China’s ambitious Belt and Road Initiative, now in its sixth year, has come in for substantial criticism recently as the massive inter-continental scheme receives tighter scrutiny. 

Among the concerns that have been flagged are rising project costs, obscure project management operations, poor governance and developments which environmentalists fear will cause lasting damage.  

Chinese premier Xi Jinping addressed some of the complaints during the 2nd Belt and Road (BRI) forum held in April this year when he promised to tackle the financial and environmental worries.  

The message from the top must have swayed doubters at the latest BRI summit in Hong Kong in September, more than 5,000 attendees from corporates, banks and professional services from over 60 countries across Europe, Africa and Asia showed up.

A key takeaway from the April BRI forum was an increased emphasis on green development to reduce emissions in light of climate change.

Potential economic benefits have often been pushed through at the expense of environment protection and conservation by both China and BRI countries, with certain BRI projects implemented without a thorough evaluation of its environmental impact.

It is unlikely though that the BRI will turn green overnight as it is too challenging to implement and enforce proposed green policies in the short term.

The application of these rules will likely take time and thus, current projects are unlikely to be altered to include more green elements. BRI’s ever increasing global footprint, coupled with the current bilateral nature of BRI, also makes it difficult to enforce common standards across BRI countries.

With regard to energy projects, a phase-out of coal projects in the short term is not likely as coal remains an important fuel for electricity generation in many BRI countries due to its low cost.

In the long term however, as the BRI moves towards a multilateral model of cooperation, we can expect a stricter enforcement of green policies, which may see the eventual cut in support of coal projects.

The artery that carries the BRI across continents and therefore the key to investment growth is infrastructure. 

And despite six years of investment, the infrastructure shortfall in many BRI countries remains high. As such, a push for projects in these countries, both by China and the local governments, is expected to continue.

According to James Su, infrastructure analyst at Fitch Solutions and one of the authors of a new report on the BRI called “Trade, Debt & the Push for Sustainability”, infrastructure will remain the driving force behind the BRI.

But the report points out that the pace of project implementation is likely to moderate. “The Belt and Road, as we all know, is not just an infrastructure project. It is essentially about trade and cooperation between China and other countries, and hopefully, from a Chinese government's perspective, cooperation between other Belt and Road countries as well,” says Su.

“Increasingly, we are seeing a lot of talk about trade, so that's why we focus on other sectors as well, like the auto sector and the consumer sector. To see whether these infrastructure projects that have come online have actually helped to facilitate trade between these countries,” he adds.

Another concern has been the lack of accessibility allowing investors to take part in the BRI and the financing of the numerous infrastructure projects.

“There is a lack of a common framework, an international standardized framework which the Chinese could have implemented, and that has prevented a lot of foreign capital from flowing into these projects,” says Su.

“But, I think China wanted their own capital to kickstart the entire project first, and their own companies to be involved, and once the BRI gains momentum and international recognition, then they will try to open the BRI up for more private and foreign participation. I think that's the ultimate goal of the Chinese government,” Su adds.

As well as going west, the BRI is also moving across Southeast Asia with ongoing projects in Malaysia, Thailand, Indonesia and Cambodia tackling infrastructure deficiencies. But unlike the BRI hinterlands to the west, China faces competition in Southeast Asia from well-established Japanese and Korean multinationals.

As well as possessing the technical know-how, the other North Asian competitors have been doing business in the region for decades.

“In terms of technical abilities, I wouldn't be too concerned as the Chinese probably already have everything they need. They could, however, potentially benefit from learning how to conduct business with foreign stakeholders and how to interact with foreign governments,” says Su.

“They have a steeper learning curve in terms of learning how to do business and interact with other countries. This is where I think they stand to gain,” adds Su.