Foreign Policy Research Institute A Nation Must Think Before it Acts Why China’s Belt and Road is Off Track
Why China’s Belt and Road is Off Track

Why China’s Belt and Road is Off Track

Xinjiang, in northwest China, seems in many ways like the far edge of the modern world. Spanning a vast desert ringed by high mountains, the region was remote enough to have been chosen as the site of China’s nuclear testing in the 1960s. But in ancient times, Xinjiang marked a key stage of the overland trade routes linking the Eastern and Western worlds, and the contemporary visitor will find giant superhighways snaking across the steppe—one of the more dramatic symbols of China’s intention to resurrect the ancient Silk Road.

Announced in 2013, this vision, which has become known as the “Belt and Road Initiative,” has become a global sensation, with nearly a trillion dollars in proposed Chinese investment poised to build roads, railways, ports, and oil pipelines from Beijing to Berlin. Indeed, the concept is so expansive that it has become a kind of shorthand for virtually every China-funded development project worldwide. Unsurprisingly, given this catch-all quality, the Belt and Road has given rise to breathless commentary about the eclipse of the West, and especially America, by a rising China. But there are growing signs that China’s grand strategic vision is off track, with worrying implications for both East and West.

Much about the Belt and Road is either confusing or unclear. In policy terms, the Belt and Road Initiative actually incorporates a sprawling array of regional and country-specific partnerships, programs, and projects stretching across much of the developing world and into Europe. But one aspect of the Belt and Road is unambiguous: its scale and ambition. Its pride of place in China’s foreign policy was cemented with its inclusion in the Chinese Communist Party constitution this past fall. And while Beijing has been careful to cast the Belt and Road as an apolitical development strategy calculated to deliver “mutual benefit” and “global partnership,” these bromides mask increasing economic, political, and environmental risks.

Perhaps the biggest challenge stems from the headwinds facing China’s financial sector. Most of the money for projects is set to come from Chinese state-owned banks, which sit on a mound of foreign exchange reserves and benefit from high consumer savings rates. But pressures on these institutions are growing thanks to Washington’s trade war, with Beijing taking steps to prop up domestic growth with increased lending at home. This pressure is likely to squeeze balance sheets abroad, with Chinese banks having already issued hundreds of billions of dollars in questionable loans to fragile countries like Afghanistan and Syria. Concerns are also growing that a lack of discipline and robust risk assessment on the part of Chinese lenders may plunge already-indebted countries like Pakistan and Laos deeper into financial distress. U.S. officials, seeking to capitalize on such concerns, have meanwhile begun touting alternatives to this kind of “debt diplomacy.”

Just as worrying as these economic woes is a mounting political backlash to Belt and Road investments in some countries, as well as within China itself. Despite Beijing’s best efforts to suppress discontent among Xinjiang’s ethnic minorities, the region remains restive, and its enthusiastic deployment of surveillance technology and internment camps to stifle “separatism” has provoked widespread condemnation abroad. The threat of political instability is at least as great in neighboring countries. Malaysia’s new government has blamed Chinese investment for making housing unaffordable, and even in Pakistan, one of Beijing’s closest development partners, the chairman of the country’s Water and Power Development Authority bluntly stated that China’s financial terms for a proposed hydropower dam were “not doable and against our interests.” In some cases, the backlash has been violent. In late August, a suicide bomber wounded three Chinese engineers in Pakistan’s Baluchistan province in an attack that separatists claimed was intended “to warn China to vacate Baluchistan and stop plundering its resources.”

But as this warning suggests, in the long run, the highest costs of the Belt and Road will likely be borne by the planet. Despite Beijing’s pledges that the Belt and Road will support sustainable development, the vast majority of projects have supported environmentally harmful infrastructure like coal-fired power plants, oil pipelines, and large dams. A 2017 study warned that the Belt and Road would “create new environmental risks across the entire Eurasian continent.” In some places, meanwhile, projects are exacerbating pressure on already-scarce local resources, in turn hindering investment. During a December conference, for example, a Chinese diplomat in the Pakistani city of Karachi reportedly complained that the country’s chronic water shortages were holding up the massive Gwadar port project, a posterchild for the entire Belt and Road.

Of course, none of this means that China’s grand strategic vision is doomed to failure. But it does signal that China’s Belt and Road is riddled with potholes, and a course correction is needed to ensure it stays on track. In particular, weak financial, social, and environmental safeguards have left projects vulnerable to economic, political, and ecological risks. If Beijing’s strategic vision is to stay on track, it must work closely with other nations and multilateral institutions to ensure robust rules to protect people and the planet are applied to all its development projects overseas. Other countries, including the United States, should meanwhile hold China to its pledges to make the Belt and Road both sustainable and mutually beneficial—and keep it from running off the road.

The Foreign Policy Research Institute, founded in 1955, is a non-partisan, non-profit 501(c)(3) organization devoted to bringing the insights of scholarship to bear on the development of policies that advance U.S. national interests. In the tradition of our founder, Ambassador Robert Strausz-Hupé, Philadelphia-based FPRI embraces history and geography to illuminate foreign policy challenges facing the United States. more about FPRI »

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