Counting the Cost

China’s mission to reinvent the Silk Road

Beijing’s One Belt, One Road project aims to boost trade and connect three billion people in Asia, Africa and Europe.

China’s One Belt, One Road project has been described as the largest overseas investment drive ever launched by a single country. 

So far China has pledged $900bn to build ports, highways and power grids in about 60 different countries. When it’s finished, this ultramodern trade route will give China much easier access to markets all over the world.

But the project has been criticised for a number of reasons. One of the main problems surrounds who really benefits. Infrastructure projects don’t always end in growth. So what happens when the countries involved are unable to pay back their Chinese creditors?

Since the project was first announced in 2013, China’s growth has slowed, but Beijing is pressing ahead, leading some to question China’s expanding political influence via economics.

India, the US, and Australia have declined so far to be part of it, although Pakistan and New Zealand have embraced the mega project.

The benefits are quite overwhelming to the fears that exist.

by Khurram Dastgir Khan, Pakistan's Minister of Commerce

While Pakistan is a key part of the plan to connect three billion people in Asia, Africa and Europe via trade routes, what happens to the local economy when all roads lead to Beijing?

China is pumping $55bn into Pakistan to build a China-Pakistan economic corridor, which is a network of road, rail, power and port projects. With Chinese money in its back pocket, the Islamabad government is attempting to solve the country’s problem with power outages.

Al Jazeera’s Hoda Abdel Hamid asked Khurram Dastgir Khan, Pakistan’s minister of commerce, whether he’s optimistic.

“There’s a clear sense in Pakistan that Pakistan is about to tackle its energy shortages completely. Pakistan’s public finances have stablised and we have massively controlled our non-development spending. We’ve been able to reduce and hold our budget deficit to under 4 percent,” says Khan.

Asked whether there is some fear that Pakistan will become too reliant on China, Khan explains: “When a country opens up to the world, I think these fears arise everywhere. When China opened up to the West in the late 1970s, practically the same arguments were made in China that are being made in Pakistan today.

“What most people don’t realise is that more than three-quarters of the Chinese investment is in energy. It’s not the infrastructure part that most people focus on – the ports, roads and the airports. It’s actually energy and once people realise this, they’ll know this is an investment that came at the right time for Pakistan. And of course, these energy projects are rapidly reaching fruition and should be able to begin production soon. So, yes there are fears on one side but people can actually see this project actually linking Pakistan … the benefits are quite overwhelming to the fears that exist.”

Also on this episode of Counting the Cost:

France’s EU reform agenda: France’s president-elect Emmanuel Macron wants to reform and reboot both the French economy and the wider European Union. But does he have what it takes? Macron has promised to tackle low growth, deliver spending cuts and fight high employment in France. He also wants to win over those Euroskeptic voters who fear globalisation will kill off jobs. So he’s suggesting a more protective EU. Veronique Nguyen, Professor of Strategic Management at HEC Paris, offers her take.

Philippine mining: Over half the mines in the world’s top nickel ore supplier were ordered to shut and open-pit mining was banned altogether earlier this year. Nickel is a key ingredient in the global stainless steel industry. But last week, the environment minister who said the Philippines was unfit for mining because of its unique ecosystem was dismissed. And now the new head of the environment ministry says it is possible to balance mining and natural resources protection.

Rough diamond: An auction for one of the world’s largest diamonds failed this week. The government of Sierra Leone rejected a $7.8m bid for the rough 709-carat stone. It’s the largest uncut diamond to be found in four decades. The government now hopes to get more for the stone at an international auction. Nina Devries reports that it was discovered in the Kono district where many depend on mining for their livelihood.

Snapchat: We saw this week how the battle for consumers is heating up as companies are vying for Internet users. That’s how they get billions of advertising dollars. Just last month, Snap, the parent of photo-sharing app Snapchat, was the highest profile technology IPO so far this year. But its first set of earnings as a publicly listed social media company failed to sparkle. In fact, it posted a much wider-than-expected $2.2bn quarterly loss. But worse than that, user growth was less than expected in the final three months of 2016, just around the same time that Facebook-owned Instagram launched copycat rival features.

Emirates Airlines: Fierce competition in the airline industry is hitting Dubai-based Emirates, which reported its first fall in profits for five years. Imran Khan reports.

Cuba trading: Many Cubans say they are concerned about their economic future. They’re waiting for all US trade restrictions on their country to be lifted, as Daniel Schweimler reports from Havana.