Introduction

Since its launch in 2013, the Belt and Road Initiative (BRI) has been central to the dramatic growth of China's global economic influence. Through the BRI, the Chinese government has steered the country's banks, state-owned enterprises (SOEs) and private companies to lend, invest and trade with some 148 countries in every region of the world. And that political direction has, in turn, enabled a dramatic over­seas expansion of critical Chinese industries. Chinese firms operate harbours, power stations, solar farms and data centres in every corner of the globe. Not only has the initiative reshaped China's relations with other developing and emerging economies, it has also forced the United States and its allies to reassess their own economic and political engagement with these countries.

Chinese President Xi Jinping announced the two components of what would become the BRI in two speeches in 2013. The first speech came in September during a visit to Kazakhstan. Xi announced plans for a 'Silk Road Economic Belt' to deepen China's connections with Eurasia, boosting trade with Asia and between China and Europe. A month later, in Indonesia, Xi detailed his proposal for a '21st Century Maritime Silk Road' to deepen maritime trade links between China, Southeast Asia, South Asia and the markets of the West. In 2015, the Chinese government set out its proposals for six economic corridors through its neighbouring regions.

The initial ambition was straightforward: China sought closer economic ties with its neighbours and stronger trade connectivity, linking East, South and West Asia from the Pacific to Europe. The Chinese government promised cooperation with partner countries in five priority areas to achieve this: policy coordination, connectivity improvements, reduced impediments to trade, financial integration, and ex­changes and dialogues in various sectors.

However, this version of the BRI was short-lived. The initiative quickly became a catch-all for almost every Chinese project in developing (low- and middle-income) countries. Chinese companies sought to ingratiate themselves with Beijing by associating all and sundry overseas projects with the BRI; and Beijing, for its part, seized on this uncoordinated wave of Chinese economic activity overseas as proof of the initiative's success. Gradually, Beijing clamped down on the BRI's unintended consequences, but China multiplied its own objectives for the initiative at the same time.

As a result, the BRI has become the main vehicle for Beijing's industrial strategy beyond China's borders, and China regularly adds new strands to the initiative. The Digital Silk Road, announced in 2015, was the first added component. In 2017, Beijing set out plans for the 'Green Belt and Road' and the 'Health Silk Road'. And since 2019, the BRI's scope has widened further to bring the norms and standards in partner countries' key industries into closer alignment with China's own. The initiative has also served the political goal of enhancing China's soft power around the world.

Beijing's enlarged aspirations for the BRI have been borne out geographically. Its plans had centred initially on the countries along six economic corridors but, as the initiative grew beyond China's neigh­bourhood to take in Africa, Europe, Latin America and Oceania, the number of countries involved in­creased. Lower- and middle-income countries around the world have had a huge appetite for Chinese lending, investment and trade; their need for capital for physical infrastructure and of affordable digital and green technologies has seen them participate enthusiastically in the BRI.

However, the BRI has had to adapt to the idiosyncrasies of each region and country, and it has done so with varied success. Governments in countries including Bangladesh, Kazakhstan, Russia and Vietnam have been wary of China gaining too much economic influence over them. Other governments have managed their finances poorly and China has been forced to renegotiate debts. And some partner governments have been more successful than others at using the BRI to their own advantage, whether by directing Chinese capital towards their domestic priorities, instead of Beijing's, or by leveraging their relations with China to extract con­cessions from other states.

Although the BRI has outgrown its initial geographical remit and now includes 148 countries, the amount of money allocated to the initiative and the number of projects under way have fluctuated. Lending by Chinese policy banks - state-owned banks that lend according to Beijing's policy priorities at lower-than-commercial interest rates - to foreign governments peaked in 2017 and since then has slowed. The coronavirus pandemic saw China's overseas lending drop further still.

Nevertheless, the BRI has turned relations between developing countries and the world's richest economies into an arena for geopolitical competition, as Western states worry about the erosion of their influence and China's growing sway. There is a nervousness in the West too about China stealing a march on them by rolling out new technologies overseas. Suspicions about the initiative abound. The Trump administration in the US reg­ularly rehearsed unsubstantiated allegations that China deliberately sought to ensnare other countries in debt or to seize strategic assets overseas. And although these accusations have abated since president Donald Trump left office in early 2021, considerable misunderstanding about the BRI, its purpose and its evolution remains.

The purpose of this dossier is to cast a clearer light on the BRI: to explain the evolving scope of the initiative, changes in how Beijing has managed it, fluctuations in China's financing and variations in how it has been received around the world. The dossier looks at how geo-economic and geopolitical drivers have shaped the BRI and how, in turn, the initiative has affected geo-economics and geopolitics bilaterally, between China and individual BRI partner states, as well as regionally and globally.

Like any analysis of the BRI, this dossier has had to grapple with the amorphous nature of the initiative. In China's domestic economy and in its domestic economic initiatives, Beijing relies heavily on the shadow of hierarchy - the looming prospect of sanctions and inducements - to shepherd and strong-arm state and private actors in the direction it desires. The state is a constant presence even if its influence is indirect. The BRI is no different. The BRI is not merely the sum of loans extended to foreign governments by China's policy banks, the foreign investments made by state-owned companies, the projects stamped with the BRI label by press offices in Beijing, or the loans from state banks to private companies to support their investments overseas. There is no clear line of command and control or of financing from the Chinese government to each and every BRI project. Chinese companies, both SOEs and private enterprises, respond to the direction and incentives set by Beijing, even if their activities are wholly independent of the state.

This dossier therefore looks broadly at how the Chinese government's pronouncements and policies on the BRI have set the course for Chinese commercial and diplomatic activity overseas. It examines the ways in which Chinese companies and banks have responded to Beijing's BRI agenda, and the ways in which the Chinese state has both supported these businesses and institutions and reined them in over the years since the initiative's launch.

Moreover, as the ambitions for the BRI extended beyond Xi's early vision of better trade connectivity and stronger diplomatic relations with neighbouring states, so the geographical bounds of the BRI have dissolved. Countries in every region of the world have signed memoranda of understanding (MOUs) with Beijing to par­ticipate in the BRI. More still have participated in the Belt and Road Forums for International Cooperation, major gatherings of governments in Beijing in 2017 and 2019, to discuss BRI plans. Therefore, the scope of the dossier is not limited to the countries along the BRI's main trade corridors or to the countries that have signed MOUs. All countries that have engaged with Beijing as part of the BRI are within the scope of this study.

The first chapter of the dossier sets out what China has sought, and continues to seek, to achieve through the BRI, how it has pursued these goals and how successful it has been. It charts how China has used the BRI to increase its economic security and to pursue ambitions in different industries over time. The second chapter examines how Beijing has managed the BRI and how its management has evolved in response to domestic and international pressures. The third chapter looks at what has driven fluctuations in the financing of the BRI. It explores how con­ditions in the wider Chinese economy have motivated and constrained the flow of funds for Chinese lending and investment overseas. The fourth chapter compares and contrasts the BRI around the world, and subsequent chap­ters look, region by region, at what Beijing has sought to achieve in different places and how the BRI has played out there. The conclusion explores the future of the initiative and how effectively the West has responded to the BRI.