China In Eurasia

Despite criticism that it has saddled some countries with unsustainable levels of debt since being launched 10 years ago, Chinese leader Xi Jinping is expected to tout the Belt and Road Initiative (BRI) as a foreign policy success while showcasing it as an alternative development model to the West at a major summit in Beijing.

The third Belt and Road Forum will begin on October 17 and is set to be attended by representatives from around the world as China looks to cement the program championed by Xi as a key part of the country's foreign policy.

"This is the 10-year anniversary for the first big foreign policy idea that Xi pushed out," Raffaello Pantucci, a senior fellow at the S. Rajaratnam School of International Studies in Singapore, told RFE/RL. "Everyone always focuses on individual projects, but [BRI] is ultimately a Chinese vision for how to engage with the world and Beijing is looking to celebrate that idea."

Formally launched in 2013 following speeches by Xi in Kazakhstan and Indonesia shortly after he became China's leader, the BRI has financed the construction of ports, power plants, railroads, highways, and other infrastructure projects and invested hundreds of billions of dollars in dozens of countries to boost trade and investment by improving China's transport links with the rest of the world.

Ahead of the upcoming Belt and Road Forum -- the first since 2019 -- the Chinese government released a report praising the program's accomplishments as a sustainable development model and framing it in opposition to the West, with Li Kexin, the Chinese Foreign Ministry's director for international economics affairs, telling reporters on October 10 that the BRI "transcends the old mindset of geopolitical games and creates a new paradigm of international cooperation."

Many experts say the BRI has directed much-needed funding to poorer countries, but that this has also come with a cost. Over the past decade it has grappled with scandals over corruption, environmental degradation, and contributing to a rising debt crisis in the Global South.

The BRI has seen the amount of financing decline since 2016 and fewer projects being funded following numerous high-profile scandals over soaring debts tied to projects that left host governments unable to make repayments, such as a nearly $1 billion highway in Montenegro and a port in Sri Lanka.

Analysts say these problems have led to Beijing becoming more risk-averse.

A study earlier in October by Boston University's Global Development Policy Center said the BRI had delivered more than $330 billion in loans to developing countries through 2021, lending more than the World Bank in some years. But the study also noted that many recipients of Chinese loans are now struggling with their overall debt and that many Chinese-funded power plants abroad are greatly adding to greenhouse gas emissions.

Despite these obstacles, the BRI is far from fading away, Pantucci said, adding that Xi is likely to use the Belt and Road Forum to respond to these criticisms while enshrining the program as a "foundation within Xi's foreign policy vision" for a "new global order where China is at the center."

"The BRI was always a concept with very fluid goals and very fluid goal posts," Pantucci said. "So, Beijing can move the goal posts and redefine what success looks like."

What To Look For At The Forum

The BRI has been central to Chinese efforts to raise its international stature over the years and experts say Beijing will be looking to carefully manage the optics of the Belt and Road Forum.

Central to that will be ensuring a large delegation of attending officials from around the world.

Beijing has not released an official guest list yet, but the Chinese Foreign Ministry said "representatives from more than 130 countries as well as many international organizations" will attend. However, it's unclear how senior these officials will be.

The first Belt and Road Forum in 2017 had 30 heads of state or government in attendance and the second gathering, in 2019, had 37. Beijing will be looking to grow that figure as it celebrates the BRI's 10th anniversary, but it may face some difficulties, especially as many top officials around the globe find themselves dealing with the crisis between Israel and Hamas, designated a terrorist organization by the U.S. and EU.

Ensuring strong representation across Europe may also be difficult. While pro-Beijing governments in Hungary and Serbia have said they will send high-profile delegations led by Hungarian Prime Minister Viktor Orban and Serbian President Aleksandr Vucic, it's unclear who else will attend, particularly among European Union members.

European countries formed some of the largest contingents of leaders at the previous meetings, but fallout from China's handling of the pandemic, its support for Russia since its full-scale invasion of Ukraine, and numerous scandals related to BRI projects have seen Beijing's standing fall and ties fray. Italy, which was the only Group of Seven country to join the BRI, announced its intent earlier this year to withdraw from the program.

"A lot has happened since 2019 and many countries have been shocked by China's leadership and how it's navigated certain issues," Niva Yau, a nonresident fellow at the Atlantic Council's Global China Hub, told RFE/RL. "This shift has now changed how China can use and market the [BRI]. It's no longer seen simply as this public good that China is providing to the world."

