China’s landmark Belt and Road Initiative will be 10 years old later this year. But for some commentators, the anniversary will be more like a funeral than a birthday party. In a recent article headlined “China’s Belt and Road to Nowhere,” China expert Scott Kennedy of the Center for Strategic and International Studies calls the initiative “a shadow of its former self.”
Whether you agree with that evaluation depends on what you believe the Belt and Road Initiative, or BRI, was meant to be. If you see the BRI as “an ambitious infrastructure development plan,” as Kennedy puts it, the declinist argument makes sense. After all, investment via the BRI has dropped dramatically in recent years. According to Boston University’s Global Development Policy Center, between 2008 and 2021, the China Exim Bank and China Development Bank lent $500 billion dollars to support over 1,000 projects, with the vast majority of these loans taking place between 2013 and 2016. But in 2020 and 2021 specifically, those same banks only extended 28 loans for overseas projects, worth $10.5 billion. With this comparison in mind, the “shadow of its former self” characterization seems apt.
On the other hand, if you believe that the BRI was never only about infrastructure, the picture looks somewhat different. Like some of its predecessors—such as China’s Going Out strategy of the 1990s and early 2000s, as the official push for Chinese companies to seek out foreign markets was dubbed—the BRI was always studiedly vague. So too are its recently announced possible successors, like the Global Development Initiative, or GDI, and Global Security Initiative, or GSI. More of a “big idea” than a rigidly defined action plan, the BRI set a general direction to seek out investments and projects, while individual Chinese actors, including private and state-owned firms, responded to the call, but did so according to their own agendas.
A decade later, a very different China is reemerging onto the world stage after its multiyear “zero COVID” shutdown. Whether the BRI is being retooled, replaced by the GDI and GSI, or living on as is, Chinese authorities seem interested in reshaping China’s role as an international development partner. The results of those efforts will also be about more than infrastructure, and they could transform global development itself.
China’s Development Role in the BRI Era
The BRI remains difficult to quantify, in part because it represented continuity with the focus of the Going Out strategy. In short, it was about finding investment destinations for China’s accumulated foreign exchange reserves, while leveraging new projects and foreign markets for China’s massive construction sector to relieve domestic overcapacity and competition. In practice, this meant that after its official announcement in 2013, earlier initiatives were retroactively designated as BRI projects.
The BRI retained this initial strategic focus on markets and supply chains, but its emergence as a distinct initiative was also seen as an opportunity to position China as a future center of the global economy. In that sense, it was a product of President Xi Jinping’s first two terms in office from 2013 to earlier this year, in which he shifted from the narrow commercial focus of former leader Deng Xiaoping—and the Deng-era slogan of “hide your capacity and bide your time”—to explicitly positioning China as an emerging global superpower.
Key to this narrative were the choices of Kazakhstan and Indonesia for the announcement of the BRI’s initial two components: the Silk Road Economic Belt and the 21st Century Maritime Silk Road respectively. They allowed Xi to evoke China’s historical role as the center of both overland Eurasian trade via Central Asia and Southeast Asian maritime trade. Symbolically reuniting China’s current economic heft with its earlier political centrality was clearly part of the BRI’s work.
The China that launched the BRI in 2013 was a very different one than the China staring down a string of defaults across the Global South by the early 2020s.
That said, the BRI soon became primarily known for the provision of hard infrastructure via supercharged lending from Chinese policy banks. For example, under the BRI, 65 rail freight routes opened between China and Europe. It also provided numerous special economic zones, road connections and thousands of kilometers of undersea cables across the Global South. These include huge multimodal initiatives like the China-Pakistan Economic Corridor, as well as high-profile infrastructure projects like the Jakarta-Bandung high-speed railway in Indonesia. At the peak of BRI spending, from around 2014 to 2016, China Exim Bank’s infrastructure lending to Africa rivaled that of the World Bank. In the process, China transformed skylines across the Global South.
However, revolutionizing development is messy work, and the BRI delivered its share of expensive “white elephants” that plunged recipient countries in debt. Kenya’s Standard Gauge Railway—or SGR, the first phase of which started operations in 2017—now stands as a monument both to the BRI’s ambition of trans-frontier connectivity and to some of its eventual problems, including high levels of opacity that allegedly allowed the padding of contracts by both local officials and Chinese contractors. The SGR’s cost per kilometer of track was three times the world standard. Kenya now chafes under $3.2 billion in debt for the SGR alone, and the train line still has no clear path to profitability.
The BRI’s sheer scale, and the anxiety it inspired in the capitals of Africa’s traditional Western development partners, also led to a reputational change for China during this period, and not necessarily for the better. In the context of expensive missteps like the SGR, Trump-era allegations that China lends to states in the Global South as part of a “debt trap,” in order to extract state assets once they default, spread widely. This was despite the fact that no assets were seized in response to debt distress.
