other raw materials are imported from China,” Nasir Sohrabi, president of Gwadar’s Rural Community Development Council, told the FT.  

Local workers have even protested against the Chinese presence, something that was, as recently as 2019, the subject of glowing, or at least guarded, local testimonials in . 

Chinese investment into Pakistan has a little in the last couple of years. The pandemic era has seen a comparable contraction of China’s international standing and some Belt and Road projects.

But from primary industry and haulage to prestige projects, BRI has provided the capital for construction across the less developed world. Its loans have funded ‘’, Mattala Rajapaksa International in Sri Lanka, which lay in suspended animation – with no flights departing or arriving each day – for several years before the pandemic added variety and excitement to aviation.

Belt and Road loans have poured into Arab countries like Oman, whose Duqm port has received increased investment and traffic thanks to Chinese money and trade. There are others like it, terminals for a world-spanning trading system under constant construction.

These loans have also built and a port, Hambantota, which was already administered by workers from China. Defenders of the project insist that Chinese worker numbers, , remain a small proportion of the total labour force in Sri Lanka. 

Similar projects are either ongoing, or are in prospect, across the Eurasian continent.

From Kashgar in Xinjiang province to the Balkans, the model is the same. Infrastructure projects are drawn up, sometimes necessary ones, sometimes projects designed for government prestige rather than local utility. Loans are made by state-backed Chinese banks, to pay part or the whole of the cost, which is often inflated.

The firms tasked with the building are Chinese. They import Chinese managers and Chinese workers. Once the project is done, the local government is left with the bill – unless they default, in which case Beijing is able to take possession.

The Chinese control of vital infrastructure in countries like and , and even abandoned projects like in the , show that China can also easily buy and sell its way to the ownership of key industries. 

In the equivalent period, as the Belt and Road Initiative has grown, Chinese diplomacy has also become more abrasive. So-called , named for a popular jingoistic film series, have started spats on Twitter (which is banned in China) with journalists, politicians, and critics of the Chinese Communist Party in democratic countries.

At the same time as China is keener to appear militarily strong and more diplomatically assertive, its immense financial musculature has become more prudishly hidden. Entebbe airport will now never fall under formal Chinese ownership, so great has the international backlash proven.  

Nor will China likely take possession of much of the primary industry and logistics of Pakistan, despite China’s having profound financial leverage over the Pakistani state, and enough reason to invoke the diplomatic equivalent of ‘punishment clauses’ in all manner of loan agreements. 

Behind the scenes influence may prove preferable to direct control, especially in an age where the publics of many countries  to China and perceived Chinese bids for hegemony. In foreign countries where Chinese have newly moved (either as workers on these megaprojects, or middle classes looking to spend money amid relative freedom), there has often been local hostility.

Chinese workers often have to be protected by police forces, as in the , , , and . Meanwhile Chinese tourists and expatriates are disdained for reputed bad behaviour, and for pricing locals out of  housing and retail markets, as in .

Some of this might be little more than anti-Chinese xenophobia. But whatever its origins, it might militate policymakers in Beijing towards a softer and more consensus-based approach to foreign loans, rather than a coercive one.

The brute realities of China’s own economy are increasingly scrutinised with scepticism by international financial institutions. China has in its densely populated cities, and an oversupply of homes, and which must be demolished, in other places. Its banks are broadly considered rackety, with the property giant Evergrande perpetually in the headlines as it this month.

Even as China attempts to prove itself a safe harbour for foreign debt, a few international investors have begun to talk  about China being an unsafe bet, as every country without the rule of law is prone to be.

The massive ‘bribes’ and favourable contracts apparently given by Apple to China as the price of doing business in the PRC have and deflated business confidence.

It is possible that China’s smooth glide to economic domination, something anticipated by the CCP by , might encounter unexpected obstacles.

But commercial big hitters like Tesla’s CEO, Elon Musk, whose company has a ‘gigafactory’ in Shanghai which is expected to increase output in the near future, maintain that China will likely have an economy the size of the United States’ very soon.

With the world’s poorest countries developing at a , the possibility remains that many countries will never be able to repay their BRI debt.

Some involved with Chinese investment in Africa claim that Chinese debt conditions may be stringent, but that .  It may prove true. Even exploitative agreements can produce benefits for some.

But as publics in countries where BRI projects are taking place discover, there may be much to oppose in projects paid for by Chinese credit, built using Chinese workers, which result in the prospect of Chinese-owned assets in the event of default.

The credit remains ready to be used, the projects to be built – all available at the cost of debt.

James Snell is a writer whose work has appeared in numerous international publications including The Telegraph, Prospect, National Review, NOW News, Middle East Eye and History Today.

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