The second “One Belt, One Road Project” (Belt and Road Initiative, BRI) forum was held in Beijing recently. The heads of state and government of 37 countries arrived in the Chinese capital, including the presidents of Russia, Switzerland and Portugal, the Austrian Chancellor and Italian Prime Minister, and the heads of all ASEAN member states; high-ranking representatives of Western countries, with the exception of the United States. In 2017, the leaders of 29 countries participated in the first BRI summit.
Of the losses, that is, those countries that participated in the first BRI Forum, but did not come to the second, we should mention Turkey, whose relations with China deteriorated because of the Uygurs, and Poland, which arrested two Huawei employees in January of this year. For various reasons, the representatives of Spain, Fiji, Sri Lanka and Argentina did not come. By tradition, the Indians did not participate in the forum.
The second BRI Forum significantly exceeds the first Forum in all quantitative indicators, but the atmosphere was far from festive, because in six years the project had a lot of problems. China is determined to resolve them and restart the BRI.
Reloading the “One Way”
The main outcome of the One Belt, One Road Forum, apart from contracts and agreements for $ 64 billion, is the promise of PRC Chairman Xi Jinping to take into account all the comments of partners and to restart the project. He promised to make the project truly transparent and strengthen its financial sustainability, as well as aggressively fight corruption.
“EVERYTHING SHOULD BE DONE AS TRANSPARENTLY AS POSSIBLE,” THE CHINESE LEADER EMPHASIZED IN HIS SPEECH AND SAID “WE MUST TREAT CORRUPTION WITH ZERO TOLERANCE.”
The campaign “Let’s Clean the“ One Belt, One Road “from Corruption” was headed by the deputy head of the Central Commission for Discipline Inspection (CCDI), Li Shulei. Already developed guidelines for companies participating in the BRI. They are instructed to strengthen control over foreign missions.
Beijing has already begun to change attitudes towards the BRI, although the West, as usual, accuses the Chinese of perfidy and cosmetic changes. The National Development and Reform Commission of the People’s Republic of China (NDRC) is finalising a list of projects that are eligible to use the BRI brand. Under the new rules, all BRI projects are required to undergo a thorough audit and study. Xi also promised equal conditions for all BRI members and invited foreign companies to participate in it and finance it.
Beijing has seriously changed the approach to advertising its main project. Two years ago, the main Chinese newspaper, People’s Daily paid unprecedented attention to the first Forum: a month before the summit, two daily columns and a separate publication devoted to the project were launched. This year there were no orders from above on the enhanced coverage of the Forum, Bloomberg claims. In Beijing, it seems, they realised that the previous advertising campaign was too persistent and aggressive.
Christine Lagarde, who came to Beijing, welcomed the changes in China’s policy. She emphasised in her speech at the Forum that openness, fair tenders and a more thorough risk assessment in the selection of projects would benefit all BRI participants and, first of all, China itself.
Successes & Achievements
Nobody argues with Xi, the godfather and the key architect of the project “One Belt, One Road,” who once called his creation “the project of the century”. As of April 18, China, according to the Xinhua News Agency, has signed 173 agreements on participation in the BRI with 125 countries and 29 international organisations. Moreover, more than 60 countries joined it only in 2018.
“One Belt One Road Project” has long outgrown the borders of three continents. Many BRI participants, are in Asia and Africa, but this does not mean that the Old World is being neglected in Beijing. On the contrary, in the leadership of the People’s Republic of China they pay heightened attention. The results are obvious – from a five-day European tour in late March, Xi Jinping brought an agreement to join the BRI of two more European countries – Luxembourg and, most importantly, the first G7 member – Italy.
As Donald Trump comes out of international trade agreements, Xi Jinping at lightning speed fills the vacuum and positions China as a defender of global cooperation, development and free trade.
