The Belt and Road Initiative: Unveiling China's Decade of Global Influence and Economic Expansion

China commenced a summit on Tuesday to celebrate the 10th anniversary of its Belt and Road Initiative. This notable endeavor aims to enhance global connectivity and trade through Chinese funding and expertise in infrastructure development. Prominent world leaders, such as Vladimir Putin of Russia, are currently convening in Beijing for this high-profile event, which coincides with the escalating conflict between Israel and Hamas.

Since its inception in 2013 under Chinese leader Xi Jinping, the Belt and Road Initiative (BRI) has extensively invested billions of dollars in the infrastructure development of bridges, ports, highways, power plants, and telecoms projects across Asia, Latin America, Africa, and certain parts of Europe.

Regarded by Xi as a historic endeavor, the BRI has become a prominent emblem of China's ascension as a worldwide force. However, it has also attracted increasing doubt, particularly in Western capitals where governments remain cautious of China's global aspirations.

The massive project has faced constant criticism, with Beijing being accused of burdening developing countries with insurmountable debt. Additionally, concerns over environmental impact, labor violations, and corruption scandals have plagued the sprawling endeavors.

Now, ten years later, Xi's ambitious global construction initiative is at a critical juncture. Chinese investment in projects related to the Belt and Road Initiative (BRI) has declined as the world's second-largest economy experiences a slowdown. Further complicating matters, recipient countries are facing increased difficulties in repaying their debts due to the global economic repercussions of the Covid-19 pandemic and the ongoing conflict in Ukraine.

As for the United States, it perceives the BRI as a means for Beijing to expand its worldwide influence to the detriment of American power. Consequently, the United States has put forward its own investment initiative aimed at enhancing global infrastructure development.

In Beijing, security measures have been intensified, causing road closures and a significant increase in police presence, as leaders and delegations from various countries have started arriving.

Heres what you need to know about Xis signature foreign policy strategy.

The opening ceremony of Cambodia's Morodok Techo National Stadium, funded by China's Belt and Road Initiative, in Phnom Penh on December 18, 2021.

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What has it achieved?

Initially conceived as a terrestrial "belt" and an oceanic "road" linking China to Europe and Africa, the BRI has provided financial backing for infrastructure and energy initiatives throughout the emerging nations.

Chinese construction firms, backed by China's development banks and state-run commercial lenders, have successfully built highways spanning from Papua New Guinea to Kenya, established ports across Sri Lanka to West Africa, and created power and telecoms infrastructure across Latin America to Southeast Asia.

According to Beijing, over 150 nations have entered into cooperation agreements under the BRI, committing to more than 3,000 projects and mobilizing up to one trillion dollars in investment.

However, accurately tracking the financing of the Belt and Road Initiative (BRI) proves challenging due to China's lack of transparency in sharing this information and the involvement of various financial entities. Boston University's Global Development Policy Center conducted a study revealing that China's two primary development banks have provided at least $331 billion to government borrowers in developing nations between 2013 and 2021.

China, during the initial five-year period of the initiative, allocated, on average, more than double the amount of funding per year for overseas development projects compared to other major economies, including the US, as stated by AidData, a research lab based in William & Mary, USA.

Chinese authorities have praised the initiative for surpassing the outdated mentality of geopolitical maneuvers and establishing a fresh model of international collaboration.

What are the risks and criticism?

Despite the critical financial support provided by the BRI to impoverished nations - often likened to the post-World War II rebuilding efforts of the Marshall Plan in Europe, dissenters argue that the initiative's undertakings have incurred significant consequences.

Some have been accused of lax environmental and labor standards, others have being repeatedly stalled by funding shortfalls or political pushback.

Zimbabwe's Hwange Thermal Power Station expanded electricity generation capacity with a Chinese-funded expansion.

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China's considerable investment in Africa's infrastructure has raised concerns about the future trajectory of such support. Research conducted by the Global Development Policy Center revealed that fossil-fuel power plants constructed by China emit approximately 245 million tons of carbon dioxide annually. Furthermore, their development finance initiatives are associated with elevated risks to biodiversity and Indigenous lands, surpassing those aligned with World Bank-funded projects.

Critics argue that China's risky lending practices have burdened low- and middle-income governments with disproportionately high levels of debt in relation to their GDPs. While economists largely dismiss the notion that Belt and Road is a deliberate "debt trap" aimed at gaining control over local infrastructure, the reputation of the initiative has been tarnished, particularly following Sri Lanka's inability to repay its debt resulting in the transfer of control over the port of Hambantota to China.

More recently, according to researchers, China's lending portfolio abroad has undergone a shift to assist countries in distress with their borrowing. This shift has occurred in response to a changing financial climate and the challenges faced by countries when repaying substantial loans to Beijing and other lenders.

What comes next?

The BRI was initially proposed as a means to redirect China's surplus capabilities abroad and create fresh opportunities for Chinese merchandise. However, with the deceleration of the Chinese economy, the ambitious initiative seems to be losing momentum, a trend that commenced prior to the arrival of the Covid pandemic.

Government borrowers in China have experienced a significant decline in overseas financing from the country's two development banks. In 2016, the funding reached a peak of $87 billion, but has since dropped to $3.7 billion in 2021. However, it is important to note that this figure does not include funds from other lenders, such as commercial banks or other entities, as per data from the Global Development Policy Center.

China is currently facing economic challenges domestically as it enters the second decade of the Belt and Road initiative. Despite expectations of a post-Covid economic rebound, the country has yet to experience this, and local governments are struggling with escalating debt related to a property crisis.

In 2016, workers in Kenya embarked on the task of laying track for the Mombasa-Nairobi Standard Gauge Railway. However, this ambitious project, which was funded by China, is still unfinished and serves as an illustration of the shortcomings of China's Belt and Road Initiative.

Riccardo Gangale/Bloomberg/Getty Images/FILE

China's Belt and Road is facing challenges. But can the US counter it?

The long-term impact of Beijing's domestic economic challenges on its overseas lending is yet to be determined, but there are indications of changing strategies. Analysts have observed a shift towards smaller projects that offer better returns, such as those related to renewable energy and digital technology, instead of grandiose but often inefficient multi-billion infrastructure projects.

China may consider increasing its focus on environmental concerns, strengthening social safeguards, and ensuring careful scrutiny, particularly as Beijing and its financial institutions gain insights from the first ten years of these initiatives, according to analysts.

In 2021, Xi advocated for prioritizing "small and beautiful" initiatives, which Chinese authorities believe will resonate with local communities. Subsequently, Xi made a commitment that China will refrain from constructing new coal-fired power projects overseas.

The BRI has also prompted other nations to intensify their own endeavors in supporting infrastructure initiatives in the developing world.

During June 2022, leaders of the Group of Seven advanced economies committed to mobilizing $600 billion in investments by 2027 in order to "implement transformative projects aimed at bridging the infrastructure divide" among nations.

Last month, the US, Saudi Arabia, the United Arab Emirates, France, Germany, Italy and the European Union announced their own plan to link Europe, the Middle East and Asia by rail.