09/14/2023, 18.04
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After 10 years, the Belt and Road Initiative has winners, but some are putting on the brakes

by Alessandra De Poli

Many changes have occurred since 2013, University of Nottingham Professor Hongyi Lai told AsiaNews. The “New Silk Road" has expanded to new sectors but several infrastructure projects are being implemented at a slower pace. China’s economic woes will not end soon.

Milan (AsiaNews) – This month marks ten years since Chinese President Xi Jinping delivered a speech at Nazarbayev University in Astana, Kazakhstan, launching what came to be known as the “New Silk Road", formally called the Belt and Road Initiative (BRI) in English.

Beijing will mark the occasion with a big summit next month; however, a lot has changed since its inception. Many countries have joined. Some have benefited greatly while others, like Italy, are trying to get out. Meanwhile, China’s economy is now facing increasing difficulties.

Prof Hongyi Lai, a social scientist at the School of Politics and International Relations, University of Nottingham (United Kingdom), China’s current difficulties will have a long-term impact, and not be solved soon.

"The impact of the Belt and Road Initiative on the economies of individual countries depends on how they are involved in the project,” said Hongyi Lai, who has studied Xi's political reforms and their impact.

The New Silk Road is often described as a single large infrastructure project, but it is much more. It began “because China needed new markets and wanted to propose a new image of itself, different from the one created by Western propaganda.”

Known as "One Belt, One Road" in Mandarin (一带一路), BRI has provided China with several avenues of cooperation with other countries over the years.

Centred initially on four pillars (policy coordination, infrastructure connectivity, financial integration, unimpeded trade), it has been extended to other sectors.

A maritime silk road was added to the overland version, then came the health road, the digital road and even space, as did the use of local currencies, lending through the Asian Infrastructure Investment Bank (AIIB) and the Silk Road Fund. Great emphasis has also been placed on cultural exchange and connecting people as well.

"The BRI announcement was accompanied by great enthusiasm ten years ago, now things are much less rosy," Lai explained. "At the start, it seemed that China had achieved great economic results in a short time, and for this reason, it managed to include important European economies in the project, especially through the AIIB.”

However, “if we look more closely at what the AIIB does, investments are not always directly linked to BRI.” ranging instead from the energy sector to agriculture, environmental protection, telecommunications, and sanitation.

In any event, “there have been many changes in recent years related both to the initiative itself and China's external relations.” A series of circles with Beijing in the middle best illustrates the degree of involvement in the BRI.

In light of all of Beijing’s initiatives, “The countries that have benefited the most from the initiative are so far in Southeast Asia, geographically and economically closest to China, and those in Central Asia,” Lai said. “The economies of some allied countries in South Asia, such as Bangladesh and Pakistan, also benefit from their proximity to China."

Conversely, India, China’s rival, quickly made it clear that it did not want to be part of it and now, with the help of the United States, it is trying to act as an alternative, especially in the Middle East.

Still, despite the somewhat dampened enthusiasm, new BRI-related projects are being implemented in accordance with a typically Chinese approach, slow but sure over the long period.

One example is Afghanistan. China is the first country to send an ambassador to that country since the Taliban came back to power in 2021.

Rather than fill the vacuum left by the West, Beijing will exploit Afghan mineral wealth and energy resources to connect the Sino-Pakistani economic corridor to Central Asia.

This issue might come up at the third BRI forum scheduled next month, which should be attended by Russian President Vladimir Putin.

"In the last decade, energy trade between Russia and China has grown tremendously, and Beijing has invested in the development of Russian know-how."

In Africa, many countries “definitely benefited from the BRI in the early years, because they gained economic infrastructures quickly,” but now there is a greater desire “to develop local projects and manufacturing sector using local resources.” Strong cultural differences with China are an added factor.

“I don't think this can be stopped in the future, but it could be counterbalanced by European and US initiatives. In short, the level of BRI involvement around the world is largely uneven.”

Italy is in a delicate situation. In March 2019, Rome signed a memorandum of understanding with the People’s Republic of China, but now, under Prime Minister Giorgia Meloni, it has signalled its intention of pulling out of the pact with Beijing. Among Italian government officials, this has raised concerns because of possible economic retaliation.

"China has imposed tough economic sanctions on South Korea, Australia and, to some extent, Japan,” Prof Lai noted. These “countries, together with the US and other allies are not in the BRI".

“Still, as large economies, they have managed to overcome economic obstacles. I don't think that the consequences for Italy would be so serious”. While the European Union and the United States are putting pressure on Italy, “for China it is more a question of image.”

Countries should decide to join or not the BRI based on long-term cost-benefit considerations, not ideology, especially if they want to avoid the “debt trap”.

"It's often easy to put all the blame for foreign debt on China; it's still a two-way relationship. Of course, the initial enthusiasm may have obscured long-term consequences. A striking example is the case of Sri Lanka, which today finds itself having to repay several creditors, not only China, and this weighs heavily on its economy.”

For those in this situation, things are very critical, because China’s economy no longer looks like what it was ten years ago, when it needed new outlets.

Today, for Lai, great uncertainty reigns "due to choices made during the COVID period and a personalistic leadership that prioritizes politics and nationalism far above economic growth and people's welfare". This is different from the “collective and institution-driven leadership that characterised China before Xi Jinping”.

“It is well known that some sectors have suffered greatly due to Xi’s unilateral choices. The fact that only one person decides creates great anxieties among foreign investors.

“The loss of investment has pushed the situation into a negative, self-reinforcing economic spiral. This means that it is very hard to go back.”

Former Chinese President “Hu Jintao also went through a period of great change, but he had been much more cautious in economic decisions." For this reason, Lai contends, the current situation is unlikely to be resolved on the short run.

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