Giving Compass’ Take:
• Rafiq Dossani explains how the Belt and Road Initiative is engaging high- and low-income countries in strong economic relationships with China.
• How will these economic ties impact development, particularly in low-income countries? What can philanthropy do to support development in these places given the economic ties to China?
• Read about the impact of the Belt and Road Initiative in Asia.
Until 1999, China was the largest borrower from the International Development Association (IDA), the member of the World Bank Group responsible for lending to the world’s poorest countries. Two decades of high growth later, in 2019, China overtook the World Bank as the world’s largest lender of development finance.
This remarkable change is owed primarily to the Belt and Road Initiative (BRI), a global infrastructure plan conceptualized in China in 2013 and which has been implemented in more than 70 countries. Under the BRI, China works with partner countries to design and implement large infrastructure projects.
International infrastructure aid dates back to the Marshall Plan of 1948 and has been a regular feature of foreign aid to developing countries ever since. So, what is unusual or new about the BRI? In fact, there are several aspects to the BRI that make it particularly notable even beyond China’s turnaround from borrower to lender.
One interesting aspect of the BRI is that while most of the partner countries are developing countries, several are high-income countries, such as Greece and Italy.
The BRI in Pakistan, termed the China Pakistan Economic Corridor (CPEC), will bring in investments of $62 billion over a ten-year period. The projects include transportation, communication, and energy investments that are located in overlapping zones, enabling comprehensive economic development. Already, Pakistan’s energy sector has been transformed with CPEC investments that will total $33.79 billion by 2023, and will add 17 Gw of electricity capacity to an existing base of 28 Gw, i.e., an increase of 60 percent.
CPEC is typical of BRI projects, now under way in a number of countries. Such transformative, national-scale investment is naturally attractive to poor countries, and helps explain why they, as well as some rich countries, are willing to turn to the BRI. In return, they appear willing to accept that the investments will connect them more closely to China—this is most evident through observing the geography of projects, but also through increasing these countries’ reliance on Chinese project management and operating systems, and through transacting increasingly in renminbi.
Still, success stories aside, why are countries of all stripes turning to China for funding when the world is awash with cash? Traditionally, such countries have preferred to work with the World Bank and other multilateral lenders, which provide borrowers with good practices, while making significant funding available on a meritocratic rather than political basis.
This brings us to what is likely China’s strongest motive behind the BRI: long-term economic security. The maritime routes of the BRI will help the relatively underdeveloped, landlocked areas of China such as Yunnan and Xinjiang provinces by linking them with ports in the more rapidly growing areas of Asia. At the same time, the emerging land routes of the BRI are developing an alternative to the South China Sea, through which most of China’s trade currently passes and which is becoming a zone of contestation between the United States and China.
Read the full article about the Belt and Road Initiative by Rafiq Dossani at RAND Corporation.
Global Development is a complex topic, and others found these selections from the Impact Giving archive from Giving Compass to be good resources.
Looking for a way to get involved?
Learning with others and benchmarking are key steps towards becoming an impact giver. If you are interested in giving with impact for Coronavirus, take a look at these events, galas, conferences and volunteering opportunities to connect with individuals like you.
Are you ready to give?
If you are ready to take action and invest in causes for Coronavirus, check out these Giving Funds, Charitable Organizations and Projects related to Coronavirus.