China is both a destination country for foreign investment and a major investor abroad. The “six means of communication”—rail, highways, seagoing transport, aviation, pipelines and aerospace integrated information network—identified under the BRI comprise the main targets of infrastructure connectivity. As the neighboring region, South Asia is in a unique position to benefit from its immediate neighbor China.
Along with Nepal, five South Asian countries share their borders to China. Nepal has a 1414 km long boarder with China in the northern side along the Himalayas. China is the second largest trading partner of Nepal.
Nepal and China signed the Memorandum of Understanding (MOU) on cooperation under the BRI on 12 May 2017. Following the signing of the MoU—during the visit of Nepali delegation to Beijing during the Second Belt and Road Forum for International Cooperation in April 2019—two countries signed, among others, the protocol for implementing the Transit and Transport Agreement which allows landlocked Nepal to use seven sea and land ports in China for its international trade.
BRI has determined five routes for the Belt and Road to promote international cooperation. A framework including six corridors along these routes has been developed. Among the “six corridors” two engages the South Asia region: the China-Pakistan Economic Corridor (CPEC) and the Bangladesh-China-India-Myanmar Economic Corridor (BCIM-EC). Afghanistan, the Maldives and Sri Lanka also have been leveraging the BRI for their developmental needs.
The BRI, however, grapples with loads of criticisms from participating countries and others. The biggest of them is the risk of being trapped by high-interest Chinese debt. The Sri Lankan port of Hambantota is perhaps the most controversial BRI project. The US$1.1 billion debt that Sri Lanka incurred in constructing this “economically unviable” project was written off by China in exchange for a 99-year lease on the deep-water port of Hambantota.
Meanwhile, a study led by Aid Data at the College of William & Mary in the United States found positive impacts of BRI on host countries. The study examined 3,485 BRI projects across 138 nations to conclude that BRI projects help narrow economic inequalities within host countries even if they risk tempting them into possible debt traps.
In a recent New York Times article Prof. Deborah Brautigam, Head of the China-Africa Research Initiative at the Johns Hopkins University, writes that “it seems that the risks of BRI are often overstated or mischaracterized”. His writing is based on information on more than 1,000 Chinese loans in Africa between 2000 and 2017 (totaling more than US$143 billion); and also on Boston University’s Global Development Policy Center’s tracking of more than US$140 billion in Chinese loans to Latin America and the Caribbean since 2005.