NIAS China Reader
Ten years of BRI: Xi and the Beijing Summit
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Femy Francis
22 October 2023 |
What happened?
On 18 October, Beijing hosted 23 world leaders celebrating the third Belt and Road Initiative Forum on their ten-year anniversary. In 2013, Chinese President Xi Jinping first proposed the idea of transnational developmental collaborations. The forum was facilitated by three European leaders: Hungarian Prime Minister Viktor Orban, Russian President Vladimir Putin and Serbian President Aleksandar Vucic. From the African region Nigerian Vice President Kashim Shettima, Kenyan President William Ruto, Ethiopian Prime Minister Abiy Ahmed, and Republic of Congo President Denis Sassou Nguesso joined the celebration. Moreover, 13 leaders sent heads of their states. These countries include Chile, Ethiopia, Indonesia, Kenya, Laos, Pakistan, Uzbekistan, and Vietnam amongst others.
Xi Jinping’s address at the gathering focused on the agenda of “shared cooperation” and reminisced over the achievement of BRI in the past ten years. He claimed the forum was able to mobilize over USD one trillion in investments. Additionally, it completed 3,000 projects with 200 agreements signed with more than 150 countries. Xi warned against the “decoupling” from China by the Western countries where their growing economy should be viewed as an asset rather than a threat. He accused the West of hampering Chinese growth through economic coercion and disruption of the supply chain. Xi opined that: “Viewing others’ development as a threat or taking economic interdependence as a risk will not make one’s own life better or speed up one’s development.” He stressed that China can only do well when the world does well. Furthermore, Xi proposed eight major steps for better BRI cooperation which included multidimensional connectivity with greener initiatives. It is advocated as pioneering an open world economy with free trade, and furthering scientific and technological innovations amongst others. Russian President Vladimir Putin was the guest of honour showcasing a clear stance on their unyielding friendship. Putin lauded BRI’s vision and stated that it: “Represents the advancing of our times and the right path forward", and that it was “on the right side of history.” While commending BRI, Pakistani Prime Minister Anwaarul Haq Kakar said: “This vision promotes cooperation, collective security, inclusive and sustainable development, and a balanced ecosystem as the only way to address global challenges.”
What is the background?
First, a decade of the Belt and Road Initiative. Drawing inspiration from the Silk Route, Xi Jinping proposed the idea of BRI, an economic belt which aimed to link China with Southeast Asia, Central Asia and Europe by land. Currently, the initiative has invested in countries like Pakistan with the China-Pakistan Economic Corridor. The Malaysian government signed the East Coast Rail Link (ECRL) project often accused of being dubious and riddled with corruption. Africa has been heavily invested by China with major projects like the Addis Ababa–Djibouti Railway and Ethiopia-Djibouti Water Pipeline. Global Times, one of the Chinese government’s flagship newspapers, cited the World Bank report on BRI. According to the newspaper, the BRI cooperation will generate USD 1.6 trillion in revenue each year by 2030. In the third BRI forum, it is estimated that USD 97.2 billion worth of new projects were signed. It also planned to set up a financial window worth USD 95.8 billion to support projects under the forum. Since the advent of the decade into BRI, it has been able to create inroads into developing countries. It has established itself as a regional power, while reaping economic benefits in light of agreements giving them access to untapped and resource-rich countries of South America, Africa and the Middle East.
Second, the debt trap narrative and dwindling domestic economy. Beijing’s role as a creditor to developing countries is seeing bleak development with major investments leading to countries saddling debts. The attractive initiative of unreserved investing and borrowing has left several countries in a vacuum of debt. China is coercing Tajikistan to give up 158 square kilometres of its land owing to USD 1.2 billion debt. Another example is the perils facing Pokhara Airport in Nepal. It was observed that the investment disproportionately benefited China’s state-owned conglomerates like CAMC Engineering. The company dictated terms to create maximum profits by constructing subpar airports. The telltale 99-year leasing of Hambantota Port of Sri Lanka to China remains an example of caution. During the BRI forum of 2023, China vehemently opposed the debt trap narrative. However, it needs to be considered that Beijing is also facing a domestic economic crisis and therefore is pushing to revive its economy. The narrative also needs to be observed from the perspective where the Chinese loans are also “trapped” in loss-incurring investments. Moreover, what would it do if the country refuses to pay the collateral?
Third, widening the market under heavy sanctions. China is considered a “deemed threat” by Western countries. The exponential rise of China and its aggressive foreign policy has displeased countries leading to sanctions. The suspicion against China’s motives led to the halting of the export of advanced artificial intelligence technologies and semiconductors. Several sanctions were also imposed against Chinese nationals concerning human rights abuse of Uyghur Muslims in China. China expressed its displeasure against the unfair treatment and seeks to find alternative markets and resources amidst sanctions focusing more on developing countries.
Fourth, implications on the environment. BRI’s investments were in the infrastructure department and heavily built on coal-fired power plants in the early years of BRI collaborations. It contributed to greenhouse emissions. While Xi Jinping in 2021 announced that they would not build coal plants on the contrary, the Chinese companies continued to work on the signed contracts. Several BRI projects are built in sensitive environments. The dam construction in the Indonesian Batang Toru Forest Island of Sumatra, home to Sumatran Orangutans gathered to protest the USD 1.6 billion Batang Toru- Hydro Power Project. It posed a threat to the already endangered species. In Mekong, Lao the construction of the Xayaburi dam construction affected the sediment quality and disrupted the water levels affecting agriculture and livelihood. The Lower Sesan 2 hydropower project in Cambodia displaced 5,000 people with several families not compensated and many were forced to accept the resettlement by intimidation. While BRI outlined its plans to become greener, similar promises were made by Xi Jinping in 2017 the promise to pursue green development did not see any fruition.
