The Belt and Road Initiative: China’s Strategy to Bring Nations around the World into its Orbit
Launched in 2013 by China’s President Xi Jinping, the Belt and Road Initiative (BRI) is a highly ambitious, international infrastructure program that currently involves more than 150 countries on five continents and carries a colossal price tag, with estimates ranging from $1 trillion to $8 trillion. Most experts believe that the true cost is closer to the higher end of that range. The “belt” in BRI refers to the land routes and infrastructure projects like railways, conventional highways, power plants, and energy pipelines, while the “road” signifies the plan’s maritime routes.
One high profile BRI segment is the China-Pakistan Economic Corridor (CPEC), an arrangement between the People’s Republic of China (PRC) and Pakistan prioritizing the construction of coal-fired power plants and transmission lines meant to prevent Pakistan’s frequent brownouts and blackouts, a serious obstacle inhibiting its economic growth. BRI involvement has led to anti-China sentiments among Pakistanis, and in response, China has installed surveillance equipment to protect Chinese nationals working on the projects. This is a common Chinese government practice when operating in BRI partner nations which serves the dual purpose of “training” PRC facial recognition AI. China’s anticipated investment in this region alone is set to top $60 billion on infrastructure and energy projects. With 30% of Pakistan’s overall foreign debt owed to China, Pakistan is perilously close to being engulfed in a PRC debt trap making it more vulnerable to China’s economic and political influence and interference.
As of 2023, expenditures on the BRI total around $1 trillion, and China either directly finances these projects through construction contracts with Chinese companies or provides loans from state-owned banks to be paid back in full at a 6% interest rate. BRI lease agreements include provisions allowing China to claim ownership of the natural resources on and seize administrative control of the land that is being developed as part of a BRI project in the event of default. While BRI loans and investment have slowed overall, tracking closely to lackluster PRC economic growth, they have not stopped, and CPEC and assistance to Latin America appear to be the exceptions with spending continuing at the pre-pandemic pace.
The BRI is widely regarded as a geoeconomic/strategic enterprise to draw countries away from the Paris Club—which focuses on “coordinated and sustainable [financial] solutions” for developing nations—and into China’s economic orbit, ensnaring countries and regions that China deems critical for its future geopolitical ends in a debt trap. China is painstakingly trying to construct a new world order to serve as a tempting alternative to Paris Club engagement with the US, UK, France, Germany, Italy, and Japan.
However, there are consequences for forging economic relationships with the PRC, and Sri Lanka‘s experience provides a striking example of China’s aggressive enforcement of loan repayment. In the early 2000s, Sri Lanka’s President Mahinda Rajapaksa sought loans from the PRC to develop a port at Hambantota – a project that had been rejected by other potential lenders including India as too risky. As predicted, the port failed, and Rajapaksa was voted out of office but only after saddling Sri Lanka with crushing, unsustainable debt. After the Sri Lankan government defaulted on its BRI loan in 2017, China acquired a 99-year “lease” that is open to extension to the port of Hambantota and a few years later extended the lease for a second 99-year term. This spring, the International Monetary Fund offered the beleaguered south Asian nation a $2.9 billion bailout – Paris Club members reached a deal nearly a year ago with China grudgingly assenting to forgive some of Sri Lanka’s debt offered months later in March 2023.
China’s goal is for the Belt and Road Initiative to ultimately serve as the centerpiece of the Chinese Communist Party’s expansion of influence around the world which would effectively subject more nations and more people to PRC hegemony. ALEC adopted model policy five years ago designating each November 7th as Victims of Communism Memorial Day providing an opportunity to commemorate those who lived and continue to live under communist domination. The United States, along with our economic partners, would be wise to provide tangible fiscal options to effectively counter the BRI or risk ceding critical geostrategic ground to China. America’s “Build Back Better World” initiative is a start at ensuring prosperity for the global community without the potentially harmful conditions inherent in BRI agreements. American leadership on programs to rival the BRI are a constructive demonstration of US soft power at its best.