Belt and Road bounces back, as Beijing seeks to future-proof its flagship global infrastructure initiative

New AidData flagship report and dataset show China is refocusing time and money on troubled projects, distressed borrowers, and sources of public backlash in effort to de-risk its portfolio and out-maneuver G7 competitors.

November 6, 2023
Alex Wooley
Worker at the site of the Grand Renaissance Dam in Ethiopia. The Grand Renaissance Dam is one of the largest infrastructure projects under construction in the country, with the support of Chinese investment. Photo by Davide Monteleone, used with permission.

Worker at the site of the Grand Renaissance Dam in Ethiopia. The Grand Renaissance Dam is one of the largest infrastructure projects under construction in the country, with the support of Chinese investment. Photo by Davide Monteleone, used with permission.

AidData, a research lab at William & Mary’s Global Research Institute, today released a new, 400-plus page report—Belt and Road Reboot: Beijing’s Bid to De-Risk Its Global Infrastructure Initiative—that provides myth-busting evidence about the changing nature, scale, and scope of China’s overseas development finance program. It reveals new insights about Beijing’s ongoing bid to de-risk the Belt and Road Initiative (BRI)—and outflank its competitors.

The report draws upon a uniquely comprehensive and granular dataset of more than 20,000 projects across 165 low- and middle-income countries supported by loans and grants from China worth more than $1.3 trillion. The highly anticipated 3.0 version of AidData’s Global Chinese Development Finance (GCDF) Dataset was published today, alongside Belt and Road Reboot.

“Beijing is not going to stand by and watch its flagship global infrastructure initiative crash and burn,” said Brad Parks, AidData’s Executive Director and a coauthor of the report. “It is finding its footing as an international crisis manager and refocusing its time and money on troubled projects, distressed borrowers, and sources of public backlash in the Global South. I think the G7 has underestimated Beijing’s level of ambition. In the short-run, it is firefighting, but it is also working behind-the-scenes to future-proof the BRI by putting in place stronger loan repayment and project implementation guardrails.” 

Belt and Road Reboot was written by a team of ten researchers at AidData, including Parks, Ammar A. Malik, Brooke Escobar, Sheng Zhang, Rory Fedorochko, Kyra Solomon, Fei Wang, Lydia Vlasto, Katherine Walsh, and Seth Goodman. It documents the specific measures that Beijing is taking to manage three different types of risk in its overseas project portfolio: (1) repayment risk, (2) environmental, social, and governance (ESG) risk, and (3) reputational risk.

“Contrary to conventional wisdom, Beijing is not in retreat,” added Parks. “Its grant and loan commitments to developing countries have not plummeted to nearly zero. With new data from more than 700 state-owned lenders and donors in China, we demonstrate that Beijing remains the single largest source of international development finance in the world. It is still outspending all other bilateral and multilateral sources of aid and credit to the developing world, including the U.S. and the Word Bank.”

Ammar A. Malik, a Senior Research Scientist at AidData and a coauthor of the report, notes that the G7 has made some efforts to close the overseas development spending gap with Beijing. Washington, for example, has overseen a fifteen-fold increase in the overseas activities of the U.S. International Development Finance Corporation (DFC). “However, in the long-run, it is not clear that the U.S. and its allies have the financial firepower to compete dollar-for-dollar with Beijing,” said Malik. “The G7 has a history of over-promising and under-delivering net increases in international development spending. Beijing, by contrast, has a real source of financial strength that allows it to avoid making promises that it cannot keep: foreign exchange reserves that are vastly larger than the official, foreign currency reserve holdings of its central bank.”

AidData’s latest report comes just a few days before world leaders gather in San Francisco for the Asia-Pacific Economic Cooperation (APEC) Summit from November 11-17. China and the U.S. are two of the 21 member economies of APEC; the combined membership is responsible for nearly 50% of global trade. 

The road to repayment

The authors of Belt and Road Reboot identify short-term and long-term measures that China is taking to reduce its exposure to distressed debt in the developing world. First, in recognition of the fact that many of its largest borrowers are illiquid or insolvent, Beijing has ramped up short-term, emergency rescue lending to ensure that major BRI participants have enough cash on hand to service their outstanding infrastructure project debts. Second, when borrowers fall behind on repayments, Beijing has started “paying itself” by sweeping dollars and euros out of their cash collateral accounts. Third, it is requiring that financially distressed borrowers replenish these accounts in exchange for an easing of repayment terms. 

