OPINION: BRI Investment is Fool’s Gold for Victoria

PRC President Xi Jinping at the Belt and Road international forum in 2017

PRC President Xi Jinping at the Belt and Road international forum in 2017

A memorandum of understanding (MoU) was announced on October 26 between the Chinese government and the Australian state of Victoria over Beijing’s Belt and Road Initiative (BRI). The MoU was specifically signed between Victoria’s state government and China’s chief macroeconomic planning authority, the National Development and Reform Commission, according to the Global Times.

ABC notes that Victoria is the first state or territory within Australia to sign onto the project. In fact, by signing onto the agreement, officials in Melbourne put themselves at odds with the national government in Canberra. To date, the official stance of the national government has been to abstain from the BRI, with officials citing “strategic” consequences.

Officials in Melbourne should take note of the national government’s position because signing onto the BRI has been historically problematic for other countries and gives little in the way of economic benefit. The South China Morning Post points out that numerous contracts for construction projects under the BRI have been procured by Chinese state-owned enterprises (SOE) using bribery, which results in local governments being littered with corruption cases.

Furthermore, the Nikkei Asian Review compiled a report evaluating BRI construction projects in eight different countries and discovered considerable delays of completion, botched projects, lack of participation by local workers, and insurmountable debt hangovers. The report also points out sovereignty concerns surrounding the inevitable debt traps. In fact, the Times of India reports that the loans backing the construction of a port in the Sri Lankan city of Hambantota were unable to be paid off by the national government, which culminated in a 99-year lease of the port to Chinese merchants.

Nevertheless, the government in Victoria has chosen to look past the various concerns surrounding the BRI. Instead, officials in Melbourne now can only hope to find gold at the end of the BRI rainbow. That is, if they can build the rainbow in the first place.