China Hordes Construction Contracts on Silk Road
President Xi Jinping has made an aggressive push to bring back the “silk road.” China’s Belt and Road Initiative (BRI,) which is a series of construction projects to build trade routes connecting Asia and Europe, is expected to cost the countries involved $1.4 Trillian.
China pledged to contribute at least $124 billion. This seems like a significant percentage, but it’s a strategic move.
China will and already is benefitting the most from the construction of the silk road, and in fact are hogging all of it, rather than sharing with the strategic partners in the Silk Road project.
According to a new study, the construction projects will give China a labor boost. The majority of contractors and laborers hired to work on these projects are Chinese. Specifically, 89% of contractors and laborers working on the Silk Road are Chinese.
Only 11% of workers on the China-funded transport infrastructure projects are from other countries, reports the Center for Strategic and International Studies (CSIS,) a Washington-based think-tank.
The construction projects and the BRI itself was sold to the other countries as an investment that would benefit all.
“We should stick together through thick and thin, promote trade and investment liberalization and facilitation and make economic globalization more open, inclusive and balanced so that its benefits are shared by all,” said China’s president in his keynote speech.
The CSIS study reveals how disproportionate the labor selection has been for the projects so far and also shows that the project should be referred to as CBRI, since China has the most to gain from this new silk road.
But, this could ultimately backfire and lead to countries questioning why they should continue to contribute and invest.
“Despite official rhetoric about the Belt and Road being open, it is first and foremost a China-centric effort,” said Jonathan Hillman, director of the Reconnecting Asia Project at CSIS. “It is in everyone’s interest, including China’s, that projects are open to fair competition. Unless there are more concrete opportunities to participate in the BRI, more countries will start to ask why they joined the BRI and those that have not joined will not.”
Not to mention, in other infrastructure projects in and funded by Europe there was more of an even distribution of contractors hired.
“In contrast to the overwhelming preference shown to Chinese contractors in China-funded projects, data for projects in Eurasia funded by two western multilateral development banks (MDBs) — the World Bank and the Asian Development Bank — shows a more even distribution of awards. Among MDB-funded transport infrastructure projects, 41 percent of contractors were from countries in which the infrastructure was being built, while 29 percent were Chinese and 30 percent were from third countries, according to the CSIS study, which covered 178 projects between 2006 and now,” writes the Financial Times.
China desperately tried to sell the idea that the BRI would be a “group effort” that would pay off for all countries involved.
The BRI could put China at a massive advantage over other world powers including the U.S.
“Xi is offering a lot of money and infrastructure to a lot of recipient countries who have a pressing need for their economies to be modernized,” said Sourabh Gupta, a senior fellow at the Institute for China-America studies to Fox News. “There are real political, economic and strategic goals at stake. It is China effectively applying soft power in a very visible way. It wants to become what the United States has been until now – the leader of the world economy.”
Author’s note: This shows that China can’t resist keeping all of the work to itself. A more sophisticated and fair leader would make sure the work was divided among the participants. Soon, the countries involved are going to feel like President Xi was just a sleazy salesman. This proves this is less about fair trade and more about regional dominance.