China’s Belt and Road Initiative – a game-changer, but which game?

I had the privilege to attend the Belt and Road Forum for International Cooperation in Beijing this week. This high-profile event marked a new stage in President Xi Jinping’s Belt and Road Initiative (BRI) designed to extend and deepen cooperation along an economic belt following the route of the ancient Silk Road through Asia to Europe (the ‘belt’) and around a new 21st Century Maritime Silk Road linking China’s maritime neighbours across the seas to East Africa (the ‘road’).  Invited by the Development Research Centre (DRC) of the China State Council with whom IDS signed an MOU in 2015, I found this a fascinating opportunity to listen, learn about and in a modest way engage with a pivotal moment in the history and future of development.

Advertising hoarding for the Belt and Road Forum on the streets of Beijing (Photo credit: Melissa Leach)

A game-changing initiative

More than 1500 delegates attended including 29 heads of state, Russia’s Vladimir Putin, Turkey’s Recep Erdogan and UN Secretary General Antonio Guterres. This was a large scale endeavour in true Chinese style, with hundreds of banners, security staff and volunteers, traffic routes closed, and factory production halted to provide blue skies.

As the major foreign policy initiative of the world’s second largest economy and fastest rising power, the BRI aims to enhance integration and connectivity between more than 65 countries and could reach 70% of the world’s population. It involves funds, trade agreements and investments amounting to around $900 billion. The Forum was intended to reinvigorate the BRI and translate it into further practical progress, with a raft of 40 further policy coordination mechanisms and 60 trade agreements slated for signature. In scale and commitment, this is undoubtedly a game-changer for international development co-operation.

But what is the game? The posters all over town portray it as one of ‘peace and cooperation, openness and inclusiveness, mutual learning and mutual benefit’. President Xi Jinping’s dazzling opening speech evoked the ancient history of the Silk Road and seas with their adventurers who came ‘not as conquerors but as friends’, connected people of different nationalities and religions, and boosted flows of knowledge and understanding. At a time of unprecedented human means but also of conflict and difficulty, he suggested that the spirit of this ‘great heritage of human civilisation’ is now our best guide: ‘the glory of the silk road shows that we can embark on a path of friendship, peace, harmony, and greater progress’. This particular reading of Silk Road history and symbolism – by no means uncontested – dominated a talk which emphasised five purposes of the new silk road: for peace, prosperity, opening-up, innovation, and connecting civilisations. The premiers of Pakistan and of Ethiopia were amongst those who praised and echoed this vision, as did Christine Lagarde of the IMF, evoking the silk road product of tea as ‘connecting cultures and economies, and providing new economic flavours’ – an optimistic vision of diversity within harmony.

Just an economic project?

For many commentators and participants, however, this broad vision masks what is fundamentally an economic project. The BRI is set to create a vast Eurasian area of economic union, and to boost trade between China and countries along six economic corridors, already exceeding $3 trillion in value in 2014-16. Forum participants included many government and business representatives from countries along the Belt and Road eager to cut new trade and investment deals. Indeed President Xi Jinping’s opening speech laid out the importance of connectivities in infrastructure, trade and finance as central to a vision of regionally-integrated open markets, free trade and accelerated economic globalisation. In the supportive statements of several heads of state including Russia, Turkey, Pakistan, Chile and Greece, as well as leaders of the IMF, WTO, World Bank and WTO, this stance was strongly welcomed. Some contrasted it less-than-subtly with the UK’s decision to leave the European Union and with the protectionism of recent US policy – as Vladimir Putin put it, ‘isolationism is a route to conflict’.

Winners and losers

Yet as recent history tells us, economic globalisation and free trade are rarely as equal as this rhetoric implies, and there are losers as well as winners. Several government leaders urged that China-Europe trade be a ‘two way street’ – suggesting that to date it has not been. The UK Chancellor of the Exchequer Philip Hammond told of the new train line that now connects Yiwu in China with East London, and the first train arriving ‘full of Chinese goods – and returning last week full of British goods’. Yet the export of Chinese manufactures to Europe as well as many African and Asian countries has often been one way, while many commentators point to Chinese investments in infrastructure and factories more as means to discharge China’s over-capacity of cement and steel manufacture, than as ways to benefit recipient countries.

As my conversation with a group of East African journalists made clear, behind the rhetoric of cooperation and benefit are widespread worries about the risks of the BRI – including effects on employment and the viability of local and national businesses. Britain and European countries at the end of the Silk Road also voice concerns about the effects of globalisation – as Hammond put it tactfully ‘we have to acknowledge that rapid economic growth has been unsettling for many of our citizens, and as leaders we have to make sure all our citizens benefit’.

The Sustainable Development Goals

Others cautioned – again despite the rhetoric – that the style of economic growth promoted by the BRI might not genuinely align with the values of inclusivity, employment generation, poverty reduction and sustainability. As Antonio Guterres, UN Secretary-General put it in the opening session: ‘it’s crucial to stress the links between the initiative and the UN Sustainable Development Goals’. The Belt and Road are touted as ‘green’ roads, yet there has been critique of the environmental impacts of key transport and factory investments. And despite claims that the BRI will build on China’s achievements in bringing 800 million people out of poverty, the poverty-reducing impacts of key BRI projects remain to be seen. In an afternoon thematic session on policy coordination Guterres was more challenging: ‘China needs to show that BRI is genuinely oriented towards equitable, inclusive and sustainable development for all’.

A new road to geo-political domination?

Economics are almost always entwined with politics. From some angles the BRI is an overtly empire-building game, in which China is exerting its hard and soft power on a global stage in a new bid for Asian domination. This is the central argument of Tom Miller’s book about the scheme, China’s Asian Dream. As the isolationist stance of US under Trump leaves a geopolitical power vacuum, so world domination looms. An article in The Guardian reports the private worries of western diplomats that the so-called ‘win-win’ BRI is a ploy to lure less powerful nations into its economic orbit and boost its geopolitical power. Notably, only one G7 leader actually attended the Forum, the Italian Prime Minister Paolo Gentiloni; others sent representatives and in the case of the US, a relatively junior one. There are also political concerns amongst Asian and African countries. The most vocal critic has been India, which boycotted the Forum entirely, with Prime Minister Modi accusing Beijing of trying to ‘undermine the sovereignty of other nations’ over the China-Pakistan corridor running through disputed territory in Kashmir.

Chinese officials are quick to rebut these accusations, as argued in a commentary from the official news agency Xinhua and President Xi himself stated that the BRI is ‘not meant to reinvent the wheel but to complement national development strategies by leveraging policy coordination’.

So what will really unfold as the funds and deals agreed during these two days start to flow, as they surely will? Some suggest that the uncertainties are too great; that the BRI is a high-level vision but lacks a clear plan and set of rules to see it through, and that these need to be settled as a matter of urgency. Yet perhaps with a scheme as complex as this, it would be pointless to try to set the rules in advance. Instead as has sometimes been said of national policy in China, one should follow the Chinese proverb and ‘cross the river by feeling the stones’ – learn while doing, adapt as one goes. This is more like a children’s game, in which there are some starting rules, but then one expects to improvise within and sometimes to push the boundaries. It’s a tempting analogy. However, this is course far more than child’s play. The belt and road initiative is serious stuff, the power dynamics are tense, and the stakes could hardly be higher. Everyone must feel for the stones but also carefully watch their step.…