Major infrastructure projects, such as China’s Belt and Road Initiative carry heavy implications for global trade and corporate supply chains that underscore the geopolitical, operational, and technological risks associated with such strategies
Key Insights:
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Creating a global trade network — China’s Belt and Road Initiative (BRI) aims to create a global trade network by developing and owning trade routes, which introduces significant geopolitical, operational, and technological risks.
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Rising geopolitical tension — The initiative has led to geopolitical tensions, with countries like Panama withdrawing from the BRI due to pressure from the United States.
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Seeking AI-driven advantages — Advancements in technology, such as AI and autonomous systems, could enhance control over supply chains, but also pose risks like surveillance and trade restrictions
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The Belt and Road Initiative (BRI), China’s infrastructure and trade strategy, was launched in 2013, and is that nation’s attempt to create a global trade network by developing and owning trade routes, including both overland and maritime assets. China compares it to the ancient Silk Road, but it is more than that.
To secure and control a trade and transportation network for predominantly Chinese supply chains, the BRI spans over 70 countries, in which massive investments in ports, railways, highways, and energy infrastructure have taken place. These assets are predominantly owned by Chinese companies; for example, Chinese state-owned enterprises (SOEs), particularly COSCO Shipping and China Merchants Port, have ownership stakes in numerous Western ports like Piraeus (Greece) and Valencia (Spain) that enhances China’s control over container shipment flows in Southern Europe.
While the initiative promises economic development and connectivity, it also introduces geopolitical and operational risks. As a result, the United States and other Western countries oppose participation in the initiative. Panama, the first Latin American country to join the BRI in 2018, announced in February 2025 that it would leave the initiative following pressure from the US. Indeed, with advancements in chip technology, goods tracking, autonomous systems, and the infusion of AI into supply chain operations, one can imagine the extent of control infrastructure owners could exert — from surveillance to trade restrictions.
The BRI thus represents a vertical supply chain strategy, allowing China to control not only the sourcing of critical materials but also their transportation and the infrastructure that enables it. Participation in the BRI can therefore pose significant geopolitical risks — not only for member countries but also for those that are relying on BRI infrastructure and may face tariffs or blockades. The initiative has the potential to further divide global trade into supporters and opponents.
China’s Belt and Road Initiative represents a vertical supply chain strategy, allowing China to control not only the sourcing of critical materials but also their transportation and the infrastructure that enables it.
The rise of geopolitical or country risk has become a dominant trend since the global pandemic five years ago, when companies began reassessing their supply chains. National regulations have since incentivized on-shoring or near-shoring activities. And this trend has only accelerated, as illustrated by declining foreign investment in China and reduced sourcing from the region.
Further, several government regulations support this shift. For example, in 2023, the US expanded export control measures on advanced technologies to prevent China’s (and other countries’) access to critical tech. In response, China restricted the export of rare earth minerals, disrupting US industries such as electronics, renewable energy, defense, and metallurgy.
Given this atmosphere, it’s not surprising that almost three-quarters (74%) of respondents identified geopolitical complexity as a top challenge, according to KPMG’s 2025 Industrial Manufacturing and Automotive Report.
Expanding the risk lens
Organizations that engage in global trade must now evaluate all the risk factors within their supply chains through a geopolitical lens, including the sourcing of raw materials and the final delivery to internal or external customers. Diversifying supply chains will often require near-shoring or on-shoring; and while these strategies may increase production costs, they can be offset by reduced organizations’ exposure to tariffs, logistics disruptions, and the cost of geopolitical instability, which can be manifold
From an operational risk perspective, production bottlenecks, logistics disruptions, and inventory management are easier to manage when operations are closer to home. However, financial risks — such as currency fluctuations, credit risk, inflation, or tariff changes — may still persist even in more politically aligned sourcing regions.
In addition to geopolitical and operational risks, several other challenges are becoming increasingly relevant:
Cybersecurity risk — As infrastructure becomes more digitized, the risk of cyberattacks increases. Smart ports, AI-driven logistics, and autonomous systems are all vulnerable to sabotage or espionage. Cybersecurity is now a core supply chain concern.
Environmental and climate risk — BRI projects have been criticized for environmental degradation and the lack of human rights standards. Climate-related disruptions — such as floods or extreme weather — can damage infrastructure and delay shipments. As a result, resilience around Environment, Social & Governance (ESG) issues is becoming a strategic necessity and should favor supply chains outside of the BRI.
Debt diplomacy and political instability — Several BRI countries have experienced debt distress. This could mean that infrastructure assets may be nationalized or seized, introducing more long-term uncertainty. For example, Sri Lanka borrowed heavily from China to finance the Hambantota Port. When the port failed to generate expected revenue, Sri Lanka was unable to repay its debt and ultimately signed a lease with China Merchants Port Holdings, resulting in a the Sri Lankan government giving up a sizable stake in the port to the SEO.
To counter the BRI, Western nations have launched the G7’s Partnership for Global Infrastructure and Investment, offering alternative infrastructure development aligned with democratic values and transparency.
Navigating the new environment
The evolving geopolitical landscape requires careful monitoring of two key factors: i) dynamic geopolitical regulations (such as tariffs, sanctions, investment incentives, and taxes); and ii) third-party relationships.
When countries or sectors fall under sanctions or tariffs, how can producers and distributors adapt? The rise in transshipment activities — such as goods from China being rerouted through Vietnam, or shipments to Central Asia ending up in Russia — makes third-party monitoring essential. This applies not only to new suppliers but also to existing ones that may be acquired by sanctioned entities or used to bypass restrictions.
Companies are investing in tools to increase visibility and transparency across their supply chains. While ESG initiatives have improved visibility, this data is now also used to understand where counterparties operate.
Companies are investing in tools to increase visibility and transparency across their supply chains… and technological innovations in AI enable real-time data collection and analysis to monitor third-party activity.
Further, technological innovations in AI enable real-time data collection and analysis to monitor third-party activity. For example, one third-party beneficial ownership database includes more than 3 billion records from more than 190 jurisdictions. This allows supply chain executives to uncover ownership structures with up to 10 degrees of separation — a critical capability when dealing with complex corporate webs that may conceal illicit activity.
Risk monitoring is further enhanced by access to open-source intelligence and adverse media. With automation and AI, companies can build and update risk profiles in real time, and by adding geolocation data for entities, assets, and executives, firms can detect trans-shipments or recent changes in beneficial ownership.
Looking forward
In today’s fractured geopolitical landscape, supply chain resilience is no longer a matter of operational efficiency but a matter of strategic necessity. China’s Belt and Road Initiative exemplifies how infrastructure, trade, and technology can be used to increase a country’s global influence. For companies operating in this environment, the ability to anticipate, adapt, and act on geopolitical shifts is becoming a core competency.
To do this, however, organizations much expand risk lens beyond traditional metrics. It’s not just about cost and lead time anymore but about who owns the infrastructure, who controls the data, and who sets the rules. The convergence of AI, surveillance, and trade policy means that supply chains are now deeply entangled with national security and global power dynamics.
And for organizations in the West to succeed, they need to treat geopolitical risk as a strategic variable that needs to be integrated into every sourcing, investment, and partnership decision. The future of global trade will be shaped not just by markets, but by global alliances — and the time to prepare is now.
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