Editor's note: C. Saratchand is a professor at the Department of Economics, Satyawati College at the University of Delhi in India. The article reflects the author's opinions and not necessarily the views of CGTN.

China's Belt and Road Initiative (BRI) commenced in 2013 as a program for global development. A principal focus of BRI has been a thrust for advancing infrastructural investment in developing countries.

Developing countries have a relative infrastructural deficit due to persistent historical factors. During the many centuries of colonial rule, the colonies were either utilized as sites of European settlement, as sources of primary commodities, as markets on tap for metropolitan output or a wellspring for the drain of wealth. Consequently, metropolitan investment in colonies was principally in mines and plantations. 

Relatively limited (but government guaranteed) investment in railways or (user charges based) irrigation in countries such as India were designed to drive the aforementioned colonial processes but did not lead to any significant economic development. After political decolonization, most former colonies adopted dirigible policies that involved some (primarily public) investment. However this process could not be sustained as the neoliberal project became ascendant in most countries of the world. Most subsequent efforts to further infrastructural attainment in developing countries through private sector investment have failed.

Since 2013, upwards of 145 countries in all continents of the world have joined the BRI. Cumulative BRI investment till now exceeds $850 billion. Within these countries, the BRI led process of advancing infrastructural investment tends to involve the following processes.  First, the BRI finances the construction of projects in areas such as energy, transport, real estate, metals etc. Second, this infrastructural investment could "crowd in" public and private investment in related areas. 

For instance, building of a railway line could lead to road construction (on account of public investment) and private investment in agriculture (purchase of a tractor). Third, this increase in investment will boost production capacity, demand and output.

Critics of BRI claim that it amounts to a resurrection of neocolonialism. Since the BRI involves the creation of infrastructural (and other) assets it is clearly distinct from any colonial arrangement. Transport lines, such as ports, railways and highways in BRI partner countries are not only increasing connectivity with China but also within these countries and beyond. Further, BRI does not involve payments for "good governance" unlike what was the case in the colonial period (where for instance in colonial India "home charges" were paid to the British government).  

Critics also claim that a BRI partner country gets ensnared in a debt trap. This claim might be correct if the rate of interest on BRI loans is more than the rate of growth of output on account of BRI loans. This increase in output on account of BRI loan based infrastructural investment will involve both the increase in output due to the BRI infrastructural investment in question and the induced increase in output that is consequently triggered. 

The repayment of the BRI loan is possible from both the surplus from the BRI infrastructural investment, as well from the higher tax revenues that accrue to the government. As long as the sum of both these factors exceeds the debt service of the BRI loan, it will be rational for the BRI partner country to accept the BRI loan financed infrastructural investment project. 

The viability of BRI infrastructural investment will increase if the propensity to import of the BRI partner country either declines immediately or over time. This will require the BRI partner country to promote appropriate policies for import substitution.

It may be the case that a part of BRI debt may be repayable in foreign exchange. This will require a part of the consequent increase in output be exported. However repayment in foreign exchange does not necessarily imply repayment in U.S. dollars. The unilateral and coercive economic sanctions imposed by developed countries during the ongoing conflict in Ukraine have exposed the pitfalls of U.S. dollar based international trade. 

Trade between BRI partners provides a potential that may be utilised to diversify international economic transactions away from its excessive dependence on the U.S. dollar. The required increase in exports may be induced by appropriately coordinated and consequently complementary investment in various BRI partner countries.

What critics in developed countries are actually apprehensive about are mainly two issues. First, they apprehend that companies in developed countries are unable to "adequately" participate in BRI programs. BRI members would have no objections to companies from developed countries participating in infrastructural projects on mutually acceptable terms. 

For instance, within the framework of the Fourth Round China-France Third-Party Market Cooperation Pilot Project List, French companies have recently agreed to partner Chinese companies in seven projects in various areas such as infrastructure, environmental protection and new energy. The aggregate value of these seven projects, to be implemented in Africa and Europe, exceeds $1.7 billion.

Second, elites of developed countries are concerned that China will garner "greater influence" among developing countries as a result of the BRI. If BRI projects were merely debt traps then this apprehension would have been unfounded. However, the fact that U.S.-led program termed Build Back Better World and the EU program called Global Gateway have been launched to counter BRI is testimony to the fact that "talk can only get you so far." 

Both competition and cooperation between these two programs and BRI will enhance the development of developing countries. Governments of developing countries must utilize this potential by securing their consequent policy initiatives in a framework of strategic autonomy. That will not only boost their own economic development but also the world as a whole.

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