Five risks of the BRI

Han Seung-soo, co-chair of the IFF and former prime minister of the Republic of Korea, frames five of the major risks facing the Belt and Road Initiative, and discusses what should be done to negate them and the potential consequences of failing to do so
IFF China Report 2018 25
The Silk Route dates back to 207BC
IFF China Report 2018
This article is part of The IFF China Report 2018

Geopolitical risks 

The Belt and Road Initiative (BRI) should be inclusive, not exclusive, and not only towards Asian countries but also other regions in the Americas and Africa. Transportation is vital to society, exemplified by the fact that the Silk Route has been functioning since horses and camels were the only means of transportation. Inclusivity in the BRI is therefore imperative. An ideal starting point for widening this inclusivity could be to engage Japan – which is interested in joining the BRI, according to its prime minister – as well as the Republic of Korea, which, if a railway can be established to connect it to North Korea, has ambitions of establishing a starting point to the route along the BRI on the Korean Peninsula. The involvement of Japan and the Republic of Korea would be mutually beneficial.

IFF China Report 2018 Han Seung-soo 25
Han Seung-soo

Geo-economic risks 

The second risk is related to the current global trends of globalisation and free trade. These trends are becoming ‘bad words’, but humanity will prosper if these two ideals continue to develop, and so the BRI should promote their development. 

Technological risks 

The Silk Road Economic Belt covers a heterogeneous region in terms of technological advancement – some countries along its route are technologically advanced, and othes are not. There are relatively advanced countries – such as China – and technologically limited ones in the Middle East and Central Asia. It is imperative to the success of the BRI that the technological gap in this region is narrowed. 

The risk of neglecting the people 

During periods of economic development, material possession is prioritised over the needs and desires of the people. This narrative must change – the people should be the priority in any economic development that will acompany the BRI.

Renminbi currency risk 

The importance of the renminbi is well understood – it is now part of the International Monetary Fund’s Special Drawing Right basket. However, if renminbi is used to fund the BRI outside of China, it will come up against limitations, the most important of which is the attitude of the Chinese government. It was announced at the 19th National Congress of the Communist Party of China that the country is worried about the amount of outbound investment. If China makes an effort to limit foreign investment, naturally the BRI will suffer.

 

This article is part of The IFF China Report 2018, which draws mainly on content provided by China-headquartered think tank, the International Finance Forum, and is published in association with Central Banking.

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