A Decade of China's Belt and Road Initiative (BRI)

To date, 148 nations have signed memorandums of understanding (MOUs) with China. These agreements highlight the countries' desire to work together on the pillars of the project, which include policy cooperation, trade, investment, people-to-people exchanges, and infrastructure development. Later on it also focused on industrial cooperation as well. Notwithstanding Italy's intention to withdraw from the BRI in 2023, numerous Asian, African, and Latin American nations remain steadfast supporters of the project.

Source: FISF Fudan University, Shanghai

The BRI has been instrumental in the development of infrastructure in developing nations, as it has already surpassed the trillion dollar mark. A large portion of the funds allocated for this project have been used to fund traditional infrastructure, such as railways, roads, and energy. The changing strategy of China's investment in the BRI has become an important subject of discussion. Some of the key trends that have emerged include the greening of the initiative, the scaling back of its grand projects, the increasing number of private enterprises, and the global reaction to its debt sustainability.

The third Belt and Road Forum, which was recently held in Beijing, attracted over 4,000 participants from 140 nations. It resulted in the signing of various agreements worth over $97 billion (approx). China also released 89 multilateral documents and provided details about 458 cooperative programs. The event highlighted the country's increasing focus on international investment and the potential of its companies.

One of the most prominent events during this event was the unveiling of the (Global Artificial Intelligence Governance) GAIG Initiative, which follows several other initiatives launched by China (e.g. Global Development and Civilization Initiatives). The goal of the project is to prevent groups and ideological barriers from preventing the development of AI in other nations. Whereas, the timing of the unveiling of the initiative, which coincided with the US' decision to restrict China's access to certain, advanced chip technologies, was interesting.

During the event's opening ceremony, Xi Jinping unveiled various strategic goals:

·      One of the most important goals that were discussed during the event was the enhancement of the Europe-Asia logistics corridor that could be linked to the BRI's other projects and the European Union's Global Gateway initiative.

·      Establishment of an e-commerce zone along the Silk Road, which will allow companies to conduct business more efficiently and effectively.

·      Financial commitment of almost $50 billion from Chinese banks.

·      The Green Development Agenda that involves prioritizing sustainable projects in collaboration with the New Development Bank (NDB) and China's environmental goals.

·      The cultural exchange and tourism sectors were urged to create an alliance between themselves and Central Asian and Middle Eastern nations. Doing so will allow them to promote their activities and join the Organization of Islamic Cooperation (OIC).

·      Clean and transparent cooperation by promoting transparency and ensuring that foreign investments are following proper standards.

·      Establishing a central BRI institution, allowing the foreign investors to better understand the various opportunities that the initiative has to offer.

China's two major policy banks, the Development Bank and Export-Import Bank, will provide funding for the various projects related to the BRI. The Silk Road Fund, a state-owned fund, will also contribute around 11 billion USD. China's vision for the BRI is starting to shift from large-scale infrastructure projects to more technological and sustainable initiatives. This includes projects that are focused on e-commerce and digital finance.

Some African nations have praised the project, while the US and India have criticized China for its actions. They have accused the country of engaging in debt trap diplomacy, which involves trying to acquire assets of other nations if they can't pay back their loans.

BRI in African Context:

This time, there are numerous agreements and projects that have been abandoned or delayed due to various factors. Some of these include disagreements over the terms of the agreements, China's insistence on gradually reducing its funding for coal projects, and the risk that African nations might not be able to pay their share of the costs. Botswana withdrew from a road rehabilitation project because of the delays. Due to the delays in the financial negotiation, the governments of Uganda and Kenya decided to withdraw from the negotiations for the construction of a standard gauge railway in 2023. In addition, ICBC, which is one of China's major banks, also stopped funding the projects in Zimbabwe and Kenya.

