While some China observers are already declaring the Silk Road initiative of state and party leader Xi Jinping to be dead, the G-7 states have just started a new attempt to compete with the Chinese infrastructure initiative at their meeting at Schloss Elmau.

Presenting the plan, Joe Biden said he had no doubt that the democracies “will win the competition”.

According to the will of the American President, 600 billion dollars are to be raised for projects in developing and emerging countries over the next five years.

America wants to contribute a third of this.

Friederike Böge

Political correspondent for China, North Korea and Mongolia.

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That sounds like a lot, but there are question marks.

Part of the funds will come from private investors who have yet to be found.

The European Union apparently wants to bring in the money it promised last year under the name of the Global Gateway Initiative.

Biden had already made a similar move at the previous G-7 summit in Cornwall, but it hasn't gotten very far so far.

But China's Belt and Road Initiative (BRI), as it is known internationally, is not nearly as powerful as it is sometimes portrayed.

Since 2016, the volume of Chinese development loans has fallen rapidly.

There are different assessments of the extent of the decline because China does not publish any reliable figures and keeps the contents of the contracts under wraps.

A study by Boston University concluded last year that the country's two most important development banks provided around 94 percent less money for loans in 2019 than in 2016. Critics of the study, however, pointed out that it ignored other banks that recently played a more important role.

Borders closed for two years

Johns Hopkins University estimates that Chinese loans to African countries fell by 74 percent over the same period.

There is agreement on the reasons for the downtrend.

After the Belt and Road Initiative was declared Xi Jinping's prestige project in 2013, banks and state-owned companies were under political pressure to initiate as many large projects as possible as quickly as possible.

The economics hardly played a role.

This earned the initiative an international reputation as a "debt trap" and led to China having to write off or reschedule many loans.

It wasn't well received in their own country either.

Development banks' risk appetite declined after China's leaders warned them to better manage risk.

The corona pandemic has accelerated the downward trend.

“Many BRI projects started before the pandemic appear to have been abandoned,” says a recent study by French investment bank Natixis.

Negotiation and planning of new projects has largely come to a standstill because China has kept its borders closed for more than two years, preventing decision-makers, engineers and workers from traveling to the countries concerned.

The economic consequences of the war and the pandemic have pushed partner countries such as Sri Lanka, Pakistan and Zambia even deeper into the debt crisis.

In China itself, the strict zero-Covid strategy is stalling the economy.

Banks are under pressure to lend at home rather than abroad.

Today, security policy goals are proclaimed

The new direction became apparent at the end of last year at the China-Africa summit.

In his speech, head of state Xi Jinping completely dispensed with the word “infrastructure”, which had been the focus of the previous summit in 2018.

Instead of the $20 billion Xi pledged for such projects three years earlier, there was no such item this time.

Instead, he pledged $10 billion in economic and trade development.

“Beijing is visibly moving away from its infrastructure-centric and credit-based approach,” wrote the American Brookings Institute.

Of course, this is not the end of the Belt and Road Initiative.

This is unlikely because the BRI is enshrined in the Chinese constitution and China has signed memoranda of understanding with 146 countries.

Rather, the BRI has developed into an organizational structure through which China regulates its foreign relations and which is filled with new content as required.

Beijing's vaccination diplomacy has been sold as a health Silk Road.

The export of telecom infrastructure such as 4G networks and submarine cables goes under the heading Digital Silk Road.

China's activities in the Arctic were marketed as the Polar Silk Road.

Training programs for students and party cadres designed to bolster China's soft power are also part of the BRI.

While China has denied in the past that this is a geostrategic initiative, Beijing is now increasingly aggressively linking its Belt and Road activities to security policy goals.

China recently promised new BRI projects to the Solomon Islands while negotiating a security pact with the island nation that would allow soldiers and warships to be deployed and ports to be used.

Beijing is increasingly naming the BRI in the same breath as Xi Jinping's latest catchphrase, the Global Security Initiative (GSI).

The concept is just as fuzzy and vague as the Silk Road Initiative was when Xi Jinping presented it in Kazakhstan in 2013.

However, the claim is the same: a new principle of order for the world.