Is This the End of Belt and Road, or Just the Beginning?

There is a puzzling propensity in some quarters in the West to dismiss everything China is doing as weighed down by inefficiencies and internal contradictions and hence doomed to fail. Much recent commentary on China’s Belt and Road Initiative (BRI) falls into this category. Predictors of BRI’s death usually seize on indications of an international pushback that has evolved from skepticism to outright criticism of China’s predatory practices and “new version of colonialism.” Indeed, both the U.S. and the EU have started to denounce BRI’s geostrategic aims and lack of compliance with good governance standards. An increasing number of recipient countries have expressed second thoughts about the terms of their “Belt and Road” deals and indicated a desire to re-negotiate them, or even to cancel some of them because of the financial burden they would impose. But mounting resistance seems to have strengthened, rather than weakened, the Chinese Communist Party (C.C.P.) leadership’s resolve. Instead of retreating quietly, the regime has decided to plough ahead. In an August 2018 symposium dedicated to BRI, China’s Chairman Xi Jinping gave instructions for tactical adjustments designed to reinforce local popular support for the initiative, boost cooperation with recipient countries, strengthen the C.C.P.’s oversight, and regulate investment activities to forestall risks. The recent inclusion of Italy into the BRI club has given Beijing reason to cheer.

In six years, BRI has become so pervasive and ubiquitous that it is now difficult to distinguish it from China’s foreign policy, or for that matter, from China’s rise itself. The Chinese leadership does not talk about innovation in information and telecommunication technologies, but about the creation of a “Digital Silk Road”; it does not talk about environmental policy but about building a “Green Belt and Road”; it does not openly express its wish to alter global governance’s norms and values, but calls to uphold the “Silk Road spirit”; it doesn’t spell out its ambition to become a global hegemon, but beckons the creation of a “community of shared future for humankind.” BRI is not just about infrastructure building or financing; it has become Beijing’s main instrument for achieving its unimpeded rise. Speculating about BRI’s death is therefore equivalent to raising doubts about the ability of C.C.P. leaders to achieve the most important goal that they have set out for their country. They might fail. But they have not done so yet, and they are certainly doing everything in their power to succeed. The rest of the world should get serious about the implications of BRI’s continuing expansion and possible success, rather than standing back and waiting for it to die a quiet death.

China’s Belt and Road Initiative (BRI) has recently met with increasing domestic and external challenges. Even so, several reasons could be cited as to why even a slow demise of the BRI is unlikely. Here, I will focus on one: that the initiative is a strategic, long-term global influence operation.

Beijing has traditionally influenced politically and economically weaker nations by inducing ruling elites to trade selfish short-term gains for their nations’ long-term interests. The BRI is a platform that systematizes this strategy. While the initiative may be costly, it could yield significant long-term dividends.

The types of influence created by the BRI are broadly comparable with historic forms of Chinese overlordship. The Qing emperors appointed Amban (“high officials”) to govern remote border regions where direct rule was difficult to achieve or maintain. The Amban system had broad parallels to European colonial protectorates such as Native States in British India. Also, Chinese empires employed a native chieftain system under which local elites, often ethnic minorities, were loosely integrated into the imperial structure through the bestowal of court titles. Both systems typically granted considerable local autonomy.

Qing imperial tributary networks broadly encompassed regions like eastern Uzbekistan, Mongolia, Nepal, Myanmar, and Laos—all key regional corridors within today’s BRI.

Contemporary Chinese “overlordship” methods differ. In today’s world, financial and technological hegemony are equivalent to military dominance in former times. BRI nations are not threatened with military might. Rather, they become dependent on Chinese loans and investments in exchange for economic and political favors. Just as Qing suzerainty meant that a region could enjoy the empire’s protection, BRI nations may find that China will aid them. Moreover, as in the Qing, where ruling local elites benefited financially, governing officials in BRI nations have frequently secured significant personal gains from such deals. In return, Chinese imports might flood their markets, their core infrastructure might depend on Chinese expertise, and China will expect their political loyalty.

