The Second BRI Forum: Signaling Change?

China hosted the 2nd Belt and Road Forum for International Cooperation in Beijing from 25 to 27 April 2019 with a few dozen heads of state/government and of international organizations in attendance. Seen as a key event of the Chinese diplomatic calendar, international participation at the BRI Forum is seen by Beijing as some sort of validation of its attempts at regional and global leadership using the mantra of economic growth through infrastructure development.

This infrastructure development provided by Chinese enterprises around the world has come under increasing scrutiny since the launch of the BRI in 2013 and the Chinese appear to have used the 2nd Forum both as a sort of reality check for themselves as well as a fresh attempt to convince countries hosting BRI projects and those not yet on board that there is still much on offer.

Problems with Chinese Infrastructure

There is no denying the fact that the Chinese are meeting an important regional and global need. Asia, Africa, and Latin America are infrastructure-deficient and even the US and parts of Europe often lack of modern infrastructure. The Chinese are among the few countries well placed to meet the requirements but the problem is several fold.

The differing political and economic conditions as well as low infrastructure base in many countries in which BRI projects operate makes it exceedingly hard to draw up uniform standards of judging the importance or viability of these projects. Indeed, for infrastructure development, profit is often not the primary motive but the other opportunities and economies that are built up around connectivity and access. Nevertheless, evidence so far indicates that BRI projects in different parts of the world suffer from problems of transparency, financial feasibility and corruption, as well as of poor integration with or involvement with local economic actors, and lax environmental standards among other things.[1]

‘Debt-trap diplomacy’ – as represented by Hambantota in Sri Lanka and even doubts in Pakistan to talk of just two countries in India’s neighbourhood – therefore, represents only one part of the many issues with the BRI. At the 2nd Forum, the Chinese tried to counter the bad press by creating a long ‘list of deliverables’, promising ‘283 concrete results’. And the Chinese propaganda machine is good and formidable enough to keep the impression going for a while longer that the BRI is succeeding and sometimes that is all that might be needed to create a momentum for still more countries to climb on the bandwagon and create a global network of supply and demand between Chinese entities that can eventually come to match the current free trade regime.

Why and how does all of this matter? It matters because while China is a crucial member of the latter regime, under the BRI, the Chinese are essentially building a mercantilist system in parallel in which tenders and contracts are won only by Chinese enterprises. And while there might be an element of competition in that different Chinese companies or perhaps even local joint ventures with Chinese partners will be bidding for these projects, the control essentially remains in Chinese hands.

2nd BRI Forum – leaders group photo (source: People’s Daily)

It is important to remember that all Chinese enterprises – whether state-owned or private – are ultimately beholden to the Communist Party of China (CPC) and its requirements not to local laws and regulations, no matter claims to the contrary by these companies or by Beijing. Chinese companies might want to be international or multinational in the classical sense, but they are expected by the CPC to be Chinese companies first and foremost no matter which country they operate in. The CPC does not want to lose control over Chinese public and private companies and seeks to use them as instruments of international politics.

While Chinese involvement in physical infrastructure like roads do not pose major security problems, anything which involves digital infrastructure such as in power stations or telecommunications networks, for example, comes with risks about remote control and access by Chinese state agencies. Similarly, Chinese companies are also gaining access to financial companies and markets, smartphones and their apps, as well as security and surveillance technologies in other countries by virtue of fact that they are either the major investors and suppliers or even market leaders in these domains. The political, social and security implications do not look pretty for countries participating in the BRI.

India’s Options

What the world needs is alternatives to the BRI, and here, one might ask how India is doing, given its identity as a democracy and long record as a champion of the Third World as well as aspirations to global power status.

India has a long way to go in terms of matching China’s BRI. Even India’s much less ambitious rivals to the BRI, like the Asia-Africa Growth Corridor with the Japanese and the Bangladesh-Bhutan-India-Nepal connectivity network within South Asia itself are yet to show significant results.

The Japanese have since also launched multiple joint projects with the Chinese under the BRI framework. Similarly, India has laid great store by Chabahar in Iran as part of the International North–South Transport Corridor and has started receiving shipments from Afghanistan via the port already. However, the Iranian foreign minister has also been on record inviting both Pakistan and China to participate in further developing Chabahar as well as calling the Chinese-funded Gwadar port in Pakistan under the China-Pakistan Economic Corridor, a ‘sister port’ to Chabahar. Once again, an Indian partner has ignored India’s strong objections to the BRI, including over the issue of sovereignty.

This in turn suggests that ignoring the BRI as an option altogether might not be a wise course of action for New Delhi. And this is especially so, if as its foreign ministry data indicates India was able to increase its foreign development assistance from US$11 billion in 2013-2014 to just US$28 billion in 2018-2019. While this is a substantial jump by Indian standards, it is no match for the amount of money the Chinese are putting into the BRI. Even if the Chinese monies are in the form of loans, India’s grants are divided into some 280 lines of credit spread over 63 countries in Asia and Africa[2] suggesting a wide dispersion but also therefore, rather small sums overall in each country. What is more India’s poor record of delivery and implementation so far threatens to undermine even this positive increase in sums disbursed.

While New Delhi is making plenty of efforts, it might need to consider if absolute opposition to the BRI and the heightened degree of competition with China that this implies is ultimately doing either its relationship with China or its own international image any long-term good. What India might need to do is be flexible – swallow its pride while focusing on cooperation with China in those areas where the Chinese are willing to meet global best practices and follow Indian regulations even as New Delhi gradually but surely sets better benchmarks for infrastructure development in Asia and the wider world. If Beijing does not agree to this arrangement, then we will know for sure that the Chinese are unwilling to really change their behaviour and walk the talk at the BRI Forum.

A version of this article was originally published as Jabin T. Jacob, ‘China’s 2nd Belt and Road Forum: Continuing Doubts’, International Affairs Review, 1 May 2019.

 REFERENCES

[1] https://s3.amazonaws.com/files.cnas.org/CNAS+Report_China+Belt+and+Road_final.pdf

[2] https://www.livemint.com/news/india/india-s-development-grants-more-than-double-in-5-years-1556479303772.html

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