Dispelling some misgivings about Belt & Road

By Ritu Raj Subedi
0 Comment(s)Print E-mail China.org.cn, July 12, 2017
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Nepal [File photo]

When Chinese President Xi Jinping first announced the Belt and Road Initiative (BRI) in Kazakhstan in September 2013, he must have had it in mind to share prosperity with the neighbors, after China had already achieved mesmerizing economic development.

When neighbors are poor and reel from constant instability, it will also be difficult for China to sustain economic growth and good fortune.

Beggar-my-neighbor policies can never be palatable for a China engaged in building a truly socialist nation and trying to raise the bar for global governance.

The BRI reflects these aspirations. As President Xi unveiled his landmark initiative during his visit to central Asia, he set a grand goal to liberate the least developed/developing landlocked countries from their perennial bondage by facilitating trade and transition a wide scale.

For landlocked countries, it provides not only land connectivity, but also access to the sea. In view of Nepal’s high dependency on India for much of its trade and commerce, for example, Nepal’s accession to the BRI framework has been hailed as a giant step on the path to economic sovereignty and freedom.

As a typical landlocked nation, Nepal had suffered from huge economic losses as well as being humiliated when India used vulnerability to impose its vested geopolitical policies on its small neighbor. It had so far enforced three separate embargoes on Nepal at times when the latter defied its hegemonic attitude and behavior.

Given this bitter past, Nepal’s trade and transit treaty with China supplies much respite. The BRI brings double happiness to Nepal by offering it access by land and ultimately, by sea.

However, some detractors harbor misgivings about the prospects for the BRI. Misconceptions have arisen largely due to a skin-deep approach to the global initiative based on a win-win strategy.

They claim that the debt Nepal will incur in order to implement BRI projects will create a debt trap from which it will be hard to escape. This faulty assumption is the outcome of incomplete understanding of the BRI that is based on five pillars – policy and planning coordination, infrastructural connectivity, unhindered trade, financial integration and people to people contact.

Unlike usual neo-liberal policies, guided by the framework of a client-donor relationship, the Belt and Road is an open platform whereby its members reveal their genuine concerns and find a negotiated solution for mutual benefits.

For Nepal, the creation of cross-border economic and industrial zones is the best viable means to avoid any possible debt trap.

China has shown readiness to invest in such economic zones to manufacture and trade goods of comparative advantage. The cross-border economic zones will not only enable Nepal to reduce a ballooning trade deficit with China but also unfold sustainable projects with BRI funding.

It is only with such a creative and innovative approach that Nepal can reap benefits from the BRI. So, the idea of "sharing of natural resources," is highly practical in our context. This is popular in African nations where China has made massive investment in infrastructure development and technology transfers in return for natural resources.

Nepal is rich in hydropower, forests and minerals, while China has developed unique experiences in infrastructure building, and has sufficient finance and advanced technology. Thus, Nepal and China should create a mutually beneficial resource exchange mechanism within the BRI framework.

In addition to Nepal’s lack of financial strength, critics question its capability to carry out broader institutional reforms and implement multi-level and multi-channel cooperation under the BRI.

Dr. Upendra Gautam, general secretary of the China Study Center, argues that Nepal is able to deal with above challenges if it first fixes critical priorities from the BRI.

"If our priorities are a trans-Himalayan railway and cross-border power lines, then Nepal can take a long term integrated perspective of the sustainability factor. As these critical priorities have profound historical, social, psychological and geographical senses, Nepal will have to go for a sustainability perspective that is an economic plus," says Dr. Gautam.

He notes that adopting a cluster development approach along the transport hubs will help optimize benefits from project investment.

Nepal has floated the idea of the Asian Infrastructure Investment Bank (AIIB) issuing bonds in Nepalese rupees to finance BRI projects; however, Gautam suggests Nepal’s central bank can itself issue the bonds to create matching funds for BRI projects.

Once the five BRI pillars are set in motion, Nepal will be able to balance development planning, tap into its economic potential and diversify its trade and finance for mutual benefit. It will be better to give momentum to the BRI projects by setting aside the "scarecrow" of a debt trap.

Ritu Raj Subedi is an associate editor of The Rising Nepal.

Opinion articles reflect the views of their authors, not necessarily those of China.org.cn.

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