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Belt and Road Reboot

Beijing's Bid to De-Risk Its

Global Infrastructure Initiative

Full Report

November 2023

Bradley C. Parks, Ammar A. Malik,

Brooke Escobar, Sheng Zhang,

Rory Fedorochko, Kyra Solomon,

Fei Wang, Lydia Vlasto, Katherine

Walsh, and Seth Goodman

Acknowledgments

WethankSamuelBrazys,HarshDesai,CharlotteGardes-Landolﬁni,Sebastian

Horn,DavidLandry,MariaRepnikova,MarinaRudyak,BradSetser,L.Teal

Emory,andHaonanZhouforcommentsonanearlierversionofthisreport;John

Custer,SarinaPatterson,SariahHarmer,andAlexWooleyfromAidDataforthe

editing,formatting,andgraphicdesignoftheﬁnalreport;DavideMonteleone

forgenerouslygrantinguspermissiontousehisphotographforthis

publication’scover;SashaTrubetskoyforcartographicsupport;andNicholas

Costa,TaylorLiegel,MiloYen-Goossens,RushikaDevineni,ShiyingCai,andEli

Svobodafordatamanagementsoftwaresupport.Wealsooweadebtof

gratitudetothelargeteamofresearchassistants(RAs)whohelpedconstructthe

datasetthatmadethisstudypossible—includingAbenaKonadu,AbigailTaylor,

AldrinYashko,AlecVeit,AlejandroSchnappMezerhane,AlexPark,AllySwindell,

AlysonReynolds,AndreaPhelps,AndyShufer,AnnaGarrett,AnnabelRichter,

AnnePaxton,AnnikaSuri,AriannaLagamma,AudreySun,BaileyGarber,Ben

Greenberg,BeyoncéLightfoot,BreeJiang,CaitlinConnor,CaitlinNoe,Camilla

Yeleussizova,CarinaRosenberg,CarolinHelmholz,CarolineElszy,Changlin

(Bob)Zhang,CheckKingTay,ChristianMoore,ClaireRudinsky,ClaireSchlick,

ClaireWyszynski,ClaraMcAllister,CollinAbsher,ConnorStanton,DavidZhu,

DorothyGao,DoryGilmer,EliseTsao,ElizabethOtt,EmmaBury,FalanKiﬂe,

GelilaYonas,George(Teddy)Chunias,GujieShen,GwynethSmith,HarinOk,

HarrisonAbramsohn,HelenTieder,HenryTieder,HoliRaparaoelina,Jack

Mackey,JacksonHumphreys,JasonBao,JenniferLuo,JiajuDu,JiayiXu,Jiexi

Lin,JoanneLee,JoeyLindsay,JosephBohley,JuhwanCho,KateHentz,Katelyn

Oxer,KathrynSpurrier,KathrynZiccarelli,KaylaAviles,KellyShinners,Kerim

Gales,Kien-TamElston,LainaLomont,LauraLam,LexiOlsen,LiangGeng,

LillianButler,MaddieSharpe,MariannaBonilla,MaryTrotto,MaxBerckmueller,

MeverynChua,MiaMaccario,MicahKatahara,MichaelOlyniec,MujiaHe,

NancyLang,NateSpiers,NicoRullo,NoahTran,OliviaSchlamp,Peter

Awabdeh,PoojaMuthuraj,PoojaTanjore,PrestinTran,RedeitHailu,Riely

Capece,RileyCompanion,RinTsujikawa,RodrigoArias,RyanMcCormich,

SabrinaLevri,SailorMiao,SamLeBlanc,SamanthaRofman,SarahKennedy,

SarangaBansal,SeanNguyen,ShannonMcGuire,SophieAdams-Smith,Sophie

Alden,Sophie(Grace)McGehee,SophieStrauss,SophieTorres,Susannah

Matthews,TaylorPerry,TomMooney,VictorGedeck,WillWu,YeXiao,YouWu,

YufeiTang,Yunlang(Bella)Li,Yuxi(Felix)Tian,YuxinQin,Zheyi(Serena)Liu,

Zhiying(Cindy)Zhou,ZipuLiu,Ziqi(Samuel)Yan,andZupengZeng.

