China's Belt and Road Initiative was first announced five years ago in 2013. Broadly speaking, the grand plans is for a grand set of transportation connections from China across Asia, and reaching to Africa and Europe. Some of the connections would be overland (the "belt") and others would be overseas (the "belt"). Chinese banks and investment funds would provide substantial finance for these projects, and Chinese firms--many with considerable experience building infrastructure in China-- would carry out a substantial chunk of the work.

The timeline for a massive set of infrastructure investments that could affect 80 countries and two-thirds of the world's population is appropriately measured in decades, not in a few years. Still, five years after the main announcement is a reasonable time to review the record. Jonathan Hillman offers one perspective in "China's Belt and Road Is Full of Holes" written as a Policy Brief for the Center for Strategic & International Studies (CSIS, September 2018). For additional detail, the Economist magazine ran a cover story on the subject in the July 26 issue, "China has a vastly ambitious plan to connect the world: What is behind the Belt and Road Initiative?"

In evaluating the Belt and Road Initiative, the first step it to recognize that there is no list of what projects included, or not included. As Hillman writes: "The BRI is also breathtakingly ambiguous. There is no official definition for what qualifies as a BRI project. There are Chinese-funded projects in countries not participating in the BRI that share many of the same characteristics. The BRI was officially launched in 2013, but projects started years earlier are often counted. The BRI brand has been extended to fashion shows, art exhibits, marathons, domestic flights, dentistry, and other unrelated activities. The BRI’s loose, ever-expanding nature, and a lack of project transparency, have led many observers to exaggerate its size. When assessing the BRI, there is always a risk of imposing order where, by design, it does not exist."

Or as the Economist puts it: "No definitive BRI map has been published. The scheme has expanded far beyond its original core of Eurasia and the Middle East, from New Zealand to the Arctic, Africa to Latin America and even outer space. Estimates of the BRI’s total intended investment range from $1trn to $8trn."

There are a number of motivations, all possibly overlapping, for the Belt and Road Initiative.

1) As China becomes the largest economy in the world, it will want to build on trade ties across the region. Many countries in south and east Asia, or on the eastern coast of Africa, have enormous infrastructure needs. One can paint a picture of the BRI as the basis for an "everybody wins" expansion of global trade.

2) China is looking for ways to sustain its high growth rate. Using a combination of Chinese finance that supports employment of China's construction and infrastructure companies is a potential method of doing that. There is some talk that China would also like to build or transfer some of its lower-margin and environmentally dirtier industries to other countries, as well.

3) From a foreign policy point of view, the Belt and Road Initiative can been seen as a way of projecting Chinese power and influence, both over the governments of countries involved in these projects and also by building ports and other infrastructure that could be used by China's military.

There are also some potential economic and political dangers here for China. As an example of issues that can arise, consider the project of building a port in Hambantota, Sri Lanka, as described by a New York Times report earlier this summer (July 1, 2018).

Sri Lanka already has one large port at its capital city of Colombo. However, Mahinda Rajapaksa--who was president a few years back, thought it would be a good idea to have a second big port at another location of Hambatota, which happens to be not far from where he is from. Various possible sources of finance evaluated the proposal, and turned it down as not commercially viable. But then China financial sources stepped in and loaned a few billion dollars. 

The Hambantota port got built, but it goes largely unused. As the Times reported: "The seaport is not the only grand project built with Chinese loans in Hambantota, a sparsely populated area on Sri Lanka's southeastern coast that is still largely overrun by jungle. A cricket stadium with more seats than the population of Hambantota's district capital marks the skyline, as does a large international airport - which in June lost the only daily commercial flight it had left when FlyDubai airline ended the route. A highway that cuts through the district is traversed by elephants and used by farmers to rake out and dry the rice plucked fresh from their paddies."

In the 2015 election, China dumped a few million dollars into the re-election campaign for Rajapaksa, who lost anyway. The debt payments owed by Sri Lanka for this dysfunctional project were climbing. The government of Sri Lanka ended up handing over Hambantota port, and 15,000 acres around it, to Chinese financial interests, in exchange for knocking $1 billion off its debt. But according to the Times story, the Sri Lankan Finance ministry estimates that "[t]his year, the Government is expected to generate $14.8 billion in revenue, but its scheduled debt repayments, to an array of lenders around the world, come to $12.3 billion.

Does this kind of experience count as a "success" for the Belt and Road Initiative? China now has ownership and control over a port only a few hundred miles from India--although the current arrangement (subject to later negotiation, of course) is that it will not be used by the Chinese military.

On the other side, this kind of "success" comes at a high cost. The funds loaned to Sri Lanka are mostly lost--it's just a matter of when the renegotiation happens. Other countries around the region have become quite concerned about going into debt to Chinese sources of finance, and concerned about whether China will end up meddling in their elections or perhaps bribing their local officials, and concerned about how their domestic workers don't get many of the construction contracts, and concerned about possible environmental damage.

In the Belt and Road Initiative, China's banks and investment funds have often been willing to lend to projects that had been turned down by others potential funding sources like development banks, Japan, Europe, the US, and issuing bonds in global financial markets. The Chinese loans have also often included lots of conditions about business going to Chinese firms, but not many conditions about the environment, local workers, or anything else. The bankers and sources of finance in high-income countries will testify that when you loan lots of money to a foreign government which can't repay, that government doesn't feel appreciative! Instead, that government is likely to regard you as an enemy. And sovereign governments can make life hard on foreign investors within their borders, if they wish to do so. 

The Belt and Road Initiative is a spectacular success as a brand name. But on the ground, matters are less clear. For example, Hillman carries out an exercise of looking at six geographic "corridors" that have been identified with the Belt and Road Initiative, and then asks whether most of the BRI projects are actually happening in those corridors. He writes: "For five of the six corridors, there appears to be no significant relationship between corridor participation and project activity ..." The exception is the China-Pakistan corridor, which is also the only corridor which connects China with a single country.

Again, the Belt and Road Initiative will unfold over time, and it's far too early for lasting judgments.  But in these projects, China's conduct as a business and foreign policy partner is being judged by other nations across the region--and often found wanting.