Saved Laws For Credtrans

SENATOR EMMANUEL D.
PACQUIAO
CHINA’S BELT AND ROAD INITIATIVE (BRI)
BRIEFER
BELT AND ROAD INITIATIVE (BRI)

 It is a restoration of the ancient silk road trading route with an ambitious effort to deepen
regional cooperation by boosting connectivity and reducing trade costs through massive
trans-continental scale projects of transport infrastructure.
 But not all of the projects are hard infrastructure. It must be noted that China also plans
to set up international courts in Shenzhen and Xi’an to resolve commercial disputes
related to BRI.
 It is basically a web of bilateral ties with China functioning at the center.
 It was first introduced by President Xi Jinping in 2013 during a visit to Kazakhstan.
 As of now, it already covers 71 countries that account for half of the world’s population
and quarter of global GDP.
 China is reportedly spending roughly $150 billion a year in the countries involved.
o BRI projects may be funded through: (1) government-to-government grants, (2)
traditional export credit models such as the buyer credit and supplier credits, (3)
Official Development Assistance (ODA) or aid, or (4) the use of a Public Private
Partnership model. Most, however, have been funded through aid or PPP.
 BRI is classified into two:
1. Silk Road Economic Belt - linking China to Central and South Asia and onwards to
Europe
2. New Maritime Silk Road - linking China to the nations of South East Asia, the Gulf
Countries, North Africa, and on to Europe.
1
SOME OF THE BRI PROJECTS:
1. With RUSSIA - China reached a consensus with Russian President Vladimir Putin in
February, 2014 on the construction of Russia railways across Europe and Asia.
2. With PAKISTAN - $46-billion worth of energy and infrastructure projects in the China-
Pakistan Economic Corridor, linking Gwadar in Pakistan to Kasshgar in China.
3. With KAZAKHSTAN – a new transit railway to link the East and West, facilitating the flow
of goods along the ancient silk road trade route.
4. With MALDIVES – for maritime silk route, China secured the support of Maldives which
straddles major international shipping lanes.
5. With KENYA – its first fast train service from the capital of Nairobi to its Mombasa port
was just opened.
POTENTIALS OF BRI:
 New and improved transport infrastructure and policy reforms
 Substantial reduction of trade costs
 Improved connectivity
o For example, shipment from China to Central Europe usually takes 30 days, as
most goods travel by sea. Shipment times by train are about half as long, but given
current infrastructure, much costlier.
o But while rail transport will remain costlier than maritime for these routes, the
time and cost reduction will have significant consequences for certain goods
impacting the mode choice and total flows of international trade.
 Higher cross-border trade and investment

 Improved growth in the covered regions
 Deeper regional cooperation
o If successful, BRI could contribute to fill the gaps on inadequate infrastructure and
weak commerce, and fully integrate in the world economies countries like
Afghanistan, Nepal, Tajikistan, and Laos.
CRITICISMS AGAINST BRI:

1. There are potential environmental, social, and corruption risks associated with any large
infrastructure project. These risks may be especially significant in countries involved in
the BRI, which tend to have relatively weak governance.
2. For some countries, the financing required for BRI projects may expand debt to
unsustainable levels. For instance, the construction of the Lao PDR section of the Kunming
-Singapore Railway has an estimated cost of US$ 6 billion – nearly 40 percent of GDP of
2
Laos in 2016. BRI is even deemed as a form of economic imperialism that gives China too
much leverage over other countries, often those that are smaller and poorer.
3. As mentioned, in relation to BRI, China plans to set-up international courts which may be
a vehicle for China to write new rules, establish institutions that reflect Chinese interests,
and reshape ‘soft’ infrastructure.
4. While there was a lack of “individual diplomatic clout” in Cambodia, Laos and the
Philippines, Chinese debt could give China a “proxy veto” in ASEAN, academics said.
IMPACT OF BRI IN THE PHILIPPINES

