
Coronavirus recovery: China’s Belt and Road is the ideal route for developing nations
- There can be no global recovery, especially for developing countries, without a recovery in the cross-border flow of capital, goods and services
- As a cosmopolitan, high quality and sustainable network for investment and trade, the Belt and Road Initiative can make a vital contribution to restarting the world economy
Amid a fragmented global response to the virus, this network of 138 countries is uniquely positioned to channel trade and investment to developing countries that lack the resources to revive their own economies.
China cannot do this by itself, though: no country can. If the initiative is to deliver on its potential to support global recovery, it must be a collective effort. It must also live up to the high standards it has set itself for transparency and sustainability.
More than 170 countries beyond the G20 – more than 40 per cent of the world’s population – face a grim double-whammy. On one hand, their health care infrastructure is at risk of being overwhelmed as the virus spreads; on the other, the capital they require to reboot their economies is scarce.

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Belt and Road Initiative explained
For decades, globalisation has delivered greater prosperity and better living standards to countries across the developing world. Investment in infrastructure allowed supply chains to flourish and boosted countries’ international trade. Greater trade led to greater employment and wealth creation.
This has been China’s development formula for the last 40 years. In that time it has transformed itself from one of the world’s poorest countries into a major manufacturing base, investment destination and export market.
It is no surprise, then, that international trade and investment are the DNA of the Belt and Road Initiative. This is also what makes it so important today. There can be no global recovery, especially for developing countries, without a recovery in the cross-border flow of capital, goods and services.
Is China getting real with its grandiose visions for the belt and road?
There is no equivalent as a network for these flows. According to HSBC Global Research, the initiative involves some 1,800 projects in countries that account for 40 per cent of the world’s population.
It has established pathways for private capital and trade to follow government investment, and has evolved over the past seven years from a heavy focus on energy and infrastructure development to also encompass manufacturing and even services.

I have seen for myself how investment under the plan’s umbrella, whether in ports or auto manufacturing, can help a local economy connect with international markets, boost businesses and generate jobs.
Leveraging the initiative for the benefit of developing countries, however, will depend on its being truly international, high quality and sustainable.
It must function as an international network and not as a “China club” to increase its positive impact. It is encouraging, for example, that at least 14 countries have signed cooperation agreements with China that allow businesses from both countries to collaborate on projects in a third market.
Why China is not gunning for a roaring economic recovery
High standards will be critical. The initiative has created well-documented concerns about debt sustainability and the transparency and viability of projects.

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Xi sets tone for future Belt and Road development at Beijing forum
But it is not logical that China should want to be the sole financier of the initiative, in spite of the country’s deep financial resources. Indeed, it is very much in China’s interests to ensure projects associated with it are affordable and commercially sound.
That reduces risk for its state-owned lenders, as well as giving projects a better chance of being funded by private capital. Likewise, it will not serve China or, in the long term, anyone else if energy and infrastructure projects along the initiative’s planned routes lock in high carbon emissions.
As a cosmopolitan, high quality and sustainable network for investment and trade flows, the Belt and Road Initiative can make a vital contribution to the global recovery. For capital-constrained emerging economies, it may be the best hope for a swift revival.
Mukhtar Hussain is head of Belt and Road Initiative and Business Corridors, Asia-Pacific, at HSBC
