Beijing CNN –
China opened a summit on Tuesday marking the 10th anniversary of its Belt and Road Initiative – an ambitious but controversial effort to boost connectivity and trade around the world using Chinese money and expertise in infrastructure development.
Leaders from around the world, including Russia’s Vladimir Putin, are gathering in Beijing for the high-profile event, which comes in the shadow of an escalating war between Israel and Hamas.
Since its launch by Chinese leader Xi Jinping in 2013, the Belt and Road Initiative (BRI) has poured hundreds of billions of dollars into building bridges, ports, highways, power plants and telecommunications projects across Asia, Latin America, Africa and other parts of Europe .
Hailed by Xi as the “project of the century,” the BRI has become a blatant symbol of China’s rise as a global power. But it is also being viewed with growing skepticism, particularly in Western capitals where governments are wary of Beijing’s global ambitions.
The major project is met with criticism. Beijing has been accused of burdening developing countries with crippling debt, while its sprawling projects often face concerns – and even protests – over their environmental costs, labor abuses and corruption scandals.
A decade later, Xi’s global construction boom is at a crossroads. Chinese investment in BRI projects has fallen as the world’s second-largest economy slows. Recipient countries are struggling more than ever to repay their debts amid global economic headwinds from the Covid-19 pandemic and the war in Ukraine.
Meanwhile, the United States, which sees the BRI as a tool for Beijing to expand its global influence at the expense of American power, has proposed its own investment program to boost global infrastructure development.
Security measures were tightened in the Chinese capital, with road closures and a heavy police presence, as leaders and delegations from around the world arrived.
Here’s what you need to know about Xi’s key foreign policy strategy.
Lon Jadina/AFP/Getty Images
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.
Originally envisioned as an “overland belt” and “sea route” connecting China to Europe and Africa, the BRI has funded infrastructure and energy projects across developing countries.
Funded by China’s development banks and state commercial lenders, Chinese construction firms have paved highways from Papua New Guinea to Kenya, built ports from Sri Lanka to West Africa, and provided power and telecommunications infrastructure from Latin America to Southeast Asia.
Beijing says more than 150 nations have signed cooperation agreements under the auspices of BRI, with commitments to more than 3,000 projects and “up to $1 trillion in investments” mobilized.
However, tracking BRI funding is notoriously difficult because Beijing does not openly share this data and a variety of financial institutions play a role.
China’s two largest development banks provided at least $331 billion to sovereign borrowers in developing countries from 2013 to 2021, according to a study by Boston University’s Global Development Policy Center.
And in the initiative’s first five years, China spent on average more than twice as much per year on financing foreign development projects as any other major economy – including the United States, according to AidData, a research laboratory at William & Mary in the United States.
Chinese officials praised the initiative for “overcoming the old mindset of geopolitical games” and “creating a new paradigm of international cooperation.”
What risks and criticism are there?
While the BRI has provided crucial funding to poor countries – drawing a comparison to America’s Marshall Plan to rebuild Europe after World War II – critics say its projects come with costs.
Some have been accused of lax environmental and labor standards, while others have been repeatedly bogged down by funding shortages or political opposition.
According to the Global Development Policy Center, power plants built in China that run on fossil fuels emit around 245 million tons of carbon dioxide per year. The Center also found that Chinese development finance projects pose significantly higher risks to biodiversity and indigenous lands than projects financed by the World Bank.
The biggest concern, however, is risky lending. Critics accuse China of burdening low- and middle-income governments with excessive debt relative to their GDP.
Allegations that the Belt and Road is a wide-ranging “debt trap” aimed at seizing control of local infrastructure have been widely rejected by economists, but have damaged the initiative’s reputation – particularly after Sri Lanka took control of the port of Hambantota ceded to China after it failed to repay these debts.
More recently, China’s foreign lending portfolio has shifted toward supporting distressed borrowing countries, researchers say, amid a changing financial climate and challenges for countries repaying large loans to Beijing and other lenders.
When the BRI was first proposed, it was intended in part 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 before the Covid pandemic hit.
Foreign financing from China’s two development banks to sovereign borrowers fell significantly from a peak of $87 billion in 2016 to $3.7 billion in 2021 – although this did not include funds from other lenders such as commercial banks, according to the Global Development Policy Center or other facilities includes data.
China will navigate the second decade of the Belt and Road Initiative against the backdrop of major economic challenges at home. The expected economic recovery after the Corona crisis has not materialized and local governments are struggling with rising debt in connection with the real estate crisis.
It remains to be seen how Beijing’s domestic economic challenges will affect its foreign lending in the longer term, but there are signs of a change in strategy.
Analysts have noted a shift away from the focus on grandiose – but often wasteful – multi-billion dollar infrastructure projects towards smaller projects with better returns, such as those involving renewable energy and digital technology.
China may also seek to put more emphasis on environmental issues, better 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 that Chinese officials claim would appeal to local populations. Later that year, Xi promised that China would not build new coal-fired power projects abroad.
The BRI has also spurred other countries to increase their own efforts to support infrastructure projects in developing countries.
In June 2022, leaders of the Group of Seven advanced economies pledged to unlock $600 billion in investments by 2027 to implement “game-changing projects to close 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.