SIMON: Do you think China will increase the investment it's going to make in the Belt and Road program now, or does it have the wherewithal to do that right now? China has policy banks, and public finances do find themselves in a tight spot, especially as China's economic growth, as we're witnessing these days, is not as taken for granted as it used to be. SIMON: So there are countries that are just not paying the loans back to China? And at the same time, it now has a lot of problems domestically because there has been not just that trap diplomacy on the recipient countries' side but also on China's side, meaning that Chinese loans do not necessarily then equate in strategic collateral or, in fact, on the ability of those recipient countries to pay back those Chinese loans. And so there was international pushback against China's perceived neocolonial infrastructure project. That pushback, especially from the U.S., was brewing in 2018, but it really kick-started in 2019. And this was the unfortunate thing for Italy. SIMON: Has China's strategy been successful? And so the result of all this, to cut a long story short, was to do a very symbolic and shallow memorandum of understanding with China in March of 2019 to show that Italy was about to harness a better relationship with China, to have more access to the Chinese market through a rather symbolic political statement. And this was a very peculiar moment in Italian history where a populist government wanted to take back control, to paraphrase Brexit, away from Brussels and claim that they would be able to show results by signing deals with countries with which Italy was traditionally a bit shy, such as China.
SIMON: Italy has participated, hasn't it? And this would have also guaranteed the Chinese subcontractor companies to work on these infrastructure projects, export its industrial champions and, through that economic interaction, deepening interaction, have bigger, larger, deeper political heft. And with a little bit of help from the central propaganda department, the Belt and Road effectively became a grand strategic narrative about China's unstoppable rise and its willingness to harness the markets of emerging countries and developing economies to provide loans for infrastructure and, through those loans, foster better relations with what China would claim is going to become the first and largest economy in the world.Īnd so this was a win-win game where China would have had more interactions, economic interactions with these countries, also through trade eventually but especially at the beginning with investment loans. That's why it was announced in Central Asia and Indonesia precisely 10 years ago. China has tried to export its overcapacity, which couldn't be met by domestic demand, by effectively engaging in massive infrastructure loans, as you mentioned. Effectively, the fundamentals of the Belt and Road Initiative are economic.
SIMON: First, help us understand what China set out to do 10 years ago with Belt and Road, and has it worked? Giulio Pugliese teaches Europe-Asia studies at the European University Institute. For the past decade, China has used its so-called Belt and Road Initiative to create better relations through massive infrastructure loans. An unofficial goal, at least for the U.S., is to try to provide an alternative to a rising China. The official agenda centers around climate change and economic security. President Biden's at the G-20 summit in India.
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