Is The War In Ukraine Threatening China's Belt And Road Initiative?

The Russian war in Ukraine has been a devastating war for all, with the ramifications of the war likely to be wide-ranging.

China is one such country that could face numerous ramifications. A close political and economic partner to Russia, as well as being the largest trading partner of Ukraine, China is in a tough predicament.

Especially precarious is the future of the Belt Road Initiative (BRI) in Europe following the invasion. In this week’s article we will be discussing the history of the silk road, the history of the BRI, the opportunities and risks of the BRI, and consequences of the war in Ukraine on the BRI.

History of the Silk Road

According to National Geographic, “The Silk Road is neither an actual road nor a single route. The term instead refers to a network of routes used by traders for more than 1,500 years, from when the Han dynasty of China opened trade in 130 B.C.E. until 1453 C.E., when the Ottoman Empire closed off trade with the West.” Various goods were traded along the road.

Europe would often trade glassware, textiles, and manufactured goods in exchange for jade, precious stones, porcelain, tea, and spices from Asia. The Centre International Relations and Sustainable Development adds that the silk road became an incredible opportunity for significant cultural and societal exchanges, making it one of the most important trading networks.

History of the BRI

The BRI is the modern iteration of the silk road. First announced in 2013 during visits by President Xi Jinping to Kazakhstan and Indonesia, it is essentially an ambitious plan to develop new trade routes and infrastructure networks across the world. According to the Council on Foreign Relations, the BRI has two components: the overland Silk Road Economic Belt and the Maritime Silk Road.

“Xi’s vision included creating a vast network of railways, energy pipelines, highways, and streamlined border crossings, both westward—through the mountainous former Soviet republics—and southward, to Pakistan, India, and the rest of Southeast Asia.” However, evidently the BRI is not limited to the Asian continent. The Guardian reports seventy-one countries have signed onto the BRI.

Among the most high profile countries involved in the BRI are Italy, Greece, Malaysia, Nigeria, Kenya, among many others. Moreover, approximately USD 210 billion has been invested in BRI projects, with an estimated USD 1 trillion likely to be invested in total.  More often than not these funds go into loans to finance projects or Chinese contractors hired to build the various projects.

Opportunities and Risks of the BRI

The biggest opportunity afforded by the BRI is certainly the near limitless funds. The Diplomat adds that BRI has the potential to increase regional and inter-regional connectivity. For example, China has been working on creating a more tenable rail network connecting Asia to Europe, as a means to reduce global dependence on seaborne trade.

On the other hand, the greatest risk posed by the BRI is its possibility to act as a debt trap. Chatham House writes “‘Debt trap diplomacy’ is the accusation that China uses Belt and Road as part of a manipulative global strategy, funding major infrastructure projects in developing nations with unsustainable loans, then using the debt to gain leverage over those governments.”

The clearest example of this sort of debt trap can be seen in Sierra Leone in which China essentially seized the Hambantota Port after Sri Lanka failed to pay back the loans which funded the development of the port.

Consequences of the War in Ukraine

The Diplomat sums up the most important BRI projects in Ukraine. “For China, the vast Russian landmass was the most reliable land-route to the rich EU market. Russia, Ukraine, Poland, and Belarus had all hoped to be part of the New Eurasian Land Bridge, which is a mainly rail-based connectivity vision.”

The South China Morning Post adds that in 2020, Ukrainian company WindFarm and Chinese company PowerChina agreed to USD 1 billion contract to build a wind farm in Eastern Ukraine. At the same time, China Railway International Group and Pacific Construction Group have invested hefty sums to the construction of an underground railway line in Kyiv.

However, China also has extensive ties with Russia. That means if China has any desire to conduct business with Russia they must now navigate the myriad of sanctions and restrictions. At the same time, it could also serve as an opportunity for China to take advantage of and make Russia more reliant on China economically.

Conclusion

In conclusion, the BRI is a gargantuan initiative spanning continents and costing untold sums of money, serving as an influential arm of the Chinese government.

However, China stands to lose quite a lot owing to the war in Ukraine. At the same time, it must be very careful in managing its relations with Russia and the West.