In September and October 2013, General Secretary Xi Jinping put forward the proposal of jointly constructing a “Silk Road Economic Belt” and a 21^st Century “Maritime Silk Road.” This was a major strategic decision made in close connection with the new situation of economic globalization and the deepening development of regional economic integration, in order to better integrate the domestic and international situations, better coordinate the two focuses of domestic development and opening up to the outside, and foster shared development and prosperity in the world, thereby promoting the building of a community of common destiny for humankind. BRI construction centers on regional economic cooperation along six international economic corridors, namely, the New Eurasian Land Bridge, China–Mongolia–Russia, China–Central Asia–West Asia, China–Central Asia–South Asia, China–Pakistan, and China–India–Myanmar. Adhering to development based on openness, cooperation, and win-win outcomes, and the principles of bilateral, multilateral, and regional openness and cooperation, it integrates diversified cooperation mechanisms¹ at multiple spatial levels, such as “point-to-point,” “point-to-line,” “point-to-area,” “belt-to-road,” and “circle-to-line” (between economic regions and corridors). With policy communication, infrastructure connectivity, unimpeded trade, financial integration, and closer people-to-people ties as its main content and powerful tools, it seeks to jointly promote the orderly and free flow of economic factors, efficient allocation of resources, and deep integration of markets, and to join hands with the countries along its corridors (“routes”) in building a new framework for regional economic cooperation that is open, inclusive, balanced, and beneficial to all.

Between 2013 and the present, construction of the Belt and Road Initiative (BRI) has gradually moved from the layout initiation stage to the high-quality development stage. As BRI construction continues to advance, the spillover effects of related economic security risks are becoming more and more prominent, gradually rising to become a focus of strategic competition and games among powers. In order to achieve high-quality development of the Belt and Road, China should strengthen the early prediction, accurate identification, and strong prevention of economic security risks. The vast geographical coverage and complexity of the countries and regions involved in constructing the BRI has resulted in many risks and challenges for BRI economic construction: Most of the countries along the BRI are developing countries with low levels of economic development, so there are uncertain sovereign debt risks and financial security risks; geopolitical problems in the regions along the BRI are pronounced and terrorism is frequent, which leads to threats to infrastructure construction and subsequent operation, as well as high investment risk; conflicts between multiple cultures and religions lead to certain obstacles to civil exchanges; there is a mentality in some countries of “waiting for, relying on, and requesting from others,” and China has undertaken too many construction tasks, with the risk of imbalance in the structure of investment and construction, and even negative effects on the upgrading of China’s industrial structure; and so on. Under these circumstances, China urgently needs to be guided by the concept of overall national security, deeply study the principles and methods of national economic security governance, and push BRI construction in the direction of high-quality development. By sorting out the manifestations of economic security problems in BRI construction, and systematically studying the causes of the relevant economic security problems and the political, economic, and cultural logic behind them, this paper will clarify the development objectives and international discourse expressions of BRI construction, which helps promote benefit-sharing and risk-sharing, and put forward ideas and approaches to actively address the economic security risks and challenges, thereby promoting the high-quality development of BRI construction and the modernization of national economic security governance.

I. Situation and Development Characteristics along the BRI

The BRI Initiative (BRI) has driven countries and regions along its routes to expand their development space through innovative cooperation. The “Silk Road Economic Belt” mainly consists of three direct land corridors to Europe through northwest China and Central Asian countries. The “21st Century Maritime Silk Road” starts from China’s southeastern coast and covers Southeast Asia, South Asia, West Asia and Southern Europe, reaching as far as East Africa and other countries. Under General Secretary Xi Jinping’s initiative, in order to strengthen the close ties between the economies of Eurasian countries and promote mutual cooperation, in 2015 China issued the Vision and Actions on Jointly Building the Silk Road Economic Belt and 21st-Century Maritime Silk Road, which proposes to strengthen the construction of bilateral and multilateral cooperation mechanisms, highlight the role of the relevant international forums and other platforms, and gradually realize policy communication, infrastructure connectivity, unimpeded trade, financial integration, and closer people-to-people ties.

As of the end of March 2022, China had signed more than 200 cooperation documents on joint BRI construction with 149 countries and 32 international organizations, covering areas such as connectivity, investment, trade, finance, science and technology, society, culture, people’s livelihood, and the oceans. Between 2013 and May 2022, China’s trade in goods with countries along the BRI totaled about US$11.8 trillion, and direct non-financial investment by Chinese enterprises in those countries totaled over US$140 billion. The BRI’s fruitful results have created a favorable external environment for China to build a new pattern of development that takes domestic circulation as the mainstay and in which domestic and international circulation are mutually reinforcing. According to a 2019 World Bank research report, the implementation of the BRI will enable 7.6 million people in the countries concerned to escape from extreme poverty (living on less than US$1.9 per day), and 32 million people to escape from moderate poverty (living on less than US$3.2 dollars per day), and will increase total trade volume globally and of countries along the BRI by 6.2% and 9.7%, respectively, causing global income to increase by 2.9%. ² In 2020, the combined GDP of the countries along the BRI reached US$28.8 trillion, accounting for 32.8% of the global economy, which is a higher share of the global economy than that of BRICS, Shanghai Cooperation Organization, or Regional Comprehensive Economic Partnership (RCEP) member countries (see figure 1). ³

