China will hold its third Belt and Road Forum on October 17 and 18 to celebrate the 10-year anniversary of initiative. The forum is the most important diplomatic event hosted by China this year, themed “High-quality Belt and Road Cooperation: Together for Common Development and Prosperity”. Chinese and foreign businesses are expected to negotiate and sign a series of cooperation projects. More than 4,000 delegates from over 140 countries and 30-plus international organizations have confirmed their attendance.
At the first Belt and Road Forum for International Cooperation in 2017, Chinese President Xi Jinping touted the global infrastructure-building plan as “a project of the century”. He recounted the story of the Silk Road, telling world leaders in Beijing that “our ancestors, navigating rough seas, created sea routes linking the East and West”. From a railway in Indonesia to a port in Pakistan, the Chinese leader said the Belt and Road Initiative (BRI) had brought “enhanced infrastructure connectivity” to the world. “We should promote land, maritime, air and cyberspace connectivity, concentrate our efforts on key passageways, cities and projects and connect networks of highways, railways and seaports,” he said. Six years on, analysts say the huge infrastructure deals Beijing previously championed appear to have taken a back seat as countries struggle with mounting debt and as their priorities shift. Instead, projects under what China calls the Digital Silk Road have emerged as a driving force of the initiative, now in its 10th year.
At the forum in 2017, Xi had listed the digital economy as a “frontier area” of cooperation. Analysts say China’s digital push is part of efforts to cement its status as a global technology leader while keeping the BRI appealing as it tries to expand its influence around the world. China launched the Digital Silk Road in 2015 as the technological arm of the BRI aimed at boosting digital connectivity. It broadly covers network infrastructure such as 5G, e-commerce and the digital economy, as well as urban planning. Lim Tai Wei, Associate Professor at the Singapore University of Social Sciences, said Digital Silk Road projects had grown in importance in recent years because some emerging economies had matured beyond basic infrastructure needs. “Countries are ready to kick-start their own Industrial Revolution 4.0 and are now requesting that Beijing share those technologies with them,” he said.
Last year, a report by the People’s Daily said countries along the BRI’s trade routes had “weak digital infrastructure and low access rates to the internet” and that China was helping them in those areas. Yu Hong, Senior Research Fellow at the National University of Singapore’s East Asian Institute, said developing countries increasingly saw the value digital technologies could bring to economic growth. He said that while infrastructure projects would still be the mainstay for some countries such as Cambodia or Laos – where physical infrastructure remained weak – others have sought to tap into China’s tech capabilities. Some African countries have asked Beijing to consider a shift away from building infrastructure such as roads, railways and ports. Malaysian Prime Minister Anwar Ibrahim told Xi in April that his country would work with China to expand cooperation in the digital economy. Digital projects would allow China to set its own tech standards and it would be a “win-win situation” when other countries adopted them.
Alvin Camba, Assistant Professor at the Josef Korbel School of International Studies at the University of Denver, said digital projects had gained significance as China involved its major tech firms, from Huawei to Tencent. Ventures under the initiative could help China increase its commercial gains, he said, adding that digital projects “seem to be the pillar of the Belt and Road Initiative which has the most momentum today”.
Chim Lee, China Analyst at the Economist Intelligence Unit (EIU), noted that China’s developmental finance and overseas direct investments had slowed in the past few years. He said risk tolerance had declined among many Chinese investors as the government increasingly emphasized the “rationalization” of overseas investments. “The average size of China’s overseas lending commitment has declined. Digital infrastructure projects thus become more viable compared to railways and roads given that they tend to be smaller in size,” Lee said. According to a report by the Green Finance and Development Center, a think tank at Fudan University in Shanghai, the average deal size in the first half of this year was USD392 million – 48% smaller than in 2018 when investments peaked. The average investment in the first half of this year was about 36% lower than last year. Lee said he expected the overseas footprint of China’s digital economy actors to continue expanding as the country’s income and tech capabilities advance and as its domestic market matures. According to the Cyberspace Administration of China (CAC), the country’s internet regulator, 17 countries have signed agreements specific to the Digital Silk Road.
Analysts say China’s shift away from bigger infrastructure projects is a continual effort to satisfy the needs of other countries in a bid to keep its belt and road scheme relevant. Besides the digital push, Lim from the Singapore University of Social Sciences said Beijing had also transitioned from basic infrastructure projects to helping countries with industrialization, the South China Morning Post reports.
China's State Council Information Office (SCIO) also published a white paper entitled “The Belt and Road Initiative: A Key Pillar of the Global Community of Shared Future”, which can be viewed here. More than 150 countries and 30 international organizations have so far joined the BRI. Two-way investment between China and other countries involved in the BRI totaled more than USD380 billion between 2013 and 2022, among which China’s outward direct investment (ODI) exceeded USD240 billion.
