The Stanford Center at Peking University (SCPKU), the Center on Democracy, Development and the Rule of Law (CDDRL), and the APARC China Program jointly hosted a workshop on China’s Belt and Road Initiative (BRI) in early March. The workshop, held on March 2 and 3, welcomed researchers from around the world with expertise in the Initiative. Unfortunately, because of the rapidly developing health emergency related to the coronavirus, participants from not only China, but also Japan, were prevented from attending. As described by Professor Jean Oi, founding director of SCPKU and the China Program, and Professor Francis Fukuyama, director of CDDRL and the Ford Dorsey Master's in International Policy, who co-chaired the workshop, the meeting aimed to provide a global perspective on the BRI, consolidate knowledge on this opaque topic, and determine the best method and resources for future research.  

The workshop began with presentations from several of the invited guests. Dr. Atif Ansar from the University of Oxford’s Saïd Business School kicked off the first day by describing not only the tremendous opportunity that the BRI presents to developing economies, but also the serious pitfalls that often accompany colossal infrastructure projects. Pointing out the poor returns on investment of mega infrastructure projects, Ansar examined the frequest cost and schedule overruns, random disasters, and environmental degradation that outweigh the minimal benefits that they generally yield. China’s own track record from domestic infrastructure projects does little to mitigate fear of these risks, Ansar claimed. In response, he urged professional management of BRI investments, institutional reforms, and intensified deployment of technology in BRI projects. Dr. Ansar was followed by Dr. Xue Gong of the S. Rajaratnam School of International Studies, Nanyang Technological University, Singapore. Dr. Gong’s analysis centered on the extent to which China’s geopolitical motivations influenced its outward foreign direct investments (OFDI). Although her research was still in the early stages, her empirical analysis of China’s OFDI inflows into fifty BRI recipient countries from 2007-2018 nevertheless revealed that geopolitical factors often outweigh economic factors when it comes to China’s OFDI destinations.

Participants then heard presentations from Amit Bhandari of Gateway House: Indian Council on Global Relations and Professor Cheng-Chwee Kuik of the National University of Malaysia. Mr. Bhandari’s talk focused on Chinese investments in India’s six neighboring countries, which tend to center more on energy rather than connectivity projects. He first found that the investments are generally not economical for the host countries because they come with high costs and high interest rates. Secondly, he argued that these projects often lacked a clear economic rationale, appearing instead to embed a geopolitical logic not always friendly to India. Professor Kuik, by contrast, provided a counterexample in his analysis of BRI projects in Southeast Asia. He described how, in Southeast Asia, host countries’ reception of the BRI has varied substantially; and how various stakeholders, including states, sub-states and other entities, have used their leverage to shape outcomes more or less favorable to themselves. Kuik’s analysis injected complexity into the often black-and-white characterizations of the BRI. He highlighted the multidimensional dynamics that play out among local and state-level players in pursuit of their goals, and in the process of BRI implementation.

Professor Curtis J. Milhaupt and Scholar-in-Residence Jeffrey Ball, both at Stanford Law School, followed with individual presentations on the role of State-Owned Enterprises (SOEs) in the BRI and the emissions impact of the BRI on climate change, respectively. Professor Milhaupt  characterized Chinese SOEs as both geopolitical and commercial actors, simultaneously charged with implementing Party policies and attaining corporate profits. Chinese SOEs are major undertakers of significant overseas BRI projects, acting not only as builders but also as investors, partners, and operators. This situation, Milhaupt asserted, carries significant risks for SOEs because these megaprojects often provide dismal returns, have high default rates, and can trigger political backlash in their localities. Milhaupt highlighted the importance of gathering firm-level data on businesses actually engaged in BRI projects to better infer geostrategic, financial, or other motivations. Jeffrey Ball turned the discussion to carbon emissions from BRI projects and presented preliminary findings from his four-country case studies. He concluded that, on aggregate, the emissions impact of the BRI is still “more brown than green.” Twenty-eight percent of global carbon emissions may be accounted for by BRI projects, Ball asserted, underscoring the importance of the BRI to the future of global climate change.

