Only qualified BRI projects will meet Nepal’s long-term interests: Dr. Xu Wenhong

Dr. Xu Wenhong, Deputy Secretary General of the Center of One Belt One Road at the Chinese Academy of Social Sciences (CASS), has published journal articles on transportation connectivity under the Belt and Road Initiative Development Framework. Professor Associate at the Institute of Russian, Central Asian and East European Studies of CASS, Dr. Xu is also a senior fellow at China’s Pangol Institution, CITIC Foundation for Reform and Development Studies, and China-Russia Strategic Cooperation High-End Think Tank.

With a PhD in Law from the Graduate School of CASS, Dr. Xu has, in the past, served as a visiting scholar at Stanford University, USA and ADA University, Azerbaijan.

In a recent visit to Beijing, Chief Editor Jagadish Pokhrel had caught up with Dr. Xu for a conversation, where he agreed, despite his busy schedule, to respond to queries on the China-led Belt and Road Initiative. Dr. Xu’s written responses are published here in view of the 2nd Belt and Road Forum for International Cooperation, beginning in Beijing from April 26, 2019.xu


On the eve of the 2nd Belt and Road Forum, what is the most heartening news about BRI that you may like to share with our readers in Nepal and South Asia?

For the past forty years, the development of China has been one of the inspiring success stories of our time. Only a few countries in human history can lift so many people out of poverty in such a short period of time. As a visionary initiative the world had never known before, this was unprecedented in scale and scope. BRI is a new wave of globalisation, which will support countries like Nepal to grow and prosper at a faster speed.

As we know well, infrastructure connectivity is the top priority of BRI. As a landlocked country, Nepal will be linked to the world via railways, highways, digital ways, transmission line and gas pipeline connectivity under BRI between Nepal and China.

Before the 2nd Belt and Road International Forum, China and Nepal have already signed the protocol to Agreement on Transit Transport, which will provide Nepal access to all the Chinese sea ports. Because of the BRI, Nepal has now become a land-linked country from a land-locked one.

Also, an MoU on Cooperation in the Railway Project has been signed and the pre-feasibility study has already been completed. The trans-Himalayan railway will be a game changer of this sub-continent nation and thus provide Nepal unlimited possibilities for further development.

We believe that under BRI, the two nations can do much more in future for the benefits of their peoples. That both our countries have been focusing on creating better life for our people has been the most heartening news from the forum, vis-à-vis such uncertainties, for example, the wall US is trying to build at its Mexico border and the territorial disputes among some middle east countries, etc..

Where do you think Nepal, as a signatory to BRI, fits into the big picture of BRI networks, partners and their projects?

It is China’s foreign policy to treat all nations as equal. In terms of size of territory or population, some countries are bigger than others. However, China treats nations with dignity, irrespective of their size and, together, strives for better living for their people.

Nepal is geopolitically a very important country. As a signatory to BRI since May 2017, Nepal has played an important role in helping China export goods from Tibet and the western provinces of China, maintaining stability and prosperity in China’s Tibet, enhancing people-to-people exchange and strengthening China-South Asia trade via the proposed China-Nepal-India Economic Corridor.

How aware are you about BRI projects in Nepal? Do you think Nepal and China can speed up the pace of development of BRI projects and their implementation to create an example of win-win cooperation?

I understand that there are several BRI infrastructure projects in Nepal and they are proceeding well now. These projects are related to road, bridge, power grid, and industrial parks etc..

These projects were selected by both sides according to their needs, capabilities and priorities. As to speed up the pace of these projects, I think that all things have their own timings.

Often, the price of speeding up is compromise in quality. We believe that only quality projects will satisfy the long term interests of Nepali people. And we do believe that these projects will be good examples of win-win cooperation under BRI.

Which principles guide BRI projects and their investment modalities in countries with a variety of needs and prospects? For example, given the experience of big infrastructure projects elsewhere, which financing modality would you suggest for BRI projects in Nepal?

Seek a suitable investment modality according to the real needs of social-economic development and repayment capability. Transportation infrastructure should be built moderately ahead of market needs to serve as a catalyst of growth. Based on forty years of experience of development, we do believe this should be a golden guiding principle for all signatories of BRI

There are different lenders to suit the needs of infrastructure projects, for example, PPP (public-private-partnership), commercial bank loans or loans with preferential rates from China’s policy banks, multilateral/bilateral cooperation funds, Panda bonds, etc..

For financing modalities, they can be: PCF (Project Contracting+Financing), PCFO (Project Contracting+Financing+Operation), CTP(Construction-Transfer–Operation), COT (Construction-Operation-Transfer), DP (Design-Procurement), DPC (Design-Procurement-Construction), COO (Construction-Ownership-Operation). Nepali people may choose them based on their own real needs and repayment capabilities.

What do you say about the criticism that BRI is sending borrowers into potential debt traps?

“Debt trap” is a malicious term created by the western media to discredit BRI. Some think tanks or institutions have not conducted serious studies about loans provided to BRI projects.

They often cited Chinese projects such as Hambantota port, Sri Lanka, and Gwadar port in Pakistan, to support their arguments.

But, after a careful study, you will see that China has been investing heavily in infrastructure along the ancient silk road, aiming to better the connection between China and the countries from Central Asia, South Asia and Africa to increase trade and economic relations, and, along the way, pull the world economy out of slow growth.

In modern times, it is normal for big projects to borrow under different financing modalities even if the borrower is financially independent. The key is to keep the debt under control, according to its repayment capability. Up to now, all the projects under BRI between China and other signatories are normal. The Western media smear these projects for special political purposes. In fact, the true stories are totally different from what the western media say.

Kenyan president Uhuru Kenyatta has vigorously defended the country’s taking of loans from China in an interview with Richard Quest from CNN. He pointed out that Kenya also borrowed from other countries, and the loan amounts were even bigger than loans from China. Why do the western media just criticise loans from China? The truth is that by providing low-cost loans to developing countries along the ancient silk road within BRI, China helps to improve the economic wellbeing of the people of the Eurasian continent, thus making exploitation by the west impossible. That’s why with more and more countries signing up BRI, criticism from western media has also become more frantic.

How does the capacity of individual country in developing projects and negotiating modalities help shape and implement BRI projects? Does BRI consider capacity building of countries for trade and development partnership important?

If the countries have strong capacities in developing projects and negotiating modalities, it will be good for both sides in the whole process of cooperation and to smoothly complete the projects. If they don’t, potential problems may occur sooner or later.

Sure, the stronger the capacity building of countries, the closer will be the partnership. The qualified partners will benefit from right projects at right time at right place.

How does BRI address gaps among countries in connectivity infrastructure, its potential economic impacts and policies and institutions?

The limitation of transportation infrastructure once was the key barrier for the connection among nations. BRI is an unprecedented initiative targeting reducing the gaps among countries in connectivity infrastructure. Roads, rail roads, pipelines, cable lines of the BRI will eliminate such gaps. Infrastructure connectivity spurs economic development by mobilising all kinds of favourable factors to work towards policies and institutional change. Constant dripping wears away a stone. Infrastructure connectivity will bring benefits to the people one day.

Would you like to say anything special in relation to BRI in Nepal?

Nepal and China have been good neighbours for thousand years. The Himalaya has witnessed China’s goodwill towards the Nepali people. Now, both of us are facing the challenges to provide our people a better life. BRI with its projects is a good start for a new chapter of friendship between China and Nepal. May the Himalaya be the linkage of people-to-people exchange, may the man made melody of BRI last for a long time for the benefits of all.

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