Xi calls the grand initiative “a road for peace.” Other world powers
such as Japan and the U.S. remain skeptical about its stated aims and
even more worried about unspoken ones, especially those hinting at
military expansion. To assess the reality of Belt and Road from the
ground up, Bloomberg Markets deployed a team of reporters to five
cities on three continents at the forefront of China’s grand plan.
What emerges is a picture of mostly poor nations—laggards during the
past half-century of global growth—that jumped at the promise of
Chinese-financed projects they hoped would help them catch up. And yet
as some high-profile ones falter and the cost of their Chinese funding
rises, would-be beneficiaries from Hambantota, Sri Lanka, to Piraeus,
Greece, are questioning the long-term price. In Malaysia, one of the
biggest recipients of Chinese investment in Southeast Asia, newly
installed Prime Minister Mahathir Mohamad is pushing back. Expressing
concerns about loan conditions and the use of Chinese labor that limit
benefits to the local economy, he’s put billions of dollars of
Chinese-funded rail and pipeline projects on hold.
Xi intends a century-long enterprise. China has already outspent the
post-World War II U.S. Marshall Plan, measured in today’s dollars.
Within a decade, according to Morgan Stanley estimates, China and its
local partners will spend as much as $1.3 trillion on railways, roads,
ports, and power grids. “Economic clout is diplomacy by other means,”
says Nadège Rolland, Washington-based senior fellow for political and
security affairs at the National Bureau of Asian Research. “It’s not
for today. It’s for mid-21st century China.”
Belt and Road, says Michael Every, head of financial markets research
for Rabobank Group in Hong Kong, is “a political special sauce. ... If
you drizzle it on anything, it tastes better.”
At first, the sauce whetted the appetites of many developing countries
in Asia and Africa. As the notion of a modern Silk Road gained
traction, Belt and Road meandered into places that had never had any
connection with ancient caravans. This year it reached South America,
the Caribbean, and even the Arctic.
The growing web of trade routes, including the Silk Road Economic Belt
and the Maritime Silk Road Initiative, now extends into at least 76
countries, mostly developing nations in Asia, Africa, and Latin
America, together with a handful of countries on the eastern edge of
Europe. With most global trade moving by sea, it’s no surprise that
many of the first places to lock up major Chinese investments were
ports along with pipelines and other transport links that connect
shipping to markets.
China’s plans to build or rebuild dozens of seaports, especially
around the Indian Ocean, have sounded alarm bells in Washington and
New Delhi: How many of those docks will end up hosting Chinese
warships? Just as mighty navies and global networks of military bases
helped support trading empires for Britain in the 19th century and the
U.S. in the 20th century, so China is building a fleet of submarines,
aircraft carriers, and warships that will rival U.S. power.
Hambantota, Sri Lanka
In a southern Sri Lankan jungle, Dharmasena Hettiarchchi plucks green
chile peppers that grow in the shade of banana trees. His grandfather
tended the same patch of land when this island was the British colony
of Ceylon. Hettiarchchi takes a break from the heat under a teak tree,
removes his wide-brimmed hat, and says, “If a jeep with Chinese
characters comes down the road, the whole village will gather in
Hettiarchchi’s village and the surrounding town of Hambantota have
become a cautionary tale for Xi’s Belt and Road aspirations. The idea
was to take an inconsequential harbor visited by fewer than one ship a
month on average and turn it into a modern, bustling seaport adorning
a southern Belt and Road maritime route. It hasn’t turned out so well.
After Sri Lanka elected Hambantota native Mahinda Rajapaksa as
president in 2005, he began sprinkling development projects across the
region, one of the least-developed parts of this nation of 21 million
people. Even long before Belt and Road was officially embedded in
Chinese government policy, Beijing was eager to lend a hand, and
Chinese loans financed Rajapaksa’s munificence. Hambantota (population
at the time 11,200) got a new port, an international conference
center, a cricket stadium, and an airport that, despite all the staff
on show, doesn’t service a single scheduled flight.
To fund the projects here and others all across Sri Lanka, the
Rajapaksa government fell deep into debt. The port at Hambantota, for
example, was partly funded during the Rajapaksa administration by a
loan from the Export-Import Bank of China. By the time Rajapaksa was
voted out of office in 2015, more than 90 percent of Sri Lanka’s
government revenue was going toward servicing debt.
Last year, with Xi’s Belt and Road plan in full flow, a new Sri Lankan
government moved to ease the debt. In return for $1.1 billion, it
basically handed the seaport over to China. Under a 99-year lease
agreement, the government gave 70 percent ownership of the port to
China Merchants Group, a state-owned company with revenue bigger than
Sri Lanka’s economy.
