China’s recent survey shows that 60% of the world’s Belt & Road Projects have been hit by the Covid-19 Pandemic, but it will be misreading Beijing if one believes that the infrastructure ventures will be placed on the back-burner.
Briefing the Media on the outcome of the “High-level Video Conference on Belt & Road International Cooperation” held on June 18, Senior Chinese Official said a survey showed that about 20% of projects under the Belt & Road Initiative (BRI) are “seriously affected” by the pandemic while 30%-40% are impacted at various degrees.
But China is not sitting idle to see these multi-billion dollar projects under President Xi Jinping’s ambitious BRI being destroyed by the novel coronavirus disease (Covid-19).
Beijing is conducting a study on the impact of the pandemic on the BRI Projects, according to China’s Foreign Affairs Ministry International Economic Affairs Director General Wang Xiaolong at the June 18 press conference.In Malaysia, Chinese officials involved in BRI Projects have been holding discussions with Transport Minister Datuk Seri Dr Wee Ka Siong, who has posted photos of their meetings on facebook.
The June 18 Video Conference on BRI was Chaired by China’s Foreign Minister Wang Yi, and attended by 24 Other Countries Ministers, the World Health Organisation & United Nations Development Programme (UNDP).
The organisation of the conference on BRI at a time when China is struggling to stem the second wave of the epidemic speaks volumes about Beijing’s commitment to carry on supporting the troubled BRI Projects, most of which are funded by Chinese state corporations.It is significant to note that this meeting on BRI was held soon after Chinese Premier Li Keqiang reiterated the importance of BRI in China’s economic policy this year. It was also held amid some wild speculations on the fate of the BRI.
Li said in his government work report during China’s “two sessions” last month that the BRI Projects would boost outbound investment from China.
The participation of UNDP in the June 18 video conference demonstrates the importance placed on the BRI Projects by this United Nations agency. In the past, infrastructure projects had spurred economic growth and brought about economic recovery.
In this regard, the pandemic is likely to spur demand for more infrastructure projects in developing nations.
While the BRI, launched by President Xi Jinping in 2013 to promote international trade and connectivity, has helped China to extend its economic reach overseas, it has also assisted host countries in trade and economic expansion.
Since 2013, China has promised or given out about US$1 trillion in loans and grants to BRI participating countries in Africa, Latin America, ASEAN, Central Asia and Europe.
BRI Projects are largely infrastructure in nature. They are linked to transport, energy, mining, information technology and communications, industrial parks, economic zones, tourism and urban development projects.
Post Covid-19, it is clear that many countries are facing financial restraints after allocating huge resources to stimulate their virus-rattled economies.
According to The Economist, African countries see the most casualties in BRI Projects.
Egypt has postponed construction of a coal-fired power plant, Bangladesh has cancelled plans for a coal plant, Pakistan has asked Beijing for easier repayment terms on US$30bil power projects and Tanzania has planned to cancel a port project.
But in South-East Asia, there is a prevailing view that infrastructure projects are important to their economies. Hence, most governments continue with the on-going projects while delaying negotiations for new BRI Plans.
In Indonesia, one project that has been hit by the Covid-19 lockdown is the 142 km Jakarta-Bandung high speed rail line, where construction was halted in mid-April when the government imposed social distancing rules.The opening of the rail link project, financed by a Chinese bank, is now expected to be delayed from the original 2021 date.
Thailand has pushed back its date for signing of a contract over a 253km Sino-Thai high-speed railway with China to October.
But in Laos and Cambodia, BRI Projects have continued to speed ahead.
The construction of a 422 km electrified passenger and cargo railway has not been delayed in Laos, according to media reports.
The China-Laos rail link, which started construction in 2016, is scheduled to complete in December 2021.
In Malaysia, work on the East Coast Rail Link (ECRL) project has resumed after stoppage during Covid-19 crisis, but negotiations to finalise the Kuala Lumpur-Singapore High Speed Rail have been postponed.
Economist Lee Heng Guie says: “From the recipient countries’ perspective, the severe economic fallout from Covid-19 would challenge countries facing financial challenges to be less enthusiastic towards the BRI over the next 12 to 24 months.”
However, China has acted to address the debt issues of the BRI recipient nations.
On June 9, Beijing announced it has suspended debt repayments for 77 developing countries and regions as part of the G-20 debt relief initiative to help impoverished countries weather economic difficulties during pandemic.
On June 17, President Xi announced China would cancel the debt of some African countries in the form of interest-free government loans that are due by the end of 2020.
China has continued to invest in BRI Nations, despite being the first country to be hit by Covid-19 and the grim outlook on the global economy.
China’s outbound direct investment in BRI participating nations increased 13.4% in the first four months of 2020, according to figures released by China’s Ministry of Commerce.
China’s direct investment in 53 BRI Partner Countries totalled US$5.23bil in the first four months of 2020, accounting for over 15% of its total outbound investment of US$33bil in 155 countries during the period.
Nearer to home, China’s investment in ASEAN had increased over 43% to US$3.94bil in the first four months, according to official data from China.
Asean, as a bloc, has become the biggest trading partner of China in the first quarter this year, replacing the European Union (EU) due to the exit of Britain from EU as well as China’s surging imports of integrated circuits from the ASEAN Countries.