The day concluded with presentations by  Michael Bennon, Managing Director at the Stanford Global Projects Center, and Professor David M. Lampton, Oksenberg-Rohlen Fellow at the Freeman Spogli Institute for International Studies. Bennon first presented findings from two empirical case studies of BRI projects and then went on to describe how the BRI is now practically the “only game in town” for infrastructure funding for developing countries. Lengthy environmental review processes at Western multilateral banks have turned the World Bank, for example, from a lending bank into a “knowledge bank,” he argued. He also highlighted that, in general, economic returns on BRI projects for China are very poor, even though recipient countries may accrue macroeconomic benefits from these projects. Finally, Professor Lampton turned the discussion back to Southeast Asia, where China is currently undertaking massive cross-border high-speed rail projects through eight ASEAN countries. He described how each host country had varying capacity to negotiate against its giant neighbor, and how the sequential implementation of these cross-border rail projects also had varying impacts on the negotiating positions of these host countries. BRI played out differently in each country, in other words, eliciting different reactions, push-backs and negotiated terms.

The second day of the workshop was dedicated to working toward a collaborative approach to future BRI research. The group discussed the key gaps in the existing research, including how to know what China’s true intentions are, how to measure those intentions, who the main players and their interests in both China and the host countries are, and even what the BRI is, exactly. Some cautioned that high-profile projects may not be representative of the whole. Participants brainstormed about existing and future sources of data, and stressed the importance of diversifying studies and seeking empirical evidence.

When economists, policymakers, and media commentators discuss growth or compare living standards across countries, they typically turn to a single measure: Gross Domestic Product (GDP). In layman’s terms, GDP is the monetary value of all goods and services made or exchanged in a country during a specific period of time. The calculation of a nation’s GDP is complex and takes in a multitude of country-specific caveats, but the final figure per capita is supposedly a proxy for a nation’s economic health.

Using GDP as a measure of welfare, however, has multiple problems. Just ask Dr. Amit Kapoor, an expert in economic development and business strategy, who rebuts the focus often placed on the importance of GDP. As the chair of the Shared Value Institute of India, president and CEO of the India Council on Competitiveness, and as an affiliate faulty member with the Institute of Strategy and Competitiveness of the Harvard Business School, Kapoor has spent a great deal of time and effort working with the governments of India and other countries on measuring social progress and developing living standards, performance, and progress indices. In a recent lecture as part of APARC’s South Asia Colloquia, Kapoor made his case for looking past GDP when considering the overall well-being of nations.

GDP, says Kapoor, originated in the 1940s as a wartime estimate to provide a window into a region’s economic situation and is based on the paradigm that economic objectives equal social objectives. Yet economic development doesn’t always lead to advancements in social progress and human prosperity. To gain a complete understanding of a nation’s growth, he argued, it is important directly to measure social progress, which includes indicators of human well-being such as access to education, equal opportunity, health services, sanitation and clean water, social inclusion, and even tolerance.

 Our world as we know it is facing multiple threats, Kapoor reminds us, from environmental extinction to the rise of populism and to the crisis of capitalism. We can only address these issues “by creating alternate measures of how we assess human well-being.”

Kapoor points to the apparent growing gap between economic gains and social parity as evidence that GDP-centricity gives a very pixelated, partial picture of national development. In the past 80 years, economies as a whole have gained exponentially, as indeed reflected in GDP measurements, but progress on issues such as basic human needs, personal well-being, and opportunities for individual fulfillment have seemed to lag.

Kapoor’s issue with GDP is that it fails to account for these other kinds of social, environmental, and cultural factors. To this end, he advocates considering other means of measuring success and development, such as the Human Development Index, or his research to gauge and codify “ease of living” measurements in his home country of India.

That research, says Kapoor, shows there exists a non-linear relationship between ease of living and per capita GDP. Therefore, the impact of economic development on a population’s ease of living will depend on where the region is placed. Moreover, if one is at a lower level of economic development, then investing in economic well-being will translate into social well-being, but after the cutoff is reached, higher economic development will lead to a fall in the ease of living.    

“In an economy with well-being at its heart, economic growth will simply be another tool to guide it in the direction that the society chooses. In such an economy, the percentage points of GDP, which are rarely connected with the lives of average citizens, will cease to take the center stage. The focus would instead shift towards more desirable and actual determinants of welfare.”

You can read more of Amit Kapoor’s perspectives and learn more about his work to redefine development in India in his Harvard Business Review article, “GDP Is Not a Measure of Human Well-Being.”