ANU Press

Chapter Title: China’s Belt and Road Initiative: Contributions to connectivity

Chapter Author(s): Pelagia Karpathiotaki, Yunhua Tian, Yanping Zhou and Xiaohao Huang

Book Title: New Dimensions of Connectivity in the Asia-Pacific

Book Editor(s): CHRISTOPHER FINDLAY, SOMKIAT TANGKITVANICH
Published by: ANU Press. (2021)
Stable URL: https://www.jstor.org/stable/j.ctv23hcdsw.10

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 2
China’s Belt and Road
Initiative: Contributions
to connectivity
Pelagia Karpathiotaki, Yunhua Tian, Yanping Zhou
and Xiaohao Huang

Introduction
The first signs of China’s desire to go abroad in a coordinated manner
can be found in the first speech of Xi Jinping on 15 November 2012 in
Beijing, when he emerged as general secretary of the Chinese Communist
Party and, among others, highlighted the priority of national rejuvenation
and China’s role in world affairs:
Our responsibility is to unite and lead people of the entire party and
of all ethnic groups around the country while accepting the baton
of history and continuing to work for realizing the great revival of
the Chinese nation in order to let the Chinese nation stand more
firmly and powerfully among all nations around the world and
make a greater contribution to mankind. (BBC News 2012)

That day marked a turning point, as it changed the way China viewed the
rest of the world and upgraded its role as a global player.
About a year later, in September 2013, during a visit to Kazakhstan,
President Xi made a speech titled ‘Promote People-to-People Friendship
and Create a Better Future’ and introduced the Silk Road Economic

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 NEW DIMENSIONS OF CONNECTIVITY IN THE ASIA-PACIFIC

Belt (SREB) (an overland route), which, along with the 21st Century
Maritime Silk Road (MSR) (a maritime route), announced a month later
in Indonesia, came to be collectively known today as the Belt and Road
Initiative (BRI). The first geographical presentation of the BRI was made
in a map published by Xinhua News Agency on 8 May 2014. According
to this map, the SREB would begin in Xi’an, whereas the MSR would
start in Quanzhou’s harbour in Fujian Province.
The political significance of the BRI initially was demonstrated in the
‘Decision of the Central Committee of the Communist Party of China
on Some Major Issues Concerning Comprehensively Deepening the
Reform’, adopted on 12 November 2013, according to which:
We will set up development-oriented financial institutions,
accelerate the construction of infrastructure connecting China
with neighbouring countries and regions, and work hard to build
a Silk Road Economic Belt and a Maritime Silk Road, so as to
form a new pattern of all-round opening. (Article 26, Section VII)

The BRI has become so integral to China’s foreign policy strategy that
it was adopted into the Chinese Communist Party’s constitution on
24 October 2017:
The Party shall constantly work to develop good neighbourly
relations between China and its surrounding countries and work
to strengthen unity and cooperation between China and other
developing countries. It shall follow the principle of achieving
shared growth through discussion and collaboration, and pursue
the Belt and Road Initiative. (CPC 2017)

Since 2013, many official documents and white papers have been
published that clarify the principles, priorities and thematic specialisations
of the BRI. Undoubtedly, the first official and probably one of the
most important documents on the BRI was the ‘Vision and Actions
on Jointly Building the Silk Road Economic Belt and 21st Century
Maritime Silk Road’, jointly issued by the National Development and
Reform Commission (NDRC), the Ministry of Foreign Affairs and the
Ministry of Commerce at the Boao Forum on 28 March 2015. It is an
action plan on the principles, framework and cooperation priorities and
mechanisms of the BRI.

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 2. CHINA’S BELT AND ROAD INITIATIVE

According to this document, the BRI is:

• open to all countries, and international and regional
organisations for engagement
• advocates peace and cooperation, openness and inclusiveness,
mutual learning and mutual benefit
• promotes practical cooperation in all fields, and works to build
a community of shared interests, destiny, and responsibility
featuring mutual political trust, economic integration and
cultural inclusiveness.

In 2016, the State Council published the Thirteenth Five-Year Plan for
National Informatisation, devoting a section to the construction of an
‘online Silk Road’ and encouraging the full participation of Chinese
internet companies. In May 2017, speaking at the first BRI forum in
Beijing, President Xi reiterated the critical role of the digital Silk Road
in the overall initiative. He called for further integration into the BRI of
next-generation network technologies—including artificial intelligence,
nanotechnology, quantum computing, big data, cloud computing and
the concept of smart cities—to enable innovation-driven development
(Xinhuanet 2017).
In January 2017, China and the World Health Organization (WHO)
agreed to jointly implement a BRI project focused on health. In August
that year, China hosted an international conference on health related to
the Silk Road. On 16 March 2020, during the COVID-19 pandemic
and while Italy was facing perhaps the greatest humanitarian crisis in its
modern history, President Xi, during a phone conversation with then
Italian Prime Minister Giuseppe Conte, raised the notion of working
closer with Italy to build a ‘Health Silk Road’.
Today, the BRI’s overland route comprises six land corridors:
1. The China–Mongolia–Russia Economic corridor (CMREC).
2. The New Eurasian Land Bridge (NELB).
3. The China–Central Asia–West Asia Economic Corridor
(CCWAEC).
4. The China–Indochina Peninsula Economic Corridor (CIPEC).
5. The China–Pakistan Economic Corridor (CPEC).
6. The Bangladesh–China–India–Myanmar Economic Corridor
(BCIMEC).

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 NEW DIMENSIONS OF CONNECTIVITY IN THE ASIA-PACIFIC

In addition, the maritime route of the BRI proposes more direct linkage
of Chinese ports with emerging countries and economic regions such
as the Association of Southeast Asian Nations (ASEAN). According to
another official document, the ‘Vision for Maritime Cooperation under
the BRI’, released on 20 June 2017 by the NDRC and the State Oceanic
Administration (SOA), the BRI comprises three sea routes, or blue
economic passages:
7. The China–Indian Ocean–Africa–Mediterranean Sea Blue Economic
Passage, linking the CIPEC, CPEC and CCIMEC.
8. The China–Oceania–South Pacific Blue Economic Passage.
9. The China–Northern Europe Blue Economic Passage, through the
Arctic Ocean.
On 28 January 2018, China’s State Council Information Office released
a white paper titled ‘China’s Arctic Policy’, detailing the country’s plan to
develop shipping lanes opened up by climate change.
The original name of the BRI was coined in 2013 by President Xi, who drew
inspiration from the concept of the Silk Road, which was established during
the Han Dynasty 2,000 years ago and was an ancient network of trade
routes that had for centuries connected China to the Mediterranean via
Eurasia. The term ‘Silk Road’ was coined by German geographer Ferdinand
von Richthofen in 1877. In China, the ancient trading routes across Eurasia
were more prosaically called the northern and southern routes. The reference
to the ancient Silk Road was not chosen by chance. It conjures up images
of peaceful and diverse exchanges from one prosperous end of the Eurasian
continent to the other and is easily identifiable in countries outside China
as a shared heritage defying civilisational differences.
Chinese sources never refer to the BRI as the New Silk Road Initiative
(NSRI) because this term was first envisioned in 2011 by the United States
as a means for Afghanistan to integrate further into the region by resuming
traditional trading routes and reconstructing significant infrastructure
links broken by decades of conflict. The NSRI shares a focus on energy
and transportation infrastructure with China’s SREB.
In the ‘Vision and Actions’ document, the BRI is described as 倡议 (‘a call
for action’), translated into English as ‘initiative’. In August 2015, China’s
NDRC, together with the Ministry of Foreign Affairs and Ministry of
Commerce, clarified that the BRI is the official English translation and
words such as ‘strategy’, ‘program’, ‘agenda’ and ‘project’ are inaccurate

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 2. CHINA’S BELT AND ROAD INITIATIVE

(Xie 2015). According to the official documents, the BRI is a unilateral

concept that requires willing cooperation from others who also have a
stake in the provision of public goods, which is why Chinese officials will
not use the term ‘strategy’, which requires close association or alliances
among those who share its specific goals. Because the initiative relies on
voluntary participation, it faces a collective action problem.
The BRI is not just a development plan; it is also an important element
of Chinese foreign policy in the twenty-first century, and therefore the
definition of what constitutes a BRI project is broad. For the purposes
of this chapter, BRI projects are any that originated in China (that have
direct Chinese participation at a consultant, owner, contractor and
financer level) and are focused on Asia, Europe and Africa, but open to
all partners and fulfil the scope of the two Chinese policy documents
that outline the BRI: the ‘Vision and Actions on Jointly Building the
Silk Road Economic Belt and 21st Century Maritime Silk Road’ and the
‘Vision for Maritime Cooperation under the Belt and Road Initiative’.
In 2019, the NDRC compiled an official list of participating BRI nations
and approved projects. Many of the BRI-branded projects began before
2013 but gained momentum under the initiative.
In this chapter, we focus on the contributions of the BRI to connectivity,
and its consequences, but first, we examine some of its philosophical and
geopolitical features, including its governance. These are the topics of the
following two sections. We then identify the BRI’s contributions to
connectivity. We examine the economic effects of connectivity on trade,
foreign investment and global value chains. Subsequently, we examine
some risks in the BRI, including political and legal, debt sustainability
questions, governance risks and those associated with the environment.
The final section of the chapter provides a conclusion.

BRI foundations

Philosophy
The BRI is a unique megaproject in global economic history, which is
in line with President Xi’s ‘Thoughts’ on China as a global power and
globalisation in the twenty-first century, and which contributes to his
mission of national rejuvenation. At its core, the initiative incorporates
elements of Chinese and Western philosophy.

