Key Takeaways

  1. The Belt & Road Initiative (BRI) is a decades-long strategy to shore up China’s international influence through a series of international transport projects.
  2. This initiative secures the flow of goods and services out of China, but also into China through energy and transport corridors.
  3. The US and the EU have developed their own strategies in an attempt to compete with the BRI on the international stage.

China’s global infrastructure and development strategy, the Belt and Road Initiative (BRI), marked another milestone recently after China and Malaysia broke ground on the $13 billion East Coast Rail Link. The endeavor aims to connect Malaysia’s coasts from the South China Sea to the Strait of Malacca, while other BRI-affiliated projects in the country include the expansion of the Kuantan port and creation of a nearby industrial park.

Malaysia’s neighbors also have their own BRI projects. In Thailand, the Thai-Chinese Rayong Industrial Zone (TCR) and Thailand-China high speed railway project are under development. Meanwhile, Indonesia inaugurated its own BRI-affiliated high speed railway network last year and is negotiating with Beijing to invest its new capital city, Nusantara.¹

Of course, China’s BRI extends far beyond Southeast Asia. Unveiled by President Xi Jinping in 2013, China’s BRI has since become his signature diplomatic and economic policy, forming a global network of energy², transport, telecommunications, and more. Last year marked the initiative’s ten-year anniversary, with representatives from 150 affiliated countries demonstrating its enormous role in international trade and the global economy.

Wary of rival infrastructure and funding mechanisms, many Western observers have been apprehensive and critical of the BRI. Some countries which host BRI projects have also expressed criticism toward them. And while the BRI is often seen as an interconnected and cleverly orchestrated plan to increase China’s global influence, others view it as an inconsistent and episodic collection of initiatives without a cohesive master plan. Despite some mixed results, China’s efforts are largely welcomed in most countries the BRI operates in, and Beijing has seen its power expand significantly as a result.

Chinese motivations

China has several incentives behind the BRI. Its rapid industrialization saw its economic and industrial production expand significantly during the 2000s. However, the economic slowdown resulting from the Global Financial Crisis in 2008 saw Chinese industrial output outpace global demand for Chinese goods and services. While China could redeploy some of this excess production capacity domestically, Beijing saw an opportunity to export it abroad and prevent its capabilities going to waste.

The enormous investment associated with the BRI allows China to pull countries closer into its orbit through economic integration, and it has become many countries’ top debt holder and trading partner. Many countries have welcomed an alternative to Western infrastructure projects for the first time in decades, while China can provide substantial financing, which the Soviet Union was less able to do on a comparable global scale. Security and political integration also often accompany BRI projects.

Having become the “world’s factory”, China requires increasingly massive energy and raw material imports to fuel its ballooning industrial base. However, these imports remain vulnerable on passage through U.S.-controlled global sea lanes. Using railway and road networks across Eurasia allows China to bypass global trade chokepoints controlled by the U.S. military, such as the Strait of Malacca, Persian Gulf, Mediterranean, and other regions where China cannot yet match U.S. power.

Additionally, the need to increase the number of alternative pathways between destinations has become more evident in recent years. The Ever Given disaster³ disrupted trade through the Suez Canal in 2021, while the Black Sea has been partially blockaded as a result of the Russian War in Ukraine, which has also cut off some overland routes from China to Europe. Additionally, ongoing drought has reduced the ability of the Panama Canal to handle traffic, while the Houthis have significantly disrupted trade through the Red Sea since October 2023.

While the BRI helps build multiple pathways for trade to hedge against potential disruptions and for increasing Chinese influence abroad, it also provides a profitable avenues for investment for China’s private sector and international businesses already operating in China. China’s Tsingshan Holding Group Company Limited’s joint venture with Indonesia’s Merdeka Copper and Gold represents just one of many arrangements with private Chinese companies. Beijing is still keen to keep close links on such developments – Tsingshan’s Morowali Industrial Park in Indonesia has largely been funded through loans from state-owned Chinese banks and its processing technology contractor is largely run by a state-owned Chinese subsidiary.

