About 130 countries attended China’s third Belt and Road Initiative October 2023 forum to learn about and win Chinese investment in global infrastructure.
China’s President Xi Jinping started the economic program in 2013, which seeks to deploy capital to developing countries trying to expand their infrastructure. At the same time, it gives China an introduction to new markets — a chance for Chinese companies to expand globally. At least 149 countries have signed a memorandum of understanding with China.
According to Statista, the Belt and Road Initiative (BRI) has created more than $1 trillion of investment in everything from energy to transportation in 148 countries. Indeed, the Green Finance and Development Center said China inked 103 deals worth $43 billion in the first half of this year compared to $35 billion in the first half of 2022; energy made up $22 billion, transportation comprised $16 billion, and metals made up $7.2 billion.
However, Statista notes that health and utilities had the highest annual growth rates, with 246% and 192%, respectively.
“The major growth countries of Chinese engagement were Bolivia, Namibia, Eritrea, and Tanzania – making Sub-Saharan Africa the fastest growing area of BRI engagement,” the center reported. “Twenty-six countries saw a 100% drop in BRI engagement, including Turkey, Poland, and Kenya; Russia continued to see no public engagement from China.”
BRI stretches across four continents and nearly 150 countries, creating an expansive network of railways, pipelines, and highways. By doing so, China is creating partnerships in places that lack such infrastructure — a move that can potentially encourage trade ties with regions that may now be purchasing U.S. goods and services.
China emphasizes that it has no desire to exercise global control — only to increase the potential markets for its products and services. To that end, it is a country with 1.4 billion people and will remain an importer of all sorts of goods, especially liquefied natural gas.
Will The Initiative Hold Up Under Scrutiny?
The initiative came under the microscope during the Trump administration, which declared an “America First” policy. In other words, while this country became isolationist, China pursued global contracts.
But could China dominate the global economy and international trade? Its foreign investment can potentially alienate the host countries — just as it once did for ambitious U.S.-based multinational corporations, accused of soaking up profits before moving on. China, for example, is making loans to developing countries while bringing in many of its workers to build the needed infrastructure.
In short, China is gaining leverage in international markets, although commanding them will never happen. It may also be stretching itself too thin because it needs more money in the bank to make sufficient inroads. Not only is its currency not traded in international markets, but the mainland’s foreign reserves are $1.2 trillion. That’s about 15% of the international trade.
China says that developing nations around the globe are advancing more rapidly because of its BRI initiatives.
BRI intends to increase economic and cultural cooperation among the countries it invests in. It seeks only a win-win proposition. The same deal is open to any country. It underscores that it strongly supports the rules set forth by the World Trade Organization.
Without a doubt, China uses its market power to effect outcomes. And a centralized government makes it much easier to bring about changes. To be credentialed internationally, China needs to improve its transparency and ensure foreign businesses can access domestic markets.
“The BRI faced some setbacks recently, especially due to the COVID-19 pandemic, with China’s investment in BRI countries dropping by nearly half to around 60 billion U.S. dollars annually,” Statista writes. “However, the BRI will most likely remain an important tool of China’s foreign policy and economic strategy.”