China’s Belt and Road Initiative turns 10

Xi announces 8 new priorities, continues push for global influence

ANALYSIS | AGENCIES | China’s Belt and Road Initiative, which now includes 44 African countries, got under way 10 years ago. President Xi Jinping launched it in 2013 with a first speech in Kazakhstan and a second one in Indonesia. The initiative is something of a trial-by-doing development policy enigma: it keeps China watchers chasing Xi’s next move to help define just what it is.

The two speeches, however, give some lasting guidance. The Kazakhstan speech outlined five elements of the “Belt”: strengthening policy communication; road connectivity; currency circulation; people-to-people ties; and promoting unimpeded trade. In Indonesia, the five points were more abstract and diplomacy-oriented. They were framed as pursuing win-win cooperation, mutual assistance and affinity, and remaining open and inclusive.

So, what’s happened since then? As an economist with a keen interest in the political economy of China-Africa relations, I have studied the Belt and Road Initiative since its inception.

Among the more tangible achievements so far is fostering “road connectivity”. China has helped to finance and construct highways, rail and energy projects in various countries. People, goods and commodities flow more smoothly in many places than before, within and between countries. But at a cost. Most of these projects have been funded by loans from Chinese banks, including the China Export Import Bank and China Development Bank.

Marking the 10th anniversary at a forum in October, Xi outlined the progress of the initiative. He also made a commitment to raise the quality of development cooperation, and provided more details on people-to-people ties and on areas of policy dialogue especially.

Much is made of a fall in spending on the Belt and Road Initiative. But if these promises take shape, the early big spending years may come to reflect a down payment. That down payment was made in times of low interest rates and kick-started some important and highly visible infrastructural projects.

Xi’s announcement at this year’s forum offered old and new news for the Belt and Road Initiative and its signatories. For African signatories (and their regional organisations and development banks) to make the most of what China is now offering, they need to understand the origins of the Belt and Road Initiative and also what has and has not changed since.

In addition, Xi’s announcement comes at a time when China’s relationship with the African continent is changing. The change sees the China-Africa relationship move beyond a focus on oil, extractive commodities and large infrastructure projects.

It shifts attention to industrial production, job creation and investments that lead to African exports, and productivity-enhancing agricultural and digital technology opportunities. This model, called the “Hunan model”, is named after the province in southern China that is leading the push. This also helps to explain why China’s lending is moving from bilateral development finance to include more commercial and trade finance lending.

Comparing promises 10 years on

Xi made eight major commitments at the October 2023 forum. More than half of these draw directly from the policy focus areas announced a decade ago.

• Xi promised to build a multidimensional Belt and Road connectivity. He referred to roads, rail, port and air transport and related logistics and trade corridors.

• He promised to open China’s economy more to the world. Higher trade levels would be one way. Alongside a new emphasis on the digital economy, Xi added that China would establish pilot zones for e-commerce-based cooperation. In Africa, a guide to those may be provided by the two existing digital commerce hubs set up by Alibaba in Ethiopia and Rwanda under its electronic World Trade Platform Initiative.

• He spoke of “practical cooperation”. This seems to refer to financing for expensive infrastructure projects, smaller livelihood projects and technical and vocational training. This has an aspect of crossover with currency circulation, people-to-people ties, unimpeded trade and more.

• Xi’s recent speech also promised to support people-to-people exchanges. This is a direct take from the first launch speech of 2013. But he added detail about establishing arts and culture alliances. Also, that China would host a “Liangzhu Forum” to enhance dialogue on civilisation.

• Finally, in line with the earlier commitment to elevated policy dialogue, Xi promised to strengthen institutional building for international Belt and Road Initiative cooperation. This relates to building platforms for cooperation in energy, taxation, finance, green development, disaster reduction, anti-corruption, think-tanks, media, culture, and other fields.

Where extending sovereign lending may present a challenge at the moment while the legacy of debt sustainability issues is addressed, Chinese policy banks are continuing to lend to institutions of the global south. For example, in the lead up to the forum the China Development Bank agreed a US$400mn loan to Afreximbank to support small and medium enterprise trade efforts, with an eye on the goal of “unimpeded trade” and Africa’s own regional integration efforts under the African Continental Free Trade Area.

Beyond the promises made in Xi’s speech to this year’s forum, elevated funding for China’s policy banks was announced. Further, agreements made between participants also signal commitment to the original principles of the Belt and Road Initiative. For example, Xi’s speech in Kazakhstan in 2013 called for elevated currency circulation. China has not only developed its mobile payments ecosystem, but is now testing its emerging central bank digital currency, the eCNY, at home and abroad.

New promises

There are three new policy promises added to those of a decade ago.

• China will promote green development, including green infrastructure, green energy, and green transportation. It will hold a Belt and Road Initiative Green Innovation Conference and establish a network of experts. China also promised to provide 100,000 training opportunities in areas of green development.

• China will continue to advance scientific and technological innovation. It will hold a conference on Science and Technology Exchange, and increase the number of joint laboratories that support exchange and training for young scientists. Xi also promised that China would propose a Global Initiative for Artificial Intelligence Governance, and promote secure artificial intelligence development.

• China will promote integrity-based cooperation. This would include publishing details of Belt and Road achievements and prospects, and establishing a system of evaluating compliance.

These new areas are of increasing economic importance to China, amid rapid population ageing especially, and competition with high-income countries.

The future

Where the twin launch speeches of the Belt and Road Initiative had very broad agendas, Xi’s speech at the 10-year anniversary revealed progress on earlier themes and a push to elevate the quality of development. There was more detail especially on people-to-people ties and on areas of policy dialogue to be fostered.

He added some new areas such as artificial intelligence governance, green development, e-commerce, and greater emphasis on scientific and tech cooperation. These new areas are becoming more economically important to China.

Comparing the new policy signals with the earlier ones implies that the initiative is by design adaptable. Further, since the COVID pandemic, some countries that had benefited from China’s new level of Belt and Road lending have run into debt problems and interest rates have risen. This signals China’s increased interest in lending to regional and locally present multilateral development and commercial banks that are relatively well positioned to target local entrepreneurs and development. In Africa, this offers a new chance to evolve strategies that can sustainably tap Chinese resources towards fostering the independent advance of the African Continental Free Trade Agreement and local socioeconomic development.

*****

Source: The Conversation