China’s Debt Role in the BRI Era
While Chinese loans certainly contributed to emerging debt crises in Zambia and Sri Lanka, for instance, Chinese lending was only part of the Global South’s growing debt problem, and it should be seen in the context of extensive financial barriers facing Global South economies desperate for growth-boosting infrastructure. While Chinese loans make up about 12 percent of African debt, 40 percent is owed to private creditors, notably bondholders.
This reflects a broader set of dynamics. First, bilateral lending from Africa’s traditional Paris Club development partners—including the United States, Japan and Europe—has essentially declined since the mid-2000s. Second, while debt to multilateral development banks, or MDBs, like the World Bank increased during this period, these lenders have largely pivoted to financing social services, democracy-promotion and administrative costs, rather than infrastructure. Only 30 percent of World Bank funding now goes to economic infrastructure, compared to 70 percent in its early days. Third, private sector lending grew rapidly between 2012 and 2020, as low interest rates in the Global North pushed private investors to seek higher yields in emerging economies, frequently boosted by an African “risk premium.” The result is that the share of low-interest concessional lending versus market-rated commercial lending in Africa’s total debt portfolio plunged from just below half in 2006 to less than a third in 2020.
The BRI essentially stepped into a wider infrastructure-financing crisis that Global South regions like Africa already faced. Its semi-concessional lending may have been more expensive than loans offered by the Paris Club and Western-led MDBs, but it was cheaper than the commercial rates offered by Western private lenders. These loans also favored much-needed infrastructure development at a time when Paris Club lenders and MDBs were retreating from that space. The result was a rapid increase in Chinese lending, at the same time that a similar jump in private lending saw African private debt go from 6 percent of its total debt in 2000 to 25 percent by 2015.
In addition, China differs from Western-based private creditors in that its infrastructure funding also has a political role in building and maintaining relationships with the Global South. Despite the criticism it has faced for delaying debt-restructuring processes, which has sometimes been warranted, China has participated in the G-20’s Debt Service Suspension Initiative, writing off some of its zero-interest loans to African countries.
The details around these write-offs remain opaque. In 2021, the Foreign Ministry announced that 23 such loans maturing that same year to 17 African countries would be written off, but didn’t indicate the total amount of debt or the countries involved. It should also be pointed out that zero-interest loans make up a small proportion of China’s total lending to African countries. In contrast, however, private creditors like BlackRock and Eurobond lenders have so far resisted any concessions, including pandemic-related repayment pauses.
As researchers Nicolas Lippolis and Harry Verhoeven recently wrote, “What really keeps African leaders awake at night is not Chinese debt traps. It is the whims of the bond market.”
That said, even before the pandemic, concern that the BRI’s lending lacked oversight was growing in Beijing. In 2019, the commercial research and consultancy firm Rhodium Group found that numerous BRI loans to governments with shaky economic fundamentals may have been renegotiated in secret. These included at least 22 loans to African countries worth $32 billion. The high levels of opacity surrounding Chinese lending means the real number could be significantly higher.
The concerns in Beijing reflected the ways in which the impact of the pandemic and China’s zero-COVID policies, as well as other domestic woes like a deflating real estate bubble, had changed the country’s economic outlook. The China that launched the BRI in 2013 was a very different one than the China staring down a string of defaults across the Global South by the early 2020s, while facing record unemployment at home. The result was a sharp pullback in BRI lending.
Global South stakeholders, like Nigerian Transport Minister Rotimi Amaechi, started acknowledging that the era of massive BRI lending was coming to an end, despite Africa’s infrastructure gap and the potential impact that the resulting development delays could have on its young population. In 2022,Amaechi told journalists, “We are stuck with lots of our projects [in the proposal stage] because we cannot get money. The Chinese are no longer funding.”
The short-term impact of this pullback is that debt could increase, as African governments turn from Chinese funding to more expensive private capital markets instead. However, as China emerges from its COVID-19 cocoon, there are signs that it has broader ambitions that could affect the structure of global development itself.
Time for a Rebrand?
Xi announced the Global Development Initiative on the sidelines of the United Nations General Assembly in New York in September 2021 and subsequently elaborated on the concept during the BRICS summit that following June. Unlike the BRI’s clear China-centered nature, the GDI emphasizes close cooperation with the U.N. and is framed as “a Global Development Partnership for the New Era to Jointly Implement the 2030 Agenda for Sustainable Development.”
This U.N.-centric approach covers several bases at once. Overlapping the GDI with the U.N.’s sustainable development goals, or SDGs, polishes China’s sometimes controversial image as a development actor by linking it to the highly respected multilateral development benchmarks articulated in the U.N.’s 2030 Agenda. Doing so also takes advantage of the fact that the U.N. is both widely popular in many Global South regions and one of the only truly global multilateral bodies in which the United States doesn’t hold full sway. Finally, it also augments China’s own efforts to build influence within the United Nations.
The GDI was twinned with the Global Security Initiative, which was announced in 2022, which focuses on fostering work between countries in the Global South to achieve “indivisible security.” The emphasis on South-South cooperation seems designed to counter the dominant role that Global North countries—and particularly the U.S.—play as providers of global security.
