Unease lingers over China’s ‘project of the century’
Unlike some of China’s actions in recent years – notably its contentious behavior in the disputed South China Sea, which has caused great tension and sparked concerns around the region and beyond – Beijing’s Belt and Road Initiative (BRI) has generally generated a sense of optimism about China’s goodwill and regional cooperation, stability and prosperity.
Yet, questions and concerns about this trillion-dollar initiative’s feasibility, motives and ramifications still linger.
The grandiose plan, also widely known as “One Belt, One Road” (OBOR), is, without a doubt, China’s boldest foreign attempt yet. In terms of spending, it is by far the largest of its kind in the world, dwarfing the Marshall Plan, a US-funded program to reconstruct western European economies shattered by the Second World War.
From Beijing’s perspective, the enterprise, described by Chinese President Xi Jinping, its architect, as the “project of the century,” is aimed at building infrastructure connecting China to other parts of Asia, Europe and Africa by land and sea. This will, consequently, foster international connectivity and cooperation, boost trade and investment, and stimulate economic growth across Asia and beyond.
In his keynote speech at the inaugural Belt and Road Forum (BRF) for International Cooperation in Beijing on May 14-15, as at the World Economic Forum in Davos in January, Mr Xi strongly advocated for economic openness and free trade. The need for such opening up was also underlined in a joint communique issued at the end of the two-day forum.
At a time when US President Donald Trump pursues a nationalist, protectionist and isolationist “America First” foreign policy, abandoning his country’s traditional mantle of free trade and globalization, and other Western countries are in retreat or no longer able to offer large development assistance as they used to, such an endeavor by the world’s second-biggest economy is encouraging.
All the more so when considering the fact that many countries in Asia, Africa, Europe and the Americas need huge investment to sustain their economic growth. For instance, according to the Manila-based Asian Development Bank, developing countries in Asia need to invest US$1.7 trillion per year in infrastructure until 2030 to maintain growth, tackle poverty and deal with climate change.
This is why it is not surprising that many countries, especially poorer or cash-starved ones, find China’s large Belt and Road (B&R) investments – or to borrow Xi Jinping’s metaphor, Chinese “peaches and plums” – “so attractive.” In fact, according to the Chinese leader, since its inception in 2013, “over 100 countries and international organizations have supported and got involved” in his signature initiative.
That the Chinese “peaches and plums … are so attractive that a path is formed below the trees” is also reflected by the fact that leaders and senior officials of many countries and heads of many international organizations and multinational companies found their way to Beijing for the two-day summit where they were lavishly treated by the host. According to Chinese state media, 29 heads of state/government and more than 1,500 delegates from over 130 countries and 70 international organizations attended the grand event.
Besides finding it hard to resist China’s “peaches and plums,” other countries, notably smaller regional states worried about their giant neighbors’ behavior and intentions, turn to Beijing because they hope – or because they believe Xi Jinping’s rhetoric – that the BRI will turn “into a road for peace.”
Against this background, Chinese Foreign Minister Wang Yi may be right to comment that OBOR “is, to date, the most important public good China has given to the world” and Xinhua, China’s state news agency, may be correct to report that “overseas officials, experts laud China’s inspiration of Belt and Road Initiative forum.”
Instead of promoting a reciprocal flow of trade and investment, Beijing’s One Belt, One Road could harden the current one-way traffic
Yet, this does not mean all people and countries wholeheartedly believe the venture is a purely economic endeavor and will bring “win-win” results.
Indeed, while offering hopes and opportunities, it also brings about fears and risks.
For instance, it is unclear whether the current list of deliverables of the BRF will ever be delivered in full and, more importantly, genuinely benefit countries involved in five, 10 or 20 years.
A reason for this doubt about the B&R projects’ financial viability and economic profitability is that as most of the funds are loans, rather than grants, if not used and managed effectively, borrowing countries could end up with enormous debt.
Such an outcome is a real possibility for those that are already running massive trade deficits with the People’s Republic and facing huge public debt. At the moment, the Asian giant is enjoying trade surpluses with most of its BRI participants and several countries that have accepted B&R projects have credit ratings below investment grade.
For others, notably those from Europe, instead of promoting a reciprocal flow of trade and investment, Beijing’s One Belt, One Road could harden the current one-way traffic, in that China’s trade and investment mainly goes to other countries, rather than vice versa. The project is also regarded as lacking environmental sustainability and transparency. These factors can explain why, as reported by some international news outlets, EU member states refused to support a statement about trade prepared by Beijing.
In January this year, Fitch, one of the three major credit-rating agencies (the other two are Moody’s and Standard & Poor’s), warned that “OBOR is driven primarily by China’s efforts to extend its global influence and relieve domestic overcapacity.”
That warning can be backed up. Most of the B&R projects use not only Chinese know-how but also its materials, notably steel, cement and machinery, which the 1.3-billion-people country is producing in greater quantities than it actually needs.
It is likewise widely held that China has already used its huge economic clout as an incentive or pressure to prompt or coerce regional countries, such as Cambodia, Laos and the Philippines, to adopt its South China Sea posture. This leads to a suspicion that Beijing is using the BRI as a ploy to lure other nations, notably smaller and weaker ones, into its sphere, thereby boosting its global power and regional hegemony.
These doubts and fears could be the reasons why the leaders of the EU’s key institutions and its major members, such as Germany and the United Kingdom, as well as the leaders of several regional states, including Australia, India, Japan and New Zealand, decided to stay away from the Road and Belt Forum.
Their suspicions, apprehensions and reservations are understandable because the BRI is relatively new and financially enormous with potentially huge consequences at many levels – environmentally, socially, economically, geopolitically and geostrategically.
Even the Global Times, a state-run nationalistic newspaper, acknowledges that “suspicions and criticisms [of the Belt and Road Initiative] are normal at the current stage.”
Indeed, it is not only normal and understandable but also advisable, even critical, that countries should be cautious when supporting, agreeing or implementing China’s Belt and Road projects as they could cause long-lasting and far-reaching impacts.