China’s $1 trillion global infrastructure investment program just turned 10, and it’s losing its luster.
The Belt and Road Initiative (BRI), touted as a platform for China to build trade and investment links in developing countries, has evolved much in the past decade.
But wariness from countries in recent years has grown, and the program has drawn criticism over issues ranging from saddling partners with unsustainable debt to fueling corruption and labor abuses.
Italy formally pulled out of the initiative in December 2023, striking a blow to the Chinese regime’s aims to expand the initiative beyond low- and middle-income nations. Italy is the only G7 country to have joined the BRI.
The Philippines dropped out a month earlier and said it would seek alternative funding for the $5 billion China had pledged for three rail lines. The country’s transport minister said the decision came after Beijing was non-responsive to funding requests.
Meanwhile, the Chinese Communist Party (CCP) has become more explicit about its plans to reshape the world. Last month, the CCP touted the BRI’s “leading role” in “accelerating the reform of the global governance system.” The project is also known as “One Belt, One Road.”
Experts have said that the commercial component of the BRI was never the focus. By design, the framework uses infrastructure investments to buy other countries’ political decisions, and economic development has served as a cover for Beijing to advance its global military ambitions.
Yao-Yuan Yeh, professor of international studies at the University of St. Thomas in Houston, told The Epoch Times that the BRI’s initial purpose was to export China’s excess industrial capacity.
“China had thought about this long ago: To have an opportunity to part ways with the capitalist world or the democratic world, China has to strengthen its market,” he said.
Mr. Yeh described the CCP’s investments as “predatory” because the infrastructure projects had to contract Chinese companies. Therefore, Chinese policy banks lend money to the host country, which then pays the Chinese contractors. “Money circles back to China without providing much help to local economies,” he said.
Italy Bugs Out
Italy cited a lack of results for withdrawing from the BRI. The country signed into the BRI in March 2019, hoping to rebalance its trade with China.As a framework agreement, a BRI memorandum of understanding (MOU) doesn’t necessarily bring concrete benefits to a host country if no specific project contracts follow.
That was the situation in Italy.
Mr. Yeh said that Italy’s withdrawal might trigger a “snowball effect,” starting with countries in southern and eastern Europe.
Mr. Yeh said that the CCP may focus on the remaining countries in central Asia, the Middle East, North Africa, and the Caribbean, which need cash and aren’t aligned with U.S. values.
He said that the BRI has become a public relations tool for the CCP to grab votes at the U.N.
“One of the major objectives of ‘One Belt, One Road’ is political: Silence the criticism of the Chinese Communist Party,” Li Shaomin, professor of international business at Virginia’s Old Dominion University, told NTD, sister media outlet to The Epoch Times.
“Of course, the CCP would also welcome any economic benefits,” Mr. Li, the son of a famous CCP reform theorist under former leader Hu Yaobang, said.
In the professor’s view, the BRI was hatched to answer the CCP’s need to do business with the rest of the world while blocking any external political influence—if the CCP could influence other countries politically to silence their criticism, then Chinese people would have no reason to disapprove of the Party.
Military Ambitions
The BRI was initially positioned as an economic development program.It began in September 2013 as the “Silk Road Economic Belt,” introduced by the CCP general secretary Xi Jinping at a university in Kazakhstan. The focus was on building roads and facilitating trade.
A month later, Xi proposed the “21st Century Maritime Silk Road” during a speech to the Indonesian Legislature. At that time, it was still mainly about maritime cooperation with member states of the Association of Southeast Asian Nations (ASEAN).
The development component is just a cover for military ambitions, a strategic focus by design, according to Liang-chih Evans Chen, an associate research fellow at Taiwan’s official Institute for National Security and Defense Research.
The CCP doesn’t mention the military side of the BRI because it doesn’t want to set off alarm bells in the international community, Mr. Chen told The Epoch Times.
He said that the BRI’s infrastructure investments have covered up Beijing’s increased footprint in foreign ports for its dual civilian and military use.
In 2016, China began construction in the 2,000-acre Gwadar Special Economic Zone next to the Gwadar Port in Pakistan, at the end of the $62 billion China-Pakistan Economic Corridor.
Mike Sun, a U.S.-based businessman with decades of experience advising foreign investors and traders doing business in China, said he also thinks military considerations are a part of the BRI design. He used an alias to avoid reprisal from the Chinese regime.
Mr. Sun said that, along with infrastructure and energy projects, Beijing pushes for its ultimate goal of a “global community of shared future,” or communism under the CCP.
“The CCP intends to hold money in one hand and weapons in another. Although its military power hasn’t reached that point, that’s its next step,” he told The Epoch Times.