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 NEW DIMENSIONS OF CONNECTIVITY IN THE ASIA-PACIFIC

In contrast with Western philosophy, the BRI is not a project ‘based on

models’, which means it does not have a clearly defined framework, clearly
measurable goals or defined action steps or a timetable, but will gradually
evolve and adapt to the dynamics of the international environment. The
BRI generates strategic flexibility, seeks relative advantage for China and
preaches avoidance of direct conflict. According to Chinese philosophy,
a Chinese general does not set goals or make plans; he tries to detect
and exploit the internal dynamics of the ‘environment’ and adapts his
decisions to the natural course of things, to make the conditions work
in his favour.
Another element of Chinese philosophy that also characterises the BRI is
‘transformation’—mainly as an ideological concept. According to Engels
and Marx, only in the final analysis is the economy the driving force of
history, but people are becoming aware of the conflicts that are taking
place in the economic world, in the ideological field. ‘Transformation’ is
a process that causes gradual changes that often are not visible in the short
term, reducing the chance of friction, in contrast with the term ‘action’
(as in Western philosophy), in which friction is usually inevitable. Through
the BRI, China seeks to ‘transform’ the international environment and
promote an alternative model of globalisation and world order adapted
to the twenty-first century with a moral advantage to create a fairer
world based on globally accepted values (not Western or Eastern) and
without any discrimination regarding different political or social systems
(Karpathiotaki 2016).
On the other hand, the official geographical presentation of the BRI
and its basic principles incorporate elements of Western philosophy and
culture. The BRI’s ‘roads’, ‘corridors’ and ‘passages’ give shape to the
project, creating geometric ‘ideal models’, which in fact are not absolutely
and immediately applicable but they contribute to a better understanding
of the project by the Western world. In addition, the principles and values
that officially are promoted by the BRI are in line with the principles of the
UN Charter, and especially Article 26 of the Charter of Economic Rights
and Duties of States adopted by the UN General Assembly in 1974:
All States have the duty to coexist in tolerance and live together
in peace, irrespective of differences in political, economic, social
and cultural systems, and to facilitate trade between States having
different economic and social systems. International trade should
be conducted without prejudice to generalized non-discriminatory

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 2. CHINA’S BELT AND ROAD INITIATIVE

and non-reciprocal preferences in favour of developing countries,

on the basis of mutual advantage, equitable benefits and the
exchange of most-favoured-nation treatment. (UN 1974)

The BRI is China’s attempt to balance the Western-centric perception

of the world and propose a new world order that resembles the one
determined in 1648 by the Peace of Westphalia treaties. China, through
the BRI, seeks to redefine the role of the ‘state’ in the twenty-first century
as the basic political unit of the international system, which can interact
with other states in the global market but at the same time maintains
control of its economic future, its political system and its foreign policy.
This is in contrast to the perception of the ‘flat world’, without ‘borders’,
which in some degree described globalisation until recently.
The success of the BRI is not easily or immediately measurable but it
will be judged largely at the ideological level and, in future, it could be
measured by the impact it has on the global community and the acceptance
of the BRI’s values.

Geopolitics
China is the largest nation in Eurasia, with an extensive coastline
stretching from the tropical zone to the temperate zone. It has one of
the most advantageous geographical positions on the planet, while from
a geopolitical point of view, it faces challenges through its proximity to
other potential world powers (Russia, India, Japan). In this environment,
China’s strategic decision to ‘go out’ by land and sea through the BRI
could be seen as an expected and realistic political decision, with its main
goals, on the one hand, to achieve its key national interests of economic
survival and growth and, on the other, to increase its political capital at
the international level to settle key issues of its national security. The BRI
does not take a missionary approach to international relations, as was the
case with the United States after World War II, because China does not
seem to propagate any particular ideology or system of governance.
The BRI is an effort to create a network of infrastructure on the
southern Eurasian coast (‘Rimland’) and in Central Asia (‘Heartland’),
but also in the Arctic north, with final destinations in Europe that
could lead to the unification of Eurasia and provide autonomy from
the oceanic communications network dominated by the United States.

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 NEW DIMENSIONS OF CONNECTIVITY IN THE ASIA-PACIFIC

This infrastructure could shape a new anthropogeographic reality in

Eurasia that could affect the international system and have extremely
important geopolitical implications for the world (Costas 2019).
The BRI could be seen as China’s ‘anti-containment’ strategy because it
contributes to the ‘unification’ of Eurasia—an attempt to counter the
United States’ ‘containment’ strategy that traditionally seeks the ‘division’
of Eurasia and the prevention of the emergence of a dominant power in the
region. The United States’ containment strategy incorporates theoretical
elements of different geopolitical theories (Mackinder, Spykman and
Mahan), emphasises control of Rimland (Asia Minor, Arabia, Iran,
Afghanistan, Southeast Asia, China, Korea and eastern Siberia excluding
Russia), and combines Mackinder–Spykman’s theory with Mahan’s
argument, which considered naval power and control of the ocean as the
key elements for world domination.
The melting of the Arctic ice sheet ‘liberates’ Russia from the north,
with Rimland no longer a semicircle formed by the inaccessibility of the
Arctic, and now more of a ring. The melting of the Arctic ice not only
adds more sea routes to the existing maritime transportation network but
also contributes to the ‘unification’ of the Eurasian maritime region into
a single and indivisible web of maritime routes that allow the Eurasian
east to communicate with the west without crossing the open ocean
dominated by the United States. The MSR and the Polar Silk Road
(PSR) are key elements of China’s strategy and contribute to the shaping
of a single maritime transportation web around the Eurasian continent,
which geopolitically is much more important than the simple sum of its
various sea routes (Costas 2019).
In conclusion, the BRI is a key element of a new geopolitical mechanism
that, seeking to protect China’s national and security interests, incorporates
historical experience (the Cold War), is a response to US efforts to contain
China’s emergence and contributes to the transfer of the balance of power
from the Western hemisphere to the Eastern, which could facilitate the
emergence of a new bipolar global system to succeed the current unstable
multipolar one. Even if the international system does not become bipolar
in the near future, a multipolar system based on a more equal balance of
power could create greater stability in the international system than what
we are experiencing today.

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 2. CHINA’S BELT AND ROAD INITIATIVE

Development
China’s BRI is the largest such initiative in global history. Investing in
infrastructure is a crucial aspect of a successful growth strategy. Woetzel
et al. (2017) find that in all countries there is a significant gap between
what they are spending and their infrastructure requirements if they are to
continue to grow well until 2035. The BRI initiative is generally popular
in the developing world, where almost all countries face infrastructure
deficiencies and are not willing to attract private investment, which
generally requires a very high rate of return, making it expensive. Therefore,
developing countries that want to establish infrastructure quickly often
have little alternative than to participate in the BRI.
China lends money to developing countries to construct infrastructure
for transport, power and water supply and other sectors. In his opening
remarks at the Belt and Road Forum in Beijing in May 2017, President
Xi noted: ‘Infrastructure connectivity is the foundation of development
through cooperation … We should improve transregional logistics
networks and promote connectivity of policies, rules and standards
so as to provide institutional safeguards for enhancing connectivity’
(Xinhuanet 2017).
The World Bank and other development banks were originally set up for
this core function, but now only about 30 per cent of World Bank lending
is for infrastructure and its procedures are extraordinarily bureaucratic
and time-consuming (Jones 2019). On the other hand, China is offering
to finance infrastructure at what could be called commercial terms. Most
of its loans are in dollars on commercial terms that are more generous
than developing countries can get from private investors, but much more
costly than funds from Western donors or the concessional windows of
the multilateral development banks (Dollar 2020). In addition, many
BRI projects would be unbankable by Western standards. Even so, they
can still be important to the countries involved and they ‘make sense’
to China.
To illustrate, ASEAN countries traditionally could rely on Western
support—through bilateral financing and the multilateral development
banks—to finance some of their infrastructure investment. However, that
is no longer the case. Japan is the only remaining significant financier
of infrastructure. During 2015–17, Japan committed US$13 billion to
transport and energy infrastructure in ASEAN countries. No other Western

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 NEW DIMENSIONS OF CONNECTIVITY IN THE ASIA-PACIFIC

donor reached $1 billion per year. The total from the six major Western
sources—Australia, Japan, the Asian Development Bank (ADB), World
Bank, United States and South Korea—amounted to about 2 per cent
of the infrastructure financing needs of the ASEAN countries. There are
two main reasons for this: first, the overall amount of Western aid is not
keeping up with demand and, second, the donors are generally turning
away from infrastructure. Another aspect of declining Western support is
the ideological view that infrastructure can be left to private investment,
which has proved hard to achieve.

BRI governance
The BRI has typically been described as a cooperative arrangement
among likeminded states interested in advancing infrastructure and
connectivity projects around the world. The initiative is not yet a formal
institutionalised body and is still highly centralised and coordinated from
the top by the Chinese political leadership. As the breadth and depth
of the BRI have grown in terms of the projects undertaken, the actors
involved and the objectives being pursued, the need for a more formalised
institutional architecture has become clear.

