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More Groundwork and Greater Participation: Gains of the Second Belt and Road Forum

May 27, 2019

More than responding to criticisms and challenges, the second Belt and Road forum held in Beijing last month confirmed a sustained effort to entrench and expand the six-year old connectivity initiative. 

The larger attendance for this year’s summit demonstrates the growing appeal of the initiative. Numerous agreements signed with participating countries and references to the Belt and Road Initiative (BRI) in important documents of several regional organizations are more than symbolic gains. They, in fact, represent underrated achievements in institutionalizing the BRI. With actual projects completed or underway, the BRI is showing resilience in the face of tremendous political and economic headwinds. But setting a higher bar increases expectations and puts the initiative into greater spotlight. China’s capacity to absorb mounting risks will also be tested. 

Continuity and deepening 

The second forum drew more countries than that of the inaugural summit. 25 of 32 world leaders who were present in 2017 showed up again, displaying continuity. These world leaders included Czech President Milos Zeman, Myanmar State Counsellor Aung San Suu Kyi, Kenyan President Uhuru Kenyatta, Philippine President Rodrigo Duterte and Russian President Vladimir Putin. United Nations Secretary General Antonio Guterres and International Monetary Fund Managing Director Christine Lagarde also reappeared. Fourteen new countries, including Austria, Djibouti, Egypt, Mozambique, Nepal, Papua New Guinea, Portugal and the United Arab Emirates, added depth to the leaders’ roundtable held in Beijing. For the first time, national leaders of all ten ASEAN countries were present as well. 

The vision and promise of the Belt and Road also showed resilience. Leadership transition in Chile, Ethiopia, Italy, Kazakhstan, Kyrgyzstan, Malaysia, Mongolia, Pakistan, Switzerland, and Vietnam did not alter their continued participation in BRI. Even elections in Indonesia did not stop Southeast Asia’s largest country from participating as Vice President Jusuf Kalla represented Jakarta. There were, however, notable absences. Leaders of Argentina, Fiji, Poland, Spain, Sri Lanka, Turkey and the World Bank, who all attended the 2017 Summit, did not make the second iteration. 

A report prepared ahead of the three-day summit outlined the Belt and Road’s progress in six key areas. BRI was incorporated into declarations and joint leaders’ communiques of the Shanghai Cooperation Organization (2015), G20 (2016), United Nations (2016, 2017), Forum of China and the Community of Latin American and Caribbean States (2018), China-Arab States Cooperation Forum (2018) and Forum on China-Africa Cooperation (2018). Beijing also signed 173 cooperation agreements with 125 countries and 29 international organizations to implement the initiative. 

High-level meetings and agreements on digital connectivity, standardization, taxation, intellectual property, legal cooperation, and energy partnership were also made. In transport connectivity alone, 18 bilateral and multilateral facilitation agreements were signed. In e-commerce, bilateral agreements with 17 countries were reached. These activities demonstrate the broad range of fields that the ambitious initiative attempts to cover. This foundational groundwork is crucial in order to embed the initiative into national and regional connectivity thrusts. Multilateral pledges reinforce bilateral deals, while the latter serve as an insurance against the difficulties of achieving regional covenants. While not all these agreements will be seamlessly implemented, best practices can be drawn from successful cases for future application. 

In terms of infrastructure, projects completed thus far include the full opening of the Western China-Western Europe Expressway, China-Kyrgyzstan-Uzbekistan highway, China-Vietnam Beilun River Bridge II, China-Russia-Mongolia overland cable system, China-Myanmar oil and gas pipeline, Khalifa Port Container Terminal in the UAE, and Piraeus Port Pier III expansion work in Greece. Cross-border economic zones with Kazakhstan (Khorgos) and Laos (Mohan-Boten) were also cited. 

BRI taps into regional desire for greater connectivity. To this date, the China-Europe rail service connects 108 cities in 16 countries within Asia and Europe, providing a fast and cheaper alternative to sea transport, and at the same time unleashing opportunities for landlocked countries along the route. Railway projects underway include the Hungary-Serbia railway which began with construction of the Belgrade Stara Pazova section, China-Laos, China-Thailand and Jakarta-Bandung lines. 

However, despite top-level cover, many projects remain hampered by administrative gridlock and local opposition. The second summit gave Beijing a chance to reassure participants and show how the BRI can be flexible in responding to participants’ particular needs. The successful renegotiation over the cost of Malaysia’s East Coast Rail Link project ahead of the summit illustrates this. 

Raised expectations 

But the second forum also gave a taller order for the BRI. The call for an “open, green and clean” and a “high standard, people-centered, sustainable” approach will raise the stakes for the initiative. Absent in the 2017 Joint Communique, “green” appeared seven times and “clean” four times in the 2019 Joint Communique. To counter concerns arising from China’s alleged intent to ensnare countries into debt traps, guiding principles on financing the BRI and a debt sustainability framework was published. China’s increasing confidence in tackling these issues may be attributed to several factors. This includes China’s emergence as the world’s largest producer of renewable energy and second largest green bond market. The country’s gains in its domestic war against corruption, poverty, and pollution may also be another driver.  

The BRI also exhibited its growing inclusivity during last month’s summit. In his keynote speech, President Xi Jinping welcomed the participation of multilateral and national financial institutions of other countries, as well as private capital. He also encouraged third-market cooperation which attracted developed country partners such as France, Canada, Singapore, Spain, Netherlands, Belgium, Italy and Australia. Last October, China and Japan signed a comprehensive third-party market cooperation agreement that encompasses infrastructure, finance, logistics and information technology. 

The 2019 Joint Communique also supported “improving cooperation in project preparation and implementation, to promote projects that are investable, bankable, economically viable and environment-friendly.” This could probably be seen as a response to charges of adverse environmental effect and underutilized projects. Since last year, over 140 officials from 45 countries obtained training from the China-IMF Capacity Development Center

By opening the BRI up to other investors, China not only dispels the notion that the BRI is simply a China-club, but it also minimizes the increasing amount of debt that China incurs overseas. In addition, building partnerships with developed countries that have longstanding finance experience and reputational capital can ultimately help soften local pushback against Chinese investments. 

In sum, the second Belt and Road forum showed that the international connectivity project is an evolving initiative that will continue to gain traction despite persistent challenges. While the initiative unmistakably represents China’s aspirations of global leadership, its success will hinge in its ability to integrate and reconcile an ever-increasing number of actors and interests. 

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