China's Belt and Road Initiative: Bold Strategy or Irrational Exuberance?


China's Belt and Road Initiative: Bold Strategy or Irrational Exuberance?

The Belt and Road Initiative (BRI) is a project of breathtaking scale that aims to reshape economic geography to enhance China’s centrality in the world. Estimates for the costs of infrastructure to create a sea and land network linking more than 60 countries from Asia to Europe run upwards of US$6 trillion. China has to date committed several hundred billion yuan and created financial institutions to carry out the Belt and Road vision, including the Asian Infrastructure Investment Bank and the Silk Road Fund, alongside the China Development Bank, Export-Import Bank, and state-owned commercial banks. But does China have the financial wherewithal to implement this grand scheme?

This lecture examines China’s recent development and places the BRI in the long arc of fiscal expansion since the turn of the century. Under Hu Jintao and Wen Jiabao, the government spent lavishly on boosting public services, especially in the rural areas, using buoyant revenues that grew from ¥1.34 trillion to ¥8.3 trillion during the decade of 2000–2010. The BRI is a signature program in Xi Jinping’s assertive international posture, likewise conceived in an era of high growth and high foreign reserve accumulation. What happens when China’s growth slows? Will China’s fiscal institutions be robust enough to manage the transition and avoid overextending its finances under the BRI?


  • Professor Christine Wong
    Professor Christine Wong, Asia Institute, The University of Melbourne