Institutional evolution
On 4 November 2014, the eighth meeting of the Central Leading Group
for Financial and Economic Affairs, chaired by President Xi, focused on
the BRI. On 9–11 December 2014, the BRI was identified at the Central
Economic Work Conference as a key strategy for 2015 for the promotion
of regional economic development. At the end of March 2015, the Chinese
Government issued its ‘Vision and Actions’ document defining the BRI’s
guiding principles, routes and cooperation priorities and identifying
the NDRC as the lead organisation for coordinating BRI efforts, with
some shared responsibility from the ministries of commerce and foreign
affairs. At the same time, two task forces were established under the State
Council’s guidance to supervise all BRI-related activities: the Leading
Small Group on Advancing the Construction of the Belt and Road, and
the Office of the Leading Small Group on Advancing the Construction
of the Belt and Road, located within the NDRC, which manages the day-
to-day central oversight and coordination work with relevant ministries

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 2. CHINA’S BELT AND ROAD INITIATIVE

and entities. In addition, in 2017, the Belt and Road Promotion Centre
within the NDRC was created. Moreover, nearly 32 Chinese provinces
are also participating.
At the top of the chain, President Xi gives guidance during regular study
sessions specifically dedicated to the BRI. Following the Thirteenth
National People’s Congress in March 2018, Vice-Premier and Politburo
Standing Committee member Han Zheng became chairman of the
Leading Small Group, while State Counsellor and former minister of
foreign affairs Yang Jiechi, Vice-Premier Hu Chunhua, Secretary-General
of the State Council Xiao Jie and NDRC Director He Lifeng assumed
responsibility as vice-chairmen.
BRI leading small groups have also been created in relevant Chinese
ministries and in each province. Similar to the central one, ministerial and
provincial groups meet on a regular basis and include representatives from
a variety of relevant government entities whose responsibilities pertain to
the advancement of the BRI. Since 2013, several white papers have been
released to inform global audiences of the BRI’s new priorities.
China has vowed to provide financial support for the BRI. In its initial
stages, the Chinese Government extended the scope of its financial backing
to US$90 billion for the Silk Road Fund (SRF), which was established in
2014 to foster development along the BRI route. Its major stakeholders
are the State Administration of Foreign Exchange, the Export–Import
Bank of China (Exim Bank), China Investment Corporation and China
Development Bank. Moreover, China has built very large banking
institutions to support its outward investments and its credit, lending
and aid activities, such as the China Development Bank (CDB) and the
Exim Bank.

BRI takes a more multilateral approach

To date, China has organised two Belt and Road Forums (BRFs) for
International Cooperation in Beijing, in 2017 and 2019, with the
participation of state leaders from around the world. The purpose of
the BRF is to build a more open and efficient international cooperation
platform, a closer, stronger partnership network and to push for a more
just, reasonable and balanced international governance system. Key terms
supporting multilateralism—such as ‘inclusive’, ‘voluntary participation’
and ‘being open to all and respectful of national and international

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commitments’—have been prominent in the forum’s rhetoric. President

Xi called for the BRF to become a regular event, suggesting it would be
used to implement a multilateral institutional architecture for the BRI.
In addition to the BRF, China has initiated two international development–
oriented banks, the Asian Infrastructure Investment Bank (AIIB) and the
New Development Bank (NDB). The AIIB began operations in January
2016 and has evolved into a high-profile multilateral institution that now
has 102 approved members worldwide, while the NDB was established
in 2014 and remains largely restricted to the five BRICS countries
(Brazil, Russia, India, China and South Africa).
Another aspect of the BRI related to global governance is collaboration
with multilateral development banks (MDBs)—in particular, the World
Bank Group, the European Bank for Reconstruction and Development,
the ADB, the AIIB, the NDB and the European Investment Bank. These
six MDBs signed a joint memorandum of understanding with China
on 14 May 2017 to support the BRI. In terms of overall finances and
institutions, however, the MDBs are only one piece of a larger picture.
In recent years and especially since the first BRF, Beijing has taken a range
of steps to exert more control over the BRI, including a more muted
publicity drive, clearer rules for state-owned enterprises, restricting the
use of the BRI brand and building overseas auditing and anticorruption
mechanisms. It is also stepping up efforts to get developed nations to join
in to spread the risk of building projects in poorer nations and to counter
allegations the BRI is an attempt to build China’s political influence.
However, to fully engage with other stakeholders, China would have to
invent a bureaucratic framework with reasonable consistency, setting up
clear criteria for selecting potential projects that are credit-worthy. This
consistency would have to be spelt out clearly, and practised diligently, to
reassure international partners.
In May 2017, during the first BRF for International Cooperation,
the BRF Advisory Council was created to give multilateral intellectual
support to the forum. The council is an international policy advisory
body with 11 members from international organisations, research and
politics. Two members are from China and the remainder are from
Asia, Europe and Africa. The council is led by Shamshar Akhtar, former
executive secretary of the UN Economic and Social Commission for Asia

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 2. CHINA’S BELT AND ROAD INITIATIVE

and the Pacific, and Justin Yifu Lin, former senior vice-president of the
World Bank and Honorary Dean of the National School of Development
at Peking University.
The BRF and its advisory council could emerge as the major multilateral
platform for BRI cooperation. They may also benefit from the models of
some existing multilateral platforms on how to institute an architecture
of supporting mechanisms. The principles of extensive consultation, joint
efforts and shared benefits call intrinsically for a multilateral approach
to working together. Becoming more multilateral could also broaden the
support base of BRI cooperation and enhance the sense of ownership
of all partners.
Indicative of this orientation are the findings and recommendations of the
first report issued by the BRF Advisory Council. It proposed to promote
an open world economy by fostering a global, broad-based partnership
built on connectivity, to focus on building high-quality BRI cooperation
by galvanising a shared commitment to multilateralism, to build a ‘clean
Silk Road’ with ‘zero tolerance for corruption’ and to use green finance to
accelerate achieving the ambitions of the BRI. According to the report,
the development of cooperative financing and sectoral multilateral
mechanisms would also be essential for sustaining further development
of cooperation in the long term.
The BRF Advisory Council has also suggested that BRI cooperation stay
committed to upholding multilateralism, safeguarding the rules-based
multilateral trading system centred on the World Trade Organization
(WTO), promoting free and open trade and investment and opposing
all forms of protectionism. However, in this regard, greater synergy needs
to be tapped between the BRI and various national, regional and global
development strategies, including, among others, the UN 2030 Agenda
for Sustainable Development (which aims to improve global development
along 17 Sustainable Development Goals), the African Union’s Agenda
2063, the development plan of the Eurasian Economic Union, the Master
Plan on ASEAN Connectivity, the Asia Pacific Economic Cooperation
(APEC) Connectivity Blueprint, the Community of Latin American and
Caribbean States (CELAC) and the EU Strategy on Connecting Europe
and Asia.

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 NEW DIMENSIONS OF CONNECTIVITY IN THE ASIA-PACIFIC

The move to create a multilateral architecture for the BRI is inevitable.

To date, most formal arrangements exist in the form of bilateral treaties or
contracts on specific projects. Since its 2013 launch, the BRI has not been
described as a formal organisational setup; rather, the BRI has been used
as a descriptive label for a range of projects being undertaken around the
world that involve China in some way.
The advisory council’s report directly addressed the issue of enhancing the
BRI’s institutional architecture. It suggested the BRF become formalised
and meet every two to three years to discuss and set the broad parameters
of the BRI. From this, there can also be ‘satellite events’ on a regional or
sectoral basis to examine particular issues. The BRF Advisory Council
further recommended expanding and leveraging diversified sources
of finance for BRI projects—in particular, to fill the funding gap for
sustainable infrastructure.
Formalising the BRI’s activities through a multilateral architecture will
also bring more effectiveness to the connectivity and infrastructure
projects through more organised planning that in turn increases the
effectiveness of the projects. And, as the advisory council explains, ‘going
more multilateral could broaden the supporter base of the Belt and
Road cooperation and enhance the sense of ownership of all partners’
(Yang 2019). The advisory council’s suggestions must be acted on to
transform the BRI into a formal international institution.

The BRI’s impacts on connectivity

In this section, we review the consequences of the BRI for both transport
and digital connectivity. We then discuss the importance of policy
coordination across economies to capture these benefits.

Infrastructure connectivity
Transport connectivity
BRI-related transport infrastructure projects—such as railways, highways
and ports—will build on existing transportation networks, creating
new links and making the connectivity of networks denser. Reed and
Trubetskoy (2019) compiled the first geocoded database of BRI transport

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 2. CHINA’S BELT AND ROAD INITIATIVE

infrastructure projects in Eurasia (see Figure 2.1).1 The status of these

projects differs widely: some are already operational, such as Highway
AH-3 and Highway AH-4 connecting Russia, Mongolia and China;
other projects are under construction, like the Juba–Mombasa Railway
connecting Kenya and South Sudan; still others are uncertain, such as
the Dushanbe–Afghanistan rail upgrade in Tajikistan. In Figure 2.1, the
improvement in railway construction is remarkable. For example, while
in 2011 there were only 17 trains travelling between Europe and China,
carrying goods worth just US$600 million, by 2018, there were more than
6,000 train trips between Europe and China carrying goods worth US$16
billion (see Figure 2.2). The China–Europe Railway Express connects
108 cities in 16 countries across Eurasia, with the main destinations in
Germany, Russia, Kazakhstan, Tajikistan, Poland, Belarus, Netherlands
and Uzbekistan.

Figure 2.1 BRI-related transport projects by 2018

TEU = 20-foot equivalent unit
Sources: Reed and Trubetskoy (2019); World Bank (2019).

1 The full list of BRI-related transport projects is provided in Appendix A of Reed and Trubetskoy
(2019). It is worth noting that there is no official list and no uniform definition of BRI-related
transport projects.

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7000
6363
6000

5000
3673
4000

3000
1702
2000
815
1000
308
17 42 80
0
2011 2012 2013 2014 2015 2016 2017 2018

Figure 2.2 Number of China–Europe Railway Express trains, 2011–18

Source: Silk Road Guoxin Big Data Technology Co. Ltd (n.d.).

