The current administration in the United States has signaled a retreat from global engagements, evident in its rejection of the Paris Climate Accords and critical stance towards NAFTA and NATO. This shift provides an opening for China to assume a more prominent role in global affairs.
This context sets the stage for the 19th Party Congress in China, where the focus is on balancing external influence with maintaining domestic economic stability. One key avenue for China to exert influence is through infrastructure development, a critical component of global progress.
The Organization for Economic Cooperation and Development (OECD) estimates that addressing global development needs requires an annual infrastructure investment of US$6.3 trillion until 2030. Given China’s extensive experience in development gained through rapid economic growth, it is well-positioned to shape the trajectory of global development in the 21st century.
China has been involved in infrastructure projects globally since the 1970s, but it wasn’t until 2013 that a comprehensive policy for infrastructure investment emerged. Xi Jinping introduced the Silk Road Economic Belt concept during a speech in Kazakhstan, followed by the proposal for the Asian Infrastructure Investment Bank.
Other institutions supporting China’s global infrastructure initiatives include the Silk Road Fund and the New Development Bank, led by China, Brazil, Russia, India, and South Africa. The flagship initiative, the Belt and Road Initiative is anticipated to attract US$1 trillion for trade, transport, and energy projects worldwide.
However, countries receiving loans for infrastructure projects should exercise caution. While infrastructure is crucial for development, its cost can be a barrier.
Although over 60 countries have signed agreements for China to fund their projects, it is essential to recognize that infrastructure alone may not guarantee economic transformation. Instances such as Sri Lanka’s struggle to service debts for underutilized projects highlight the potential pitfalls.
Environmental concerns also accompany China’s infrastructure investments. Despite President Xi’s commitment to green and sustainable development, some Chinese-funded projects, such as coal-fired power plants in the China-Pakistan Economic Corridor, raise environmental issues. This trend could intensify without local resistance or consideration for broader impacts.
China’s domestic commitment to clean energy, evidenced by significant investments in renewable energy and green bonds, offers a model for transitioning from unsustainable to green energy sources. As the Belt and Road Initiative unfolds, China can leverage its experience to shape environmentally sensitive infrastructure developments globally.
To mitigate risks associated with infrastructure projects, China and collaborating countries should evaluate projects against not only financial but also environmental and social standards. The Asian Infrastructure Investment Bank’s 2016 framework, incorporating environmental, social, and governance standards, serves as a template for responsible lending in global infrastructure projects.
The Belt and Road Initiative presents an opportunity for China to showcase its model of state-led economic growth supported by extensive infrastructure initiatives on the international stage. With careful strategy and vigilant monitoring, this initiative could signify a departure from decades of unsustainable and failed global infrastructure development.
If China emerges as a preeminent global power, it must acknowledge the significant responsibility of leadership in development. Aid-dependent countries aspire to sustainable infrastructure, and their expectations warrant better assistance than they have historically received.