Let’s Talk About: The Belt And Road Initiative
What The Policy is and Catching up on Recent Developments
D. H. Kang
When I first saw articles on The One Belt One Road initiative, it was the coming of a new age. The introduction of an internationally-spanning policy that would re-mould the global paradigm. A couple of years have passed, but I seem to rarely hear new information or see anything on my news feed. So here is an explanation of what it is and an update on the situation.
Let’s start with some introductory descriptions. The Belt and Road Initiative (BRI) is a global development infrastructure project originally proposed in 2013. According to the initiative, its five major priorities are policy coordination, infrastructure connectivity, unimpeded trade, financial integration and connecting people. The infrastructure looks like building roads, railways, airports, power plants, and telecommunication networks in developing countries in need of economic stimulus. As of now, the number of countries that have joined the initiative number over 151.
If you think that the name Belt and Road rings a bell, it was coined, drawing upon inspiration from the Silk Road that connected China to the Mediterranean via Eurasia, trading silk, tea, dyes and porcelain for gold, honey and wine.
It’s clear that China is advancing national interests, and this policy is a way of building its soft power in developing nations that would affect the outcome of voting and political sidings in international committees like the United Nations. It can be seen as an act of legitimising China’s model of governmental and economic development that differs from the democratic system of government promulgated by the West.
Yet simultaneously, it has brought some undeniable benefits. Infrastructure has brought stronger, more efficient supply chains, access from rural areas to key facilities like hospitals and education in urban areas, and important fiscal stimulation, creating jobs and employment opportunities. Studies from the World Bank show that the BRI could increase trade flows by 4.1% and cut the cost of global trade by 1.1–2.2%. See Michael’s article on trade from the SWR Archives (2021??) on the benefits and costs of trade.
There is no doubt that BRI has sparked heated debate about how countries like Australia should deal with such a policy. The U.S. government has alleged that the Belt and Road Initiative is a form of Debt-Trap Diplomacy, which as the name suggests, lends out a sum of money or investment in the form of a loan that the opposing party is unable to pay back, resulting in a never-ending cycle of piling debt. However, many refute such accusations. Research from Deborah Brautigam, a political economist from John Hopkins University and Meg Rithmire from Harvard Business School points out that up till now, “Chinese banks are willing to restructure the terms of existing loans and have never actually seized an asset from any country, much less the port of Hambantota.” Rather, the system of lending resembles that of Western lending frameworks like the IMF.
Others have pointed out ecological issues that arise from such an initiative. For example, the Emba Hunutlu power station in Turkey is being built as part of the BRI and is obviously not great for the environment. Critics have reasonably pointed out that China may have motivations to outsource pollution to less economically developed areas like Serbia. In 2017, Xi Jinping stated the BRI would “pursue the new vision of green development and a way of life that is green, low-carbon, circular and sustainable.” A later report by the United Nations Development Programme and CCIEE portrays the potential environmental benefits of the BRI, insofar as it provides green trade, finance, and investment, which it has begun to adopt.
Over time, however, the initiative’s pace has changed. From 2013 to 2023, China has inked roughly one trillion USD for infrastructure and investment with partner nations. However, things haven’t gone as planned. In August 2022, China stated that the loans of 17 African nations would be forgiven, which surfaces some of the underlying problems; investing large sums of money in countries with the inability to pay it back is inevitably unsustainable. The original plans to spend brazen amounts of money have slowly mellowed out, and the Chinese government’s outlook has now changed. Foreign lending has decreased ever since 2016. Mr Xi claims that the BRI will now focus on “small but beautiful” investments, a significant change in the previously brazenly ambitious tone of the initiative. This is also in part due to China’s recent economic slowdown (see Brad’s article last Term for more).
Only time will tell us the conclusion of the BRI. Stay informed and make your own judgements based on evidence.
An example of transportational infrastructure built as part of the BRI.
A railway in Kenya linking a large part of East Africa to a major port on the Indian Ocean as part of the BRI.