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Ralph Jennings

The Belt and Road Initiative, an ongoing effort to link economies into a China-centred trade network, largely via Chinese-backed megaprojects abroad, has entered a phase that Beijing says involves “small but beautiful” additions.
As the plan to grow global trade approaches its 11th anniversary, the ambitious undertaking is expected to shift away from massive projects that have sometimes been accused of resulting in large debt piles or environmental damage in other countries.
Here are four points of interest and importance for the initiative in the coming decade:
1. High-priority countries
China has present or past agreements with 152 countries to pursue belt and road projects. Belt and road work could eventually cost Beijing US$1 trillion to US$8 trillion over an unspecified period, the Centre for Strategic and International Studies think tank estimated in 2018.
Today, 44 of those countries are in sub-Saharan Africa, more than in any other region.
Over the next decade, China might shift its focus to Central and Southeast Asia, said Jayant Menon, a senior fellow at the ISEAS-Yusof Ishak Institute in Singapore. Central Asian projects help fortify China’s trade links to Europe because of the largely landlocked region’s geography, he explained.
Landlocked countries “can become land-linked”, President Xi Jinping said last year at the Third Belt and Road Forum for International Cooperation.
Developed nations are likely to stay out, said John Simon, senior adviser for the Project on Prosperity and Development under the Centre for International & Strategic Studies, a US think tank.
Those countries, he said, see little benefit from China’s initiative, and “the few that have received [belt and road financing] have not had great experiences”, he said. In total, 17 European Union countries have previously taken part. Italy withdraw from the initiative in December.
The [Belt and Road Initiative] will likely become more commercial and aim to position itself distinctly from Western development models
Christoph Nedopil, Green Finance & Development Centre
2. Likely types of project
The belt and road plan will “deepen cooperation” abroad in “green infrastructure, green energy and green transport”, Xi said at a forum for the initiative in October. Hydroelectric, wind and solar energy projects particularly fit into the “new era”, he said.
In Bangladesh, for example, a wind-power project invested by China-based Wuling Power and built by PowerChina Chengdu Engineering will cut coal use by 44,600 metric tonnes, the Shenzhen Daily reported last year.
Xi further forecast cross-border cooperation in science and technology.
Future projects will run less debt risk than earlier ones and would – if small and non-polluting – reduce criticism from abroad about environmental degradation or population resettlements, Menon said.
For instance, in June, Xinhua said that the Namagumba-Budadiri-Nalugugu Road in Uganda’s mountainous eastern region would be upgraded from gravel to asphalt. Chinese construction firm Shandong Luqiao Group is tasked with improving a 39km (24-mile) stretch of the road. The three-year effort will employ more than 600 locals and reduce travel time from one hour to 20 minutes in a region known for its trade in coffee, bananas, potatoes and milk.
In contrast, Chinese contractors built a 472km railway in Kenya in the previous decade.
“Overall, the [Belt and Road Initiative] will likely become more commercial and aim to position itself distinctly from Western development models,” said Christoph Nedopil Wang, director of the Shanghai-based Green Finance & Development Centre.


3. Top funding sources
China, like Japan and the United States, is shifting to multilateral development banks to find funding for its projects in other countries.
Beijing could go in that direction by tapping the Asian Infrastructure Investment Bank (AIIB), Menon said. China spearheaded creation of the AIIB in 2016, and the Beijing-based lender now has 109 member countries.
The New Development Bank, established by Brics countries nine years ago, may offer additional help as it seeks resources to build infrastructure in emerging-market economies. The Brics acronym covers Brazil, Russia, India, China and South Africa. Egypt, Ethiopia, Iran and the United Arab Emirates were admitted this year.
Development banks are set up so that no single member country accepts responsibility for project outcomes.
Hong Kong as a Chinese international finance centre is expected to provide further funding for belt and road projects. Speaking at a summit on Wednesday, Chief Executive John Lee Ka-chiu said the city contributes to belt and road environmental goals by developing “green tech” and “leveraging our expertise in financial services”.
Expect Middle Eastern investment and construction firms to act as belt and road “partners” as well, Wang said. China has been strengthening relations in the Middle East over the past two years.
Financing from Chinese institutions, at the same time, “should become more strategic and limited” with some from the private sector, Wang added.


