In 2013, Chinese President Xi Jinping announced the launch of both the

Silk Road Economic Belt and the 21st Century Maritime Silk Road,
infrastructure development and investment initiatives that would stretch
from East Asia to Europe. The project, eventually termed the Belt and
Road Initiative (BRI) but sometimes known as the New Silk Road, is
one of the most ambitious infrastructure projects ever conceived. It
harkens back to the original Silk Road, which connected Europe to Asia
centuries ago, enriching traders from the Atlantic to the Pacific.

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Some analysts see the project as an unsettling extension of China’s
rising power, and as the costs of many of the proposed projects have
skyrocketed, opposition has grown in some participant countries.
Meanwhile, the United States shares the concern of some in Asia that
the BRI could be a Trojan horse for China-led regional development,
military expansion, and Beijing-controlled institutions. Under President
Donald J. Trump, Washington has raised alarm over Beijing’s actions
even as it has abandoned some U.S. efforts to isolate China and deepen
its own ties with economic partners in the region.

What was the original Silk Road?

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The Silk Road came into being during the westward expansion of
China’s Han Dynasty (206 BCE–220 CE), which forged trade networks
throughout what are today the Central Asian countries of Afghanistan,
Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, and Uzbekistan, as
well as modern-day India and Pakistan to the south. Those routes
extended more than four thousand miles to Europe.

Central Asia was thus the epicenter of one of the first waves of
globalization, connecting eastern and western markets, spurring
immense wealth, and intermixing cultural and religious traditions.
Valuable Chinese silk, spices, jade, and other goods moved west while
China received gold and other precious metals, ivory, and glass
products. Use of the route peaked during the first millennium, under the
leadership of first the Roman and then Byzantine Empires, and the Tang
Dynasty (618–907 CE) in China.

But the Crusades, as well as advances by the Mongols in Central Asia,

dampened trade, and today Central Asian countries are economically
isolated from each other, with intra-regional trade making up just 6.2
percent of all cross-border commerce. They are also heavily dependent
on Russia, particularly for remittances—they make up one-third of the
gross domestic product (GDP) of Kyrgyzstan and Tajikistan. By 2018,
remittances had dipped from their 2013 highs  due to Russia’s economic
woes.

What are China’s plans for its New Silk Road?

President Xi announced the initiative during official visits to
Kazakhstan and Indonesia in 2013. The plan was two-pronged: the
overland Silk Road Economic Belt and the Maritime Silk Road. The
two were collectively referred to first as the One Belt, One Road
initiative but eventually became the Belt and Road Initiative.

Xi’s vision included creating a vast network of railways, energy

pipelines, highways, and streamlined border crossings, both westward
—through the mountainous former Soviet republics—and southward, to
Pakistan, India, and the rest of Southeast Asia. Such a network would
expand the international use  of Chinese currency, the renminbi, while
new infrastructure could “break the bottleneck in Asian connectivity ,”
according to Xi. (The Asian Development Bank estimates that the
region faces a yearly infrastructure financing shortfall of nearly $800
billion.) In addition to physical infrastructure, China plans to  build fifty
special economic zones , modeled after the Shenzhen Special Economic
Zone, which China launched in 1980 during its economic reforms under
leader Deng Xiaoping.

Xi subsequently announced plans for the 21st Century Maritime Silk

Road at the 2013 summit of the Association of Southeast Asian Nations
(ASEAN) in Indonesia. To accommodate expanding maritime trade
traffic, China would invest in port development along the Indian Ocean,
from Southeast Asia all the way to East Africa.
   
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China’s overall ambition for the BRI is staggering. To date, more than
sixty countries—accounting for two-thirds of the world’s population—
have signed on to projects or indicated an interest in doing so. Analysts
estimate the largest so far to be the $68 billion China-Pakistan
Economic Corridor, a collection of projects connecting China to
Pakistan’s Gwadar Port on the Arabian Sea. In total, China has already
spent an estimated $200 billion on such efforts. Morgan Stanley has
predicted China’s overall expenses over the life of the BRI could reach
$1.2–1.3 trillion  by 2027, though estimates on total investments vary.

What does China hope to achieve?

China has both geopolitical and economic motivations behind the

initiative. Xi has promoted a vision of a more assertive China , while the
new normal of slowing growth has put pressure  on the country’s
leadership to open new markets for its consumer goods and excess
industrial capacity.

To date, more than sixty countries—accounting

for two-thirds of the world’s population—have
signed on to projects or indicated an interest in
doing so. The United States has shared other
countries’ concerns about China’s perceived
intentions.
   