Both initiatives remain vaguely defined, as was the BRI before them. That said, the GDI commits China to cooperating with Global South countries in eight areas: poverty reduction, food security, vaccines, development financing, climate action, industrialization, digital economies and connectivity. Beijing’s announcement of the new initiative listed 32 direct deliverables, among them setting up a Global Alliance for Poverty Reduction and Development, and boosting South-South sharing of development knowledge. A list of 50 concrete pilot projects to be implemented across South and Southeast Asia, Africa and Oceania has also been circulated. Most of these are co-implemented by the China International Development Cooperation Agency and various U.N. offices.
The Global Development Initiative is emerging at a moment when China is already challenging the West as a thought-leader and norm-setter on development.
Though some scholars have characterized the GDI as merely a rebranding of the BRI, the jury is still out on this issue. Indeed, Xi has hinted that China could host a third Belt and Road Forum this year, which could indicate that the two will co-exist. Either way, it’s important to remember that the BRI was never only about infrastructure. Rather, the bridges, roads and ports that became BRI icons fell under infrastructural connectivity, just one of the so-called “five connectivities” that structured the BRI. The other four related to trade and financial integration, people-to-people exchange and policy coordination. Even during the height of the BRI’s hard infrastructure phase, between 2013 and 2017, the coining of initiatives like the Digital Silk Road and the Health Silk Road hinted that China’s provision of physical and digital connectivity was aimed at closer coordination with Belt and Road countries that would put China in a position to set new norms.
The GDI continues this move more explicitly. By positioning both the GDI and GSI as mechanisms to improve the pursuit of U.N. objectives, China avoids the hub-and-spokes logic of the BRI while creating an environment in which its leadership on development and technical standards can engage with a Global South audience.
The Larger Challenge
Beyond the aims of closer coordination with the Global South, the GDI is emerging at a moment when China is already challenging the West as a thought-leader and norm-setter on development.
The BRI’s legacy of debt-supported development is key. Western officials like U.S. Treasury Secretary Janet Yellen and outgoing World Bank President David Malpass have singled China out as a barrier to debt relief for debt-distressed countries like Zambia and Sri Lanka. However, Chinese government spokespeople are increasingly hitting back, pointing out the role of Western private lenders and Western-led multilateral institutions in the Global South debt crisis, a point that is increasingly showing up in African publications.
Just before the International Monetary Fund and World Bank’s Spring Meetings in early April, for instance, Chinese Foreign Ministry spokesperson Wang Wenbin pointed out that, according to World Bank statistics, most of Africa’s external debt is owed to multilateral financial institutions dominated by the U.S. and Europe or commercial creditors from the U.S. and Europe. “They have unshirkable responsibility in terms of resolving Africa’s debt,” he concluded.
China has repeatedly called for the Bretton Woods institutions—the World Bank and the IMF—to accept losses in debt renegotiations with borrowing countries, a shift that would change the conventions of development finance. Since their establishment after World War II, these institutions have been “lenders of last resort,” able to extend credit when nobody else was willing to lend to stricken governments and charging very low interest. This meant that they were always first in line for repayments and never accepted losses as part of debt restructuring.
When asked about China’s call for the Bretton Woods institutions to take “haircuts,” Malpass was dismissive. “There’s not a mechanism to do that,” he said. “That’s been discussed actively at the G-20 and rejected as a direction, so I hope they’ll move on from that.”
However, despite reports of a retreat from this demand, China’s challenge might not be so easy to bat away. Beijing has long chafed under attempts by the U.S. and its allies to limit its say in the Bretton Woods institutions. At the heart of this dispute lies these institutions’ privileged role at the center of the development space. China’s establishment of parallel institutions like the Asian Infrastructure Investment Bank and the New Development Bank was arguably part of the drive to broaden options for borrowing countries. It also taps into broader unhappiness in the Global South about the conditions the IMF imposes as part of debt relief.
China’s call is a challenge to the centrality of Western leadership in development, as well as the myriad conventions that have maintained it. This sets it up for a longer struggle with Washington and Brussels. But there are fears that those Global South countries that are deeply indebted to both sides could become collateral damage in this broader fight.
As Zambian Finance Minister Situmbeko Musokotwane put it, “Discussions at higher levels like those just make our situation worse, because what we are looking for is urgent solutions, not discussions that may drag out the matter.” He added, “We should all just focus on and get the debt [relief] delivered.”
However Zambia’s debt is resolved, the legacy of the BRI and the launch of the GDI shows that China is gearing up for a fundamental challenge to Western leadership on such core issues as whether development is a human right. While China and the vast number of Global South countries say yes, the U.S. says no, out of fears of state overreach. At a moment when the geopolitics of U.S.-China competition are seeping into seemingly every aspect of global politics, the impacts of this struggle could be profound. And here, too, they will be about more than infrastructure.
Cobus van Staden is the managing editor of the China Global South Project and a senior research affiliate with the South African Institute of International Affairs.