The BRI is Dead? Long Live the BRI? Part I: Present at the Creation

The Belt and Road Initiative (BRI), which consists of two main components, the sea-focused Maritime Silk Road Initiative (MSRI) and the land-focused Silk Road Economic Belt (SREB), came into being in 2013.[1] Since Chinese President Xi Jinping launched the MSRI and the SREB, there has been considerable positive and negative froth about the BRI. Enthusiasts have lauded the BRI as a foundation for building a community of common interests, solving infrastructure gaps in the developing world, helping countries industrialize, expanding people-to-people exchanges, and pluralizing international relations.

Critics have denigrated the BRI as an attempt to build a new Chinese empire, a threat to good governance, a danger to the political independence of some countries, a risk to sea lines of communication (SLOCs) and resource supply chains, and a serious challenge to the Western-dominated global order. Despite their dissimilarities, both proponents and naysayers have shared the assumption the BRI would come to fruition as envisioned (or fantasized) and axiomatically produce certain economic and political effects. The mantra now, though, is of the BRI being “reined in,” “going nowhere,” and experiencing a “great downfall.”[2]

There has never been any official Chinese disclosure of the projects comprising the BRI. Even so, there has been wide agreement from the get-go that China’s global spanning initiative (primarily) encompasses large-scale connectivity-oriented hard infrastructure such as airports, ports, high-speed rail, roads, and telecommunication systems that facilitate flows of goods, services, and peoples between China and other regions. Over time, observers have adopted the stance that the BRI also includes government buildings, logistics, power plants and power transmission lines, pipelines, special economic zones (SEZs), and (even!!!) real estate developments.[3] Despite the lack of concrete evidence, commentators boldly proclaimed that Beijing would “invest” hundreds of billions and perhaps even the low trillions of dollars in BRI hard infrastructure.[4]

Observers have put forth a myriad of views about the BRI’s aims. As far as economic goals are concerned, the BRI putatively represents a way for China to increase its channels for exporting goods, reduce trade frictions with the West, improve access to natural resources, build supply chains, and generate opportunities for Chinese companies to invest overseas as well as sell goods and services. It further offers China a channel for promoting regional economic integration, supporting participant country development, and facilitating the internationalization of China’s currency, the renminbi. Domestically, the BRI was expected to boost the development of China’s more backward regions and internal economic integration.[5] Turning to political objectives, it is asserted that Beijing seeks to leverage the BRI inter alia to improve its security by diversifying its markets and resource suppliers, reshape global economic institutions and standards, and combat poverty-fueled political instability, extremism, and terrorism. Some argue the BRI is about China’s search for status and prestige and a mechanism for augmenting its soft power. China allegedly hopes to ensnare other countries in its economic web, too. Lastly, Beijing wants to weaken the political importance of the West.[6]

In the wake of the BRI’s launch, there was apprehension and exuberance in national capitals and the foreign business community. Proliferating reports about BRI “successes” only intensified these sentiments. Highlighted “accomplishments” included Chinese airport, railway, and SEZ projects in Cambodia and Laos, financial center, port, and power plant endeavors in Pakistan and Sri Lanka, port investments in Greece, light railway and high-speed railway systems in Serbia, and railways, ports, and SEZ initiatives in Africa.[7] Pessimists worried about the competitive threat from Chinese firms, greater Chinese economic leverage over BRI participants, and risks to SLOCs. They fretted, too, about the BRI’s effects on Western norms, the sanctity of traditional spheres of influence, and the prospects for democracy. Optimists waxed enthusiastically about the BRI’s potential to bring capital, advance industrialization, improve infrastructure, open pathways to sell goods and services, and create jobs. They also saw the BRI as a way to gain independence from the West and Western economic institutions and an external political ally.

About three years ago, the BRI began to lose some of its luster. One reason was that many countries actively involved in the BRI started to experience financial problems associated with, but not necessarily caused by, BRI financing. A second was that Beijing began to limit capital outflows because of their volume, the questionable outlets into which Chinese firms were pouring money, and the troubled situation of BRI borrowers.[8] A third was Covid-19 and China’s associated Zero-Covid policy which stopped or severely limited China’s business, political, and other exchanges with and involvement in the outside world. A fourth was the emergence of competing European, Japanese, and United States infrastructure schemes, as deficient as they were.[9] A fifth was the problematic global economic situation, which related to Covid-19 and other factors. Regardless of causes, it reduced funding for projects and adversely affected the current and/or future economic viability of projects. These developments collectively have shifted the consensus about the BRI from one of great to low expectations.[10]

Is the BRI truly dead or close to it? The next piece in this four part series argues that it is not because the various domestic and international political and economic factors that initially propelled the BRI still remain. This said, the BRI will never approach the fantasized version for reasons to be laid out in the third part of this series. The final piece in this series explores what a more realistic understanding of the BRI means for businesspeople and policymakers.