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By: Naz Soysal
The Belt and Road Initiative is an infrastructure development project sponsored by China that has spanned investment from Europe to Latin America. Largely, however, investment has focused on developing countries within Central Asia and Africa. According to the Chinese government, more than 138 countries have engaged in the program, allowing China to extend their sphere of influence across the international community. The program seeks to develop networks of connection across borders, develop needed infrastructure in under-resourced areas, and stimulate economic growth for the countries involved. In real terms, the BRI has led to the construction of bridges, ports, and airports, the expansion of telecommunication networks, and the creation of new markets within partner countries.
Why has China engaged in this program?
China has several incentives to engage in this infrastructure development. First, this investment has allowed China to diversify its economy, critical in avoiding the Middle Income Trap that prevents middle-income countries from gaining enough sustained economic growth to become high-income countries. China desires continued economic growth instead of a plateau that prevents it from accessing the same investment and benefits down the line. The benefits to the Chinese economy have been a major selling point for State-Owned Enterprises and private corporations in the country to participate in the BRI. Second, the BRI enables China to check back on the US’ engagement in Asia. Through ASEAN and through the increased dependence on Chinese investment, China has been able to counter US dominance in these regions, promoting Chinese interests within its regional allies. Furthermore, by investing globally, China has gained meaningful allies to boost soft power on the international stage. These connections have enabled it to challenge the West in international institutions and challenge the unilateral hegemony of the US. Third, the BRI has allowed China to export its excess production of steel and aluminum. The markets opened by BRI investment, especially through the construction of infrastructure projects, have improved the profits and stability of the Chinese economy.
What effects has the BRI had on countries receiving investment?
Countries in the Global South have found Chinese loans to be an attractive alternative to loans from the West. For many, the harsh conditions, such as forced austerity, imposed by Western-dominated institutions such as the IMF has driven them away from these loans. They desire more political and economic freedom in their use of funds and repayment plans. These factors mean that Chinese loans, which are unconditional, can be preferable to these countries. Chinese loans through the BRI use a method called “patient capital” that enables countries to pay back their loans in the long-term rather than immediately with the threat of austerity. These loans offer countries increased freedom to invest funds into bridges, roads, and other infrastructure projects without fear of retaliation and overbearing economic policies forced upon them. Additionally, some loans from these Western institutions come with the requirement of political changes and democratization; for governments who seek to keep their political standing intact, China is an attractive investment.
At the same time, China has been accused of engaging in debt-trap diplomacy, in which it causes excessive debt to increase its leverage over a country. Many of its loans have led to unsustainable debt repayment plans that have forced incredibly high debt-to-GDP ratios. These debt traps have led to the seizure of ports and other infrastructure, as evidenced by the 99-year seizure of the Hambantota Port in Sri Lanka. Further, some have accused China of entrenching authoritarianism in the countries they invest in, especially with its importations of facial recognition technology. For example, Chinese-made cameras send footage to Ecuador’s domestic intelligence agency and reinforce corruption to the targeting of political opponents within the country. These digital surveillance tools have propped up corrupt leaders such as Venezuela’s Maduro and Yoweri Museveni in Uganda. With the spread of Huawei through Africa, Central Asia, and Latin America, privacy concerns have heightened.
Ultimately, the BRI comes with risks and rewards. The question for the countries involved is weighing up the harms and benefits of this investment. Unfortunately, the BRI is one of the most controversial subjects, both in academia and in governments themselves. What we do know for sure, though, is that the BRI comes with mass consequences for individual countries and for the current international order.
Discussion Questions:
What steps can prevent the dangers of the BRI from triggering?
What impacts does the BRI have on geopolitical stability?
How do Chinese incentives differ from those of the West when it invests?
Do the risks of accepting BRI investment outweigh the benefits?
How does the scope and scale of Chinese investment through the BRI compare to that of other actors in emerging economies, such as India?
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