Figure 1.  Composition and economic size of countries along the BRI and participating countries in relevant international and regional economic cooperation organizations or agreements

Countries along the BRI have different degrees of national advantage in industries and fields such as energy, infrastructure, agriculture, machinery, and chemicals. Singapore’s electronics, finance, and shipping industries are well developed; Indonesia is rich in oil, natural gas, and tin resources; Iran and Iraq have oil industries as their main economic pillars; India mainly exports textiles, jewelry, machinery products, agricultural products, and minerals; Kazakhstan mainly exports minerals, and is rich in coal, iron, copper, lead, and zinc, as well as oil and gas resources; Russia mainly exports oil and natural gas; Ukraine mainly exports ferrous metals and inorganic chemical materials; Belarus is more developed in machinery manufacturing, metallurgical processing, agriculture, and animal husbandry.

In going from the layout initiation stage to the high-quality development stage, BRI construction needs to further refine the development goals, clarify the development path, and highlight the development priorities. In 2018, General Secretary Xi Jinping pointed out at a symposium marking the fifth anniversary of the BRI that “in the past few years, the overall layout of Belt and Road construction has been completed, and the ‘big picture’ has been drawn. In the future, we need to focus on the key points, fill in the details, and work together to do the delicate ‘fine brushwork.’”⁴ At the layout initiation stage, BRI construction mainly focused on top-level design and mechanism-building, highlighting infrastructure construction, and promoting national connectivity, specifically including industrial investment, construction of industrial parks abroad, and the construction of facilities such as railroads, highways, ports, energy pipelines, and so on. At the high-quality development stage, it is necessary to strengthen refined construction management and solve key issues such as project selection, financial support, investment assessment, risk control, and security assurance.

Infrastructure is the cornerstone of promoting the high-quality development of the Belt and Road. Infrastructure construction is the priority development area in BRI construction, and its basic framework is “six corridors, six roads, and multiple countries and ports.” Economic corridors such as the New Eurasian Land Bridge can lead many countries to participate in joint economic development. With land transportation trunk routes such as the China-Europe Railway Express, sea routes such as the Indian Ocean route, and information network routes, three-dimensional channels of interconnection have been constructed, and a connectivity network has been built relying on railroads, ports, pipeline networks, etc., forming a “four-in-one” infrastructure layout of land, sea, air, and internet. To strengthen infrastructure construction and promote connectivity, BRI construction must take multinational enterprises as the main actors, industry investment as the main method, and multilateral cooperation as the principal assurance in carrying out the orderly construction of infrastructure such as road transportation, shipping routes, and information networks, and thereby achieve the interconnection of the Asian and European continents.

International cooperation is key to promoting the high-quality development of the BRI. China and the countries and regions along the BRI routes have a huge consumer market and momentum for sustained economic development, and they are at different stages of economic development. It is the differences in the distribution of industries and stages of development which create the expectation that China and the countries concerned will realize economic complementarity and industrial linkages. Under the BRI initiative, China adheres to the core values of mutual benefit and win-win cooperation, and actively cooperates with the BRICS countries, the ten ASEAN countries, and other Asian and European countries, either by signing memorandums of cooperation or establishing strategic cooperative partnerships, to strengthen international cooperation, enhance political mutual trust, promote diplomatic coordination, and drive the recovery of the global economy. This has created a new model of win-win cooperation and provided a new type of public good for global cooperation.

Figure 2 shows China’s trade with countries along the BRI from 2007 to 2021. China’s import and export trade with countries along the BRI has developed rapidly since 2007. In particular, China’s exports to 64 countries along the BRI have increased from US$261.9 billion in 2007 to US$1.0243 trillion in 2021, with an average annual growth rate of 20.79%. During the same period, the exports to China of the 64 countries along the BRI increased from US$207.8 billion to US$771.9 billion, with an average annual growth rate of 19.39%. In terms of trade balance, before 2005 China usually ran a deficit in trade with countries along the BRI. Since 2007, however, China has run a trade surplus with the countries along the BRI due to exports growing faster than imports. That surplus reached a new high of about US$252.4 billion in 2021. Countries along the BRI have different resource endowments: Some are rich in energy, some have broad market prospects, and some are in urgent need of infrastructure construction. Generally speaking, China and the countries along the BRI have complementary resource advantages and strong economic complementarity, and there is great potential and space for cooperation. Over the past decade, bilateral trade relationships between China and the countries along the BRI have developed rapidly, laying a solid foundation for further cooperation between those countries and China.