Already, some border nations put their relationship to China over the welfare of their own citizens. Kazakhstan, Kyrgyzstan, and Pakistan have citizens, citizens’ spouses, or members of their ethnic groups in Xinjiang’s internment camps, but chose to remain silent, feign ignorance, or suppress related advocacy. Despite their independence, these nations are being used as proxies for Beijing’s domestic and foreign ambitions.

Before thinking that the BRI might be in demise, we should remember that throughout the history of the Amban and chieftain systems the empire’s ability to maintain control over its border regions waxed and waned. However, in the long run it usually recovered at least some control. Moreover, the primary aim of such overlordship was not economic gain but secure borders and expanding imperial influence.

Similarly, the BRI will face varying challenges. However, China adapts projects and cuts costs to maintain channels of control. Financial success is not the main objective. As long as China seeks to become a glorious “great modern socialist nation” by 2049, the BRI will continue to be a strategic global influence operation.

This week, China will hold its second major international conference dedicated to the Belt and Road Initiative (BRI). As with the first Belt and Road Forum held in May 2017, Beijing has pulled out all the stops to lure dozens of world leaders to offer their blessings of legitimacy to the BRI. However, much has changed: China was riding a wave of positive hype in 2017, but since then the international narrative around the BRI has taken a decidedly negative turn.

At the time of the last forum, India stood alone in publicly rebuking the BRI. A few months later, however, the Trump administration moved from a position of ambivalence to one of hostility. In October 2017, then-Defense Secretary Jim Mattis warned: “No one nation should put itself into a position of dictating ‘one belt, one road.’” Harsher, more direct criticism from U.S. officials, members of Congress, and military leaders followed soon after.

Leaders from Australia and several European countries soon began voicing their own concerns—about the lack of transparency, accountability, and financial sustainability, while highlighting the risks of corruption and debt traps. Rumblings of discontent then spread to the developing world. Sri Lanka, the Maldives, Malaysia, Burma, Indonesia, Pakistan, and several African countries began scrutinizing, amending, or canceling BRI deals. Meanwhile, the U.S., India, and some European countries had official endorsements of the BRI scrubbed from UN resolutions.

Still, for two key reasons, BRI is here to stay. First, the BRI, enshrined in the Chinese constitution in 2017, carries the personal signature of President Xi Jinping and is intimately tied to his legacy, making BRI too Xi to fail. Second, as Italy recently demonstrated, the allure of billions of dollars in investments is still too tempting for many countries to disavow the BRI. This will remain true so long as China offers competitive packages of capital, expertise, and willingness to finance large infrastructure projects in risky and distressed markets.

To be sure, the backlash to the BRI has spurred greater awareness of the pitfalls it presents, as well as a greater appetite for devoting more attention and resources toward overseas connectivity initiatives in the West. In the past two years, the “Quad” (Australia, India, Japan, and the U.S.) and the EU have signed a web of new cooperative infrastructure arrangements and unveiled new government programs. The U.S., in particular, is revamping its entire overseas development apparatus with the establishment of a new International Development Finance Corporation.

Yet, Indo-Pacific democracies are often unable to match China dollar-for-dollar or to assume the type of risk that Chinese state-owned enterprises can. At times, the latter will willingly endure substantial financial losses in order to advance their government’s broader strategic objectives. Nevertheless, in just the past two years, the BRI “awakening” has shown the dark underbelly of the Chinese initiative, spurred greater action from the Indo-Pacific democracies, given the developing world greater leverage and impetus to scrutinize BRI deals, and put pressure on Beijing to increase standards, transparency, and accountability. That’s a good start.

Are reports of the Belt and Road Initiative’s (BRI’s) death premature? Given the lack of a consensus on what the BRI actually was in the first place, we’re unlikely to reach agreement on whether its demise is imminent. Instead, perhaps the best way of thinking about this question is to move beyond the terminology of “belt and road” to the ideas which underpin it.

While Xi Jinping announced the initiative in late 2013 as something new, the drivers for the BRI were not new. These included the growth in China’s outward foreign investment, rising levels of trade and investment with its neighbors and other “Silk Road” economies, growing capability and willingness by Chinese corporations and banks to engage in infrastructure development overseas, and a sense in Beijing that a more positive “win-win” approach to the neighborhood was important in developing China’s foreign policy.