4. Opportunities and risks
Smaller and more cautiously financed projects would improve China’s image in belt-and-road recipient countries, analysts expect.
Chinese projects built in foreign economic corridors stand to make money by themselves if those zones are “economically vibrant”, Menon said. Brisk income would make it easier to pay back any construction loans.
One example may be the China-Pakistan Economic Corridor. The region of Pakistan that is heavily invested in by China is expected to enhance agriculture, industry and tourism, according to the host country’s government.
But even smaller projects run the risk of not being paid back as the Chinese economy struggles to get back on solid footing in its post-pandemic recovery, analysts say.
Belt and road projects such as underused airports and railways in Africa are particularly exposed to unpaid debt, said Alicia Garcia-Herrero, chief Asia-Pacific economist at investment bank Natixis.
Last month, officials in Nepal asked China to convert a 1.379 billion yuan (US$193 million) Export-Import Bank of China airport loan into a grant because the 20-month-old project had not generated enough income to pay back the debt, according to Nepali news reports.
“Chinese banks are more likely to continue to focus on fine-tuning specifics of loans already made, to enable cash flows through trade,” said Zha Daojiong, an international studies professor at Peking University.


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What China’s Belt and Road Initiative has in store for coming decade as priorities evolve

Belt and Road Initiative

A family rides past a decoration in the shape of the national flags of China and Pakistan ahead of a visit to the capital city of Lahore by Chinese Vice-Premier He Lifeng in July last year to mark the 10th anniversary of a mega economic plan that is the cornerstone of Beijing’s Belt and Road Initiative. Photo: AFP

In Uganda’s mountainous eastern region, the Namagumba-Budadiri-Nalugugu Road (pictured) will be paved with asphalt by a Chinese construction firm. Photo: Handout

China’s central government will ‘expand’ Hong Kong’s role in Belt and Road Initiative

Li Yongjie, China’s deputy international trade representative, said Beijing would expand Hong Kong’s role under the Belt and Road Initiative. Photo: Eugene Lee

Nguyen Hoa Binh (centre), Vietnam’s deputy prime minister, called for more two-way exchanges between his country and Hong Kong at the Belt and Road Summit. Photo: Eugene Lee

Chief Executive John Lee touted the potential of emerging economies covered by the Belt and Road Initiative. Photo: Eugene Lee

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People from Pakistan’s Baloch community take part in a demonstration on July 28 in the city of Gwadar, home to a Chinese-funded port project. Photo: AFP

Pundits caution that setbacks in Chinese-funded projects in Pakistan, one of Beijing’s closest allies, could pose challenges to their “all-weather” relations. Photo: EPA-EFE

Gwadar port, seen here in 2018, gives Beijing direct access to the Indian Ocean and is seen as the centrepiece of the US$60 billion CPEC. Photo: Xinhua

China playing it safe with capital, researchers say, as SOEs get hefty payout

China’s state-owned enterprises and other “safe” industries are diverting capital from more dynamic sectors, research group Rhodium has warned. Photo: Xinhua

‘Why China?’ EU business group says strategic rethink may be needed for foreign investors

An employee works at an automotive-parts workshop in China’s Jiangsu province earlier this year. A survey has found that European Union firms operating in the country are most pessimistic about the automotive sector. Photo: Getty Images

Jens Eskelund, president of the EU Chamber of Commerce in China, says members want to see a “meaningful implementation” of Beijing’s opening-up measures. Photo: AP

For China’s barbecue capital, reality bites as debt risk stokes fire of economic distress

Chinese tourists enjoy a local barbecue meal in Zibo, Shandong province. Photo: Xinhua

A chef shows off grilled meat at a barbecue eatery in Zibo, Shandong province. Photo: Xinhua

Tourists from around China have flocked to Zibo for its famed barbecue. Photo: Kinling Lo

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Gone may be the days when huge infrastructure projects left partner countries holding a big bill and facing environmental implications


With focus of global trade plan shifting, gone may be the days when huge infrastructure projects left partner countries holding a big bill and facing environmental implications.


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Explainer | What China’s Belt and Road Initiative has in store for coming decade as priorities evolve

Gone may be the days when huge infrastructure projects left partner countries holding a big bill and facing environmental implications

1. High-priority countries