All eyes on China’s Belt and Road Initiative (BRI) summit

China’s Belt and Road Initiative (BRI) is celebrating its 10-year anniversary this year. In October, the People’s Republic will hold a summit to talk about the direction of this global infrastructure development strategy.

Already last week, Hong Kong held its eighth BRI summit with 21 cooperation agreements being signed between government bodies and companies from Hong Kong, Mainland China, and ASEAN countries. Renewable construction resources, sustainable energy, R&D, infrastructure, and logistics were the main project themes. Among them, memorandums of understanding (MoUs) have been signed with Bahrain, Saudi Arabia, and the United Arab Emirates (UAE) to strengthen the ties between Hong Kong and the Middle East.

The BRI was launched by Chinese President, Xi Jinping in 2013 to boost economic ties and expand the country’s economic influence across the world. Originally planned to connect East Asia and Europe through physical infrastructure, the BRI network expanded to include Africa, Oceania, and Latin America in the later years.

Likely focus on ASEAN, Middle East, green projects

Scheduled for October, China’s BRI summit has already begun to draw a lot of attention from experts and researchers.

While some opine that China’s massive infrastructure investments may spur a new era of trade and growth for Asian economies and beyond, critics say some Belt and Road-connected countries have experienced extreme debt crises and trade deficits. Italy, a BRI member since 2019, saw its trade deficit with China double in three years through 2022. Reports also suggest that Italian Prime Minister, Giorgia Meloni has signaled to Chinese Premier Li Qiang about exiting the BRI.

Despite a slowdown in growth at home, ASEAN countries are likely to continue as an investment priority for China for its Belt and Road Initiative. According to Maybank IBG, investment, and construction contracts from China to ASEAN surged 72% over the year to $18.6 bn in 2022. “These investment flows are likely to rise as China fully re-opens its economy and embarks on the next phase of BRI development, with an emphasis on risk control,” said Dr Chua Hak Bin, Co-Head, of Macro at Maybank IBG. “For the region as a whole, a recovery in Chinese BRI inflows is unlikely to raise engagement to pre-pandemic levels.”

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According to BRI data, between January to June 2023, China’s non-financial direct investment in all the countries along the Belt and Road reached $11.22 bn. In July 2023, total investments under China’s Belt and Road Initiative (BRI) crossed a significant milestone of $1 tn.

Singapore, Indonesia, Malaysia, the United Arab Emirates, Vietnam, Thailand, Laos, Kazakhstan, Cambodia, and Russia are among the countries that received Chinese investments. Several market watchers also feel that besides ASEAN, China would also focus on growing its ties with the Middle East in the upcoming BRI summit.

With most ASEAN countries also focussing on net-zero commitments, the next BRI summit could see more projects on sustainability, technology, and Electric Vehicles (EVs), say experts. They believe that China is likely to chart some concrete paths to achieve its target of green BRI by 2025.

BRI could face likely comparisons with IMEC

However, analysts feel that the economic downturn in China and the mounting debt pile could weigh on its position in the upcoming BRI summit.

Emerging as a strong contender to the BRI is the India-Middle East-Europe Economic Corridor (IMEC) which was an outcome of the recent G-20 summit. This multi-modal corridor would contain railways, a hydrogen pipeline, and a high-capacity optical fibre network. The proposed IMEC involves two primary routes: the Eastern Corridor, connecting India to the Middle East, and the Northern Corridor, connecting the Middle East to Europe. According to the Indian Council for Research on International Economic Relations (ICRIER), by 2030, IMEC could boost India’s trade with the Middle East and Europe by up to $200 bn. The US and European Union have backed this project to counter China’s growing economic clout through the BRI.