The Challenge to the Challenge: The Belt and Road Initiative’s Implications for Liberal Trade and (Digital) Finance and the Response in Other Countries

The project is envisioned with a bipod structure.

1. Documenting and defining the nature of the challenge to the international liberal script

This project considers the implications of China’s Belt and Road Initiative for the liberal script. Researchers focus on two policy areas, namely trade and finance. Both are critical for the potential re-allocation of wealth across borders. They begin with a definition of the script in this area. The liberal script prescribes free markets and free-moving capital. The project discusses the international arenas, which are generally international organizations, where conflicts over these issues play out.

The research team uses the first part of the project documenting, and defining, the nature of the challenge to the international liberal script. To document the challenge at the international organization level, they will conduct expert interviews at the WTO and in the OECD. To document the challenge from below, they will interview consumers and firms that work on the BRI outside of China. They will also interview Chinese officials and rely on Chinese secondary sources to document the nature of the challenge from the Chinese side.

2. Documenting and explaining the challenge to the challenge

After defining the nature of the challenge, the second part of the project will document, and explain, the challenge to the challenge in trade and (digital) finance. The research team focus on three sets of actors—the European Union, major emerging market economies, such as Brazil and India; and small emerging markets, which on their own cannot respond to the Chinese initiatives.
In terms of the “challenge to the challenge”, they expect that at least four topics will be important: a) new industrial policies to update trade and tax digitalization, b) types of coalitions, c) narratives for different audiences, and d) reforms of existing international organisations or building of new regimes. To explore these four topics, the team will delve into questions of domestic political economy, as well as international institutions and negotiations.