Chinese researchers on balancing recipient countries gain and China's own interests.

How did the Chinese view PM Oli's visit and BRI proposal by Nepal? Here's a perspective from two frequent Chinese researchers observing Nepal.

A day before PM KP Oli departed for his first visit to China as a Prime Minister since July 2024, on December 2 President Xi Jinping had held a symposium in Beijing, 2nd November, on the review of the Belt and Road construction work. This was the 4^th symposium on the BRI, the last time being held in November 2021. In 2021, the focus was on reducing risks associated with Chinese enterprises overseas where President Xi spoke on building political mutual trust, creating risk assessment platform for China’s overseas projects and developing coordinated mechanism to protect its interest abroad. At the 4^th symposium, however, Xi Jinping reiterated on necessity on striking a balance between BRI participating countries’ sense of fulfillment and ensuring benefits for China in an effort to address geo-political risks.

Not much had been stated on how China approaches balancing its own and recipient countries interest. However, in December, a leading Chinese think-tank China Center for International Economic Exchanges (CCIEE) researcher Xu Zhanchen who is the head of Institute of Belt and Road Studies at CCIEE, has argued that mishandling the essence of profit-making of the initiative and serving developing countries needs can harm the initiative in the long-run. Balancing, according to Xu, is integrating “ ‘righteousness’ of the Chinese government in building major infrastructure projects and improving developing countries’ economy […] and ‘profit’ where BRI adheres to market-oriented operation and thus reasonable commercial returns are the basic premise of sustainable development of the initiative”. Xu pleads not to harm profit with righteousness and not to harm righteousness because of profit making nature of the initiative.

This statement comes with Xu’s critique that “certain politicians in some BRI partner countries willfully depict the BRI as a foreign aid initiative”. Here’s what he said:

Indeed, the joint construction of the "Belt and Road" is far from smooth sailing. The increasing uncertainty of the international situation and the continuous changes in the political landscape of participating countries pose challenges. In practice, the "Belt and Road" initiative often faces difficulties in balancing two aspects: enhancing the sense of gain for participating countries and adhering to a principle of mutual benefit. This deserves close attention.

In some participating countries, certain politicians have developed a misunderstanding, or even intentionally misinterpreted, the principles of "extensive consultation, joint contribution, and shared benefits," as well as the concept of balancing righteousness and profit. They mistakenly, or deliberately, perceive the "Belt and Road" projects as a form of "international aid." However, these projects adhere to a market-oriented approach, with enterprises acting as the primary operators and the government playing a guiding role. The government cannot entirely replace the role of enterprises, nor can it violate commercial logic.

This remark of Xu comes just a day after PM Oli’s visit to China was concluded which only serves as a reminder that China’s BRI projects remain a commercial endeavor. From Nepal’s perspective, the coalition party has made it clear to only accept grants and concessional loans in line with interest rates similar to rate offered by multilateral institutions. Globally, the average interest rates on loans from China’s overseas lending is 4.2% which is nearly twice as high as World Bank’s 2.1%. Not that China has not preferred concessionality on its overseas lending. A report by Center for Global Development highlights China’s concessionality lending in Africa at similar level to that of World Bank. However, the concessional loans provided by World Bankconstituted 60% of its total lending while for China its was mere 22%.

Furthermore, few days after Xu Zhanchen’s remarks, Liu Zongyi of the Shanghai Institute of International Studies remarked in an interview about that Nepal’s decision to ask ‘donation’ from China was influenced by the United States and India in line with the recent MCC agreement. Here’s a section of his critique on Nepal’s approach to aid under China’s BRI:

“This idea [donations] is nothing but a day dream. Nepal, with a population of over 30 million, is a sovereign nation. China’s money doesn’t come from thin air- it is earned through the hard work of Chinese people. How could it be given away for free? If Nepal accepts China’s donations and then uses it as leverage to ask for more money from India and the US, what does that mean? If the Indians want to give them money, let them; if the Americans want to give them money, let them.”

Given Nepal’s demands and nature of the BRI projects, both the researchers acknowledge that it is difficult for developing countries like Nepal where there are multiple parties, limited control of central government over projects and high political instability to carry out a major initiative like the BRI. They further urge China to address the balance between “enhancing the sense of gain for participating countries and adhering to what is advantageous for China” in order to provide a sustainable growth of BRI in long-term.

Cover photo reference: The State Council of PRC.