By Felix K. Chang
When international delegates to the Third Belt and Road Forum gather in October 2023, they might find the focus of China’s Belt and Road Initiative (BRI) has shifted again. If that happens, it could prompt some to wonder anew what are the ultimate goals of the BRI—a program that began in 2013 as the “Silk Road Economic Belt and the 21st-Century Maritime Silk Road” and then abbreviated to the “One Belt, One Road Initiative” before its current appellation. After ten years of investment and construction, enough BRI projects have been completed that a clear picture of the initiative’s goals should have emerged. But that has yet to occur.
As originally billed, the BRI aimed to finance the logistics and transportation infrastructure development needed to better connect Asia, Europe, and everywhere in between. All the BRI’s member countries would profit. Naturally, China and Europe, which formed the BRI’s end points, were expected to benefit from greater trade flowing in either direction. The countries in between were also expected to benefit by becoming transshipment centers and, with other investment, as new value-adding links in international supply chains.
But ten years on, the BRI’s aims have steadily diverged from that original vision. Rather than focusing on the logistics and transportation infrastructure needed to resurrect the ancient Silk Road, Beijing appeared willing to apply the BRI banner to any sort of infrastructure project that it embraced and Chinese money underwrote. Ahead of the Third Belt and Road Forum, there are signs that the BRI’s aims could broaden again. Given the waning interest among developing countries for more infrastructure projects, Beijing might change the BRI’s focus to helping the developing world industrialize by financing factories and other industrial facilities. The forum’s delegates may well applaud such a change. However, the BRI’s ever-shifting aims suggest that the initiative’s ultimate goal may have become more political than economic.
Plan A: Silk Road Trade
At the BRI’s 2013 launch, Chinese General Secretary Xi Jinping waxed lyrical about a new “transcontinental Silk Road linking East and West.” The BRI’s intent seemed clear: to resurrect the ancient Silk Road in the form of new-build airports, seaports, railways, and roads. All involved would profit. China would benefit from Europe’s industrial and high-tech exports. Europe would benefit from China’s consumer exports. The in-between countries would benefit from the modern infrastructure by becoming transshipment centers and possibly developing new value-added manufacturing and services industries, much like what Singapore did in the 1980s and 1990s.
The economic logic behind the BRI scheme was easy to understand. With trade barriers lowered through more modern logistics and transportation infrastructure, countries could maximize their respective competitive advantages to reap the rewards of being part of a globalized economy. While the BRI always had a political dimension, it was not overt. At least initially, the BRI would not directly challenge the United States or the West’s liberal economic order. On the contrary, it would complement that order. It proved a persuasive pitch. Greece, Italy, and over 150 other countries joined. And although Europe’s biggest economies refrained from joining, they still eagerly sought more trade with China.
With time, however, European countries became wary. They gradually realized that China was not content with exporting consumer goods. Chinese firms were steadily moving up the value chain and displacing their European competitors in a variety of industries, from semiconductors to solar panels and wind turbines. China had even started to set technical standards for large swathes of Africa and Asia. At the same time, European governments began to wonder what China might do to them after witnessing Beijing’s economic intimidation of Australia in 2020. The net result was waning European enthusiasm for the BRI. And rather than remind Europe of the BRI’s economic benefits and non-political aims, China cut the BRI’s freight rail service through Lithuania after a dispute with it over Taiwan in 2021.
Plan B: Infrastructure for All
Perhaps fortunately for the BRI, it never strictly hewed to its Plan A. From the BRI’s start, Beijing had incentivized Chinese banks to make loans under its banner. It did not take long for them to stray from Xi’s Silk Road vision. They extended credit to all sorts of infrastructure projects, from power plants to mineral mines, and did so far from the Silk Road’s ancient (or even modern) paths, venturing to West Africa and Latin America. Many of the loans were structured to make them “win-wins” for Beijing. Chinese banks earned interest from loans whose proceeds largely flowed to Chinese construction companies, which built infrastructure that often served Chinese commercial interests. For its part, Beijing seemed more intent on claiming credit for the infrastructure than how neatly it fit with Xi’s original vision.
Certainly, according to Beijing, some of the BRI’s biggest successes have been in Africa. That might be because the infrastructure built in Africa was not primarily designed to support trade between Asia and Europe. Rather it was intended to support African trade more broadly. Still, from 2013 to 2021, the total trade value of Africa’s top thirty trading countries barely budged, according to the UN Comtrade database. While some countries saw their trade balances improve, others saw theirs significantly deteriorate, including Angola, one of the largest recipients of BRI financing.
