China ‘One Belt, One Road’ used for military base expansion, critics say

China’s ambitious “Belt and Road” global financing strategy is sporting its first serious potholes, as backlash from smaller nations across Asia mounts amid frustration over opaque and predatory lending practices and white-elephant infrastructure projects that analysts say mask Beijing’s attempt to expand its political and economic sway across the region.

While Chinese President Xi Jinping and his aides tout the One Belt, One Road initiative as a benevolent, win-win offer of financing and technical expertise from a rising global power for vitally needed infrastructure projects in Asia, Africa and the developing world, growing skepticism about the Chinese project from Pakistan, Sri Lanka, Malaysia and others tells a different story.

“In the past month, China has had brutal wake-up calls from governments it thought it could manipulate through its massive checkbook,” said Humphrey Hawksley, author of the recent book “Asian Waters: The Struggle Over the South China Sea and the Strategy of Chinese Expansion.”

Complaints about One Belt, One Road — known in diplomatic circles as OBOR — include the awarding of contracts to favored Chinese firms, the wisdom of some of the projects selected and concerns that the multidecade project is laying foundations for a string of Chinese overseas military bases.

But the biggest grievance among leaders in Asia is that their economies are at risk of being trapped by high-interest Chinese debt. Malaysian Prime Minister Mahathir Mohamad underscored that concern last month when he canceled more than $20 billion in previously approved Chinese-funded projects.

“We do not want a new version of colonialism,” Mr. Mahathir bluntly said while standing beside Chinese Premier Le Keqiang at an Aug. 20 press briefing in Beijing.

“The Malaysia experience is causing everybody across Southeast Asia to take a closer look at their current and potential dealings with China to make sure these projects actually deliver for their country and not just for China,” said Brian Harding, a Southeast Asia analyst at the Center for Strategic and International Studies.

Another cautionary tale emerged last year when Sri Lanka was pressured into selling control of its port of Hambantota to a Chinese state-owned company after falling behind on $1.5 billion in One Belt, One Road financing from Beijing.

Two months after the Sri Lanka development, exiled Maldives opposition leader Mohamed Nasheed made headlines by declaring that Beijing’s deals with the Indian Ocean archipelago were tantamount to a colonialist “land grab.”

In Pakistan, newly elected Prime Minister Imran Khan, who campaigned on a promise to bring transparency to his nation’s notoriously corrupt financial dealings, has signaled that he might put the brakes on Islamabad’s extensive involvement in One Belt, One Road.

The Khan government intends to review or renegotiate agreements within the $62 billion China-Pakistan Economic Corridor plan, according to the Financial Times, which framed the plan as “by far the largest and most ambitious part” of the Chinese infrastructure project, which seeks ultimately to connect Asia and Europe along China’s ancient Silk Road.

The review will include Chinese loans that expanded Gwadar port on Pakistan’s southern coast as well as road and rail links and some $30 billion worth of power plants in the South Asian nation.

’Cold-hearted calculus’

Michael Kugelman, a regional analyst with the Woodrow Wilson International Center for Scholars, said in an interview that Pakistan represents the best example of a One Belt, One Road recipient nation “realizing there’s not much transparency about the actual terms of these contracts and loan deals with China.”

More than anything else, Mr. Kugelman said, Pakistan’s participation will be driven by “the cold-hearted calculus of money and finances,” with the Khan government under pressure to avoid being saddled by massive loans from any foreign entity.

That likely includes the International Monetary Fund and the World Bank. The two institutions have been supporting infrastructure financing and public finances long before China’s rise as a global player. They also have been accused of muscling developing nations into embracing Western political values in exchange for debt relief, making China’s One Belt, One Road financing offer all the more attractive.

While concern grows over the sorts of concessions that China’s communist government might seek to extract, some nations are becoming aware of the “risk of social engineering at play” behind One Belt, One Road, Mr. Kugelman said.

“The concern is that China is not only deepening its economic footprint, but also its social footprint,” he said. “You have so many Chinese people setting up shop in these countries, setting up businesses, sending workers, establishing newspapers — basically setting up an infrastructure to support the Chinese presence.”

Beijing-funded construction projects in Pakistan have hired thousands of local workers, but Chinese migrants also are flowing into the Muslim-majority nation. The arrangement sparked outrage in Pakistan in April when video clips purporting to show Chinese construction workers attacking Pakistani security guards spread on social media.

The Chinese appeared to be heading out for a night on the town in a Pakistani red-light district and became outraged when security guards refused to allow them to leave the workers’ camp.

The authenticity of the clips could not be verified independently.

Beijing pulls back

Chinese leaders fiercely reject claims that One Belt, One Road is a scheme of predatory lending designed to ensnare recipients.

Mr. Xi and his advisers argue that Beijing is delivering badly needed assets to developing countries, is fully aware that repayment may take decades, and has no designs to exploit the lending as leverage to extract anything other than new and expanding economic partnerships around the world.

“People’s livelihoods and economic development have been boosted,” Ning Jizhe, deputy chairman of Mr. Xi’s Cabinet planning agency, said at a recent news conference. “No ’debt trap’ has been created.”

Several Asian nations have welcomed China’s strategy. The Asian Development Bank says more than $26 trillion of infrastructure investment is needed by 2030 to keep economies growing. Mr. Xi said in speech marking One Belt’s five-year anniversary last week that China’s trade with countries involved in the initiative now exceeds $5 trillion with some $60 billion in investment from Beijing.

African, Eastern European and even Latin American nations have been recipients of Chinese development funding. A study led by AidData at the College of William & Mary in Virginia examined 3,485 projects associated with One Belt across 138 nations and gave a generally positive verdict.

The study, released Tuesday, said the One Belt, One Road project has led to a more equal distribution of economic activity by improving access to jobs and markets. It also said the initiative has helped reduce economic differences that “elevate the risk of violent unrest.”

“Western pundits and politicians often claim that Beijing is a reckless, self-serving or sinister actor,” AidData’s executive director, Bradley C. Parks, told The Associated Press. But by helping to spread economic activity more evenly, “Beijing’s investments address one of the root causes of instability around the globe and thus make it easier for Western powers to tackle other global threats and crises.”

Still others warn that Beijing may have overreached.

“China on some levels is playing with fire with this whole enterprise because the more it pushes forward, the more it accumulates economic risk,” said Mr. Kugelman. “It’s betting the farm on this idea that pouring loans into poor countries than often lack the capacity to absorb such large debts can work and actually get paid off.”

“The Chinese,” he said, “ultimately will have to renegotiate these loans or write off the debt.”

Timothy Taylor, managing editor of the Journal of Economic Perspectives who blogs as “The Conversable Economist,” said the One Belt, One Road program has been a “spectacular success” as a branding exercise, but that “on the ground, matters are less clear.”

The Chinese program “will unfold over time, and it’s far too early for lasting judgment,” Mr. Taylor wrote in a post this week. “But in these [early] projects, China’s conduct as a business and foreign policy partner is being judged by other nations across the region — and often found wanting.”

Mr. Harding, who recently examined the initiative on a visit to China, said Chinese officials are not backing down. “What I heard in Beijing last month was people saying, ’We need to better understand local conditions.’”

It remains to be seen how China will tackle that challenge. Mr. Hawksley told The Times that “if China wants to become the predominant power in the Indo-Pacific, people there need to feel safe.”

“Right now, the way China is behaving, they don’t feel safe,” he said. “Beijing hasn’t yet learned that there’s a lot more to being a superpower than mixing concrete, building railroads and pushing people around.”