23/09/2023, 18:05 Will the U.S. Plan to Counter China’s Belt and Road Initiative Work?

t and Road Initiative Work? | Council on Foreign Relations

from Asia Unbound and Asia Program

Will the U.S. Plan to Counter China’s Belt and Road

Initiative Work?
At the G20 summit, the United States and its partners revealed an economic corridor linking
India, the Middle East, and Europe. It is premature, however, to call this a serious counterweight
to China’s Belt and Road Initiative.

U.S. President Joe Biden speaks with Prime Minister of India Narendra Modi at the opening session of 2022’s G20 Summit held in Bali,
Indonesia. Prasetyo Utomo/G20 Media Center/Handout via Reuters

Blog Post by David Sacks

September 14, 2023 2:37 pm (EST)

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23/09/2023, 18:05 Will the U.S. Plan to Counter China’s Belt and Road Initiative Work? | Council on Foreign Relations

At last week’s G20 summit, President Joe Biden announced an India-Middle East-
Europe Economic Corridor (IMEC), which seeks to counter the inroads China has
made through its Belt and Road Initiative (BRI) by linking India, the Arabian Gulf,
and Europe. This reflects a recognition in Washington that even though BRI has
encountered serious setbacks, Chinese leader Xi Jinping’s signature foreign policy
undertaking is not going anywhere. In addition, even a stumbling BRI poses
significant challenges to the United States, as we argued in our CFR-sponsored
Independent Task Force report. If successful, IMEC would help knit together
important regions and offer an alternative to BRI, but major questions remain
regarding financing, timeline, and viability.

Read the Full Report

China’s Belt and Road

The Belt and Road Initiative Turns Ten

In September 2013, during a visit to Kazakhstan, Xi Jinping proposed building a “Silk

Road Economic Belt,” later adding a “21st Century Maritime Silk road.” Taken
together, these two strands, which sought to connect China to Central, South, and
Southeast Asia, the Middle East, Africa, and Europe would form “One Belt, One
Road” (now more commonly known as the Belt and Road Initiative). BRI has since
outgrown its original corridors, becoming global in scope. Under BRI, China has
financed and built roads, power plants, ports, railways, and digital infrastructure. It is
the world’s largest ever global infrastructure undertaking, with China financing up
to $1 trillion in infrastructure around the world. Nearly 150 countries have signed on
to BRI in some form.

The Original Vision of the Belt and Road Initiative Was More Limited

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23/09/2023, 18:05 Will the U.S. Plan to Counter China’s Belt and Road Initiative Work? | Council on Foreign Relations

RUSSIA
Moscow
NETHERLANDS
GERMANY
Rotterdam Duisburg
KAZAKHSTAN
Venice Urumqi
GREECE Istanbul Bishkek Almaty
UZBEKISTAN
ITALY
Samarkand Kashgar
Athens Dushanbe CHINA Xi'an
TURKEY Tehran
IRAN PAKISTAN

Gwadar Kolkata
Hanoi
Gu
Silk Road Zhan
Economic Belt Arabian VIETNAM
Sea SRI LANKA
Maritime Silk
Road Colombo MALAYSIA
KENYA Kuala
Lumpur INDO
Nairobi
INDIAN
OCEAN Jakarta
Source: Xinhua; CFR research.

China pursued BRI in hopes that it would absorb excess manufacturing capacity,
enable Beijing to put its excess savings to use, narrow the gap between China’s
affluent coastal cities and its impoverished interior, and help secure a consistent
source of inputs for China’s manufacturing sector. New trade routes would reorient
commerce away from the United States and Western Europe and toward China,
further boosting Chinese economic growth. In addition to the domestic drivers of
BRI, China could convert its economic clout into political sway, pressuring countries
not to take stances that run counter to China’s interests on sensitive issues. China’s
investments in overseas ports would give its military greater power projection
capabilities.

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The Belt and Road Initiative Has Gone Global

Official BRI participants by year of joining

Map Table

+
-

CHINA

2013–14
2015–16
2017–18
2019 or later
Unknown

Sources: Green Belt and Road Initiative Center; Belt and Road Portal.

BRI’s implementation has raised serious concerns about debt and environmental
sustainability. Many BRI projects were not economically viable and have increased
the debt load of already heavily indebted countries. As the COVID-19 pandemic
eviscerated the global economy, debt crises emerged in countries that were major

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recipients of BRI loans, such as Pakistan, Sri Lanka, Zambia, and Kenya. As a result,
since 2019 China has spent over $100 billion bailing out developing countries in debt
distress. BRI has also financed carbon-intensive power generation, most worryingly
coal-fired power plants, locking in a reliance on fossil fuels for decades to come.

