Policy brief

The Belt and Road turns five

Five years after its launch, Michael Baltensperger and Uri Dadush reflect on China’s Belt and Road Initiative. The plan to revive ancient trade routes

Publishing date
10 January 2019

China’s Belt and Road Initiative (BRI) is an international trade and development strategy. Launched in 2013, it is one of the ways China asserts its role in world affairs and captures the opportunities of globalisation. The BRI has the potential to enhance development prospects across the world and in China, but that potential might not be realised because the BRI’s objectives are too broad and ill-defined, and its execution is too often non-transparent, lacking in due diligence and uncoordinated.

This Policy Contribution recounts the background of the BRI and its context, what is known about the extent of the initiative and the intentions behind it. The initiative could address very large infrastructure investments gaps, which is welcome and needed. China’s goal of forging stronger links with its trading partners around the world is legitimate assuming, of course, the underlying intent remains peaceful.

Though many observers welcome the BRI, many others oppose it for good reasons, while others misunderstand it and oppose it for bad reasons. We identify and discuss concerns about the initiative that relate to its geopolitical objectives, its priorities, its geographic scope, the role of state-owned enterprises, the allocation of resources and issues of transparency and of due diligence. In particular, we show that this initiative deals with a vast number of countries that are at very different states of development, and that an apparent lack of well-defined priorities holds the initiative back. We also highlight the issue of debt overload which is distressing several BRI countries and discourages further projects.

There are improvements that China and other stakeholders in the BRI could make to get the most from their investments. The BRI, to be effective, needs to meet the basic conditions of a trade and development strategy, which are clear objectives, adequate resources, selectivity, a workable implementation plan, due diligence and clear communication. Involvement of multilateral lenders could help with this. Finally, China must improve the evaluation of the risks and costs of BRI projects and step up its approach to due diligence to demonstrate that it respects the long-term interests of those countries that are at the receiving end of its BRI projects.

About the authors

  • Uri Dadush

    Uri Dadush is a Non-Resident Fellow at Bruegel, based in Washington, DC and a Research Professor at the University of Maryland. He is also a Non-Resident Fellow at the Policy Center for the New South in Rabat, Morocco and Principal of Economic Policy International, LLC, providing consulting services to international organizations and corporations. He was a co-chair of the Trade, Investment and Globalization Task-Force of the T20 and Vice-Chair of the Global Agenda Council on Trade and Investment at the World Economic Forum. His books include “WTO Accessions and Trade Multilateralism” (with Chiedu Osakwe, co-editor), “Juggernaut: How Emerging Markets Are Transforming Globalization” (with William Shaw), “Inequality in America” (with Kemal Dervis and others), “Currency Wars” (with Vera Eidelman, co-editor) and “Paradigm Lost: The Euro in Crisis”.

     

    Dadush was previously Director of the International Economics Program at the Carnegie Endowment for International Peace, and Director of International Trade, as well as Director of Economic Policy, and Director of the Development Prospects Group at the World Bank. Based previously in London, Brussels, and Milan, he spent 15 years in the private sector, where he was President of the Economist Intelligence Unit, Group Vice President of Data Resources, Inc., and a consultant with Mc Kinsey and Co. His columns have appeared in the Financial Times, the Wall Street Journal, Foreign Affairs, Foreign Policy, Il Sole 24 Ore, and L’Espresso. He has a B.A. and M.A. in Economics from Hebrew University of Jerusalem and a Ph.D. in Business Economics from Harvard University.

  • Michael Baltensperger

    Michael is a research assistant at Bruegel focusing on international trade and energy economics. Prior to joining Bruegel, he worked for the Economic Research and Statistics Division of the World Trade Organization and as an external collaborator for the International Labour Organization. As a student, Michael was a research assistant for Political Economy at the Faculty of Business and Economics in Basel.

    Michael holds a Master’s degree in International Economics from the Graduate Institute of International and Development Studies in Geneva and Bachelor’s degrees in History as well as Business and Economics from the University of Basel.

    He is a Swiss citizen, speaks German and English and has a good knowledge of French.

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