The concept of the BRI was based on the Chinese belief that building roads first is the key to achieving wealth. However, due to the current state of global transformation and turbulence, the projects related to the initiative are starting to evolve. At the 2021 China-Africa construction symposium, Xi Jinping called for more creative ways of funding the BRI. The various events that occurred during the BRI's construction symposium and the upcoming FOCAC meetings in 2024 will provide valuable information on the future of the project in Africa. China's focus on the phrase "xiao er mei" literally means "small and beautiful." This means that banks should support projects that are both modest and valuable. For instance, loans under a certain amount of money, such as those secured by large syndicated loans, are considered small. On the other hand, projects that are expected to have positive environmental and social outcomes are considered beautiful. Despite the various factors that have affected the country's loan financing, the trends in Africa are expected to improve but not to the previous heights. The various events that occurred during the BRI's construction symposium and the upcoming FOCAC meetings in 2024 will provide valuable information on the future of the project in Africa. As it stands, the small and medium-sized loans that are secured by projects with favorable environmental and social outcomes are expected to be the main focus of the loans in the future.

The risks involved in building infrastructure are never taken lightly. Large projects such as the BRI will have numerous failures and success stories. India first raised concerns about the projects' sustainability and debt traps. Similar concerns were also raised by EU and US. But, despite the criticism, many developing countries, especially those in Asia, Africa, and Latin America, still sees BRI as an attractive project.

The economic situation has become more difficult over the past decade. China has also realized some weaknesses. That's why; it has started implementing various reforms, such as linking projects with the SDGs. However, implementing these rules might not be feasible for certain undertakings.

In the last BRI forum, the number of heads of state participating decreased from the previous meetings. It's possible that the initial enthusiasm for the project has cooled off. Due to the increasing geopolitical tensions, the US has started to criticize the BRI more. In the beginning, European policymakers seemed to be positive about the project. Whereas, for decades now, the EU has been promoting integration initiatives all around the world. In 2015, China and the EU established a connectivity framework through the BRI. European leaders were present at the initial two forums, but the number of leaders is decreased in last meetings. In the past couple of months, however, the concerns about the project's implementation and China's intentions have started to emerge. This is a reflection of the EU's growing dissatisfaction with its relationship with China. As a G7 member, Italy's possible withdrawal from the BRI would be symbolic.

India on BRI:

Since 2013, India's stance on the BRI has been relatively consistent. It has reservations about the project due to various issues, such as its potential impact on sovereignty and the China-Pakistan Economic Corridor's (CPEC) passage through PoK. Since its inception, the CPEC has been regarded as a forerunner project of the BRI. Despite the political and economic situation in Pakistan, which is going through a difficult time, it is still expected to continue with the project. The $60 billion CPEC is seen as a vital component of the China-Pakistan alliance and has become a cornerstone of the two nations' strategic partnership and free trade agreement. Most of it is energy-related, and the rest involves various projects, including the Gwadar port and railway infrastructure.

The Indian Ocean has also become more important to China due to its growing trade and energy transportation activities. It has also started investing in various ports in Pakistan, Bangladesh, Sri Lanka, and Myanmar, which could be used for military purposes. These developments have raised concerns in India. The economic activities of China in India's neighborhood, particularly in South Asia, have been growing. Unfortunately, the negative developments in the India-China relationship, such as border tensions and the trade deficit, have affected the country's perception of the BRI more. Although it has not endorsed the BRI, India has been a regular participant of the China-backed AIIB since it was established. The Silk Road Fund and the AIIB are two main channels for the BRI's financing and investment. With about $10 billion of its total lending, India has become a significant market for the agency.

Conclusion:

The BRI is regarded as President Xi Jinping's most significant foreign policy project. In 2017, he referred to it as the "project of the century." because of his vision of a China that can dominate the world. Despite the criticism that the BRI has received, China has maintained its geopolitical and diplomatic advantage within the Global South due to its infrastructure projects. The West, on the other hand, is still trying to find an alternative to the project. And due to the current economic and geopolitical situation, China is now focusing on smaller and more sustainable development projects by shifting its vision accordingly. The success of the BRI will most likely affect other initiatives spearheaded by China, such as those involving diplomacy and economic affairs.

Pic Courtsey-Adeolu Eletu at unsplash.com

(The views expressed are those of the author and do not represent views of CESCUBE.)