Xi Jinping's Belt and Road Initiative (BRI), also known as the New Silk Road, is one of the most ambitious infrastructure and foreign policy projects in the history of mankind. Announced in 2013 by General Secretary Xi Jinping, the BRI is a set of development and investment initiatives that stretch from East Asia to Europe to the Americas, remarkably growing China's economic and political power. Since the initiative was launched, it has proven to be one of the PRC's most successful foreign policy tools. The COVID-19 pandemic, however, may change that, and for the worst.
The combination of the virus, mandatory restrictions, and the collapse of international trade will most likely cause a severe economic crisis along the New Silk Road. Prior to the pandemic, severe BRI recipient countries reported high external debt and large budget deficits. Making matter worse, a plurality of the BRI countries are either hard-hit by the virus, or are threatening to become hotspots once travel restrictions are removed. These realities will force Beijing to confront simultaneous debt crises in partner countries where it has heavily invested. Some of the most vulnerable include Angola, Belarus, Malaysia, Malaysia, the Republic of Congo, Pakistan, Vietnam, and Zambia.
Although the People's Republic has successfully renegotiated debts with BRI countries previously, it has never dealt with simultaneous debt crises among this many partner states with economic uncertainty at home. Even more disconcerting for the Authoritarian state, because of its role as the main financier of the BRI, it will be the most exposed creditor in the wake of the pandemic.
The worst case scenario appears to be that the Belt and Road Initiative hits a funding shortfall. The BRI, up to this point, has been mainly powered by the People's Republic of China. The CCP faces a daunting mission in revitalizing the Chinese economy, which is in its first slump since the 1990s. Beijing has been swamped with bad news at home since the start of the pandemic. In 2019, the PRC's official numbers put urban unemployment at 6.2 percent, although that number is suspected to be a fabrication. An estimated nine million more jobs have been lost as a result of the virus and ensuing central government lockdown. These domestic issues will undoubtedly have an impact on the BRI.
Ensuring domestic stability and continued economic growth at home will require a great-deal of China's assets and focus at the expense of the BRI. The COVID-19 pandemic has exposed the need for the Chinese Communist Party to put a greater focus on domestic development and policy while at the same time presenting itself as a superpower abroad. Thus, the BRI may be withheld funding from its largest supporter.
The views expressed are those of the author and do not reflect the official policy or position of the United States Army, Department of Defense, or the United States Government.
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