BRI – an engine of growth

The Belt and Road Initiative (BRI) with China plays a key role in building economic resilience and boosting socioeconomic development of underdeveloped countries as accredited by numerous developing nations across the world. Positive trends indicate that the developing world stands to greatly benefit from the BRI in 2023 and beyond.

Building economic resilience and boosting socioeconomic growth in the developing world in 2023 and beyond is the key for a peaceful, prosperous and just world order. As aptly acknowledged by Cambodian Prime Minister Samdech Techo Hun Sen, the BRI provides tangible benefits to all participating nations by injecting vital impetus into domestic economies and allowing countries such as Cambodia to realise their economic potential. Solutions to emerging economies confronting dual challenges of balancing economic growth with global geopolitical dynamics such as the Ukraine War and supply side shocks from the pandemic are desperately needed and the BRI in 2023 provides optimism in that regard.

Developing countries in South East Asia such as Malaysia, Indonesia, Thailand and Laos benefit greatly from the continuation of the BRI in 2023. According to Chinese ambassador to Phnom Penh, Wang Wentian, the Sihanoukville Special Economic Zone with Cambodia enabled enterprises to both settle in the zone and create 30,000 jobs for locals, which is vital for its economic development. Similarly, projects such as airports, expressways, manufacturing bases and electrical power plants usher in greater integration between South East Asian countries such as the China-Laos Railway that connects Kunming with the Laotian capital Vientiane. Such projects are transnational in scope and provide vital cooperation in fields such as investments in the green economy, building up the capacity of financial institutions in the developing world and strengthening people to people contacts.

Beyond South East Asia, regions such as Latin America also stand to benefit from the continuation and upgrading of the BRI in 2023. From just $12 billion in 2000 to more than $430 billion in 2021, trade between China and countries such as Argentina and Nicaragua remains driven by higher demand, particularly for a range of commodities, from iron ore to petroleum. The preceding year 2022, has also witnessed the rising influence of the BRI as a suitable investment and infrastructural framework with Nicaragua entering it officially in January 2022, followed by Argentina in February. Given that the continent has been reeling from persistent negligence of the Biden administration in 2022, which also dates back to the 2017 US withdrawal from the Trans-Pacific Partnership, governments in Latin America also view China as a pragmatic economic alternative.

Benefits from the BRI in 2023 also stem from historical foreign direct investments that have ushered in billions of dollars in investments to Chinese and Latin American companies through the China Development Bank and Export-Import Bank of China. Such unconditional assistance has helped build ports, hydroelectric dams and bridges in 11 countries ranging from El Salvador to Panama, which is vital for the smooth flow of trade, energy generation and economic resilience in the pandemic era.

The year 2023 is also marked by greater economic uncertainty. There is a need to revive and resuscitate localised economies in the developing world to ward off economic shocks such as rising sovereign debt and depleting reserves. The BRI has demonstrated a proven record of offering numerous opportunities for the developing world in that regard. This includes the ability to counter debt servicing head on as Argentina managed to do in 2022 after partaking in it. Buenos Aires benefitted from $5 billion in currency swaps with China, enabling it to make short term payments to the International Monetary Fund (IMF). Similarly, Greenfield investments and greater sovereign lending ensures greater investor control, and provides opportunities to form marketing partnerships and avoid intermediary costs. All this benefits developing states in both the shorter and longer run. According to the director general of the International Relations Institute of Cambodia, Kin Phea, every country stands to benefit from the BRI at varying levels depending on the participation of the states. Argentina’s case is a prime example.

Additionally, for countries aspiring to graduate from lower income status, the BRI serves as an important framework. For Cambodia specifically, Neak Chandarith, the director of the Cambodia 21st Century Maritime Silk Road Research Centre, affirms that Phnom Penh’s ambitions of becoming an upper middle income by 2030 and a high income country in 2050 is greatly bolstered by BRI projects, ranging from its trading potential to infrastructural networks. For countries at a similar stage of development, the BRI provides ample opportunities in this regard.

Much of the developing world that wishes to depoliticise economic matters and avoid ideological confrontations stand to benefit from the BRI in both letter and spirit. The high degree of complementarity between economic structures in both Latin America and South East Asia with China ensures a balanced and focused approach towards stimulating economic growth. Looking ahead to 2023 and beyond, the BRI remains an engine of economic growth for the developing world. There should be little doubt regarding its significance that extends from CPEC to the 215 cooperation documents that have been signed with 149 countries. It can prove to be a game changer for developing countries, particularly those which are grappling with sovereign debt and structural issues.

It is the ideal blueprint for the future.

The writer is an Assistant Research Associate at IPRI