The Electoral Equation: China's BRI Investments Amid Political Transitions

April 10, 2024 by Farwa Aamer and Blake Berger
As China's Belt and Road Initiative (BRI) embarks on its second decade, it does so with heightened ambitions, aspirations, and ample experience. Recent changes in governments have both positively and adversely impacted the BRI’s foothold in partner countries. For instance, in December 2023, the BRI Memorandum of Understanding between China and Italy was canceled following Prime Minister Giorgia Meloni's assumption of office. Conversely, the election of Maldives President Mohamed Muizzu in October 2023 opened doors for increased BRI cooperation and investment in the Indian Ocean archipelago.
As significant political transitions and elections unfold in key BRI states in 2024 — including elections in Indonesia, Pakistan, Bangladesh, and Sri Lanka slated for later this year — the initiative could face substantial political risk. With major flagship BRI projects spanning South and Southeast Asia, what does the future hold for the initiative in these four pivotal nations following this election year? There is a glimmer of optimism for Beijing and Chinese stakeholders as election outcomes seem poised to align favorably with the BRI agenda, albeit not without accompanying caveats and the need for recalibration on both ends.
Indonesia
China rose to become Indonesia’s largest investor and trading partner under President Joko Widodo (Jokowi). During Jokowi’s decade in the office, Indonesia remained one of the favored destinations for BRI and Chinese infrastructure investment and became the largest recipient of BRI investments, raking in almost US$7.3 billion in 2023. An illustrative example of the scope and scale of China’s infrastructure presence in Indonesia is Whoosh, the BRI’s multi-billion-dollar high-speed railway flagship project connecting Jakarta to Bandung, which launched in October 2023 to much acclaim but faced significant delays with exorbitant cost overruns.
February’s electoral victory of General Prabowo Subianto to the presidency suggests overall policy continuity and sustained or intensified interest in expanding Indonesia’s BRI footprint. This outcome bodes well for Beijing's ties with the world’s largest archipelagic state. Prabowo, on the campaign trail, continued to court Chinese investments for a range of sectors, including infrastructure. Conversely, there were concerns that should Anies Baswedan, the former Jakarta governor, win the election, it would prompt a potential shift in Indonesia’s approach toward China and result in a change to Chinese infrastructure investment and development in the country. In the lead-up to the election, Anies said he would prioritize increasing cooperation with European countries and other East Asian states over China and directly questioned the rationale for developing a new capital in Nusantara, where Chinese firms are heavily invested.
With Prabowo’s electoral triumph and Jokowi’s eldest son Gibran Rakahuming Raka set to become vice president, any concerns in Beijing over the potential for the bilateral relationship to take a sharp turn for the worse have largely abated. In early April, President-elect Prabowo made his first trip overseas to Beijing to meet with President Xi Jinping, underscoring the priority the incoming administration places on bilateral ties with China. During a meeting with Premier Li Qiang, Prabowo expressed his desire to further deepen cooperation with China on infrastructure development.
However, there are risks that could impact the BRI and, consequently, Sino-Indonesia relations. Discontentment is growing in Indonesia over debt concerns and the environmental and health impacts of Chinese investments and projects in the country. Following Prabowo’s trip to Beijing, the president-elect traveled to Tokyo where he met with Japanese Prime Minister Fumio Kishida to not only discuss defence and security ties but also infrastructure development. Kishida relayed Japan’s desire to support Indonesia’s infrastructure and energy development. Prabowo’s trips to both Beijing and Tokyo could be a signal of his desire to diversify the country’s investor portfolio.
Beyond the BRI, escalating tensions in the South China Sea represent another risk vector. A recent survey in Indonesia found that roughly three-fourths of the Indonesian population perceive China’s actions in the disputed waters as a threat to the country’s sovereignty. Prabowo, a strident nationalist, has continually advocated for Indonesia to have a more independent and assertive foreign policy, and a number of Indonesian analysts expect Prabowo to be much more willing to respond to and deter Chinese activities in the South China Sea. It will be interesting to see how Beijing balances its desire for closer cooperation with Indonesia while continuing its South China Sea activities.
Pakistan
The China-Pakistan Economic Corridor (CPEC) has been a cornerstone of bilateral cooperation between China and Pakistan since its launch in April 2015. Initiated under the leadership of then–Prime Minister Nawaz Sharif, head of the Pakistan Muslim League-Nawaz (PML-N) party, CPEC over the years has expanded from an initial investment of US$46 billion to a staggering US$62 billion. The corridor encompasses a multitude of infrastructure projects spanning transportation, energy, telecommunications, and industrial cooperation and aims to revolutionize connectivity and economic development across Pakistan. However, despite its transformative potential, challenges have arisen, ranging from security threats to governance issues and concerns over debt sustainability.
While Pakistan’s previous prime minister, Imran Khan, was slow to fully welcome CPEC after assuming office, his stance evolved in the succeeding years, ultimately embracing the project’s strategic importance and potential for spurring economic development. However, following Khan’s ouster from the office and in the run-up to the February 2024 election, his political opponents, particularly the PML-N, accused Khan of impeding progress on CPEC.
With the return of the PML-N–led government following the recent elections, there is anticipation for renewed vigor in advancing CPEC. The PML-N and the Sharif family's historical alignment with Chinese investment and infrastructure initiatives work well for continuity and stability in Pakistan's approach to CPEC. The recent statements from Chinese officials, affirming their commitment to expediting work on CPEC phase-II, indicate Beijing's confidence in the new government's ability to drive the initiative forward.