Based on the list of BRI-related transport projects compiled by Reed and

Trubetskoy (2019), de Soyres et al. (2018) obtained information on rail
and maritime infrastructure linked to the BRI, allowing a comparison
of the pre-BRI and post-BRI scenarios.2 They exploit geographic
information system (GIS) analysis to calculate the reduction in shipping
times between cities.3 As a starting point, the transportation network in
2013 was used to estimate the pre-BRI shipping time. The post-BRI travel
time is computed in accordance with the ‘improved scenario’, including
all planned BRI-related rail and maritime projects by 2018.
Before the implementation of the BRI, shipping between some
BRI locations was slow as there was little access to quality transport
infrastructure and services (see Table 2.1). For instance, the average
shipping time within East Asia and the Pacific was longer than within
other regions, taking 19.6 days. It takes, on average, 26.8 days to ship
goods between East Asia and the Pacific and Central and Eastern Europe,
and the average shipping time between East Asia and the Pacific and
Central and Western Asia is also long, at 22.5 days.

2 The majority of BRI-related transport projects comprise rail and maritime infrastructure. Note
that there is a slight difference between the list in de Soyres et al. (2018: Annex 2) and that in Reed
and Trubetskoy (2019).
3 The global database in de Soyres et al. (2018) includes 1,000 cities in 191 countries.

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 2. CHINA’S BELT AND ROAD INITIATIVE

Table 2.1 Average pre-BRI shipping time within and between

regions, 2013

Average Central Central East Asia Middle East South Sub-

shipping time and and and the and North Asia Saharan
(days) Eastern Western Pacific Africa Africa
Europe Asia
Central and 3.3
Eastern Europe
Central and 13.4 13.0
Western Asia
East Asia and 26.8 22.5 7.1
the Pacific
Middle East and 12.8 15.4 20.4 9.0
North Africa
South Asia 22.4 20.3 15.5 15.2 11.8
Sub-Saharan 19.8 23.2 20.6 14.4 17.6 4.0
Africa
Regional 13.9 16.6 19.6 14.0 17.8 18.5

Note: Averaged over all country pairs in each regional pair.

Sources: de Soyres et al. (2018); World Bank (2019).

The implementation of BRI-related transport projects can reduce

shipping times for the BRI corridor economies (see Figures 2.3 and 2.4).
The findings of de Soyres et al. (2018) show that average shipping time
between the BRI economies can decrease by 1.7 per cent (for the lower
bound) and 3.2 per cent (for the upper bound).4 In particular, the decline
in travel time is larger along the BRI economic corridors. The smallest
improvement in shipping time is for the China–Mongolia–Russia
Economic Corridor, for which the reduction in shipping time ranges
between 3.6 per cent and 3.8 per cent on average. The largest improvement
is for the China–Central Asia–West Asia Economic Corridor, which
will experience a simple average decrease in travel time ranging between
10.3 per cent and 11.9 per cent.

4 In the lower-bound scenario, there is no mode switching between the pre-BRI and the post-BRI
shipping routes; in the upper-bound scenario, mode switching is allowed, so that routes can be moved
from maritime lanes to railway lines for larger gains in shipping times.

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Figure 2.3 Average decline in shipping time by economy: Lower bound

Note: For each economy, the aggregate proportional reduction is calculated as the average
proportional shipping time reduction with all other economies in the world.
Source: de Soyres et al. (2018).

Figure 2.4 Average decline in shipping time by economy: Upper bound

Note: For each economy, the aggregate proportional reduction is calculated as the average
proportional shipping time reduction with all other economies in the world.
Source: de Soyres et al. (2018).

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 2. CHINA’S BELT AND ROAD INITIATIVE

Interestingly, the BRI can induce a positive spillover effect on shipping

times for the non-BRI economies, which will also benefit from the
improved transportation network when their transport routes pass through
the new or upgraded ports or railways. As an example, the construction
of Tanzania’s Bagamoyo Port is anticipated to benefit not only Tanzania
but also surrounding countries. Consequently, when all BRI-related
transport projects are implemented, the proportional decrease in travel
time from Rwanda to Australia is predicted to be 0.5 per cent. Likewise,
the improvement for Djibouti’s port will see a reduction of 1.2 per cent
in the shipping time between Ethiopia and Australia. In general, shipping
times across all country pairs in the world can come down, on average, by
1.2 per cent (for the lower bound) and 2.5 per cent (for the upper bound).

Digital connectivity
The level of digital connectivity within and between the BRI economies
varies widely. The World Bank (2016b) suggests the digital gap within
economies can be as large as that between economies. Many people remain
untouched by the modern digital revolution. As shown in Figure 2.5a,
apart from Singapore, Malaysia, Kazakhstan and economies in the Arabian
Peninsula, the proportion of the population using the internet was less
than 55 per cent in most Asian economies in 2018, even in China, which
had the largest number of internet users. Mobile broadband networks
provide a significant channel for digital connectivity, but there are also
two extremes to the coverage of fourth-generation (4G) mobile signals
among the BRI economies. As shown in Figure 2.5b, 4G coverage is high
in China, Thailand, Eastern Europe and the Arabian Peninsula, but low
in the rest of Asia, particularly the landlocked countries.
Efforts are being made to address the digital divide among the BRI
economies. According to the China Academy of Information and
Communication Technology, China is considering establishing several
cross-border overland fibre-optic cable systems and supplying international
internet transmission services. Therefore, countries bordering China
will have greater access to global submarine cables. So far, remarkable
progress has been made in the construction of China–Kyrgyzstan, China–
Myanmar, China–Pakistan and China–Russia cross-border fibre-optic
cables, which will effectively facilitate communication connectivity within
the BRI region. In addition, the China–Nepal cross-border fibre-optic
cable, which launched in 2018, provides China and East Asian countries
with the shortest internet path to Africa and the Middle East.

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 NEW DIMENSIONS OF CONNECTIVITY IN THE ASIA-PACIFIC

Figure 2.5 Internet users and access to mobile broadband, 2018

a. Internet users (percentage of population) b. 4G coverage (percentage of population)
Note: Western European economies are included as comparators since most BRI-related
infrastructure projects are in Eurasia, and a network is only as good as its weakest link.
Source: World Bank (2019).
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 2. CHINA’S BELT AND ROAD INITIATIVE

Policy coordination
Policy coordination has played a significant role in shortening shipping
times—for instance, by reducing border delays and the frequency of
cargo transhipment. As an example, although there are roads linking the
two non-bordering countries China and Uzbekistan, vehicles from one
country were not allowed to enter the other for a long time, so their goods
needed to transit through Kyrgyzstan for eight to 10 days. In the wake
of the implementation of the ‘China–Uzbekistan Intergovernmental
Agreement on International Road Transport’, the transit period between
the two countries has been reduced to two days, and the cost of freight
per tonne has been cut by US$300–500 (Wu 2018). More and more
countries and international organisations have signed intergovernmental
BRI cooperation agreements over the years. By the end of January 2020,
the Chinese Government had signed 200 cooperation agreements with
138 countries and 30 international organisations. In addition, the BRI
has expanded from Eurasia to Africa, Latin America and the South Pacific.
Great importance is attached to the continued integration of the various
development strategies, plans, platforms and projects among the BRI
economies, achieving complementary advantages and producing effects
according to the theory that ‘one plus one is greater than two’. So far,
the BRI has been dovetailed with Kazakhstan’s Bright Road Initiative,
Vietnam’s Two Corridors and One Economic Circle Plan, Indonesia’s
Global Maritime Fulcrum Doctrine, Poland’s Amber Road Framework,
Mongolia’s Development Road Program, Saudi Vision 2030 and so on,
effectively promoting common prosperity and development.
There are other examples of efforts on policy coordination. First, the
Digital Silk Road has been an important part of the BRI. In December
2017, China, Egypt, Laos, Saudi Arabia, Serbia, Thailand, Turkey and
the United Arab Emirates jointly launched the Belt and Road Digital
Economy International Cooperation Initiative. Sixteen countries have
signed a memorandum of understanding with China for the construction
of the Digital Silk Road. Second, China published the ‘Action Plan on
Belt and Road Standard Connectivity (2018–2020)’ in December 2017,
under which it has signed 85 standardisation cooperation agreements with
49 economies. Third, the BRI’s long-term tax cooperation mechanism is
maturing. In May 2018, China coorganised the Belt and Road Initiative
Tax Cooperation Conference (BRITCC) and issued the ‘Astana Proposal

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by BRITCC Participating Jurisdictions for Enhancing Cooperation in

Tax Matters’, expanding the tax cooperation network to 111 countries
and regions. Fourth, in terms of legal operations, China published the
‘Statement of the Co-Chairs of the Forum on the Belt and Road Legal
Cooperation’ in July 2018. Moreover, China has carried out cooperation
on intellectual property, issuing the ‘Joint Statement on Pragmatic
Cooperation in the Field of Intellectual Property Among Countries Along
the Belt and Road’ with 49 BRI economies in August 2018.

Economic effects of BRI connectivity

Better infrastructure connectivity and greater policy coordination under
the BRI framework can inject strong impetus into the economies of the
BRI countries and regions, making the trade network between them more
intensive, leading to more foreign direct investment (FDI) flows and
improving their positions in global value chains (GVCs).

Impacts on trade
Trade costs
Declines in shipping times can be transformed into decreases in trade
costs by estimating the ‘value of time’ by sector (Hummels and Schaur
2013). De Soyres et al. (2018) investigated the BRI’s effect on trade costs
based on their research on shipping time reductions mentioned above
(see Figures 2.6 and 2.7). Their findings show that implementing all
BRI‑related transport projects will result in a reduction of average trade
costs for the BRI economies ranging between 1.5 per cent and 2.8 per cent,
and for the world ranging between 1.1 per cent and 2.2 per cent. Similar
to the changes in shipping times, trade costs will decrease along the BRI
economic corridors, ranging from 2.4 per cent for the China–Mongolia–
Russia Economic Corridor to 10.2 per cent for the China–Central Asia–
West Asia Economic Corridor in the upper-bound scenario.

