Belt and Road

Malaysian malaise

More negative headlines for China’s BRI


Najib Razak: in the spotlight

“Light is good from whatever lamp it shines,” is the advice of a Chinese proverb. But a small group behind Beijing’s Belt and Road Initiative (BRI) shrank from the spotlight when the Wall Street Journal alleged improper conduct in China’s dealings in Malaysia this month.

The newspaper reported that senior figures had offered to help former Malaysian leader Najib Razak handle the fallout of the 1MDB debacle in exchange for signing up to a number of Chinese-led infrastructure deals.

The minutes of one of the alleged meetings are damning, noting that although the proposal was “political in nature” it needed to be presented as market-driven to the public. Elsewhere it was implied that the projects could be used to generate cash for other needs through loans at “above-market values”, fuelling the suspicion that lots of the lending didn’t add up.

Unsurprisingly the coverage hasn’t merited mention in the Chinese media but the reports reinforce the sense that the fast-growing BRI has become problematic, following negative headlines from Sri Lanka, Pakistan, Kenya and the Maldives too.

At the very least the programme needs some kind of reboot in public relations terms, possibly beginning at the Belt and Road Forum planned in April. And Beijing has yet to task a central agency with delivering BRI policies. This is contributing to the impression that it lacks focus and struggles with execution errors.

Beijing recognises that it needs to do more to counter the allegations of ‘debt trap diplomacy’ and it set up a new agency last year to better evaluate the performance of the foreign projects that it funds. But in the meantime there are glaring deficiencies in how BRI’s impact is being monitored and communicated. That allows stories about the negative cases in the programme (which undoubtedly exist) to head the news, despite anecdotal evidence that China’s wider efforts in development finance are having a more positive effect.

This was one of the implications of a study by AidData, a research unit based at the College of William & Mary, the second-oldest university in the United States.

Researchers there put out a paper last September proposing that China’s lending is having better results in reducing inequality than many of its critics suggest, especially in “connective infrastructure” that brings more rural areas into closer contact with larger cities.

AidData staff said they came to this conclusion after compiling a list of more than 3,400 projects (most of which pre-date Belt and Road) from news reports, putting together one of the most comprehensive datasets on Chinese-funded investment ever assembled.

Then they turned to satellite imagery to look for night-time light around the roads, railways and bridges that they had identified, reasoning that this was a decent indicator of improving levels of household income.

What they found was much more nocturnal light once the infrastructure had been built, not just in the immediate vicinity but spreading across nearby districts and provinces as well.

The authors say that this suggests that that the investment really is fostering economic growth, although more work is required to link the findings to improvements in specific areas such as health and education.

Admittedly they acknowledge that their findings say nothing about the costs of the projects or whether they are providing value for money for the recipient countries. But the researchers posited that Western aid agencies prefer to do work in wealthier areas within host countries, while the Chinese are more effective in targeting poorer communities.

AidData’s approach raises the question of when China will start to do more to track the benefits of BRI. Simply put, bashing ahead with building Belt and Road isn’t enough; more thought is required about how Beijing makes the case for its benefits across local communities, and how it communicates these advantages if and when they begin to appear. Otherwise the bad headlines created by problem projects will continue to set the tone and negatively steer global perceptions.

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