Inadequate U.S. Response to Beijing’s Belt and Road Risks Ceding Economic and Political Power to China, Warns Task Force

China’s massive Belt and Road Initiative (BRI), which finances and builds infrastructure around the world, “poses a significant challenge to U.S. economic, political, climate change, security, and global health interests,” finds a new Independent Task Force report sponsored by the Council on Foreign Relations (CFR).

The Task Force is co-chaired by former Treasury Secretary Jacob J. Lew and former Chief of Naval Operations Admiral Gary Roughead, Ret., and comprises more than twenty distinguished experts. The report, China’s Belt and Road: Implications for the United States, is authored by Senior Fellow Jennifer Hillman and Research Fellow David Sacks.

Launched in 2013, BRI is “Chinese President Xi Jinping’s signature foreign policy undertaking and the world’s largest infrastructure program,” and has now “become a globe-spanning enterprise encompassing 139 countries,” explains the report. Beijing has poured billions of dollars into building roads, power plants, railways, ports, and telecommunications infrastructure around the globe.

“U.S. inaction as much as Chinese assertiveness is responsible for the economic and strategic predicament in which the United States finds itself. U.S. withdrawal [from the competition] helped create the vacuum that China filled with BRI,” says the Task Force. “These collective shortcomings allowed China to tap into a legitimate need around the world for new infrastructure and to fill the gap in infrastructure financing and construction in a way that benefits it.”

“If BRI meets little competition or resistance, Beijing could become the hub of global trade, set important technical standards that would disadvantage non-Chinese companies, lock countries in to carbon-intensive power generation, have greater influence over countries’ political decisions, and acquire more power projection capabilities for its military,” the report warns.

“The United States has a clear interest in adopting a strategy that both pressures China to alter its BRI practices and provides an effective alternative to BRI—one that promotes sustainable infrastructure, upholds high environmental and anticorruption standards, ensures U.S. companies can operate on a level playing field, and assists countries in preserving their political independence,” counsels the Task Force.

“The COVID-19 pandemic has made a U.S. response to BRI all the more needed and urgent,” notes the report. The Task Force recommends a four-pronged strategy:

To mitigate the economic risks of BRI, the Task Force recommends

• “leading a global effort to address emerging BRI-induced debt crises and to promote adherence to high-standards lending practices;”

• “enhancing U.S. commercial diplomacy to promote U.S. high-quality, high-standards alternatives to BRI and to raise public awareness in host countries of the environmental and economic costs of certain BRI projects;” and

• “offering technical support to BRI countries to help them vet prospective projects for economic and environmental sustainability.”

To improve U.S. competitiveness, the Task Force recommends

• “devoting an additional $100 billion toward federal research and development funding, with further investments in universities and research institutions to fund cutting-edge research, and enhanced support for private-sector investment in next-generation technologies;” 

• “improving coordination and providing greater support for participation in international standards-setting bodies;” and 

• “reforming the Development Finance Corporation and the Export-Import Bank of the United States by providing them with greater flexibility to compete with BRI’s offerings and to partner with other development finance institutions from around the world.”

To strengthen the multilateral response to BRI, the Task Force recommends

• “working with allies and partners to reenergize the World Bank so that it can offer a better alternative to BRI;” 

• “negotiating sectoral trade agreements with important regional partners, starting with digital trade agreements, and working to improve and then join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership;” and 

• “requiring pre-project environmental assessments, denying financing or insurance to projects likely to have significant adverse environmental effects, and adopting binding standards for what constitutes a green BRI investment.”

To protect U.S. security interests in BRI countries, the Task Force recommends

• “creating mitigation plans for possible Chinese disruption of critical infrastructure in BRI countries;”  
  “investing in undersea cables and undersea cable security;” and  
  “training cyber diplomats who can work with host governments to reduce cyber vulnerabilities.”

“The United States cannot and should not respond to BRI symmetrically, attempting to match China dollar for dollar or project for project. Instead, the United States should focus on those areas where it can offer, either on its own or in concert with like-minded nations, a compelling alternative to BRI,” concludes the report.

To read the report, visit www.cfr.org/BeltAndRoad. For more information, please contact the Global Communications and Media Relations team at 212.434.9888 or [email protected].