Between 20 and 23 October, the Chinese Communist Party’s Central Committee will hold its Annual Congress to discuss the upcoming 15th Five-Year Plan (2026-2030). A major tenet of China’s geoeconomic ambitions, the Belt and Road Initiative, launched in 2013, now spans over 3,000 projects worth around $ 1 trillion and involves more than 150 countries. Since its launch, BRI projects have faced a host of challenges, including financial non-viability, environmental concerns, public protests, issues with operationality, and corruption. In 2019, China shifted to BRI 2.0, with an emphasis on ‘small and beautiful’ projects, suggesting a tacit acknowledgment of these issues and an effort to address them.
As China moves toward the next Five-Year Plan, it is imperative to examine what are the structural problems that lead to the failure of BRI projects. This also begs the related question: how much do these failures affect such a vast ecosystem? Most importantly, we look at the BRI vis-à-vis India and China’s geopolitical goals.
Myths of a monolith
Imagine any state government in India, such as Punjab, faces a shortage of government funds. To make up for the shortfall of government revenue, it gets involved in a port project in the neighbourhood. Something similar plays out in China’s Belt and Road Initiative.
Unlike popular perception, the BRI is not a centrally coordinated, intricately planned venture, and every project is not mapped out by the central political leadership in Beijing to maximise geopolitical gains. Some projects, the ones with major strategic value, are indeed initiated by the central leadership. Most projects, though, follow a very bottom-up approach. Chinese companies often directly negotiate deals with the host countries or win tenders for projects abroad.
The approval process for such projects is equally decentralised. To begin with, there is no single nodal agency or department in charge of the BRI. There is a minimum of seven government bodies involved in various capacities at the central level. In fact, not all projects come under the purview of central agencies. Projects below a certain minimum value or projects spearheaded by smaller provincial State Operated Enterprises(SOE) are independently reviewed by local level bodies. These include provincial-level State-owned Assets Supervision and Administration Commissions(SASAC) and National Development and Reform Commissions (NDRC).
Apart from the largest State-Owned Enterprises, the rest of the projects come under the purview of provincial-level SASACs and under the jurisdiction of provincial governments. The 2015 BRI Vision document had detailed the roles select provinces could play in furthering China’s economic connectivity and growth. The Guangxi province, for instance, has pioneered initiatives like the China-Indonesia Economic Trade Cooperation Zone, or the Beihai Singapore Industrial Park.
So basically, a mega initiative roughly the size of Saudi Arabia functions in a hyper-decentralised structure. This naturally creates quality control issues. At the same time, however, this also means that not all BRI projects are relevant to China’s geopolitical ambitions per se.
What about China’s long game?
In 2017, Sri Lanka handed over the Hambantota Port to China, owing to the inability of the country to generate revenue from the port and repay Chinese construction loans. This is a classic example of financial non-viability, which several BRI projects suffer from. Yet, that did not necessarily discourage Sri Lanka from the BRI, as evidenced by the announcement of the $ 3.7 billion Sinopec refinery.
So even a colossal failure did not result in an outright ‘No’ to BRI from Colombo. In fact, across India’s sphere of strategic interest, countries have opted to renegotiate the terms of engagement with BRI without rejecting it. Thus, the BRI cannot be assessed solely based on the successes or failures of its individual projects.
The fact is that even if a BRI project does not see the level of commercial success it was envisioned to achieve, the very act of a host country signing a BRI contract is a win for China. Every BRI contract is a de facto validation of China’s revisionist world order. Case in point, BRI contracts are relational in nature as opposed to the treaty-based institutional approach that lenders from the West generally follow.
What it means is that there are no clearly defined rules to the arrangement, and it depends more on mutual understanding between the parties. Since 2018, China has also been trying to create its own dispute mechanism apparatus for the BRI. This involves the specially created China International Commercial Court as well as arbitration courts in Guangzhou, Shanghai, Xiamen, Hainan International Arbitration Court, and Hong Kong as part of the “one-stop” international commercial dispute resolution mechanism.
All this enables China to create a credit and investment ecosystem very distinct and separate from the prevalent one dominated by Western institutions, like the International Monetary Fund (IMF) and World Bank.
In the same vein, China has been able to entrench itself among the host countries’ political elite. Say, for a politician, the easiest way to gain visibility and political capital is by creating flashy infrastructure. The BRI’s mandatory confidentiality clauses, no-strings-attached approach, allow political elites to do just that with easy Chinese money and minimum transparency.
While these projects might not be viable in the long run, they help the political calculus and visibility of leaders. Despite being purportedly close to New Delhi, Bangladesh received $ 26 billion in BRI investments between 2016-2022. Several of these projects were affected by allegations of corruption and financial non-viability, yet were enthusiastically co-opted by the Bangladeshi ruling elite.
How should India look at it?
Even as China and India pursue a rapprochement of ties, a China-led world order is not in India’s best interests. The biggest challenge to countering BRI’s influence in India’s strategic sphere is New Delhi’s inability to catch up with Beijing’s financial might. Moreover, BRI has become highly established in the domestic economic-political matrix of such countries. The fact that even Malaysia’s former Prime Minister Mahathir Mohamad—who came to power on a plank of opposition to alleged corruption in BRI projects—opted for renegotiations instead of disengagement, underscores the non-expendability of BRI in such countries.
It is interesting to see how India innovates to put up a viable alternative to China. One option is to focus on areas like health and education. This is not cash-intensive like infrastructure projects, but at the same time has the potential to create long-term goodwill and help dispel negative perceptions about India in the neighbourhood. Another option is to extend Lines of Credit, or partner with programmes like the EU’s Golden Gateway.
India’s best bet is to leverage countries’ desire to diversify their investment partners.
Siddhartha Gupta is pursuing Chinese studies at Ashoka University. Views are personal.
(Edited by Ratan Priya)