Belt and Road: Just how successful is Xi's 'Chinese Dream'?

China is hosting its third Belt and Road summit this week, marking the 10th anniversary of its iconic Belt and Road Initiative (BRI). Worldwide leaders and representatives from over 100 countries are gathering in Beijing, which may yet include Russian president Vladimir Putin.

Putin is keen on intensifying relations with China and show that he is not isolated internationally, Russia expert at the University of Leipzig, Alexei Chigadaev, told DW.

Whether Putin will attend or not, Russian Foreign Minister Sergei Lavrov's presence is guaranteed as Chinese President Xi Jinping heralds a milestone for his "Chinese Dream."

In 2013, shortly after becoming president, Xi proposed the ambitious concept of "One Belt One Road", which has since been recognized as the core of China's "major country diplomacy" and an important strategy for realizing the "Chinese Dream."

Ten years on, the BRI has expanded to Europe, Asia, Africa and Latin America, far exceeding the scale of the ancient Silk Road, but it seems to be facing more challenges than ever before.

According to Germany's Strategy on China, Beijing's political initiatives, such as the BRI, provide the framework for China's political and geoeconomic relations on all continents. For example, in some countries, infrastructure loans have contributed to unsustainable levels of debt and have created strong political dependencies.

Many successes?

According to official Chinese data, as of June 2023, China has signed over 200 Belt and Road cooperation agreements with 152 countries and 32 international organizations. The BRI has exceeded $1 trillion (€950 billion) in cumulative participation since its inception in 2013, according to the Green Finance and Development Center at Fudan University.

Chien-fu Chen, Executive Director of the Belt and Road Research Center at Tamkang University in Taiwan, told DW that for the Xi Jinping administration, achieving the "Chinese Dream" through the BRI is not only about gaining real power but also about balancing against the West. From this perspective, he believes that the initiative is "largely successful."

"The BRI has now reached Africa, Central America, and even Southeast Asia. It has also extended to the South Pacific islands beyond the so-called second island chain. It is constantly evolving with international situations and China's friendly relations. The BRI has transformed from early-stage infrastructure construction to energy control and has become an important strategic military outpost. China hopes to push its diplomatic, military, and political influence outward through national efforts," according to Chen.

Yun Sun, Co-Director of the East Asia Program and Director of the China Program at the Stimson Center, told DW: "One piece of the China Dream is China helping the less developed countries to grow. Some would say China did achieve that."

In October, Indonesia's Jakarta-Bandung High-Speed Railway just opened. This flagship project is built by a joint venture of Chinese and Indonesian state-owned enterprises. China provides part of the funding through loans. The railway is the first high-speed railway in Southeast Asia and also China's first overseas high-speed rail project, raising hopes of boosting economic development and attracting investment for the Indonesian government.

Many failures?

However, this does not mean the BRI has not faced setbacks.

China recently released a white paper on the BRI, stating that from 2013 to 2022, direct investment in co-building countries exceeded $240 billion, and "not a single country has fallen into a debt crisis due to participating in Belt and Road cooperation."

Jianfu Chen told DW, however, that this white paper "underestimates" the debt deficit part and does not reflect the real situation.

In the past decade, China has become the largest creditor for many developing countries. The West has criticized China for conducting "debt trap diplomacy" through the BRI. One of the most common examples is Sri Lanka.

In 2022, Sri Lanka declared bankruptcy and China is Sri Lanka's largest creditor, accounting for about 52% of its total debt, approximately $7.3 billion. Sri Lanka borrowed from China to build the Hambantota Port but was unable to repay the debt. In 2017, the deep-water port was leased to China for 99 years.

Sri Lankan President Ranil Wickremesinghe is also set to attend the third BRI Forum and meet with Xi Jinping.

Sri Lanka aside, many other countries are facing similar risk challenges.

Taking the Jakarta-Bandung High-Speed Railway in Indonesia as an example again, the final budget for the project has significantly exceeded the original estimate of about $5.5 billion and has risen to over $7 billion, experiencing serious cost overruns. Some are concerned that Indonesia may face a "debt trap" in the future, and China may not be able to recover its debt.

Ian Chong, Associate Professor at the Department of Political Science at the National University of Singapore, told DW: "In the future, China will be more cautious in terms of risk management," Chong explained.

"The debt issues of these planned projects will still exist. China will try to handle them, but the question is how much it can handle. In the future, it may choose projects with lower risks or higher returns to avoid the label of the 'debt trap' being revived."

However, it is still difficult to estimate to what extent the "debt trap" narrative will impact the BRI.

Yun Sun, China expert at the Stimson Center, told DW: "BRI will not be derailed. The more than 100 countries going to Beijing for the BRI Forum is a testament of how the majority of countries in the world do not want to anger China, even if Italy pulls out."

Italy is the only G7 country that has joined the BRI. In recent months, the country has questioned the effectiveness of the BRI, saying that it has not truly benefited Italy, leading to the intention to withdraw.

Can China continue spending big?

China's weakening economy also challenges the Belt and Road Initiative.

According to the latest data from the Green Finance and Development Center at Fudan University, for construction projects, the deal size in the first half of 2023 was the lowest since the BRI was announced in 2013.

A paper released last month by Boston University's Global Development Policy Center (GCI) pointed out that China's lending in Africa in 2021 and 2022 was below $2 billion, the lowest in 20 years.

"If China's economic development does not have any sudden breakthroughs, this way of spending big cannot be sustained," stated Ian Chong.

Chien-fu Chen, Director of the Belt and Road Research Center at Tamkang University in Taiwan, also pointed out that when China's economy begins to decline, there may be a major review of the BRI internally.

"China's economy is in trouble, but you are still spending big? This is an internal conflict and struggle," Chen told DW, adding that Chinese people may question whether the big-spending Belt and Road projects from the past should continue.

What Lies Ahead?

Many observers have pointed out that the BRI is moving away from the big money spent on major infrastructure.

Observing the latest Belt and Road white paper, Chen told DW that China will emphasize the so-called "high-quality Belt and Road" projects in the future, instead of spending big. In addition to developing the Digital Silk Road in e-commerce, investment projects must also have returns. According to Chen, this may include "letting China exploit your minerals, control your rare resources, or having special military value."

As the BRI faces increasing external scrutiny, President Xi has recently proposed several concepts that have attracted attention, such as the Global Development Initiative, Global Security Initiative, and Global Civilization Initiative.

Some opinions believe that these three "global initiatives" may replace the BRI as the core of China's diplomatic framework over the next decade.

Yun Sun, China expert at the Stimson Center, also believes that as these "global initiatives" become new focal points, the level of international attention on the BRI has decreased significantly. It is natural for the BRI to morph to its next stage, but it will not be easily stopped.