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One world leader who confirmed his attendance long ago is Russian President Vladimir Putin, who will be making his first trip to China since his February 2022 invasion of Ukraine and is expected to raise a variety of issues with Xi, including the future of the much-sought-after Power of Siberia-2 gas pipeline.

In an October 15 interview in Moscow with the state-owned China Media Corporation, Putin praised Xi and the BRI and took aim at the West's own history of development assistance across the world, saying the main difference for BRI is that "no one imposes anything on others" and that the program doesn't have the same "colonialist flavor" as other projects.

Adapting For The Future

The BRI's official goal since its launch a decade ago has been to boost trade and investment by improving China's transport links with the rest of the world and to build up China's economic and political influence in the process.

Yau says that while the BRI's main narrative has been about building and funding infrastructure, the project itself shows that "China feels so confident about its own practices that it is ready to offer them to the world."

"The BRI is much more than a global infrastructure and connectivity project. The BRI has instead communicated a clear Chinese conviction that China believes it's ready to articulate its own vision and values to the world," Yau said.

This attitude was on display ahead of the Belt and Road Forum, with a new Chinese government report on the BRI saying the program offered a new approach that wouldn't look to "dominate world economic development, control economic rules, and enjoy development fruits."

But Chinese officials also looked to respond to criticism against the BRI in the report, saying China would adhere to "the principle of sustainable debt" and work with indebted countries toward "a sustainable and risk-controllable investment and financing system."

Christoph Nedopil, director of the Asia Institute at Griffith University in Australia, told RFE/RL that in response to debt crises in multiple countries and also because China has less money to lend as its own economy slows down, Chinese banks have become more selective of projects and partners and are increasingly prioritizing investments in renewable energy and digital initiatives that are seen as more likely to bring a return on investment.

Nedopil adds that this shift away from large-scale lending by Chinese policy banks seen in the early years of the BRI has coincided with an uptick of involvement from Chinese private companies in recent years that looks set to continue into the future.

"This is partly because Chinese banks might be turning their attention away from developing countries and toward the domestic market," Nedopil said. "But lots of these private companies are now investing because they are far more competitive globally than they were when [the BRI] was originally launched."

Will Russian President Vladimir Putin finally be able to secure a Chinese commitment on an ambitious natural-gas pipeline project that could transform energy flows across Asia?

Putin is expected to push for progress on the China-bound Power of Siberia-2 gas pipeline when he meets Chinese counterpart Xi Jinping in Beijing for talks and to attend the third Belt and Road Forum on October 17-18.

The proposed pipeline would bring gas from the huge Yamal Peninsula reserves in western Siberia to China, the world's top energy consumer and a leading gas customer.

Russian officials have in recent months met with their counterparts from China and Mongolia -- where the pipeline is intended to traverse -- with Russian Deputy Prime Minister Aleksandr Novak announcing in September that Power of Siberia-2's route is to be finalized after the trilateral negotiations.

In another sign that energy talks are advancing, Reuters reported that Putin is also expected to go to Beijing with the heads of Russian energy giants Gazprom and Rosneft, Aleksei Miller and Igor Sechin, respectively.

"It's striking to see both Miller and Sechin traveling with Putin, as well as the recent meetings with the Mongolians," Joseph Webster, a senior fellow at the Atlantic Council's Global Energy Center, told RFE/RL.

Putin's high-profile trip marks his first visit to China since Russia's full-scale invasion of Ukraine and comes as Moscow is trying to boost trade with Asia as economic ties with the West decline. China -- a crucial political and economic partner for the Kremlin amid the war -- is central to that diversification strategy and the Russian economy would get a huge boost from the new gas pipeline.

The catch for Moscow -- which needs the Power of Siberia-2 to compensate for at least part of the European Union market it has lost due to fallout from the war in Ukraine -- is that Beijing currently has no particular incentive to agree to the new pipeline.

Energy analysts say the proposed venture will need to overcome growing economic, financial, and technical challenges to come to fruition. Moscow's bargaining power with its more economically powerful neighbor has weakened over the course of the war in Ukraine and questions remain over Gazprom's ability to underwrite such a complicated infrastructure project.

Revenue from the pipeline is also uncertain because it faces competition from China's growing shift toward renewable energy.

Despite these mounting concerns, the pipeline could still get the green light, Webster noted, as a sign of Xi looking to prioritize Moscow's geopolitical importance to Beijing despite the risks stemming from the troubled economic outlook of the pipeline.

"The Russians have been pushing for an agreement for some time despite the economics being highly unfavorable," Webster said. "The Russia-China relationship is strong and both Xi and Putin appear intent to lay the foundations so it can outlast them as leaders."

