Jaya Josie, Advisor China Africa Center, Zhejiang University International Business School (ZIBS) & Professor Adjunct, University of Venda
Beijing was abuzz on Wednesday, 18 October 2023 as President Xi Jinping and the Government of China prepared to welcome heads of states, governments, and delegates to celebrate ten years of the Belt and Road Initiative (BRI) at what has become known as the BRI Forum. The event welcomed representatives from 140 countries and more than 30 international organizations. At the opening President Xi emphasised that the BRI is based on mutually accepted agreements and negotiations and opens up a new global chapter in intergovernmental inclusive multilateral cooperation. Among the heads of State attending the gathering were Presidents from Russia, Sri Lanka, Kenya, Indonesia, Hungary, Argentina, Ethiopia and, and from the United Nations, the secretary general.
The BRI was launched ten years ago in September and October 2013 following a visit by president Xi Jinping, first in Kazakhstan during a visit in September and, subsequently in October when President Xi attended conducted a state visit and attended an ASEAN Summit in Indonesia. On 7 September 2013, following the G20 Summit in Russia and, during his visit to Astana, Kazakhstan, President Xi evoked memories of the ancient Silk Road trade that linked China with Eurasia, the Middle East and Europe. President Xi underlined the importance of Kazakhstan as China’s energy supplier and, gateway westwards to consolidate relations with Central Asia. Not long after, President Xi visited Indonesia on 4 October 2013 and while addressing the Indonesian Parliament, announced the intention to build a new “maritime silk road” for partnerships in Southeast Asia and beyond. Ten years later the BRI is a reality linking countries across Africa, Asia, Europe, Eurasia, Southeast Asia, the Middle East, and Latin America.
At the 10th Anniversary BRI Forum in Beijing in October 2023, President Xi highlighted the achievements of the initiative and committed that China will continue to pursue coordination, connectivity, financial cooperation, unimpeded trade, and people to people links. In his congratulatory remarks, the Secretary General of the UN, Antonio Guterres, said the BRI is an historic opportunity that can turn infrastructure emergencies in the developing world into infrastructure opportunities. Sub-Saharan African (SSA) countries in Africa and other developing countries are currently bedevilled with infrastructure emergencies. The BRI is already heavily invested in building rail, energy, renewable energy, ports, harbours, and highways across SSA and North Africa. In the Middle East similar levels of infrastructure investment is linking the region with each other and with China. To date the BRI links148 countries across Asia, Africa, Eurasia, the Middle East, and Latin America, and accounts for two thirds of the world’s population, and approximately 40% of the worlds GDP. The BRI opens up investment opportunities for corporations in China and other partners across the BRI linked countries. Initial data published in the first half of 2023 on the 148 countries indicate 102 projects worth US$ 43.3 billion. The latest data on developments in the BRI was published in the China Belt and Road Initiative (BRI)Investment Report 2023 H1 – the first ten years, by Fudan University’s Green Finance & Development Center, Shanghai.
From the Report, preliminary data on Chinese engagement through financial investments and contractual cooperation for the first half of 2023 in the 148 countries of the Belt and Road Initiative (BRI) suggest that globally, China’s BRI Investment shows a marked increase of 130% in Sub-Saharan countries in Africa and, with a 69% increase in construction contracts. With this level of BRI investment Sub-Saharan Africa has become, after Southeast Asia, the second most significant destination for BRI construction investment. A breakdown of the regional distribution of BRI total investment globally for 2023 reveals the following data trends: Sub-Saharan Africa 69%; Arab Middle East, and North Africa 56%; East Asia 43.9%; South America 22.88% and, Europe 3.7%. China investments in construction projects are financed through loans from financial institutions or contractors and are backed by guarantees from host government institutions. This compares to construction contracts that are typically financed through loans provided by Chinese financial institutions and/or contractors with the project often receiving guarantees through the host country’s government institutions.
The Report provides a breakdown of the US Dollar value invested in the 45 BRI countries in 2023. Of the 45 countries 24 received direct investment and 29 engaged in construction contracts. Saudi Arabia received the highest construction contractual engagements in the first half of 2023 valued at about US$3.8 billion, with Tanzania receiving US$2.8 billion and, the United Arab Emirates US$1.2 billion. With respect to investment Indonesia received the largest allocation worth about US$5.6 billion, with Peru receiving US$2.9 billion and, Saudi Arabia US$1.6 billion. The Report suggests that the BRI includes more than 900 ten year infrastructure projects valued at US$1.3trillion across Eurasia, South East Asia and, the Middle East. The funding for the projects will be backed by China’s Silk Road Infrastructure Fund and the Asian Infrastructure Investment Bank (AIIB) and, the BRICS New Development Bank (NDB). It is important to note at this stage that the AIIB includes 70 countries from across the world. Among the countries include members from Europe and, the BRICS group of countries. The AIIB also includes members of the G20 and the Shanghai Cooperation Organization (SCO).
While many of the BRICS + and the BRI member countries are emerging economies and represent a sizeable proportion of the world’s population and GDP, currently many of them are also going through difficult economic problems of underdevelopment, unemployment, inequality and poverty. These difficulties are exacerbated by socio-economic and political economy contradictions characterised by corruption, poor governance, capital flight and, undue international pressures from geopolitical tensions. In fact there is a chorus of international media voices that paint China’s BRI program as promoting China’s international economic agenda to control the flow of its resource inputs by focusing on transport access across countries and oceans. There is also the old narrative that China’s loan agreements are creating a debt trap for emerging and developing economies. However, many economists and international organizations have debunked the notion of a debt trap and juxtaposed the loans from the west that have created a classical debt trap against the benefits that BRI investments bring to developing countries.
Of course China is promoting the BRI as part of its own policy of inclusive multilateralism and the loans and investment are made by private sector corporations. In addition many countries in the BRI are also members of the AIIB. In addition the BRICS and BRICS + are linked with many BRI member countries and, as many are themselves members of the BRICS New Development Bank they will, like the other members of the NDB benefit from the BRICS Contingent Reserve Arrangement (CRA). The CRA will continue to be an important mitigating mechanism to address situations of financial crises. In this sense it will contribute towards reinforcing the global financial safety net. Also at the Johannesburg 15th BRICS summit the leaders resolved that the BRICS + group will promote the use of own currencies in financial transactions across the member states. As recent as the end of September 2023, CGTN reported that according to the Bank of China, Brazil and China completed a transaction using local currencies.
At the commemorative BRI Forum President Xi announced steps that will support further collaboration and cooperation in the BRI. He proposed a market and business-based financial support for BRI projects in which the China development bank and the Export-Import Bank of China to each set up $48.75 billion financing window, and an additional 80 billion yuan for the Silk Road Fund. He committed China to an open world-economy, building a BRI connectivity network, green development and people-to-people exchanges and, integrity based cooperation. While the BRI was developed as China’s multilateral policy its benefits and opportunities are for the world to share. For Africa and other developing and emerging economies the BRI has already created much need infrastructure and employment and its future development will usher in period of sustainable development.