China's Infrastructure Investment to the Belt and Road: The Case of the China-Indochina Peninsula Economic Corridor

Inspired by China's historical role as a central hub in the Silk Road, the Chinese government officially launched the Belt and Road Initiative (BRI) in 2013. The BRI aims at deepening regional economic cooperation on a transcontinental scale and investing in infrastructure that promotes regional connectivity over land and sea. In recent years, China's outward foreign direct investment (OFDI) has increased tremendously. Empirical evidence suggests that Chinese OFDI is about 40 percent higher in BR! countries than non-BRI countries. Under the BRI framework, China is currently a global leader in the construction of transportation infrastructure. In this paper, we examine the case of the China-Indochina Peninsula Economic Corridor (CIPEC) and investigate the macroeconomic implication of the BRI by conducting empirical study on Chinese OFDI to the CIPEC, analyzing China's infrastructure investment, and conducting case studies of BRI infrastructure projects in the region. Our findings draw implication for policy-makers in BRI nations who intend to attract Chinese infrastructure investment to improve regional connectivity. The lessons learned from these BRI projects hightlight the importance of institutional relationship, domestic politics, political stability, and policy uncertainty, which in turn shed light on future infrastructure projects between China and host countries under the BRI framework.