It is partly because these are deeply rooted trends that the BRI has legs as an initiative. In many ways, the BRI is more of a “nudge”—an amplification of existing trends—than a substantive change of direction.

As the mixed international responses show, however, not everyone has perceived the BRI this way. Despite the strong arguments that the ideas it is based on are “status quo,” many have described the initiative as a revisionist effort by Beijing, while others have engaged with it as a commercial and strategic opportunity.

This has shown that formulating and implementing the BRI is not entirely in Chinese hands. Its regional and global scope means that it is relational and dynamic, depending for its ongoing shape on the way others respond to it.

The structural trends and growth in China’s economic engagement with the rest of the world, however, are likely to continue. So the sorts of activities envisaged under the BRI—policy engagement, infrastructure development, growing trade, financial connections, and intensified people-to-people ties—are likely to continue, whether or not the BRI label is attached to them.

Herein lies the point for other governments: Like it or not, China as a major global actor is here to stay. Recent developments show that even though Washington wants to push back, it is finding it difficult to bring even traditional allies alongside. Italy’s government is the latest of several in Europe to engage positively with the BRI. For those outside China, the BRI remains a good framework through which to shape changes in the global economy as China’s influence continues to grow.

It is far too early to declare the “death” of the Belt and Road Initiative (BRI). Such assessments are premature, and fail to recognize the importance of the BRI to the leadership in Beijing. It is a flagship project of the Xi Jinping era, illustrative of Beijing’s shift from “hide and bide” to “striving for achievements.”

Recently, the initiative has been increasingly scrutinized for its lack of transparency, rampant corruption, and failure to promote economically sustainable projects and good governance. However, despite growing criticism of the BRI, many developing countries welcome it: they have a genuine need for infrastructure development but a dearth of funding.

I am doubtful we will see the BRI abandoned any time soon. What we can hope for is a recalibration of the BRI that seeks to sincerely address international criticism, match rhetoric with actions, and set more achievable goals. We should also hope China opens up BRI projects to non-Chinese companies, addresses concerns about debt and economic sustainability, and implements international development best practices.

If China were to take such steps, it would be better not only for the countries along the Belt and Road, but also for China. In addition to international critiques, Beijing has also received pushback from its own citizens for spending so much abroad at a time when many areas within China still need development. Following the September 2018 Forum on China-Africa Cooperation, flickers of domestic discontent flared up over China’s pledge to provide U.S.$60 billion in concessionary loans, grants, and investments. Some Chinese observers question whether Beijing is developing other countries at the expense of its own citizens.

Although the BRI has encountered significant setbacks and criticisms, too much political, financial, and intellectual capital has been sunk into the project for Chinese leaders to abandon it. As long as Xi helms the Chinese political system, the BRI is likely to occupy a central place in China’s foreign policy. Ultimately, however, the success or failure of the BRI will depend on what China does to learn and adapt from the initiative’s shortcomings. If Beijing fails to make the initiative more transparent, more equitable, and more sustainable, I suspect the United States and like-minded countries will continue to harbor negative views. If, however, China demonstrates sincere efforts to learn and adapt, it could generate positive impacts and move China toward a more responsible model of development.

The Belt and Road (BRI) has taken a beating, but its central feature of big infrastructure projects will remain recognizable for years to come.

Three forces could change the BRI’s path, but each likely promises more continuity than change. The first and most important is China itself, where powerful interests still want a piece of the BRI action. Of course, as Minxin Pei argues, China is no longer quite as flush with foreign exchange reserves and faces rising costs and shrinking revenues at home. There are already indications of a pullback on BRI-related projects, and it would not be surprising if project announcements are slimmed down in the coming years.

But the BRI’s biggest beneficiaries are not going anywhere. In 2018, seven out of the world’s 10 largest construction contractors were Chinese. Unless these massive state-owned enterprises are ready to pack up and go home, they will continue pursuing new projects that Beijing can place under the BRI banner. Big projects take years to complete and decades to repay. If the BRI was magically paused today, and no more projects were announced, its current footprint would still take years to unfold.

