Thursday, August 26, 2021


The BRI project is a Chinese trade concept, based on the British Commonwealth. The only thing China does is copying. The CCP has a huge talent base which sees and researches everything possible to push China as an economic superpower. So it was a matter of time that they dissected the workings of the British Commonwealth and tuned it to their liking.

Feb. 27, 2021 Gravitas Plus: The Belt & Road initiative.

What is the British Commonwealth? The concept was envisioned in the Balfour Declaration at the 1926 Imperial Conference. Britain and its dominions agreed they were "equal in status, in no way subordinate to one another in any aspect of their domestic or external affairs; though united by common allegiance to the Crown, and freely associated as members of the British Commonwealth of Nations".

The term "Commonwealth" was officially adopted to describe the community. So the British Commonwealth is comprised of all nations that were ruled by Britain. The bottom line was the economic power status of Britain. So these states supplied the raw materials, which were shipped to Britain, the finished goods were sent back and Britain prospered while the local industries decayed into oblivion.

But the 50s were not good to Britain. It lost the control of the Suez Canal in 1956 and the comprising nations were becoming independent. The new nations were more focused on redefining relations and ties with Britain than keeping up the supply lines. They started searching for new markets, centering on their own local industries.

So Britain turned to the EEC. But there was the French firebrand President Charles de Gaulle (wiki), who vetoed them out every time. Britain had to wait for his death in 1970 to join the EEC. 

That's one way of looking at the father of BRI. Now lets come back to China. Anything coming out of China is labelled 'grand', especially if the CCP leader is showing approval of it. The BRI or the Silk Road Economic Belt and 21st-Century Maritime Silk Road Development Strategy is also coupled with the Ice Silk Road, encompassing Artic sea lanes.

So coming back to China prior to 1979, China, under the leadership of Chairman Mao Zedong, remained a centrally planned economy. The country's economic output was directed and controlled by the state, which set production goals, controlled prices and allocated resources throughout the economy.

During the 1950s, all of China's individual household farms were collectivized into large communes. To support rapid industrialization, the central government undertook large-scale investments during the 1960s and 1970s. Such policies created distortions in the economy.

True to Communism, the economy was managed and run by the central government, there were no market mechanisms to efficiently allocate resources, so there were few incentives for manufacturers, workers and farmers to become more productive. Instead they were focused on production goals set by the government.

In 1978, (shortly after the death of Chairman Mao in 1976), the Chinese government decided to break with its Soviet-style economic policies by gradually reforming the economy according to free market principles and opening up trade and investment with the West, in the hope that this would significantly increase economic growth and raise living standards. 

As Chinese leader Deng Xiaoping, the architect of China's economic reforms, put it: "Black cat, white cat, what does it matter what color the cat is as long as it catches mice? China would couple State Capitalism to authoritarian social rule. 

Beginning in 1979, China launched several economic reforms. The central government initiated price and ownership incentives for farmers, which enabled them to sell a portion of their crops on the free market.

In addition, the government established four special economic zones along the coast for the purpose of attracting foreign investment, boosting exports, and importing high technology products into China. 

From 1979 to 2018, China's annual real GDP averaged 9.5%. Under Xi, China has emerged as the world's largest manufacturer according to the World Bank.

As China's manufacturing grows it needs new markets to sell. This is where all its economic power and the  BRI come in. But China may be the biggest hub of manufacturing, it is still excessively dependent on two things, oil and minerals.

The BRI project is kicking off in despotic nations first, like Burma, where the military is ruling since ages. China has no problem with that. It prefers authoritarian ruled countries, because firstly there is no red tape, and secondly there are no environmental issues. You go in, you dig and take out what you want, be it copper, iron, minerals, or anything the CCP requires.

But the most smart thing is, they offer client states infrastructural projects. They will tell them they need to link their biggest cities by rail and road with bridges and all the other construction needs. So China builds it and operates it for the next 30 years or so, like toll roads for example, or if its a dam, they will sell the client state the electricity after 30 years.

After that the client state will be dependent on them for maintaining it because the Chinese construction giants are using exclusively machinery, equipment and parts of Chinese standard specifications. A perfect example is the Karot Hydropower Project in Pakistan. 

Another reason states fall into the BRI trap is because unlike the West, China doesn't look at their balance sheet to see how they will pay. The CCP simply designs a project and Chinese companies build it. The local economy is supplying unskilled laborers, whom they use and dispose of. The middle level and top level management is always Chinese.

So they build the project at their rates, and the client state pays, that is the bottom line. Either you squeeze your people by taxes to pay for it or you hand over assets if you can't pay, like Sri Lanka did in case of Hambantota International Port.

Overall BRI is a project to create and expand the market of Chinese finished products, nothing else. It is profitable only for China, the rest is just there to be used and sucked dry.

All this happens when nations have leaders who are greedy and have no vision for their nations future.

By Rajesh Chaudhary

Sept. 9, 2020 Asia Society: How China Is Weaponizing the Belt and Road Initiative.