An Introduction to the Belt and Road Initiative
What is the Belt and Road Initiative?
The Belt and Road Initiative is a currently US$4 trillion investment spend to develop supply chains through road, rail, and ports and supporting infrastructure and operating systems on a global basis.
What is the purpose of the Belt And Road Initiative?
To secure trade and supply chains for China and to create prosperity via trade in the less well-off and less secure nations.
What is the Belt and Road Initiative policy?
Peace via trade and to ensure supply chain connectivity.
What does a Belt and Road initiative Map look like?
It comprises several maritime and overland trade routes, mostly encompassing Asia and Eurasia but also including the Middle East and Africa with some routes to Latin America. In linking Eurasia and Africa, it appears in a simplistic form like this:
The Belt and Road Initiative continues to develop and now has hundreds of routes encompassing thousands of projects around the world. Detailed analysis is too complicated to be shown in one map but can be found in regionally specific breakdowns.
How did the Belt and Road Initiative get its name?
It was originally called the One Belt One Road (OBOR) however it became apparent it would be more than this, so the Belt and Road Initiative name was introduced in 2016.
The Belt and Road Initiative Schedule and Timing : FAQ
When was the Belt And Road Initiative announced?
The Belt and Road Initiative was first announced by Chinese President Xi Jinping as Chinese state policy at an infrastructure investment conference in Kazakhstan in September 2013.
When did the Belt And Road Initiative start?
China had been going through a significant internal infrastructure build since the early 1990's, so arguably then. It was announced that China would provide overseas finance and outbound investment as state policy in 2013.
When will the Belt And Road Initiative be completed?
The main portion of the required infrastructure build is expected to continue until 2035.
What is the Belt And Road Initiative current status?
The Belt and Road Initiative currently involves 147 counties with China funded infrastructure projects being undertaken globally except for the European Union and United States, which have their own development schemes known as B3W "Build Back Better" and "Globally Connected Europe" although they seem to be targeted at their own infrastructure needs and not be investing internationally.
The Belt and Road Initiative explained
What is the Belt And Road Initiative policy?
To put contemporary infrastructure and supporting technologies in place on a global basis. China has said that any country is welcome to participate.
What is the Belt And Road Initiative scheme?
Trade and Security. China wants to secure supply chains into the next century and sees that regional conflicts around the world can be better resolved with greater connectivity.
China's Belt And Road Initiative - will it reshape global trade?
Yes. New supply chains are opening that will and are reducing transport times and are less expensive that existing infrastructure. Two examples are the INSTC which is an alternative to the Suez canal, and the Northern Sea Passage across the Arctic Ocean. New supply chains are also being equipped with digital and green technologies to make them more secure and eco-friendly.
What are the Belt And Road Initiative visions and challenges of China geo-economic strategy?
The overall vision is to improve global connectivity. The challenges are political, mainly from the West who sees it as an attempt to place China rather than the West as a leading global power.
Will the Belt And Road Initiative increase the connectivity between China and Eurasia?
Yes, and this is already happening. Overland freight train supplies from China and Asia to Europe have increased annually by nearly 100% in both directions over the past three years and this trend seems likely to continue.
Facts about the Belt and Road Initiative
How many countries have joined the Belt and Road Initiative?
Currently 147 countries have joined the Belt and Road Initiative. Others, especially in Latin America may also start to join in coming years.
How many countries are involved in the Belt and Road Initiative?
All nations around the world are affected as they can use Belt and Road infrastructure. India for example is not a BRI country but is building infrastructure such as roads and rail that intersect with BRI projects.
How many projects are part of the Belt And Road Initiative?
It is estimated that China has funded about 2,970 Belt and Road projects globally with an estimated expenditure of about US$4 trillion.
How much is Belt And Road Initiative trade?
BRI trade has been increasing and is now responsible for about 30% of all China’s import-export global trade. Non-China trade between BRI countries has also increased about 27% each year over the past three years.
Progress, Success and Setbacks
Is the Belt And Road Initiative successful?
At present the BRI appears to be successful. It has faced a lot of Western criticism however appears to have been able to finance and build infrastructure in poorer nations that would otherwise not had the opportunity. This includes countries that are rebuilding after wars such as Libya and Syria, countries whose infrastructure was decaying such as Pakistan and countries in Africa that have not previously been able to afford such development or did not have the skilled labor to build it.
What are the Belt And Road Initiative Advantages and Disadvantages?
The advantages are China’s ability to have provided loans to poorer countries at highly attractive rates, a typical BRI loan is repayable over several years at rates of just 2%. Disadvantages have been when planned income from these infrastructure builds to repay the loan has been delayed, such as driver payments for using toll roads or train tickets. Covid-19 has seen the use of some projects delay repayments to China and these debts have had to be renegotiated. However, in total only 1 in 140 dollars that China has lent overseas currently has a loan risk, meaning China has been able to successfully refinance debt when cashflow repayment problems have arisen.
Why doesn't the United States and EU like the Belt And Road Initiative?
They see it as a ploy to gain greater global influence at their expense.
Why is the Belt and Road Initiative a good idea?
It provides 21st century infrastructure needs at a time global infrastructure has required massive investment.
