Beijing welcomed the leaders of more than 130 countries, largely from the global south, in October as China commemorated the tenth anniversary of its ambitious Belt and Roads Initiative (BRI).
Chinese President Xi’s keynote speech preceded three high-level forums on digital economy, connectivity, and green development were convened. Attendants included Prime Minister Abiy Ahmed (PhD), Russian President Vladimir Putin, and more than 10,000 representatives from 151 countries and 41 international organizations.
The Belt and Road Forum, which was the third of its kind, saw close to 460 outcomes reached and nobody seems more pleased about it than its mastermind – Xi.
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In ten years, BRI cooperation progressed from “sketching the outline to filling in the details of real projects,” said the Chinese President during his address.
He announced eight major steps China will take to support high-quality Belt and Road cooperation, including building a multidimensional Belt and Road connectivity network, supporting an open world economy, promoting green development, advancing scientific and technological innovation, supporting people-to-people exchanges, promoting integrity-based Belt and Road cooperation, and strengthening institutional building.
Initially launched in 2013 as a purely infrastructure and economic growth facilitation project, BRI has turned into a fermentation of colossal political-economic integration across Africa, Latin America, Asia and Europe.
Xi’s self-proclaimed ‘project of the century’ is slated to link Beijing with Kazakhstan, Moscow, Rotterdam, Greece, Egypt, Nairobi, India and Indonesia economically and physically with a series of mega rail, road, sea, and air transport projects.
Ten years down the road, China has thus far shelled out USD 1.016 trillion on its grand plans. Close to USD 600 billion went to construction projects, and another USD 420 billion to financing related development investments.
As of June 2023, 148 countries have signed up for BRI cooperation with China.
The first half of 2023 saw more than 100 deals valued at USD 43.3 billion put into effect under BRI, up from USD 35 billion from the same period the previous year, according to the 2023 BRI investment report.
The first half of 2023 saw more than 100 deals valued at USD 43.3 billion put into effect under BRI, up from USD 35 billion from the same period the previous year, according to the 2023 BRI investment report.
In 2022, China committed USD 72.6 billion to BRI – USD 24 billion in the form of investments and USD 16 billion in credit.
It is a massive amount of financing but less than the USD 120 billion allocated in 2018. BRI engagement is not evenly distributed among participants either. Sub-Saharan countries saw a 130 percent increase in Chinese investments, mostly in construction, making the region the second-largest recipient of overall BRI investment, after East Asia.
Sub-Saharan Africa accounted for 38.6 percent of BRI construction engagements in the first half of 2023, a full seven percentage points higher than the second-largest recipient region –the Middle East and North Africa– and more than double the engagement in East Asia.
However, East Asia accounts for 44 percent of BRI investments while Sub-Saharan Africa receives 17 percent.
Saudi Arabia, Indonesia, Peru and Tanzania receive the highest BRI finances in 2023. But 26 countries, including Turkey, Kenya, Poland and Pakistan, saw a 100 percent drop.
Nonetheless, BRI is a lifeline for African economies and governments hungry for development financing, technology and marketspace.
Albert Muchanga, head of Trade and Industry at the African Union Commission, believes BRI came at the “right time” for boosting Africa’s development.
In Africa, railway projects such as the Mombasa-Nairobi Railway and the Addis Ababa-Djibouti Railway are now operational and have become important drivers of in-depth development not only in East Africa, but across the entire continent.
China’s Maritime Silk Road is expected to reach Africa through the Mombasa port in Kenya, and extend inland along the Mombasa-Nairobi railway line. The sea route will also link the Suez Canal to Greece.
In East Africa, the construction of railways connecting the hinterlands to the coastal ports is essential and the main projects in East Africa’s railway master plan include the Djibouti-Addis Railway and the Nairobi-Mombasa Railway.
The 759 km Djibouti-Addis line has reduced travel time from three days by road to 12 hours by railway Ethiopia hopes to construct rail network of approximately 5,000 km to connect South Sudan, Kenya, and Sudan, while Djibouti anticipates greater connectivity between the Red Sea and the Atlantic Ocean through a rail network.
