Belt and Road Initiative

China’s global investment project, revisited

April 13, 2025

The Belt and Road Initiative (BRI) is a global infrastructure and investment project by China.

 

BRI was started in 2013 and goes beyond just infrastructure:

 

  • Connecting continents: building and investing in infrastructure that would link Asia, Africa and Europe 

  • Boosting trade: creating and growing markets for Chinese exports

  • Projecting power: increasing China’s influence and centrality in international affairs

 

BRI participants hope to boost economic output and reduce poverty by removing trade barriers, improving connectivity, and integrating emerging countries.

 

Countries involved in the Belt and Road Initiative account for a third of the global trade and 60% of the world’s population.

 

The Chinese government promotes BRI as a win-win effort in which all parties can benefit. 

 

For China, BRI means new markets for Chinese goods as a solution for Chinese industrial overcapacity while increasing Beijing’s economic and political influence.

 

For BRI countries, it means infrastructural development, more trading opportunities, and job creation.

  

Many of the 150 countries in the BRI are from the Global South, especially in Asia and Africa, where governments and citizens prioritize economic development.

 

Many of these economies have traditionally been seen as too risky for Western investors and lenders.

 

This meant that these countries often couldn’t find enough money for their economic development.

 

Western institutions like the World Bank or the IMF normally pit specific requirements as conditions for loans, including:

  • Privatisation of state-owned assets

  • Reduction in government spending

  • Reforms of political institutions and practices

 

BRI is seen as a very attractive alternative. Advantages?

  • Low-interest loans

  • Chinese technical expertise

  • No economic and political requirements

 

This contrast has generated goodwill towards China in the Global South while Western lending practices have become more unpopular.

 

China’s own economic rise has been seen as a potential model for development for other countries. BRI is viewed by some countries as a way to replicate China’s own successes.

 

Maritime Silk Road: Developing various ports to increase their capacity and efficiency, boosting trade.

  • Hambantota Port: Deep-water port in Sri Lanka that serves as a transshipment hub (a port where a lot of incoming cargo is sent on to other countries)

  • Port of Gwadar: Pakistan’s southwestern port is intended to serve as a BRI hub connecting East Asia, South Asia, the Middle East and Africa

 

Digital Silk Road: Providing greater technological connectivity by using Chinese technology.

  • Fiber optic networks: Laying cross-border cables to improve internet connections

  • Satellite navigation: China’s BeiDou serves as a non-Western alternative to GPS

  • 5G networks: Building new phone towers in order to help rural communities connect to the internet

 

Energy Projects: improving energy capacity of partner nations, aiming to increase global energy supply.

  • Helping Chinese industry meet rising energy needs while securing geopolitical ties with Russia

  • Constructing power plants, including using renewable sources, to help emerging economies to reduce or eliminate energy shortages, such as Pakistan

 

Railway Projects: Creating overland transport routes that connects BRI partners in a bid to boost international trade.

  • Laos-China Railway: $6 billion train link that connects southern China to the Gulf of Thailand

  • Hungary-Serbia Railway: 350 kilometre-long high-speed railway modernisation project, inproving connectivity between central and southeastern Europe

  • Jakarta-Bandung "Whoosh" Rail: One of Indonesia’s flagship projects that reduced travel time between the capital city and the port city by half

 

Despite the advantages, both the BRI as a whole and individual countries involved have faced challenges. 

 

Despite often generous funding, several countries now have unsustainable debt levels, partially as a result of their ambitious projects.

 

Inability to repay has also created challenges for BRI with China having provided over $240 billion in bailouts for various projects between 2008 and 2021, usually in the form of rescue lending.

  • Sri Lanka, for example, struggled to repay loans for its Hambantota Port, ultimately leasing it to a Chinese company for 99 years in 2017. 

 

This has led to claims of so-called “debt-trap diplomacy,” in which BRI participants are allegedly convinced to take on debts that they China knows they won’t be able to repay, which the Chinese government has consistently denied.

 

China has entered debt restructuring negotiations with its partner-countries both to help with repayment as well as improve their international reputation.

 

Debt restructuring is agreeing new terms for a loan when a party cannot repay it as agreed, such as by providing:

  • Delayed repayment schedules

  • New interest rates

  • Additional loans 

 

Pakistan’s ongoing economic challenges have led to repeated debt restructuring negotiations with China over its BRI-funded power plants and infrastructure projects.

 

In 2019, China extended $1.7 billion worth of loans to the Republic of Congo by another 15 years.

 

BRI lending has shifted in recent years: now 80% of China’s overseas lending goes to middle-income countries.

 

Another criticism has been that BRI has not created as many jobs as hoped, in part because Chinese firms often bring their own labour force instead of relying on local workers.

 

Growing Chinese influence internationally has raised worries in both the United States and Europe, who view China as a strategic competitor.

 

They have begun promoting their own investment programs, such as the EU’s Global Gateway and the G7’s Partnership for Global Infrastructure and Investment.

 

Unlike BRI, these efforts do not provide direct financing but instead use their resources to help attract investment firms and individual investors.

 

Many Western companies have remained unwilling to invest large amounts of money without government support as many of these emerging economies still face structural challenges, making them risky investments.


Evolution of the BRI

Some countries, such as Italy and Panama, have withdrawn from the BRI, often as a result of pressure from the United States.

 

Worsening international security and growing geopolitical tensions have also harmed BRI.

 

For example, Western sanctions have reduced Russia’s ability to serve as a bridge between China and Europe. 

 

As a result of deteriorating relations with the West, the Chinese government has doubled down on its ties with the Global South.

 

Continuing tense relations on the border between China and India has prevented economic cooperation between the two biggest countries on Earth (in terms of population) from reaching their full potential. 

 

Despite this, China-India trade grew by almost 60% between 2019 and 2023.

 

BRI has also moved away from megaprojects in favour of more economically sustainable projects.

 

Chinese overseas lending peaked in the mid-2010s, having become increasingly more selective and with a greater focus on viability.

 

In response to growing concerns about climate change and criticism of financing ecologically damaging projects, BRI has increasingly focused on green investments, such as clean energy projects.

 

Author Naman Habtom

Editor Anton Kutuzov

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