Domestic Consequences of the Belt and Road Initiatives

• In Event: Autocracy and Public Policy

Abstract

How do and under what conditions do the Belt and Road Initiative (BRI) benefit Chinese citizens? Since 2013, the Chinese government adopted a global engagement strategy known as the BRI, directing infrastructure funds into nearly 70 countries around the world. The large-scale expansionist strategy has ignited enthusiasm from both inside and outside China. Scholarly attention has been focused on the global impact of the BRI initiatives (e.g. its impact on the US-China rivalry, on the employments in the BRI member countries, and the transaction costs between China and BRI countries). However, relatively a few focus on the domestic consequences of the BRI. In the absence of coordinated plans or official guidelines, subnational actors (including local governments and state-owned enterprises) have competitively raced to brand themselves as the main actors of the BRI. The uncoordinated competition has affected the way local states spend their budgets, sometimes at the expense of citizens’ benefits. When, then, do the state-motived yet uncoordinated expansionist development strategies benefit and hurt local citizens? I argue that the local engagement in the BRI decreases local spending on social security and welfare unless the local BRI projects are funded and supported by the policy banks (Export and Import Banks and China Development Banks). In localities where the projects are supported by the policy banks, the engagement in the BRI initiative does not deplete the spending on social security. In localities where the BRI projects are only weakly supported by the policy banks, the BRI initiatives lower the social security spending. I use the data collected by China’s financial diplomacy project data and the media data collected by China Infobank newspaper (over 10,000 newspaper articles published between 2014 and 2019 with the title “belt and road initiative”) to examine how the policy bank support the local BRI projects moderates the subnational impact of the BRI on Chinese city-level social spending. This project explains why the subnational impact of the BRI varies across localities and how the expansionist policies may worsen the social security of citizens living in underdeveloped localities that often fail to draw attention from the policy banks.

Author

• Yujeong Yang, University of Illinois at Urbana Champaign