By Federico Alistair D’Alessio
The Belt and Road Initiative (BRI) is a grand development plan adopted in 2013 by the People’s Republic of China (PRC). It involves over a thousand projects investing in several international organisations and countries in Asia, Africa, and Europe. The main activity is to develop infrastructure for transportation by land and sea from China to various regions of the world. The BRI was designed to promote connectivity and trade between different continents, as well as to create new jobs and stimulate economic growth.
This paper seeks to identify the causes and consequences of the Belt and Road Initiative while taking into consideration that it is a relatively new and on-going strategy; hence some implications may not be precisely predictable yet. It will firstly focus on the economic and political factors that favoured the implementation of this plan, including what could be perceived as the main objectives the Chinese government seeks to achieve. This essay will later analyse the political and economic impact of the BRI in China and the other countries involved, including current risks and obstacles that may arise. In this section of the paper, consequences will be differentiated into two categories: the first subsection will focus on the effects, while the second will identify and examine the challenges that may be encountered.
The decision to adopt the Belt and Road Initiative was influenced by several factors that are subject to interpretation according to diverse views of the world. For instance, a western perspective would explain the objectives of the BRI as merely political and strategic, with the main aim of increasing China’s influence around the globe. On the contrary, the Chinese government claims it was principally designed to address issues facing the national economy and to improve connectivity among different regions of the world. The potential reasons behind the implementation of the BRI can thus be explained in both economic and political terms.
The first factor to highlight is the economic slowdown in China since 2012, which could justify the need for a grand strategy to recover and boost the economy. The government especially needed to deal with the country’s industrial overcapacity and stagnating exports. The low domestic demand was inadequate to deal with the high level of production, and therefore China needed to improve connectivity with developing economies to conquer new markets around the globe. The Belt and Road Initiative was thus conceived to improve trade and cooperation between different regions and continents of the world. According to the World Bank, the BRI will succeed to increase foreign investment and improve living conditions in the participating countries. A further benefit is the removal of the obstacles to commerce, such as trade barriers, which would benefit all governments involved. In fact, the reductions in transport costs and trade liberalisation attributed to this plan are estimated to generate large GDP benefits for countries along the BRI corridor.
Furthermore, the BRI reaches regions of the world that were marginalized from globalisation, and it does this by developing transport networks and thus facilitating trades with those countries. For instance, the project of the China-Pakistan corridor attempts to reduce the distance between the PRC and the Middle East: from the current 12.900 kilometres by sea, the distance would be shortened to 3000 kilometres by land. This point brings us to another factor to consider, which is China’s need to mitigate its energy security concerns, as the country’s demand has been rising and almost 60% of the oil reserves are located in the Middle East. Hence, the PRC sees the Belt and Road Initiative also as an opportunity to obtain regular energy supplies in the fastest and most secure way.
The Chinese government aims to use economic cooperation also to address challenges in both domestic and foreign policy, such as the political tensions with neighbouring countries, especially those in Central Asia. The BRI could serve as a means to connect Xinjiang with its central Asian neighbours and Europe, while also mitigating perceived threats of terrorism and separatismoriginating from this region.
It could be also argued that while the US were choosing a rather isolationist approach, China saw the opportunity to achieve global governance and become the new model to follow. Osnos suggested that “as Donald Trump surrenders America’s global commitments, Xi Jinping is learning to pick up the pieces”, implying the Chinese government has a great opportunity to gain global leadership, whereas the US are slowly retreating. This is plausible since one of the main drivers of the BRI is considered to be China’s desire to create a new silk road: a new Sino-centric network of economic, political, and security relations, that would promote China’s vision of global governance. As a result, this strategy could effectively enhance its political power and influence over other countries, hence improving the national image and soft power.
Indeed, Summers argues that it could be compared with the US Marshall Plan for Europe in the aftermath of the Second World War: in the same way as USA gained geopolitical influence over Western Europe with this initiative, the BRI could allow China to gain influence over several countries in Europe, Africa and Asia.
Another element to include is the so called ‘String of Pearls’ theory, which represents China’s potential intentions in the Indian Ocean. The Belt and Road Initiative will allow the country to establish ports in maritime routes to increase influence in the Indian Ocean, especially since India’s aggressive maritime strategy may contrast with China’s objectives. An important location that affects China’s affairs and influence over the ocean is the Malacca Strait, which is controlled by Singapore and protected by the US military. This poses a dilemma to the Chinese government, and the BRI seeks to solve this problem by building the Karat Canal in Thailand. In this way, the Indian Ocean and the South China Sea will be successfully connected, and China would reduce its dependence on the Strait of Malacca.
As previously introduced, it is complicated to effectively determine the consequences, given that many BRI projects are on-going or have not started yet. However, it is possible to identify the immediate and estimated effects concerning China and the other countries involved. In addition, we can detect the risks, including the repercussions that may arise in years to come if the challenges are not adequately addressed.
