Significance of the ‘Belt and Road Initiative’ goes beyond trade

Globalisation is the stated goal of trade plan but the benefits will be seen in other areas too, most notably in China’s further opening up to the world

PUBLISHED : Wednesday, 17 May, 2017, 3:21am
UPDATED : Wednesday, 17 May, 2017, 3:21am

If the “Belt and Road Initiative” becomes the defining legacy of Xi Jinping’s (習近平) leadership, history will record the significance of the international cooperation summit just concluded in Beijing. As the world’s leading proponent of globalisation, Xi’s projection of China as a driver of global trade and investment went further than the obvious contrast with isolationist sentiment in the United States. His support for the trade plan sent a strong message to the domestic audience: the mainland’s opening up and reform will continue. It is a commitment China needs to make if it is to maintain sustainable growth and if the belt and road scheme is to reach its full potential.

Mapping technology developed by Chinese University of Hong Kong to aid urban planning for ‘Belt and Road’ investors

It is reflected in a pledge of at least US$113 billion in extra funding to kick-start the initiative and Xi’s announcement of an import expo next year at which China will open up its domestic markets. There is also a long-term plan as shown by the announcement that Beijing will host another summit in 2019 to promote its globalisation strategy.

We lack specifics on the import expo and details need to be ironed out. There remain risks, both security and financial, in deals with 68 countries to jointly develop infrastructure. But a clear blueprint for a China-led revival of ancient Silk Road trade routes is unfolding.

Wrapping up the forum, Xi hailed a new phase of the initiative “with construction in full swing”, untainted by ideology or a political agenda. Amid the perception among critics that the initiative will become a vehicle for China to project its own influence, Xi called for geopolitics to be put aside to enable focus on trade and economic development. In this regard the elephant in the room was India, whose low-key representation by local embassy staff and academics signalled New Delhi’s deep unease about the project.

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Also absent among 29 leaders were those of major trade partners the US, Japan and Australia, among other developed countries. Several European countries, including Germany, France and Britain also declined to sign a trade statement at the summit, citing lack of clarity on a level playing field for private companies in tendering against state-owned enterprises for government contracts, or on social and environmental standards.

Scepticism among Western countries is understandable. They are accustomed to thrashing out rules and standards before signing a treaty. But one set of rules will not fit everyone in the diverse mix of belt and road countries. As a result China seeks more flexibility through bilateral negotiations, an approach that has served it well in Africa. There may be criticism of the lack of clarity, standards and rules, but the belt and road plan is to be encouraged because it is a commitment to further opening up, not to mention Hong Kong’s self interest in the chance to become the principal financial hub for China’s global trade and commerce strategy.