At the same time, Beijing is making long-term course corrections to de-risk its overseas lending portfolio. “Rather than relying on its own banks to vet borrowing institutions and loans, Beijing is increasingly outsourcing risk management to Western commercial banks and multilateral institutions with stronger due diligence standards and safeguard policies,” said Brooke Escobar, Associate Director of AidData’s Chinese Development Finance Program and a co-author of the report. “Fifty percent of China’s non-emergency lending to low- and middle-income countries is now channeled via syndicated loan arrangements. And roughly 80% of these loans involve Western commercial banks and multilateral development banks (MDBs), such as Standard Chartered, BNP Paribas, the IFC, and the EBRD.” In parallel, Beijing is ratcheting down its use of the policy banks (China Development Bank and China Eximbank), while ratcheting up its use of state-owned commercial banks (such as ICBC, Bank of China, and China Construction Bank).

As Beijing pivots from ESG skeptic to advocate, the G7 focuses on a version of BRI that no longer exists

Beijing enjoys a dominant position in the global infrastructure market because of its reputation for implementing brick-and-mortar projects with lightning speed. However, its rivals and critics claim that speed has come at the expense of safety. Beijing, they allege, has not taken meaningful steps to subject its overseas infrastructure project portfolio to stringent ESG safeguards.  

These claims are false, according to AidData’s latest report. By 2021, nearly 60% of China’s grant- and loan-financed infrastructure project portfolio in low- and middle-income countries had strong de jure ESG safeguards in place. Parks, Malik, Escobar, and their coauthors provide evidence that the pace of ESG safeguard reform is accelerating as part of a broader reboot of the BRI (known as “BRI 2.0”). Beijing is not only unwinding aid and credit relationships with countries that present high levels of ESG risk, but also squaring the circle between safety and speed: the average infrastructure project financed with Chinese aid or credit takes approximately three years to complete, even if it is subjected to strong de jure ESG safeguards.

“After sitting on the sidelines for decades, the members of the G7 and the EU are trying to get back into the overseas infrastructure business by rolling out new initiatives like the Partnership for Global Infrastructure and Investment, the India-Middle East-Europe Economic Corridor, Global Gateway, and the Blue Dot Network,” said Parks. “But Beijing is several steps ahead of its competitors in the global infrastructure market. It is focused on giving leaders in the developing world exactly what they want: rapid delivery of large-scale infrastructure projects without unreasonably high levels of ESG risk. If Washington and its allies cannot compete on this basis, they will face a crisis of relevance. They are focused on competing with a version of the BRI that no longer exists—BRI 1.0 rather than BRI 2.0.”

Maximizing the reputational upside and minimizing the reputational downside of the BRI

According to AidData’s latest report, the BRI has generated a far-flung set of soft power assets and liabilities around the globe, which Beijing is now seeking to actively manage. In some places, China has momentum on its side: infrastructure projects are being completed on time or ahead of schedule, media coverage is favorable, public opinion is improving, and political leaders want to avoid alienating or antagonizing their most important patron and creditor. However, in other places, Beijing is sailing into strong headwinds: infrastructure projects have failed to achieve commercial viability, media coverage is souring, public antipathy is rising, and political leaders want to distance themselves from China. 

On balance, AidData finds that Beijing has in recent years experienced more losses than gains vis-à-vis Washington on three measures of soft power: public opinion, elite support, and the favorability of media coverage. The Chinese authorities have responded to these challenges by changing the way that they allocate aid and credit during the BRI 2.0 era. Nearly two-thirds of Beijing’s entire international development finance portfolio is now devoted to “toss-up” countries—i.e., jurisdictions where neither China nor the U.S. has opened up an insurmountable soft power lead vis-à-vis its principal rival. The authors of Belt and Road Reboot also find that Beijing is doubling down—with additional aid and credit—in those jurisdictions where it has recently made reputational gains at the expense of Washington.

