Is the Belt and Road Initiative adapting to a changing world?2 November 2023
The Belt and Road Initiative (BRI), one of the world's largest infrastructure and development strategies, marked its tenth anniversary in 2023. Following the recent Belt and Road Forum for International Cooperation (BRF III), we reflect upon the BRI’s future.
In October, the forum was held against a global backdrop of the pandemic's lingering impacts, surging armed conflict and military coups, increasing effects of climate crises and environmental degradation, and an economic slowdown. These factors have contributed to rising debt in countries where BRI projects are implemented, constraining their ambitions for greater infrastructure connectivity and agency in their own development and green transitions.
The BRF III provided insights into how the BRI is likely to evolve and to respond to these and other pressing global challenges, including continued investment that emphasises different approaches – such as ‘small but smart’ social projects – and a focus on green development and the environment. Amid global financial and sociopolitical upheaval, the future of the BRI is likely to be more market-driven; however, with conflict and violence on the rise, the BRI will also need to consider more conflict-sensitive implementation approaches – creating both new opportunities and new challenges for businesses. There also remains a disconnect between the BRI’s strategy and approaches and the impacts of its projects on local communities.
The Chinese government announced that the China Development Bank and the Export-Import Bank of China will each set up a CNY350 billion (USD$48 billion) financing window, and an additional CNY80 billion ($11 billion) will be injected into the Silk Road Fund, an initiative to foster increased yet sustainable investment in BRI countries. Such financial commitments signal that China will continue its resource input into the BRI, but these commitments are both flexible – using the term financing ‘window’ – and vague, with no timeframe announced. Analysts have pointed out that the market, rather than the government, will decide the actual amount of such loans.
The Chair of the BRF III also encouraged multilateral development banks and international financial institutions to provide more financial support for infrastructure projects. The call for increased multilateral investment is not new, yet takes on new importance amid a growing economic crisis in China. It acknowledges the need to diversify BRI financing by pooling funding sources globally, as the BRI cannot sustainably rely solely on Chinese financing. While commitments made at the BRF III show that there is some support for this diversification, time is needed to understand its true impact.
The BRI and the green transition
The Beijing Initiative for Belt and Road Green Development, launched at one of the high-level forums at the BRF III, emphasises greater collaboration among BRI partner institutions in the infrastructure, energy, transport and finance sectors. This vision for collaboration includes prioritising the construction of environmentally friendly and climate-resilient infrastructure. The Chinese government also announced that Chinese development banks and financial institutions will implement the Green Investment Principles for the BRI.
This vision for collaboration includes prioritising the construction of environmentally friendly and climate-resilient infrastructure.
In his statement, the Chair acknowledged the critical role of businesses in BRI cooperation, asserting that business practices are key to the delivery of the BRI. In line with this statement, the Beijing Initiative calls on investors and project implementers to adopt high environmental standards and bolster their corporate environmental, social and governance (ESG) performance. In a meeting on the margins of the BRF, business leaders pledged to establish compliance management systems and improve their capacities to control debt risk and implement projects. This reflects a broader shift towards ESG for Chinese companies, particularly as increased legal requirements around ESG in the international marketplace have led more Chinese companies to treat ESG as a compliance issue.
Infrastructure has always been at the core of the BRI framework. Following the BRF III, however, there appears to be a more nuanced vision, stated by the Chair, emphasising ‘viability, affordability, inclusiveness, accessibility, and broad benefit over the entire life-cycle of the infrastructure’. Implementing these commitments, alongside increased ESG standards, will require a gear shift from past BRI approaches. These commitments should be applied not only to infrastructure projects but mainstreamed across all BRI projects. The commitments must also be grounded in broad participation from both international and local actors.
New mandates for BRI businesses
Among the many policy papers, action plans, projects and mechanisms announced at the BRF III, several stand out. Firstly, in recent Chinese foreign diplomacy discourse China framed the BRI as a conflict prevention approach, with peaceful development leading to lasting peace and security. Businesses now share the responsibility of contributing to peace in the communities and countries where they operate. This role is a departure from prior practice and will require both incentives and clear policy guidance on conflict-sensitive implementation for the business community. Research on potential peace pathways for BRI projects is also essential to frame the path going forward.
Secondly, the Chinese government announced its commitment to carry out 1,000 ‘small-scale’ and ‘smart’ social and livelihood projects, alongside major infrastructure endeavours. Businesses will be increasingly tasked with implementing social projects under the BRI banner that focus on poverty alleviation, disaster prevention and response, and humanitarian assistance. Compared to large-scale infrastructure, these projects tend to be less controversial and have the potential to make a positive impact in a shorter period. However, businesses may not be prepared to navigate the challenges involved in ensuring equitable and conflict- and gender-sensitive design and implementation, particularly in complex, fragile and conflict-affected environments.
The BRI and civil society
According to Chinese government rhetoric at the BRF III, the BRI adheres to ‘the principles of extensive consultation, joint efforts, and shared benefits, the approach of open, green, and clean cooperation, and the pursuit of high standards, people-centred, and sustainable development’. The action plans and outcomes from the BRF III suggest that everything is on track. However, many BRI projects face criticism regarding their impacts on communities on the grounds of human rights, conflict risks and environmental issues.
People-to-people exchange has been a stated foundation of the BRI since its inception. However, the BRI’s many exchange and capacity-strengthening programmes have historically fallen short in inclusiveness, particularly with regards to civil society engagement and consultation with communities where BRI projects are implemented. The BRF III also followed a pattern of largely overlooking the gendered dimensions of BRI implementation – how BRI projects impact or are affected by women, girls, men and boys. Gender did not specifically feature either in the official BRF III agenda or the final outcome document. These trends suggest that, so far, the BRI is taking a top-down path, and inclusiveness remains largely rhetorical.
Can more be done to mitigate the potential harms and maximise the benefits of the BRI? The answer is yes. National governments and businesses can work collaboratively with civil society and communities to deliver the BRI, as these groups are best placed to advise on how policy decisions and business practices affect them, both negatively and positively. By working in partnership with civil society and local communities, BRI implementers can better mitigate operational risks, to ensure the safety of BRI projects and personnel, reduce the likelihood of exacerbating local conflict dynamics, and support China’s vision of development-driven peace.
To learn more about public perceptions of the BRI, read our report here.
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Photo: Part of Kenya's SGR railway network, a BRI initiative. Credit: Flickr/Kamweti Mutu