Figure 2.   China’s trade with countries along the BRI

The large number of countries and the complexity of geopolitical relationships make BRI construction vulnerable to geopolitical risk, that is, the direct or indirect impacts of international political actors and events on transnational corporations or key value chain partners. Such impacts can expose enterprises engaged in BRI joint construction to the risk of loss of benefits and opportunities. Wars between states, power shifts, multilateral economic sanctions and interventions, terrorist attacks, and regional tensions or rivalries between major powers can all adversely affect the normal operation of business infrastructure and enterprise supply chains. For example, in order to maintain its global hegemony, the United States has, since the Obama administration, insisted on pursuing the Asia-Pacific rebalancing strategy, and with the help of mechanisms such as the “trilateral security partnership” between Australia, the UK, and the United States (AUKUS), and the Group of Seven (G7), it has expanded the rebalancing region, from the national security alliance point of view, into “an arc extending from the Western Pacific and East Asia to the Indian Ocean region and South Asia.” Although the Trans-Pacific Partnership (TPP), which the United States led in organizing in the international economic arena, has failed to advance effectively, the United States has adopted workarounds, using high-threshold, high-standard trade rules to intervene in Asian-European economic interconnection and hinder China’s participation in global economic development. For example, using carbon tariffs, environmental subsidy taxes, green technology standards, green environmental labels, green packaging, green quarantine, green subsidies, and other means, it has practiced trade protection in the name of low-carbon development; through technical barriers, artificially raising market access thresholds, and restricting imports of products from developing countries by the United States and its Asian and European allies, it has weakened the competitiveness of products from developing countries; it has established the US-EU Trade and Technology Council (TTC), joining with its allies to curtail the technological conditions necessary for China’s development of a digital economy, and to seek monopolies on a number of technologies in the field of digital trade; and so on.

II. Assessment of BRI Construction Economic Security Risks

From layout initiation to high-quality development, the development stage of BRI construction has changed, and the spillover effects of economic security risks are increasingly pronounced, requiring China to clarify the economic security risks in construction and improve the level of refined management. The BRI crosses the Eurasian continent, connecting many Asia-Pacific and European countries. It covers a large area, involves many countries, and faces a complex social environment, which means that it will inevitably face numerous economic security risks in the construction process.

(i)    The manifestation of economic security problems

1. The risk of global economic barriers. Most of the countries along the BRI are developing countries, and in the trade and investment system dominated by western countries, their participation in global free trade and investment is often restricted by trade barriers, industrial transfer, and even economic sanctions. Under their Indo-Pacific strategies, the United States and Japan are trying to use the Asia-Africa Growth Corridor as a platform for building so-called “institutional connectivity” as a counterbalance to China’s “material connectivity.” The concept of “extensive consultation, joint contribution, and shared benefits” advocated by the BRI may conflict with the industrial barriers imposed by some countries, leading to trade and investment restrictions on the grounds of national security. After they go global, China’s private enterprises may be more vulnerable than state-owned enterprises (SOEs) to the adverse effects of political and social actions of host countries, thus bearing more risks of national economic barriers.⁵ The tariff barriers between China and the countries along the BRI have different industry distributions, which implies that different strategic initiatives may have different regional and sectoral effects, and also implies that different strategies may lead to different supply chain adjustments and logistics developments. Table 1 presents import and export tariffs calculated using the Global Trade Analysis Project (GTAP) model. The model is a global multi-region, multi-sector computable general equilibrium (CGE) model, with U.S. dollar amounts in 2011 as the base period. It includes basic data on 140 economies and 57 industries worldwide, and can reflect the extent of bilateral economic barriers.⁶ In the GTAP model framework, changes in a country’s economic policy not only generate domestic effects, but also have impacts on other countries through international trade and foreign investment. As shown in Table 1, textiles exported from Russia to China were subject to a tariff of 17.23%; Chinese agricultural and textile exports to Europe were also subject to tariffs of 9.47% and 9.95%, respectively; transportation equipment exported from Europe to China was subject to tariffs as high as 19.18%; and China’s agricultural, transportation equipment, and textile industry exports to the Middle East and North Africa (MENA) faced tariffs of 16.87%, 17.24%, and 12.04%, respectively; MENA’s textile industry exports to China are also subject to 9.66% tariffs; China’s agricultural and textile exports to South Asia are subject to tariffs of 22.5% and 16.15%, respectively; and South Asia’s exports of transportation equipment to China face a 6.36% tariff. Overall, there are different degrees of trade barriers between China and the countries along the BRI, mainly in the agriculture, textiles, paper products, publishing, chemical, rubber and plastic, and transportation equipment industries. If trade liberalization can be achieved between China and the countries along the BRI, it is foreseeable that the above industries will see further development.