An immediate consequence is the economic growth in both China and the countries along the BRI corridor, as well as the creation of new employment: it is estimated that almost 300 thousand jobs were created since the start of the project. In addition, a report published by the World Bank calculated that the BRI-related investments could drastically reduce the rates of global extreme and moderate poverty. Contributions to the Chinese plan are thus estimated to increase, especially the overseas direct investments (ODI). However, some scholars argue that, rather than improving economic conditions in foreign countries, the increase of ODI will mainly enhance China’s soft power over the countries involved in the initiative.
Another projected and expected result is the improvement of the relations between China and the EU, which will allow the increase of trade and investments between these two regions of the world, hence also improving the economic stability of the old continent. Therefore, the EU could benefit from the Belt and Road Initiative, as well as have the opportunity to enhance its global influence.
One can argue the immediate effects of this plan are beneficial to all the governments involved, but it is also true that the majority of the projects are assigned to Chinese companies, rather than foreign ones. Freymann also argues that many Chinese corporations are exploiting the Belt and Road Initiative brand as a shortcut to get funds from Chinese state banks. Labour and manpower are also mainly Chinese, and therefore the BRI might not create much employment in foreign countries. In addition, the standards we are accustomed to, such as workers’ rights, may not be the same under Chinese supervision: in fact, many African countries are starting to put up resistance against certain projects because of low wages and poor working conditions.
Along with the economic and political consequences, there are also risks and obstacles to take into account. The most imminent threat originates from the outbreak of Coronavirus, which affected more than half of the BRI projects. The Chinese government has announced that the initiative will adapt to this circumstance: more resources will be put on public health, environmental sustainability, and technology, in order to facilitate its progress and attract more partners. However, it is complicated to establish how these strategies will be implemented, and what will be the long-term impacts of the Covid-19 crisis.
A crucial challenge is the environmental impact, as the large-scale construction of several infrastructure could have negative effects on biodiversity, such as increased wildlife mortality and restrictions of animal movement. In addition, transport is estimated to increase carbon dioxide emissions by up to 7 percent in the countries where production will expand. The various projects could also create pollution of various sources, such as noise, chemicals, and light, which would seriously affect the ecosystem in the areas involved. This aspect should thus be getting more attention from policymakers and the BRI management, in order to successfully mitigate the several environmental risks before the situation deteriorates.
An additional aspect to consider is the debt accumulated by borrower countries. Since 2013, China has made several loans to many governments, and there is the risk that it would use that debt to exert political and economic influence on those nations. According to a policy paper published by the Center for Global Development, eight countries are estimated to be pushed into a debt crisis because of BRI-related loans. Hence, the PRC could make use of a strategy commonly referred to as ‘dept-trap diplomacy’. An example is the case of Sri Lanka, which could not repay its debts and had to hand over an important port to a Chinese state company for the duration of 99 years.
Moreover, in a very costly and global plan such as the BRI, corruption is another factor that requires a deep focus. According to the World Bank, bribery in transport projects “can account for 5 percent to 20 percent of transaction costs”. Therefore, corruption is one of the main risks that the Chinese government should manage in order to guarantee transparency in the BRI projects. Such concern is often associated with the Asian Infrastructure Investment Bank (AIIB), which could support the Belt and Road Initiative undermining good norms of governance.
The last aspect we should focus on involves perceived threats to human security. Security-related challenges are crucial to address, and particularly in this case. Some BRI corridors are located in countries affected by ongoing conflicts, extremism, and terrorism. Therefore, the level of risk in these areas is very high, especially if we consider that the Chinese government is often accused of discrimination towards ethnic and religious minorities. It is also believed that the PRC may not have sufficient military power to deal with this issue, hence failing to protect building sites and infrastructure, such as roads and railways along the route.
Despite the Belt and Road Initiative being in constant development, we can already infer it will have serious economic and geopolitical implications. Two diverse visions of the world interpret the purpose of the BRI differently, and both perspectives are based on valid arguments. China will most probably see a rise in its economic influence and will gain strategic dominance across three continents. It will use the BRI for its own benefit and recovery, but it will also improve relations and cooperation with many countries, as well as create employment and reduce poverty. The Chinese government will create a new ‘Silk Road’ to invest in regions of the world that were left out of globalisation and trade, while also enhancing its national image and exerting political influence in order to secure Chinese goals. While Trump-led USA turned towards protectionism, China has opened its market with the rest of the world and has taken advantage of the situation. The BRI could effectively allow the Chinese government to take control of most of the maritime and land routes across Africa, Asia, and Europe.
However, it is still early to determine whether the BRI will be successful or not, as it will also depend on its impact in the countries involved. After the Coronavirus outbreak, some countries may not decide to invest in projects that were seriously affected by the Covid-19 crisis, which could lead to further complications in the following months. Foreign governments could choose a different approach towards the legitimacy of the Belt and Road Initiative, especially if we consider the ambiguity in some aspects of the Chinese plan. For instance, the US led by Biden have adopted a different approach towards China’s global initiative, as opposed to Donald Trump. In addition, there are environmental and security challenges to address, that could drastically affect the progress of the BRI.
Nevertheless, it is premature to state that these obstacles are being overshadowed by the PRC for mere political agenda because the Chinese government may decide to take further measures and find valuable solutions in the years to come. As a result, future events and developments will be helpful to better understand and evaluate the implications of this grand strategy, as well as China’s position in the global political and economic landscape.