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1 1 (January 22, 2021)

handle is hein.crs/govebls0001 and id is 1 raw text is: Congressional Research Service Inforrming the legislative debate since 1914 January 22, 2021 China's One Belt, One Road Initiative: Economic Issues President Xi Jinping of the People's Republic of China (PRC or China) in 2013 launched an ambitious and multifaceted foreign economic policy initiative-One Belt, One Road to expand China's global economic reach and influence. In 2015, Beijing changed the English name to the Belt and Road Initiative (BRI), possibly to deflect from its focus on developing China-centered and controlled global ties in a hub and spoke format. In October 2020, the Communist Party of China's Central Committee reaffirmed the effort's central role in national economic development and securing China's supply chains. A January 2021 White Paper, International Development Cooperation in the New Era, issued by China's cabinet, highlights the initiative's role as a platform for China's global commercial activity. Scope and Objectives One Belt, One Road aims to develop China-centered and - controlled global infrastructure, transportation, trade, and production networks. While initially focused on Asia, Europe, and Africa, the scope has become global and encompasses over 100 countries, including the United States. It includes a land-based Silk Road Economic Belt, a 21st Century Maritime Silk Road, and a Digital Silk Road that seeks to promote overseas China's information and communications technology (ICT) supply chain, including hardware, and optical cable and satellite networks. The initiative also emphasizes economic policy coordination, trade and investment facilitation, dispute settlement, tourism, student and personnel exchanges, and cooperation in research and development, standards, media, and health. One Belt, One Road focuses on infrastructure, and related supply chain, transportation, technology and financial integration that expands the use of China's credit information system and currency. Projects in energy (supply, generation, and transmission), ICT, manufacturing (industrial parks and trade zones), and transportation (rail, roads, ports, and airports) look to vertically integrate China's production supply chains, technology and service infrastructure, and transportation networks. The initiative seeks to expand China's state firms' presence overseas, create new markets for China's goods and services, and secure access to foreign sources of agriculture, energy, and strategic commodities required for China's economic development and policies. Projects also aim to develop China's interior regions, employ Chinese workers overseas, and offload excess industrial capacity. China is focusing on global collaboration in health, research, and standards setting in response to the COVID-19 pandemic, a focus on basic research in the 14th Five-Year Plan (2021-2025), and implementation of the China Standards 2035 strategy. China's Investment and Financing China has emerged as a top global investor and financier as its companies have moved offshore to access raw materials, commodities, and energy; acquire foreign capabilities; and build infrastructure. China's overseas development finance between 2008 and 2019 is estimated to have totaled $462 billion, rivaling $469 billion in World Bank lending over the same period, according to Boston University's Global Development Policy Center. China's global outward FDI stock is estimated to have risen from $34.7 billion (0.5% of world total) in 2001 to $2.1 trillion (6% of world total) in 2019. The United States accounted for $7.7 trillion, or 22%, of global outward FDI stock (down from 32% in 2001). China's state banks-including China Export-Import Bank, China Development Bank-state firms, and government guidance funds (e.g., the Silk Road Fund), undertake a large share of China's overseas lending and investment. China's payments appear to bypass the host country. The Chinese government typically pays its firms onshore in China for the projects they implement, while host governments pay the Chinese government for the project. These projects are neither assistance-China's loans are typically not offered interest-free and tend to be issued at, or near, market terms-nor truly commercial, because repayments are often backed by collateral commitments (e.g., lease rights, minerals, or commodities) made to the PRC government, which in turn absorbs much of the commercial risk for Chinese firms. Recipients of collateral commitments may include state firms designated by the PRC government that were not party to the original transaction. Figure I. China's Overseas Signed Contracts by Value Source: Rhodium Group with data from China's Ministry of Commerce through October 2020. China's outward FDI levels peaked in 2016, but its government statistics show that cross-border contracts have been more stable (Figure 1). China's use of onshore financing and special purpose investment vehicles complicates the ability to track activity. Some analysts anticipate headwinds for China in 2021 due to rising debt levels in many countries in response to the COVID-19 pandemic and an inability to commit to new infrastructure. China's interest in offshoring excess capacity and expanding overseas, and its ability to fund its firms, however, may continue to drive certain projects. Drts.congress.ov 0

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