A comparison of China’s investments in BRI, projections and competing projects shows Beijing having a clear lead so far and others are playing catch up.
President Xi Jinping set out on November 19, a new vision for the Belt and Road Initiative (BRI) as per reports in the Chinese media, at the third symposium on the development of the initiative in Beijing, “highlighting the need to make it high-standard, sustainable and beneficial to public well-being and support developing nations in going green and low-carbon in their energy sectors.”
Undeterred by competing projects launched by the United States, the European Union and critique from adversarial states and governments of huge debt burden on invested countries, President Xi stated that “China will consolidate the foundation for BRI cooperation on interconnectivity and create new opportunities for international cooperation”.
Xi bid for higher level of cooperation, investment efficiency, quality of supply and resilience to sustain the BRI, the flagship project for supporting infrastructure and allied projects in regional countries.
China has signed cooperation documents on jointly building the Belt and Road with 140 countries and 32 international organizations since the BRI was proposed by Xi in 2013 said the China Daily.
Xi mindful of risks of competition and factors such as Climate change highlighted that “international environment for the BRI is becoming increasingly complex”.
Nevertheless, the next step of development is likely to be “land, maritime, air transport and internet interconnectivity”, expansion of. “trade flows”, “encourage imports of more high-quality products and improve the level of trade and investment liberalization and facilitation”.
New areas of cooperation will include health, green development, digitalization and innovation, in line with the necessity to assist countries to fight the pandemic.
Green and digital are expected to develop simultaneously as China hopes to “develop Silk Road e-commerce and formulate a pattern for digital cooperation”.
Xi also stressed on the need to “strengthen risk prevention and control across the board”, including steps to carry out risk management mechanisms.
China is expected to establish an “all-weather early warning and evaluation service platform for risks faced by its overseas programs to enable timely risk warning and evaluation on a regular basis”.
“Greater coordination in mechanisms for the protection of overseas interests, international counterterrorism and security, saying that all-out efforts must be made to ensure the safety and mental health of staff stationed overseas,” has also been underlined to include targeting of corruption overseas
Scale of Investments
As per an OECD report, “BRI investment projects are estimated to add over USD 1 trillion of outward funding for foreign infrastructure over the 10-year period from 2017”.
For financing Silk Road Fund has been established but most of the Chinese funding is coming from state-directed development and commercial. Multilateral Development Banks are also being involved in the projects
For the current year figures are available from January to May in 2021 released by Chinese State agencies such as Ministry of Commerce, denote that Chinese companies will invest RMB 48.16 billion in non-financial direct investment in 55 countries along the “Belt and Road”, an increase of 5.1% year-on-year (equivalent to US$7.43 billion, an increase of 13.8% year-on-year), accounting for 17.2 of the total in the same period. %, an increase of 1.7 percentage points from the previous year, mainly invested in countries such as Singapore, Indonesia, Vietnam, the United Arab Emirates, Kazakhstan, Laos, Bangladesh, Thailand, Malaysia and Sri Lanka.
In terms of foreign contracted projects says the report by the Ministry of Commerce PRC, “Chinese companies signed 1920 new foreign contracted project contracts in 59 countries along the “Belt and Road”, with a new contract value of 301.37 billion yuan, a year-on-year decrease of 8.6% (equivalent to US$46.49 billion, a year-on-year decrease of 1%) ), accounting for 56.2% of the newly signed contract value of my country’s foreign contracted projects in the same period; the completed turnover was 199.6 billion yuan, a year-on-year decrease of 2.8% (equivalent to 30.8 billion US dollars, a year-on-year increase of 5.2%), accounting for 58.2% of the total in the same period”.
Competing Projects
United States and the European Union have launched competing programmes such as Build Back Better World (B3W) and “A Globally Connected Europe” strategies
B3W is an expansion of the Blue Dot Network (BDN) launched by the United States Australia and Japan in November 2019
BDN is expected to provide project finance alternatives to BRI with loans criteria that ensure adequate payback.
However BDN has received just US$2 million from the US State Department and the only project planned is undersea fibre optic cable to Palau though it has yet to receive official certification. B3W has not seen any concrete investment announcements so far.
While the Globally Connected Europe project has been launched in July 2021, no firm commitments are evident.
Conclusion
The BRI launched by Chinese President Xi in 2013 has established a clear lead in terms of investments and promotion of China’s interests across the globe.
Despite criticism of unilateralism, debt burden on developing countries, violation of green norms and encouraging corruption the Third BRI Forum event indicates that the projects are growing albeit slowly.
Competing projects as B3W and BDN are in a nascent stage and may take time to catch up, till then the field appears to be open for China.