FP’s Guide to China’s Belt and Road

As world leaders prepare to meet in Beijing on April 25-27 for a summit on China’s Belt and Road Initiative, a once confident China seems on the back foot. President Xi Jinping has made the Belt and Road his signature foreign-policy plan, leading local Chinese leaders to jump on every possible chance to boost it and demonstrate their loyalty to the central leadership. It has even been embedded in the often-changing Chinese Constitution.

Yet as Belt and Road projects have increasingly swallowed up China’s foreign-policy plans, criticisms over the sustainability and fairness of Chinese loans have only multiplied. Skeptics, meanwhile, point out that for all the talk of grand schemes, the last few years haven’t seen any significant increases or changing trends in China’s actual spending or lending abroad.

To help make sense of what some see as a plot, some as an opportunity, and some as a white elephant, we’ve gathered together our best pieces on Belt and Road.

The initiative originally started as a relatively limited project designed to create Eurasian connectivity through road and rail infrastructure modeled on the Chongqing-Duisburg rail route. But that was a faulty plan. The Chongqing-Duisburg rail route was never a state project but “an existing route reused and redeveloped by Hewlett-Packard”—and every attempt to imitate it has failed, Andreea Brinza, a prominent researcher into Belt and Road, points out. “Today, most of the BRI’s rail routes function only thanks to Chinese government subsidies. The average subsidy per trip for a 20-foot container is between $3,500 and $4,000, depending on the local government.”

As Belt and Road grew, observers have looked long and hard at the impact of past Chinese lending. Venezuela’s economic crisis was an early sign of the disasters China’s lending policies might cause, suggests the economist Christopher Balding. “A Venezuelan default could have consequences far beyond Caracas and Beijing. As part of its Belt and Road Initiative … China is planning to extend the same kind of deal it made with Venezuela to many more countries around the world.”

Not so fast, though, argue a group of Africa experts. In an underdeveloped continent, Chinese aid is bringing a new world of possibilities. “Chinese loans are neither inherently good nor bad—they will be whatever the African nations choose to make of them.” In the end though, “it is up to African leaders to drive harder bargains and African publics to demand transparency.” That view is backed up by Salem Solomon and Casey Frechette, who point out that local corruption sometimes wastes Chinese funds, such as the “more than half of $1.163 billion in loans from China to Congo in exchange for minerals” that vanished into officials’ pockets.

China may be doing more damage to itself than to others. The financial pressure of Belt and Road projects is helping slow down the Chinese economy, says the international development consultant David G. Landry. “Through the Go Out policy and the Belt and Road Initiative, China’s firms have been economically and politically incentivized to invest in countries where they have little to no experience. Chinese President Xi Jinping’s trillion-dollar Belt and Road Initiative has backed the Go Out policy’s economic incentives with a healthy dose of political pressure, reflecting China’s desire to have its economic rise matched by political clout.” Size hinders more than helps, as “China’s mammoth firms frequently make massive losses on foreign investment ventures.”

Nevertheless, the United States needs to think smart if it’s going to counter China’s efforts, argue the conflict scholars Ethan B. Kapstein and Jacob N. Shapiro, especially given how massively Beijing is outspending it. Washington might have launched the International Development Finance Corp., but whereas “the new IDFC will have about $60 billion in capital, the Belt and Road Initiative is a $1 trillion effort.” A country unused to being David, rather than Goliath, will have to learn new strategies. “The answer is to use a version of what some economists call the ‘judo strategy’—a method small firms deploy to compete against larger companies. Judo strategies tend to involve turning what is supposedly a competitor’s key asset—in this case, its size—against it.”

Japan’s tactics might be another place for U.S. strategists to look. Tokyo’s foreign investments are more far-reaching and more successful than China’s—and it has ramped them up in response to the Belt and Road, as Foreign Policy’s own Keith Johnson shows. “Tokyo is increasingly joining up with other countries and especially India, launching a $200 billion infrastructure plan, and even boosting its military efforts in the broader Indian Ocean area in what is seen as a deliberate bid to counter Beijing’s growing heft.”

But perhaps the United States should welcome the Belt and Road instead of fearing it—not because of the possibilities of cooperation but because it’s a huge blunder by Beijing, the strategist Tanner Greer suggests. “By buying into the flawed idea that barrels of money are all that is needed to solve complex geopolitical problems, China has committed a colossal error. Xi’s dictatorship makes it almost impossible for the country to admit this mistake or abandon his pet project. The United States and its allies gain nothing from making China’s blunders their own.”

Yet the scheme may also be working in Beijing’s favor—largely by paying off local elites, the journalist Will Doig writes. “When such projects are approved by local leaders more interested in enriching themselves than in weighing the cost for their country, locals can find themselves crushed beneath the weight of white elephants.” Doig points to the now infamous example of Sri Lanka, “where Hambantota Port was built by China under former President Mahinda Rajapaksa.” When Rajapaksa faced a tight election, “money earmarked for the port’s construction somehow found its way into the president’s campaign coffers … and the port proved so unprofitable that the new government was forced to hand it over to China in a debt-for-equity swap.” In a taste of the damage that corruption can do, Rajapaksa’s allies attempted a coup to put him back in office after losing—creating a divided government that failed to stop the 2019 Easter Sunday bombings.

Even for its advocates, concerns about the feasibility and fairness of Belt and Road projects have filtered up to the highest levels in Beijing. “[A]lmost daily media reports announce political troubles, stalled or canceled projects, and security challenges,” the Chinese legal expert Jamie Horsley notes. The Chinese government has laid out an array of new regulations to ensure better oversight. Beijing can also draw on its “own developmental and regulatory experience to promote good infrastructure governance standards that seek to harmonize international, regional, and country-specific standards and best practices,” Horsley argues.