Executive Summary

This report aims to provide a nuanced discussion of China’s Belt and Road Initiative (BRI) and provide policy prescriptions for a U.S. response based on extensive desk and field research in East Africa (Ethiopia and Djibouti) and Southeast Asia (Malaysia and Singapore). The scale of the BRI, in terms of both monetary value and the number of participating countries, along with the ambiguity surrounding it and its impacts, makes the BRI difficult to assess and complicates any potential response.

We found that the BRI manifests in varying ways in different contexts and that some BRI projects are meeting real needs in participating countries. However, BRI projects we visited were often poorly implemented, negating their potential economic benefits and heightening concerns over the negative impacts of the BRI. Specific findings in our areas of interest include:

Economic and financial The BRI is a complex program that serves to fulfill Chinese domestic economic policy goals and increase Chinese geopolitical influence while being couched in the language of development assistance. We found that debt distress remains a serious concern for many participating countries, but see limited risk of future collateral seizures of infrastructure projects given China’s desire to maintain access to these markets and its need to manage its own debt through renegotiations.

Political and social BRI does not seem to have significantly affected local perceptions of China. A common refrain in interviews with policymakers was a preference for maintaining flexibility and strong distaste for pressures to “choose” between the U.S. and China.

Regulatory and governance BRI projects generally follow host country environmental, labor, and quality standards but these standards are often low or poorly enforced. Journalists and local media coverage could help shed light on low in-country standards, but self-censorship and weak protections for free speech hinder media oversight.

In order to address the economic, geopolitical and developmental challenges posed by the BRI, the U.S. should aim to increase competition on infrastructure projects, improve project quality by expanding the options available to host countries, build local capacity to manage projects, and assist with raising existing regulatory standards. More proactive and nuanced diplomatic engagement in key regions is necessary, both to improve regulatory and governance standards and to demonstrate U.S. commitment. These aims can be accomplished by expanding existing U.S. programs and agencies, working toward the success of new programs and agencies such as Prosper Africa and the USIDFC, and leveraging the United States’ unique position in several international organizations.