What is the Belt and Road Initiative, why does China need it and is it useful for our country

Since 2013, China has been developing the Belt and Road Initiative, which is building maritime and land routes in Asia, Africa and Europe. Trends understand what it is, how it is financed and what goals it pursues

What is the Belt and Road

The Belt and Road Initiative combines land and sea routes from China to Europe. It used to be called “One Belt, One Road”. The word “way” is not accidental, as the concept is being developed under the slogan of the new Silk Road. This is a set of projects in various areas: transport, logistics, trade and others. Vladimir Petrovsky believes that the initiative is reminiscent of international economic regime, since within its framework different countries act in concert in the common interest. It is also not an integration project, and there are no coercive mechanisms.

Alexander Gabuev argues that the Belt and Road is not a specific plan, but general ideas that can be expressed like this:

Anyone can participate in the initiative. In order to become a part of it, it is enough to proclaim the commitment to the concept. The initiative is connected with the attempt of Xi Jinping, the President of the People’s Republic of China, to find his own major project in foreign policy, by analogy with the country’s past leaders. For example, for Jiang Zemin (Secretary General of the Chinese Communist Party from 1989 to 2002), it represented the idea of ​​Chinese corporations entering the world market, and for Xi Jinping’s predecessor Hu Jintao, China’s peaceful rise, Gabuev emphasizes.

How the Belt and Road started

In September 2013, Xi Jinping arrived in Astana and gave a lecture in which he proclaimed a broad framework idea that it is time for China to start cooperation with Central Asia in a number of areas: political, transport, financial, trade and others. It was called the “Silk Road Economic Belt”. Two months later, he spoke in Southeast Asia and stressed that it is possible to revive the ancient sea trade route, Alexander Gabuev notes.

Vladimir Petrovsky says: in 2013, Xi Jinping proposed a system “strategy conjugation”. It suggests that each of the countries that would like to join the initiative should bring their own vision and develop their own plan. According to him, initially it was only about land routes that would resemble the traditional Silk Road. A few months later, a sea route arose. Also discussed is the “Ice Silk Road” – the use of the Northern Sea Route with the use of icebreakers. It would also be beneficial in terms of the delivery time of goods from East Asian countries to European ports. It turns out 10-12 days faster than through the Suez Canal, in which unforeseen circumstances may again occur, Petrovsky summarizes.

Why does China need a “Belt and Road”

The Belt and Road is a bureaucratic project in a personalistic regime, so it can be compared with the ideas of modernization of Dmitry Medvedev or the general vector of digitalization in the third term of Vladimir Putin, notes Alexander Gabuev. Everyone joins the initiative at the direction of the leader. If you are a Chinese oligarch and want to buy a football club in Europe, then for legitimation within the country it is enough to say that this is part of the humanitarian aspect of the initiative. You can even come up with a catchy name, such as “Sporting Silk Road”. It is a transformer that various players within the Chinese political system use to gain leader approval, money and publicity.

On the other hand, China is a huge industrial country with much of its internal infrastructure already built. So that these capacities do not stand idle, it is necessary to export them abroad. Accordingly, many Belt and Road infrastructure facilities are needed to deliver Chinese goods to emerging markets. The reverse process can also occur – the export of natural resources of other countries to China. Moreover, they can also be used by local businesses, resulting in different business solutions. It is also beneficial for China: the economies of its neighbors are growing, trade volumes are growing, more objects for investment are appearing, so the situation can be described as a win-win, says Gabuev.

Transport projects “Belts and Roads”

The “Belt and Road” is not only trade, but also the development of logistics chains, transport corridors, including road and rail, Vladimir Petrovsky notes. For example, the highway that goes from Belarus through the Smolensk region to the Orenburg region, and then through Kazakhstan to the Xinjiang Uygur Autonomous Region. However, everything is delayed due to our country. Kazakhstan has already built its part, and our country is a bit addictive.

A high-speed railway project from Moscow to Beijing is also being discussed. While the part to Kazan is being built. These decisions play an important role in the initiative, as expressed in the Chinese proverb: “If you want to become rich, build a road”. our country, these projects are also beneficial, as they help to equip the vast Eurasian expanses of the country. More highways help the Russian Federation realize its transport potential as a link between Europe and Asia, emphasizes Petrovsky.

How Belt and Road projects are funded

Mechanisms for financing infrastructure projects vary. Small countries in Southeast Asia often take soft Chinese loans. Vladimir Petrovsky cites the example of the railway from China to Laos, which brought a lot of money to the local economy. However, there is always a risk of non-return – the authorities of Sri Lanka, for example, could not return the funds allocated by China for the construction of the port. As a result, under the terms of the loan, China leased it for 99 years.

Western politicians and experts have traditionally been skeptical about the Belt and Road. They call it the expansion of the Chinese sphere of influence. However, the fact is that the main participants in the initiative are the countries bordering China, which a priori benefit from such a partnership. At the same time, African countries often take Chinese funds. knowing that they will not be able to give them away. This model is risky. our country would prefer investment interaction, which China is not very willing to do so far. Partly because in the Russian Federation there are constant problems – with the attraction of private capital, with the expenditure of funds, and so on, summarizes Petrovsky.

How is the initiative treated in our country?

Alexander Gabuev is in solidarity with his colleague. According to him, China’s investment is beneficial for our country, since it did not have much money before February 24, and now even less. The construction of port infrastructure or terminals for shipping liquefied natural gas attracts capital and creates facilities that will work for both Chinese and interests.

How the Belt and Road was affected by the events of 2020-2022

The pandemic has complicated the interaction of the Belt and Road countries, explains Vladimir Petrovsky. In the second half of 2021, everyone began to discuss how to reach the pre-Covid level in trade relations, and then sanctions were imposed on our country, which further complicated Russian-Chinese economic interaction. The researcher notes: trade does not need a war, so China has taken a neutral stance and calls for a speedy end to the conflict.

On the other hand, our country has a new incentive to actively develop a strategy in the context of the Belt and Road, since all energy supplies, main highways and other aspects will now be oriented not to the West, but to the East. Thus, the initiative becomes more relevant, summarizes Petrovsky.

The Future of the Belt and Road

According to Alexander Gabuev, since 2015, China has been conducting a large-scale audit of its financial sectors and it turned out that the balance sheets of many banks look very bad. Therefore, funds for long-term projects with a poor payback are much less than planned when the initiative was launched in 2013. So since the mid-2010s it has been fixed much greater accuracy when investing. Gabuev believes that China is calibrating its behavior, and the Belt and Road issue is being raised less and less in 2020-2021. Most likely, the future of the initiative can be found out at the Congress of the Communist Party of China in November 2022.

Vladimir Petrovsky is more optimistic. According to him, the process is more important than the result: the initiative is long-term and is designed for several decades. It can be influenced by certain negative circumstances, such as a pandemic or sanctions, but it will not fully disrupt its development.