Blog Post

The next step of the Belt and Road Initiative: Multilateralisation with Chinese characteristics

The increasingly broad objective of China's Belt and Road Initiative has attracted the attention not only from the BRI members, but also from other major players such as the United States and the European Union.

By: , and Date: April 18, 2019 Topic: Global economy and trade

Regardless of the attitude towards President Xi Jingping’s grand plan for China’s global expansion – namely the Belt and Road Initiative (BRI) – the world is eyeing the second BRI Summit to be held on 26-27 April in Beijing. Two years after the first BRI Summit, which was greeted with enthusiasm by the developing world, things have changed rather quickly.

Since President Xi Jinping first introduced the concept of One Belt One Road in late 2013, shortly after his arrival to power, China has invested massively in infrastructure projects to enhance connectivity among neighboring countries. Although the BRI is only five years old, China has expanded aggressively in many countries. Beyond China’s actions and the world’s response, the objective of the Belt and Road Initiative seems to have evolved. From a more economic-oriented goal of facilitating export of China’s excess capacity through increased trade connectivity, it has become a soft power tool with a large part of the infrastructure projects considered strategic. The increasingly broad objective of President’s Xi’s global plan has attracted the attention not only from the BRI members, but also from other major players such as the United States and the European Union.

In a recent empirical analysis, using big data on millions of media outlets globally, we find that the sentiment toward the Belt and Road Initiative had been generally positive from its early stages, although it varies widely across countries[1]. However, a closer look at the media after the first BRI Summit shows a clear worsening of the Belt and Road’s image globally (Figure 1). The exceptions are the Middle East and North Africa. The worsening image of BRI is definitely a wake-up call for China in its pursuit of a successful strategy to increase soft power globally.

Our analysis suggests some of the reasons for the worsened image of the BRI. The first and most evident seems to be trade. Countries appear wary of an imbalanced trade pattern and excessive dependence on Chinese imports. In addition, debt dynamics in recipient countries could be an issue. On the whole, China may have been piling up too many objectives under the BRI cover, some of which could be inconsistent. Replicating China’s internal way of doing business – i.e. relying on China’s own resources and materials with a clear favour of state capitalism – in the overseas markets has been questioned.

While keeping state-owned companies busy with BRI projects may be appealing from an economic perspective, it only exacerbates foreign concerns, weakening China’s international image. Most of the recipient countries welcome infrastructure financing from China, but also expect transparency and fair competition. The latter is at odds with China’s existing strategy.

The fact that the BRI is backfiring is not only demonstrated in its worsening image globally, but also by the announcement of alternative proposals both by the US, through the Indo-Pacific Strategy with Australia, India and Japan, and the European Union, in the form of its EU-Asia Connectivity Plan. The US confronts mainly the geopolitical aspects of the BRI, as it focuses on the political and military coordination among states in the Indo-Pacific region through the Quadrilateral Security Dialogue (QUAD). The European Union’s response, on the other hand, is clearly narrower, focusing on the economics behind the BRI, in particular on physical connectivity. Beyond the Indo-Pacific Strategy, the US-led trade war could also be seen as an economic response to China’s rise, not only domestically, but also in other countries through BRI.

Although the response seems painful for China, it is not a completely disastrous as it provides an opportunity for the big country to learn how to acquire international soft power. In fact, such backlash offers China an opportunity to shift from its earlier BRI strategy to a more sustainable one. China seems to be realising that creating confrontation with the US might not be a winning strategy in spite of the economic benefits. Given the diminishing returns on investment, China needs to expand in the overseas markets. Against this backdrop, the next step for China’s Belt and Road is definitely to take a more flexible and open pathway to building its soft-power image.

To that end, China has recently made a number of strategic changes regarding the BRI, which have probably remained unnoticed given the much more low-key approach. First, China has sharply increased the number of countries signing memorandums of understanding (MOUs) from the original 63 to 126. The key is to make the Belt and Road less targeted to ease the West’s geopolitical concerns about this project. Second, China is trying to use a more multilateral framework to push the BRI, i.e. the Asian Infrastructure Investment Bank (AIIB). Such multilateral framework retains Chinese characteristics, allowing China to keep ultimate control of key projects, but at the same time offers room for other developed countries to get involved, especially the European countries and Korea. In other words, China is willing to make compromises and share benefits with other countries, but it ultimately strives to preserve the BRI’s non-Western model.

