Why China is running into political potholes on its ‘New Silk Road’

Beijing’s ‘Belt and Road Initiative’ aims to increase trade and infrastructure links to Asia and beyond, but setbacks include rows over Chinese ownership and disputes over costs

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A file picture of a road construction project in Pakistan forming part of China’s Belt and Road Initiative. Photo: Associated Press

Published: 3:00pm, 11 Jan 2018Updated: 9:11pm, 12 Jan 2018

China’s plan for a modern Silk Road of railways, ports and other facilities linking Asia with Europe has hit a US$14 billion pothole in Pakistan.

Pakistan’s relations with Beijing are so close that officials call China their “Iron Brother”. Despite that, plans for the Diamer-Bhasha Dam were thrown into turmoil in November when the chairman of Pakistan’s water authority said Beijing wanted an ownership stake in the hydropower project. He rejected that as against Pakistani interests.

China issued a denial, but the official withdrew the dam from among dozens of projects jointly developed by the two countries.

From Pakistan to Tanzania to Hungary, projects under President Xi Jinping’s signature “Belt and Road Initiative” are being cancelled, renegotiated or delayed due to disputes about costs or complaints host countries get too little out of projects built by Chinese companies and financed by loans from Beijing that must be repaid.

In some areas, Beijing is suffering a political backlash due to fears of domination by Asia’s biggest economy.

“Pakistan is one of the countries that is in China’s hip pocket and for Pakistan to stand up and say, ‘I’m not going to do this with you,’ shows it’s not as ‘win-win’ as China says it is,” said Robert Koepp, an analyst in Hong Kong for the Economist Corporate Network, a research firm.