The Belt and Road Initiative
restricted access to conventional borrowing (Kelly, 2024). Therefore, governments use shell companies, called LGFVs, to use the land as collateral for borrowing money. The LGFVs can then use the money to develop infrastructure, which counts as investment and counts towards GDP growth. This process is unique because it allows governors to fulfil both issues laid out by the central government. It often leads to over-investment in infrastructure, commonly high-speed rail, which leads to inadequate productivity growth for its costs. However, this has also allowed China to develop experience producing infrastructure that other nations cannot match. China has the ability to mobilize more than 10,000 scientists and engineers to develop high-speed rail systems in recipient nations (Cai, 2017). Many nations have taken this call to be developed, which has led to total trade increasing between BRI countries by 9.7% since the launch of the project. Overall, this has increased global trade by 2.9%. This is because there is a massive demand for infrastructure in developing nations, which can only be fulfilled with the help of an external actor. This has now raised trade to a total of $2.8 trillion between BRI nations as increasing infrastructure links will decrease the time taken and money traders spend. As a result, this will allow China to be the centre of a more integrated regional market (State council, 2023). 2. The problem of oversupply China is facing a problem of oversupply, which is most evident in its housing market. Currently, the Chinese housing market has an excess capacity to house around 150 million people, equivalent to about 50 million homes. This situation has been caused by increasing speculative demand, government subsidies, and excessive investment in infrastructure and manufacturing facilities, leading to production capacities exceeding domestic and international demand. The problem of insufficient demand in China further exacerbates the issue. Due to cultural norms, Chinese citizens tend to have a lower average Marginal Propensity to Consume (MPC) than citizens in the west; they tend to want to save more money due to the stronger family values, which means that collective family spending in China is far more common, especially on younger generations. This problem is called excess capacity. Therefore, dealing with excess capacity has become one of China's main policy objectives, as Premier Li Keqiang describes it as the 'sword of Damocles hanging over its head' (Wang Sinan, 2023). China seeks to correct this by moving the excess production capacity out of China by migrating entire production facilities and thereby avoiding the tariffs. The proposal to relocate some of the enormous surplus steel manufacturing facilities in Hebei province is one blatant illustration of this. By 2023, this province, which currently produces the most steel in China, plans to shift 20 million tonnes of production capacity overseas (Cai, 2017). According to the plan, businesses would relocate their excess steel production facilities to southeast Asia, Africa, and west Asia, along with cement and pleat glass facilities. For instance, in collaboration with a regional Thai operator, Permsin Steel Works, Delong Steel from Xintai is constructing a steel mill in Thailand with the capacity to produce 600,000 tonnes of hot rolled coil annually (Cai, 2017). This shows how factories in BRI countries help China reduce the supply glut at home while helping less developed countries build up their industrial bases, therefore turning a domestic problem into diplomatic leverage and asset. In conclusion, I believe that the Belt and Road Initiative (BRI) is primarily an economic project rather than a political one. China's primary goal is to promote connectivity, trade, and investment, as well as to address its excess capacity issues. The BRI is essentially a modern-day Silk Road that seeks to revive ancient trade routes and stimulate economic growth for all participating countries. This focus on
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