Five myths about China’s BRI, busted

China’s Belt & Road Initiative (BRI) is the country’s attempt to promote globalisation and reshape economic order.

The program is designed to improve regional connectivity, primarily through infrastructure construction. The goal is to bring together Asia, the Middle East, Africa, and Europe via railways, highways, sea ports and other infrastructure and trade channels. 

In a broader sense, it also encourages financial integration, policy coordination and cultural exchange. By October 2017, 68 countries had signed bilateral memorandums of understanding on the initiative, according to the Chinese government.

" The Asian Infrastructure Investment Bank has approved 18 infrastructure projects associated with the BRI, with committed funding of $US2.9 billion."

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Since the launch of the BRI in 2013 there have been a number common misconceptions arise, particular in overseas countries. Today we will attempt to correct the record on some of these issues.

Real progress on the BRI has been lacking

This is incorrect. So far, the Asian Infrastructure Investment Bank has approved 18 infrastructure projects associated with the BRI, with committed funding of $US2.9 billion.

The Silk Road Fund has approved 15 projects, with total funding of $US6 billion. The Fund has also spent $US2 billion to set up a fund for capacity cooperation with Kazakhstan.

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It is all about infrastructure investment

While infrastructure investment is a key cooperation area of the BRI, there are many other business opportunities, including trade, financial cooperation, cultural exchange, tourism and policy coordination.

There is little opportunity for non-BRI countries

Firstly, the BRI is an open-ended initiative and China has welcomed all countries to participate. Secondly, unlike free trade pacts, the BRI does not have any binding responsibilities and rules (but likely less clear benefits) for participants.

Countries yet to be involved can participate via investment into projects as joint-ventures, providing various services/expertise (including technology, intellectual inputs, financial services and consultancy services) and even benefit from integration into the whole supply chain.

China is using the BRI to export excess capacity

While China can use this opportunity to export its production capacity, it also fulfils the demand gap from BRI countries.

More importantly, we believe it carries China’s longer-term development vision and willingness to promote globalisation as its global influence is rising.

It is designed to challenge some regional trade pacts

The BRI complements regional free trade pacts. A successful BRI will benefit local infrastructure conditions and facilitate regional trade flows, FDI and local job markets, which are also promoted by free trade pacts. 

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Betty Wang is Senior China Economist at ANZ

The views and opinions expressed in this communication are those of the author and may not necessarily state or reflect those of ANZ.

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