7th December 2023 – (Beijing) The Belt and Road Initiative (BRI), President Xi Jinping’s signature foreign policy vision, has proven a flexible platform adept at advancing China’s interests. While adapting to serve new strategic aims, it retains the immense capacity to reshape global trade flows and expand China’s international footprint.
Recent setbacks like Italy’s withdrawal must be viewed in balance. The BRI has already achieved numerous initial goals, facilitating expansive infrastructure development across Eurasia and beyond. Its evolution was inevitable – no initiative implements a static vision over a decade. The BRI’s next phase will likely emphasize sustainability and high-tech connectivity.
Claims of the BRI’s demise or failure to benefit recipients are overstated. The data shows Chinese firms operating ports have significantly augmented trade with China at the expense of other partners. Completed projects also deliver temporary export boosts. The BRI has been impactful, though ensuring lasting inclusive growth requires recipient countries to implement complementary reforms.
Going forward, expect a “BRI 2.0” – greener, more streamlined and export-oriented. President Xi’s recent remarks signalled this, as did the subsequent 10-year BRI plan. The vast built infrastructure now needs efficiency. Trade facilitation efforts will likely focus on improving intermodal transport and customs cooperation.
Critically, China’s excess capacity in green energy equipment and telecoms gear needs foreign markets. Its world-leading solar and wind industries already produce double the current global demand. The BRI is an ideal outlet, replacing its early coal plant investments with Chinese-made renewables.
Likewise, 5G champions Huawei and ZTE require expanded access as Western countries restrict their 5G bids. With China’s domestic 5G rollout nearly complete, securing new frontiers via a “Digital Silk Road” is essential to their vitality. The BRI can aid their global entrenchment.
In this sense, the BRI must serve urgent commercial needs at home, not just geopolitical ambitions abroad. This pragmatic orientation could reshape the initiative’s next decade.
The BRI’s First Phase: Laying the Groundwork
The BRI’s progress should be judged on its own initial aims, not external expectations. A review of official goals shows substantial achievements.
The BRI’s founding vision centered on building connectivity through infrastructure and policy coordination. Improving Eurasian transport and energy links would facilitate trade flows and integration. Signing infrastructure deals and cooperation pacts with partner states created frameworks for engagement.
By these measures, the BRI succeeded remarkably. Deals were inked across sectors from roads and railways to ports and pipelines. Pledges reached over $1 trillion. Win-win rhetoric abounded, anchored in respect for sovereignty and mutually beneficial development.
The speed and scale of the BRI’s unfolding took the world by surprise. An initiative encompassing over 70 nations across a vast stretch of humanity materialized rapidly. However, critics claimed the BRI burdened poor countries with unsustainable debts.
This critique misses the point – no one expected every project to succeed. The BRI created tools and narratives that allowed China to expand influence globally through deal-making. This dispersed influence matters more to Beijing than the fate of any given project.
With extensive infrastructure and connections now in place, the BRI is transitioning from laying groundwork to maximizing returns on its vast investments. Refining operations, not ribbon-cutting, will define its next decade.
China’s Ports Strategy: Reshaping Global Trade Flows
The BRI’s expanding port network exemplifies its concrete impact on global trade flows. Chinese state-owned enterprises (SOEs) have secured ownership and operating stakes worldwide, integrating these ports into China’s shipping ecosystem. Analysis shows that where Chinese SOEs run port operations, trade with China increases significantly at the expense of previous partners. Chinese operators buy more goods from host countries as imports from China rise by a smaller degree.
In contrast, port construction projects temporarily boost host country exports across the board around the time of building. But these impacts fade a few years after completion, leaving no lasting trade gains. This data reveals nuances about the BRI’s effects. Port projects offer a short-term stimulus, yet Chinese involvement in operations reroutes trade long-term. The latter binds host countries closer to China’s economic orbit.
These trends manifest clearly in Piraeus, Greece. Chinese SOE COSCO has developed the port into a major Mediterranean transhipment hub since acquiring a controlling stake in 2008. The throughput COSCO’s huge vessels deliver has made Piraeus a critical infrastructure for Greece, even as the country’s exports increasingly flow to China.
COSCO has similarly invested in northern European ports like Rotterdam, Antwerp and Hamburg. It holds minority stakes but remains a dominant player. China’s SOEs enjoy competitive advantages from state support, protected home markets and integrated supply chains. This expanding port network advances Beijing’s aims – COSCO now transports over 10% of global seaborne volume. As Xi Jinping stated, “He who controls the Indian Ocean controls the destiny of the world.”
In short, the BRI has successfully expanded China’s economic and strategic footprint through ports development. Host countries have seen gains, but dependency risks require caution.
Adaptation: The BRI’s Second Wind
In its second decade, the BRI is adapting to heighten sustainability and address overcapacity pressures:
- Infrastructure Quality over Quantity
Past projects were criticized for saddling poor countries with unaffordable debts. Xi has pledged smaller, higher-quality projects attuned to hosts’ absorptive capacities and policy environments.
This shift will minimize white elephant projects and corruption risks. Expected outcomes include more feasibility studies, localized procurement and project integration with national development strategies.
- Exporting Excess Capacity
Vast oversupply in industries like solar panels and EV batteries requires overseas demand. The BRI will help absorb this excess capacity through renewable energy projects.
China’s output of finished EVs, batteries and solar panels already exceeds current global demand by up to four times over. BRI markets are vital release valves for these strategic sectors.
- Capturing Telecoms Markets
With Huawei and ZTE frozen out of Western 5G networks, securing third-country markets becomes imperative. The “Digital Silk Road” will likely accelerate developing country 5G rollouts using Chinese tech.
As China nears completion of its own 5G buildout, the BRI offers Huawei and ZTE opportunities to offset lost developed market revenues. Developing economies present higher growth prospects.
- Enhancing Trade Facilitation
Much built infrastructure suffers from inefficient cross-border links, customs barriers and lack of skills. Upgrading trade facilitation is now critical.
More intermodal connectivity, customs streamlining and targeted education programs will maximize returns on existing assets. Realizing BRI projects’ potential requires proper governance.
- Going Green
Environmental concerns prompted a pledge that the BRI will be “open, green and clean.” Expect more renewables, less coal and a push towards carbon neutrality.
China’s world-leading investment in green energy positions it well to aid other countries’ transitions. But high standards must be maintained to ensure quality and social benefits. These adaptations show Beijing is attentive to criticisms. Refocusing the BRI on higher-impact projects in strategically important industries will sustain engagement opportunities on China’s terms.
Maximising host country benefits requires capable institutions and reforms. Beijing claims it embraces co-planning and seeks partners’ input. If sincere, China should push for transparent, inclusive planning that aligns BRI projects with local needs.
The BRI’s Next Phase
The BRI’s next phase will see it act as an enterprise matching China’s commercial priorities with host countries’ development gaps. This pragmatic evolution can bring mutually beneficial gains – but only if governance improves. The initiative has already expanded China’s global sway through deal-making, more so than specific project outcomes. Its flexible nature means it can keep providing platforms to entrench national champions abroad.
As the BRI transitions from planner to operator, the watchwords will be quality over quantity, integration over isolation and collaboration over imposition. If executed sincerely, Chinese money can facilitate sustainable development. The BRI’s baseline metrics show real progress in expanding connectivity. But fully delivering on its lofty rhetoric requires China to not just build infrastructure, but build capacity in host countries.
Overall, the BRI holds immense potential as an evolving force that can reshape global development. Despite setbacks, China is in it for the long haul. With openness, accountability and transparency, a reset BRI 2.0 could change the world for the better.