What's At Stake For Putin's Trip?

Conceived of more than a decade ago as part of a Russian move to diversify gas sales to Asia, the pipeline has taken on a new dimension since February 2022, when European consumption started falling dramatically and forced the Kremlin to urgently find alternative buyers for its gas.

Discussions over the pipeline were already under way when the project was again discussed on Putin's visit to China during the Beijing Olympics just weeks before Russia's full-scale invasion of Ukraine. Since then, Moscow has continued to emphasize its readiness to begin construction on Siberia-2, though China has remained largely silent on the issue.

During a March summit, Xi appeared to skirt around the pipeline proposal, while Putin initially spoke about it as if an agreement had been reached, saying during public remarks that "practically all parameters...have been finalized."

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This was walked back in a Russian statement at the end of the summit to show that it had been discussed but no deal was struck. Russian Prime Minister Mikhail Mishustin traveled to China in May and reportedly held discussions on the pipeline, but ultimately left without a clear commitment from Beijing.

Amid the ongoing talks around Power of Siberia-2, Xi has largely stood by Putin during the war in Ukraine. Chinese-Russian trade has soared since the invasion, and Russia has sold Asian powers -- including China -- greater volumes of the oil it can no longer sell to the West because of sanctions.

China and Russia already have the Power of Siberia pipeline, which was launched in 2019 and agreed between Putin and Xi in 2014 shortly after Moscow's forceful annexation of Kyiv's Crimean Peninsula and the outbreak of fighting in eastern Ukraine by Russian-backed separatists. That pipeline is expected to reach its maximum capacity of 38 billion cubic meters (bcm) per year by 2025 and is reliant on new gas fields in eastern Siberia.

In contrast, Power of Siberia-2 aims to supply China with gas from the Yamal Peninsula, which historically has pipelines bound for the EU market, including Nord Stream, which was a major source of dispute over the years before being sabotaged in 2022. According to Russian estimates, the second Siberian pipeline could carry up to 50 bcm per year.

While Putin may be feeling pressure to find new customers for the gas that flowed to Europe before the invasion of Ukraine, if China bides its time it may allow Beijing to secure a lower price for the gas transiting Power of Siberia-2, Jon Yuan Jiang, an Australian-based analyst of Chinese-Russian relations, told RFE/RL.

China and Russia have yet to agree on the terms of gas delivered via the new route, including pricing. Jiang notes that negotiations are complex and that further complications could arise over uncertainty about China's natural-gas needs after 2030, when its reliance on renewables is expected to rise and domestic gas consumption could be phased down.

Adding to this, Russia's ultimate revenue could be marginal compared to other pipeline deals struck by the Kremlin and would not be able to match what has been lost from European sales.

The investment firm BCS Global Markets estimates that Power of Siberia-2 would bring in $12 billion a year for Gazprom and send some $4.6 billion in taxes to the state. That latter amount is less than half of Russia's average monthly energy revenues in 2023 but very welcome amid the Kremlin's costly war in Ukraine.

China's Energy Strategy

Beijing prioritizes its energy security and has been active in securing natural-gas contracts for larger quantities than it actually needs in order to avoid being too dependent on any one exporter.

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Russian gas currently makes up a small portion of China's overall market, with overland pipelines that transit Central Asia from Turkmenistan -- as well as long-term contracts with Qatar, the United States, Australia, and other energy players for liquefied natural gas (LNG) making up the rest of its supplies.

Diversification is central to China's gas deals and Xi also offered support for the construction of the so-called Line D pipeline -- which would be the fourth to bring Turkmen gas to China -- during a summit with Central Asian leaders in May.

Alicja Bachulska, a China policy expert at the European Council on Foreign Relations, told RFE/RL that China has yet to signal "what its demand for Russian gas will be in the future" and that Beijing is hesitant about over relying "on Russia when it comes to gas imports."

She added that even if the pipeline were to be approved, "its full completion will take years and many more rounds of hard negotiations regarding pricing and other related issues" that would delay any impact on China's energy market and Russian state coffers.

The Atlantic Council's Webster notes that the pipeline's approval is far from a certainty and Putin's upcoming trip may see the Russian leader leave Beijing without a clear commitment on Power of Siberia-2. But he said China may still offer other forms of support during the trip to signal their close bilateral ties.

"China might be more willing to offer Russia benefits in other areas that are not natural gas," Webster said. "Maybe it's favorable terms in oil or nonlethal assistance in other sectors. China has lots of options to assuage Russia that don't involve Power of Siberia-2."