China should be open to more foreign involvement in the belt and road

Michael Clauss says Beijing should seek greater foreign business involvement in its landmark initiative to increase trust and confidence around the world, as well as to ease concerns in partner countries over debt and jobs

PUBLISHED : Wednesday, 28 March, 2018, 3:32pm
UPDATED : Wednesday, 28 March, 2018, 3:37pm

China’s “Belt and Road Initiative” has come in the nick of time. Countries around the globe are struggling with difficult economic and social conditions like low living standards, low incomes and unemployment that remain widespread in much of the world and await global solutions. Many regions in central Asia, South Asia and Africa suffer low levels of investment in new infrastructure.

Building the New Silk Road is therefore a highly welcome initiative that can boost connectivity, trade and growth. China is currently the only country willing and able to invest huge amounts into large-scale infrastructure projects to stimulate and foster economic development in underprivileged regions, but even a rising China needs committed and equitable partnerships to harness the initiative’s full potential.

Germany has always been open to China’s initiative. We have a long record of active engagement in development cooperation and share an interest in promoting infrastructure projects contributing to sustainable growth in Europe, Asia and Africa, not least because it is a way to tackle the causes of migration. So what are the prospects for deeper Sino-German cooperation along the belt and road? Like France and the UK, we believe the commitment to transparency, as well as international standards and procurement procedures, should form the basis of deeper cooperation.

In this respect, the Asian Infrastructure Investment Bank (AIIB), initiated by China in 2013 and joined by Germany soon after, can serve as a model. The AIIB sets high standards for its procedures. Public tenders for AIIB-financed projects must be transparent, non-discriminatory and based on international standards. The same principles should apply to infrastructure projects under the umbrella of the Belt and Road Initiative. Today, it seems the absence of public tenders is not the exception but the rule. Foreign businesses, however, should have a fair chance to compete.

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In fact, German firms wish to participate in belt and road projects. They are ready to contribute expertise and global experience. It goes without saying that participation should not be linked to explicit or implicit technology transfers. For the time being, companies still have to move past some practical roadblocks, such as how to find information about upcoming projects or public tenders in which they can take part.

Beijing has pushed back time and again against criticism that the New Silk Road was a China-centred project. More involvement from foreign companies could help allay concerns. It now seems that more than 90 per cent of projects along the belt and road have been run by Chinese companies alone. To improve local acceptance of projects, communication and consultation with affected communities and other stakeholders is key. It would also help to hire more local workers. Moreover, adherence to high environmental and social standards is crucial to projects’ sustainability.

Debt sustainability of operations is another important issue, as public debate in Sri Lanka has shown. More transparency could strengthen confidence in China’s lending practices and help counter international criticism that it seeks political influence in partner countries. The bankability of projects should be an essential condition to their approval and implementation. After all, it is in China’s own interest to limit its exposure to financial risks.

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Transparency, international standards and openness are essential for attracting more countries to the initiative. It is imperative for the long-term success of the New Silk Road that its partners are on a par with their Chinese counterparts. We would welcome China being ready to embrace these principles and turn the initiative into a truly multilateral platform for economic cooperation. Deeper Sino-German cooperation should focus on concrete projects that help improve connectivity between Europe, Asia and other parts of the world.

Furthermore, the Belt and Road Initiative should be seen in the wider context of Eurasian connectivity. Our cooperation should support synergies with the Trans-European Networks, taking into account the outcome of discussions in the EU-China Connectivity Platform. Equitable partnership, overall planning and harmonised standards would support a coordinated infrastructure development between Europe and China as the strongest nodes along the New Silk Road.

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In the leaders’ joint communique at the Belt and Road Forum, in May 2017, China committed itself to openness, inclusiveness and non-discrimination. Observing these principles can broaden the basis for our cooperation along the initiative. The time is right to further unleash the growth potential of the belt and road for the benefit of all.

Michael Clauss is the German ambassador to China