The Ethiopia-Djibouti Railway cost USD four billion, with the Ethiopian section costing USD 3.4 billion. China’s Exim Bank financed 70 percent of the total cost. Although Djibouti is not rich in natural resources, it is a strategic location for China and all global and regional powers.
Additionally, investment by Chinese-owned companies in Ethiopia’s special economic zones (SEZs) is growing with Europe being the key market for the manufactured goods from these zones.
Ethiopia, which China considers its gateway to Africa, lately strengthened its ties with China as more than just a BRI partner. Following Ethiopia’s endorsement to the BRICS, China has upgraded its diplomatic relationship with Ethiopia to an “all-weather strategic cooperation partnership.”
PM Abiy Ahmed (PhD) signed 12 MoUs and two letters of intent on Belt and Road cooperation, implementation of the Global Development Initiative, agriculture, culture, health, digital economy, green development, and urban and infrastructure construction, during the Forum last month.
The PM also agreed to align Ethiopia’s Ten Years Perspective Plan (TYPP), which spearheads Ethiopia’s development path for 2020 to 2030, with BRI.
Mega-projects are underway on four continents and some have already been completed.
These include metro projects, coal-fired power plants, hydropower plants and transmission lines on the China-Pakistan Economic Corridor.
The Belgrade-Novi Sad section of the Hungary-Serbia Railway in Serbia became operational in March 2022, and track-laying has started on the Budapest-Kelebija section in Hungary.
Along the China-Indochina Peninsula Economic Corridor, the China-Laos Railway has been completed, as well as the Jakarta-Bandung High-speed Railway, the flagship project of BRI cooperation between China and Indonesia. Construction has also begun on the China-Thailand Railway.
Along the China-Mongolia-Russia Economic Corridor, a railway and highway connecting China and Russia have opened to traffic and the China-Russia eastern natural gas pipeline is fully operational.
Similar transport, natural gas, and oil-related projects have begun or been completed in Central and South Asia, particularly in Bangladesh, as well.
Maritime connectivity is a BRI priority. Cooperation is expanding in shipping among the ports of participating countries, and the efficiency of cargo transportation has seen a notable increase.
Maritime connectivity is a BRI priority. Cooperation is expanding in shipping among the ports of participating countries, and the efficiency of cargo transportation has seen a notable increase. BRI includes investments in ports in Nigeria, Italy, Greece, Pakistan, Myanmar, and Sri Lanka, among others.
The Silk Road Maritime network has continued to expand. By the end of June 2023, it had reached 117 ports in 43 countries, and more than 300 well-known Chinese and international shipping companies, port enterprises and think tanks, among other bodies, have joined the Silk Road Maritime association.
The Air Silk Road has made notable progress. The aviation route network between participating countries is expanding rapidly, and the level of air connectivity is steadily improving.
China has signed bilateral air transport agreements with 104 BRI partner countries and opened direct flights with 57 partner countries to facilitate cross-border transport.
Trade and investment are expanding steadily as well.
Between 2013 and 2022, the cumulative value of imports and exports between China and BRI partner countries reached USD 19.1 trillion, with an average annual growth rate of 6.4 percent.
The cumulative two-way investment between China and partner countries reached USD 380 billion, including USD 240 billion from China. The value of newly-signed construction contracts topped USD two trillion, and the actual turnover of Chinese contractors reached USD 1.3 trillion.
In 2022, the value of imports and exports between China and partner countries reached nearly USD 2.9 trillion, accounting for 45.4 percent of China’s total foreign trade over the same period, representing an increase of 6.2 percentage points compared with 2013. The total value of imports and exports of Chinese private enterprises to partner countries exceeded USD1.5 trillion, accounting for 53.7 percent of the trade between China and these countries over the same period.
China has signed 21 free trade agreements with 28 countries and regions. On January 1, 2022, the Regional Comprehensive Economic Partnership (RCEP) agreement entered into force, creating the world’s largest free trade zone in terms of population size and trade volume.