As it stands today

China’s BRI has already achieved a global scale, demonstrated by a handful of projects below. The China-Pakistan Economic Corridor (CPEC)⁴ is a collection of infrastructure projects that include the construction of highways, railways, and energy projects, stretching from China’s Xinjiang region, into Pakistan to the Indian Ocean. Key components include the upgrading of the Karakoram Highway and the construction of new coal, hydro, and renewable energy projects.

In Kenya, the Nairobi-Mombasa Standard Gauge Railway (SGR) and Nairobi-Mombasa Highway projects⁵ involve constructing a modern railway line connecting Kenya’s capital, Nairobi, with its major port city, Mombasa. This will reduce transport costs, boost trade, and enhance regional connectivity, while the railway network will connect to neighboring countries like Uganda, Rwanda, South Sudan, Burundi, and the Democratic Republic of Congo.

Europe has seen the BRI attached to the Budapest-Belgrade Railway⁶, involving the modernization of the railway line between Hungary and Serbia. It is intended to improve transportation and trade links between Central and Southeastern Europe, facilitating faster movement of goods and passengers. China gains strategic access to European markets by integrating with Europe’s continental rail network, enhancing economic ties and showcasing its infrastructure capabilities.

Others have more bilateral focuses not solely based on upgrading transport infrastructure. In the Middle East, the China-UAE Industrial Capacity Cooperation Demonstration Zone focuses on developing an industrial park that will host manufacturing and logistics companies. Unlike transport infrastructure projects, this industrial park aims to enhance industrial capacity, attract investment, and foster economic ties between the two nations.

Meanwhile, the Coca Codo Sinclair Hydroelectric Plant in Ecuador, completed in 2016, is one of the largest BRI infrastructure in Latin America. Developed with Chinese financing and built by Sinohydro, this plant can supply roughly one-third of Ecuador’s electricity needs, and aims to reduce Ecuador’s reliance on fossil fuels, promote sustainable energy, and support the country’s economic growth by providing a stable and renewable energy source.

Maritime Silk Road

In addition to expanding overland routes and building infrastructure projects on land, China’s BRI has also focused on building the Maritime Silk Road.⁷ Much of this effort has been directed towards building ports and upgrading existing ones, for several reasons. Control over a port or part of it allows the collection of docking and storing fees, handling charges, and influence over its operational control, including docking decisions and service provision. The strategic benefits of such control also enable China to manage which ships enter ports, while gaining economic leverage over the host country by becoming a crucial part of its transport infrastructure.

In the Indian Ocean, for example China has privileged port access at Gwadar, Pakistan, where China Overseas Ports Holding Company Limited (COPHC) has a 40-year agreement running from 2013–2053. In 2017, Sri Lanka meanwhile proposed to lease to China the port of Hambantota for 99 years, built as part of the BRI, to help service its debts. Chinese company COSCO meanwhile also upgraded Greece’s port of Piraeus, the country’s largest, and assumed a two-thirds majority stake of the port in 2018. Chinese entities also have majority or large stakes in other ports across Europe.

China’s Maritime Silk Road is particularly evident in the Eastern Mediterranean and Red Sea.⁸ Chinese entities hold a 20 percent stake in Egypt’s Port Said and a 25 percent stake in Ain Sokhna, with further collaboration being discussed for Dekheila port. In 2023, a $6.75 billion deal was signed between Egypt’s Suez Canal Economic Zone and the China Energy Engineering Corporation for green ammonia and hydrogen projects. In Djibouti, China helped finance the Doraleh Multipurpose Port in conjunction with a military base, coupled with a 2023 deal to build a satellite launch center at Obock. Eritrea’s Assab port has also seen a major upgrade through the BRI.

China Harbor Engineering Company will meanwhile build a new container terminal at Saudi Arabia’s Jeddah Islamic Port. Beijing has also used the disruption caused by the Houthis to Red Sea shipping to showcase the adaptability of the BRI through a joint function of land and sea routes. In December 2023, Saudi Arabia approved the creation of a “land bridge” from ports in the Persian Gulf, including the UAE’s Jebel Ali port and Mina Salman port in Bahrain, across Saudi territory territory via truck, until they could reach Israel’s Haifa Port.