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 2. CHINA’S BELT AND ROAD INITIATIVE

Figure 2.6 Average decline in trade costs by economy: Lower bound

Note: For each economy, all destinations are weighted by import flows.
Source: de Soyres et al. (2018).

Figure 2.7 Average decline in trade costs by economy: Upper bound

Note: For each economy, all destinations are weighted by import flows.
Source: de Soyres et al. (2018).

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 NEW DIMENSIONS OF CONNECTIVITY IN THE ASIA-PACIFIC

Overall trade flows

Based on the results for trade cost reductions from de Soyres et. al. (2018),
Maliszewska and van der Mensbrugghe (2019) and de Soyres et al. (2019)
use a dynamic computable general equilibrium (CGE) model and a static
structural general equilibrium (SGE) model, respectively, to study the
impacts of BRI infrastructure improvements on trade (see Figure 2.8).5
According to the results from the CGE model, the exports of the BRI
economies increase by 2.8 per cent (in 2030 relative to the baseline)
and global exports increase by 1.7 per cent. The BRI countries that will
experience the largest trade growth are Thailand (14.9 per cent), Malaysia
(12.4 per cent), Pakistan (9.8 per cent) and Bangladesh (8.7 per cent).
Non-BRI economies can also benefit from the denser transport network
generated by BRI-related transport projects, experiencing an increase
in export volume of 0.7 per cent in aggregate. Among the non-BRI
economies, Ethiopia will obtain the largest trade gains by taking advantage
of the new ports in East Africa, with an increase in exports of 3.9 per cent.
The United States and the remaining high-income economies will also
benefit greatly, with their export volumes increasing by 3.4 per cent
and 1.4 per cent, respectively.6 However, not all non-BRI economies
will benefit from the BRI’s improved transportation network. The non-
BRI economies in Latin America and the rest of Western Europe will
experience a slight decrease in trade (by –0.5 per cent and –0.3 per cent,
respectively) due to trade diversion.7
The trade effects of the BRI infrastructure improvements projected by the
SGE model are similar to those predicted by the CGE model but tend to
be much larger. The BRI economies are projected to increase exports by
up to 9.7 per cent, while global export volumes will go up by 6.3 per cent.
The proportional increase in the non-BRI economies’ exports is predicted

5 The CGE model in Maliszewska and van der Mensbrugghe (2019) is the ENVISAGE model
developed by the World Bank, incorporating five production factors, 28 sectors and 34 countries and
regions. The SGE model in de Soyres et al. (2019) is based on the Ricardian model in Caliendo and
Parro (2015), which includes sectoral linkages, trade in intermediate goods and sectoral heterogeneity,
comprising 107 countries and regions. The CGE model has a more detailed structure of the economy
than the SGE model, which comes at the expense of a higher level of aggregation of countries into
large regions.
6 The remaining high-income economies include Australia, New Zealand, Hong Kong, Japan,
South Korea, Taiwan and Canada.
7 The rest of Western Europe includes Austria, Belgium, Cyprus, Denmark, Finland, France,
Germany, Greece, Ireland, Italy, Luxembourg, Malta, Netherlands, Portugal, Spain, Sweden, the
United Kingdom, Switzerland and Norway.

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 2. CHINA’S BELT AND ROAD INITIATIVE

to be 4.1 per cent. The results from the two models are complementary and
should be viewed as providing a range for the potential trade-promoting
effects of the BRI transport infrastructure improvements. Unlike the CGE
analysis, the SGE model stresses the connections through GVCs because
it supposes that there are strong complementarities between the foreign
and domestic inputs in production. As trade costs fall due to the denser
transportation network, the SGE model projects that firms will increase
their use of imported input products, with larger promotion effects on
their productivity and export volumes.

BRI Area

World

Non-BRI Area

0 2 4 6 8 10
Per cent
Structural general equilibrium model Computable general equilibrium model

Figure 2.8 Export-promoting effects of BRI infrastructure

improvements: Upper bound
Sources: de Soyres et al. (2019); Maliszewska and van der Mensbrugghe (2019); World
Bank (2019).

Bilateral trade flows

The BRI is anticipated to reshape trade relationships for participating
economies with each other and with the rest of the world. Long trading
times before the implementation of the BRI led to the downturn in
intra–BRI country trade (see Table 2.1). The SGE model predicts that
implementing all BRI-related transport projects will induce growth of
7.2 per cent in intra–BRI country trade.
Changes in trade flows will differ by region, depending on the extent to
which new or improved infrastructure affects trade costs and the countries’
economic structures. Table 2.2 reports that all BRI regions, except the
Middle East and North Africa, will expand their exports to East Asia
and the Pacific, reflecting a surge in imports for economies like China,
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 NEW DIMENSIONS OF CONNECTIVITY IN THE ASIA-PACIFIC

Thailand and Malaysia. The BRI transport infrastructure improvements

will also lead to an increase in exports from East Asian and Pacific
economies to other BRI regions—most remarkably, to the Middle East
and North Africa (10.98 per cent), Europe and Central Asia (8.63 per
cent)—and among themselves (5.88 per cent). Regional value chains will
be intensified. Other significant changes in bilateral trade flows are the
increase in exports from the Middle East and North Africa to Europe and
Central Asia (37.87 per cent) and South Asia (25.90 per cent). This can
be interpreted by firms’ access to cheaper inputs from other BRI regions,
which enhances their competitiveness in overseas markets. Such channels
are of particular importance for firms in Europe and Central Asia, whose
exports to non-BRI areas will increase by 18.35 per cent.

Table 2.2 Changes in BRI regional trade flows

From BRI East Europe Middle South Sub- Non-

to BRI Asia and East Asia Saharan BRI
and Central and Africa area
Pacific Asia North
Africa
Exporters East Asia and 5.88 8.63 10.98 0.75 –4.05 9.86
Pacific
Europe and 0.27 9.59 13.69 0.29 23.82 18.35
Central Asia
Middle East and –1.76 37.87 3.76 25.90 8.21 8.59
North Africa
South Asia 5.98 13.86 8.52 1.12 –1.45 5.65
Sub-Saharan 16.95 22.37 11.00 17.43 –0.28 15.03
Africa

Source: de Soyres et al. (2019).

In terms of the trade effects of BRI digital connectivity, Zhang (2018)

uses the gravity model to investigate the impact of telecommunications
infrastructure construction on bilateral trade flows among the BRI
countries in Asia, which shows that each 1 per cent increase in the
level of telecommunications infrastructure will lead to a 1.56 per cent
rise in import volumes. Compared with transport infrastructure, the
improvement in telecommunications infrastructure can not only raise
trade efficiency, but also reduce information asymmetry, which helps the
price mechanism come into play.

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 2. CHINA’S BELT AND ROAD INITIATIVE

Impact of BRI policy coordination on trade

Policy coordination in the BRI framework plays a non-negligible role in
achieving unimpeded trade. Based on the quadratic assignment procedure,
Chong and Qin (2017) compare the trade networks before and after
the implementation of the BRI and find that intergovernmental trade
agreements have a significant and positive impact on trade in the BRI
economies. Tao and Qiao (2020) achieved a similar result by using the
gravity model. Tian and Liu (2019) examine the validity of the BRI and
suggest it has boosted bilateral trade among the participating economies,
helping avoid the trend of reverse globalisation. Zheng and Zhou (2019)
further classify the BRI corridor economies into those that have reached
intergovernmental trade agreements and those that have not, noting
that trade agreements have a greater potential trade-promoting effect on
the BRI economies without agreements. This can be explained by the
fact that the BRI economies without trade agreements mostly adopt
protectionist policies and set higher trade barriers for their relatively
backward economies. Once a trade agreement is reached to lower trade
barriers, it will create a lot of trade.
Policy coordination can magnify the trade gains from infrastructure
improvements. De Soyres et al. (2019) simulate two scenarios of
complementary policy reform for the BRI economies: 1) a 50 per cent
decline in border delays, and 2) a 50 per cent decline in preferential
tariffs. As shown in Figure 2.9a, a decrease in border delays and tariffs will
amplify the promotion effects of BRI-related transport projects by a factor
of about four on global trade, and even five on trade among the BRI
economies. In terms of border delays, if, in addition to the transportation
network improvements, border delays are reduced by half, exports from
the BRI economies will increase by 28.1 per cent. This is not surprising
given the long delays at the borders of many BRI economies. It can be
verified in Figures 2.9b and 2.9c: the largest trade-promoting effect of
BRI infrastructure improvements and border delay reductions will be for
low-income economies and the Middle East and North Africa, which
tend to have longer border delays. In terms of tariffs, a 50 per cent decline
in tariffs among all the BRI economies will amplify the trade-promoting
effect of BRI-related infrastructure projects more than the 50 per cent
decline in border delays. Not surprisingly, regions with higher tariffs,
such as sub-Saharan Africa, will obtain the largest trade gains under this
policy scenario.

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 NEW DIMENSIONS OF CONNECTIVITY IN THE ASIA-PACIFIC

BRI Area

World

Non-BRI Area

0 10 20 30 40 50
Per cent
Infrastructure
Infrastructure and reduced border delays
Infrastructure and reduced preferential tariffs
Infrastructure, borders, and tariffs

Lower middle income

Low income

Upper middle income

High income

0 20 40 60 80
Per cent
Infrastructure
Infrastructure and reduced border delays
Infrastructure and reduced preferential tariffs
Infrastructure, borders, and tariffs

c
South Asia
Middle East & North Africa
Sub-Saharan Africa
Europe & Central Asia
East Aisa & Pacific

0 20 40 60 80
Per cent
Infrastructure
Infrastructure and reduced border delays
Infrastructure and reduced preferential tariffs
Infrastructure, borders, and tariffs

Figure 2.9 Trade-promoting effects of BRI infrastructure

improvements and policy coordination
a) Gains by area
b) Gains by income group
c) Gains by region
Source: de Soyres et al. (2019).