What does it mean?
First, ten years of BRI aided the Rise of China. Since 2013 BRI has laid the foundations for transnational economic statecraft. BRI is the catalyst for China’s expansionist policies aiding the development of financial institutions in developing countries. The global arena has been dominated by the West-based institution outlining norms and measures for development and investment. The forum put China on the map in fulfilling its expansionist foreign policies and becoming a strong alternative to the West-based institution. The heavy investment made through BRI over the decade has provided open access into overlooked, untapped and resource-rich regions. While the initiative has provided a global platform to China, the unbridled hasty investment also has incurred losses. China is reconsidering its tactics and it envisions becoming more selective.
Second, the West’s scepticism to BRI’s developments. The dynamic rise of China in the spheres of global economy and influence has always created suspicion. Additionally, the lack of transparency and unsustainable investments have created anxieties about the underlying strategy and motivation of China. The distinctive feature about Chinese investments is that its focus is on revenue and profit generation, political/ ideological differences stand secondary. This does not bode well with the West whose investments also demand either agreeable ideologies or the investee’s want to alter itself accordingly. Mapping the current geopolitical loyalties, both the West and China stand at the opposite end where the former supports Ukraine the latter has strong friendships with Russia. China has continued engagement with the heavily sanctioned and isolated North Korea while the West, especially the US, actively supports the South Korean cause putting them always at odds. Even if BRI does become greener, transparent, accountable and sustainable the West would remain suspicious of any new giant threatening their dominance.
Third, championing the Global South. The unanimous opinion is that China is inching its way to becoming a regional and global power. Xi Jinping has always criticized the hegemonic US behaviour and often has vouched for a “multilateral” world order. He stated that its investment is a “win-win” where China claims to not want unyielding authority over the states but aims to enrich the market. Xi expressed that BRI looked for mutual benefit and packaged BRI as a Global Development Initiative. Xi has casted China itself as an alternative to the West, especially the US. Xi while meeting Ethiopian Prime Minister Abiy Ahmed Ali stated that certain countries practising unilateralism and protectionism have hampered economic growth. He further emphasized that it is therefore vital for them to further “South-South Solidarity.”
Fourth, strategic changes to foreign policy for a profitable BRI. China is under sanctions and it is a troublesome economy. Beijing now has aimed to make its currency stronger by opting for Yuan-denominated loans. The aim is to integrate Yuan into the international market where during the recent forum several contracts were signed with Malaysia’s Maybank, Egypt’s central bank, and BBVA Peru with Yuan-based transactions. This would not only aid China but also its communist counterpart and dear friend Russia. Amidst volatile sanctions, the total isolation of Russia and the downfall of Rubel, Yuan is the alternative to resolve Russia’s international transactions issue. The growing Sino-US competition has led to China pursuing the dominance of the Yuan. China International Capital Corporation (a global financial investment services) stated: “Amid rising currency volatility globally, the BRI provides a good opportunity to expand the RMB's international clout,” Another shift can be observed in the eight-part vision listed by Xi Jinping where they would focus more on “small-scale programmes,” However, it does not mean it would only invest in small programs but it would be more careful to not choose a loss incurring project and would even use this exclusivity to its leverage.
| BRI and China’s Eight Future Steps: Takeaways from Xi Jinping’s Address Femy Francis Xi Jinping addressing the third BRI forum in Beijing announced eight major future steps for BRI to pursue “high-quality” cooperation. 1. To accelerate China-Europe Railway Express and participate in the Trans- Caspian International Transportation Corridor China wants to make joint efforts to build new corridors with Eurasia countries aiming to build an alternative Belt and Road connectivity network. Additionally, further Silk Road Maritime and establish the New International Land-Sea Trade Corridor. 2. To establish a pilot zone for Silk Road e-commerce cooperation China wants to get into more free trade agreements and treaties aiming to have an open world economy where they remove all restrictions from accessing foreign investment in the manufacturing sector. 3. To invest in small, yet smart programmes China to invest in “small yet smart livelihood programs.” The China Development Bank and Export-Import Bank will set aside RMB 350 billion for financing, and RMB 80 billion will be invested in the Silk Road Fund. Beijing plans to institute 1,000 small scale “livelihood assistance projects.” 4. Going Green The BRI to go green, where China plans to establish a BRI International Green Development Coalition aiming to exchange technology and measures for low-carbon developments. A Green Investment Principle will be established with over 100,000 training opportunities. 5. To host S&T Conference BRI to hold its first conference on Science and Technology Exchange and further the global movement of Artificial Intelligence governance for sound AI development. Additionally, the Belt and Road Science, Technology and Innovation Cooperation Action Plan will continue. 6. To start Liangzhu Forum on People to People Contacts To increase collaboration and interaction, China will host the Liangzhu Forum to initiate dialogue on civilizations with the BRI countries. An additional focus would be given to promoting art and culture exchange through initiatives like the Silk Road International League of Theaters, the Silk Road International Arts Festival and the International Alliance of Museums of the Silk Road amongst others. 7. To emphasis on integrity on BRI cooperation On accountability, China will focus on integrity in BRI cooperation by establishing a Compliance Evaluation System for Companies Involved in Belt and Road Cooperation. Release achievements and Prospects of Belt and Road Integrity Building and the High-Level Principles of Belt and Road Integrity Building. 8. To establish a Secretariat China wants to build institutions, to promote cooperation amongst BRI countries by taking care of energy, taxes, corruption, and green development, with the formation of a separate secretariat for the BRI.xt block. |