China’s new Silk Road hits $14 bn pothole in Pakistan

One Belt One Road: China issued a denial but the official withdrew the dam from among dozens of projects being jointly developed by the two countries.

By: AP | Beijing | Updated: January 11, 2018 5:05 pm
China's new Silk Road hits  bn pothole in Pakistan In some areas, Beijing is suffering a political backlash due to fears of domination by Asia’s biggest economy. (Source: Reuters)

China’s plan for a modern Silk Road of railways, ports and other facilities linking Asia with Europe hit a $14 billion pothole in Pakistan.

Pakistan’s relations with Beijing are so close that officials call China their “Iron Brother.” Despite that, plans for the Diamer-Bhasha Dam were thrown into turmoil in November when the chairman of Pakistan’s water authority said Beijing wanted an ownership stake in the hydropower project. He rejected that as against Pakistani interests.

China issued a denial but the official withdrew the dam from among dozens of projects being jointly developed by the two countries.

From Pakistan to Tanzania to Hungary, projects under President Xi Jinping’s signature “Belt and Road Initiative” are being cancelled, renegotiated or delayed due to disputes about costs or complaints host countries get too little out of projects built by Chinese companies and financed by loans from Beijing that must be repaid. Also Read: China’s new ‘Silk Road’ cannot be one-way, says French President Emmanuel Macron

In some areas, Beijing is suffering a political backlash due to fears of domination by Asia’s biggest economy.

“Pakistan is one of the countries that is in China’s hip pocket, and for Pakistan to stand up and say, `I’m not going to do this with you,’ shows it’s not as `win-win’ as China says it is,” said Robert Koepp, an analyst in Hong Kong for the Economist Corporate Network, a research firm.

“Belt and Road,” announced by Xi in 2013, is a loosely defined umbrella for Chinese-built or -financed projects across 65 countries from the South Pacific through Asia to Africa and Europe.

Other governments welcomed the initiative in a region the Asian Development Bank says needs more than $26 trillion of infrastructure investment by 2030 to keep economies growing. Nations including Japan have given or lent billions of dollars for development, but China’s venture is bigger and the only source of money for many projects.

Governments from Washington to Moscow to New Delhi are uneasy Beijing is trying to use its “Belt and Road” to develop a China-centered political structure that will erode their influence.

Among projects that have been derailed or disrupted, authorities in Nepal canceled plans in November for Chinese companies to build a $2.5 billion dam after they concluded contracts for the Budhi Gandaki Hydro Electric Project violated rules requiring multiple bidders.

Consulting firm BMI Research has compiled a database of $1.8 trillion of infrastructure investments across Asia, Africa and the Middle East that include Chinese money or other involvement.

“It’s probably too early to say at this point how much of the overall initiative will actually be implemented,” said Christian Zhang, a BMI analyst.

The U.S. and Japanese governments express interest in building contracts or other potential opportunities. But they also are trying to develop alternative initiatives.

The stumbles for one of the world’s most ambitious infrastructure ventures could help temper concerns Beijing will increase its strategic influence.

Even Pakistan, one of China’s friendliest neighbors, has failed to agree on key projects.

The two governments are developing facilities with a total cost of $60 billion including power plants and railways to link China’s far west with the Chinese-built port of Gwadar on the Indian Ocean.

A visit by a Chinese assistant foreign minister in November produced no agreement on railway projects in the southern city of Karachi valued at $10 billion and a $260 million airport for Gwadar.

The same month, the chairman of the Pakistan Water and Power Development Authority announced the Diamer-Bhasha Dam would be withdrawn from joint development.

“Chinese conditions for financing the Diamer-Bhasha Dam were not doable and against our interests,” the official, Muzammil Hussain, told legislators, according to Pakistani news reports.

The Chinese Cabinet agency overseeing “Belt and Road,” the National Development and Reform Commission, denied in a written statement that it asked for an ownership stake.

“Belt and Road” is interwoven with official efforts to export Chinese rail, hydropower and other technology and steel, aluminum and other industrial goods.

In Thailand, work on a $15 billion high-speed railway was suspended in 2016 following complaints too little business went to Thai companies. A new plan announced in July gives local contractors a bigger role.

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  1. Gogula Murty
    Jan 11, 2018 at 9:23 pm
    all these countries will relaise slowly
    1. Raman Kay
      Jan 11, 2018 at 6:35 pm
      China and Chinese are greedy bunch and very insidious, like any one in our neck of the woods. The difference is that China is the sole beneficiary. While China benefits and instead of employing local population, Chinese are imported to complete the job. So while you pay the loan to China, the country suffers, while the ry is going to Chinese to complete the job! I would rather trust the West, who while paying loan uplift the country by employing the locals. Many countries in the African sun-continent were illated by Chinese offers, that they plunged in but only to regret later. China is one of the best prac ioners of bait and switch policy! Never trust them, ever!
      1. Srichand Vanvari
        Jan 11, 2018 at 10:24 pm
        Eat your heart out Muhammad Dar.
      2. Mohammad Dar
        Jan 11, 2018 at 6:31 pm
        Some one s hindu stinky hin hurts, name few, from hind of hindus crooks of india and their hindu crook gods of hinduism racism by faith, the American government.
        1. Tony Singh
          Jan 11, 2018 at 10:13 pm
          I AM NOT A HINDU, but frankly your comment is racist. China will over run pakistan at its home. Although Modi is following dangerous trends, pakistan with china will be a colony of China soon.
          1. Jawad Mahmood
            Jan 12, 2018 at 1:12 am
            Dear Tony this is beyond profit and loss and commercial worth project for both Pakistan and china hope you know the meaning of strategic interest, regional politics ,security depth and energy corridor of CPEC
            1. Kay Gee
              Jan 12, 2018 at 3:52 am
            2. Srichand Vanvari
              Jan 11, 2018 at 10:27 pm
              Eat your heart.
            3. Vinod Behari Lal
              Jan 11, 2018 at 5:23 pm
              Pain sustained during those trying months of demon. is bound to bring well deserved rewards.
              1. Indian Singh
                Jan 11, 2018 at 5:10 pm
                CHINESE BUSINESS MODEl is a ready made route to disaster for any country doing Business with CHINA. It starts with CHINESE LOAN with HIGH INTEREST RATE and all the CONTRACTS going to CHINESE COMPANIES. Most of the WORKERS for the PROJECT also will be brought from CHINA. Thus 90 PERCENT of the LOAN will go back to CHINA and the HOST COUNTRY is left to REPAY the LOAN. CHINA will also FORCE HOST COUNTRY to give TAX HOLIDAY for long period thus depriving the HOST COUNTRY of even TAX INCOME as in the case with PA-KIS who have been forced to give 40 year TAX HOLIDAY to CPEC PROJECTS. ............. The apt example of CHINESE BUSINESS MODEL is the HAMBANTOTA PORT of SRILANKA developed with ONE BILLION DOLLAR LOAN from CHINA which had to be handed over to CHINA as SRI LANKA could not repay the LOAN.
                1. Rajani Kant
                  Jan 11, 2018 at 6:48 pm
                  Even if Pak continues with OBOR project minus a few, Pak will definitely go ahead with china, since the existence of Pak is to see India suffers in all spheres, and for that it can go to the extent of its own self destruction as can be seen from its policy of waging proxy war against India through export of terrorism. And Pak itself has fallen a victim of terror and sectarian war.
                  1. Kay Gee
                    Jan 12, 2018 at 3:55 am
                    I will die but will make you widow
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