Such concerns have led China to recalibrate the initiative. Xi has stated that BRI will
focus more on poverty alleviation, health care, and green development. He has
highlighted the need for economic and fiscal sustainability of projects and pledged
that BRI will follow international standards for project development. Still, there
remains a gap between such declarations and how BRI is being implemented on the
ground. Now, as China is contending with its own economic issues, BRI is likely to
move forward as a less ambitious undertaking, with fewer major infrastructure
projects and increased focus on digital infrastructure, financial integration, and
people-to-people ties.

An Alternative Emerges?

While BRI has not gone according to plan, it nonetheless poses challenges to the
United States. BRI has increased debt burdens, locked countries into carbon-
intensive futures, tilted the playing field in major markets toward Chinese
companies, and drawn countries into tighter economic and political relationships
with Beijing. It has the potential to displace American companies, set technical
standards that are incompatible with U.S. products, and push countries to politically
align with China. BRI also makes it harder for the World Bank and other traditional
lenders to insist on high standards by offering quick infrastructure packages that
forego rigorous environmental- and social-impact assessments.

Asia Unbound
CFR fellows and other experts assess the latest issues emerging in Asia
today. 1-3 times weekly.

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Despite BRI’s many flaws, it is important to note that it is addressing a real issue,
namely the urgent and unmet need for infrastructure investment. The World Bank
has identified an $18 trillion global infrastructure gap. As traditional lenders shifted
their focus away from infrastructure, China was willing to step into this void, and as
a result is now the world’s largest official creditor.

Although the United States has recognized that it has to offer an affirmative vision
for global infrastructure rather than merely opposing BRI, its response has to this
point been insufficient. On the positive side, under the Trump administration the
United States provided greater authorities to the Export-Import Bank and
established the Development Finance Corporation. The Biden administration, for its
part, announced an initiative titled Build Back Better World (B3W), which seems to
have been rebranded the Partnership for Global Infrastructure Investment (PGII).
PGII aims to mobilize private capital to invest in four areas: climate change and
energy security, health and health security, digital technology, and gender equity and
equality.

Now, in an echo of BRI, the United States and its partners have introduced IMEC,
which seeks to link India, the Arabian Gulf, and Europe via railways and shipping
lines. In addition to the trade links, IMEC envisions electricity and digital
infrastructure as well as pipe for clean hydrogen export. In Africa, a Trans-African

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Corridor (the Lobito Corridor) will connect Angola to the Democratic Republic of
the Congo (DRC) and Zambia, eventually reaching the Indian Ocean. Details
regarding financing and timeline, however, have yet to be announced.

If successful, these corridors have the potential to increase supply chain security and
resilience, generate economic growth, and promote trade among U.S. partners.
European Commission president Ursula von der Leyen, for instance, noted that IMEC
would make trade between India and Europe 40 percent faster. At the same time, the
new corridors’ geopolitical motivations are hard to miss. If the Lobito Corridor is able
to increase the production and trade of critical minerals such as copper and cobalt, it
will decrease reliance on China for the electric vehicle supply chain. IMEC can be
seen as an effort to respond to Saudi Arabia and the UAE’s tilt toward China,
facilitate economic integration between Israel and the Arab world, and promote an
alternative to Russian energy supplies.

IMEC and the Lobito Corridor are big undertakings that will take many years to bear
fruit even under the best circumstances. But there is a better and simpler way to
compete with BRI right now: reorienting the World Bank to focus more on digital
connectivity, infrastructure, and energy access while expanding its lending capacity.
Given its long history of leadership in the World Bank and its unique position in
World Bank governance, the United States is well positioned to spearhead such
efforts. The Biden administration should be commended for beginning this process,
which could prove even more consequential than headline-grabbing economic
corridors.

Next month, attention will turn back to Beijing as Xi hosts the third Belt and Road
Forum for International Cooperation, where he will likely introduce further tweaks
to BRI. The United States, for its part, has put an affirmative agenda on the table but
has a long way to go in turning the idea into a reality. As Washington begins to do so,
it should also reinvigorate the World Bank and introduce a trade strategy that
demonstrates its commitment to the Indo-Pacific.

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