The second is recipient countries, especially developing economies, whose infrastructure needs will remain insatiable. Developing Asia alone needs U.S.$26 trillion of infrastructure investment by 2030. With few alternatives for investment, even countries that have been burned by the BRI still cozy up to Beijing. For example, despite becoming the poster child for accusations of “debt trap diplomacy,” Sri Lanka recently signed a U.S.$1 billion loan with China for a new highway. Malaysia has renegotiated an expensive railway rather than killing it.

Third, China’s competitors are waking up but face coordination challenges. The United States sharpened its competitive toolkit with the BUILD Act but can do more. The European Union announced its “EU-China Connectivity Platform,” and has appointed an ambassador for connectivity, both positive steps. Australia, India, and Japan have been active as well. But until these comparatively modest efforts are brought together and made into something greater than the sum of their parts, particularly for mobilizing private investment, China’s BRI will have plenty of room to operate.

Rather than dying quietly, the BRI is likely to slog along with minor modifications. After all, it is not only Xi Jinping’s signature foreign policy vision, but also enshrined in the Chinese Communist Party constitution. Facing criticism and resource constraints, China will try to bring more partners into its projects to share reputational risks and funding responsibilities.

Nor is China’s interest in large projects likely to end with Xi. The “Go Out” policy preceded the BRI, and someone could fashion yet another tagline to make Chinese power, projected through infrastructure and investment, appear more palatable. Or China could drop the charade and continue building without big slogans. But like the great powers that have come before it, as long as China’s rise continues, it will crave the access and influence that large projects provide.

Xi Jinping may have dialed down the triumphalist tone in his speech at this year’s Belt and Road Forum in Beijing, but he left the audience in no doubt that China will forge ahead with the Belt and Road Initiative (BRI). Chinese diplomats pushed relentlessly for months to secure more and higher-level dignitaries than attended the 2017 Forum. Having enshrined it in the People’s Republic of China Constitution, the Chinese Communist Party will not let BRI die.

What it can do, however, is tighten guidelines for the Chinese development banks that finance the projects and for the Chinese construction companies that build them. Chinese officials acknowledge, at least privately, that better standards for BRI would reduce the strain on public finances, lower the risk of political blowback or of the failure of individual projects, and temper reputational damage to Xi Jinping. Moreover, only standards and practices on par with international development lenders like the World Bank, Asian Development Bank, or China’s own Asian Infrastructure Investment Bank would enable China to implement Xi Jinping’s call to “internationalize” BRI.

No serious financial institution or private lender outside China will invest in a project that has not been de-risked or is not shown to be financially viable. And yet, few BRI projects are grounded in comprehensive pre-project viability analyses. Most lack credible and publicly available Environmental and Social Impact Assessment reports. Precious few BRI projects have proven to be “bankable.” And financing aside, participation in BRI projects by international firms will always be limited without open tenders, standardized contracts, transparent procurement rules, and anti-bribery safeguards. There is no list, let alone database, of authorized BRI projects. In fact, no Chinese official seems able to answer the question: “what is a BRI project?” let alone point to mandated standards or requirements.

Presentations by Chinese officials at this year’s Forum were heavy on win-win slogans about BRI’s virtues, but there were also some acknowledgements of mistakes and the need for improvements. This points to the tension between doctrine and pragmatism. Chinese initiatives often begin with a vague political slogan that unleashes a period of experimentation. Trial and error can gradually produce evidence of what works (and should be embraced) as well as what doesn’t (and should therefore be disavowed). But political rigidity and ideological conformity can short-circuit that process and substitute propaganda and denial for problem-solving.

Will China opt to level-up BRI projects to international standards of financial and environmental sustainability, labor practices, and transparency? Or will it opt to cover up BRI projects’ myriad shortcomings with a blizzard of slogans and rhetoric instead? The international community may play a part in determining this. Fatuously glorifying BRI, as some Forum participants did, is not the answer. Neither is vilifying and denouncing BRI as the U.S. government is doing. The world would be wise to nudge China to make the right choice by objectively and persistently pushing for higher standards in selecting, financing, and building overseas infrastructure.