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Impact of U.S.-China trade war felt in both countries
China’s Belt and Road Initiative is the most expensive infrastructure project in history. Chinese companies are constructing roads, pipelines and railroads across the globe. But they are also building China’s influence, and critics in the U.S. and Asia worry Belt and Road projects can reduce countries’ sovereignty and grow Chinese power. With the help of the Pulitzer Center, Nick Schifrin reports.
China's Belt and Road Initiative is the most expensive infrastructure project in history. Chinese companies are building roads, pipelines, and railroads around the world. But the initiative is also building China's influence.
With the support of the Pulitzer Center, Nick Schifrin has the second installment in our series "China: Power & Prosperity."
He begins this report in Indonesia, a recipient of Belt and Road investments.
In the middle of West Java, Indonesia, fishermen drop nets from bamboo poles, and a tea plantation fills rolling hills that lead to a major highway and Indonesia's fourth largest city.
Here on the outskirts of Bandung, the commuter train is old and slow. But now, cutting through the hills that lead to Indonesia's capital, Jakarta, there's a tunnel for a high-speed train, and the engineers and managers who lead this $6 billion project are Chinese.
They construct railway that will carry the fastest train in Southern Asia, able to travel 215 miles an hour.
Xiao Songxin leads the consortium of Indonesian and Chinese companies building the railroad.
Xiao Songxin (through translator):
The two countries' companies can complement each other, support each other, and develop together. It's fundamentally a win-win project.
Two thousand years ago, the ancient Silk Road helped China spread goods, ideas and culture all the way to Europe. Today, China aspires to recreate a maritime Silk Road of ports and an economic belt of roads, in the orange, and railways, in the red, including the high-speed route from Bandung to Jakarta, where, in 2013, President Xi Jinping debuted the Belt and Road Initiative as a signature foreign policy.
President Xi Jinping (through translator):
Only with high ambition and hard work can one make great achievements. We have the confidence, conditions and capabilities to obtain our goals.
For Indonesia, the goal is to collaborate with China on Belt and Road projects to lift millions of its citizens out of poverty. At this construction yard, many lower-skilled Indonesians, in the yellow hats, have been trained by Chinese workers in the white hats.
Belt and Road projects create jobs and spark development, says Indonesian minister Luhut Pandjaitan.
Luhut Binsar Pandjaitan:
This benefit us very much, you know, because we are going to have also like new cities, suburbs, so then we can spread out people to the area.
With new industry, new employment, new production?
Yes. Yes, indeed.
Indonesia needs improved infrastructure. Right now, the road from Jakarta to Bandung weaves through the edges of forests, where constant traffic means the 90-mile trip takes five hours.
On the railroad been built over the next three years, the trip will take 45 minutes. Luhut dreams of Indonesians traveling like the Chinese.
I experienced that when I was in Beijing. I went from Beijing to what name of the city only one hour by speed train, very comfortable.
Like the train we rode from Hong Kong to the city of Shenzhen on the Chinese mainland.
Welcome to China.
In 20 years, China has gone from no high-speed rail to the longest high-speed rail network in the world, thanks to state-owned enterprises, the rails, the electricity, the telecommunications all produced by majority state-owned enterprises. And much of the steel comes from companies like the majority state-owned Baosteel.
The company is now so large, it has its own ports, four of them, on the outskirts of Shanghai. Baosteel Group makes as much steel as the entire U.S. It's actually too much. Excess Chinese steel capacity weighs down the economy.
The Belt and Road Initiative gives Baosteel new markets.
Huang Weiliang directs Baosteel's strategic planning and technology.
Huang Weiliang (through translator):
For the steel industry, the Belt and Road Initiative will generate direct demand for steel products.
With the economic development in those Belt and Road countries, their people's living standards will improve, and thus the demands for durable consumer goods will increase.
And China says the Belt and Road Initiative also improves Chinese living standards by connecting rural, previously unconnected areas, such as this site in Sichuan province.
The government argues more rail access produces prosperity and stability.
Xiao Weiming (through translator):
We encourage Chinese companies to go out of China to enhance their production capability. In return, we can use the increased government revenue to improve the income level of some poor areas. This is important.
Xiao Weiming leads the office in the Chinese Ministry that oversees the Belt and Road Initiative. He describes the initiative as helping China to develop internally and expand externally.
Xiao Weiming (through translator):
China has entered a new era. The Belt and Road Initiative is the banner of China's new round of reform and opening up, as well as a general plan of economic cooperation with foreign countries.
But, for some countries, that cooperation led to a loss of control. In Kuantan, Malaysia, a state-owned Chinese developer was building this industrial park and port. But the construction is frozen, stopped by an unlikely critic.
Prime Minister Mahathir Mohamad:
China is a big power now. And big powers normally want to expand their influence.
Mahathir Mohamad served as Malaysian prime minister from 1981 to 2003. He used to describe the U.S. as the colonizer.
But last year, at the age of 92, he came out of retirement and was reelected. His opponent was accused of siphoning off Chinese money connected to Belt and Road contracts. Mahathir called China the new colonizer and Belt and Road projects predatory.