 As of April 2017, 13 bilateral cooperation agreements were signed by China and the
Philippines.
 USD 24 billion worth of Chinese funding and investment was pledged.
 Correspondingly, the Philippines took action to become a full member of the China-led
Asian Infrastructure Investment Bank (AIIB) as an indicative of Philippine interest in
China’s massive infrastructure project.
o AIIB was established in January, 2016, which now has 80 country- members.15
o AIIB agreed to lend USD 1.73 billion by the end of 2016 and has cooperated with
the World Bank and Asian Development Bank (ADB) in co-funding projects.
 As already mentioned, BRI projects may be funded through, among others, “aid” or
through the Official Development Assistance (ODA).
o China has recently been projected by the Philippine government as a reasonable
aid donor compared to other countries due to its “no economic or political
conditions,” except the adherence to the “One China Policy” and access to natural
resources its aid finances.
 China’s BRI does not only open for greater cooperation and diplomatic relations with the
Philippines but it also serves as a push for the country’s prioritization of infrastructure
acceleration particularly with the ambitious infrastructure development agenda under
the “Build, Build, Build” program.
 The prioritization of infrastructure acceleration has become evident in the
administration’s allocation of PHP 847.2 billion in the 2017 National Budget, which is 5.3
percent of the Philippine gross domestic product (GDP). The grand plan is to spend around
PHP 8-9 trillion for the next six years.28 According to the Philippine Development Plan
2017-2022, infrastructure development will focus on transportation systems, water
resources, energy, information and communication technology (ICT), and social
infrastructure.
 The government plans to finance the infrastructure projects by: (a) pursuing an
expansionary fiscal strategy with 80 percent of loans coming from domestic sources and
3
20 percent coming from foreign sources; and (b) tax policy and tax administration
reforms. All these are seen as measures that will improve Philippine competitiveness in
ASEAN.29
RISKS
 However, the success of implementing a BRI project in the Philippines will depend on how
the Philippine government will balance opportunities with the risks attached to
participation.

 Financial risks may also come about. It is important to understand that in these projects
and transactions, different currencies and national financial capacities are at
play.33 Differences in legal frameworks, possible incompatibility of technical
specifications, language barriers, and other forms of operational risks also need to be
looked into.
“China needs ASEAN so they can start with their Maritime Silk Road, which passes through the
South China Sea. They need our support for their Asian Infrastructure Investment Bank. Why will
these countries support China if China is grabbing their maritime zones?” SC Justice Carpio
remarked.
Sources:
1. https://blogs.worldbank.org/trade/three-opportunities-and-three-risks-belt-and-road-
initiative
2. https://www.economist.com/the-economist-explains/2017/05/14/what-is-chinas-belt-
and-road-initiative
3. https://www.rappler.com/newsbreak/iq/149535-china-belt-road-initiative
4. http://www.chinadaily.com.cn/a/201808/20/WS5b7a2509a310add14f386a9f.html
5. http://www.fsi.gov.ph/the-belt-and-road-initiative-and-philippine-participation-in-the-
maritime-silk-road/
6. http://www.fsi.gov.ph/chinas-belt-and-road-initiative-implications-for-the-philippines/
7. http://www.fsi.gov.ph/chinas-belt-and-road-initiative-implications-for-the-philippines/
8. https://www.theguardian.com/cities/series/cities-of-the-new-silk-road
4
9. https://www.theguardian.com/world/2018/may/15/warning-sounded-over-
chinas-debtbook-diplomacy
10. https://www.worldbank.org/en/topic/regional-integration/brief/belt-and-road-
initiative
11. https://www.forbes.com/sites/greatspeculations/2018/09/04/chinas-
belt-and-road-initiative-opens-up-unprecedented-
opportunities/#70b7ce043e9a

Saved Laws For Credtrans

Uploaded by

Copyright:

Available Formats

Saved Laws For Credtrans

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Saved Laws For Credtrans

Uploaded by

Copyright:

Available Formats

SENATOR EMMANUEL D.

BELT AND ROAD INITIATIVE (BRI)

 Higher cross-border trade and investment

CRITICISMS AGAINST BRI:

IMPACT OF BRI IN THE PHILIPPINES

You might also like