China Merchants has promised to revive the port and turn it into a
major regional trading hub. But some local people have had enough of
promises. “All these huge projects are a waste,” says Sisira Kumara
Wahalathanthri, a local politician who opposes the current Sri Lanka
government. “No ships are coming to the port. No flights are coming to
Surrounded by desert in southwest Pakistan there’s a stone arch
bearing a single name, Al-Noor. Farther along a desolate road, a black
shipping container has been painted to tell you where you are: Gwadar
Al-Noor and Gwadar Creek are planned housing developments—emphasis on
“planned.” There’s nothing here yet. The same goes for White Pearl
City, Canadian City, Sun Silver City, and other residential tracts on
the drawing boards. What you see are billboards, lots of them, as
speculators and developers carve out future projects on the
sun-blasted outskirts of an old fishing village named Gwadar.
Gwadar is a city of dreams made in China. Beijing is pouring money
into highways and roads, a hospital, a coal-fired power plant, a new
airport, a special economic zone along the lines of Shenzhen, and,
crucially, the port.
Astride his boda boda, or motorcycle taxi, at a crossroads in Mombasa,
Simon Agina is counting containers on a passing train that’s heading
to Nairobi: “… 82, 83, 84.”
There are plenty of freight containers back where those came from—and
much more besides. The port of Mombasa, Kenya’s import lifeline, is a
heaving mass of traffic of all sorts. Trucks line up quayside to move
shipping containers from the docks to the railway. Three-wheeled
tuk-tuks weave dangerously between other vehicles through hot, dusty
streets filled with noise and litter.
Kenya’s largest port is also its oldest. So in 2011, with the ancient
British colonial-era Mombasa-to-Nairobi narrow-gauge railway falling
into disrepair and Beijing in the market for African investments,
Kenya made its move. It agreed to let China finance and build a
standard-gauge railway at a cost of $3.8 billion. The Mombasa-Nairobi
SGR, as it’s called, is the nation’s largest infrastructure project
since independence from Britain in 1963.
Atanas Maina, managing director of Kenya Railways, says more than
30,000 Kenyans were employed directly on the project, which was run by
China Road and Bridge Corp.; an additional 8,000 worked for
The first paying passengers rode the line in June last year. Along its
293-mile journey, the SGR rumbles across almost 100 bridges and
viaducts, many designed to allow the lions, zebras, and other wildlife
that inhabit two national parks, Tsavo East and Tsavo West, to cross
under the tracks.
Freight trains like the one Agina saw from his boda boda began running
in January. “Those are 84 trucks off the road,” he says as the
containers whiz by. The railway cuts the Mombasa-Nairobi trip to five
hours, down from more than eight by truck. Five freight trains a day
were making the journey during spring. The number could eventually
increase to 12, removing as many as 1,700 of the 3,000 trucks that
currently ply the route.
Like any major infrastructure project, the rail line has its
detractors. The economist and government critic David Ndii says it’s
not commercially viable, while a Kenyan newspaper, the Standard,
accused China Road and Bridge of “neo-colonialism, racism and blatant
discrimination” in its treatment of local employees; Kenya Railways
subsequently said it would investigate the allegations.
Trucking companies, whose business grew steadily as the old railway
decayed, are now worried about the loss of customers. Vanessa Evans,
managing director of Rongai Workshop & Transport Ltd., says the SGR
could have been a plus for the Kenyan economy in the long run, but
poor coordination at the Mombasa and Nairobi rail terminals causes
cargo backups and delays. The new rail line, she says, “has nearly
destroyed our business because the turnaround time varies between not
good and awful. We have been in agony for the past five months.”
The train that pulls out of Nairobi Railway Station each morning at 8
o’clock, with noteworthy punctuality, is called the Madaraka Express.
In Swahili, “madaraka” means power or responsibility; Madaraka Day, a
national holiday, celebrates self-rule. If the old railway was a relic
of Kenya’s British colonial past, the new one, built with Beijing’s
money, could be seen as a harbinger of a new kind of imperial reach.
It’s a blue-suited Chinese instructor who makes sure the female train
attendants—uniformed in the colors of the Kenyan flag—are standing in
a nice straight line as passengers board. China financed 90 percent of
the SGR’s $3.8 billion cost. And the giant Chinese Communications
Construction Co. will operate the rail line for its first decade.
The area around the station thrums with activity as construction
pushes ahead on houses, container yards, and warehouses. Along the
route to Mombasa, gleaming steel-and-glass stations stand out against
clusters of tiny houses with rusty corrugated iron roofs and mud
walls; the contrast encourages the locals “to dream big,” says Maina.
Michael Ndungu, 21, a student who studies in Mombasa and visits the
capital on weekends, used to take the bus. “The SGR has made my life
much better,” he says. “It is faster and definitely safer.” In Mombasa
the surge in passengers—1.3 million during the first six months of the
year—has been good for the economy. “Business is good,” says Stephen
Kazungu, a 26-year-old taxi driver.
The newly laid track, the trains, the stations—“You don’t see that
kind of infrastructure development in this part of the country,” says
Agina, the 22-year-old boda boda driver, as the freight train fades
into the distance. “This is amazing.” —Samuel Gebre