After almost a decade of existence, the Belt and Road Initiative, Chinese President Xi Jinping’s signature infrastructure program, is in trouble. While many countries with real development needs have jumped on the bandwagon, the cooling global economy is exposing serious problems with BRI projects around the world. The pressure is now on Xi, fresh off a victory lap at the party congress, to reboot the initiative in a viable way.
The original model of the BRI was ridden with problems, but there’s no guarantee that the next iteration will be any better. Analysis of how the program has been portrayed by China’s propaganda suggests that BRI 2.0 may well be more questionable than 1.0.
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var _bp = _bp||[]; _bp.push({ "div": "Brid_69932167", "obj": {"id":"27789","width":"16","height":"9","video":"1198465"} }); ","theme.0000017c-2d32-d5c4-af7f-7d77b7920000.:core:enhancement:Enhancement.hbs.enhancementAlignment":null,"theme.0000017c-2d32-d5c4-af7f-7d77b7920000.:core:enhancement:Enhancement.hbs._template":null,"_id":"00000184-e1e4-da74-a1bd-ebf4821d0000","_type":"2f5a8339-a89a-3738-9cd2-3ddf0c8da574"}”>Video EmbedAn easy way to understand the BRI is to think of it as China’s domestic investment splurge — only that it’s exported to the developing world. China is known for its aggressive infrastructure investment at home, which is often made by local governments borrowing from state-owned banks. Every party involved is turning a blind eye. State-owned banks don’t ask tough questions when they lend to, well, the state. Local governments hide the loans in off-balance-sheet funding vehicles so the debt doesn’t show up. And Beijing is OK with it because that’s the way things go when it needs to stimulate the economy.
BRI projects have gone down the same path. Because the initiative is Xi’s global brand, Chinese banks aren’t keen on due diligence when they lend to Beijing-picked projects. The loans are parked at special-purpose corporations rather than the destination country’s national debt. According to a 2021 report by AidData at the College of William and Mary, about a third of BRI projects are plagued by problems like corruption, labor violations, and environmental issues, and about half of China’s overseas lending for roads, railways, and power plants is hidden debt. When the global economy slows and the cost of borrowing rises, these problems stand out.
I investigated how the People’s Daily, the Chinese Communist Party’s flagship paper, has covered the BRI over the past nine years. The analysis reveals that Beijing is keenly aware of the initiative’s pitfall. But Xi’s effort to revamp the project hasn’t received meaningful support from the pragmatic faction inside the CCP. As long as BRI 2.0 remains Xi’s one-man show, it has no better chance of reviving Chinese investment or bettering lives in developing economies.
First off, Beijing’s BRI enthusiasm has been declining since before the pandemic hit. When China hosted the 2017 BRI Summit, which drew 29 heads of state, its newspaper talked about the initiative about 700 times in one day. By late 2019, the BRI talk in the People’s Daily was down to only dozens per day. Before the pandemic, the newspaper talked the most about cooperation and economic growth when it covered the BRI. But since early 2020, the coverage shifted to so-called high-quality development and a cryptic slogan of “community of common destiny” that Beijing thought BRI destinations shared. It’s clear, even to Xi, that the projects had low quality and that the people in those countries held different values.
Second, Premier Li Keqiang, presumably the second most powerful politician in the country, leads a more pragmatic faction in Beijing that cares more about the economy. But Li’s faction seems not to be on board with what Xi has in mind for the BRI. Before the COVID pandemic, Li’s name used to show up once in a while when the People’s Daily talked about the initiative, although Li is constantly overshadowed by his boss, but it barely made any appearance in the paper during the BRI’s post-COVID overhaul. It’s anybody’s guess how Xi and the yes men in his new leadership can make the BRI viable without the input from those who understand the economy.
Third, it seems Xi’s strategy to revamp the BRI is to play it by ear. While BRI talk in the party newspaper has been down across the board, there are occasional bright spots, and they seem to coincide with the Chinese president’s trips overseas. When Xi traveled to Kazakhstan and Uzbekistan in September for the Shanghai Cooperation Organization Summit, where he met with Russian President Vladimir Putin, mentions of BRI projects in Central Asia briefly spiked to near their all-time high. The coverage of investment in Southeast Asia also registered a blip when the Chinese leader attended the November G-20 summit in Indonesia, where he met with President Joe Biden.
If the trend of a scaled-back, spontaneous investment program run by yes men continues, perhaps BRI 2.0 may not become as big a threat to the liberal international order as it first appeared. Washington and its allies have been wanting to come up with an investment plan that can counter the BRI. As the Chinese program retreats and possibly falters, it’s time for the West to make a difference in the developing world.
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Weifeng Zhong is a senior research fellow with the Mercatus Center at George Mason University and a core developer of the open-sourced Policy Change Index project, which uses machine-learning algorithms to predict authoritarian regimes’ major policy moves by “reading” their propaganda. He’s also the curator of the Wei To Think Again newsletter on U.S.-China competition.
