OVER THE PAST two years, Chinese President Xi Jinping (習近平) has unveiled the Global Development Initiative, the Global Security Initiative and the Global Civilization Initiative, all of which are intended to enhance China’s Belt and Road Initiative (BRI). This appears to signify a shift in the BRI’s direction, moving away from extensive and sometimes imprudent infrastructure investments. Instead, it seems to be transitioning into a new phase, one that prioritizes building an international order under Beijing’s leadership, in alignment with the vision of the “China dream.”
The BRI began in 2013 as a trade and infrastructure project. Investment peaked in 2016 and has steadily declined since then, hitting a low during the COVID-19 pandemic. It is now at about the same level as it was in 2020. China has already poured US$1 trillion into the initiative, spanning 150 countries.
However, the total cost of completing all BRI projects is now estimated at a staggering US$8 trillion.
Numerous projects have failed. Many are unfinished, while others suffer from construction flaws. These will require additional borrowing by already debt-strapped nations to complete.
Western countries have called the BRI a debt trap. For example, Laos is facing an economic crisis with debt standing at 123 percent of GDP, half of it owed to China.
Other projects have been complete failures. Beijing promised to help landlocked Kazakhstan boost its exports by connecting it with world markets through BRI infrastructure, but the boost has not materialized. Since signing on to the BRI, Kazakhstan’s trade with Japan has steadily declined, while Chinese ownership of the country’s resources has increased.
The BRI was originally called the New Silk Road, harkening back to a historical trade route linking Europe and China. While some European countries have accepted investment from Chinese state-owned companies, the reception in Europe has cooled and the project is viewed with suspicion there.
The UK was going to join, but then opted not to. Afterward, British intelligence became vocal about national security threats posed by BRI membership. Italy is considering withdrawing and most European countries are rejecting continued investment.
China’s support for Russia in Ukraine, and for Iran and Hamas in the Middle East has alienated most Western countries. Aggression in the South China Sea has made many Asian nations wary. And China’s own economic slowdown has left Beijing less financially capable of buying friends and influencing people.
Participation in the 10th Anniversary Forum of the BRI in Beijing last month was telling. Only 20 world leaders attended, compared with 36 in 2019. Previous meetings were attended by leaders from countries such as Greece, Spain, the Czech Republic and Switzerland, but this time they were notably absent.
Furthermore, leaders from other nations, including Singapore, Malaysia and the Philippines, opted not to attend.
Notable guests included Russian President Vladimir Putin, who made the trip to Beijing despite an International Criminal Court warrant out for his arrest. The Taliban was also officially represented. Hungarian Prime Minister Viktor Orban, who recently voiced his opposition to ongoing funding for Ukraine in its conflict against Russia, was there.
The fact that the BRI is moving forward without Europe suggests that its goals are different than those originally stated. Beijing claims that the initiative is a global good, helping developing countries to build infrastructure, but part of the BRI’s appeal is that it does not have to succeed. A mere verbal commitment to build infrastructure is already part of China’s branding.
The US provides support to Israel, Ukraine and Taiwan, allowing Beijing to label it a warmonger. Xi then contrasts this by highlighting the BRI, stating that while the US supplies the world with weaponry, China offers infrastructure and development.
China is also bailing out countries that are defaulting on BRI loans. So far, China has provided US$240 billion in rescue loans to BRI nations. This allows Beijing to present itself to the world as the lender of last resort, the friend who is willing to lend money to countries in need when the IMF, the World Bank and traditional lenders have abandoned them.
Never mind that the debt was caused by China in the first place.
At the anniversary summit, Xi rolled out his new project, a global framework for the governance of artificial intelligence (AI), to “promote orderly and secure development.” Xi was clear that AI products should not violate national sovereignty.
Western nations are unveiling their own alternatives to China’s BRI. The EU has introduced the Global Gateway, a worldwide investment and connectivity program. Last year, the US revealed its Partnership for Global Infrastructure and Investment during the G7 summit.
Last month, Washington put forth the India-Middle East-Europe Economic Corridor initiative.
These initiatives are not in direct competition with China concerning the scale of investment, but they are distinguished by their perceived higher quality and greater transparency. In contrast to the BRI, which has seen significant investments in projects such as sports stadiums with limited economic impact on debtor nations, the US and EU projects are focused on constructing essential infrastructure that will boost the prosperity of participating countries.
In September, there was an announcement that the US and the EU would collaborate to develop the Lobito Corridor, a project involving the construction of a railway connecting Angola’s Lobito port with Zambia and the Democratic Republic of the Congo. This declaration is considered a significant shift, as Africa has been predominantly within China’s sphere of influence for the past decade.
Looking ahead, we may see a decrease in the demand for and supply of BRI investments. Western nations have withdrawn their support. For the time being, developing nations, particularly in Africa and Latin America, will continue to engage, as will heavily sanctioned pariah states like Afghanistan and Russia.
China lacks the money to lend as generously as before and fewer countries trust the Chinese model. Chinese banks are sitting on a mountain of debt already and they do not want to risk adding more.
Moreover, China has strained relationships with potential BRI partners such as Vietnam and the Philippines due to disputes in the South China Sea.
India, a BRICS member, has never joined the BRI, and now that China has released an official map of the PRC which includes Indian and Malaysian territory, it is less likely that India will move into China’s camp.
The next phase of the BRI will be more strategic, diplomatic and geopolitical, and less about earning money.
Antonio Graceffo, a China economic analyst who holds a China-MBA from Shanghai Jiaotong University, studies national defense at the American Military University in West Virginia.
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