Kiel Institute in the News

Belt and Road projects direct Chinese investment to all corners of the globe. What are the local impacts?


Analysis by Andreas Fuchs et. al. about the chinese Belt and Road Initiative (BRI).

Excerpt from the Article

(...) There’s some good news to report. Chinese development projects — in particular, investments in connective infrastructure, such as roads, bridges, railways and ports — create a more equal distribution of economic activity within the provinces and districts where they are implemented. We also estimate the impact of these investments on inequalities between subnational jurisdictions and find that Chinese projects narrow rather than widen economic disparities.

These findings have potentially far-reaching implications. Left unchecked, inequality can undermine social cohesion, increase political polarization, slow the pace of economic development, and elevate the risk of violent conflict and terrorism.

Many countries that stand to benefit from BRI investment also suffer from high levels of inequality, making them vulnerable to these knock-on effects. Therefore, to the extent that China can help these countries increase economic activity in rural areas that have traditionally suffered from neglect or discrimination, U.S. and other Western powers may see a diminished need to engage in costly and complex humanitarian, peacekeeping and state-building activities in distant lands.

Complete article