Table 1. Tariff barriers (%) between China and countries along the BRI

2. Investment risk of countries along the Belt and Road. From a ranking of the investment risk levels of the top ten countries in terms of investment stocks and flows in 2019 (see Figure 3), it can be seen that Singapore is the host country with the largest investment stock and flow, and is also the only country among the top ten BRI countries in terms of scale of investment with a low risk rating (AAA-AA). Countries with medium investment risk (A-BBB) include the United Arab Emirates, Cambodia, Indonesia, Laos, Thailand, Malaysia, Kazakhstan, Russia, and Vietnam. With regard to investment flows, Iraq, as a major new investment target country for China, has a high investment risk level (BB-B) due to the influence of rampant extremist forces and frequent terrorist attacks and kidnappings, among other factors. In terms of the risk ratings for BRI investment, there are more medium-risk countries and fewer high-risk and low-risk countries. The risk ratings of RCEP member countries are better than the overall level. The overall investment risk of countries along the BRI is controllable, but there is still a need to fully take into account the trade-off between investment necessity and risk.

On one hand, China’s rapid rise has made developed countries such as the United States and some developing countries such as India vigilant, and trade and investment reviews on national security grounds have proliferated, making the complexity and volatility of the international investment environment increasingly severe. On the other hand, Chinese enterprises have insufficient experience in outbound investment, and the risk assessment system for outbound investment is weak, resulting in some cases of blind investment, duplication of investment, and even investment failure in the layout initiation stage. Once the scale of Chinese investment exceeds the economic scale of the host country, it may reduce the return on investment.⁷ At the same time, the diversity and instability of local standards, laws, and regulations also inhibit transnational investment and increase the uncertainty of overseas investment by Chinese enterprises. In addition, it is also necessary to be alert to the investment risk brought about by waving necessary conditions. For example, when competing with Japanese companies for high-speed rail projects in Malaysia, Thailand, and Indonesia, Chinese enterprises waived host government guarantees. Some scholars believe that this will bring about uncontrollable investment management risks for China, resulting in bad infrastructure investments and causing huge economic losses.⁸ Against the background of slowing growth in overseas investment by Chinese enterprises and the overall shrinkage of the scale of investment, it is more important to pay attention to investment risks in countries along the Belt and Road.

Figure 3.    Country risk ratings of Chinese investment in countries along the BRI

3. Risk of hollowing out domestic industries. Although China has become a net exporter of capital, it is still in a critical period of industrial upgrading and transformation, the quality of China’s manufacturing industry is not yet high, and the demographic dividend is gradually disappearing. Under these circumstances, overly rapid growth of overseas investment could lead to imbalances in China’s industrial structure. For example, with China’s central and western regions needing to develop and improve their industrial systems, overemphasis on international production capacity cooperation while neglecting the industrial cascading between the eastern and western regions of the country will increase the risk of hollowing out domestic industries. Lessons can be learned from the experience of predecessors. For example, industrial hollowing out in the United States led to its financial recession and fiscal deficits, and in Japan, the transfer of a large number of manufacturing industries following the Plaza Accord also harmed its employment, technological development, and industrial restructuring. In the actual process of expanding industries into overseas markets, China should distinguish between different types of industrial investment and transfer, and adopt corresponding strategies for them. First, for the production substitution type of transfers carried out purely for reasons of cost reduction, environmental protection, and trade friction alleviation, if the industries and regions in which they are located fail to fill the gaps left after the transfers with new industries and their required production factors, it will inevitably lead to industrial hollowing out. In addition, even if production substitution-type transfers are done out of necessity, production lines of medium- and high-end products should be appropriately retained or regional headquarters should be established in order to maintain close links between overseas production bases and the sectors in China. Second, for small and medium-sized enterprises (SMEs) with low productivity, actively promoting their outward industrial relocation can alleviate their business difficulties. When an economy’s high-speed growth ends, and as markets becomes saturated and factor costs rise, factors of production and resource allocation will rapidly gravitate to the leading enterprises with large scale effects, while SMEs with smaller scale effects will face enormous competitive pressure in the industry or even suffer bankruptcy and closure. This will in turn have negative impacts on the economy, consumption, employment, and social stability. The transfer overseas of SMEs whose productivity is lower but still high relative to the target countries can not only help the SMEs allay their difficulties, it also provides more development space and resources for the development of new industries, thereby improving overall industrial productivity. Third, for those industries that can develop emerging markets by increasing outward investment, their strategic transfer should be given support. In the final analysis, the key to avoiding the danger of hollowing out local industries due to international industrial transfer lies in continuous industrial upgrading. Under the of BRI initiative’s concept of extensive consultation, joint contribution, and shared benefits, partner countries usually hope that China will help them develop high-quality production capacity, rather than simply hoping to take up China’s excess capacity. While giving full play to its traditional advantages in joint construction of the Belt and Road, China needs to strengthen multi-party cooperation, jointly create and cultivate new advantages, vigorously promote the development of high-end industries, make up respective shortcomings, actively promote the division of labor in production chains, and develop new growth areas in trade cooperation, so as to improve the level and quality of trade.

