Called “one stop shopping” China’s Belt and Road initiative provided participating countries with loans that financed the projects that Chinese companies were supposed to build.
For two days this week, China’s Belt and Road Forum commemorated the beginning of its second decade. Attendance was down:
China’s Belt and Road Initiative
We could summarize the Belt and Road past decade with four numbers and three words.
The four numbers:
- 200 BRI cooperation agreements
- 150 organizations
- 30 international organizations
- 5 continents
The three words:
- mega infrastructure lending
Targeting “Belt and “Road,” the BRI projects had city connectivity as a thread. By “Belt,” they meant the overland routes that wind through central Asia, Southeast Asia, and South Asia to Europe. Meanwhile “Road” was supposed to be the complementary maritime network that links China to major Asian, African, and European ports. Composed of a long list, the infrastructure projects included highways and railways, ports, power plants, and pipelines.
This 2020 BBC map was the most up to date I could find:
However, it has not quite worked out.
In a current white paper, China says it will pivot from mega projects to smaller ventures, The reason? Chinese banks have had debt problems in an estimated one-third of the projects they’ve financed. Typical of the unsustainable debt exposure, Sri Lanka had to lease a port to a Chinese company after it could not repay the development loan. Similarly, called “serial rollovers.” for countries like Argentina, China’s loans continually replace the previous one.
Offsetting BRI’s problems, the BBC tells us that China enjoyed a massive trade boost. The goal, according to China scholars, is to create a network that is separate from the U.S. dominated West. Through that network, China was able to reduce its dependence on the U.S. for soybeans, Instead, it turned to Brazil, a major recipient of BRI funding. Similarly, it could rely on oil and gas imports from countries including Russia and Oman. As a result, China’s trade with BRI countries was close to $19.1 trillion during the past decade.
Our Bottom Line: Financial Infrastructure
We could say that we are looking at a shift in the world’s financial infrastructure. Dominated by the United States and the IMF, borrowing and bailouts were shaped by governments, businesses, and individuals from Western nations.
Now though, we have some changes.
Through its Belt and Road initiative, China has entered the world’s financial infrastructure. Not yet as central as the U.S. and the IMF, still China has become a major player.
My sources: For our most recent Belt and Road update, we started with the Council on Foreign Relations. Then, continuing with The Guardian and the BBC, we had recent facts. But to complete the picture, do take a look at our March 2023 post.