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 2. CHINA’S BELT AND ROAD INITIATIVE

Enhancement of trade facilitation

Both infrastructure connectivity and policy coordination can promote
trade through enhancing trade facilitation. Feng and Zhang (2019)
identify a core of 23 countries along the six BRI corridors by sifting
through the data in the Global Enabling Trade Report 2016, the Global
Competitiveness Report 2019 and the World Bank’s World Development
Indicators (WEF 2016, 2019; World Bank 2021a). Based on this, they
compute changes in the levels of trade facilitation in the six BRI corridors
from 2013 to 2018. Their trade facilitation index is weighted by four first-
level indicators—namely, ‘government capacity and policy environment’,
‘customs and border management’, ‘logistics and infrastructure’ and
‘financial and communication capability’—which are subdivided into
11 second-level indicators and 27 third-level indicators.

70 65.23
60.12 61.37
58.16 57.42
60 55.41
54.51 52.66 51.27
51.69 48.34
50 45.76
Score

40

30

20

10 2013

0 2018
a
ge

n
a

ar
si
ul

si

ta

nm
id

us
tA
ns

is
Br

ak
-R

ya
ni

es
Pe
nd

-P
lia

M
W

na

a-
go
La

a-
na

di
hi
si

on
an

hi

-In
C
lA
c

-M
si

do

na
tra
ra

na
-In

hi
Eu

en

hi

C
na

h-
ew

-
hi

na

s
N

de
C

hi

la
C

ng
Ba

Figure 2.10 Trade facilitation scores for the BRI economic corridors,
2013 and 2018
Source: Feng and Zhang (2019).

Since 2013, with the exception of the China–Pakistan Economic Corridor,

trade facilitation in the BRI economic corridors has improved significantly
but the degree of development varies with each corridor (see Figure 2.10).
Among them, the New Eurasian Land Bridge (65.23 points) had the best
performance in 2018, while the Bangladesh–China–India–Myanmar
Economic Corridor (51.27 points) had the worst, with its weakest areas in
‘financial and communication capability’ and ‘logistics and infrastructure’
(Feng and Zhang 2019). The China–Mongolia–Russia Economic
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 NEW DIMENSIONS OF CONNECTIVITY IN THE ASIA-PACIFIC

Corridor has experienced the largest improvement in trade facilitation,

particularly in ‘financial and communication capability’ and ‘customs and
border management’ (Feng and Zhang 2019).

Impact on the structure of trade networks

The BRI has brought the trade network between the corridor economies
closer and changed its structure from a multicore pattern to one with
China as its single core. Zhao and Sun (2019) map the simplified BRI
trade network for 2003 and 2017, which retains only the largest trade
flows between the 66 BRI countries and regions (see Figures 2.11 and
2.12). Before the launch of the BRI, China had become one of the
central nodes of the regional trade network, in 2003, directly connecting
economies including Thailand, India, Vietnam, Saudi Arabia, Egypt,
Israel and so on. Meanwhile, Russia was also a core node of this regional
trade network, linking economies such as Turkey, Romania, Greece and
the other members of the Commonwealth of Independent States. Hence,
there was a multicore BRI trade network in 2003. However, some BRI
economies remained independent from this network, such as Slovakia,
Czech Republic, Slovenia, Croatia and North Macedonia, which indicates
the network was relatively loose in 2003.
The structure of the BRI trade network changed in 2017. China’s central
role has been significantly enhanced: more economies have direct trade
linkages with China. There were many economies indirectly connecting
with China through ‘brokers’ (like India, Thailand and Israel) in 2003,
but in 2017, China became their largest trading partner. Zhao and Sun
(2019) indicate the sustained development of China’s economy and trade
is the most important reason for this transformation. On the other hand,
the density of the Commonwealth of Independent States’ trade network,
with Russia as its core, has decreased. The scope of the isolated local
trade network has also declined: only the largest trade flows of Slovenia,
Croatia and Bosnia and Herzegovina were not directly connected to the
core BRI trade network in 2017. This reflects the fact the BRI has reduced
the decentralisation of regional trade in the area and gradually deepened
regional trade integration.

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 2. CHINA’S BELT AND ROAD INITIATIVE

Figure 2.11 Structure of BRI corridor economies’ trade networks, 2003

Source: Zhao and Sun (2019).

Figure 2.12 Structure of BRI corridor economies’ trade networks, 2017

Source: Zhao and Sun (2019).

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 NEW DIMENSIONS OF CONNECTIVITY IN THE ASIA-PACIFIC

Impacts on foreign direct investment

Longer travel time is a barrier to FDI flows. Based on the estimates in
de Soyres et al. (2018), Chen and Lin (2018) studied the impact of the
proposed BRI transportation network on FDI flows to the BRI economies.
They find the proposed infrastructure improvements are projected to
induce a 4.97 per cent increase in total FDI flows to the BRI economies.
Specifically, there will be a 4.36 per cent increase in FDI flows within the
BRI area, a 4.63 per cent increase in FDI flows from the Organisation
for Economic Co-operation and Development (OECD) economies and
a 5.75 per cent increase in FDI flows from the non-BRI area.
Across regions, the proposed BRI transportation network will lead to the
largest increase in FDI flows to BRI economies in sub-Saharan Africa
(7.5 per cent), followed by Central Asia (7.3 per cent), East Asia and the
Pacific (6.3 per cent), South Asia (5.2 per cent), Europe (3.7 per cent) and
the Middle East and North Africa (3.4 per cent) (see Figure 2.13).

Sub-Saharan Africa

Central Asia

East Asia and Pacific

South Asia

Europe
Middle East and
North Africa
0 2 4 6 8
Per cent

Figure 2.13 Promotion effects on FDI of BRI infrastructure

improvements
Sources: Chen and Lin (2018); World Bank (2019).

Impacts on global value chains

Based on value added in trade, Dai and Song (2019) measure the changes in
correlations among GVCs from 2010 to 2017, finding that there has been
a significant overall trend of enhancement and considerable adjustment.
They further explore whether the reconstruction of GVCs is related to
China’s BRI. Their results show the industrial relevance of the BRI area
to GVCs has been significantly reinforced, while that in the non-BRI
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 2. CHINA’S BELT AND ROAD INITIATIVE

area has been significantly weakened. It is worth noting that the relevance
between the BRI and non-BRI areas has also shown a strengthening
trend. From these results, a preliminary judgement can be reached that
the implementation of the BRI has promoted the reconstruction of GVCs
to a certain extent.
In fact, the economies along the BRI economic corridor have comparative
advantages such as cheap labour and abundant natural resources, which
make them important destinations for a new round of international
industrial gradient transfers and considerable partners with which China
can carry out cooperation on production capacity. Therefore, there are
two possible reasons for the aforementioned GVC change. On the one
hand, with the rising prices of production factors in China, especially
labour costs, multinational companies in developed economies will
relocate more of their industries and production links to BRI economies.
On the other hand, in the BRI framework, China has actively transferred
its industries that have gradually lost their comparative advantages to other
BRI economies, and even carried out cooperation in high-end industries
such as environmental protection, thus promoting the integration
of the BRI economies into GVCs. If the former factor dominates, the
reconstruction of GVCs may not be caused by China’s BRI. To figure
out this problem, Dai and Song (2019) first measure the changes in the
upstream dependence of the BRI economies on North America, Western
Europe and China.
The results in Table 2.3 show that the BRI economies in most regions
have intensified their upstream dependence on North America, Western
Europe and China, which verifies that the BRI economies are indeed
important destinations for a new round of international industrial
transfers. However, it should be noted that the upstream dependence of
the BRI economies on China has increased the most.

Table 2.3 Changes in upstream dependence of the BRI economies on

North America, Western Europe and China, 2010–17 (per cent)

East ASEAN Eastern South Central Others

Asia Europe Asia Asia
North America 0.25 0.47 0.61 –0.27 –0.19 0.46
Western Europe 0.46 0.75 4.76 –0.29 –0.71 1.31
China 1.26 1.49 0.92 0.45 –0.12 1.35

Source: Dai and Song (2019).

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Dai and Song (2019) also compute the changes in the downstream
influence of North America, Western Europe and China on the BRI
economies. As shown in Table 2.4, China’s downstream influence on
the BRI economies has increased more than that of North America.
Compared with Western Europe, China also has a greater upward trend
in its downstream influence on the BRI economies—except for those in
Eastern Europe, because they have close relations with Western Europe.
Therefore, in terms of both upstream dependence and downstream
influence, it can be inferred that the implementation of China’s BRI has
significantly promoted the reconstruction of GVCs.

Table 2.4 Changes in the downstream influence of North America,

Western Europe and China on the BRI economies, 2010–17 (per cent)

North America Western Europe China

East Asia 0.16 0.15 1.11
ASEAN 0.19 0.12 0.88
Eastern Europe 0.11 0.76 0.30
South Asia –0.06 –0.04 0.06
Central Asia 0.00 –0.01 0.00
Others 0.45 0.73 1.47

Source: Dai and Song (2019).

