Public procurement, regional integration, and the belt and road initiative

Abstract

China's Belt and Road Initiative (BRI) is a mechanism through which countries can upgrade connectivity-related infrastructure, including through cross-border projects, complementing traditional sources of finance. An overarching goal of the BRI is to reduce trade costs between China and partner countries, in part by helping to integrate regional markets. The large-scale borrowing associated with BRI projects has given rise to potential debt servicing and sustainability concerns. The rate of return of BRI regional infrastructure projects depends in part on the integrity of public procurement processes and realizing value-for-money objectives. To date BRI projects financed by Chinese institutions have been largely awarded to Chinese companies. Enhancing transparency of BRI procurement processes and international cooperation among countries participating in the BRI would help achieve value for money goals and support the integration of BRI countries.