Second Belt and Road Forum: Winds of Change in Xi Speech?
Chinese President Xi Jinping’s Key Note Address at the BRF seemed to suggest willingness to transit from bilateral to multilateral BRI projects with transparency and debt accountability
China held the Second Belt and Road Forum for International Cooperation in Beijing from April 25-27, 2019, the last one was held in May 2017, thus making the event a biennial feature in the calendar of international events.
As per Mr. Yang Jiechi, Member of the Political Bureau of the Central Committee of the Communist Party of China and Director of the Office of the Central Commission for Foreign Affairs, who was the principal organiser overseeing the Forum 124 countries and 29 international organizations have signed BRI cooperation documents.
The first member of the G 7 countries and the only one to sign so far is Italy during President Xi’s visit to that country. Yang also underlined that BRI vision has been included in documents of major international institutions including the United Nations, the G20, the Asia-Pacific Economic Cooperation and the Shanghai Cooperation Organization.
The Chinese commerce ministry has indicated that Chinese investment in 55 Belt and Road countries companies stood at US$11.9bn in the first ten months of 2018, up 6.4 percent year-on-year.
Since Chinese President Xi Jinping launched the initiative in 2013, China has invested $90 billion in projects while Chinese banks have provided at least $200 billion in loans to foreign governments.
With this background it is not surprising that the marquee event saw attendance by 37 heads of state. The guest list included Russian President Vladimir Putin, Pakistani Prime Minister Imran Khan, and Italian Prime Minister Giuseppe Conte amongst others.
Despite the huge success of the gigantic enterprise so far, there have been a number of apprehensions of participants apart from countries as India which has stayed out of the BRI altogether citing sovereignty concerns as the Chin Pakistan Economic Corridor (CPEC) passes through the state of Jammu and Kashmir an integral part of India under Pakistani occupation.
Some of the other issues relate to excessive state intervention with limited scope for participation by the private sector, lack of guidelines for lending by China which can drive up the debt for borrowers as Sri Lanka has noticed recently.
China is alleged to be providing large loans to countries knowing well that this cannot be absorbed and later leading to acquisition of equity in such projects.
One such case is the port of Hambantota in Sri Lanka. Thus the BRI is seen as predatory philanthropy to gain control of strategic assets in the region of core Chinese interests such as the Indian Ocean.
Moreover execution of projects is by Chinese contractors, labour and using Chinese equipment.
There are no strings attached unlike the West thus the loans are welcome but disrupts the standards of probity by the recipient including financial management which are some of the conditionality’s that come with large loans by global financial institutions as the World Bank or Western countries.
Lack of transparency is another concern with the MOUs and contracts remaining outside the public domain.
Possibly accepting these apprehensions of various stake holders in the project there was an attempt to project a shift noticed in the Key Note Address, “Working Together to Deliver a Brighter Future For Belt and Road Cooperation,” delivered by Chinese President Xi Jinping on 26 April at the opening ceremony of the BRI Forum.
President Xi in his keynote address highlighted that, “More than 150 countries and international organizations have signed agreements on Belt and Road cooperation with China. The complementarity between the BRI and the development plans or cooperation initiatives of international and regional organizations such as the United Nations, the Association of Southeast Asian Nations, the African Union, the European Union, the Eurasian Economic Union and between the BRI and the development strategies of the participating countries has been enhanced”.
Going ahead, Mr Xi identified focus on prioritised projects and effective execution to include, “extensive consultation, joint contribution and shared benefits. We need to act in the spirit of multilateralism, pursue cooperation through consultation and keep all participants motivated”.
Green development, transparency, zero tolerance for corruption and clean governance, adopt international rules and standards in project development, operation, procurement and tendering and bidding and respecting laws and regulations of participating countries.
Poverty alleviation and job creation was also emphasised, “to deliver true benefits to the people of participating countries and contribute to their social and economic development”. Commercial and fiscal sustainability of projects would also be ensured.
Meanwhile the core themes of BRI – connectivity, infrastructure and economic corridors, were to be pursued.
Importantly participation of multilateral and national financial institutions in BRI investment and financing and third-market cooperation was also included in the speech thus indicating the possibility of opening the projects to international investors.
This will bring in greater confidence but will there be a level playing field for international companies to compete with Chinese state owned enterprises remains to be seen?
President Xi also promised that, “China will take a series of major reform and opening-up measures and make stronger institutional and structural moves to boost higher quality opening-up,” to expand market access for foreign investment in more areas and ensure intellectual property protection to encourage innovation.
He also promised to increase the import of goods by China to offset the adverse trade balance of many countries.
Implementation of the President’s points will be welcomed by the global community both political and economic for this will transit the BRI from what is seen today as a bilateral to a multilateral arrangement involving multiple stakeholders – government, public and private.