Criticism of the BRI

Western criticism of China’s BRI has focused on accusation of debt trap diplomacy, where China strategically loans large sums to developing countries for infrastructure projects, then leverages the resulting debt to gain political and economic influence when these countries struggle to repay. While now generally considered to be false, an increasing amount of bailouts for BRI partner countries, such as Zambia and Sri Lanka, have already gone into default. If too many countries are unable to pay their debts to China, its reputation and that of the BRI will be damaged.

Many Western observers view the BRI as a thinly veiled attempt by China to undermine the Western-led international order by placing China at the center of global trade, infrastructure, and development networks. A rise in debt standoffs, such as in Pakistan, has seen Western and Chinese lenders balk at bailing out struggling countries for fear that funding a bailout will simply be used to pay the other back, and exacerbated fears over China’s growing influence. Like the China social credit system, the BRI is sometimes seen by the West as an act of overreach by the State. 

While China’s support for megaprojects often sounds promising, in some cases it has faltered in its execution or had to downgrade for political and economic reasons. Ballooning costs for projects, like Indonesia’s railway, have made them politically sensitive as the government had to use parts of the state budget for continued financing.

Sri Lanka’s port of Hambantota and rarely used airport have also been criticized as wasteful, while Pakistan’s Lahore Orange Line Metro project has faced criticism for the quality of construction, impact on important cultural sites, and high costs. Ecuador’s government also declined to formalize the reception of the country’s hydroelectric plant, operational since 2016, because of cracks in the structure that prevented it from meeting the criteria for receiving public works.

Controversy has also surrounded China’s use of its own citizens to work in foreign infrastructure and development projects, as this practice often sidelines local labor. These tensions have sometimes boiled over into violent riots, like in Central Asia, and brought unwanted attention to other projects in places like Kenya due to the deployment of Chinese-only services and establishments.

Future

Nonetheless, most countries welcome Chinese investment and seek to link themselves to the BRI. The Chinese economy increasingly trades with BRI countries instead of others, a trend that aligns with the rising number of BRI participant countries.

Much of the BRI’s original focus was to link China to Europe, and Italy became the largest EU country to sign onto the BRI in 2018. But in the wake of the Russian invasion of Ukraine and perceptions of China’s support for Moscow and threat to Western interests, Italy withdrew in 2023. While smaller European countries remain committed to the BRI, enthusiasm has dampened considerably, while the BRI’s ability to traverse through Russia and Ukraine into Europe has also been largely severed.

In response to Chinese domestic financial troubles, a global economic slowdown, economic tensions with the U.S., and the massive costs of some BRI projects, Beijing has begun to emphasize funding and building “small and beautiful” projects⁹ as the scale of larger projects has curtailed. These smaller projects are being prioritized for their efficiency and relative lack of risk, while still pushing forward the BRI.

Having seen the results and popularity of China’s BRI, other countries and blocs have been spurred into action to compete with Beijing. The U.S. has unveiled the Strategic Competition Act, CHIPS and Science Act and the U.S. International Development Finance Corp. The EU has put forward its Global Gateway Initiative, and G-7 countries have proposed the Build Back Better World scheme, as well as support for the Supply Chain Resilience Initiative. Japan and India are also investing in multinational infrastructure, investment, and industrial value chains.

Despite China’s rapidly growing military capabilities, it still lacks the military ability to protect its assets and civilians overseas. The BRI has thus helped fuel the global rise in private military and security companies (PMSCs) over the last few decades. PMSCs had already grown substantially in Russia following the collapse of the Soviet security state in the 1990s and in the U.S. due to their use in the Global War on Terror. China’s employment of PMSCs for the BRI¹⁰ has further burgeoned the industry as their capabilities continue to grow, which will continue to alter the global security landscape.

Conclusion

China’s BRI is already a major part of the global economy and will continue to be and grow in influence as it continues to develop. The recent and ongoing competition between China and the U.S. over the construction of undersea internet cables playing out in Asia highlight the new directions of the BRI as China’s capabilities and technologies continue to advance.

