Is This the End of Belt and Road, or Just the Beginning?

COMMENTARY Asia

Is This the End of Belt and Road, or Just the Beginning?

Apr 26th, 2019 2 min read
COMMENTARY BY
Jeff M. Smith

Research Fellow, South Asia

Jeff Smith specializes in South Asia as a research fellow in Heritage's Asian Studies Center.
Fower beds reading "Chinese Dream" at Zhouji Green Expo Garden to welcome the 2nd Belt and Road Forum for International Cooperation on April 24, 2019. VCG / Contributor / Getty Images

This week, China will hold its second major international conference dedicated to the Belt and Road Initiative (BRI). As with the first Belt and Road Forum held in May 2017, Beijing has pulled out all the stops to lure dozens of world leaders to offer their blessings of legitimacy to the BRI. However, much has changed: China was riding a wave of positive hype in 2017, but since then the international narrative around the BRI has taken a decidedly negative turn.

At the time of the last forum, India stood alone in publicly rebuking the BRI. A few months later, however, the Trump administration moved from a position of ambivalence to one of hostility. In October 2017, then-Defense Secretary Jim Mattis warned: “No one nation should put itself into a position of dictating ‘one belt, one road.’” Harsher, more direct criticism from U.S. officials, members of Congress, and military leaders followed soon after.

Leaders from Australia and several European countries soon began voicing their own concerns—about the lack of transparency, accountability, and financial sustainability, while highlighting the risks of corruption and debt traps. Rumblings of discontent then spread to the developing world. Sri Lanka, the Maldives, Malaysia, Burma, Indonesia, Pakistan, and several African countries began scrutinizing, amending, or canceling BRI deals. Meanwhile, the U.S., India, and some European countries had official endorsements of the BRI scrubbed from UN resolutions.

Still, for two key reasons, BRI is here to stay. First, the BRI, enshrined in the Chinese constitution in 2017, carries the personal signature of President Xi Jinping and is intimately tied to his legacy, making BRI too Xi to fail. Second, as Italy recently demonstrated, the allure of billions of dollars in investments is still too tempting for many countries to disavow the BRI. This will remain true so long as China offers competitive packages of capital, expertise, and willingness to finance large infrastructure projects in risky and distressed markets.

To be sure, the backlash to the BRI has spurred greater awareness of the pitfalls it presents, as well as a greater appetite for devoting more attention and resources toward overseas connectivity initiatives in the West. In the past two years, the “Quad” (Australia, India, Japan, and the U.S.) and the EU have signed a web of new cooperative infrastructure arrangements and unveiled new government programs. The U.S., in particular, is revamping its entire overseas development apparatus with the establishment of a new International Development Finance Corporation.

Yet, Indo-Pacific democracies are often unable to match China dollar-for-dollar or to assume the type of risk that Chinese state-owned enterprises can. At times, the latter will willingly endure substantial financial losses in order to advance their government’s broader strategic objectives. Nevertheless, in just the past two years, the BRI “awakening” has shown the dark underbelly of the Chinese initiative, spurred greater action from the Indo-Pacific democracies, given the developing world greater leverage and impetus to scrutinize BRI deals, and put pressure on Beijing to increase standards, transparency, and accountability. That’s a good start.

This piece originally appeared in ChinaFile