All you need to know about China’s ‘Belt and Road Initiative’: what is it, who’s paying, who’ll benefit and who might lose out
China’s much-discussed “Belt and Road Initiative” will shape the global economic market and geopolitical landscape for years to come. Ahead of a summit devoted to the plan, scheduled to take place on May 14-15 in Beijing, we take a look at its significance.
What is it?
Previously known as “One Belt, One Road”, the initiative is being spearheaded by the Chinese government to improve trade and economic integration across Asia, Europe, and Africa. The strategy uses free-trade agreements and infrastructure projects – including roads, ports and railways – to create a modern Silk Road spanning some 65 countries, which have a combined gross domestic product (GDP) of US$21 trillion. It includes both an economic land “belt” through Eurasia, and a maritime “road” to connect coastal Chinese cities to Africa and the Mediterranean.
When and why did China create this initiative?
Chinese President Xi Jinping endorsed the scheme in late 2013, with a stated goal of increasing global economic cooperation. In additional to stimulating China’s own economy, the plan is aimed at bolstering its economic relationships and influence, while providing more political capital at home and abroad.
Many observers have said the initiative could help establish China as a regional power – despite Xi’s insistence the country will not interfere in other nation’s affairs or seek hegemony – on a scale that supersedes the Marshall Plan that the United States launched to help rebuild Europe after the second world war. It also has significant implications for China’s ability to achieve energy security.
How will the plan be financed?
China established the US$40 billion Silk Road Fund in early 2014 to fund the scheme’s infrastructure projects, including the creation of six economic corridors by building roads, railways, pipelines and highways. Additional financing will come from the Asian Infrastructure Investment Bank (AIIB), the China-backed global bank launched in October 2014 and the New Development Bank (NDB), a Shanghai-based bank for the BRICS (Brazil, Russia, India, China, South Africa) countries.
What is happening at the summit?
In what is expected to be China’s biggest diplomatic event of the year, state leaders will meet in Beijing to discuss the initiative over two days. In January, Xi said the summit was a chance to brainstorm on ways to address regional and global economic problems, and ensure the initiative delivered benefits to all countries involved. Top leaders from at least 28 countries have confirmed their attendance at the summit, including major southeast Asian leaders, as well as Russian President Vladimir Putin.
But only one G7 leader is expected to show – Italian Prime Minister Paolo Gentiloni. When Chinese Foreign Minister Wang Yi announced the summit’s guest list in April, he did not mention officials from South Korea, North Korea, or Japan – which have strained ties with China.
What does the scheme mean for the United States and its allies?
While China bills the “Belt and Road Initiative” as a move toward global economic cooperation, its expansive reach has set off alarm bells for the United States, which has been wary of China’s growing influence. The strategy not only kicks China’s economic standing up a notch, it also challenges trade agreements that have excluded China, such as the Trans-Pacific Partnership, which US President Donald Trump nixed. Neither the United States nor its primary Asian ally, Japan, are part of the China-led AIIB, and neither of their heads of state will be at the upcoming summit.
How is China’s new Silk Road perceived in Europe and Russia?
Many European countries have openly welcomed China’s initiative, hoping it will attract more Chinese investment and development, but others remain hesitant about Beijing’s growing influence and motivations on the continent. Nations in Europe such as Britain have signalled a willingness to partake in China-led institutions such as the AIIB, despite its exclusion of their ally, the United States.
But in the wake of post-Brexit Europe, it is difficult to say how perceptions towards the belt and road plan will be shaped. Meanwhile, for Russia, the Silk Road scheme is poised to benefit Sino-Russian relations, as it brings the two countries closer together through joint investments and projects. Much of the scheme also relies on Russian cooperation and involvement, given its strong historical influence in Central Asia, and has been perceived to be economically symbiotic.