China experiences an energetic crisis and it has a devastating effect on the country’s economy because of import dependence of China from the energy resources. This becomes the reason for the rapid spread of the falling production volumes and weakening economic relations with other countries. According to the National Statistics Bureau, in July –September, retail sales had decreased by 20.5% compared to the same period in 2020, industrial production by 13.5%, and investment in fixed assets by about 25%. However, it is expected that China will recover its economy faster than other states because it has financial reserves and high human quality. However, China’s export sector will inevitably weaken in the coming months due to the global recession; the internal domestic consumption is expected to help the country’s economic restoration in 2022. Although the recovery in employment rates has been gradual over the past few weeks, major problems, such as the inability of rural workers to return to work in urban areas and the slow recovery in domestic consumption, persist and Forecasts about China’s economy are not optimistic.
Belt Road Initiative under This Circumstance
The crisis-imposed economic damage also raises questions about the further progress of China’s Belt and Road Initiative (BRI). This initiative was first announced in 2013 in Nur-Sultan (Kazakhstan) by the Leader of the People’s Republic of China Xi Jinping. The initiative covers highways, railways, pipelines, ports and other infrastructure projects that will connect China and other Eurasian countries. Its main goal here is to strengthen economic connections between Central Asia, South Asia, Southeast Asia, the Middle East, East Africa and finally Europe, connecting Eurasia overland as well as via sea routes. The project in total covers 71 countries, accounting for 30% of world GDP and 62% of the world’s population. China’s projects are mainly related to the development of transport, energy, mining, IT and communications infrastructure; the initiative also covers industrial parks, Special Economic Zones (SEZs), tourism and urban development. Overall, it consists of two parts: the Silk Road Economic Belt and the Maritime Silk Road. The Silk Road Economic Belt comprises 6 corridors. The Chinese government plans to turn the country into a Eurasian economic hub, diversify energy routes and export goods by gaining access to new markets. In particular, the implementation of the Silk Road Economic Belt is of strategic importance for China, as it is heavily dependent on oil imports from the Middle East and Africa, and transit routes pass through the Indian Ocean, the Straits of Malacca and the South China Sea. The Silk Road Economic Belt has the potential to boost energy corridors through Central Asia, the China-Pakistan Economic Corridor and the China-Myanmar Corridor to ensure energy security and enable export of the Chinese goods to new markets. Projects such as the port of Gwadar in Pakistan, the Khorgos dry port in Kazakhstan, the Addis Ababa-Djibouti railway in Africa and the Mombasa-Nairobi railway, as well as the China-Myanmar high-speed railway are strategically important for the BRI.
Moreover, according to the Chinese government, BRI will at the same time contribute to the economic development of the participating countries by accelerating regional integration, creating opportunities for both China and the participating countries. Therefore, Beijing will be enabled to accelerate its economic development by acquiring new markets and diversifying into energy routes and to contribute to the economic development of participating countries through new investments and loans.
Nevertheless, Chinese Foreign Minister Wang Yi said that the global crisis would not have any negative impact on BRI; problems with project development were already emerging. For example, Bangladesh’s transport minister warned that a $1 billion bridge project was in jeopardy and announced the postponement of the Payra Coal power plant construction. In addition, the suspension of a railway project in Nigeria, and the recent announcement by Pakistan’s Minister of Planning and Development that the $62 billion China-Pakistan Economic Corridor is facing delays, are examples of these problems. The development of projects also depends on both Chinese workers and materials which come from China. The closure of factories, ports, cancellations of flights and suspensions in the global supply chain are hampering the delivery of materials that are important to the BRI’s projects. Another factor that has delayed or suspended projects is the fact that Belt and Road Initiative projects are mostly run by Chinese workers, and China has been unable to send them to other countries due to the crisis (more than 50 countries have banned Chinese nationals from entering the country). In addition, projects are often financed by loans from Chinese banks, but the current economic situation raises questions about whether banks will continue to lend in the future.
Finally, although the energetic crisis will have a negative influence on the Chinese economy, the Chinese government will continue to support and finance BRI projects. In addition to economic support, China is taking pros of the crisis, seizing an opportunity to different states and increasing the attractiveness of the BRI by reviving the Health Silk Road project, which is part of the BRI. Even in the post-crisis, China will continue to support the BRI project, which is a mediator of global claims, applying both its economic strength and various soft power tools.