WSJ What’s News: How China’s Trillion-Dollar Infrastructure Bet Undercuts U.S. Dominance
Release Date: February 23, 2025
Host: Luke Vargas, The Wall Street Journal
Introduction to the Great Power Rivalry
The episode delves into the intensifying competition between China and the United States, emphasizing the critical role of international alliances and infrastructure investments in this global power struggle. Ling Ling Wei, the Journal's chief China correspondent, underscores the importance of China’s expansive network:
“In the great power rivalry between the US and China, it matters who's on your side, whose network of trade partners is growing...” (00:29)
China's Belt and Road Initiative (BRI)
At the heart of China’s strategy is the Belt and Road Initiative (BRI), a massive infrastructure program launched in 2013. Luke Vargas explains that over the past decade, BRI has funneled over a trillion dollars into projects across approximately 150 countries, from highways in Pakistan to seaports in Sri Lanka.
“Since 2013, China's massive infrastructure program, known as the Belt and Road Initiative, has funneled a trillion plus dollars to projects...” (01:38)
Objectives of BRI
Ike Freeman, a Hoover Fellow at Stanford University, breaks down the multifaceted goals behind BRI:
- Consolidate Domestic Control: “The goal of Belt and Road in 2013 was first and foremost, consolidate the domestic system around Xi Jinping...” (03:30)
- Enhance Diplomatic Relations: Providing opportunities for China’s leadership to engage with foreign leaders.
- Build International Influence: Linking economic power with political relationships to advance China’s global standing.
Execution and Adaptation
Kevin Gallagher from Boston University highlights how China’s development banks, such as the China Development Bank and the Export-Import Bank of China, have been pivotal in executing BRI. These banks prioritize strategic gains over immediate profits, enabling rapid deployment of infrastructure projects.
“These development banks were spraying money all over the place, but they weren't looking to make the huge profits...” (05:16)
From 2014 to 2019, China secured over $100 billion annually in BRI deals, quickly establishing its presence. Gabrielle Steinhauser, the Africa bureau chief, observes the tangible outcomes in regions like Sub-Saharan Africa, where Chinese-built airports and highways are now commonplace.
“From the moment you land, a lot of the airports are Chinese built... You have Chinese banks of Chinese construction companies.” (06:41)
Impact and Challenges of BRI Projects
While BRI has successfully launched numerous projects, not all have been without issues. Instances of shoddy construction in Ecuador, Pakistan, and Uganda have raised concerns about the long-term viability of some infrastructure. Additionally, the Sri Lankan port project exemplifies potential pitfalls, where inability to repay loans led to a 99-year lease to a Chinese state company.
“All of the debt for Sri Lanka, with little infrastructure, rewards to speak of.” (07:03)
Despite these challenges, Gallagher asserts that China has effectively mobilized development projects globally:
“You can see an increasing and sort of solidified share of Chinese firms just about everywhere you go in the world.” (08:51)
Diplomatic Leverage and Influence
China’s ability to provide swift and decisive infrastructure solutions has positioned it as a preferred partner over traditional Western institutions like the World Bank. Gabrielle Steinhauser points out that China’s lenient lending standards and direct negotiations with heads of state have enhanced its diplomatic clout.
“China's laxer lending standards, paired with its preference for striking deals directly with heads of state, made it that much easier to hand political wins to its partners.” (10:53)
The growing attendance at the Forum on China Africa Cooperation—from 10 leaders in 2012 to 53 in 2024—illustrates China’s expanding diplomatic influence.
“Back in 2012, just 10 stood shoulder to shoulder with then Chinese President Hu Jintao, whereas last September in Beijing, it was 53.” (11:26)
Western Response and Concerns
Initially, U.S. officials like Senator Marco Rubio criticized BRI for creating “debt traps,” where countries become overly indebted to China and lose strategic assets. However, Kevin Gallagher counters this narrative by noting that China has not yet capitalized on such opportunities to seize assets, despite global debt crises.
“If that was China's goal, it would have happened by now. But that's not happening at all.” (13:03)
Long-Term Strategic Goals
Ike Freeman elaborates on how BRI serves China’s broader geopolitical ambitions. As China's confidence grows, so does its intent to influence global governance and reshape international norms to align with its interests.
“Fast forward 10 years and you have Xi Jinping at the G20 talking about a vision for global governance that includes security cooperation...” (15:31)
Freeman suggests that China’s deepening relationships through BRI could enable it to withstand potential ruptures with the U.S., leveraging support from developing nations.
“China has not only economic relationships established through this debt, they have deep political relationships...” (16:47)
Rejiggering BRI for Sustainability
Despite its successes, BRI faces internal pressures within China. Ling Ling Wei reports issues within Chinese banks, where there are pushbacks against financing unprofitable projects unless deemed “policy instructed,” indicating a shift towards more economically sound practices.
“Some banks really, they have threatened to stop supporting certain projects unless regulators let them clarify that those loans were, quote, policy instructed.” (18:51)
Conclusion and Future Outlook
The episode concludes by acknowledging China’s significant achievements with BRI in expanding its global footprint and influence. However, it also highlights the ongoing challenges and the necessity for China to adapt its strategies to maintain economic sustainability and political ambitions. Upcoming episodes will further explore China's evolving lending practices and Western responses to its infrastructure dominance.
Notable Quotes:
- Ling Ling Wei: “In the great power rivalry between the US and China, it matters who's on your side...” (00:29)
- Ike Freeman: “The goal of Belt and Road in 2013 was first and foremost, consolidate the domestic system around Xi Jinping...” (03:30)
- Kevin Gallagher: “These development banks were spraying money all over the place, but they weren't looking to make the huge profits...” (05:16)
- Gabrielle Steinhauser: “From the moment you land, a lot of the airports are Chinese built...” (06:41)
- Marco Rubio: “They come in, you know, with the promise of a big investment... Ultimately, they wind up in a debt trap.” (12:29)
- Ike Freeman: “China has not only economic relationships established through this debt, they have deep political relationships...” (16:47)
This comprehensive summary encapsulates the key discussions and insights from the episode, providing a clear understanding of how China's Belt and Road Initiative is strategically undermining U.S. global dominance through extensive infrastructure investments and diplomatic maneuvers.