Overthelasttenyears,alargegroupofcoauthorsandcollaborators—including

ChristianBaehr,ArielBenYishay,RichardBluhm,MengfanCheng,Samantha

Custer,CarrieDolan,AxelDreher,Thai-BinhElston,SebastianHorn,Andreas

Fuchs,AlyshaGardner,AnnaGelpern,SiddharthaGhose,RolandHodler,Brook

Lautenslager,JoyceJiahuiLin,JacobHall,AlexandraJoosse,ScottMorris,

EdwinMuchapondwa,DanielNielson,JuliusN.Odhiambo,PaulRaschky,

CarmenReinhart,DanielRunfola,AustinStrange,MichaelTierney,Christoph

Trebesch,RachelTrichler,LukasWellner,andLincolnZaleski—hashelpedreﬁne

andexpandthedatasetuponwhichthisstudyisbasedbypilotingcoding

procedures,recommendingnewsourcesandmethods,andscrutinizing

preliminaryprojectrecords.

WegratefullyacknowledgeﬁnancialsupportfromtheWilliamandFloraHewlett

Foundation,theFordFoundation,andtheSmithRichardsonFoundation.The

ﬁndings,interpretations,andconclusionsexpressedinthisstudyareentirely

thoseoftheauthors.TheydonotnecessarilyrepresenttheviewsoftheWilliam

andFloraHewlettFoundation,theFordFoundation,ortheSmithRichardson

Foundation.AidData’sresearchisguidedbytheprinciplesofindependence,

integrity,transparency,andrigor.AdiversegroupoffunderssupportsAidData’s

work,buttheydonotdetermineitsresearchﬁndingsorrecommendations.

Citation

Parks,B.C.,Malik,A.A.,Escobar,B.,Zhang,S.,Fedorochko,R.,Solomon,K.,

Wang,F.,Vlasto,L.,Walsh,K.&Goodman,S.2023.BeltandRoadReboot:

Beijing’sBidtoDe-RiskItsGlobalInfrastructureInitiative.Williamsburg,VA:

AidDataatWilliam&Mary

ExecutiveSummary

TheBeltandRoadRebootreportprovidesmyth-bustingevidenceaboutthechangingnature,scale,andscopeofChina’soverseasdevelopmentprogram.ItalsorevealsnewinsightsaboutBeijing’songoingbidtode-riskitsﬂagshipglobalinfrastructureinitiative—andoutﬂankitscompetitors.ThereportdrawsuponAidData’suniquelycomprehensiveandgranulardatasetofinternationaldevelopmentﬁnancefromChina,whichcaptures20,985projectsacross165low-andmiddle-incomecountriesﬁnancedwithgrantsandloansworth$1.34trillionovera22-yearperiod.1

IsChinastillthesinglelargestofﬁcialsourceofaidandcredittothedevelopingworld?

Fourkeytakeaways

1.Contrarytotheconventionalwisdom,Beijing’sannualinternationaldevelopmentﬁnancecommitmentshavenotplummetedtonearlyzero.2Itremainstheworld’ssinglelargestofﬁcialsourceofinternationaldevelopmentﬁnance.China’saidandcredit(ODAandOOF)commitmentstolow-andmiddle-incomecountriesarenowhoveringaround$80billionayear.3

2.WashingtonisbeginningtoclosethespendinggapwithBeijing.DueinlargeparttotheU.S.InternationalDevelopmentFinanceCorporation(DFC)’sﬁnancingofprivatesectorprojects,whichhasledtoaﬁfteen-foldexpansioninU.S.OOF,Washingtonnowprovidesapproximately$60billionofdevelopmentﬁnanceeachyeartolow-andmiddle-incomecountries.

3BaseduponOECD-DACdeﬁnitionsandmeasurementcriteria,AidDatacategorizeseachproject/activityinitsdatasetasOfﬁcialDevelopmentAssistance(ODA)orOtherOfﬁcialFlows(OOF).ODAmostlyconsistsofgrantsandhighlyconcessionalloansfordevelopmentprojectsandactivitiesthatareﬁnancedbyofﬁcialsectorinstitutions.OOFmostlyconsistsofnon-concessionalloansthatareissuedbyofﬁcialsectorinstitutions.Morethan90%ofChina’sannualinternationaldevelopmentﬁnancecommitmentsconsistofOOF.2Forexample,thelatestversionoftheChina’sOverseasDevelopmentFinance(CODF)databaseproducedbyBostonUniversity’sGlobalDevelopmentPolicyCentersuggeststhatoverseasdevelopmentﬁnancecommitmentsfromChinahaveplummetedby96%since2016,reachinganall-timelowof$3.7billionin2021.1Thelatest(3.0)versionofAidData’sGlobalChineseDevelopmentFinance(GCDF)datasetcapturesprojectsover22commitmentyears(2000-2021)andprovidesdetailsonthetimingofprojectimplementationovera24-yearperiod(2000-2023).Itcanbeaccessedviaaiddata.org/china.3.Intheshort-run,theG7isalsosteppingupitseffortstocompetewithBeijingthroughthePartnershipforGlobalInfrastructureandInvestment,theIndia-MiddleEast-EuropeEconomicCorridor,andotherinitiatives.AfterfailingtomatchChina’sannualODAandOOFcommitmentsduringtheearlyyearsoftheBeltandRoadInitiative(BRI),theG7outspentChinaby$84billionin2021.

