China’s Belt and Road Initiative: What Does it All Mean?
On May 14, 2017, twenty-nine national leaders, including Russian President Vladimir Putin and Turkey’s President Recep Tayyip Erdogan, were among the 1,500 people gathered at the China National Convention Center in Beijing to hear President Xi Jinping’s remarks opening the Belt and Road Forum (BARF). There, Xi announced another $14.49 billion for the Silk Road Fund, to bring its total to nearly $55 billion. Xi also noted that the China Development Bank and the Export-Import Bank of China will set up special lending plans worth $40 billion and $21 billion respectively to support Belt and Road cooperation.
Reflecting on the enormity of China’s commitment to the Belt and Road Initiative (BRI)—estimates range to as much as $4 trillion—the US-China Economic and Security Review Commission held hearing s last week in which experts presented tier views on what BRI means to the United States and what the US response should be.
The commission was created by the US Congress in 2000 to investigate and submit to Congress an annual report on the national security implications of the trade and economic relationship between the US and China, and to provide recommendations for legislative and administrative action.
BRI is generally understood as China’s plan to finance and build infrastructure projects connecting Asia and Europe, but, noted Nadège Rolland, a senior fellow at the National Bureau of Asian Research, “infrastructure development is in fact only one of BRI’s five components. The others are strengthened regional political cooperation, unimpeded trade, financial integration, and people-to-people exchanges.
“Taken together,” Rolland concluded, “BRI’s different components serve Beijing’s vision for regional integration under its helm.”
Indeed, noted Randal Phillips, managing partner for Asia at the Mintz Group, BRI “does not provide a level playing field for western multinational corporations to compete with Chinese firms.” BRI “is plain and simple an… opportunity Xi Jinping sees for China to take center stage in the world,” he added.
Foreign businesses will have to settle for supporting roles. US multinationals are on the ground in Beijing and Shanghai, “eager to carve out opportunities,” but these will be limited to “subcontracting roles to leading Chinese enterprises,” according to Phillips.
The Chinese economy has already benefited from BRI, according to Jonathan Hillman, a fellow at the Center for Strategic and International Studies, through an increase of exports of steel, concrete, and other construction materials. Exports to Pakistan, he noted, increased 77 percent between 2012 and 2015.
“These activities provide important but modest relief for Chinese overcapacity,” Hillman said. Longer term, “new infrastructure could facilitate trade by improving connectivity between China and its trading partners,” he added.
At the geopolitical level, BRI represents an important challenge to US leadership in Asia, where the US position “is considerably weaker” than it was a few years ago. “Neglect can be seen in the US decision to withdraw from the Trans-Pacific Partnership,” said Hillman. “Indifference can be seen in the absence of a positive US economic vision for the region. The administration’s support for a ‘free and open Indo-Pacific’ is a welcome development, but more must be done to operationalize these ideas. Resources matter more than rhetoric.”
Although BRI is portrayed as a Chinese juggernaut, it has not been without its difficulties. Pakistan and Nepal recently announced that they are reconsidering some BRI projects, Rolland noted, “because of unacceptable financing conditions in the first instance and irregularities in the bidding process in the second.”