Based on data from 2004 to 2014, Peng and Li (2018) find that China’s
outward foreign direct investment (OFDI) in the BRI economies can
improve its position in GVCs through the industrial separation effect.
This is because, after transferring certain industries to the BRI economies,
Chinese firms can make room for higher-tech production links or industries
that retain comparative advantages. At the same time, China’s OFDI in
the BRI economies can improve the host country’s position in GVCs
through positive technology spillovers and demand-pull effects. In the
case of industrial separation, on the one hand, Chinese firms may transfer
some advanced technologies to the BRI economies to ensure the quality
of imported intermediate products; on the other, when firms can spare
more energy to improve product quality, consumer demands for products
will increase, which will further strengthen the existing production mode
and gradually improve the host country’s position in GVCs.

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 2. CHINA’S BELT AND ROAD INITIATIVE

Risks along the Belt and Road

BRI-related projects involve various inherent risks, which are exacerbated
by weak risk-prevention and control mechanisms and poor economic
foundations in many participating economies. How to identify and
manage these risks appropriately and efficiently becomes increasingly
worthy of attention.

Political and legal risks

The complexity and impact of political and legal risks are difficult
to assess. Political changes and differences in legal systems may lead to
changes in the way foreign loans or direct investment are made and pose
more challenges to the implementation of cross-border projects.
A political risk may be distinguished from others by defining it as one that
causes losses due to certain political incidents, such as a change in national
government or the deterioration of relationships between countries.
Political risks can be categorised as geopolitical risks, risks of political
power change, sovereign credit risks, as well as risks of nationalisation.
Since most of the BRI economies are in geopolitically fragmented regions,
and the development of the BRI entails the interests and strategic goals
of some world powers, geopolitical risks become a major component of
political risk. Most of the time, the risk of a change in political power
will affect OFDI through evoking turbulence in society and increasing
uncertainties about the executive effectiveness of contracts. Sovereign
credit risks exist as the host countries or regions may default during the
projects. According to the Handbook of Country Risk issued by the China
Export & Credit Insurance Corporation (Sinosure 2017, 2018), the
overall sovereign credit level of the BRI economies is far below the world
average. In addition, to protect domestic industries, the host government
may issue policies to restrict the effective control of local assets by foreign-
invested enterprises, which is actually an expropriation of those enterprises.
One typical case of political risk is the Myanmar Myitsone Hydropower
Project initiated by the Myanmar Government with the China Power
Investment Corporation in 2006. There have been many twists in the
development of the project over the past decade or so, and it is still on
hold. This is mainly due to the political conflicts between the central
government and the Kachin Independence Army, the National League

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 NEW DIMENSIONS OF CONNECTIVITY IN THE ASIA-PACIFIC

for Democracy and various Western nongovernmental organisations in

Myanmar, which is in a geopolitically fragmented region and faces risks
created by games among the great powers.
Legal risks comprise changes to or uncertainties in systems of foreign
investment, intellectual property protection, labour rights protection,
environmental regulation, taxation, foreign exchange management and so
on. There are significant differences between the laws and regulations of
the BRI economies and, in many, they are incomplete.
In 2012, the Aluminium Corporation of China Limited (Chinalco)
announced its intention to make a bid for a proportional takeover of up to
60 per cent of the common shares of Ivanhoe Mines’ subsidiary coalminer
SouthGobi Resources, which eventually failed. To stop Chinalco’s
acquisition of SouthGobi Resources, the Mongolian Government hastily
introduced new foreign investment supervision laws. Mongolia lacks
a complete legal system and a stable legal environment for investment.
Overall, the legal factors played an influential role in the failure of
this acquisition.
According to Guo (2020), there are a number of options to reduce the
risks mentioned above. The governments of BRI corridor economies could
actively undertake political diplomacy with one another and sign more
high-quality bilateral or regional trade and investment agreements so their
economies can build and rely on multilateral, pluralistic and multilevel
cooperation mechanisms to provide policy and institutional guarantees.
More specifically, the BRI economies could establish a joint meeting
mechanism for their leaders to coordinate and resolve issues associated
with trade and investment cooperation and provide a normalised platform
for healthy, orderly and sustainable development of cooperation.

Debt sustainability risks

As described in a report called Harmonizing Investment and Financing
Standards Towards Sustainable Development Along the Belt and Road by
the China Development Bank (CDB 2019), the debt sustainability of
countries along the BRI economic corridor has become a focus regionally
and has also drawn attention from the international community. It is
necessary to balance the relationship between financing development
needs and debt sustainability.

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 2. CHINA’S BELT AND ROAD INITIATIVE

Table 2.5 Sovereign credit risk ratings of the BRI countries and regions,
2017–18
Region Country 2017 2018 Region Country 2017 2018
Northeast Russia BB BBB South Asia India BBB BBB
Asia Mongolia CC CCC Pakistan B B
Southeast Singapore A AA Bangladesh BB BB
Asia Malaysia A A Sri Lanka CCC CCC
Indonesia BBB BBB Maldives CC CC
Myanmar B B Bhutan CCC CCC
Thailand BBB BBB Nepal CCC CCC
Laos CCC CCC Central Asia Kazakhstan BBB BBB
Cambodia B B Uzbekistan B B
Vietnam BB BB Tajikistan CCC CCC
Brunei BBB BBB Turkmenistan BBB BBB
Philippines BBB BBB Kyrgyzstan CC CC
Timor-Leste CC CC Central and Moldova B B
West Asia Yemen CCC CC Eastern Belarus BB BB
and North Europe
Iraq BB BB Ukraine CCC CCC
Africa
Iran BB BB Albania CCC B
Israel AA AA Estonia A A
United Arab A A Bulgaria BB BB
Emirates
Oman BB BB Bosnia and CCC CCC
Herzegovina
Turkey BBB BB Poland AA AA
Syria C C Montenegro CCC B
Jordan BB BB Czech AAA AAA
Republic
Lebanon BB BB Croatia BBB BBB
Saudi Arabia A A Latvia BBB BBB
Qatar A A Lithuania A A
Kuwait BBB BBB Romania BBB BBB
Bahrain BB BB North BB BB
Macedonia
Egypt CCC CCC Hungary A A
Afghanistan CC CC Serbia B B
Azerbaijan BB BB Slovakia AA AA
Georgia B B Slovenia A A
Armenia CCC CCC

Sources: Sinosure (2017, 2018).

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 NEW DIMENSIONS OF CONNECTIVITY IN THE ASIA-PACIFIC

Debt sustainability risks come from a country’s present and future ability
to fulfil its debt servicing obligations, which are affected by its current debt
level and prospective borrowings. In general, a key factor for achieving
external and public debt sustainability is macroeconomic stability.
Large infrastructure investments involving debt financing in the BRI
economies entail risks to debt sustainability. There is a need for systematic
understanding, management and alleviation of debt sustainability risk by
taking into account its historical and systematic causes from the perspective
of national and global development. The level of sovereign credit risk is
an indicator with which to analyse the sustainability of sovereign debt.
Sinosure grades this risk into nine levels, from low to high: AAA, AA, A,
BBB, BB, B, CCC, CC and C. As shown in Table 2.5, the overall level of
debt sustainability risk in the BRI economies is high, but shows a slight
downward trend.
According to the World Bank (2019), in economies where there is low
scrutiny or low risk of debt distress, if indebtedness is not substantially
increased as a result of the BRI, they will generally have the fiscal space
to increase investment. However, it is necessary that projects are selected
and implemented well to maximise the gains and that financial terms
are appropriate and transparent. In addition, evaluating the BRI’s impact
on the BRI economies’ debt sustainability outlook and fiscal risks is also
an important procedure. Economies with limited or no fiscal space for
expansion would need to limit the number of debt-financed projects, rely
on grants or highly concessional financing, favour FDI over debt financing
and, if possible, increase public savings to finance additional investments.
When it comes to a concrete method for analysing debt sustainability
risks, a framework is provided by China’s Ministry of Finance. Specifying
the scope of debt is the first step. China’s framework clarifies the scope
of debt as the general public sector debt on which the principal and/
or interest must be paid to creditors, including bonds, loans and other
accounts payable. Dividing economies into groups and predicting their
macroeconomic trends are critical methods to make the analysis clearer
and more accurate. After these procedures, stress testing is performed on
different scenarios to measure the sensitivity of the expected debt burden
index to changes in given situations. Following the test, we could judge
the risk signals, modify the model result and obtain a risk rating report.

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 2. CHINA’S BELT AND ROAD INITIATIVE

It is worth noting that accurate and timely information is the premise

of reliable analysis. Governments should actively participate in the
construction of the BRI risk-monitoring system and jointly build
a comprehensive early warning system for project risk.

Governance risks
Governance risks vary across corridor economies and correlate closely
with the quality of domestic institutions.
Large infrastructure projects can induce corruption—a common
governance risk that is reflected in the abuse of public office for private
gain. Infrastructure sector corruption can include improper influence
over budgeting, the selection of projects and rent extraction in return
for a carriage permit, construction contracts, leases or concessions
(World Bank 2007). The World Bank indicates that corruption
risks correlate closely with a country’s development level, since less-
developed countries lack a strong rule of law and combating corruption
is fundamentally about addressing poor governance. There is, indeed,
a positive correlation between the Corruption Perception Index and the
Rule of Law Index (see Figure 2.14). Countries or regions with high
levels of corruption tend to have weak rule of law. This may be because
the weak rule of law promotes and reduces the possibility of detecting
corruption. According to the World Bank’s Worldwide Governance
Indicators database (2021b), the average score for corruption control in
64 major BRI economies was –0.26 in 2018 (ranging from –2.5 to 2.5)
(see Figure 2.15). There were 40 BRI economies (that is, more than half
of the major BRI economies) with a Control of Corruption ranking in
the bottom 50 per cent of the world. Consequently, the efficiency and
transparency of BRI government work will be affected, which means FDI
is likely to suffer corruption risks in the BRI economies.
Procurement in the BRI projects should be open, transparent and executed
by the best-placed firms, regardless of their ownership or nationality, to
avoid risk. For host borrowing economies, following international best
practice is necessary to maximise value for money, which is also important
for China and the financial institutions that finance BRI projects as it can
help ensure the integrity and financial performance of projects.

