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China celebrates ten years of Belt and Road Initiative facing an uncertain future

The Chinese government celebrated last October the tenth anniversary of their Belt and Road Initiative (BRI), an ambitious and sometimes controversial infrastructure development project that seeks to connect Asia with Europe and Africa, and is the center piece of premier Xi Jinping’s foreign policy strategy. 



Officially called the Silk Road Economic Belt and the 21st Century Maritime Silk Road, the BRI has already invested billions of dollars in infrastructures throughout Asia and Africa, including over 3,000 projects such as railways, roads, power plants, and ports, among other things. 


According to Chinese officials, the BRI created 420,000 jobs and lifted 40 million people out of poverty. They praised the initiative for “transcending the old mindset of geopolitical games” and “creating a new paradigm of international cooperation.” 




Trains on the China-Europe Railway Express project, a logistics distribution network that connects China with more than 200 cities in 25 European countries via the Eurasian hinterland, could travel at a speed of 120km per hour. 


Launched in 2013 as “one belt, one road”, the BRI seeks to make Eurasia (dominated by China) an economic and trading area to rival the transatlantic one (dominated by the United States).  


As of August 2023, 155 countries have joined the BRI by signing a memorandum of understanding (MoU). According to the Chinese government’s Belt and Road Portal, this includes 40 countries in Asia, 52 countries in Africa, 27 in Europe, 15 in North America, 9 in South America, and 12 in Oceania. 


Italy is the only G7 country to have joined the BRI, having signed an MoU with Beijing in March 2019.

However, the Italian government indicated recently that it is likely to withdraw from the BRI, bringing it into step with the China policy of the rest of the EU.  


Italian politicians are reported to have been disappointed with the scale of trade and other business dealings with China since the MoU was signed and are planning to exit by year end. 


After Italy signed the agreement in 2019, its imports from China accelerated but that bump wasn’t reciprocated. Last year, Italian exports to China only rose 5%, lagging those of Germany and France—two countries that aren’t in the BRI. 


The amount estimated to have been spent on BRI initiatives comes to about US$ 1 trillion, making the BRI the largest multilateral development project ever undertaken by a single country. 


However, the average BRI investment deal decreased by 48% from the 2018 peak to about US$392 million in the first half of 2023, according to a study by the Green Finance and Development Center at Shanghai-based Fudan University. The report tracks both the value of construction projects that are funded by China as well as those that Chinese companies have equity stakes in. 


The COVID-19 pandemic slowed down China’s infrastructure and trade initiative, while many debtors found themselves unable to repay their loans. Zambia was the first African country to default during the pandemic in late 2020, putting China, the nation’s largest creditor, in the spotlight. 


As other nations including Ethiopia, Sri Lanka, and Pakistan fell into debt crises, annual engagement under the BRI plummeted to US$63.7 billion in the first year of the global health crisis, according to the Fudan University study—down from a peak of more than $120 billion in 2018. 


That pullback has been sustained by geopolitical tensions and domestic problems plaguing China’s economy. 


About 40% of projects in the China-Pakistan Economic Corridor – one of the BRI’s flagship arrangements – have run into problems such as funding cuts, corruption, or insurmountable cost increases.  


Some experts have criticized BRI projects for a lack of follow-through, leaving countries with infrastructure projects and economic zones that ultimately do not contribute to the economy. A report by AidData, a research lab at William & Mary, suggests that around a third of the BRI infrastructure project portfolio has encountered major obstacles.  


Bankrolled by China’s development banks as well as state-run commercial lenders, Chinese construction firms have paved highways from Papua New Guinea to Kenya, constructed ports from Sri Lanka to West Africa, and provided power and telecoms infrastructure from Latin America to Southeast Asia. 


The length of the Yiwu-Madrid railway line, at 13,000 km, will be the world’s longest railway freight route (the Yiwu-London route is the second longest). The route is one of several used by long-distance trains as part of the “New Eurasian Land Bridge”, which is integrated with the BRI.   


The journey takes around three weeks, as opposed to six by sea. Despite the success of China-Europe rail projects over the past decade, most analysts agree that the maritime routes of the BRI still receive the most focus/trade. 


According to a study by Boston University’s Global Development Policy Center, China’s two main development banks provided at least US$331 billion to government borrowers in developing countries from 2013 to 2021. 


In the first five years, China spent more than twice as much financing overseas development projects per year as any other major economy – including the US, according to AidData. 


The main concern is risky lending, with critics accusing China of saddling low- and middle-income governments with overly high levels of debt relative to their GDPs. 


Accusations that BRI is a broad “debt trap” designed to take control of local infrastructure, while largely dismissed by economists, have sullied the initiative’s reputation – especially after Sri Lanka ceded control over the port of Hambantota to China after failing to repay its debt. 


China Merchants Port took a 70% stake in the port in 2017 after the Sri Lankan government struggled with debt repayments (the construction of the port had been financed with commercial loans from the Exim Bank of China). The Hambantota International Port in Sri Lanka was leased to China for 99 years. 



When it was first proposed, the BRI was partially designed as a way to channel China’s excess capacity overseas and open new markets for Chinese goods. But as the Chinese economy slows, the ambitious program appears to be losing steam.  


China will be navigating the second decade of the BRI amid stark economic challenges at home. An expected post-COVID economic rebound has not materialized, and local governments are grappling with mounting debt linked to a property crisis. 





China has changed its focus from grandiose multi-billion infrastructure projects to smaller ones with better returns, such as those involving renewable energy and digital technology. 


In 2021, Xi called for the prioritization of “small and beautiful” projects, which officials suggest will appeal to local populations. Later that year, Xi pledged that China would not build any new coal-fired power projects abroad. Since then, China has stated its commitment to supporting green and low-carbon energy development in BRI countries. 


Over the past few years, cultural, digital, and health-related initiatives have been playing an increasingly important role in the BRI, with the focus shifting to “softer” power initiatives, including personal training and the construction of cultural institutions. 


 

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