[1] Alicia García-Herrero and Jianwei Xu, 2019, “Countries’ perceptions of China’s Belt and Road Initiative: A big data analysis”, Bruegel Working Paper. https://bruegel.org/wp-content/uploads/2019/02/WP-2019-01final.pdf


Republishing and referencing

Bruegel considers itself a public good and takes no institutional standpoint. Anyone is free to republish and/or quote this post without prior consent. Please provide a full reference, clearly stating Bruegel and the relevant author as the source, and include a prominent hyperlink to the original post.

Read article More on this topic More by this author
 

Opinion

How Chinese competition helps western conglomerates

Firms like GE and Siemens may well find that their decision to split their businesses into multiple companies leads to increased profits and higher stock prices. But recent research indicates that this is not the only way conglomerates can boost efficiency.

By: Dalia Marin Topic: Global economy and trade Date: January 17, 2022
Read article More on this topic More by this author
 

Podcast

Podcast

Understanding Japan’s economic relations with China

What can Europe learn?

By: The Sound of Economics Topic: Global economy and trade Date: January 12, 2022
Read about event More on this topic
 

Upcoming Event

Feb
2
14:00

Towards an inventory of corporate subsidies by China, the EU and the USA

In this event panelists will discuss the latest report of the 28th Global Trade Alert Report, 'Subsidies and market access: Towards an inventory of corporate subsidies by China, the European Union and the United States'.

Speakers: Simon J. Evenett, Denis Redonnet, André Sapir and Reinhilde Veugelers Topic: Global economy and trade Location: Bruegel, Rue de la Charité 33, 1210 Brussels
Read article More on this topic
 

Opinion

How an open climate club can generate carbon dividends for the poor

The German-led G7 can accelerate decarbonisation while tackling climate justice.

By: Andreas Goldthau and Simone Tagliapietra Topic: Green economy Date: January 11, 2022
Read about event More on this topic
 

Upcoming Event

Feb
8
14:00

Is China’s private sector advancing or retreating?

A look into the Chinese private sector.

Speakers: Reinhard Bütikofer, Nicolas Véron and Alicia García-Herrero Topic: Global economy and trade
Read article Download PDF More on this topic More by this author
 

Working Paper

Timely measurement of real effective exchange rates

This paper contributes to the measurement of monthly consumer price index-based real effective exchange rates with two main novelties.

By: Zsolt Darvas Topic: Global economy and trade Date: December 23, 2021
Read article
 

Blog Post

European governanceInclusive growth

12 Charts for 21

A selection of charts from Bruegel’s weekly newsletter, analysis of the year and what it meant for the economy in Europe and the world.

By: Hèctor Badenes, Henry Naylor, Giuseppe Porcaro and Yuyun Zhan Topic: Banking and capital markets, Digital economy and innovation, European governance, Global economy and trade, Green economy, Inclusive growth, Macroeconomic policy Date: December 21, 2021
Read article More on this topic More by this author
 

Podcast

Podcast

What to watch in 2022: China's economic outlook

Our end of 2021 recap of China’s economic activities.

By: The Sound of Economics Topic: Global economy and trade Date: December 8, 2021
Read article More by this author
 

Blog Post

European governance

The Global Gateway: a real step towards a stronger Europe in the world?

Disappointment at the lack of fresh cash from European Union global connectivity strategy is short-sighted: Europe supports global development more than any other country in the world. Using existing funds more strategically is the right priority for now.

By: Simone Tagliapietra Topic: European governance, Global economy and trade Date: December 7, 2021
Read article Download PDF More on this topic More by this author
 

External Publication

Chinese economic statecraft: what to expect in the next five years?

Chapter from 'Storms Ahead: the Future Geoeconomic world order' on the expectations from the next five years of Chinese economic policy, published on 27 October 2021.

By: Alicia García-Herrero Topic: Global economy and trade Date: November 26, 2021
Read article More on this topic
 

Blog Post

Goodbye Glasgow: what’s next for global climate action?

After COP26, and as the debate on whether Glasgow represents a success or a failure dies down, what next for global climate action?

By: Klaas Lenaerts and Simone Tagliapietra Topic: Green economy Date: November 18, 2021
Read article More on this topic More by this author
 

Podcast

Podcast

Why is China cracking down on big tech?

A look at China’s recent regulatory efforts in the digital space.

By: The Sound of Economics Topic: Global economy and trade Date: November 10, 2021
Load more posts