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 NEW DIMENSIONS OF CONNECTIVITY IN THE ASIA-PACIFIC

Figure 2.14 Relationship between Corruption Perception Index and

Rule of Law Index for BRI economies, 2017
Note: Rule of Law Index scores range from 0 to 1, with 0 indicating weak perceived rule
of law and 1 indicating strong perceived rule of law.
Source: World Bank (2019).

2.50

2.00

1.50

1.00

0.50

0.00

-0.50

-1.00

-1.50

-2.00

-2.50
Azerbaijan

Bosnia and Herzegovina

Bulgaria
Tajikistan

Uzbekistan

Maldives
Ukraine

Moldova

Philippines
Albania
Kazakhstan

Serbia

Bahrain

Montenegro

Georgia

UAE
Estonia
Bhutan
Afghanistan

Cambodia

Kyrgyzstan

Myanmar

Vietnam

North Macedonia

Sri Lanka

Romania
Turkmenistan
Iraq

Laos

Pakistan

Nepal

Timor-Leste

Kuwait

India

Lithuania
Czech Republic

Israel
Oman
Egypt

China

Belarus

Malaysia

Saudi Arabia

Qatar
Yemen
Syria

Lebanon

Iran

Mongolia
Thailand

Armenia

Turkey

Croatia

Poland

Slovenia

Singapore
Bengal

Russia

Indonesia

Hungary

Jordan

Latvia

Slovak Republic

Brunei

Figure 2.15 Control of Corruption scores for the BRI economies, 2018
Notes: The Control of Corruption scores range from –2.5 (weak control, high corruption) to
2.5 (strong control, low corruption). Blue bars indicate countries with governance scores in
the top 10 per cent of 215 countries in the world; dark-green bars indicate countries in the
top 10–25 per cent; light-green bars indicate countries in the top 25–50 per cent; orange
bars indicate countries in the top 50–75 per cent; light-red bars indicate countries in the top
75–90 per cent; and dark-red bars indicate countries in the bottom 10 per cent.
Source: World Bank (2021a).

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 2. CHINA’S BELT AND ROAD INITIATIVE

Studies by the World Bank (2019) suggest that corruption mitigation can
be divided into supply-side measures and demand-side measures. On the
supply side, developing common auditing standards and enhancing audit
and related institutions are critical. The multistakeholder Construction
Sector Transparency Initiative can help economies obtain greater benefits
from public infrastructure investment by improving transparency and
accountability. Using a set of indicators called red flags that can alert
officials to potential corruption during the infrastructure construction
period is essential. Implementing integrity pacts and applying information
and communications technology can also enhance transparency and
reduce corruption risks. Social responsibility is the starting point for
demand-side measures. Community monitoring and citizen report cards
that strengthen public accountability can be implemented to effectively
combat corruption and improve governance of projects.
Studies by the World Bank emphasise three tracks to improve procurement
practices by the BRI host economies, China and multilateral international
agreements. For the BRI hosts, a first step could be to use diagnostics
related to the readiness of the national procurement system with pre-
tendering due diligence before determining which procurement rules to
apply. Mobilising resources to document the awarding of projects across
economies could be an effective approach to increase transparency and
generate more information. Two similar paths for China to enhance
competition and transparency are associated with international best
practice and establish a threshold for BRI projects. One is to introduce
international competitive bidding and the other is to include foreign-
invested enterprises and organise public national competition once the
threshold is exceeded. In addition, multilateral cooperation, such as the
WTO Government Procurement Agreement, can promote the use of
transparent and competitive procurement practices.

Environmental and social risks

Many BRI projects are large-scale transportation projects that expose local
communities to environmental and social risks.
Environmental risks refer to environmental pollution, natural resource
destruction and other problems created during project construction
that result in the risk of projects being shelved or huge fines for foreign-
invested enterprises. Many BRI economies already have resource and
environmental problems and, thus, numerous conservation areas have
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 NEW DIMENSIONS OF CONNECTIVITY IN THE ASIA-PACIFIC

been constructed (see Figure 2.16). However, many still lack strong
environmental supervision and protection systems (Guo 2020). In
addition, environmental risks are also affected by political, economic and
legal factors. For example, the host country may approve an engineering
project for the sake of economic development, but it may also adopt strict
environmental protection measures in the construction process under
pressure from the public and domestic environmental nongovernmental
organisations, or due to regime change or legal revision. Therefore,
environmental risks need to be taken seriously.

Figure 2.16 BRI road and railway projects in relation to biodiversity risks
CI = Conservation International
Source: World Bank (2019).

According to Losos et al. (2018), the impacts of environmental risks

include both the direct impacts of infrastructure construction and
the indirect impacts caused by firms’ response to new routes. Direct
BRI environmental impacts include pollution from increased traffic,
topographical and hydrological damage and the alteration of habitats at
the expense of biodiversity. BRI projects tend to follow existing transport
routes and substitute them with rail, which can reduce pollution compared
with road and air travel. Indirect BRI environmental impacts could be both
positive and negative. The positive impacts could include densification of
settlement and production and a switch to off-farm activities that support
rural land consolidation and restoration (Kaczan 2016). However, the

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 2. CHINA’S BELT AND ROAD INITIATIVE

negative effects are more pronounced, including increased emissions and

opening up border locations to development. Environmental problems
can develop by the creation not just of new settlements, but also of
particularly high-cost activities such as logging and illegal wildlife trade.
Social risks are closely related to environmental risks, because communities
and their environment are directly or indirectly affected by large-scale
infrastructure projects. According to the World Bank (2019), the impacts
that should be considered include:
• threats to human security
• disproportionate risks to vulnerable people
• discrimination against individuals or groups in the provision of
development resources and project benefits
• involuntary requisition of land or restrictions on land use
• tenure and use of land and natural resources
• health, safety and wellbeing of workers and communities affected by
projects
• cultural heritage.
In particular, the BRI projects pose a unique challenge of rapid migration
to meet the need for labour. Rapid migration has negative impacts on local
public infrastructure, utilities, housing, sustainable resource management
and social dynamics (World Bank 2016a). More specifically, it leads to
increased demand and competition for local goods and services, resulting
in rising prices, the crowding out of local consumers and increased demand
on resources, thus causing social conflict, increased rates of illegal activity
and crime and even increased risks of the spread of infectious diseases.
There are four aspects to the policies to mitigate environmental risks
that will be discussed in this section: avoid, reduce, restore and offset
(World Bank 2019). Transport routes need to be arranged to avoid
vulnerable environments—that is, to remove risks at the source. As a
result, identification and analysis of alternative routes are essential.
Integrating environmental consciousness into projects will reduce adverse
impacts on the environment. Engineering and complementary policies
include wildlife crossings, tunnel and bridge engineering, regulation
and enforcement of forest and vulnerable species protection and social
cost-benefit analyses in selecting transport options. Remedial measures
for repairing damage created by the construction process are necessary

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to restore the environment. Meanwhile, offset can include investments in

offsite locations to compensate for environmental damage that cannot
be avoided, reduced or restored, so as to ensure neutral or positive
environmental outcomes overall.
For social risks, the World Bank (2016a) has a framework for screening
investments to identify the risk profile for labour influxes and determine
the necessary mitigation measures—such as encouraging the local
recruitment of workers, affirmative action measures during the recruitment
process to give women employment opportunities and ensuring that
sufficient background checks are conducted on workers. Trafficking of
women and children for prostitution as well as of drugs are issues that
deserve attention. The spread of sexually transmitted diseases along traffic
corridors should also be taken seriously by governments, which requires
corresponding policies to limit their spread and raise people’s awareness
of prevention.
China has in fact made some efforts to reduce the environmental and
social risks of the BRI. On 25 April 2019, 19 international financial
institutions signed the ‘Green Investment Principle of the Belt and
Road Initiative’ at the second BRF for International Cooperation. This
principle aims to improve the BRI investment environment and social
risk management level and promote green investment. It covers strategy
formulation, corporate governance, project management, information
disclosure and communication and the use of green financial tools.

Conclusion
China’s BRI is a unique megaproject in global economic history, which is
in line with President Xi Jinping’s ‘Thoughts’ on China as a global power
and on globalisation in the twenty-first century and contributes to fulfilling
his mission of national rejuvenation. The project at its core incorporates
elements of Chinese and Western philosophy, generates strategic flexibility
and seeks relative economic advantage. The BRI is a key element of a new
geopolitical mechanism that is seeking to protect China’s national and
security interests, incorporates historical experience (the Cold War) and
could be seen as China’s ‘anti-containment’ strategy because it contributes
to the ‘unification’ of the Eurasian mainland (Heartland and Rimland)
and seeks autonomy from the oceanic transportation network that is
dominated by the United States.
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 2. CHINA’S BELT AND ROAD INITIATIVE

China’s BRI has brought the connectivity between the BRI countries
closer in terms of infrastructure and policy. As a result, it has shortened
shipping times, lowered trade costs and injected strong impetus into the
economies of the BRI countries, making the trade network between them
more intensive, leading to greater FDI flows into them and improving
their positions in GVCs.
The BRI projects involve various inherent risks, such as political and legal,
debt sustainability, governance and environmental and social. Although
Chinese companies have a wealth of experience, they may encounter
many problems due to the wide range of BRI projects. With numerous
opportunities for development presented by the BRI, these potential risks
and the necessary countermeasures have become issues for attention.

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