Chi on China: Hype, Suspicion and Truth of the Belt and Road Initiative

14 Jun 2017

  • The two-day Belt and Road (BAR) Forum that Beijing hosted in mid-May this year outlined action plans for building new trade and investment global networks.  It left an impression that Beijing had an integrated implementation strategy to expand its global influence.  Really?
  • Optimists argue that the BAR initiative would bring significant economic benefits to the global economy through China’s financial support for, and enhanced policy coordination with, the BAR countries.  But critics fear that it would just be a ruse for China’s self-economic and political interests. Who is right?
  • Nevertheless, even with its faults, the BAR initiative is going to improve global connectivity and China will emerge inevitably as an economic leader in Asia.  The key for realising the BAR benefits is for China to abide by international rules; evidence shows that it might just be doing that.

Three things cannot be long hidden: the sun, the moon, and the truth.  Buddha

 

Chinese President Xi Jinping first conceived the idea of the Belt and Road plan in October 2013 as a pillar strategy for realising his “Chinese Dream” in the long-term. The plan was made official in March 2015. The two-day high-level BAR forum on 14 and 15 May this year seemed to have outlined action plans to boost trade and investment along the BAR routes (Map 1). It announced that China would top up the USD40-billion Silk Road Fund3 by another USD100 billion, encourage overseas renminbi fund business and create a RMB380 billion special lending scheme for the China Development Bank and the Export-Import Bank of China to expand renminbi foreign loan business.

 

IS THERE A BAR STRATEGY?

As I argued earlier, China’s BAR initiative is a political-economic strategy conceived to “kill three birds with one stone” by achieving longer-term international, domestic and political objectives 4. Many players are excited about the long-term prospects of BAR boosting global trade and investment by linking countries and regions that account for 60% of the world’s population and 30% of global GDP. They think Beijing has an implementation strategy by pointing to many examples of Chinese-funded BAR projects.

The truth is that there is no implementation plan and no BAR projects as such! The forum in May explained, for the first time, President Xi’s vision and intentions of his BAR idea, but it provided no details of any strategy or project list. The BAR initiative is not a coherent trade and investment plan but a series of wide-ranging projects that serve Beijing’s economic and political aspirations (whatever they may be).

Meanwhile, different levels of the Chinese government have used the initiative as an excuse to launch investment projects. The media and many analysts have assumed that all these are BAR projects, even though they may not have any official BAR status. Many of these projects were planned and initiated before President Xi took office, but have been folded into the grand narrative of the BAR initiative. Beijing has talked about 67 or so countries would be included in the BAR plan, but it has also said that there would be no geographical restrictions. What actually gets built will depend on individual deals struck between Chinese and foreign firms, subject to diplomatic negotiations between the governments.

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