However, as the grace periods on more and more Chinese loans expire, Beijing will face a tough test of its skill as a reputational risk manager. 55% of China’s loans to low- and middle-income countries are now in their repayment periods, and AidData estimates that this figure will increase to 75% by 2030. “Beijing is navigating an unfamiliar and uncomfortable role—as the world’s largest official debt collector—at a time when many of its biggest borrowers are illiquid or insolvent,” said Malik. “And debt collectors don’t win a lot of popularity contests.”

AidData’s GCDF Dataset and its Chinese Development Finance Program 

The latest (3.0) version of AidData’s GCDF dataset is the result of a decade-long effort that has involved an interdisciplinary team of more than 100 faculty, staff, and student research assistants. A key feature of the dataset is its comprehensive scope. It covers all regions, all sectors, and all sources and types of financial and in-kind transfers from government and state-owned institutions in China. Other datasets capture official financial transfers from China to a single sector or region, or only track certain types of financial flows and funding sources. However, the 3.0 version of the GCDF dataset is unique, in that it captures any project that benefits from financial or in-kind support from any official sector institution in China.

In total, the dataset released today captures 20,985 projects across 165 countries supported by financial and in-kind transfers worth $1.34 trillion from official sector institutions in China. It covers every low-income, lower-middle income, and upper-middle income country and territory across every major world region, including Africa, Asia, Oceania, the Middle East, Latin America and the Caribbean, and Central and Eastern Europe. The dataset tracks projects over twenty-two commitment years (2000-2021), and it includes details on the timing of project implementation over a twenty-four-year period (2000-2023). 

To construct the 3.0 version of the GCDF dataset, AidData used an innovative, open-source methodology—called Tracking Underreported Financial Flows (TUFF)—that generates detailed and comprehensive data about Chinese government-financed development projects for low-income and middle-income countries in all major world regions. It does so by codifying a systematic, transparent, and replicable set of procedures that standardize and synthesize large volumes of unstructured information from four main sources: (1) data and documentation from Chinese ministries, embassies, and economic and commercial counselor offices; (2) the aid and debt information management systems of finance and planning ministries in counterpart countries; (3) case study and field research undertaken by scholars and NGOs; and (4) English, Chinese and local-language news reports.

Previous versions of the AidData’s GCDF dataset have been used in more than 500 research publications. They have also been used or referenced in more than 1,000 TV, radio, print, and online media stories. Data and analysis from AidData’s Chinese Development Finance Program also consistently generates debate among policymakers in the developing countries where China is most active. With this new release, AidData is working with media in the Global South to help ensure there is credible data and evidence on financial flows from foreign lenders and donors, including China, as well as understanding of their intentions, implementation, and impacts on all aspects of national life. “Better reporting on issues like these promotes transparency and accountability, civic responsibility, citizen engagement, and empowerment,” said Malik.

By the Numbers: AidData’s Global Chinese Development Finance Dataset, Version 3.0

  • 7 sources underpin each project record, on average
  • 791 official sector donors and lenders in China
  • 1,225 co-financing institutions, including Western commercial banks, multilateral development banks, and OECD-DAC development finance institutions that have chosen to collaborate or coordinate with Beijing.
  • Loans with 2,699 interest rates and 3,315 maturity lengths 
  • 5,037 recipient/borrowing institutions, including government agencies, state-owned banks, state-owned companies, special purpose vehicles/joint ventures, intergovernmental organizations, private sector companies, etc.
  • 9,497 projects with physical footprints or involving specific locations with corresponding point, polygon, and line vector data and geographic precision codes
  • 11,286 projects with precise, calendar day-level implementation start dates
  • 11,542 projects with precise, calendar day-level completion dates
  • 20,985 project records in total
  • 147,703 sources used to assemble the dataset 
  • 3,480,000 words in the dataset’s project narratives
  • $1,340,000,000,000 USD ($1.34 trillion): the inflation-adjusted monetary value of official financial flows (ODA and OOF) from official sector institutions in China to 165 developing countries, as captured by the dataset
For media enquiries, contact Alex Wooley,; +1 757-585-9875

Alex Wooley is AidData's Director of Partnerships and Communications.