NEW SILK ROAD INSTITUTE
Silk Road Headlines_1st Feburary, 2019
Among the news items and analyses from this week, several articles shed light on the ambivalence surrounding the impacts (actual or expected) of China’s Belt and Road Initiative (BRI).
In a comprehensive interview, a senior Asia economist stresses how the BRI has been first and foremost conceived as a ‘growth driver’, beyond the admittedly very visible infrastructure development dimension [Different Standards for Judging the BRI?]. In partner countries, the BRI has shown a number of potentially positive effects, notably the rise of capital inflows and trade with an economic giant like China, as well as the ability to trigger greater competitiveness thanks to better (trade) infrastructure. However, the BRI has been increasingly surrounded by concerns pertaining to its financial sustainability – especially as far as debt is concerned – in more fragile economic context. Recent data from weaker economies such as Sri Lanka and Mongolia indicate the need for the BRI ‘planners’ in Beijing to prioritise sustainable fine-tuning, by developing clearer regulatory frameworks and by fostering greater engagement with both partner countries and the private sector in order to minimise risks.
Undoubtedly, the BRI has been steadily increasing its footprint on the global economy, especially with regard to its contributions to global trade. A new study recently showed that it has already generated about US$460bn worth of investment since its 2013 inception, and forecasted an extra US$117bn in 2019 [China’s Belt and Road Initiative will add US$117 billion to global trade this year, a new study shows]. Sizable BRI-related investments are announced almost weekly [Cosco Shipping Ports investing $225m in Peru’s Chancay terminal], and another recent study illustrates the BRI’s role in developing crucial ‘trade corridors’ across Eurasia [Volumes on Middle Corridor to increase fourfold in 2019].
Conversely, as BRI implementation rolls out, it is worth stressing that concerns about its impact are also spreading beyond the ‘mere’ financial dimension. A timely Brookings publication focuses on the deforestation risks brought about by BRI-related developments [The deforestation risks of China’s Belt and Road Initiative]. Especially in areas with low prior economic developments, such as Eastern Russia or Western Thailand, the impact of the BRI might be severe, particularly in the long term. Additionally, since deforestation is often a good proxy indicator of overall environmental degradation, the study rightly points towards the need for key BRI players to strengthen their sustainability-oriented arsenal, at all stages of the policy cycle.