CHINA’S BELT AND ROAD INITIATIVE: A STRATEGIC AND ECONOMIC ASSESSMENT

General Report - ECONOMICS AND SECURITY COMMITTEE (ESC)

 In 2013, Chinese President Xi Jinping announced perhaps the most ambitious investment and infrastructure programme ever conceived. The ‘Belt and Road Initiative’ (BRI) that he laid out starkly demonstrated China’s soaring global economic and strategic ambitions. Though Xi has cast the BRI as a win-win opportunity for those countries targeted for new investment, it has come to be seen both as an opportunity and as a threat among many of the countries targeted by China. Despite myriad hesitations, 125 countries have signed BRI cooperation agreements, including several European countries. Not surprisingly, a great deal of financial capital has been staked on the effort. A 2018 US-China Economic and Security Review Commission report estimated that BRI debt and equity funding had exceeded half a trillion dollars by the end of 2017 with funds channelled through Chinese policy and state-owned commercial banks, the Silk Road Fund, the Asian Infrastructure Investment Bank (AIIB) and the New Development Bank (Segal, 2019).

Although the extent of China’s aspirations for the Belt and Road Initiative are not entirely clear, it is evident that this project could shape the coming geopolitical landscape in ways that the transatlantic community simply cannot ignore. It is important to recognise that over the last thirty years, China has re-emerged as the world’s largest trade and shipping nation. It is also now the world’s second biggest economy, controls the world’s third most powerful military, and is a technological giant that plays a key role in global value chains. While it is clearly a challenger to the West, it is also an important commercial partner and a key link in the global economy. China, of course, cannot be easily isolated from the world economy and any attempt to do so would inflict very high costs on the West and on the global trading system more generally. The BRI is thus seen as both a challenge and an opportunity by many of China’s trading partners, although it is viewed with greater suspicion by China’s rivals including the United States and increasingly by a number of European governments. They will accordingly need to work collectively and in a focused manner to ensure that any commercial ties that they forge with China do not compromise basic security interests.

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