Published: 23:57, November 22, 2023 | Updated: 17:18, November 24, 2023
BRI offers myriad of opportunities for participants
By Oriol Caudevilla

The Belt and Road Initiative turned 10 years old this year. This past decade has seen the BRI grow from an early-stage project into a much bigger and complex reality. More than 150 countries and 32 international organizations have joined this massive project, with more than 200 agreements currently underway or completed.

The BRI has indeed boosted participating countries’ economies and global GDP, even though critics, especially in the West, have been skeptical of its goals and impact on overseas development.

BRI is a transcontinental long-term policy and investment program, which aims at infrastructure development and acceleration of the economic integration of countries along the route of the historic Silk Road.

The initiative was unveiled in 2013 by President Xi Jinping and was previously known in English as “One Belt One Road”. On March 28, 2015, the official outline for the Belt and Road Initiative was issued by the National Development and Reform Commission, the Ministry of Foreign Affairs, and the Ministry of Commerce of the People’s Republic of China, with the authorization of the State Council.

The BRI aims to “promote the connectivity of Asian, European and African continents and their adjacent seas, establish and strengthen partnerships among the countries along the Belt and Road, set up all-dimensional, multitiered and composite connectivity networks, and realize diversified, independent, balanced and sustainable development in these countries”.

The BRI is a global initiative, but by its nature of building on the historic Silk Road, puts a major focus on countries in Asia, East Africa, Eastern Europe and the Middle East — regions mainly composed of emerging markets.

Overall, the BRI has enhanced connectivity and infrastructure development across continents. The initiative has seen the construction of a vast network of roads, railways, ports and other infrastructure projects that have significantly improved transportation and trade links between China and the other participating countries. These developments have facilitated the flow of capital and goods, thus increasing economic growth in various regions. Knowledge sharing, cultural exchanges, mutual understanding and diplomatic ties among nations have also been strengthened.

Furthermore, the 10th anniversary of the BRI also provides an opportunity to visualize its future opportunities, which are many. For example, the BRI can play an important role in promoting green and inclusive growth, by, for example, incorporating environmental and social considerations into project planning and implementation.

There is another area in which I would like to focus on in this article, and that is the role the BRI can play in expanding central bank digital currencies (CBDCs) — more specifically, China’s CBDC, the digital yuan.

What potential does the BRI offer to China’s digital yuan?

The BRI has indeed boosted participating countries’ economies and global GDP, even though critics, especially in the West, have been skeptical of its goals and impact on overseas development

China’s digital yuan will be beneficial in many ways, but one of the areas in which it can bring more value is in promoting the use of the yuan for cross-border payments, by converting some of the US-dollar-denominated international trade transactions into renminbi-denominated ones.

This will not happen overnight. But if there is enough penetration and acceptance of the digital yuan in a separate jurisdiction or region, it is conceivable that a trade and finance system parallel to the US dollar system can gain critical mass, a system that can allow some countries to bypass the global banking system and US sanctions.

The BRI is a key program pioneered by China, and consequently, it is possible to imagine how important the expansion of the digital yuan can become for China within the Belt and Road.

To me, the BRI area is the best possible candidate area for China to start internationalizing the digital yuan, or at least one of the best two candidates, alongside the Regional Comprehensive Economic Partnership (RCEP).

This is in line with what I mentioned in a previous article — Regional Trade Pact Will Pave Way For Digital Yuan” — where I said that through the RCEP, China will strengthen trade ties with neighboring countries, and be able to leverage the agreement to facilitate cross-border adoption of its digital yuan to benefit consumers, dealers, bankers and industries across regions.

Given the connection that the BRI will create between participating countries, especially with China, it makes sense to assume that the BRI will play a major role in internationalizing the digital yuan.

To sum up: The first decade of the BRI can be considered as very satisfactory: Through this initiative, more infrastructures have been developed, and the economic integration of countries along the route of the historic Silk Road has been accelerated, taking China’s lead. While there is, of course, plenty of room to grow, the results can be considered very good thus far. One of the BRI areas that can be relevant in the future is that of China leveraging the BRI to expand the use of the renminbi through its digital yuan, which can be relevant in the future.

The author is a fintech adviser, researcher and former business analyst for a Hong Kong publicly listed company.

The views do not necessarily reflect those of China Daily.