“I think forcefully advancing its values and worldview to combat the West is the most important idea of Xi Jinping’s BRI framework. Of course, the CCP won’t say that explicitly.”
Forced Labor, Corruption, and Debt Traps
With its investment projects, the belt and road platform has also exported to recipient countries CCP-style forced labor and corruption.“They were promised a job with good pay to support their families back in China,” the authors wrote. “Upon arriving in the host countries, however, Chinese employers confiscated their passports and told them that if they wanted to leave early, they had to pay a penalty for breach of contract, which is often equivalent to several months’ worth of their salary.”
BRI projects have also tapped into local corruption to gain advantages. Deal terms involving personal favors have inflated the valuation of projects or skewed the business case for the recipient country.
In return, Malaysia signed two pipeline projects and a $20 billion railway project under the BRI framework.
After the new Malaysian prime minister took over, the pipeline projects were canceled and the railway was revalued at $11 billion.
Under Mr. Rajapaksa, Sri Lanka’s debt tripled to $45 billion, with $4.7 billion due by the end of 2015.
When the country couldn’t repay the debt, Sri Lanka agreed in December 2017 to transfer a 70 percent stake in its Hambantota Port to the China Merchants Group and allow China to lease the port and its surrounding land for 99 years.
Shrinking Wallet, More Wary Partners
China’s BRI handouts peaked at about $75 billion in 2017 and have declined yearly until reaching their lowest level of about $48 billion in 2020, the first year of the global pandemic.When the CCP ended its zero-COVID policy in December 2022, the world expected China’s economy to rebound. Instead, the decadeslong issue of debt-fueled growth of its property sector and local governments weighed on a deflation that the regime doesn’t seem able to shake off.
With the policy banks entrenched in non-performing loans, China no longer has the same deep pockets it had in the 2010s—and it knows it.
At the third BRI forum in Beijing in October 2023, the CCP announced its outlook for the next decade, emphasizing “small and beautiful” projects to strengthen the scheme’s “golden brand” and pivoting toward artificial intelligence and green energy.
Meanwhile, the geopolitical climate has changed and countries are more wary of the CCP’s intentions.
The current theme of “de-risking” with China in the EU had also made Italy’s BRI untenable, according to Mr. Yeh.
Part of the unspoken attraction of the BRI is China’s domestic market, Mr. Yeh said. Countries that sign up to the BRI hope to make money by selling their products and services to its massive population. However, he said, China’s trade imbalances with the EU and the United States show that access to the Chinese market remains elusive.
A Waning Scheme
The CCP celebrated the BRI’s 10th anniversary in October 2023 with the third Belt and Road Forum held in Beijing.About 30 heads of state or government representatives attended the first forum, in 2017, and 37 the second forum, in 2019.
Steve Yates, chair of the China Policy Initiative at the America First Policy Institute, a Washington-based think tank, said it’s important for the United States to work with its allies to compete with the CCP in key global regions.
“It’s not something for the United States to do alone, and the United States doesn’t do it in the hopes of imperialism or overly aggressive control of the countries that are targeted,” he told The Epoch Times.
“That is very different from the People’s Republic of China luring people into debt traps or other forms of disappointment with the Belt and Road Initiative. That’s why some major partners are exiting the Belt and Road: they’ve seen the results, and the results are not happy.”
“And I think that [Xi] is realizing that there are—for example, his Belt and Road Initiative—well, we’re going to compete on that. And we’re going to—we’re doing it a different way. The Belt and Road Initiative has been a debt and a noose for most of the people that signed on,” President Biden said on Oct. 25, 2023.
“We are working with our G7 partners to provide infrastructure for the very nations that he’s trying to deal with.”
The United States pledged to raise $200 billion in five years, and other G7 countries pledged $400 billion in the same timeframe.
Mr. Yeh said the PGI program is a type of “global supply chain reshuffling investment agreement,” which will take several years to take shape.
Vietnam: A New Battleground
As China’s trade with the United States and Europe shrinks, the ASEAN region is the only bright spot. Among the 10 member states, Vietnam is the largest trade partner with China, accounting for a quarter of China’s trade with the bloc.Before Xi’s visit, the Chinese ambassador to Vietnam told Vietnamese state media that Beijing was willing to offer “free aid” for a high-speed rail from China’s Yunnan Province to the port city of Haiphong that runs through Vietnamese regions rich in rare earths.
Mr. Yeh said it’s very unlikely that Vietnam will want to completely heed China’s demand as a result of a state visit.
He said that most Asian countries will probably deal with China and the United States at the same time, trying to make the best of the U.S.–China competition.
“At the same time, they won’t choose the side of the United States before the U.S.–China relations reach a floor,” he said.
Regardless of how the CCP repackages its BRI, the next decade won’t go nearly as uncontested as the first.