Prime Minister Mahathir Mohamad:
Everything is imported, mostly from China. Workers were from China. All of the parts and the materials were from China. And the payment for the contracts were also to be made in China. That means that Malaysia doesn't get any benefit at all.
The original contracts called for Chinese-built ports, Chinese-built pipelines, a $20 billion Chinese-built rail link, and the Melaka Gateway, a Chinese-financed development project on the Melaka Strait, through which almost all Chinese oil flows.
Mahathir accused the Chinese of taking advantage of a corrupt government.
The whole thing was done in a hurry by the previous government without due regard for the interests of Malaysia.
In Belt and Road deals, countries can lose sovereignty and China can gain assets. Sri Lanka had to hand over a port when it couldn't afford debt payments to a Chinese bank.
To build this Belt and Road railroad with Chinese loans, Kenya agreed to apply Chinese law inside Kenya and give up East Africa's largest port if it couldn't repay its debts. And to pay for South America's largest dam, Ecuador is selling 80 percent of its most valuable asset, oil, to China at a discount.
Mahathir says he too feared that loss of control.
When you start borrowing huge sums of money and asking foreign countries to develop, and then you cannot pay, then, obviously you're going to lose that part of the country.
That warning has been echoed by the U.S.' most senior officials.
We don't drown our partners in a sea of debt. We don't coerce or compromise your independence. The United States deals openly, fairly. We do not offer a constricting belt or a one-way road.
The U.S. argues China's version of Belt and Road fosters corruption. The state-owned China Communications Construction Company alone has been accused of bribery across four countries.
The U.S. also warns, China's ports could one day host Chinese warships. Last year, Secretary of State Mike Pompeo warned that could lead to a Chinese empire.
When China shows up with bribes to senior leaders in countries, in exchange for infrastructure projects, then this idea of a treasury-run empire build is something that I think would be bad for each of those countries, and certainly presents risk to American interests.
The United States government describes the Belt and Road Initiative as a way for Chinese to exert control and to increase Chinese power around the world.
We Chinese do not have what you call ambition or a grand vision to change the world order. We only want to promote more economic cooperation.
What's your response to that criticism, that the Belt and Road Initiative contracts are debt traps and aren't transparent?
Chinese companies won the bidding, and other foreign companies didn't win. And the reason is simple. Foreign companies and workers are not as hardworking as the Chinese.
But don't those Chinese companies get advantages, not because they are just hard workers, but because they are protected by the Chinese state?
I cannot say it's the Chinese government's support. China's financial institutions will provide financing only if they deem the projects are profitable. We do not make investments blindly. We Chinese are not stupid.
And some of the countries with Belt and Road investments say they're not stupid either. Malaysia renegotiated with China, and, in late July, the construction of the rail link restarted, in a joint Malaysian-Chinese ceremony.
China agreed to reduce the price tag for construction by 30 percent and allow more Malaysian workers.
They are willing to listen to our views, and, in the end, they accommodated our problems.
U.S. officials say they're trying to develop an alternative. The leaders of a new $60 billion agency that will launch next month have been visiting countries where China is investing.
The U.S. is pitching public-private deals to counter Belt and Road investments. And the U.S. advocates Japanese investment as an alternative. Japan built Jakarta's local subway. But the Chinese deals are better, Indonesian Minister Luhut told the Japanese.
I said to them, OK, look, your term on the previous project, I think too tight for us. The Chinese offer us now the term much better.
And countries who receive Belt and Road investment say the Trump administration is difficult to deal with compared to the Chinese.
They have got this Belt and Road Initiative. Does the United States offer anything like that?
Never. To reach Washington is very hard. We don't know to whom to talk. In China, we have so many people over there.
The U.S. approach is always with a big stick and very little carrot. This has not happened with the Chinese. That's not the Chinese way.
But the Chinese way is to increase its presence and find allies all over the world to increase influence.
The Belt and Road Initiative is the engine to power that expansion, and it's full-speed ahead.
For the "PBS NewsHour," I'm Nick Schifrin in Bandung, Indonesia.
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Nick Schifrin is the foreign affairs and defense correspondent for PBS NewsHour, based in Washington, D.C. He leads NewsHour's foreign reporting and has created week-long, in-depth series for NewsHour from China, Russia, Ukraine, Nigeria, Egypt, Kenya, Cuba, Mexico, and the Baltics. The PBS NewsHour series "Inside Putin's Russia" won a 2018 Peabody Award and the National Press Club's Edwin M. Hood Award for Diplomatic Correspondence. In November 2020, Schifrin received the American Academy of Diplomacy’s Arthur Ross Media Award for Distinguished Reporting and Analysis of Foreign Affairs.
As the deputy senior producer for foreign affairs and defense at the PBS NewsHour, Dan plays a key role in helping oversee and produce the program’s foreign affairs and defense stories. His pieces have broken new ground on an array of military issues, exposing debates simmering outside the public eye.
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