4. Host country business environment risk. The global economic recession and the persistence of the COVID-19 pandemic have led to serious impacts on the recovery process of the world’s economies. The economic risk index of countries is rising globally, and uncertainty due to economic activities deviating from expectations is increasing, which increases the risk that outward investment income will suffer losses. When investing in countries along the Belt and Road, policies that lengthen or even restrict the cross-border investment process will increase the cost of outward investment and reduce the efficiency of BRI project construction.⁹ Poor investment environments, weak ability to repay funds, and incomplete credit systems of countries along the BRI have increased the economic security risks for Chinese enterprises participating in BRI construction.¹⁰ Under the pretext of excessive debt burdens, governments in some countries along the BRI have refused to guarantee Chinese loans, asked China to provide loans with ultra-low interest rates, or used previous investment projects as threats to require China to provide additional financial assistance. For enterprises, different investment motivations will determine the degree of business environment risk they face. First, Chinese enterprises are more competitive than their counterparts in developed countries in business environments where economic systems, credit systems, and markets are not that well developed. In the case of Chinese enterprises whose motivation for foreign direct investment (FDI) is to seek to expand their markets, they tend to choose as their investment targets developing countries with higher risks but greater market potential. Second, developing countries with a small bilateral trade base and a strategically important position are often prioritized for FDI, but many developing countries tend to have low levels of economic development,¹¹ and most of the entities preferring this type of investment are SOEs. Since SOEs generally have an ownership advantage and the ability to withstand risk when making FDI, they are more tolerant of market risk. Table 2 presents a ranking of some countries along the BRI by business environment. According to statistics in the World Bank’s Doing Business 2015 report, countries along the BRI pose security risks when it comes to starting a business and protecting investors. Among them, Myanmar ranks last in the world in terms of the environment for starting a business, which is time-consuming, laborious, and extremely costly. East Timor ranks last in the world in three aspects: registering property rights, enforcing contracts, and resolving insolvency. When settling business disputes, it takes 1,285 days from the time a plaintiff files a lawsuit to the actual payment. Afghanistan ranks last globally in terms of investor protection. Under the country’s legal framework, transparency and credit disclosure levels are low, and the governance system is very poor. Uzbekistan ranks last globally in terms of cross-border trade, with import and export costs as high as US$6,452 per container and US$5,090 per container, respectively.¹² The many security risks in the business environment of countries along the BRI undoubtedly increase the cost and risk of overseas investment for Chinese enterprises, and should be given extra attention.

Table 2.       Business environment ranking of some countries along the BRI

5. Risk of host country fiscal unsustainability. Some of the countries along the BRI routes suffer from financial weakness, poor economic structure, and high degrees of dependence on foreign investment, and the risk of excessive external borrowing by society as a whole has become more prominent, especially as the impact of COVID-19 pandemic was coupled with global trade frictions. The production chains and supply chains of some of the countries along the routes stagnated, consumption shrank, currencies depreciated, and national economies quickly fell into difficulties, adding to their existing debt problems. In order to protect the smooth operation of their economies and the stability of their financial systems, countries have generally implemented large-scale fiscal stimulus policies, resulting in a sharp expansion of the scale of global sovereign bond issuance, which has further amplified global sovereign debt risk. When a country’s sovereign debt level exceeds its economy’s repayment capacity, it is often the case that debt default risk arises, which then spreads to other countries through the credit transmission mechanism, resulting in a concentrated outbreak of sovereign debt crises and even adversely affecting the orderly operation of the international financial system. Among the 64 countries participating in BRI joint construction, eight countries face serious debt risks, and the financial ratings of 27 countries are “junk.”¹³ Existing research shows that the debt risks of countries along the routes have strong spillover effects on China. This brings unsustainable risks to the foreign investment of China and other countries. As shown in Table 3, China’s neighboring countries, such as Pakistan, Laos, and Mongolia, have very obvious debt risk spillover effects on China, and their debt repayment pressure is higher. In addition, as a major creditor of Sri Lanka, Sudan, Zambia, etc., China also faces debt risk spillover effects from the limited debt service capacity of these countries. The debt risk spillover effects of European countries such as Cyprus, Greece, and Italy on China are also obvious. Considering the economic development environment’s adaptability problems, as well as infrastructure project construction problems, from the perspective of underlying development principles, the large-scale infrastructure construction China has initiated since the commencement of BRI construction will face the challenge of how to continue to promote joint construction cooperation and economic development.¹⁴ At the same time, excessive borrowing for certain investment projects and the lack of comprehensive and scientific investment risk assessment and rational resource allocation will easily lead to inefficient spending or investment. This will not only make it difficult to drive employment and economic growth, but will also make it difficult to recover the loans, which may jeopardize China’s good outward investment situation.¹⁵

Table 3.       Spillover intensity for China of the debt risks of countries along the BRI

(ii)   Analysis of the governance elements of economic security issues

The BRI is based on international economic cooperation, but the successful construction of the BRI is closely related to international political, economic, cultural, and other factors. Research on economic security in BRI implementation should not only consider it as a trade cooperation issue, but also analyze the causes of economic security issues from the perspectives of economic investment, geopolitics, international order restructuring, and China’s foreign relations, and explore the underlying political, cultural, and social factors of economic security and their related impacts.

