Getting back on track

Xi: toasting a new approach

Tone down the rhetoric, improve the oversight and show more of the results. For months that’s been the advice on offer to Belt and Road policymakers and there were signs that the message was getting through as dozens of state leaders joined thousands of officials and investors at the second Belt and Road Forum in Beijing last week.

The meeting was decidedly lower-profile than the inaugural gathering two years ago. There wasn’t even an update on the cumulative amount that has been invested under the Belt and Road Initiative (BRI) banner since then (a hard habit to break for the hosts, who then hailed the $64 billion of deals signed during the three-day event).

Otherwise the Chinese leader – and BRI architect – Xi Jinping stuck to a newer focus on delivering “high-quality” projects, a term that didn’t feature in the communiqué from the forum two years ago, and a commitment to investment that “will be open, green and clean”.

Critics say that the proof is in the pudding for promises of this kind. But it’s also true that the Chinese have been working on ways to improve the delivery of BRI investment for months. One of the directives is a more centralised hand on how potential projects are reviewed and another is closer control of how companies are allowed to badge their deals with the BRI brand – following a flurry of transactions with no clear linkages to the policy’s goals.

The National Development and Reform Commission is said to be working on a list of projects that will be formally acknowledged by the central government, while a new code of conduct is being implemented for the country’s state-owned enterprises – by far the most active players in the BRI universe – on how they should be auditing existing projects and doing due diligence on prospective ones.

Another of WiC’s bugbears with the BRI is that not enough effort is going into showcasing the results (see WiC437) and there were signs of a sea-change here as well – with the joint statement at the end of the forum making reference to some of the star performers. The list included the ports at Gwadar in Pakistan and Piraeus in Greece, as well as railway construction in Laos, Thailand, Hungary and Serbia.

There is still much more to do but at least there was recognition that the BRI needs refreshing after months of angst about ‘debt-trap diplomacy’ and disillusioned partners who want to renegotiate. While the reboot happens, activity has slowed markedly too: China’s direct investment in Belt and Road countries grew 4.2% in the first quarter of this year, well below the 22.4% growth of the same period a year ago.

Another way of taking the policy’s pulse is to look at who turned up, not just what was said. And despite many months of critical coverage, few of the existing partners seem to have stayed away. For instance, attendees included nine of the 10 leaders of countries from ASEAN, where some of the larger projects are most advanced, with only Indonesia missing because it is in the middle of counting the votes in its presidential election.

Vladimir Putin was there showing Russia’s support again. Perhaps more significantly, Malaysian leader Mahathir Mohamad made his second visit to Beijing in as many years and he talked about how he is back on side with the BRI, following months of opposition to deals approved by his predecessor. The renegotiated terms for the East Coast Rail Link, the most contentious of the projects in question, will have helped with his change of heart – its price was reportedly slashed by the Chinese side by 30%.

Imran Khan, Pakistan’s prime minister, softened similar criticism of his own, describing the BRI as “a model of collaboration, partnership, connectivity and shared prosperity”.

Giuseppe Conte, the Italian leader, was another high-profile participant. A few weeks ago Rome had caused a stir by becoming the first G7 nation to sign up for the BRI (see WiC445). A similar accord signed by Switzerland also had the country’s president Ueli Maurer in Beijing, as representatives from European countries accounted for about a third of the forum’s top-level guests.

There were even delegates from heavyweights like Germany and France – countries that have been the most open in expressing their concerns – although they sent senior ministers rather than their heads of government. Notably Philip Hammond, the UK’s Chancellor of the Exchequer, hailed the “truly epic ambition” of the BRI during his Beijing trip last week.

There were no representatives again at the forum this year from India, which is suspicious about Chinese intentions, and only a junior one from Japan, which channels most of its infrastructure spending through a longer-standing programme of its own.

No one turned up from Washington either, which was a different situation to two years ago when a representative from the National Security Council made relatively conciliatory comments. Since then the Trump administration has been more vocal in its warnings that the BRI’s benefits are going to flow overwhelmingly in Beijing’s direction.

No doubt the White House is more focused at the moment on talks to resolve the trade row and the Chinese didn’t allude to the American absence, probably for similar reasons.

An editorial in the Global Times showed more bite in asking whether the Americans “have lost their abilities to use logic and common sense, and even rational thinking” on Belt and Road matters. “Lying, being far-fetched and holding such opinions will not have any real influence,” it added, describing the BRI plan as “a groundbreaking international endeavour for the 21st century”.

Beijing may also have concluded that the holdouts will be hard to win over and it is better to focus on more receptive audiences like the Europeans, who have been resisting calls from Washington to give Xi Jinping’s signature foreign policy a wider berth.

Hence the regular mentions in Xi’s speeches of so-called “third-party market cooperation” in which developed nations could join some of the infrastructure deals in Belt and Road countries. Bringing in partners would dilute the financial burden for the Chinese (something that has been causing concerns at home) and it might spread the reputational risk in cases where things go wrong. What’s more, it plays to European assumptions that their guiding hand will deliver higher standards in transparency and governance (one of the ways that the Italians justified signing up to the BRI a few weeks ago).

All this left Xi in effusive mood, telling the summit’s delegates: “Today’s China is already at a new historic point. Despite the glory of our achievements, there are still mountains to be scaled.” The China Daily was also in effusive mood putting a record three separate photos of Xi above the fold on its front page on Tuesday. These related to three BRI articles involving Switzerland, Portugal and Nepal.

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