Unfortunately for countries like Angola, infrastructure development alone does not guarantee economic success. By the time of the Second Belt and Road Forum in 2019, cases of debt-distressed countries such as Pakistan and Sri Lanka had already become well known. Even countries once keen on the BRI, like Malaysia, pulled back. Thus, Beijing used that forum to calm concerns about the initiative. But just how far BRI had strayed from its original economic vision could be seen in the forum’s long and meandering list of deliverables, which had little to do with trade routes between Asia and Europe.
Plan C: Industrialization Next?
To revive the BRI a second time at the Third Belt and Road Forum, Beijing may well expand the initiative’s remit again. Already, in August 2023, Xi announced that he had heard the concerns of developing countries, particularly those in Africa. They did not want more logistics and transportation infrastructure. Instead, they want industrialization. China could help. Xi assured: “China will better harness its resources for cooperation with Africa and initiatives of businesses to support Africa in growing its manufacturing sector and realizing industrialization and economic diversification.”
How successful will building new industrial capacity in Africa be? Time will tell. Certainly, some studies predict Africa’s population growth will drive demand for new goods. On the other hand, Africa’s GDP growth has barely exceeded its population growth over the last thirty years. That means the proportion of Africans who can consume those new goods has not significantly increased. Hence, if Chinese efforts to boost African industrialization succeeds, most of the new goods produced might not be consumed in Africa, but rather might flow to the developed world, where they would compete with Chinese goods.
That could chip away at China’s status as the “world’s factory.” Already, China’s industrial base has shown signs of strain adjusting to lower global demand. Beijing’s acceptance of a weaker yuan this year suggests that China has not given up on its export-led economy, despite its talk about a refocus on consumption. Thus, if the BRI were to shift its economic aims to include large-scale industrialization projects in the developing world, they could run counter to China’s own interests in the long run, hardly sound economic logic.
Politics Trump Economics
There is little doubt that Beijing will try to use the Third Belt and Road Forum to reignite enthusiasm for the BRI, which has become a key feature of Xi’s foreign policy. But that is easier said than done. The initiative must overcome the lingering economic impacts of the COVID-19 pandemic and slowing global trade, not to mention claims that it contributed to onerous debts (and perhaps deficit traps, too) in some of the countries in which it has invested. Beijing may see its support for developing-world industrialization as a way to spark renewed interest in the BRI. China may even subsume the initiative into Xi’s Global Development Initiative. Whatever the path China chooses for the BRI, the more tortuous its economic logic becomes, the more pronounced its political dimension will be. While the BRI’s economic aims may be continuously shifting, its political goals remain focused.
Broadly, Beijing has long been concerned about encirclement by Washington. The BRI was, in part, meant to ensure that America could not isolate China. To that end, Beijing has always regarded the initiative as a way to garner political support and create new spheres of influence. In that regard, the BRI has been somewhat successful. China has parlayed its BRI investments into political sway in various parts of the world, at the United Nations, and even among American allies in Europe. Certainly, China has effectively used the BRI to persuade several countries to drop their diplomatic recognition of Taiwan (e.g., Panama in 2017, the Dominican Republic in 2018, Solomon Islands in 2019, Kiribati in 2020, Nicaragua in 2022, and Honduras in 2023). Helping developing countries to industrialize could boost China’s political capital further.
Of course, the use of economic cooperation as a political instrument is not an unfamiliar tactic for Beijing. Recently, that was on display at the BRICS (Brazil, Russia, India, China, and South Africa) summit in August 2023, when China (and Russia) sought to enlarge the membership of the BRICS grouping and, in so doing, build greater political clout. India and South Africa, two other founding BRICS members, tried to get the group to reconsider. They feared that such an expansion would turn the economic grouping into a political bloc. They failed, and China prevailed. Political aims outweighed economic ones. It seems like that may be true of the BRI, too.
The views expressed in this article are those of the author alone and do not necessarily reflect the position of the Foreign Policy Research Institute, a non-partisan organization that seeks to publish well-argued, policy-oriented articles on American foreign policy and national security priorities.
About the author: Felix K. Chang is a senior fellow at the Foreign Policy Research Institute and the Chief Operating Officer of DecisionQ, an artificial intelligence engineering company.
Source: This article was published by FPRI