1. Safeguarding national interests is the political basis for promoting BRI construction. National interests are the foundation of international relations, and the success of BRI construction has a bearing on the interests of China and the countries along its routes, as well as the interests of countries outside the region. The BRI was proposed as a top-level design for China to engage in economic diplomacy, providing an open way for developing countries to participate in international economic cooperation while safeguarding and developing their national interests. Driven by national interests, countries and regions along the Belt and Road, and even in neighboring regions, have chosen extensive consultation, joint contribution, and sharing of benefits with China, and diversified cooperation mechanisms have been created. In the traditional mode of economic globalization led by Western countries, the countries concerned are subject to the long-term constraints imposed by developed countries on supply chains and production chains, and they are often in a passive state. Therefore, whether China does not demand benefits or excessively demands benefits in the construction of the BRI, it will raise doubts among other countries, and even lead them to become passively embroiled in “pan-politicized” sanctions. For example, China’s cooperation with Central Asian countries in the field of energy is likely to arouse the suspicion of other countries, worried that the Eurasian integration process centered on them will be interfered with.¹⁶ Some countries even believe that since China’s investment projects have strategic benefits, it should not pursue commercial gains from them, and this conception will lead to a decline in the confidence and determination of the participating countries to cooperate. Some participating countries will even adopt strategies “waiting for, relying on, and requesting from others” or “free-riding,” which will not be conducive to China’s promotion of long-term and healthy BRI development.

2. Achieving economic growth is the basic demand for promoting BRI construction. At the national level, promoting development through cooperation and promoting growth through joint construction are the basic demands of countries along the BRI for participating in capacity-building and trade cooperation. Therefore, during the layout initiation phase of BRI construction, China has participated in the construction of railroads, highways, airports, shipping facilities, industrial parks, and other infrastructure in other countries, providing high-quality conditions for the transfer of international production capacity, and thus helping more countries to develop their industrial systems and manufacturing capabilities. The continuous large-scale growth of China’s foreign investment and foreign construction has generated considerable contradictions with China’s still insufficient experience in foreign investment and construction, thus giving rise to many investment security risks, financial and fiscal risks, and project cooperation risks. Some scholars have pointed out that in major infrastructure construction projects involving Russia, China faces the risk of not being able to complete the projects in a timely fashion because China is unable to comprehensively assess the actual implementation risks of Russian projects.¹⁷

At the enterprise level, transnational corporations are the main micro-level actors in BRI construction. Due to the lack of large multinational enterprises in countries along the Belt and Road, as well as high construction costs and long payback periods, most of the enterprises participating in investment, construction, and operation are Chinese SOEs. Although SOEs are quick to act, the backgrounds of SOEs cause the relevant countries to worry about changing the traditional geopolitical order, which exacerbates the pan-politicization of economic issues. This is not conducive to attracting other countries and their enterprises to share the risks and costs of investment and construction, and results in excessive international capital exports by China and a constantly expanding gap between the domestic [supply and] demand for capital, thereby harming the economic foundation of industrial upgrading and transformation.

3. Respecting cultural customs provides solid assurance for the orderly construction of the Belt and Road. As the BRI enters a period of intensive construction and operation, exchanges between countries and enterprises are becoming more and more frequent, and in order to enhance mutual trust and mutual assistance, it is necessary to respect the customs and cultures, and especially the religious beliefs, of all nationalities. Many countries along the BRI have their own unique cultural backgrounds, and due to a lack of exchanges with foreign cultures, they often have a strong sense of resistance to cultures different from their own. Religion is the cultural form most likely to trigger conflict.¹⁸ Geographical and ethnic cultural differences may lead to cultural risks, not only preventing cultural exchanges from playing their role in mutual learning and understanding, but also causing social exclusion and aggravating conflicts between ideologies and national consciousnesses.

Social identity is the concentrated manifestation of values, beliefs, and action orientations shared by members of a society.¹⁹ Failure to gain social and cultural identification, or disrespect for the other party’s cultural background, will give rise to a number of uncertainty risks that deviate from economic interests and national security, and cannot be accurately predicted or effectively addressed. Therefore, some scholars have suggested that if Chinese investors lack outbound investment experience and fail to establish a sense of “ownership” and shared interests within the host community, cultural and country-specific differences may easily lead to questioning and protests from host country nationals.²⁰

4. Multilateral cooperation is an important mechanism for the long-term development of the BRI. The diversity of political, economic, cultural, and social conditions in the countries along the BRI requires China to work with participating countries to build a new development-oriented model of cooperation. BRI construction involves a wide range of inter-governmental, inter-enterprise, and government-enterprise relationships, and is prone to multi-party disputes and controversies.²¹ It is only by building multilateral mechanisms, advocating the liberalization of global trade and investment, and respecting the political aspirations, economic interests, and cultural diversity of different countries that a community of common destiny for mankind can be built. If Chinese SOEs come to be seen as tools for the Chinese government to expand in international markets and transfer excess capacity, both greenfield investments and cross-border mergers and acquisitions will easily arouse the hostility of host countries. It would thus hinder the establishment of solid multilateral cooperation and lead to increased risk for overseas investment.²²

The key to multilateral mechanisms lies in effective national consultations, political and economic exchanges based on mutual trust, equal cooperation mechanisms, and benefit distribution models. In the course of China’s promotion of BRI construction, the political expression and representation of interests of the participating countries have demonstrated their extreme desire for institutional fairness, and also reflected their demand of safeguarding national security. If it is impossible to promote the establishment of political and economic mutual trust, China should be cautious in dealing with the cooperation demands of different categories of participating countries. Within the framework of mutual benefit and win-win outcomes, it should realize common development that goes beyond traditional economic cooperation, so as to guard against the risk of “active default” (intentional breach) by participating countries.