Still, BRI has its drawbacks.
The Chinese economy still struggles to recover from the heavy blow of Covid19. This has put strain on China’s capacity to allocate financing required to fuel BRI projects. China has been unable to regain the momentum from its peak investment period in 2018 due to the pandemic and other global crises.
Some researchers state that China’s overall activity in BRI countries is down about 40 percent from its 2018 peak as the world’s second-biggest economy slows. Beijing faces accusations of being an irresponsible lender, driving countries to default. Fractured ties with the U.S. have made association with Xi’s pet project increasingly divisive—Italy, its sole Group of Seven member, is set to exit by the year’s end.
Some Chinese officials consider the BRI dead, dealt twin blows by Covid19 and China’s economic problems. The critics point out the Chinese government hoped this summit to mark BRI’s 10th anniversary would reinvigorate the project.
The US assesses that the BRI is in deep trouble, according to senior American officials. Beijing has less capital to lend and pressure is growing to recoup the outstanding money it loaned, according to their assessments.
While several BRI partners, particularly Africans, are happy with the blitz of project financing from China, some are already crippled with the inability to repay China’s loans.
As the outbreak of Covid19 put the brakes on China’s infrastructure and trade initiative, global slowdown has imperiled debtors’ ability to repay their creditors as well. Zambia was the first African country to default during the pandemic in late 2020, putting China, the nation’s largest creditor, in the spotlight.
As other nations including Ethiopia, Sri Lanka, and Pakistan fell into debt crises, annual engagement under the BRI plummeted to USD 63.7 billion in the first year of the global health crisis, according to a study by the Green Finance and Development Center at Shanghai-based Fudan University.
Over one-third of Ethiopia’s USD 28 billion external debt is owed to China. The Ethiopian government has recently secured a two-year suspension of debt service to China – a monumental relief for the administration of PM Abiy Ahmed.
Another BRI setback is the rattle between Beijing and Washington. Washington, which sees BRI as a block of China’s political mobilization, has recently launched a new initiative aimed at countering BRI. During the last G20 summit, President Joe Biden announced India-Middle East-Europe Economic Corridor (IMEC), which seeks to counter the inroads China has made through its Belt and Road Initiative (BRI) by linking India, the Arabian Gulf, and Europe.
Earlier this month, President Xi traveled to San Francisco to meet president Biden. Biden reiterated that none of America’s policies against China are going to change.
The US President spoke about supporting Ukraine and Israel and asked Xi to restrain from military activities in the South China Sea. Biden also accused Xi for unfair trade competition, and China’s punitive actions against US firms. Concerns of human rights abuses including in Xinjiang, Tibet, and Hong Kong, were also raised by Biden.
Xi warned Biden at the summit to stop arming Taiwan, according to a readout from China’s foreign ministry.
“The US side should … stop arming Taiwan, and support China’s peaceful reunification,” Xi told Biden.
Biden reiterated, however, that the US would continue to arm Taiwan as a deterrent. The US had maintained strategic ambiguity about whether it would directly intervene to protect Taiwan in the event of an invasion by Beijing.
Biden stated only one thing that is in favor of Xi, which is the recognition of one China policy regarding Taiwan. He reiterated that the United States opposes any unilateral changes to the status quo from either side, and expects cross-strait differences to be resolved by peaceful means, and that the world has an interest in peace and stability in the Taiwan Strait.
However, IMEC remains just a sketch of a plan, since America is yet to disburse the finance it pledged. Many doubt that IMEC will be a challenge to BRI. Analysts conclude that the West, which is busy with two wars, has no time and resources for development in the global south.
Constantinos Berhutesfa (PhD), former senior official at the AU and UN, says BRI and BRICS have huge potential for developing countries like Ethiopia.
“This initiative constitutes the best experiences of developing countries. The late developing economies like Ethiopia, have much to draw from these initiatives. The best performing economies in infrastructure, agriculture and technology, are in this group,” he said. “It will be highly beneficial.”