BRI is already firmly established in South America. Peru should join the list of Latin American participants in the coming days. This was announced in Lima on the eve of the opening of the Beijing summit, Chinese Ambassador to Peru Jia Guide and Peru’s Vice President Mercedes Araos.
China has bypassed the United States and is now Peru’s largest trading partner due mainly to imports of copper and other minerals. Chinese investments mainly go to the mining industry, but in recent years, Chinese companies have increasingly been investing in infrastructure projects.
BRI has already surpassed the Marshall Plan for money. According to estimates by Morgan Stanley, the cost of the project by 2027 will total $ 1.3 trillion. Chinese banks and financial organisations, mainly, of course, state-owned invested more than $ 90 billion into a megaproject. China’s BRI partners, in turn, invested more than $ 40 billion into the Chinese economy.
The volume of trade between the PRC and the BRI participants, exceeding $ 6 trillion, is also impressive. Trade with partners on the BRI increases by an average of 4% per year. In six years, it accounted for 27.4% of all Chinese trade.
Hambantota as a symbol of the flaws of the “One Way”
Of course, even with the most careful planning it is difficult to find a large project without flaws. BRI is no exception. In general, the West accuses Beijing not so much of the desire to connect the three continents, but of the intention to assert its influence on the entire planet.
As for specific accusations, China is reproached with non-transparency and often enslaving terms of agreements, unfair choice of contractors, disruption of terms, untimely provision of promised loans, construction of “white elephants”, damage to the environment. So, according to the China Global Energy Finance database, in 2018 the share of coal projects in BRI was 42%.
Most often, Beijing is accused of pumping up developing economies that participate in the project with loans and burdensome debts. In the West, they even invented a new term – “debt trap diplomacy”.
Deaf roar of discontent began to take shape in clear accusations after the story of the Sri Lankan town of Hambantota in 2017. The main “treasure” of the Hambantota is the deep-water port, the expansion of which was completed in 2010. It cost $ 6 billion and was funded by China. The port is located near the main shipping route in the Indian Ocean and serves approximately 36 thousand ships a year. Colombo defaulted and lent Hambantota for 99 years to China Merchants Port Holdings for 99 years.
The Chinese say that the benefits of the project are long-term, and they ask for a little patience. Naturally, they reject accusations of trying to seize Hambantota. Last fall, Foreign Minister of the People’s Republic of China Le Yucheng said, that the talk of financial enslavement of Sri Lanka is a clear exaggeration and that the PRC accounts for less than 10% of the island’s 50 billion foreign debt.
The Chinese point out that the Export-Import Bank of China (EIBC), which funds every fourth BRI project, gives Sri Lanka loans at 2% per annum, but the Sri Lankan opposition claims that real interest is much higher – 6%.
The new government of Sri Lanka is now asking for help not from Beijing, but from India and Japan. So, in early January of this year, plans were announced to build a light metro in Colombo for $ 1.85 billion. Tokyo will finance the project.
A few weeks later Delhi pledged to support the modernisation the island’s railways, a loan of $ 1.3 billion for the purchase of new trains.
Need a Little Patience
The Chinese say that the benefits of BRI are long lasting and that you need to suffer a little. However, Hambantota became a symbol of Chinese policy of enslaving countries with debt. After transferring it to a hundred-year rental, similar accusations against Chinese companies began to sound in other countries. There are serious disagreements on the project with China, at least in seven countries.
Even one of the main, all-weather, in Beijing terminology, China’s ally, Pakistan, made the list of the most dissatisfied. On the one hand, Pakistani Prime Minister Imran Khan arrived in Beijing for the summit, and on the other, in mid-February of this year, the Pakistan Ministry of Planning and Development redirected about 24 billion Pakistani rupees ($ 172 million), which were intended for the China-Pakistan economic corridor (CPEC) for other non-related BRI projects. However, it should be borne in mind that the estimate of the CPEC Project is $ 62 billion and that the Pakistanis have withdrawn only a quarter of a percent from it.
