Vice President, Supervisory Council
Macau Institute for Corporate Social Responsibility in Greater China (MICSRGC)
Since the 2013 announcement of the Belt and Road Initiative (BRI) in Kazakhstan by the Chinese government, the geographic scope and political and economic impact of the BRI have expanded to an extent that is almost beyond calculation. By 2022, China had signed more than 200 BRI cooperation documents with 147 countries and 32 international organisations. The initiatives included in this grand strategy have grown in both quantity and complexity across sectors and geographic regions, from the Arctic to the deep oceans and from Latin America to space.
The BRI echoes the ancient Silk Road in that it was critical to the rise and fall of cities from the Pacific to the Mediterranean. China has addressed a significant portion of the global infrastructure gap, creating hope that the BRI may reduce global poverty. However, local communities around the world affected by the BRI are dealing with the challenges associated with sustainable development due to increased land use, labour conditions and environmental impacts. Most BRI projects involve significant changes in land use, the expansion of large infrastructure and the intensification of social and environmental processes. However, in many host countries, environmental regulations and impact assessments related to BRI infrastructure are inadequate. For example, companies responsible for constructing BRI projects do not pay sufficient attention to international and host country environmental requirements, nor do they adequately inform affected populations of the impacts of these projects. Specifically, in Colombo, Sri Lanka, scientists and environmentalists have argued that dredging for the construction of a new urban port has destroyed Colombo’s coastline, coral reefs and fish breeding areas. This has heightened the threat of erosion and flooding in areas prone to natural disasters while affecting the livelihoods of people living on Colombo’s beaches who rely on the marine ecosystem for fishing.
The COVID-19 pandemic significantly complicated the BRI and drastically shocked and challenged its development. To stop the spread of the pandemic, China closed its borders to the rest of the world in January 2020, severing communication with the majority of the population and reducing businesses’ capacity to evaluate, negotiate and finalise new projects. Many prominent BRI partner countries are facing debt distress, and these pressures are related to the strength of the dollar, high oil and food prices and the collapse of the tax base during the pandemic. These compounding issues have undermined host countries’ ability to consider ambitious capital expenditures in traditional sectors of the BRI, such as transportation and logistics. The reduction in Chinese capital flows and the financial aftershocks faced by domestic Chinese Small-and-Medium Enterprises (SMEs) have reduced investor enthusiasm for the BRI and thus may have reduced investment in smaller, less important markets in the BRI. Moreover, some BRI infrastructure projects are facing pandemic-related financial difficulties, including the Kuntzwi Dam power project in Zimbabwe under contract with Sinohydro Corporation. Furthermore, speculation about the BRI’s sustainability grew during the pandemic. Investors have disputed the long-term feasibility of the BRI for a variety of reasons, including the ever-lasting debt problem, a global decline in foreign investment and the unsupportive attitudes of the US government and the European Union.
By the end of November 2022, more than 600 million cases of COVID-19 had been diagnosed worldwide, and the long-term lockdowns resulting from the pandemic will continue to have a complex impact, even after the world reopens. However, the crisis that the BRI is suffering goes far beyond the predicted issues.
Since the outbreak of the Russia–Ukraine conflict in February 2022, war and corresponding economic sanctions have ensued, resulting in repeated shocks to world stock markets, currency markets, crude oil, food and the non-ferrous metal futures markets. Russia’s invasion of Ukraine not only caused irreparable loss of life and economic damage but also profoundly changed the geopolitical landscape and direction of the world. Ukraine is located at the crossroads of Eastern and Western Europe and is of geostrategic importance as a necessary route for the development of China’s Belt and Road programme. The protracted war has also had a major collateral effect on Russia’s ally – China. It has created a broken loop in the BRI project, particularly the rail freight route linking China and Europe via Kazakhstan, Russia and Belarus. This China–Europe route had been a great success since its launch. Due to the war, this route through Ukraine was completely blocked, and the Central European Railway has been forced to bypass Russia, Ukraine and Belarus and make a detour southward into Europe. To make matters worse, many operators have also decided to withdraw from this transport route through Russia and Belarus due to sanctions imposed on Russia by the European Union. In addition, the problems of poor logistics, rising labour costs and difficulties in settling trade with Russia due to the removal of Russian banks from the international settlement system SWIFT have made the situation even more disheartening. The intensified geopolitical conflicts accompanied by the COVID-19 pandemic are bound to cast a shadow on the development of the BRI.
As the Chinese government continues to optimise its recent pandemic prevention and control measures, the Chinese economy may gradually emerge from the adverse effects of COVID-19. In this context, China’s gradual relaxing of pandemic policies will closely affect the renewal of the Belt and Road projects. However, the climate crisis, the post-pandemic impacts and the increase in conflicts around the world have put the achievement of the UN’s 17 global Sustainable Development Goals (SDGs) along the Belt and Road at risk. Given that many of the BRI investments are put on a carbon-intense development path, there might be an orientation away from the SDGs and less regards for social and environmental standards, especially without pressure from multilateral organisations.
All of the above-mentioned crises are thought to have spurred the BRI to adopt a green strategy. Most discussions on sustainability have centred on how the BRI may affect the environment or society. Sustainability is a key component of the BRI’s future because BRI countries alone could exacerbate global warming if sufficient action is not taken. However, sustainability is a trend that can potentially have an impact on the BRI’s future. It has been suggested that the BRI must become ‘green’ by moving away from carbon-intensive industries and projects like coal power. To incorporate sustainable development into China’s commitment to becoming carbon neutral by 2060, the Ministry of Ecology and Environment of the PRC published the Guidance on Promoting Green Belt and Road in 2017, and established the BRI International Green Development Coalition (now the Green BRI Centre) in 2019. Sustainability needs to re-enter the agenda and take a more strategic position to turn China’s pledge for carbon neutrality by 2060 into reality. A BRI sustainability viewpoint may be most beneficial, given that the SDGs clearly aim to benefit all people on the planet and have been regarded as the most universally agreed-upon international agenda. The BRI’s future, with its large-scale impact, might make or break the SDGs, specifically in the post-pandemic era.
Global efforts must be made to further strengthen the sustainability agenda by helping host countries set legally binding standards. For instance, multilateral funding for sustainable infrastructure in BRI host countries which may lead to potential mitigation of their debt risk has been suggested as one of many possible solutions. The standards for BRI investments could revolve around SDGs, ecological civilisations or even another sustainability-informed political concept in a world that emphasises converging rather than competing ideas. In this scenario, Chinese values would make the BRI neither Western nor Chinese but a thoroughly hybrid paradigm of global cooperation.
i. Apostolopoulou, E. (2021). Tracing the links between infrastructure-led development, urban transformation and inequality in China’s Belt and Road Initiative. Antipode, 53(3), 831–858.