In 2013, just a year after being selected to lead the People’s Republic of China, President Xi Jinping launched one of his signature policy maneuvers: the Belt and Road Initiative (B.R.I.). The Initiative invests in development through loans provided by state-owned Chinese banks. And these loans are big.

After running the Initiative for over a decade, the P.R.C. has made nearly $1 trillion of investments, primarily in developing countries. And it shows no signs of slowing down: in nominal terms, last year saw the highest spending on B.R.I. projects yet. Developments funded by the B.R.I. include mining infrastructure, manufacturing facilities, harbors, and even airports.

Although the Initiative is framed as investing in those along historical trade routes, in practice, countries around the world participate in the initiative. And although the initiative is primarily aimed at lower and middle income countries, some of the more than 150 countries which are party to the Initiative are major players on the international stage: member states include Saudi Arabia, Pakistan, and South Africa.

Joining the B.R.I. is simple. States sign a memorandum of understanding with China. This memorandum is typically non-binding and simply signals a willingness to work together. The participating country and the P.R.C. might then sign binding secondary agreements for individual projects under the Initiative.

The World Bank has estimated that, because of Belt and Road:

Increased trade is expected to increase global real income by 0.7 to 2.9 percent, not including the cost of infrastructure investment. The largest gains are expected for corridor economies, with real income gains between 1.2 and 3.4 percent. Increases in FDI would further boost these effects.

If the World Bank is correct, the global economic gains provided by the B.R.I. are indisputably good. But although the Initiative may have global economic benefits, it hasn’t been nearly as much of a success story for China’s banks. The two primary lenders of capital for Belt and Road projects, the China Development Bank and the Export-Import Bank of China, have attempted to obscure losses caused by failed loan repayment. Failure to repay has, in fact, become such a serious enough issue that China has resorted to increasingly coercive tactics to solicit repayment. Meanwhile, many of the infrastructure projects funded under the B.R.I. have been downright wasteful, leaving China in the awkward situation of attempting to force repayments of loans used to build pointless and, at times, shoddy infrastructure projects.

So, if the world is economically benefiting from Belt and Road while Chinese banks suffer because of it, then why does China continue to fund it?

Soft Power

The most commonly cited benefit of the B.R.I. is soft power. By providing funding to countries around the world, the P.R.C. is able to present itself as a benevolent state ready to take up a dominant position in the rules-based international order. Especially because of the global proliferation of democracies, it is in China’s best interests to develop a popular image for itself in the global imagination.

If soft power is/was China’s goal with Belt and Road, it would be following in the footsteps of other major powers. Although China proved uninterested in joining the Paris Club, it is quite possible that the B.R.I. was conceived of as a way to gain the soft power traditionally associated with lending options.

But although soft power may have been high on China’s list of priorities when creating the B.R.I., it seems unlikely that it remains a goal. China’s recent efforts to recoup debts from states which have fallen behind on repayments, up to, and including, the seizure of property it has helped develop, seems likely to endanger whatever popular support it gained from its lending.

Profit and Debt Trap Diplomacy

It is also possible that the P.R.C. created Belt and Road in order to profit. Although its banks have suffered in the short term, Belt and Road projects typically use Chinese labor for their construction, meaning that China’s broader economy sees major benefits.

Some have gone further, arguing that China’s ability to seize projects which have not seen repayment means that it is able to build up a more global presence. Such critics point to the seizure of a port in Sri Lanka. The port, which was leased to China for a length of 99 years after Sri Lanka was unable to repay its loans, is located just miles from a strategic waterway. Chinese control of the port could potentially strengthen China’s naval capabilities in the Indian Ocean. In fact, it already has: China has since docked military vessels in the port.

Recent research suggests that there are no signs that the P.R.C. is engaging in debt trap diplomacy. Nevertheless, there is little question that Chinese banks handing out Belt and Road loans have engaged in a number of problematic practices. First, they have loaned more money to countries than those countries can comfortably commit to paying back. Second, B.R.I. loans tend to be at much higher interest rates than comparative loans from the World Bank or Paris Club lenders. Although the phrase “debt trap” may be stretching it, there is little question that banks implementing Belt and Road have engaged in potentially exploitative lending practices. Even though Belt and Road is a state initiative, the use of poorly regulated market-driven corporations to distribute funds sets it up to engage in problematic ways.

Dependence

It is also true that there is a certain degree of power inherent in funding other states. If a smaller, weaker state becomes accustomed to receiving funding, threats to cut off that source of support can be used as a means to complement the allure of funding. A world dominated by states dependent on China will naturally become more inclined to support the P.R.C. on matters of concern to it, thereby enabling it to exert greater influence on the international stage.

Resource Extraction

Still others claim that the purpose of the B.R.I. is to extract resources from developing countries. Those who claim that Belt and Road is about resource extraction argue that because China has enormous manufacturing capabilities, it is in its interest to gain access to raw material from developing countries in order to maximize its continued growth. Although this is an intriguing theory, I am ultimately skeptical of it. China has vast natural resources, and I’m not really sure that it needs to spend the equivalent of $1 trillion, much of it on transportation and manufacturing infrastructure, to access developing countries’ natural resources.

The Raison d’Être of the Belt and Road

Since B.R.I. hasn’t proven terribly profitable for Chinese banks, and given President Xi’s project of restructuring the rules-based international order, the Belt and Road Initiative seems like it should be destined to raise China’s national image. Yet high profile repayment struggles and exploitative lending practices would seem to put that assumption in question.

But maybe the exploitative lending practices and repayment struggles don’t really matter. Maybe the target audience for China’s soft power isn’t the world writ large. Because China’s lending practices are quite obscure, Belt and Road funds have been embezzled by corrupt local officials. Although China cracked down on corruption last year, it focused on Chinese government officials who embezzled B.R.I. funds, rather than foreign politicians and bureaucrats. China doesn’t need to convince the masses that the Belt and Road is good for their countries. If it can convince corrupt officials that it’s good for their pockets, they’ll be perfectly willing to advance Chinese interests on the international stage every once-in-a-while.

If this frame of analysis is correct, then China is building soft power and dependency not for entire countries, but for specific foreign officials. Given that China favors a particularly soft approach on the global stage, proffering “win-win” scenarios as its preference for international relations, this maneuver would fit into the broader Chinese approach to foreign policy. While I recognize that a leader-based approach does not fit into an international relations framework dependent on states as the dominant unit of analysis, I also do not think this possibility should be dismissed out of hand. Having national leaders who are personally beholden to the P.R.C. is just as effective, if not more effective, than national populations who see China as a positive force in the world.

Conclusions

There is little question that the Belt and Road Initiative has had enormous positive impacts on the global economy. The problem with the B.R.I. is not that it aids development, but that its final cause remains unknown. Although it may exist solely to build traditional soft power or to generate profit, it seems indubitable that the Belt and Road Initiative exists to advance the P.R.C.’s national interests. Given the country’s continued interest in financing the B.R.I., it seems almost certain that the Initiative is succeeding on whatever metric of success China is using to measure it.

States work to maximize their own self interests. Belt and Road is almost certainly an enormous investment in China’s future as a wealthier, more powerful, and more globally involved state.