4.However,inthelong-run,itisnotclearthattheU.S.anditsallieshavetheﬁnancialﬁrepowertocompetedollar-for-dollarwithBeijing.TheG7hasahistoryofover-promisingandunder-deliveringnetincreasesininternationaldevelopmentspending.Beijing,bycontrast,hasarealsourceofﬁnancialstrengththatallowsittoavoidmakingpromisesthatitcannotkeep:foreignexchangereservesthatarevastlylargerthantheofﬁcial,foreigncurrencyreserveholdingsofitscentralbank.4

HowhastheriskproﬁleofChina’sinternationaldevelopmentﬁnanceportfoliochanged?

Threekeytakeaways

1.Repaymentrisk:Beijingisnavigatinganunfamiliaranduncomfortablerole—astheworld’slargestofﬁcialdebtcollector.55%ofitsloanstolow-andmiddle-incomecountrieshavealreadyenteredtheirprincipalrepaymentperiodsandthisﬁgurewillincreaseto75%by2030.Totaloutstandingdebt—includingprincipalbutexcludinginterest—fromborrowersinthedevelopingworldtoChinaisatleast$1.1trillionandpotentiallyevenashighas$1.5trillion(innominalUSD).5Beijingisﬁndingitsfootingasaninternationaldebtcollectoratatimewhenmanyofitsbiggestborrowersareilliquidorinsolvent.AidDataestimatesthat80%ofChina’s

5TotaloutstandingdebtfromborrowersindevelopedanddevelopingcountriestoChinaexceeds$2.6trillion(innominalUSD).4Asof2023,theofﬁcial,foreigncurrencyreserveholdingsofChina’scentralbank(thePBOC)amountedto$3.1trillion.However,thisﬁgureexcludesforeigncurrencyreservesthatthePBOChasmovedoffofitsbalancesheetby,amongotherthings,entrustingthemtothecountry’sstate-ownedpolicybanks,state-ownedcommercialbanks,andstate-ownedfunds.BradSetseroftheCouncilonForeignRelationsarguesthatthese“hiddenreserves”maybeworthanadditional$3trillion.

overseaslendingportfoliointhedevelopingworldiscurrentlysupportingcountriesinﬁnancialdistress.OverduerepaymentstoChinaarealsosoaring—inabsolutetermsandasaproportionoftotaloverdueloanrepaymentstoofﬁcial(i.e.,bilateralandmultilateral)creditors.

2.Projectperformancerisk:ThecumulativenumberofChinesegrant-andloan-ﬁnancedinfrastructureprojectsinthedevelopingworldwithsigniﬁcantenvironmental,social,orgovernance(ESG)riskexposureskyrocketedfrom17projectsworth$420millionin2000to1,693projectsworth$470billionin2021.ThecumulativepercentageofChina’sgrant-andloan-ﬁnancedinfrastructureprojectportfoliointhedevelopingworldwithsigniﬁcantESGriskexposureincreasedfrom12%to53%overthesame22-yearperiod.Infrastructureprojectsuspensionsandcancellationshavealsomounted—fromnearlyzeroattheturnofthecenturyto94projectsworth$56billionin49countries.However,BeijingissteppingupESGriskmitigationeffortstoshielditsoverseasinfrastructureportfoliofromthetypesofproblemsthathavepreviouslyplaguedtheBRI.

3.Reputationalrisk:Beijing’spublicapprovalratinginthedevelopingworldplungedfrom56%in2019to40%in2021.Washington,ontheotherhand,hasseenitspublicapprovalratingriseandopenedupa14percentagepointadvantageoverBeijing.Acrossthedevelopingworld,Chinahasalsostruggledtomaintainarazor-thinleadovertheU.S.inmediacoveragefavorability.Yetithasprovenverycapableofwinningandretainingtheforeignpolicysupportofgoverningelites.AcrossallU.N.GeneralAssemblyvotescastbetween2000and2021,thegovernmentsoflow-andmiddle-incomecountriesalignedtheirforeignpolicypositionswithChina75%ofthetime—ascomparedto23%withtheU.S.ThosewhovotewithChinaarerichlyrewarded:onaverage,ifaforeigngovernmentchoosestoincreasethealignmentofitsU.N.GeneralAssemblyvotingwithChinaby10%,itcanexpecttoseea276%increaseinaidandcreditfromBeijing.6

6Thisﬁndingisderivedfromas

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