Scholars and pundits in the West have become increasingly alarmed that China’s planned Belt and Road Initiative (B&R) could further shift the global strategic landscape in Beijing’s favor, with infrastructure lending as its primary lever for global influence. The planned network of infrastructure project—financed by China’s bilateral lenders, the China Development Bank (CDB) and the Export-Import Bank of China (CEXIM), along with the newly formed and multilateral Asian Infrastructure Investment Bank—is historically unprecedented in scope. But the B&R is only the natural progression of a global sea change in developing economy infrastructure finance that has already been under way for more than two decades.
The truth is that the West long ago ceded leadership in this area to China, a phenomenon that was largely driven not by foreign policy but by domestic infrastructure policy. The same factors that keep large infrastructure projects from getting off the ground in the United States and Europe make Western-sponsored projects in developing countries less viable than their Chinese counterparts.
China’s approach to infrastructure abroad mirrors its approach at home. Projects are evaluated more on their impact than on the specific viability of the project in question. The Chinese tend to overvalue the beneficial economic spillover effects of infrastructure projects, while undervaluing the potential harms, whether economic, social, or environmental. The Western approach, by contrast, is more transactional and focuses on painstaking due diligence concerning the economic, social, and environmental consequences of a given project. These safeguards are in the interests of ordinary people in developing countries. But Western institutions have become so risk averse that the cost and time to implement such projects have skyrocketed. Western governments and the multilateral institutions over which they exert influence, such as the World Bank, must consider making their safeguarding process more flexible if they are not to leave the field open to Chinese monopoly.
Over the past two decades, Chinese construction firms have risen from relative obscurity to dominance over
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