In the last twenty years, the rise of China has been the most significant geopolitical and global economic development. It now faces further challenges in reforming its economy, an endeavour in which Europe can play a part, writes Fraser Cameron.
Fraser Cameron is director of the EU-Asia Centre and a senior advisor at Cambre Associates. He attended the Belt and Road Forum in Beijing on 13-14 May.
China certainly knows how to put on a good show. After the Beijing Olympics, the Shanghai Expo and the Hangzhou G20, President Xi’s Belt and Road Forum on 14-15 May brought together a staggering array of world leaders including Vladimir Putin, Recep Erdogan, Michelle Bachelet, Christine Lagarde and Antonio Gutteres.
Thanks to a closure of factories Beijing was bathed in sunshine and enjoyed clear blue skies. “I wish there was a summit every month,” said my taxi driver.
Speaker after speaker lined up to laud President Xi’s vision for a new Silk Road. It was a ‘win-win project’ that would bring economic prosperity and ‘mutual benefit’ for all countries involved. The project would build roads, railways, ports, pipelines, energy and telecommunications infrastructure linking China to Central and South-east Asia, Europe and Africa by land and sea.
President Xi announced a massive boost in financial support (nearly 20 billion euros) for the initiative and more than 30 cooperation agreements were signed during the forum. But he also said it was not a mere development project but rather should be viewed as a stimulus to trade in a world challenged by rising protectionism.
The final statement included a list of major outcomes with 76 projects approved under the initiative. There was a strong commitment to fighting protectionism, defending the multilateral trading system, supporting plans for innovation, e commerce and supply chain connectivity. To the surprise of some there was even a mention of the importance of democracy, the rule of law, good governance and human rights. The EU’s traditional mention of the need for ‘a level playing field’ was also included.
More than 300 Chinese and over 50 foreign think tanks were present for a parallel meeting aimed at injecting some intellectual capital into the project. Many have joined a Silk Road network to carry out research on the project. A follow up summit is planned in Beijing in 2019.
Some of China’s big neighbours including India, Japan and Korea remain sceptical about the Belt and Road Initiative. But President Moon of Korea and Premier Abe of Japan both sent high-level envoys. At the last minute, following the surprise trade deal between China and the US, President Trump sent the Asia Director from the National Security Council.
The EU has been broadly positive about the initiative but as Commission Vice President Jyrki Katainen emphasised it was important to ensure that the initiative was embedded in and supportive of the multilateral system. He called for greater transparency as regards procurement and financing as well as more attention to social and environmental sustainability. The EU, he stressed, ‘was in the business of building bridges, not walls.’
With elections in France, the UK and Germany, there were no top-level attendees from Europe. The new French President, Emmanuel Macron, sent Jean-Pierre Raffarin while Merkel was represented by Federal Economics Minister Brigitte Zypries. Both speakers emphasised the EU dimension, unlike the Czech president (Miloš Zeman) and the Greek prime minister (Alexis Tsipras) who spoke purely about their national interests.
For the EU, the next stage of the Belt and Road Initiative (BRI) takes place in Brussels on 2 June during the annual EU-China summit. The EU side is ready to develop further the connectivity platform that is already agreed between the two sides.
The EU will also stress the importance of good governance as a key element of the BRI. There is only so much you can do with steel and cement. You have to change the mind-sets, especially those of border and customs officials who view cross-border trade as an opportunity to make money through bribes and corruption.
Another important aspect is whether the BRI will outlive President Xi as it is very much his baby. There is some disaffection in China, especially in the more prosperous coastal cities, that the BRI is distracting time and effort that should be focused more on how China can move up the value chain. Most experts agree that this will require a more open and liberal education system if China is to develop the innovation and creative industries it will need to jump to the next level of development.
In the last twenty years the rise of China has been the most significant geo-political and geo-economic development. It has brought over half a billion people out of poverty and been the engine of global growth. It now faces further challenges in reforming its economy while paying more attention to its damaged environment. Whether it can manage these internal transformations and at the same time provide the leadership to transform the countries between China and the EU is an open question. But one cannot criticise China for lack of ambition.