The Strategic (In-)efficiency of China’s Belt and Road Initiative

• In Event: Re-assessing Chinese Politics: Change and Continuity

Abstract

China’s Belt and Road Initiative (BRI) is a consequential global strategy that has proven to be strategically effective in bolstering China’s foreign influence. However, given the immense scale of the BRI, its strategic efficiency is also critical for China. Nevertheless, there is a dearth of theoretical analysis and empirical studies concerning the strategic efficiency of the BRI, despite a substantial amount of BRI literature. This paper establishes a framework for evaluating strategic efficiency and chooses the BRI as a case study to evaluate China’s foreign strategic capabilities. This study finds that the BRI replicates China’s domestic infrastructure development approach, primarily carried out by state-owned enterprises and financed by state-owned banks. This approach has allowed China to effectively mobilize economic resources at its disposal for strategic purposes, but the efficiency of its implementation has been problematic. A significant number of projects under the BRI lacked economic viability, failed to yield anticipated profits, and encountered challenges in loan repayment, ultimately compelling China to provide bailouts. In addition, the corruption in the implementation of the BRI projects has resulted in a tremendous waste of resources. Presently, the Chinese government has been forced to reorganize the BRI, resulting in a significant reduction in scale and a renewed focus on sustainability. Although it is strategically creative for China to use its economic means to achieve political goals, this paper argues that it is precisely because the Chinese government’s political considerations override economic rationality that makes the BRI strategically inefficient, which will lead to unsustainability and ultimately harm China’s national interests.

Author

• Chaoting Cheng, Freie Universität Berlin