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Trade, Connectivity Take Centre Stage at “Belt and Road” Forum

Friday,May 19, 2017

Leaders from 30 countries concluded the “Belt and Road” forum on Monday 15 May, hosted by China in the Asian economy’s capital city. The event, which also drew participation from international organisations and delegates from various countries, was meant to highlight the Belt and Road Initiative – a Chinese-led infrastructure plan aimed at connecting Asia and Europe through a combination of train routes, ports, and roads.

The planned projects under the Belt and Road Initiative (BRI) would together span the distance from the eastern part of China until Belgium in the northwest corners of Europe and Spain further south. The initiative is also known as the Silk Road Economic Belt and the Maritime Silk Road, evoking the image of the transcontinental routes that were used for trading silk, horses, and a host of other products some millennia ago.

Chinese President Xi Jinping launched the new initiative in 2013, with government officials suggesting that the contemporary version of the ancient Silk Road concept could be a landmark achievement. Proponents say that the planned projects could have the potential to slash trade costs, create new jobs, and boost trade flows and inter-regional connectivity.

“China has reached a new starting point in its development endeavours. Guided by the vision of innovative, coordinated, green, open, and inclusive development, we will adapt to and steer the new normal of economic development and seize opportunities it presents,” said Xi at the opening of this weekend’s forum.

“We are ready to share practices of development with other countries, but we have no intention to interfere in other countries’ internal affairs, export our own social system and model of development, or impose our own will on others. In pursuing the Belt and Road Initiative, we will not resort to outdated geopolitical manoeuvring,” he added.

Experts speaking to Bridges similarly noted the focus placed by Beijing on making the initiative open and inclusive, along with what this could mean for other economic integration efforts.

“The Belt and Road Initiative aims to find a solution to the current global challenges from economic stagnation to political populism. All the bilateral or multilateral cooperation or specific projects are based on win-win principle,” said Wang Huiyao, President of the Center for China & Globalization (CCG), a non-profit think tank, in e-mailed comments to Bridges.

Wang also noted the implications this initiative could have for regional and international collaboration in other forms, including on trade.

“It’s harmonious for the initiative and regional economic integration as it’s open to all potential participants on the basis of mutual benefit,” he said. “To some extent, the regional cooperation could be enlarged to global fields.”

Jean-Pierre Lehmann, emeritus professor at the IMD business school in Lausanne, Switzerland, founder of The Evian Group, and visiting professor at the University of Hong Kong, told Bridges that the initiative could have major positive potential if properly done and “should be encouraged” going forward. He also noted China’s different background from traditional major players and the need for the latter group to adjust to these changing economic realities.

“I think since the beginning of the century we’re seeing one of the most formidable transformations in the global economic scene that we’ve seen in a long time,” he said, referring to China’s evolution into an “emerging global power.”

Globalisation, connectivity

Since its inception, the initiative has drawn questions over what these ambitious infrastructure plans mean for China’s vision of globalisation, development, connectivity, and trade. In terms of funding, this week’s conference brought in several billion dollars in pledges from the event’s host.

The various infrastructure projects that would serve as the components of the Belt and Road Initiative are expected to take several years to put into place, and will require the cooperation of myriad other countries.

While the project has drawn significant interest from countries both in the regions that would be affected – as well as in continents further afield, such as South America and Africa – analysts and officials from a host of other countries and international agencies have also suggested that this initiative will need to be inclusive; cognizant of developmental needs from the countries involved; and transparent.

The initiative has the backing of various national leaders; however, the project has also seen some detractors, such as India, which was quoted in the Financial Times as having opted out of the summit due to “core concerns about sovereignty and territorial integrity.” Other countries such as Australia, while noting the initiative’s potential opportunities and highlighting the Sino-Australian business ties being formed to support it, have said that its decision about the Belt and Road Initiative will be based on the national interest.

The US, for its part, sent a representative to the meeting. The news that Washington would send an official to the Beijing event was announced as part of a series of “initial results” from bilateral US-China trade talks.

Supporters say that the Belt and Road Initiative could be an economic boon for the countries involved, while putting forward their own suggestions for the process and final product. For example, EU officials have said that supporting Asia’s infrastructure needs would be to the European Union’s own benefit – a significant statement, given that a large portion of the Belt and Road would need to traverse European territory.

“China is at one end of the ‘Belt and Road’ – Europe is at the other. Done the right way, more investment in cross-border links could unleash huge growth potential with benefits for us all,” said Jyrki Katainen, who serves as the European Commission’s Vice President, in comments to the event’s “leaders’ roundtable.”

“If we get it right, 21st century connectivity can also help the poorer parts of the world get a fairer share of the proceeds of globalisation. And it can bring the kind of economic development that helps to address the root causes of migration,” the EU official added, while also outlining a series of principles that the bloc would like to see reflected in this initiative.

These principles include, for example, making sure the initiative is “based on market rules and international standards,” while building on networks already in place. It should also be environmentally friendly and socially conscious, with its backers acting in a transparent manner aimed toward creating “real benefits for all stakeholders.”

Trade and sustainability

The communiqué issued in Beijing on Monday has specific language on trade and development, calling for strengthening “the rules-based multilateral trading regime” and urging cooperation across various forums and configurations to tackle poverty, boost employment, and support sustainable development.

The leaders co-signing it hailed from Argentina, Belarus, Cambodia, Chile, China, the Czech Republic, Ethiopia, Fiji, Greece, Hungary, Indonesia, Italy, Kazakhstan, Kenya, Kyrgyzstan, Laos, Malaysia, Mongolia, Myanmar, Pakistan, Poland, the Philippines, Russia, Serbia, Spain, Sri Lanka, Switzerland, Turkey, Uzbekistan, and Vietnam.

“We reaffirm our shared commitment to build open economy, ensure free and inclusive trade, oppose all forms of protectionism including in the framework of the Belt and Road Initiative. We endeavour to promote a universal, rules-based, open, non-discriminatory and equitable multilateral trading system with the WTO at its core,” said the joint communiqué.

The leaders’ communiqué also makes reference to a series of international initiatives or accords which they say can create new opportunities for “communication and coordination” in supporting greater connectivity while also fulfilling sustainability objectives – including the UN’s Paris Agreement on climate change; the 2030 Agenda for Sustainable Development; the Addis Ababa Action Agenda; and the WTO’s Trade Facilitation Agreement.

Leaders from international institutions, including the United Nations, the World Bank Group, and the International Monetary Fund (IMF), were all present for the Beijing event, issuing their own recommendations for the scheme.

“In order for the participating countries along the Belt and Road to fully benefit from the potential of enhanced connectivity, it is crucial to strengthen the links between the Initiative and the Sustainable Development Goals,” said UN Secretary-General António Guterres at the forum’s opening session.

World Bank President Jim Yong Kim welcomed the initiative as an “ambitious, unprecedented effort,” adding that the initiative has the potential to “improve trade, infrastructure, investment, and people-to-people connectivity – not just across borders, but on a transcontinental scale.”

The World Bank chief also called for ensuring that “appropriate policies, institutions, and services” are in place, including “effective governance, which is critical to ensuring developmental impact.” He further noted the trade-related challenges that could emerge, such as in dealing with customs procedures.

Both the World Bank and IMF have said that they are willing to cooperate with the initiative to ensure its success and address potential challenges that may arise, including in supporting affected countries which may be at different developmental stages.

The next summit will be held in 2019, also in China.

From ,2017-05-19
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