The Prospects and Challenges of Jointly Building the Belt and Road Initiative 2.0

Release Date : 2023-11-20

As time goes by, it has been 10 years since the Belt and Road Initiative proposed by China’s president Xi Jinping in 2013. He announced the support for 8 actions to jointly build high quality Belt and Road Initiative during the opening ceremony of the third Belt and Road International Cooperation Forum on October 18. One of the actions is to start a financing window with the funds of 350 billion yuan (RMB, same as below) by the China Development Bank and the Export-Import Bank of China each, and a new fund of RMB 80 billion by the Silk Road Fund to support the Belt and Road in a market-oriented and commercial way. Then in the APEC summit held in San Francisco from 15-17 December, Xi mentioned that China is promoting green Belt and Road Initiative, targeting to help a wide range of developing countries upgrade their development capacities through the special funds in dealing with climate change of the South-South Cooperation. China will synergize development strategies in economic industries and energy and mineral to promote low-carbon sustainable development with countries along the route. They will jointly promote the constructions of green infrastructure, fulfill green production capacity and equipment manufacturing, and build a green financial and trade system. It suggests that the Belt and Road 2.0 of the next decade will lead China and the “Global South” toward a new era that is worthy expectation.

In fact, the green Belt and Road construction has been underway for many years. It will continue to deepen cooperations in areas like green infrastructure, green energy, and green transportation in the future. It will also help wide developing countries to upgrade their development capabilities through the South-South Cooperation special funds for climate change. The South-South Cooperation started in 1960s with the aim to free the developing countries from the controls of the developed countries, and to develop individual national economics and engage in specialized economic cooperation. Xin Jinping announced the establishment of South-South Cooperation Assistance Fund, offering an initial RMB 2 billion in 2015 and then adding RMB 1 billion in 2017. China’s International Development Cooperation Agency (CIDCA) established the Global Development Promotion Center and upgraded the South-South Cooperation Assistance Fund to the Global Development and South-South Cooperation Fund in June 2022. It is to support developing countries to implement global development initiatives and sustainable development agenda. 

The Institute of South-South Cooptation and Development (ISSCAD) was officially established in Peking University on April 29, 2016. It is subject to the management of the National School of Development of Peking University, currently headed by Lin Yifu, with a major aim to share administration and governance experiences with developing countries and thus helping them nurture high-level talents for government management. In addition, China also established the BRI Green Development Institute and built the BRI Environmental Big Data Platform to hep countries along the route to enhance their green development technologies and environment governance capabilities.

The BRI Green Development Coalition, initiated during the first Belt and Road Forum for International Cooperation in 2017, has attracted more than 100 agencies to join as partners. Its initiatives include biodiversities and ecosystems, green energy and energy efficiency, green finance and investment, environmental development and green cities, South-South Cooperation and sustainable development goals, green technology innovation and industry’s social responsibilities, sustainable transportation with global climate change governance and green transformation, acts and standard of environment law, and maritime community of shared future and ocean environment governance. In Aril 2020, Mongolia accepted the invitation of the Coalition to become the first model country of green development.

It's widely known that the “Net Zero Emission 2050” is a global effort of most countries and China hopes to reach the goal of carbon neutrality in 2060. Therefore, China has pushed the green development effort since the 12th Five-Year Plan (FYP) and Xi Jinping stressed that “clear waters and green mountains are as valuable as mountains of gold and silver.” The green development has been listed as one of the five guiding principles of the 13rd FYP. Then a series of concrete goals about green and low carbon in the industry development were clearly outlined in the 14th FYP. The Ministry of Industry and Information Technology has issued the 14th Five-Year Plan for Green Development of Industry, constructing an industry layout favorable for carbon reduction, and strongly curbing the blind development of high energy consuming and high emission projects. Significant progress has been achieved with the top-down and orderly efforts. Promoting the green development of the Belt and Road with concerted efforts is an essential requirement to fulfill conception of green development and implement construction of an ecological civilization. It is an important project to actively deal with climate change and safeguard the global ecological security. It’s also a crucial foundation for the high-quality development of the Belt and Road and the building of a community of shared life of human beings and the nature. There has been some achievements as China has singed more than 50 memorandums of understanding for ecology and environment protection, jointly initiated the Belt and Road green development partnership with 31 participating countries, co-built the Belt and Road energy collaboration partnership with 32 participating countries. For instance, the Turgusun hydropower station in Kazakhstan could meet the daily power needs of 5 million people and save 1.4 million tons of standard coal annually. The Chaglla hydroelectric plant in Peru has completed several clean energy projects. The Mombasa-Nairobi Standard Gauge Railway (SGR) of Kenya allows giraffes to pass through a railway bridge easily by building a large animal passageway along its line. The Punjab solar power plant of India allows grass and melons to grow under the solar panels.

As the Belt and Road 2.0 moves forward, there are lots of prospects and challenges as well. Frist, many low-income countries along the route of the Belt and Road have been in deep debts. Would they continue to accept substantial financing for green development? Then, the leaders of China and the US have shown peace and goodwill at the Biden-Xi meeting of APEC, but the Belt and Road 2.0 and the South-South Cooperation will inevitably compete with the India-Middle East- Europe Economic Corridor (IMEC) proposed by President Biden in the G20 summit in India in September. Its future development worths close attention.

(Wo-chiang Lee, Professor, Department of Banking and Finance, Tamkang University)

(Translated to English by Tracy Chou)