The Belt and Road Initiative (BRI) was launched in 2013 by President Xi Jinping to foster economic cooperation from the Western Pacific to the Baltic Sea and to break the connectivity bottleneck in Asia through infrastructure investments. It was initially called the One Belt One Road initiative (OBOR). The BRI program is a centerpiece of China’s foreign policy and domestic economic strategy. In March 2015 the Chinese government unveiled a BRI initiatives action plan. The initiative covers a land-based (in essence rail-based) Silk Road Economic Belt (One Belt), including a zone of influence on both sides of the Belt, and a 21st century Maritime Silk Road (One Road).
The land-based Belt begins in Xi’an in central China before stretching west through Lanzhou (Gansu province), Urumqi (Xinjiang), and Khorgas (Xinjiang), which is near the border with Kazakhstan. The Silk Road then runs to Duisburg in Germany via Iraq, Syria, Turkey, Bulgaria, Romania, the Czech Republic, and Germany. From Duisburg, it connects to major north European ports such as Rotterdam, Antwerp, and Hamburg. The Belt runs south to Venice in Italy, where it meets up with the Maritime Silk Road. The Maritime Silk Road begins in the port of Quanzhou in Fujian province and calls at Guangzhou, Beihai (Guangxi), and Haikou (Hainan) before heading south to the Malacca Strait. Then it connects to India/Pakistan (Gwadar port) and East Africa before entering the Mediterranean with key stops in the port of Piraeus in Greece and the port of Venice.
Meanwhile, the number of routes has been extended. It now covers six economic corridors: the China-Mongolia Russia economic corridor, the New Eurasia Landbridge economic corridor, the China-Central Asia-West Asia economic corridor, the China-Pakistan economic corridor, the Bangladesh-China-India-Myanmar economic corridor, and the China-Indochina Peninsula economic corridor. Since the announcement of the BRI, the number of countries involved has continued to grow.
The BRI initiative is supported by a range of funds and financial institutions such as the Silk Road Fund, China Development Bank, and the Export-Import Bank of China (China Eximbank). CIC Capital, a subsidiary of China’s sovereign wealth fund, also finances BRI projects, as do other commercial banks. Also, the multilateral Asian Infrastructure Investment Bank (AIIB) has its role to play financing infrastructure in Asia.
China’s motives for launching the BRI are of a cultural/historical, geoeconomic, and geopolitical nature:
- The historical and cultural motives are linked to the ancient trade routes connecting China to the Middle East and Europe that were established during the Han dynasty (207 BCE to 220 CE). Xi’an served as the starting point and endpoint of the historical Silk Road. The geography of the Maritime Silk Road has some resemblance to the historical exploits of Admiral Zheng He (1371-1433) who made maritime journeys between 1405 and 1433 with a reported fleet of some 300 ships. After sailing through South Asia, India, and the Middle East, Somalia and Kenya were reached in 1418.
- The geoeconomic motives are mainly linked to China’s search for economic growth, including for its western and central provinces (Go West policy). Developing stronger economic ties with trading partners and emerging nations in Asia, Central Asia, and Africa, finding new markets for Chinese industries, for example in steel, cement, and alumina, streamlining the foreign investments of Chinese companies and enhancing capital convergence and currency integration of the Chinese Yuan (RMB) are also core motives.
- The geopolitical motives relate to China’s ambition to increase its influence and to adopt a leadership role in the world by making stronger use of economics in shaping diplomatic relationships. There is also a domestic geopolitical component as China is determined to preserve its territorial integrity. The inclusion of Xinjiang province in the BRI as a hub to Central Asia should help to meet this objective.
While the BRI offers potential for economic cooperation and development, its implementation is not without risks. Some of the key regions involved face political instability. Infrastructure development faces some governance risks such as the need for financial discipline, careful budgeting, and fair tender procedures to avoid any waste of resources. Another key issue is the need to further develop know-how and expertise on infrastructure planning and financing in some of the less developed regions along the Belt and Road.
At the seaport level, Chinese companies have proven to be highly instrumental in the realization of key port expansion and rehabilitation projects across Asia, Africa, and parts of Europe, partly in the context of BRI. Still, Chinese investments are being scrutinized regarding the security risk they might pose to national interests, the need for open and fair contracting procedures, and China’s credit terms imposed on some of the developing countries involved. Claims and accusations in these areas potentially damage China’s reputation. Therefore, the Chinese government and companies are developing a more restrictive and prudent approach. At the same time, the BRI focuses on softer aspects such as cultural exchange to complement the hard economics behind international investments and transactions.