The U.S. has been slow to propose appealing alternative projects and financing pathways, largely cautioning and criticizing many countries for collaborating with China on the BRI. However, the BRI has spurred other lending countries into action, and Washington’s own infrastructure and investment initiatives, along with those of other nations, will hopefully provide developing countries with valuable options to choose from.

Frequently Asked Questions

The funding for BRI projects primarily comes from Chinese policy banks, such as the China Development Bank and the Export-Import Bank of China, as well as from Chinese commercial banks and private investors.

More than 140 countries and international organizations have signed cooperation agreements under the Belt and Road Initiative.

China envisions the BRI as a means to enhance global trade and economic integration, create a network of interconnected infrastructure, and strengthen diplomatic and economic ties with participating countries, ultimately fostering shared development and prosperity.

References

[1] For more information on the BRI in Indonesia, see Syarif, Ahmad (2023) ‘Belt and Road Initiative’s new approach and what it means for Chinese investments in Indonesia’ The Conversation, Available at https://theconversation.com/belt-and-road-initiatives-new-approach-and-what-it-means-for-chinese-investments-in-indonesia-218438 

[2] For more information on China’s energy imports and usage, see China Power Team (updated 2023) ‘How is China’s Energy Footprint Changing?’ China Power, Available at https://chinapower.csis.org/energy-footprint/

[3] For more information on the Ever Given incident, see Chellel, Kit, Campbell, Matthew, and Oanh Ha, K (2021) Bloomberg, Available at https://www.bloomberg.com/news/features/2021-06-24/how-the-billion-dollar-ever-given-cargo-ship-got-stuck-in-the-suez-canal

[4] For more information on the China-Pakistan Economic Corridor (CPEC), see Mardell, Jacob (2020) ‘The BRI in Pakistan: China’s flagship economic corridor’ Mercator Institute for China Studies, Available at https://merics.org/en/analysis/bri-pakistan-chinas-flagship-economic-corridor

[5] For more information on the BRI in Kenya and Africa, see Rarieya, Celestine A. and de Vicente, Sophia E. (2024) ‘China’s Belt and Road Initiative in Africa: Kenya’s pivotal role’ Universidad de Navarra, Available at https://www.unav.edu/web/global-affairs/china-s-belt-and-road-initiative-in-africa-kenya-s-pivotal-role 

[6] For more information on European BRI projects in Europe and the Budapest-Belgrade railway link, see Rencz, Flora (2019) ‘The BRI in Europe and the Belgrade-Budapest Railway Link’ European Institute for Asian Studies, Available at https://www.eias.org/wp-content/uploads/2019/07/EIAS-Briefing-Paper-The-BRI-in-Europe-and-the-Budapest-Belgrade-Railway-Link-Final.pdf

[7] For a general overview of China’s BRI across both land and sea, see Smotrytska, Maria (2020) ‘The implementation of the BRI project at sea: South Maritime and Arctic Silk Roads’ Modern Diplomacy, Available at https://moderndiplomacy.eu/2020/07/13/the-implementation-of-the-bri-project-at-sea-south-maritime-and-arctic-silk-roads/ 

[8] For more information on China’s interests and activities in the Red Sea, see Scott, David (2024) ‘China’s calculated inaction in the Red Sea crisis’ Cimsec, Available at https://cimsec.org/chinas-calculated-inaction-in-the-red-sea-crisis/

[9] For more information on the ongoing evolution of the BRI, see Yeung, Chloe (2024) ‘The Belt and Road Initiative 10 Years Later: China’s Transition to ‘Small and Beautiful’ Asia Pacific Foundation of Canada, Available at https://www.asiapacific.ca/publication/china-belt-and-road-initiative-10-years-later 

[10] For more information on China’s use of private military and security companies as part of the BRI, see Chizzoni (2024), Emanuelle ‘Understanding the Chinese Security Contracting Industry’ Security Distillery, Available at https://thesecuritydistillery.org/all-articles/understanding-the-chinese-private-security-contracting-industry