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1 1 (September 27, 2023)

handle is hein.crs/govemzi0001 and id is 1 raw text is: Congr ssiona IRFesear h Servis infurnin muh ml oislativ - d bat sin co 1914 Updated September 27, 2023 China's One Belt, One Road Initiative: Economic Issues 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, China's leaders changed the English name to the Belt and Road Initiative (BRI), possibly to deflect from the initiative's focus on developing China-centered and controlled global ties in a hub and spoke format. The Communist Party of China (CPC) incorporated the initiative into the Party's Charter in 2017 and reaffirmed its significance in the November 2022 Work Report of the CPC's 20th Party Congress and in a January 2021 State Council White Paper. Some in Congress assess that One Belt, One Road projects advance China's geopolitical and economic goals while undercutting U.S. influence and challenging U.S. interests. Scope and Objectves 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, and newly revitalized Health Silk Road. 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, and media. 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 PRC 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. Chna'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 2021 totaled an estimated $498 billion, rivaling $601 billion in World Bank lending over the same period, according to Boston University's Global Development Policy Center. China's global outward foreign direct investment (FDI) stock stood at $2.9 trillion (7.4% of world total) in 2022, up from $34.7 billion (0.5% of world total) in 2001, while the United States accounted for $8.0 trillion, or 20.2% of global outward FDI stock in 2022 (down from 32% in 2001), according to official country data compiled by the United Nations. China's state banks (e.g., China Export-Import Bank and China Development Bank), state firms, and government funds (e.g., the Silk Road Fund), undertake a large share of China's overseas lending and investment. China's payments may bypass the host country. The PRC government often pays its firms in China for projects they implement, while host governments pay the PRC government for the projects. These projects are neither assistance-China's loans are typically not 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 PRC 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 Value of newly signed contracts, USD billions $300 $200 $100 *2023, through July. Source: CRS with data from China's Ministry of Commerce. While China's outward FDI flows peaked in 2016, its 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. China's overseas lending slowed during the pandemic as China had to restructure or extend loans for some countries, such as Ecuador, Sri Lanka, and Zambia. China's commitment to fund its firms' global expansion, however, has sustained cross-border investment in agriculture, energy, minerals, finance, infrastructure, technology, and shipping.

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