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1 1 (March 2018)

handle is hein.amenin/aeiaasi0001 and id is 1 raw text is: Key Points * The Belt and Road Initiative (BRI) has been primarily about construction rather than investment. State-owned enterprises account for more than 95 percent of the $208 billion in construction projects since 2014. * With the BRI focused on developing countries, there is considerable commercial risk. Private Chinese firms have thus been hesitant to take on BRI projects, including investments. * Much BRI construction and investment is ultimately financed by China's foreign exchange reserves. China no longer has money to spare, and the BRI will not hit $1 trillion in value until well into the 2020s. The Belt and Road Initiative (BRI) is characterized as an explosion of Chinese investment in Eurasian and African countries promising deals worth trillions of dollars. This is largely wrong. The BRI is better understood as construction projects worth hundreds of billions of dollars taken on by state-owned enterprises (SOEs). Belief in endless Chinese money notwithstanding, SOEs cannot by themselves deliver a multi-trillion-dollar BRI. Is the private sector willing to help? Probably not. Private investment in the BRI is rising, but it is still outpaced by SOE investment. BRI construction activity by private Chinese firms is almost nonexistent. With the BRI focused on developing countries, there is considerable com- mercial risk. SOEs can ignore much of this risk because they do not go bankrupt and usually have access to cheap financing; private firms are not as fortunate. The evidence to date indicates private firms are hesitant to participate, at least using their own funds. If that continues, the BRI will not be nearly as large as some anticipate.' BRI Affordability Xi Jinping announced the BRI in September 2013 as a program to connect China with a string of countries along the ancient Tang Dynasty Silk Road through new or improved transport infrastructure. The original list of countries included 64 countries and China, mostly in Eurasia. Recently, the Chinese government published an expanded BRI list3 with 71 countries, tapping into Sub-Saharan Africa and Latin America. Every sector, not just transport, is counted in the BRI figures. Here we consider all 71 countries and BRI activity in all sectors since 2014. Through the American Enterprise Institute and Heritage Foundation Chinese Global Investment Tracker,4 we can assess the amount of Chinese investment and construction. Construction means a Chinese company is building for another party in a foreign country. In principle, its involvement ends after the construction is complete. Through investment a Chinese company takes an ownership stake in an asset and will likely have a longer-term presence. The construction data in the tracker AMERICAN ENTERPRISE INSTITUTE

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