Experts see the BRI as one of the main planks of Chinese statecraft
under Xi, alongside the Made in China 2025 economic development
strategy. For Xi, the BRI serves as pushback against the much-touted
U.S. “pivot to Asia ,” as well as a way for China to develop new
investment opportunities, cultivate export markets, and boost Chinese
incomes and domestic consumption.

In this sense, Xi’s aggressive approach is a shift away from his

predecessors, who followed Deng’s maxim: “hide your strength, bide
your time.” CFR’s Elizabeth C. Economy writes, “Under Xi, China now
actively seeks to shape international norms and institutions and
forcefully asserts its presence on the global stage.” Nayan Chanda,
former editor of the Far Eastern Economic Review, calls the BRI  “an
overt expression of China’s power ambitions in the 21st century,”
arguing that Beijing’s goal is to remake the global geopolitical balance
of power. Others frame it in less adversarial terms, saying the Chinese
leadership  simply hopes the BRI will improve China’s image among its
neighbors, and help to rejuvenate them economically.
For some, the BRI is a Chinese response to a renewed U.S. focus on
Asia, launched by the Obama administration in 2011. Many in Beijing
read this as an effort to contain China by expanding U.S. economic ties
in Southeast Asia. In a 2015 speech, retired Chinese General Qiao
Liang described the BRI as “a hedge strategy against the eastward move
of the US.”

At the same time, China was motivated to boost global economic links
to its western regions, which historically have been neglected.
Promoting economic development in the western province of Xinjiang ,
where separatist violence has been on the upswing, is a major priority,
as is securing long-term energy supplies from Central Asia and the
Middle East , especially via routes the U.S. military cannot disrupt .

More broadly, Chinese leaders are determined to restructure the

economy to avoid the so-called middle-income trap. In this scenario,
which has plagued close to 90 percent of middle-income countries since
1960, wages go up and quality of life improves as low-skilled
manufacturing rises, but countries struggle to then shift to producing
higher-value goods and services. Zhang Yunling of the Chinese
Academy of Social Sciences, a state-backed think tank, argues that the
BRI will offer new import and export options, creating new production
chains that will spur the development of the Chinese economy.

What are the potential roadblocks ahead?

While several developing countries in need of new roads, railways,

ports, and other infrastructure have welcomed BRI investments, the
initiative has also stoked opposition. For some countries that take on
large amounts of debt to fund the necessary infrastructure, BRI money
is seen as a potential poisoned chalice. BRI projects are built with low-
interest loans  as opposed to aid grants, explain CFR’s Alyssa Ayres and
Elizabeth C. Economy and Johns Hopkins’s Daniel Markey. Some BRI
investments have required the use of Chinese firms and their bidding
processes have lacked transparency. As a result, contractors have
inflated costs, leading to canceled projects and political pushback.

Examples of such criticisms abound. In Sri Lanka, President

Maithripala Sirisena sought to renegotiate Colombo’s repayment
schedule, but China asked for a long lease on a major port in return for
debt forgiveness—some reports indicate Sri Lanka owed $13 billion  on
its debt in 2018, with expected total government revenues of just $14
billion. In Malaysia, Mahathir bin Mohamad, elected prime minister in
2018, campaigned against overpriced BRI initiatives, which he claimed
were partially re-directed to funds controlled by his predecessor. Once
in office, he canceled $22 billion worth of BRI projects. The new
Maldivian government has also begun to unwind  some of the BRI
projects introduced under former President Abdulla Yameen Abdul
Gayoom, while the China-Pakistan Economic Corridor is at risk as
Islamabad faces a balance-of-payments crisis. In 2018, as debts to
China began to weigh on its economy, Pakistan sought billions of
dollars in loans from Saudi Arabia, the International Monetary Fund,
and China.

More such stories are likely, according to a report by the Center for
Global Development, which notes that eight BRI countries are
vulnerable to debt crises. Five of the eight border China, and two more
—Djibouti and the Maldives—are choke points on the Maritime Silk
Road.
   
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Arguments against the BRI have in some cases helped propel politicians
across the region into office. Christopher Balding, a former professor at
the HSBC Business School in Shenzhen, says that the BRI’s “no-strings
approach” has, counterintuitively, made some of its investments less
attractive. The approach “has fueled corruption while allowing
governments to burden their countries with unpayable debts,” he says.
Political backlash is perhaps less of a concern in authoritarian countries
taking part in the BRI, where autocrats face less public scrutiny and
where the Chinese model of governance might hold more appeal. But
some governments, in places such as Kenya and Zambia, are carefully
studying BRI investments before they sign up, and candidates in
Malaysia have explicitly run—and won—campaigns on anti-BRI
platforms.
How has the United States responded to China-led
regional integration?