III. Governance of, and Responses to, BRI Economic Security Issues

At the BRI fine-tuning and high-quality development stage, China should strengthen theoretical and practical research on the security risks, proactively anticipate crises and risks, build an economic assurance system, strengthen the security protection of outbound investment, and form a multi-level economic security governance and response program based on policy instruments, diplomatic strategies, and economic measures.

1. Coordinate construction measures and differentiate responses to the different types and levels of economic security issues from different countries. After a systematic review, the main types of economic security issues are found to vary across countries along the BRI that are closely tied to its construction, as well as the 141 countries and 32 international organizations that have signed cooperation documents with China. For some countries, the main focus is on economic security problems associated with political factors, for some it is on investment security risks and enterprise cooperation risks caused by religious and cultural differences, and for some it is on industrial transformation risks directly arising from economic interests. Economic security problems arise for different reasons and are manifested in different ways. Therefore, in the spirit of cooperation and inclusion, China should proactively study and distinguish between the risk characteristics of different countries, and adopt targeted diplomatic strategies and economic actions. For example, where China’s share of a country’s capital investment is disproportionate, it can take the approach of cooperating with enterprises, third parties, and international financial institutions influential in that country to increase the host country’s cost of default.

2. Clarify the construction objectives and seek to maximize the convergence of national interests. In determining the objectives of BRI cooperation, we should avoid two extremes. One extreme is to put too much emphasis on safeguarding China’s interests, proposing goals such as transferring excess production capacity and developing overseas energy resources. This would be regarded as political, economic, and cultural intrusion by countries outside the region and even participating countries, leading to a defensive mentality in economic action, and strengthening the host country’s power to constrain foreign investment in political action, which would not be conducive to achieving the BRI’s “extensive consultation, joint contribution, and shared benefits.” The other extreme is to completely disregard China’s interests. This would lead participating countries to question the institutional fairness of the BRI, and even affect the motivation of the countries concerned to participate in it, thus reducing the efficiency and effectiveness of China’s outward investment and construction. Therefore, when China externally expresses its goals for participating in BRI construction, it should clearly emphasize the expansion of opening up to the outside in the new era, the joint construction of a fair and orderly international trade and investment system in a spirit of cooperation and inclusion, and the building of a system of economic diplomacy that is mainly based on outward investment and international trade, and ultimately promote the building a community of common destiny for mankind, guided by the concepts of “sincerity, real results, amity, and good faith,” and “amity, sincerity, mutual benefit, and inclusiveness.”

3. Adhere to international morality and justice, and jointly build Chinese-foreign BRI cooperation mechanisms. With clear construction goals in mind, and starting from the perspectives of promoting global development, building a community of common destiny for mankind, and respecting the rights of developing and emerging market countries to a say in international affairs, under the BRI China should give full play to its advantages as a major economic and trade power, and work with more countries to achieve national development and regional economic growth through multilateral cooperation mechanisms, emphasizing that, in BRI construction, China will never replicate the “carrot-and-stick” approach to economic diplomacy adopted by the West. While respecting the strategic interests of all participating countries, China should work with them to promote the implementation of specific measures so that each country gradually achieves its national interests, and then promote mechanism-based construction, thereby enhancing the feasibility of measures for China’s BRI and subsequent construction and operation. Specific cooperation mechanisms include financing and taxation mechanisms under the principle of marketization, market-based management mechanisms to promote international cooperation, investment protection mechanisms, dispute resolution mechanisms, international legal assurance mechanisms for national consultations, economic dispute settlement mechanisms, and so on. Joint construction of these cooperation mechanisms can lay a firm foundation for creating new fair and rational international economic mechanisms and reforming existing international rules.

4. Strengthen risk assessment and build an early warning system for BRI economic security. Existing studies have made helpful explorations of economic risk assessment. The Institute of World Economics and Politics of the Chinese Academy of Social Sciences has proposed an evaluation index system that quantitatively evaluates five aspects—economic foundation, solvency, social resilience, political risk, and relationship with China—and pointed out that although the scores of countries along the BRI in terms of relationships with China are significantly higher than those for the overall level, the investment risks of individual countries along the BRI nonetheless merit attention.²³ Other studies show that in terms of overall country risk, China’s FDI in most Central and Eastern European countries and a few West Asian countries is characterized by relatively low political and economic-financial risks.²⁴ In the future, China will need to continuously monitor the situations of the countries along the routes and those outside the region, build an economic security [risk] assessment, identification, rating, and response system, refine the security levels, and optimize the early warning mechanism and response measures to prevent being trapped in economic passive risk.

