By: Jo Qiao
A brief introduction to BRI’s goals, an initiative that aims at benefiting China and the rest of the world.
China’s Belt and Road Initiative (BRI), announced by President Xi Jinping in 2013, is the most ambitious infrastructure investment effort in history. BRI has the ultimate goal of building a thick web of infrastructure around the globe. BRI deals involve China lending vast amounts of money to countries that span Asia, Europe, and Africa to build new railroads, shipping lanes, and other infrastructure to foster trade and long-term economic development of both China and the beneficiary countries. Estimates vary, but it is commonly acknowledged that about over $300 billion have already been spent, and China plans to spend $1 trillion more in the next decade or so. Under Xi, the Belt and Road Initiative will expand trade in the international market and greatly boost the global economy.
After BRI projects finish and be put into use, they will greatly reduce the time and costs of creating and transporting products from the developing countries to China and the rest of the world. According to World Bank Group economists, if implemented fully, the initiative could lift 32 million people out of moderate poverty—those who live on less than $3.20 a day. It could boost global trade by up to 6.2 percent, and up to 9.7 percent for beneficiary countries of BRI. Global income could increase by as much as 2.9 percent. For low-income beneficiary countries, foreign direct investment could rise by as much as 7.6 percent.
China will receive extra benefits from the projects. A successful BRI would allow China to more efficiently utilize excess savings and construction capacity. For example, China’s problem of steel and cement excess production could be tackled. China used to have a large reserve of inefficiently invested savings, but with BRI opportunities exist for exporting steel to the developing countries. This would support infrastructure development and simultaneously generate a large amount of export income.
Meanwhile, BRI helps China consolidate diplomatic relations with participating countries, and diversifies China’s energy imports. It gives China access to economic corridors that circumvent United States controlled routes. For example, a BRI investment into Gwadar will help diversify China’s transport network for critical natural resources like oil and gas, which could help reduce dependence on trade routes, such as the Strait of Malacca, through which China currently receives much of its oil and gas.
Despite the benefits China is predicted to receive from BRI, it faces many questions and doubts. Among these are significant risks, exacerbated by a lack of transparency and sustainability, and weak institutions in participating economies. Many developing countries, like India and Thailand lost their enthusiasm in 2013 and are now hesitant to cooperate with China.
Iain Marlow. (2019, Sept 11). Backlash Could Cost Xi’s Belt and Road $800 Billion, Report Says. Bloomberg. Retrieved from https://www.bloomberg.com/news/articles/2019-09-11/backlash-could-cost-xi-s-belt-and-road-800-billion-report-says