Yesterday China was hosting 37 countries at its Belt and Road Summit – the largest gathering of world leaders this year. Russia’s Putin, Italy’s PM Conte, Singapore’s PM Lee Hsien Loong, Myanmar’s Aung San Suu Kyi, and leaders of countries across Asia and Europe joined 5,000 others for the 2nd year.

Wondering what is “Belt and Road”? It is the largest infrastructure project in human history, with over $1 trillion being committed to connect 65% of the world’s population by one upgraded sea route and one upgraded land route.

China forum of world leaders
World leaders at the Belt and Road forum in China

It is China’s modern upgrade of the Silk Route, to secure China’s place as the number one economy in the World. Their economy is scheduled to grow bigger than the US economy by 2020.

Should we be happy or worried?

Here’s how massive the project is. The combined routes represents:

> 65% of the world’s population
> One third of global GDP
> 30% of the world’s goods and services
> Over 150 countries and international organisations
> $350b committed to projects by 2023

China has pledged to import US$2 trillion worth of goods from Belt and Road countries by the end of 2022. The infrastructure upgrades and increased trade will bring many out of poverty.

But there’s also a dark side.

China’s is already taking action on default loans. They took control over Sri Lanka’s port a year ago after Sri Lanka defaulted on their repayments. The country still owes $13 billion, and they’ve now lost their port to China for 100 years.

Kenya is now in danger of losing its Mombasa port with a similar risk if they default.

And the Central Bank has recently raised alarm bells over Uganda’s tripling of its national debt, now risking debt default as a result of China’s loans.

Other countries where debt has risen dramatically as a result of the Belt and Road initiative include Pakistan, Mongolia, Maldives, Laos, Kyrgyzstan & Tajikistan.

Dr Malcolm Davis, senior analyst at the Australian Strategic Policy Institute explains China’s “Debt-trap Diplomacy” – “It gets countries – particularly poorer countries – hooked on debts they can’t pay back. When they can’t pay it back, China basically grabs ports, facilities or territory. It’s a debt-trap strategy.”

This strategy effectively enables China to quietly take over the key economic activities of countries without military force.

Sri Lanka, Pakistan and other countries already negatively impacted by the strategy are not attending this year’s summit. But that’s not stopping China from doubling down on their plans, following Chiang Kai-shek’s view:

“Contempt for China on the part of the enemy is his weak point. Knowledge of his weak point is our strong point.”

The next 10 years will unquestionably be China’s decade, and the Belt and Road project will, in Chinese President Xi Jinping’s be “the project of the century.”

Whether you think that’s a good thing or a bad thing, it’s worth knowing it’s happening, and it’s happening now.

~ Courtesy Roger James Hamilton

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