Belt & Road Initiative (BRI) projects in South Asia, like other continents, not only use Chinese capital but also Chinese labourers, raw material and finished products, thereby fuelling growth in the Chinese economy.
China is expanding the reach of its Belt & Road Initiative (BRI) in India’s neighbourhood, as part of Beijing’s efforts to beat economic slowdown following its trade war with the US.
The Chinese vice minister of commerce announced that the country would establish new pilot project Free Trade Zones (FTZs) in six provinces across the country, especially in the border regions, to help improve trade ties with neighbouring countries, expand the reach of the BRI and support local economies. The move is aimed at helping the local economy from the impact of the escalating trade war with the US, people familiar with Chinese policy said.
The six new FTZs would be located in Yunnan, Heilongjiang, Guangxi, Shandong, Jiangsu and Hubei. This would bring the total number of the country’s pilot FTZs to 18. This would enable China to expand projects under the BRI including in India’s neighbourhood, claimed one of the people. Besides Pakistan, China hopes to bring Nepal under the BRI in a big way and is targeting Bangladesh as well. Myanmar has seen a surge in Chinese projects and Sri Lanka has been reeling under debt to China.
BRI projects in South Asia, like other continents, not only use Chinese capital but also Chinese labourers, raw material and finished products, thereby fuelling growth in the Chinese economy. Chinese construction companies are given contracts, which are funded by Chinese banks, for development of ports and railway networks.
The Chinese leadership feels that new projects and exports under the BRI in South Asia could help generate additional revenue for China at a time when its economy is by the trade war, said one of the people. However, this will increase Chinese footprints in India’s neighbourhood, much to the discomfort of New Delhi.
Washington on September 1 began imposing 15% tariffs on an estimated $125 billion of Chinese products including clothing, footwear, sunglasses, cameras, television components, turkey and beef cuts, while Beijing pushed ahead with increased duties of 5-10% on a variety of major imported American goods, including soybeans and crude oil.
The US announced that there would be no grace period for cargoes that left China before September 1, unlike in May when it granted a grace period for the goods in transit.
These are part of the ongoing trade war between the two countries.