However, the realization of CPEC's full potential depends on the new government's ability to tackle critical challenges and seize opportunities for sustainable development. China has consistently stressed the importance of Pakistan ensuring the safety of Chinese personnel and projects, a task that has proven to be particularly challenging. Following the recent attack on Chinese engineers in Bisham, President Asif Ali Zardari reiterated Pakistan's commitment to safeguarding Chinese nationals working on various projects.
Pakistan is currently grappling with significant economic obstacles, including the necessity for another International Monetary Fund (IMF) bailout and the urgency of implementing crucial reforms to stabilize its faltering economy. The stakes are heightened as Pakistan faces mounting debt, with China holding a significant portion of it — approximately 30% (and growing) of the country’s external debt.
For Prime Minister Shehbaz Sharif's government, striking a delicate balance between harnessing CPEC's transformative potential, managing the security landscape, and mitigating associated risks is imperative for Pakistan's economic future. This equilibrium is crucial not only for Pakistan's economic stability but also for maintaining a strong diplomatic, economic, and developmental partnership with Beijing.
Bangladesh
For Bangladesh, China stands as a pivotal economic and diplomatic ally, a relationship further solidified during President Xi's visit to Dhaka in 2016. During that trip, China signed deals through which Bangladesh would receive US$24.45 billion for development projects and US$13.6 billion in joint ventures.
It is worth noting that Prime Minister Sheikh Hasina has been instrumental in nurturing China's expanding footprint in the country. This dynamic was further highlighted during President Xi’s meeting with Hasina on the sidelines of the BRICS Summit in 2023, where both leaders reiterated their commitment to advancing high-quality BRI cooperation. Last year also proved to be another important time for development cooperation between Dhaka and Beijing with the advancement or completion of nearly 14 mega infrastructure projects.
The January 2024 election saw Prime Minister Hasina secure her fifth term in office. With no change in leadership, Beijing embraced the result, viewing Hasina’s reelection as a continuation of stable governance that can further enhance bilateral relations between Beijing and Dhaka and pave the way for greater strategic cooperation. Quickly following the election and as both countries approach the 50th anniversary of bilateral ties in 2025, Chinese Ambassador to Bangladesh Yao Wen expressed Beijing’s commitment and aspiration to elevate the China-Bangladesh Strategic Partnership of Cooperation.
Sri Lanka
The forthcoming election in Sri Lanka, scheduled for fall 2024, holds significant importance for the country as it gradually emerges from a deep economic crisis. If incumbent Ranil Wickremsinghe retains leadership, his policy agenda is likely to prioritize addressing Sri Lanka's economic challenges, potentially involving closer engagement with the West and the IMF.
Strategically situated in the Indian Ocean, Sri Lanka assumed a significant role within the BRI, albeit amid considerable controversy. The country’s southern seaport of Hambantota epitomizes a cautionary tale within the broader narrative of the BRI. Despite ambitious aims, the project encountered formidable challenges, proving commercially unviable. In 2017, Sri Lanka, unable to meet loan obligations, ceded to China a controlling stake in the port and a 99-year lease for its operation. This episode accentuated the complexities and risks inherent in BRI ventures, with concerns arising over China leveraging debt for strategic gains. However, Sri Lanka's debt issues extend beyond Hambantota, reflecting years of external borrowing and weak economic governance. Also, the Hambantota endeavor was part of Mahinda Rajapaksa's broader infrastructure vision, tailored to benefit his hometown, which was initiated under his administration with Chinese support. However, with political transitions, the support for Chinese-driven investments also wavered. Interestingly, former President Gotabaya Rajapaksa, Mahinda's brother, also recently attributed his ousting in 2022 to Chinese investments.
Despite the controversy and criticisms, the Sino–Sri Lankan relationship has been sustained over the years, with China emerging as one of Sri Lanka's principal creditors. Last year at the Third BRI Forum in Beijing, President Wickremesignhe relayed during his meeting with President Xi Sri Lanka’s desire to remain actively involved in the BRI and the importance the country places on the initiative. Illustrative of this desire, In March, following a meeting between the Sri Lankan prime minister and the Chinese premier, it was announced that China would support the development of the Hambantota port and the Colombo airport and pledged ongoing support for debt restructuring.
While China remains an important economic player in the country, Sri Lanka has also garnered increasing interest from the United States as well as India. In November 2023, the United States unveiled a US$553 million initiative aimed at constructing a deep-water shipping container terminal at Sri Lanka's Port of Colombo. India is also seeking to push against China’s inroads in the country through a series of agreements and deals to support Sri Lanka’s logistics, travel, and port infrastructure and development. As these developments unfold, it will be crucial to observe how Sri Lanka navigates these opportunities and competing global interests to its advantage.
The Road Ahead
The BRI’s first decade provided Beijing with a critical lesson — elections in BRI partner countries matter, and, particularly given Beijing’s reliance on ties with political leaders instead of broader public appeal, political transitions can significantly impact bilateral ties and economic engagement. Each of the recent elections in South and Southeast Asia had the potential to reshape the landscape for China’s investments and strategic interests in the respective countries. However, the outcomes largely suggest continuity, which aligns favorably with China’s BRI ambitions.
Nevertheless, the success of the BRI hinges not only on the policies emanating from Beijing but also on local politics and policies in the host countries. For that reason, promoting a more transparent and partner-engaged BRI and better addressing partner concerns would improve the prospects for future BRI projects. Similarly, for host countries, whether new administrations take office or incumbent leaders enter their next terms, it remains vital that the lessons learned from their respective countries’ engagement with the BRI are heeded and not lost. Leaders in South and Southeast Asia should advocate for BRI investments that serve their countries’ interests in a fair manner and on affordable terms by accepting only and insisting on high-standard projects that align with national development priorities that will reliably produce substantial socioeconomic benefits for their populations.