Photo: World Economic Forum, flickr.com
The incremental coverage and commentary on China’s technological advances, military expansion and development policies by the world media have evoked significant discussion about China’s rise as a global power. China has been making gains in terms of global influence and power. Most commentators speculate this rise to be a result of major economic and governmental decisions taken by successive leaders since the Civil War in China that ended in 1949. Currently, China is one of the largest economies of the world, and has the world’s largest population and fourth-largest territory. China has held prominence in the Asian region since becoming a member of the United Nations and later, a permanent member of the UN Security Council. Engaging in massive trade deals with Latin America and Africa in 2008 was a major step in its establishment as a world power alongside the European Union and the United States. China’s Belt and Road Initiative (BRI) is a development strategy which involves infrastructure development and investment in over 150 countries and investment in international organisations around the world. Global experts identify it as a step in China’s attempts to become a superpower by gaining strategic, economic and military advantage across the globe.
What is the Belt and Road Initiative (BRI)?
The Belt and Road Initiative is a multi-billion-dollar project which aims to connect Asia, Africa and China through land and maritime networks. It will comprise of a ‘belt’ of overland corridors and a maritime ‘road’ of shipping lanes. President Xi Jinping announced the idea in 2013, derived from the spirit of Silk Road, an ancient trade route established during the Han Dynasty 2,000 years ago that connected China to Central Asia, Africa and Europe. President Xi’s vision includes the creation of a vast network of railways, energy pipelines, highways and streamlined border crossings. For example, initiatives include new highways in Pakistan, a rail terminal in Kazakhstan, a seaport in Sri Lanka, and bridges and roads in rural Laos. BRI will expand the international use of Chinese currency, while new infrastructure in many developing countries could ‘break the bottleneck in Asian connectivity’. China also plans to build 50 Special Economic Zones (SEZ), modelled on the Shenzhen SEZ.
The economics of the BRI
The initiative is projected to cost over $1 trillion. There are many different estimates by varying sources about the total amount that has been already been spent. According to one such estimate, China has already invested over $210 billion, the majority of which has been spent in Asia. Despite the investment from China, there is vast speculation over China’s ulterior motives behind the project and investment. Chinese firms are engaging in construction work across the globe on an incomparable scale. They have secured more than $340 billion in construction contracts around the world.
The combined population of all the countries involved in BRI is over 4.4 billion: the project touches about 62% of the world’s population. Trade between China and BRI countries between 2014 and 2016 totalled about $3 trillion. Supporting such a diverse spread of development initiatives that enhance connectivity throughout Eurasia and beyond can serve to strengthen Chinese economic and military interests. The development overseas would probably just remain a by-product.
Benefits for China and the countries involved
Analysts around the world have unravelled the considerable economic and political gains that China can yield from the BRI. The BRI is an umbrella initiative, covering a multitude of investment projects designed to promote the flow of goods, investment and people. This would realign global relationships, redirect the flow of economic activity, and shift power between states. The Asian Development Bank estimates about $26 trillion of total investment to enable developing countries of Asia to sustain growth momentum, eradicate upoverty and respond to climate change. China has already pledged $1 trillion to the project and has invested massive amounts of capital into Chinese public financial institutes like the Chinese Development Bank and the Export-Import Bank of China. Such institutes have low borrowing costs, enabling them to lend money cheaply to Chinese companies working on BRI projects. Such financing options allow Chinese state-owned enterprises to offer highly com