On the one hand, the chief minister of the province of Baluchistan, Jam Kamal, last year amended the law on the sale of land, prohibiting Chinese companies from buying land in Gwadar, whose port expansion is the flagship project of the CPEC. The rebels in Balochistan are now fighting not only against the central government, but also against the BRI.
At the end of 2018, two acts of terrorism took place in the province: a suicide exploded near Chinese engineers, and the Chinese consulate was attacked. But on the other hand, even the opposition understands that with its own forces and especially in view of relations spoiled in recent years with Washington, for a long time, the former main ally of Islamabad, Pakistan will not be able to get on its feet.
Any change of government in the Asian countries participating in the BRI poses a potential threat to the project, because the new government, trying to distance itself from its predecessors, begins to accuse them, at best, of short-sightedness, and at worst, of corruption and trade independence.
In the Maldives, for example, the assistants to the new president Ibrahim Solih for three months dealt with a mountain of documents related to the BRI, and tried to figure out the size of the debt to China. In the end, it turned out that the Maldives owed Beijing not $ 1.3 billion, as claimed by the Ministry of Finance of the Republic, but $ 3.2 billion. For comparison: Maldives’s GDP is $ 3.6 billion.
Myanmar’s civilian authorities persuaded Chinese contractors to renegotiate the agreement to turn Kyaukpyu into the country’s main deep-water port. As a result, it was possible to reduce the project estimate by 5.5 times – from $ 7.3 billion to $ 1.3 billion.
Another example of a successful revision of unfavourable for partners agreements on projects BRI – Malaysia. New Prime Minister Mahathir Mohamad, on the one hand, praises China for not trying to conquer Asian countries, unlike Western countries, but on the other hand, he accused his predecessor of corruption, stopped construction of the East railway earlier this year.
Coast Rail Link and forced the Chinese to sign a new agreement in April, according to which the cost of the project is reduced by almost one and a half times: from 65.5 billion to 44 billion ringgits ($ 10.7 billion).
Returning from Beijing, Mohamad told reporters that he no longer believes that China in BRI seeks only for its own benefit:
“PARTICIPATION IN THE SECOND FORUM ALLOWED ME TO UNDERSTAND MORE ABOUT THE“ ONE BELT – ONE ROAD ”INITIATIVE. AND NOW I AM SURE THAT IT WILL BE BENEFICIAL FOR ALL PARTICIPANTS.”
In response to the accusations of trying to get geopolitical benefits from BRI Project, Xi Jinping once called his creation “the road to peace”, and Chinese Foreign Minister Wang Yi asserted:
BRI is not a geopolitical weapon, but a platform for cooperation. we welcome all partners and encourage them to join us.
However, the above examples give rise to Delhi and, of course, to Washington, which continues to pry into other people’s affairs, to accuse Beijing of trying to surround India with a network of military bases “pearl necklaces” in the Indian Ocean.
The Trump administration, of course, could not miss such a chance. Washington is struggling to take advantage of Asian countries’ dissatisfaction with the terms of the BRI agreements.
The White House and the US Department of State, under Barack Obama, argued that the BRI is an instrument of insidious Beijing trying to strengthen its influence on the planet. From the actions of the current administration against the megaproject, it is enough to cite the stylistic exercises of Vice President Mike Pence, who said last year, for example, that the United States, unlike China, would never offer the countries of South-East Asia a “strap belt” “.
In recent months, Washington seems determined to move from words to deeds. Thus, the success of reducing the cost of the Myanmar BRI segment is largely due to the group of American diplomats, economists and financiers who helped him to make all the calculations and conclude a new, more advantageous agreement.
In Washington, the experience of the United States Agency for International Development (USAID) was recognised as successful and useful and decided to provide the same assistance to other Asian and African countries.
Whatever the results and consequences of the “One Belt, One Road” mega-project, criticism and reproaches to Beijing will bring them many benefits and open the lines of communication with the outside world, which had been closed for centuries.