Beijing will inject over $100 billion of new funding into its Belt and Road initiative (BRI), China's President Xi Jinping said Wednesday at a summit marking the vast infrastructure project's tenth anniversary.
The Belt and Road strategy is a central pillar of Xi's bid to expand China's clout overseas, with Beijing saying it has now inked over two trillion dollars in contracts around the world.
Proponents hail it for bringing resources and economic growth to the Global South.
Unpaid loans
This week's summit celebrates the tenth anniversary of the project, which has been stalling due to the increasing incapability of receiving countries to pay back loans used for individual construction ventures.
Xi's initiative has built power plants, roads, railroads and ports around the world and deepened China’s ties with Africa, Asia, Latin America and the Mideast.
But the massive loans backing the projects have burdened poorer countries with heavy debts, in some cases leading to China taking control of those assets.
Chinese money
At the forum’s opening ceremony at the ornate and cavernous Great Hall of the People, Xi promised that two Chinese-backed development banks – the China Development Bank and the Export–Import Bank of China – will each set up 350 billion yuan (€45,3 billion) financing windows.
An additional 80 billion yuan (€10 billion) will be invested in Beijing's Silk Road Fund to support BRI projects.
China's BRI
XI launched the BRI in 2013 during a visit to Kazakhstan.
The stated goal was to grow trade and the economy by improving China's connections with the rest of the world in a 21st-century version of the Silk Road trading routes from China to the Middle East and onto Europe.
In the following years, a total of 152 countries have signed a BRI agreement with China, though Italy, the only G7 country to do so, is expected to drop out when it comes time to renew in March of next year.
“Italy suffered a net loss," said Alessia Amighini, an analyst at the Italian think tank ISPI, as the trade deficit with China more than doubled since Italy joined in 2019.
China became a major financer of development projects under BRI, on par with the World Bank. The Chinese government says the initiative has launched more than 3,000 projects and “galvanized” nearly €1 trillion in investment.
The Belt and Road Initiative provides a historic opportunity, said UN Secretary-General Antonio Guterres at the opening ceremony of the third Belt and Road Forum for International Cooperation. #GLOBALink pic.twitter.com/X4q5xPtFzk
— China Xinhua News (@XHNews) October 18, 2023
China filled a gap left as other lenders shifted to areas such as health and education and away from infrastructure after coming under criticism for the impact major building projects can have on the environment and local communities, said Kevin Gallagher, the director of the Boston University Global Development Policy Center.
Chinese-financed projects have faced similar criticism, from displacing populations to adding tons of climate-changing greenhouse gases to the atmosphere.
The US, India and others say that China is engaging in “debt trap” diplomacy which consists of offering loans they knew governments would default on, allowing Chinese interests to take control of the assets.
The BRI also triggered similar initiatives by China's rivals, such as Japan's Free and Open Indo Pacific initiative, the Asia-Africa Growth Corridor, a joint project by India and Japan, Washington's Build Back Better World partnership and the EU's Global Gateway. But none of these projects have yet reached the massive volume of the BRI, and it is not sure if they ever will.
XiP - Putin aside
While the Chinese press is boasting the meeting as a "massive diplomatic event" that "attracts global attention," it was largely overshadowed by the unprecedented 7 October terror attacks by Hamas on Israel and Jerusalem's response to them.
But Xi used the forum to meet with many of his allies, notably Russia's President Vladimir Putin.
China is a key customer for Russian oil and gas, providing Moscow with an economic lifeline in the face of punishing Western sanctions imposed over its campaign against Ukraine.
Just weeks before Russia’s invasion of Ukraine last February, Putin met with Xi in Beijing and the sides signed an agreement pledging a “no-limits” relationship. Beijing’s attempts to present itself as a neutral peace broker in Russia’s war on Ukraine have been widely dismissed by the international community.
Orban is eager too
Hungarian Prime Minister Viktor Orbán used the forum to meet with Vladimir Putin in a rare in-person meeting for the Russian president with a leader of a European Union country. Their talks focused on Hungary’s access to Russian energy.
EU and other Western leaders have largely eschewed contact with Putin over Russia's full-scale invasion of Ukraine that began in February. Austrian Chancellor Karl Nehammer met with Putin in person in April 2022.
“Hungary never wanted to confront Russia. Hungary always has been eager to expand contacts,” Orbán told Putin, according to a Russian translation of his remarks broadcast on Russian state television.
(With newswires)