What are the Belt And Road Initiative problems?
Political problems impact the BRI from time to time as changes in Government may cancel previous infrastructure expenditures.
How does the Belt And Road Initiative benefit China?
It secures global supply chains to China, which has a huge consumer population that needs to be maintained in all aspects - fuel, energy, food, water and other supplies and consumable items such as electronics and even the latest fashions. It also helps Chinese exporters sell Chinese products onto other markets.
How does the Belt And Road Initiative benefit developing countries?
The BRI assists developing countries by providing cheap finance for new infrastructure. This creates wealth development opportunities and indirectly helps lift people out of poverty. It also lessens the prospects for regional conflicts.
Belt And Road Initiative geopolitics
The West is concerned that China is 'buying' other nations political friendship, and this will diminish their influence. As a result, the West has been putting in security mechanisms such as the ''Quad'', the "Five Eyes" network to keep an eye on China's development activities. Western media has also been engaged to spread inaccurate and misleading stories about the BRI.
Belt and Road Militarization
There have been concerns that China has been developing as part of the Maritime Belt and Road, ports to cater for Chinese warships. This is true, although the Chinese naval faciities are actually based near dangerous waters such as the southern end of the Suez Canal and the Straits of Hormuz and near the Malacca Straits, both of which are prone to shipping attacks by militant pirates. The Chnese Navy presence is aimed at providing security against attacks on commercial shipping rather than any military threat.
Belt And Road Initiative and globalization
The BRI is being developed as a further push towards globalization at a time when the West has been seeking to politically disengage. The United States has imposed numerous trade sanctions on multiple countries that are not aligned with US foreign policy or interests, with the European Union and UK tending to follow the US position. That has led to a disruption and questioning in the West about the merits of a truly globalized world and has resulted in some push back against it. The West has more recently expressed desires only to develop trade relations with ‘like-minded’ countries with ‘similar values’ which can be taken as a reference to other democratic nations and countries willing to follow US foreign policy.
China on the other hand is pushing for further globalization and has not made political distinctions between countries in terms of both BRI funding and trade. Consequently, the BRI has become a controversial scheme in Western political views as it does not follow Western ideological thinking. It is apolitical to an extent that the Western nations are not. There are additional historic problems with the Wests engagement with parts of Asia, the Middle East, Latin America and Africa. Many Western nations including the United States, United Kingdom, and several EU nations, including the Netherlands, Belgium, France, Germany, Italy, Spain, and Portugal have colonial histories that were exploitative in numerous countries that are now part of the BRI. China doesn’t have this historical baggage and is better able to engage - much to the Wests annoyance.
Finance, Funding and Economics
What is the Belt and Road Initiative economic impact?
Global trade has been able to continue and even grow during the Covid pandemic, it is in uncertain how effective this would have been without it when borders were closed, and airports shut down. It is hard to quantify the exact impact on global trade, but it has and will continue to be significant.
How is the Belt and Road Initiative funded?
China funds projects in two main ways, either direct G2G loans, or through loans provided by its State-Owned Enterprises conducted specific projects.
China's Belt and Road Initiative future development
China is now introducing soft BRI infrastructure in the form of introducing regional Free Trade Agreements. These reduce tariff barriers and open regional markets to improved trade. Examples are China’s diplomatic lead in helping African countries successfully negotiate the African Continental Free Trade Agreement (AfCFTA) and its participation in other agreements such as the Regional Comprehensive Economic Partnership (RCEP) agreement which covers East Asia. Others are still in process such as China’s tariff negotiations with the Eurasian Economic Union which includes Russia and will create a free trade area in the land mass between China and the European Union.
The Belt and Road Initiative debt trap
There has been Western criticism that China’s financing to poorer countries can put China in a position of political power over sovereign governments because of the large amount of debt owed to Beijing. After extensive research into this issue by Western institutions such as Chatham House and John Hopkins University, the concept of China leading countries into debt traps has been described as ‘myth’.
What is the Belt and Road Initiative environmental impact?
The BRI has faced previous criticism it has led to China exporting polluting coal plants. In 2020 China decided not to place any further investment into overseas coal powered infrastructure and has implemented a ‘Green’ Belt and Road. All BRI projects are now vetted by an international panel of experts to ensure they comply with China’s commitments to the various clean energy and anti-polluting global agreements such as the Paris accord that China has signed up too
How does the Belt and Road Initiative affect climate change?
The BRI is now bringing in new technologies such as solar, electric and hydrogen powered motors as a matter of policy. BRI projects must now be green-compliant.
The Belt And Road Initiative and human rights
The Belt and Road Initiative is an overseas infrastructure project. China does provide labor to these when local skills are not available, mostly on a BOT basis. Chinese companies building BRI projects overseas must comply with local labor and human rights laws.
Belt and Road Legal Mechanisms
What laws govern the Belt And Road Initiative?
BRI operational projects are subject to the laws of the country in which they take place.
Is there Belt and Road Arbitration and Dispute Resolution?
China has established three BRI courts in mainland China although there has been criticism these may not be impartial. To deal with this China is positioning Hong Kong, which retains a British legal system, to arbitrate disputes in cross-border BRI contracts.