5. Respect the participating countries and strengthen political, economic, and cultural mutual trust in BRI construction. On one hand, it is necessary to avoid misunderstandings or suspicions on the part of countries along the routes, and on the other hand, it is necessary to ensure that the interests of countries are not infringed upon, so that all countries can express their demands on an equal footing, and we advance side-by-side with the countries along the routes, whatever ups and downs we encounter. To this end, the first step is to establish a multilateral security mechanism between China and other countries, and to. In close coordination with national political, diplomatic, economic, cultural, and legal affairs, we should scientifically design and determine the timing, mode, scale, and scope of the “going global” of our military forces, so as to shape favorable strategic postures and deployment patterns.²⁵ Secondly, inclusion and mutual are fundamental demands for a cultural community, and China should strengthen social and cultural exchanges and cooperation with countries along the routes. We should disseminate and introduce Chinese cultural practices and the core values of equality, mutual trust, and mutual respect. We should also take the initiative to learn the cultural practices of other countries, and respect cultural differences in learning and exchanges, paying particular attention to the complex issue of religions and beliefs in Central Asia, so as to prevent religious and cultural risks from causing cultural barriers, economic losses, and even political conflicts. By organizing various cultural exchanges such as youth exchange visits, signing of memorandums of understanding, film and television co-production, cooperation in scientific research, and establishment of sister provinces and cities, we should shape China’s positive image, and with the help of our cultural soft power, let the world understand China and let China integrate into the world.

6. Strengthen multilateral cooperation and deepen the connectivity of BRI countries. Based on the economic development strategies of the countries in the region, as well as the current state of development in connectivity among countries and their different basic economic demands, a development strategy of overall consideration, differentiated treatment, and gradual advancement can be adopted. With regard to crisis control, further exploration can be made of establishing a crisis control exchange mechanism, specifically including the establishment of a cooperation fund, the organization of theoretical research and joint law enforcement, etc., so as to properly handle the economic risks and crisis control issues among participating countries. In multilateral cooperation, China needs to have a good grasp of the strategic positioning of each country, especially in the context of the strategic game between China and the United States, and it should pay attention to the political stability and international relations of neighboring regions, so as to avoid the risk of “strategic overstretch.”²⁶

7. Clear multiple channels and build platforms for communication between governments, industries, and enterprises. The Chinese government can use various means to expand political cooperation with countries along the routes, encourage the strengthening of friendly exchanges with cities of various countries, create financial support mechanisms for cooperative joint construction, and eliminate the prejudice and misunderstanding that the BRI is being built by the Chinese government to achieve the goal of controlling the economies of other countries, which arise due to overseas investment ownership. Industry exchanges and enterprise communication should be emphasized, and the protection of private multinational enterprises participating in the BRI investment and trade should be strengthened, for example by establishing a standard cooperation framework, improving the financing mechanisms of the Silk Road Fund and the Asian Infrastructure Investment Bank, etc. In order to attract capital from more countries, the infrastructure construction and connectivity system should respect the underlying principles of economic growth, and synchronization with the economic development needs of the countries where construction is underway should be improved, which will in turn improve the investment expectations of private capital,²⁷ thus increasing private capital investment in BRI construction.

IV. Conclusion

As emphasized by General Secretary Xi Jinping, the BRI is not a conspiracy by China, nor is it a post-World War II Marshall Plan. We should put policy communication, infrastructure connectivity, unimpeded trade, financial integration, and closer people-to-people ties into practice, create new platforms for international cooperation, and add new momentum for shared development, so that the BRI benefits more countries and people.²⁸ Existing practice has shown that, for countries along the routes, BRI cooperation has: Effectively upgraded transportation, energy, and information technology infrastructure levels; effectively reduced their debt risks by reducing the scale of their debt and enhancing their financial sustainability; and effectively improved the allocation efficiency of production factor resources and narrowed regional development gaps by promoting the flow of production factors such as talents, capital, and high technology. By strengthening economic ties among countries and deepening their investment and trade cooperation, it has improved the economic development conditions of the regions along the routes, promoted environmental upgrading and transformation in countries along the routes, and advanced the trade liberalization and facilitation levels of countries and regions along the routes in an orderly manner.

China’s long-term joint construction and cooperation with countries along the BRI requires adherence to bottom-line thinking and focusing on preventing economic security risks. To safeguard national economic security in the construction of the Belt and Road, it is necessary to adhere to the global governance concept of “extensive consultation, joint contribution, and shared benefits,” and strengthen the overall control of national economic security from the three dimensions of governance concept, governance capacity, and governance system, so as to form a more comprehensive and better governance system for economic security and economic development of the Belt and Road, effectively safeguard national economic security during BRI construction, and promote higher levels of opening up to the outside and economic development, thereby advancing the building of a community of common destiny for mankind in an orderly manner, and contributing China’s wisdom to the world’s economic security.