Canberra sinks two Belt and Road projects
The Australian State of Victoria had signed the two deals. For Australia, Xi Jinping's initiative is a propaganda tool. Relations between the two governments are increasingly strained. COVID-19, US opposition, geopolitical instability, partners’ debts and lack of resources threaten the new Silk Road.
Canberra (AsiaNews) – China uses the Belt and Road Initiative (BRI) for propaganda purposes, Australian Defence Minister Peter Dutton said today to defend his government's decision to scrap two agreements signed by the State of Victoria as part of China’s new Silk Road.
Australia announced its decision to overrule the State yesterday. According to the government of Prime Minister Scott Morrison, the Belt and Road goes against Australia's foreign policy. Chinese President Xi Jinping launched the plan in 2013 to turn China into the hub of world trade.
Dutton pointed out that Canberra has no problems with the Chinese people, but opposes the values of the Chinese Communist Party.
Under Australian law, the central government can stop local governments, including state governments, from striking deals with foreign entities if it sees a threat to national security. A law to this effect was adopted last year, which many observers see as directed at China.
In a statement released this morning, the Chinese Embassy in Australia slammed Canberra's move, call in “unreasonable” and “provocative”, noting that it would further damage bilateral relations and Australian interests.
Relations between the two governments have been deteriorating for a while. Australians are concerned about China's growing military presence in the South China Sea, and were among the first to join the Huawei boycott promoted by the United States.
The level of confrontation reached worrying levels after Canberra joined other countries a year ago in calling for an international investigation into the origins of the coronavirus and Beijing's handling of the pandemic.
In retaliation, the Asian giant targeted Australian exports, banning coal imports and imposing tariffs on products such as wine, barley, sugar, timber, cotton, meat and lobster.
The political instability of many of Beijing's partners and the decreasing resources Chinese companies and state agencies can invest in the new Silk Road are another problem. Canberra's decision further weakens the Belt and Road.
China's National Development and Reform Commission (NDRC) recently said that the initiative is threatened by opposition from the US and many of its allies.
The terrible debt situation of many countries working with Beijing in the Belt and Road is another important issue. The most striking case is that of Sri Lanka. China recently granted the South Asian nation a US$ 500 million loan, the second part of a billion-dollar financial bailout made last year.
Sri Lanka already has accumulated a huge debt towards China. According to media reports, the new line of credit was granted after the Rajapaksa administration pledged to uphold the lease to Beijing of the port of Hambantota, and grant the Chinese supervisory power over the new Colombo airport.
The Chinese claim that the greatest damage to the BRI is the COVID-19 pandemic. According to the Chinese Foreign Ministry, as a result of the pandemic in 2020, 20 per cent of BRI projects found themselves facing serious problems, 40 per cent had difficulties, while 30-40 per cent were affected in a limited way.
However, as the China Global Investment Tracker noted, Chinese investment in the Belt and Road began to decline before the health emergency. In 2018, it stood at US$ 118 billion; a year later it was down to US$ 103 billion; and then plummeted to US$ 46.6 billion in 2020.