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Analysis: China to roll out Belt and Road 2.0

If China builds it, will they still come?

If China builds it, they will likely come, but with conditions … it, being the Silk Road economic initiative, and they, being countries of the European heartland.

Russia sees the Belt and Road Initiative as a necessary economic counterbalance to EU and US sanctions [PPIO]

The Second Belt and Road Forum for International Cooperation opens in Beijing April 25 with China already having scored a number of victories in 2019.

Putting aside that the Forum will be attended by 40 heads of state including Russia’s Vladimir Putin, Prime Minister Imran Khan of Pakistan, and Egyptian President Abdel Fatah El-Sisi – and thousands of delegates representing another 100 countries, China’s mega-economic initiative to create a modern-day Silk Road is winning over pundits in Europe … where it probably counts the most.

Prime Minister Giuseppe Conte of Italy will also be participating in the two-day Forum but he may as well be taking a victory lap around Beijing because his country was the first among G7 nations to sign on to the One Belt One Road initiative, despite US protests, during Chinese President Xi Jinping’s visit to Rome on March 23.

Some European allies at first criticized Italy’s move, with Italian officials firing back that many leading European economies were secretly looking to do the same with China, and would likely do so.

It appears Europe, led by German Chancellor Angela Merkel, now appears to be coming round.

The Europeans had initially criticized Italy for not allowing a united European Union approach to the Silk Road, but given the debacle over Brexit, they may be singing a new tune.

Not ones to waste … time … the Swiss announced on April 17 that they would join the Belt and Road Initiative when President Ueli Maurer arrives with a large trade delegation on an eight-day visit to China, including his participation in the Forum.

The French and Germans will likely want to be involved in the Initiative but pressure Xi to meet them half way with assurances and increased transparency about Chinese investments in Europe.

Whereas heads of state from Hungary, Austria, Greece, and Croatia will attend the Forum on April 25, France and Germany are just sending high-level delegations.

The ancient Silk Road connected China and Europe from around 100 B.C. The 6,000-km road linked ancient Chinese, Indian, Babylonian, Arabic, Greek and Roman civilizations.

Trade conducted along the Silk Road reached much of Arabia and the eastern Africa and allowed for a proliferation of not just tradeable commodities like spices and textiles, but science and technology.

The Initiative is core to Xi’s vision to expand China’s economic prowess westward; it has become all the more crucial in light of Chinese admission that GDP growth has slowed significantly over the past ten years, from double digits to just six per cent projected for 2020.

Xi wants to revive the splendor of the ancient Silk Road to create an Economic Belt – a 21st Century Maritime Silk Road to facilitate lucrative trade deals with the West and thereby entrench Chinese influence over an area of several thousand kilometers spanning dozens of countries.

So far, it is estimated that China will over the next few years invest or lend $3 trillion to its Belt and Road partners, which number more than 100 countries. The number of partners as well as projects has increased since the last Forum in Beijing in 2017.

There has been criticism that the lucrative deals China is making with these countries who have signed onto the initiative could increase their national debt.

Just last month Malaysia put the brakes on a railway deal known as the East Coast Rail Link with China as part of the initiative because it said the project was spiralling out of fiscal control.

The project was saved when the Chinese and the Malaysians renegotiated and agreed to reduce the miles of rail thereby decreasing the cost by more than $2 billion.

European nations who have signed deals worth billions of dollars with China but have not yet fully committed to the Belt and Road initiative cite fears of runaway debt and lack of transparency as reasons behind there hesitation.

Spanish Foreign Minister Josep Borell Fontelles, who will be attending the forum, admits that China is a major economic player in Europe but like his French and German allies believes that China should apply equal and fair policies when dealing with its counterparts.

One of these concerns is that China pressures debt-ridden countries to waive competitive bidding and award deals to Chinese companies.

Some countries are either scaling back their joint projects with China or asking for fiscal reassessment.

According to reports from China, Beijing has acknowledged these issues and is promising to exert more auditing and anti-corruption efforts, including environmentally responsible policies, to allay the fears of its Belt and Road partners.

Chinese President Xi Jinping is likely to roll out a version 2.0 of the Belt and Road Initiative, taking into account concerns voiced by both France and Germany during his meetings with their leaders late March.

He wants to convince critics and those in Europe who remain suspicious of Chinese motives that the initiative is designed to be more inclusive and produce win-win scenarios for his country’s partners.

To do that, the Forum will need to agree on transparent means of financing for the multi-billion dollar projects.

Xi will also need to focus on what the Belt and Road Initiative represents. In its early days in 2013, the Initiative focused on infrastructure projects but since then it has been expanded to include foreign assistance and aid to many of the partner countries.

In China, a number of investment and property developers have also latched on to the Initiative creating further lack of clarity on what the initiative actually stands for.

To that end, the Chinese president will have to specifically highlight which projects will be the vanguard of this Initiative.

He will also have to show that while this Initiative was born in Beijing, it’s success lies in the fact  that it has become one of multilateral global economic cooperation.

The BRICS Post with inputs from Agencies

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