China-proposed BRI: A game-changer for the global economy

Launched in 2013, the China-proposed Belt and Road Initiative (BRI), which started as a bold vision to revitalize ancient trade routes, has evolved into a massive framework for international cooperation, bolstering local economies, improving people's livelihoods and forging deeper cultural and diplomatic bonds across the globe.

The BRI focuses on connecting regions through infrastructure projects, including highways, railways, ports and airports. Since its inception, over 150 countries and 30 international organizations, primarily from the developing world, have signed cooperation agreements with China.

By constructing key infrastructure, such as railways, highways, ports, power grids and communication networks, the BRI has significantly improved infrastructure in developing nations, boosting trade efficiency and facilitating industrial upgrades. The initiative has also generated substantial employment opportunities and economic growth while enhancing sustainable development through technology transfer and capacity building, making a lasting contribution to inclusive global economic progress.

According to a World Bank report, the BRI has led to a 4.1 percent increase in trade among participating countries, a five percent increase in foreign investment and a 3.4 percent rise in GDP for low-income countries. Additionally, the report states that benefiting from the BRI, the GDP share of emerging and developing economies in the world grew by 3.6 percent from 2012 to 2021, with forecasts suggesting that the BRI will generate $1.6 trillion in global revenue annually by 2030, contributing 1.3 percent to global GDP.

Elevating local economies

In Peru, the construction of Chancay Port serves as a striking example of how the BRI is transforming local economies. Located about 80 kilometers north of Lima, Chancay is poised to become one of the largest ports in the region, thanks to China's investment. 

When operational, the port will accommodate the world's largest cargo ships, handle up to 1.5 million twenty-foot equivalent units (TEUs) annually and significantly reduce shipping times. The first phase of the project will reduce the sea shipping time from Peru to China to 23 days, cutting logistics costs by at least 20 percent.

The port will not only benefit Peru but also serve as a regional logistics hub for all of Latin America. Businesses from countries such as Brazil, Venezuela, Bolivia, Paraguay and Argentina will rely on the port as a key departure point for trade with Asia.

On the other side of the world, the story of the China-Pakistan Economic Corridor (CPEC) offers another compelling example of how the BRI is revitalizing local economies and improving people's livelihoods. Spanning from Gwadar Port in Pakistan's southwestern region to China's Xinjiang, CPEC involves a massive investment of over $46 billion in roads, railways, power plants, and pipelines. The corridor aims to transform Pakistan into a central hub for trade and commerce.

Pakistan has long struggled with inadequate infrastructure, unreliable electricity and poor transportation networks. The construction of modern roads and railways has, however, opened up vital trade routes, slashing travel times between cities and facilitating faster movement of goods, which is crucial not only for internal trade but also for Pakistan's access to international markets, especially in Central Asia and China.

Besides, frequent power outages in Pakistan have hindered its development, while CPEC's energy projects are providing much-needed power to industries and homes. With an improved power supply, local industries have expanded, and businesses can operate at full capacity, creating jobs and reducing poverty.

"The CPEC is an opportunity granted to Pakistan by history, and such an opportunity may come only once in several centuries," said Ahsan Iqbal Chaudhary, minister for planning development and special initiatives of Pakistan.

Optimizing global governance

The BRI's influence extends beyond infrastructure, also contributing to global governance and sustainable development. 

To expand channels and platforms for investment and financing, China has funded the establishment of the Silk Road Fund and established the Asian Infrastructure Investment Bank (AIIB), along with other participating countries. These serve as a supplement to other multilateral financing institutions and help bridge financial gaps in improving infrastructure in developing countries.

Official data shows that since its inception, AIIB has financed over 200 projects in sectors like transportation, energy, water management and urban development in more than 30 countries, with a total investment exceeding $40 billion. By providing stable, long-term funding, the AIIB has improved infrastructure, supported green energy transitions, addressed climate change in developing countries and contributed to a fairer and more equitable global economic system.

As global trade faces headwinds from unilateralism, protectionism and geopolitical tensions, experts say the China-proposed BRI helped optimize global development and global governance.

Kevin P. Gallagher, director of the Global Development Policy Center at Boston University, said that the all-round progress in BRI cooperation is recognized internationally and that it not only increased connectivity through energy and infrastructure construction and unlocked growth potentials but also expanded energy access for the poor across the world. He highlighted that the BRI brought great benefits to the Global South and the global economy and contributed to healthy economic globalization.