Research pick: Stitching up the modern Silk Road - "Impact of the COVID-19 pandemic on global value chain and implications for the belt and road initiative"

China’s Belt and Road Initiative (BRI) is to be a modern-silk road that hooks together around 70 countries and international organizations in Africa, Asia, and Europe, to improve global infrastructure and trade between China and the rest of the world. It was initiated in 2013 as a major part of Chinese leader Xi Jinping’s foreign policy. However, the enormous capital investment needed and low profitability so far, mean its potential is yet to be fulfilled. Part of that potential is to contribute to the economic development of nations that have so far been marginalised by globalisation.

The emergence of the novel coronavirus, SARS-CoV-2, in China at the end of 2019, led to the ongoing COVID-19 pandemic, which has disrupted global value chains and has also had a major impact on the development of the BRI. Writing in the International Journal of Shipping and Transport Logistics, a team from China, South Korea, and the USA has looked in detail at the impact of COVID-19 on the BRI. They point out how the British withdrawal from the European Union, Brexit, and the US-China hegemonic conflict have also been working against the BRI.

The team explains that the pandemic has led to unprecedented economic damage and disruption to supply chains across the globe because of the need for entry bans, quarantines, and trade blockades as well as the ensuing and global protectionism that has emerged. These, the team writes are all barriers to international trade and have worked against the development of the global value chain. As it stands, COVID-19 has led to the delay of 40 percent of BRI projects with another 20 percent in serious financial strife. The researchers estimate that ultimately the impact may be between about 5 and 20 percent shrinkage of the global value chain.

In order to support the BRI and the long-term plans for the modern-day Silk Road, China must invest in marginalised nations and connectivity between markets despite international suspicions. It must also secure a strong supply chain in order to implement its “double cycle” economic policy to ensure its recovery in the wake of financial downturn and COVID-19.

Cheong, I., Yoo, J.H., Hong, K. and Lee, P.T-W. (2022) ‘Impact of the COVID-19 pandemic on global value chain and implications for the belt and road initiative’, Int. J. Shipping and Transport Logistics, Vol. 14, No. 4, pp.371–394.