After Beijing proposed its global grand strategy of “Belt and Road Initiative” (BRI) in 2013, it held its first Belt and Road Summit on May 14-15, 2017. There are 29 national leaders participating the summit, along with more than a hundred lower-level national representatives. National leaders from emerging countries (Russia, Turkey) Europe (Greece, Italy, Spain, Switzerland) and Latin America (Argentina) are the highlights of the summit. Although some of these countries are not covered by the BRI, their presence at the summit reveal their active intention to engage Asia. On the contrary, the United States and its non-European allies, such as Australia, Canada, and Japan played down the summit. Instead of showing up personally, President Trump sent the Senior Director for Asia at the National Security Council, Matt Pottinger, to join the summit. India did not even send an official delegate to the summit.
In order to expand its reputation and influence, BRI seeks to draw attention from as many countries as possible while at the same time it has to reassure other countries that BRI does not signify Beijing's revisionist ambition or offensive mercantilism. In Xi Jinping's remark, the BRI will offer a series of foreign assistance programs and cooperate with many international financial institutions in financing investment projects. He especially mentioned that BRI should forge partnerships of dialogue with no confrontation and of friendship rather than alliance and Beijing will not seek geopolitical rivalry with its counterpart.
Although the summit attracted most part of the world, many countries were still suspicious of the nature of BRI. In the end, only 30 nations signed a joint communique during the summit that outlined principles of further economic cooperation in trades and investments. There are at least three aspects of concerns. First, many Western countries worried the BRI's social and environmental impacts on the region. The Asian Infrastructure Investment Bank (AIIB) is so far the most globally accepted international financial institution (IFI) under BRI. The bank has signed seven memoranda of understanding with other IFIs, such as the Asian Development Bank, the European Investment Bank and the World Bank. Among current 25 approved and proposed projects, 18 are co-financing projects. Of those 18 projects, AIIB only finances more money than other banks in 2 projects.
However, in terms of environmental and social impacts of those infrastructure projects, 11 out of 25, or 44%, will cause significant adverse impacts and another 44% will result in potential adverse impacts. The number is significantly higher than other IFIs. Unlike most IFIs that forbid financing projects involving radioactive materials or nuclear reactors, the AIIB does not ban such projects. It also has not yet reached a conclusion whether to follow the ADB and the World Bank's policy that stops supporting coal-power plants, which are more affordable and attractive to Asia's developing countries. Countries like India and Indonesia are now counting on AIIB to develop coal-power plants. Although the market needs infrastructures that are more polluted but affordable and it is also quite convenient for Beijing to finance infrastructure that other IFIs refused to bankroll, giving the green light may push western countries further away from the AIIB and BRI. Whether to harmonize global best practices in BRI will become a hard choice for Beijing.
Secondly, how transparent will the BRI look like? In discussing trade issue, many European countries refused to engage more with China due to its opaque procurement policies. In terms of financing, even though in the end the AIIB follow international best practices, Beijing still have other financing agencies that it has absolute controls. President Xi mentioned that Beijing will add RMB100 billion to the Silk Road Funds, as well as directing China Development Bank and the Export-Import Bank of China to offer loans amounting to RMB250 billion and RMB130 billion. As a total, the volume available from China-controlled agencies exceeds the AIIB. China can use those financial institutions to implement more environmentally, politically or socially sensitive projects. Unlike AIIB publishes details of all projects online, most project details financed by those Chinese financial agencies are hard to reach. Ironically those project details may, in fact, reflect Beijing's real intentions behind BRI.
Thirdly, since the BRI covers lots of countries and sub-region, it nevertheless has to deal with strategic issues from other countries directly or indirectly. BRI may benefit one country but at the same time jeopardize the other's political or security concerns. India's absence may result from New Delhi's opposition of a US$55 billion “China-Pakistan Economic Corridor”. Receiving delegates from North Korea at the time when Pyongyang kept launching missile tests raised mistrust between Beijing and other involving parties like Tokyo and Washington.
The most troublesome divergence may exist between Beijing and Washington. The Trump administration's increasing trade protectionism and withdrawing from Paris climate accord act against the spirit of BRI, which seeks further global collaboration and put Beijing under more responsibility of regional and even global economic development. Even though Xi denied BRI's revisionist intention, it nevertheless differentiates China from a more inward-looking and exclusive United States. This may alert Washington of China's surging international image and reputation. As a consequence, the United States and its allies in the region may form a strong counterforce to the BRI.
China's global influence, albeit alarming, is rising rapidly. So far the government refrains itself from acting like a challenger. Such reluctance may result from Beijing's anxious needs for more allies in the region and therefore it has to be inclusive that reassures suspicious countries. As a consequence, it is unlikely to see BRI's deviation from the current international system. However, as BRI moves forward and sinks in more tangible and intangible assets in the BRI countries, China will have more leeway to maneuver its real intention and a more unilateral and unsatisfied China will likely to emerge.