China A summit marking the 10th anniversary of the Belt and Road Initiative – an ambitious but controversial initiative to boost connectivity and trade around the world with Chinese money and expertise in infrastructure development – began on Tuesday.
World leaders, including Russian President Vladimir Putin are Assembly in Beijing This high-level event, which is being held in light of the escalating war between Israel and Hamas.
Since its launch by Chinese leader Xi Jinping in 2013, the Belt and Road Initiative (BRI) has pumped hundreds of billions of dollars to power the construction of bridges, ports, highways, power plants and telecommunications projects across Asia, Latin America, Africa and Africa. Parts of Europe.
The Belt and Road Initiative, hailed by Xi Jinping as the “project of the century,” has emerged as a stark symbol of China’s rise as a global power. But it is also viewed with increasing skepticism, especially in Western capitals where governments are wary of Beijing’s global ambitions.
This huge project has been subject to criticism. Beijing has been accused of burdening developing countries with crippling debt, while its sprawling projects have often faced concerns – and even protests – over their environmental costs, labor abuses and corruption scandals.
A decade later, Xi Jinping’s global building spree is at a crossroads. Chinese investments in Belt and Road Initiative projects have increased I was afraid With the slowdown in the world’s second largest economy. Recipient countries are struggling more than ever to repay their debts amid global economic headwinds caused by the COVID-19 pandemic and the war in Ukraine.
Meanwhile, the United States, which sees the Belt and Road Initiative as a tool used by Beijing to expand its global influence at the expense of American power, has proposed Private investment programme To promote global infrastructure development.
In the Chinese capital, security measures were tightened, with roads closed and a heavy police presence as leaders and delegations arrived from all over the world.
Here’s what you need to know about Xi’s distinctive foreign policy strategy.
Lon Jadina/AFP/Getty Images
The opening ceremony of Cambodia’s Murudok Teku National Stadium, funded by China’s Belt and Road Initiative, in Phnom Penh on December 18, 2021.
Originally envisioned as a land “belt” and maritime “road” linking China to Europe and Africa, the BRI has funded infrastructure and energy projects across the developing world.
Funded by Chinese development banks as well as state-run commercial lenders, Chinese construction companies have paved highways from Papua New Guinea to Kenya, built ports from Sri Lanka to West Africa, and provided energy and communications infrastructure from Latin America to Southeast Asia.
Beijing says more than 150 countries have signed cooperation agreements under the auspices of the Belt and Road Initiative, with pledges for more than 3,000 projects and “mobilizing up to $1 trillion in investments.”
But tracking BRI financing is extremely difficult because Beijing does not share this data openly and a wide range of financial entities play roles.
According to a study by Boston University’s Center for Global Development Policy, China’s two major development banks provided at least $331 billion to government borrowers in developing countries from 2013 to 2021.
In the first five years of the initiative, China spent on average more than twice as much funding for overseas development projects annually than any other major economy — including the United States, according to data from Aid Data, a research laboratory affiliated with William & Mary in the United States. .
Chinese officials have praised the initiative because it “goes beyond the old mentality of geopolitical games” and “creates a new model for international cooperation.”
What are the risks and criticisms?
While the Belt and Road Initiative has provided critical funding to poor countries – by comparison to the US Marshall Plan for rebuilding Europe after World War II – critics say its projects have been expensive.
Some have been accused of lax environmental and labor standards, while others have repeatedly faltered due to lack of funding or political opposition.
Fossil fuel power plants built by China emit about 245 million tons of carbon dioxide annually, according to the Center for Global Development Policy, which also found that Chinese development finance projects carry much higher risks to biodiversity and indigenous lands than projects financed by the world. . Bank.
But the bigger concern is risky lending, with critics accusing China of burdening low- and middle-income governments with too high levels of debt relative to their gross domestic product.
Accusations that the Belt and Road Initiative is a large-scale “debt trap” designed to control domestic infrastructure, although largely rejected by economists, have tarnished the initiative’s reputation – especially after Sri Lanka ceded control of the port of Hambantota to China after it failed. in paying its obligations. religion.
More recently, China’s external lending portfolio has shifted to supporting borrower countries in distress, researchers say, amid a changing financial climate and challenges faced by countries repaying huge loans to Beijing and other lenders.
When the Belt and Road Initiative was first proposed, it was designed in part as a way to channel China’s excess capacity abroad and open new markets for Chinese goods.
But as China’s economy slows, the ambitious program appears to be losing steam – a slowdown that began even before the Covid pandemic.
External financing from the two China Development Banks to government borrowers has fallen dramatically from a 2016 peak of $87 billion to $3.7 billion in 2021 — although this does not include money from other lenders such as commercial banks or other entities, according to the Center Global development. Data.
China will navigate the second decade of the Belt and Road Initiative amid stark economic challenges at home. The expected post-Covid economic recovery has not materialized, and local governments are struggling with mounting debts linked to the crisis Property crisis.
It remains to be seen to what extent Beijing’s domestic economic challenges will affect external lending in the long term, but there are signs that strategies are now shifting.
Analysts have noted a move away from a focus on massive – but often wasteful – multi-billion-dollar infrastructure projects, to smaller projects with better returns, such as those involving renewable energy and digital technology.
China may also look to focus more on environmental issues, and improve social protection and due diligence – especially as Beijing and its banks learn lessons from the project’s first decade, analysts say.
In 2021, Xi called for prioritizing “small and beautiful” projects, which Chinese officials believe will attract local residents. Later that year, Xi pledged that China would not build any new coal-fired power projects abroad.
The Belt and Road Initiative has also stimulated other countries to increase their efforts towards supporting infrastructure projects in the developing world.
In June 2022, leaders of the Group of Seven advanced economies He promised to unleash $600 billion In investing by 2027 to “deliver game-changing projects to bridge the infrastructure gap” between countries.
Last month, the United States, Saudi Arabia, the United Arab Emirates, France, Germany, Italy and the European Union announced their own plan to connect Europe, the Middle East and Asia by rail.
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