The United States has shared other countries’ concerns  about China’s

perceived intentions. At the 2018 Asia-Pacific Economic Cooperation
(APEC) summit, U.S. Vice President Mike Pence told regional leaders
that the United States doesn’t “offer a constricting belt or a one-way
road.”

Developing the economies of South and Central Asia is a longstanding

U.S. goal that intensified after the start of the U.S. war in Afghanistan
and President Barack Obama’s pivot to Asia. The Obama
administration frequently referenced the need for the Afghan economy
to move past foreign assistance, and in 2014 then Deputy Secretary of
State William Burns committed the United States  to returning Central
and South Asia “to its historic role as a vital hub of global commerce,
ideas, and culture.” In this spirit, the Obama administration supported
a $10 billion gas pipeline through Turkmenistan, Afghanistan, Pakistan,
and India. It also spent billions of dollars on roads and energy projects
in Afghanistan and used its diplomatic muscle to help craft new
regional cooperation frameworks to foster Central Asian economic
links.

The Trump administration has pursued a more confrontational strategy

in the region. Some analysts have called on  the United States to respond
by deepening its own ties with Asian partners, as the Obama
administration tried to do with the Trans-Pacific Partnership , a deal
rejected by Trump in favor of seeking to strengthen relationships on a
bilateral basis . The Trump administration, with bipartisan support in
Congress, has instead tried to counter the BRI with the BUILD Act .
This consolidated  the Overseas Private Investment Corporation (OPIC),
a U.S. government agency for development finance, with components
of the U.S. Agency for International Development (USAID) into a
separate agency with a $60 billion investment portfolio. Although this
pales in comparison to the more than $1 trillion that financial analysts
expect China to spend on the BRI, advocates say it seeks to crowd in a
larger pool of private investment by underwriting risk.

Some have argued that the United States might find a silver lining in
the BRI. Jonathan E. Hillman of the Center for Strategic and
International Studies says the United States could use BRI projects as a
way to have China pay for infrastructure initiatives  in Central Asia that
are also in the U.S. interest.

What is the role for third countries?

Other countries have sought to balance their concerns about China’s

ambitions against the benefits that the BRI promises.

India. India has tried to convince local countries that the BRI is a plan
to dominate Asia, warning of what some analysts have called a “String
of Pearls” geoeconomic strategy whereby China creates unsustainable
debt burdens for its Indian Ocean neighbors and potentially takes
control of regional choke points.

Policymakers in New Delhi have long been unsettled by China’s

decades-long embrace of traditional rival Pakistan, and since the
George W. Bush administration, U.S. leaders have seen India as a
regional balancer against a China-dominated Asia. The Trump
administration’s 2017 Indo-Pacific Strategy  framed India as a
counterweight to China’s “repressive vision of the world order” based
on “economic inducements and penalties, influence operations, and
implied military threats.” India has provided its own development
assistance to neighbors, most notably Afghanistan, where it has spent
$3 billion on infrastructure projects, including the parliament building,
roads, hospitals, and dams.

Yet, despite U.S. misgivings, India was a founding member of China’s

Asian Infrastructure Investment Bank (AIIB), and Indian and Chinese
leaders have invested in developing closer diplomatic ties. “India does a
lot with China in the multilateral arena for its own reasons,” says
Ayres.

Japan. Tokyo has maintained a similar strategy, balancing increasing

interest in regional infrastructure development with longstanding
suspicions about China’s intentions. In 2016, Japan committed to
spending $110 billion on infrastructure projects throughout Asia. Japan
has, with India, also agreed to develop the Asia-Africa Growth Corridor
(AAGC), a plan to develop and connect ports from Myanmar to East
Africa.

Europe. Some European countries are torn between traditional ties to

the United States and the economic opportunities that the BRI presents.
Several countries in Central and Eastern Europe have accepted BRI
financing for their own infrastructure shortfalls. French President
Emmanuel Macron has urged prudence, suggesting during a trip to
China that the BRI could make partner countries “vassal states.”

Russia. Moscow has become one of the BRI’s most enthusiastic

partners, though it responded to Xi’s announcement at first with
reticence, worried that Beijing’s plans would outshine Moscow’s vision
for a “Eurasian Economic Union” and impinge on its traditional sphere
of influence.

As Russia’s relationship with the West has deteriorated, however,

President Vladimir Putin has pledged to link up  his Eurasian vision
with the BRI. Some experts are skeptical of such an alliance, which
they argue would be economically asymmetrical. Russia’s economy and
its total trade volume are both roughly one-eighth the size of China’s—
a gulf that the BRI could widen in the coming years.