BRI — for better or for worse

If you are in any doubt as to the clout that the Chinese government’s Belt and Road Initiative (BRI) has, look to the audience rollcall for The Second Belt and Road Forum for International Cooperation, which took place April 25–27. The BRI summit, designed to promote the infrastructure development and investment strategy, drew attendance from 36 heads of state or government and some 5,000 delegates from around the world. In a closing speech at the event, Chinese President Xi Jinping claimed that $64bn in agreements were signed by his country at the forum. According to the Chinese government, up to 150 nations have signed up to the BRI, at least in principle, since its inception.

Maritime impact

The development initiative consists of a maritime “Road” of shipping lanes and a “Belt” of overland corridors. While it may be a Chinese strategy, its reach extends far beyond the East Asian nation: the “Road” can be mapped all the way back to Venice in Italy and the “Belt” to Germany’s Duisburg. However, Alice Ekman, head of China research at the Center for Asian Studies at the French international relations institute Institut français des relations internationales (Ifri), argues that the BRI goes even beyond that from a location perspective.

“Initially, we thought it would be about transport infrastructure focused in Eurasia,” reflected Ms Ekman in in a recently-published video. “Now, it appears that the geographical scope is far beyond the historical Silk Road. Africa is involved, the Arctic is involved, Latin America is involved with projects under the Belt and Road label.”

Ms Ekman also noted that the BRI concerns standards and norms, institutions, customs co-operation and exchanges between political parties. Through the BRI, China, she said, is proposing a new kind of world governance.

Ms Ekman is the editor of an Ifri report, published in April, entitled China’s Belt & Road and the World: Competing Forms of Globalization. In the document, Ifri, looking to the future, says that it is possible to expect two rival poles emerging: in the one camp, China as the leader and in the other camp, the US as the leader, each with their own infrastructure networks including maritime. The report’s recommendations include the argument that the BRI is both a source of worry and an indirect source of opportunity, and particularly of opportunity for enhancing strategic planning and vision on territorial development including regional and national development, architecture and management of maritime transport infrastructure.

Indeed, there have been mixed feelings towards the BRI. Xinhuanet, whose parent organisation is the Xinhua News Agency (China’s official state-run press agency), has claimed that “Belt and Road construction facilitates a faster world”. However, as an example, the Ifri study notes that while France’s Port of Marseille Fos has displayed interest in the Maritime Silk Road part of the BRI, the Netherlands has developed advanced strategic thinking up against the venture, being particularly worried about the possible impacts of the development of its maritime component on both the Port of Rotterdam and Chinese investments in other European ports, like the Port of Piraeus. These fears, it says, are considered to be warranted according to some studies.

Forum elements

Also present at the Belt and Road Forum was International Monetary Fund managing director and chairwoman Christine Lagarde. Speaking at the event, she argued that the BRI was developing new world supply chains and aiding the stimulation of infrastructure investment. Yet, she also warned that to completely work, the BRI should only go where it is both sustainable and required.

“History has taught us that, if not managed carefully, infrastructure investments can lead to a problematic increase in debt,” she said in her remarks. “I have said before that, to be fully successful, the Belt and Road should only go where it is needed. I would add today that it should only go where it is sustainable, in all aspects.”

There were some important takeaways noted from the event. Firstly, President Xi was reported as being restrained: in comparison to his keynote speech at the first Belt and Road Forum for International Cooperation in 2017, he was more muted on the BRI’s increasing presence in other nations. Furthermore, he stuck to discussing things his country is doing to clean up the venture, as well as promising that there will be no tolerance for corruption.

The second takeaway concerns signs of rehabilitation for the BRI. Attempts by China to restore the project’s image have had some success, as eight more heads of state attended the second Belt and Road Forum than the first. Furthermore, more countries have opted for co-operation with the Asian superpower.

The final takeaway is the trade message. Although President Xi didn’t discuss the trade war between his country and the US in his speech, much of it alluded to the big problems within the negotiations between the two camps. These allusions included increasing imports, lowering non-tariff barriers, the protection of intellectual property and cleaning up state subsidies.

Given the evolution of the initiative since the first BRI Forum in 2016, it will be intriguing to hear the next BRI developments in two years’ time if China makes a habit of a biennial BRI-themed summit.

The Baltic Exchange will hold its next Shipping Economics & Investment course on June 10 and 11 in London. More information can be found here.