Beijing: President Xi Jinping unrolled what will be version 2.0 of China’s Belt and Road Initiative on Friday. Xi’s speech to the 2nd Belt and Road Forum in Beijing on April 26 indicates that China has taken on board the various critiques of the BRI, and those raised by the ongoing Sino-US stand-off on issues relating to trade and technology and melded them into a new strategy for expanding China’s global footprint in the coming decades.
In the sixth year of the BRI, the Chinese seem to have understood the importance of the need for the long-term success of its BRI projects and the importance of them yielding returns for both Chinese companies and the countries where they are situated.
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As jamborees goes, the 2nd BRI Forum (the first was held in 2017) is massive, featuring leaders from 25 countries, like Vladimir Putin of Russia, Mahathir Bin Mohamad of Malaysia, UAE ‘s Sheikh Mohammed bin Rashid Al Maktoum and Hungary’s Viktor Orban. Several international organisations are also represented here, such as IMF chief Christine Lagarde and UN Secretary General Antonio Guterres.
The new buzzwords in Xi’s speech, delivered at a huge convention centre on the outskirts of Beijing, were “quality development”, “innovation,” “science”, “green”, “multilateralism” and “sustainability” – which clearly point to the new direction that the BRI is taking.
The learning process has been steep and is visible in the new emphasis on quality infrastructure. This probably arises from two disparate strands. The first is that it was the signature point of the Japanese counter to the BRI. Japan’s “quality infrastructure” move in 2016 involved the spelling out of issues related to the environmental and social impact of infrastructure investments as well as debt sustainability and the quality of construction involved. In addition, Japan, already a major investor in Asian infrastructure, announced a 30% increase in its infrastructure investments in the 2016-2020 period.
The second was China’s own plans of moving its economy onto the path of producing higher quality goods and services, reducing dependence on investment-led growth and instead promoting one based on innovation.
Ironically, Japan, which was lukewarm to the BRI, has since signed up with China to execute 50 infrastructure projects across the world. This kind of collaboration is now being built into the BRI model and could be something that India could examine. Recall that in the Wuhan summit of 2018, New Delhi and Beijing had spoken of doing joint projects in Afghanistan.
The second important point made by Xi was that China would open its market to the world. Market access has been a major grouse of countries like the US and the Europeans. Now, Xi is seeking to tie it up with the BRI by declaring that China would, among other things, promote imports from the developing countries where it was investing in as well.
To this end, Xi also announced that China was making it easier for foreign investors to put down money in China, and that besides opening up import categories, it would also allow foreign businesses to operate in more sectors in China with a full stake or a controlling stake. These are steps that have been catalysed by the Sino-US trade war, but are now being built into the BRI.
Likewise, this would be linked to a new emphasis on Intellectual Property Rights (IPR) protection, a prohibition of forced technology transfer, “innovation” and scientific collaboration. The logic goes that if the Chinese produce innovative goods, they would like to protect their IPR.
As for scientific collaboration, with the US beginning to close its doors to Chinese scientists and researchers in several areas, China is seeking to expand its network.
Xi said that the BRI investments would have no tolerance for corruption. This is in answer to critics who say that many BRI products are over-priced because they involve payoffs to developing country politicians. Domestically, Xi has led a crackdown on corruption, but it remains to be seen how the Chinese plan to fight corruption abroad.
Again in response to criticism, Xi’s speech emphasised the importance of adopting a collaborative approach in BRI projects, as well as transparency in the area of tendering and bidding.
To this end, China is welcoming international institutions like the International Monetary Fund, Asian Development Bank and the World Bank to participate in BRI projects. There has been a lot of criticism, especially from the EU, of the opacity involved in the bidding for Chinese projects and Brussels has been critical of several BRI projects, especially in Central and Eastern Europe on this account.
Just what the BRI 2.0 would look like was evident too from the number of sub-forums that have been held along with the summit Forum itself. Speaking on Thursday at the international cooperation forum, Chinese finance minister Liu Kun came out with a strong defence against the charge that the BRI was a “debt trap”.
He released a sustainability analysis framework for BRI projects based on IMF and WB criteria. He said that the Chinese finance ministry would work with other governments as well as the multilateral banks and institutions to establish a “high quality” and sustainable financing system for BRI. So far, according to reports, Chinese financial institutions had provided $440 billion for BRI projects.
In an indication of the economic and political headwinds China is confronting, Xi also appealed to all countries to create a sound environment for investment and trade and to treat Chinese enterprises, students and scholars abroad as equals.
Manoj Joshi is a Distinguished Fellow, Observer Research Foundation.