The New Silk Roads reach the next level
The Beijing leadership seems to be aware that transparency is key for the global success of BRI, which is now supported by over 120 states and territories
The Belt and Road Forum in Beijing was a graphic demonstration of how tactical adjustments are essential to enhance the appeal of a complex overall strategy. Talk about a turbo-charged 4.0 version of the legendary Deng Xiaoping maxim “crossing the river while feeling the stones.”
For all the somewhat straitjacket approach of Chinese official pronouncements, President Xi Jinping stressed a sort of “three musts” for the advance of the New Silk Roads, or Belt and Road Initiative (BRI) – debt sustainability, protection of the environment (or “green growth”), and no tolerance for corruption.
Add to that a growing battle against trade protectionism, more bilateral free-trade deals, more financing or investments, cooperation on third-party markets, and even a plan to sell Silk Road bonds.
In his keynote speech, Xi stressed how multilateral cooperation on “six corridors and six channels serving multiple countries and ports” is all go. He was referring to BRI’s six major connectivity corridors spanning Eurasia – and the fact that BRI is still in its planning stage; implementation actually starts in 2021.
The devil, of course, is in the details on multiple Chinese promises – further opening-up of the Chinese market to foreign investment; the possibility of majority equity in more industrial sectors; no more imposed technology transfers; more protection of intellectual property rights; and last but not least, no devaluation of the yuan.
And yet Beijing is learning fast. The final joint communique, emphasizing governance as much as economic development, was signed by Xi and 37 heads of state – from Italy, Greece and Portugal to Singapore and Thailand, not to mention new members such as Luxembourg, Peru, Cyprus and Yemen.
BRI is now supported by no less than 126 states and territories, plus a host of international organizations. This is the new, truthful, realistic face of the “international community” – way bigger, diversified and more representative than the G20.
The Beijing leadership seems to be aware that transparency is key for the global success of BRI. On the opening day of the forum, Finance Minister Liu Kun presented a 15-page debt sustainability framework based on similar standards applied by the Bretton Woods system – the IMF and the World Bank.
And the governor of the People’s Bank of China (PBOC), Yi Gang, stressed how long-term debt sustainability should be evaluated in relation to better infrastructure, better productivity, raising standards of living and reducing poverty. The PBOC has financed as much as $440 billion in BRI projects so far.
It’s all about Russia-China
Supported by vast infrastructure-building know-how and cutting-edge technology, Beijing is willing to renegotiate virtually everything BRI-related, from bank loans to overall project costs, from Malaysia and Thailand high-speed rail to the finer points of the flagship China-Pakistan Economic Corridor (CPEC), from physical infrastructure to the Digital Silk Road.
So much for US media hysteria over toxic “debt-trap diplomacy”.
Moreover, the West, as usual, ignored what was the absolutely key takeaway of the BRI forum: the deepening, on all fronts, of the Russia-China strategic partnership. It’s all here, in President Putin’s speech.
Putin emphasized “harmonious and sustainable economic development and economic growth throughout the Eurasian space.” He noted how BRI “rhymes with Russia’s idea to establish a Greater Eurasian Partnership, a project designed to ‘integrate integration frameworks’, and therefore to promote a closer alignment of various bilateral and multilateral integration processes that are currently underway in Eurasia.”
I have reported extensively on the crucial BRI-Greater Eurasia symbiosis. And this was exactly the focus of the discussion when Putin met Xi on the sidelines of the forum. The Chinese Foreign Ministry vigorously stressed how Xi asked Putin to merge Eurasian Economic Union’s (EAEU) infrastructure projects with BRI.
What should be expected from the in-progress BRI-EAEU merger, which also includes the economic arm of the Shanghai Cooperation Organization (SCO) as well as ASEAN, is a massive, concerted Eurasian integration push.
Putin could not have been more specific. “The Eurasian Union…has already signed a free-trade agreement with Vietnam and a provisional agreement with Iran, paving the way to the creation of a free-trade area. The preparation of similar instruments with Singapore and Serbia is nearing completion, and talks are underway with Israel, Egypt and India. We cooperate actively with the Shanghai Cooperation Organization and the Association of Southeast Asian Nations.”
All the pieces fall into place
Addressing the forum, Putin added another enticing dimension, with the China-driven Maritime Silk Road possibly joining the Russia-driven Northern Sea Route, “a global and competitive route connecting northeastern, eastern and southeastern Asia with Europe” will emerge. Once again, Eurasia integration in practice.
And then there are the other key Eurasian hubs, Iran and Pakistan.
After Tehran and Islamabad clinched a deal for joint border patrol on both sides of Balochistan, the next logical step would be closer BRI-related integration from Southwest Asia to South Asia.
Pakistan’s Prime Minister Imran Khan was a key participant in the forum, explaining the expansion that will transform Gwadar from a tiny fishing village to a global port and CPEC terminal that will link the Pacific via the Indian Ocean to the Mediterranean. Imran confirmed that Turkey had also been invited to be part of CPEC.
Many pieces are slowly falling into place across the immensely complex Eurasian integration chessboard. A key vector now depends on China being able to develop, refine and project soft power.
BRI, apart from its status of being the one and only 21st-century global development project, is also a global PR exercise. Compared to childish US geopolitical demonization, Beijing’s game is not that hard – just learn how to appropriately sell the ultimate geoeconomic paradigm shift to International Community 2.0.