Australia’s Termination of Belt and Road Deal with China Explained

On April 21, the Australian government intervened to cancel the state of Victoria’s controversial Belt and Road deal with Beijing stating that the arrangement was inconsistent with Australia’s foreign policy and national interests.

The move was criticised by a Chinese diplomat who noted it would not help improve bilateral relations which became tense over the last year as Australia refused to kowtow to economic coercion and took measures to protect itself from Beijing’s interference.

While Victorian Premier Daniel Andrews’ state Labor government has been relatively silent since the federal government’s intervention, many experts and politicians who support classical liberal values at home and abroad, have expressed support for the move, with one state senator saying that it was “a great day for Australia.”

The BRI is the Chinese Communist Party’s trillion-dollar dual-purpose infrastructure scheme that seeks to increase China’s influence under CCP rule and trade links around the world while generating increasing income for China through a finance scheme for infrastructural development.

It is believed that the CCP also sought to use the initiative to gain greater access to export markets, facilitate trade, and promote the renminbi as a global currency.

First announced in 2013 by China’s leader Xi Jinping, the name is derived from the concepts of the “Silk Road Economic Belt” and the “21st-Century Maritime Silk Road.”

It aims to “achieve economic integration and interconnected development” between China and the world via a series of six major “corridors” and key maritime points, which include China-Mongolia-Russia; China-Central Asia-West Asia; the China-Indochina peninsula; China-Pakistan; and Bangladesh-China-India-Myanmar.

Approximately 70 countries have signed a BRI Memorandum of Understanding (MoU) with China, according to The Australian.

Key to this global expansion of China’s money and power has been the CCP push to use Beijing-controlled state-owned enterprises

Australia wisely saw the very bad precedents in other countries who joined this Belt and Road Initiative.

The concept of debt-trap diplomacy has caused concern as many of the BRI projects financed through Chinese state-controlled lenders have left borrowing nations distressed by massive debt burdens.

For example, in December 2017, the Sri Lanka government agreed to hand over their entire Hambantota Port to Beijing on a 99-year lease, after Sri Lanka agreed to convert its debt of $1.4 billion into equity.

The Hambantota Port in southern Sri Lanka was financed and built by China as part of the BRI initiative. It is also a key strategic point for control over the Indian Ocean.

Likewise, in 2018, concerns about sovereignty led Sierra Leone to terminate a $400 million construction project of its airport that would have been entirely built, managed, and maintained by China.

There’s often money loaned at concessional rates, or conditions placed in the debt documents, or government concessions that have to be made to the Chinese Communist Party.

The USA warned Australia that the United States would “simply disconnect” with Australia if Victorian’s BRI partnership with Beijing presented any risk to telecommunications infrastructure.

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