Explanation of Australia’s withdrawal from the Belt and Road Initiative

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Chinese leader Xi Jinping gives a speech at a press conference after the Belt and Road Forum at the China National Convention Center at the Yanqi Lake venue in Beijing, China, on April 27, 2019. (Wang Zhao/Getty Images)

The Australian government intervened on April 21 to cancel the state of Victoria’s contentious Belt and Road agreement with Beijing, claiming that the agreement was incompatible with Australia’s foreign policy and national interests.

A Chinese diplomat criticized the move, saying it would not help boost bilateral ties, which had become strained in the previous year as Australia refused to kowtow to economic coercion and took steps to defend itself from Beijing’s intervention.

Though Victorian Premier Daniel Andrews’ state Labor government has remained largely quiet since the federal government intervened, several experts and politicians who support classical liberal ideals at home and abroad have expressed support for the change, with one state senator calling it a “great day for Australia.”

The Belt and Road Initiative (BRI) is the Chinese Communist Party’s (CCP) trillion-dollar dual-purpose infrastructure scheme that aims to increase China’s dominance under CCP rule and trade ties around the world while also raising China’s income through a financing scheme for infrastructure construction.

The CCP is also thought to have intended to use the initiative to gain greater access to export markets, encourage trade, and promote the renminbi as a global currency.

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

It seeks to achieve “economic integration and interconnected development” between China and the rest of the world through a network of six major “corridors” and main maritime points, including China-Mongolia-Russia, China-Central Asia-West Asia, the China-Indochina peninsula, China-Pakistan, and Bangladesh-China-India-Myanmar.

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

The CCP’s drive to use Beijing-controlled state-owned enterprises (SOEs) for every BRI project has been critical to China’s global expansion of money and power. This is accomplished by undercutting infrastructure bids or supplying countries with unserviceable loans for projects they can not afford, resulting in “debt-trap diplomacy” and the loss of autonomy for the business partner.

Debt-trap diplomacy has become a source of concern in recent years, as many BRI ventures funded by Chinese state-controlled lenders have left borrowing countries in turmoil due to large debt burdens.

For example, in December 2017, the Sri Lankan government agreed to lease the entire Hambantota Port to Beijing for 99 years in exchange for converting $1.4 billion in debt into equity.

China financed and constructed the Hambantota Port in southern Sri Lanka as part of the BRI initiative. It is also a critical strategic point for gaining control of the Indian Ocean.

Similarly, in 2018, questions about sovereignty prompted Sierra Leone to cancel a $400 million airport construction project that would have been entirely constructed, operated, and maintained by China.

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Sri Lankan road construction workers construction labourers work along a road in Colombo on Aug. 5, 2018. Sri Lanka’s central bank on Aug. 3 announced it had secured a $1 billion Chinese loan as the island, a key link in Beijing’s ambitious Belt and Road initiative, develops closer relations with Asia’s largest economy. (Lakruwan Wanniarachchi/AFP/Getty Images)

On May 24, 2020, then-US Secretary of State Mike Pompeo warned Australia to scrutinize any BRI projects “extremely carefully.”

“There is often money loaned at concessional rates, conditions set in debt documents, or government concessions that must be made to the Chinese Communist Party,” he explained.

He also cautioned Australia that if Victorian’s BRI relationship with Beijing posed any risk to telecommunications infrastructure, the US would “simply disconnect” from it.

“With our Five Eyes partners, we will not take any risk to our telecommunications infrastructure or any risk to national security elements. We will protect and maintain the security of those institutions, “he said.

According to Associate Professor Michael Clarke of the Australian National University’s National Security College, the CCP extracts political and economic concessions from certain nations, such as those in the Pacific region, posing a national security danger to the Western world, according to News Corp.

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