The Belt and Road Initiative

Aug 05, 2018 Features / Columnists, Peeping Tom

On July 27th last, Guyana signed a Memorandum of Understanding with the People’s Republic of China to cooperate within the Silk Road Economic Belt (Belt) Initiative and the 21st Century Maritime Silk Road Initiative, which are collectively known as the Belt and Road Initiative (BRI).
This is a global project being pushed by China as part of its economic outreach and principally involves establishing trade and transport links between Asia and Europe and now between Asia and the rest of the world. The Euro-Asia project has now been extended to South America. China is recreating its old Silk Road to link Asia and Europe, and through maritime transport links, is expanding its reach into South America.
In January of this year, a Special Declaration was signed between China and CELAC which was limited to expressions of interest in the Road and Belt Initiative. The Declaration was extremely cautious, with CELAC merely welcoming, with interest, the presentation of the Chinese Foreign Minister on the Belt and Road Initiative. China has pledged some US$50B under its proposal to CELAC.
Latin America, which is actively courting Chinese investments, however was not rushing into a regional deal with China. But China is not waiting on a region-wide initiative. China is actively courting the expansion of the BRI by signing agreements with individual countries. While it is said that Guyana is the first South America country to sign on to the BRI, this is not true. China had previously signed agreements with Panama, Antigua and Barbuda, Trinidad and Tobago and with Bolivia.
Guyana missed the bigger picture. Guyana had the option of conditioning its involvement on either a CELAC-wide initiative or a Caribbean Community Initiative. China prefers to deal with individual countries rather than through a broader framework. Guyana could have pressed for the latter.
There are two advantages to such an approach. The first being that Guyana would have been part of a firmer regional framework which would have ensured greater safeguards on ownership of the Initiative. As it stands now, the BRI is owned by China and is for China.
The second would have allowed for integration with China to be linked with the proposed integration of Latin America and to overcome the problems of transport and ICT connectivity among the states of the Caribbean community.
CELAC would have been mindful that one of the major criticisms of this BRI is that ‘all roads lead to China.” The Chinese economy is in the second phase of its economic expansion. The first phase saw a mad rush for raw materials around the world. China used its soft power to great effect to penetrate to ensure access to these raw materials to boost its domestic production. The second phase is now more about trade, since China is concentrating less on commodities and more on exporting products. This is where the BRI comes in.
A trade war has broken out between the United States and China. China is not backing down in this war. It has imposed retaliatory tariffs on US products in response to similar measures being imposed by the United States on Chinese imports.
China is not putting all of its eggs in one basket. While it has no intention of losing the US market, it still intends to cushion any likely impact of increased protectionism by the US, by expanding its trade with other parts of the world.
China recognizes the problems which many Third World countries have with infrastructure. The BRI projects respond to the need for greater external connectivity by these countries, but it also allows for China to have improved access to these countries and for China to use the BRI to monopolize control of ports, road links and air links which it finances.
Guyana is excited by the BRI which it sees as financing the road to Brazil. But it has to be cautious, because it may end up with a situation where China ends up owning that road and thereby entirely controlling the movement of goods to Brazil, rather than Guyana benefitting.
Guyana already has existing agreements with China under the old resource-driven agreement. Guyana needs jobs for its young people. Guyana needs to press China to invest in local manufacturing so as to create such jobs. All roads must not lead to China.

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