The US offers an alternative to China’s Belt and Road Initiative

Source: The post the US offers an alternative to China’s Belt and Road Initiative has been created, based on the article “An American alternative to the China’s Belt and Road Initiative” published in “Indian Express” on 4th October is 2024

UPSC Syllabus Topic: GS Paper 2 – Bilateral, regional and global groupings and agreements involving India and/or affecting India’s interests.

Context: The article discusses China’s Belt and Road Initiative (BRI), its risks for countries, and China’s influence. It contrasts this with US investments, which emphasize transparency and sustainability. The US must reauthorize its Development Finance Corporation to continue countering China’s approach.

For detailed information on an alternative to China’s Belt and Road Initiative read this article here

What is the Belt and Road Initiative (BRI)?

China’s Belt and Road Initiative (BRI), also called “Yi dai yi lu,” is a global infrastructure financing plan. It promotes a China-centered model of development. The BRI does not require strict terms on human rights or transparency.
For detailed information on Belt and Road Initiative (BRI) read this article here

What are the risks for participating countries?

1. Participating countries often face substantial financial obligations due to long-term debts to China, creating financial dependence on China.
2. China prefers extending or renegotiating loans rather than offering debt forgiveness, increasing its control over these nations. For example, Sri Lanka leased 70% of the Hambantota Port to China for $1.12 billion, which failed to resolve Sri Lanka’s economic issues and transferred strategic assets to China.
3. China has investments in 101 global port projects, including 10 in the Indo-Pacific, giving it geopolitical leverage beyond economic influence over participating countries.

How does the US offer an alternative?

1. The US offers an alternative to China’s BRI through the US International Development Finance Corporation (DFC).
2. The DFC focuses on transparency, rule of law, and sustainable economic growth, unlike the often-opaque terms of BRI projects.
3. In 2023, the DFC committed $500 million to develop the West Container Terminal at the Port of Colombo, Sri Lanka.
4. This project is expected to create over 40,000 jobs and boost Sri Lanka’s GDP through shipping and logistics.
5. US investments are private sector-led, ensuring economic stability without creating dependency or debt traps.
6. In contrast to China’s Hambantota Port deal, where Sri Lanka leased a 70% stake to China for $1.12 billion, the DFC promotes transparency and strategic, long-term partnerships.
7. The DFC supports projects with high standards for environmental protection, human rights, and worker rights.

Question for practice:

Discuss the risks for countries participating in China’s Belt and Road Initiative (BRI) and how the US offers an alternative through its Development Finance Corporation (DFC).