One decade after its announcement, the cracks have been exposed in China’s so-called “New Silk Road.” Announced by President Xi Jinping in 2013, the Chinese attempt at expanding political and economic influence abroad to developing economies consists of the “Silk Road Economic Belt” and the “Maritime Silk Road” plans, otherwise known as the “Belt and Road Initiative” or BRI. Writing on the BRI’s goals, the Council on Foreign Relations describes that, “Xi’s vision included creating a vast network of railways, energy pipelines, and streamlined border crossings” to developing African and Asian countries while “invest(ing) in port development along the Indian Ocean, from Southeast Asia all the way to East Africa and parts of Europe.” Behind these assertive measures at foreign investment seemingly lies China’s aspirations in not only developing trade relations and export markets, but in expanding its geopolitical power. An independent task force with the Council on Foreign relations reports, “China is advancing this initiative (the BRI) in worrying ways that leave countries more susceptible to Chinese political pressure while giving China a greater ability to project its power more widely.”
In spite of the relatively obvious self-interest behind Chinese attempts at foreign investment, however, up until the pandemic the “New Silk Road” would have most definitely been considered a success. By 2019, 147 countries either signed on to BRI projects or shown an interest in them, with China spending upwards of $1 trillion on the initiative already. In the context of Africa, L. Venkateswaran writes with the Observer Research Foundation that, “China has established a significant economic presence in most African countries,” with its “lucrative economic investment package” and “big-ticket development projects” providing “an ostensibly massive opportunity to African countries.” From financing Eritrean gold mine operations to railway projects in Benin, there’s several reasons why Chinese investment has proven more favored by the African continent than that of the West.
On the one hand, Venkateswaran finds that, “financing from western countries or institutions is usually accompanied by strict conditionalities” guided by the “value-based” approaches of the West’s “transparent and accountable democracies.” “Comparatively,” Venkateswaran continues, “China’s financing strategy - through a combination of grants, aid, and loans (free or at low interest rates) with a generous schedule of return… is an attractive option for African countries.” Of course, the lack of accountability that the Chinese Communist Party faces in channeling resources, at least compared to Western democracies, has provided it with the political firepower necessary to discretionarily fund its ventures. Meanwhile for the West, what at one point seemed to be the comparative advantage of possessing inclusive democratic institutions, which maintain the incentives for wealth creation through their accountability to public opinion, has seemingly been upended by a Chinese regime that’s been able to maintain both economic power and authoritarian rule. It’s not that China has necessarily disproven the general trend that countries with democratic institutions and market economies tend to possess greater wealth, but rather that special economic zones with strong property rights and minimal government intervention have worked alongside the CCP’s discretionary regime to extend Chinese influence abroad. This was the case, at least, before the pandemic.
With the global economic shutdown that governments enforced in response to COVID-19, developing African countries soon found themselves without the necessary means to repay Chinese loans, a problem compounded by rising global interest rates as soon as the global economy began to recover. This, and its implications for the African continent and China’s presence there, will be covered more in depth in the second part.