What’s behind the bump in the Belt and Road?

Asia House’s major trade dialogue in Singapore, Asia Trade in the New Global Order, explored the political aspects of the Belt and Road Initiative. Watch the panel discussion, ‘The Politics of the Belt and Road’, below.

It’s been an eventful year for the Belt and Road Initiative (BRI), with China’s major infrastructure programme experiencing a series of setbacks. New governments in Malaysia and Pakistan have revisited Beijing-backed infrastructure projects, while Myanmar has sought to renegotiate the terms of the deep-sea port project at Kyaukpyu.

The impasse which dampened the recent APEC summit had the BRI at its core, with the US amplifying its criticism of President Xi’s flagship programme and raising concerns over standards and the debt burdens that can arise for recipient countries.

It was a pertinent time, then, to discuss the BRI at Asia House’s major trade dialogue in Singapore, Asia Trade in the New Global Order.

For the chairman of one of the world’s leading design and engineering firms, the criticism of the BRI is about more than problems on the ground.

“We should call out the elephant in the room,” Gregory Hodkinson, Chairman of Arup Group said during a panel discussion at the conference. “It’s geopolitics. It’s not quality concern, it’s not debt concern, its geopolitics.

“Has the execution been clumsy by the Chinese side in some places? Yes. Have recipient countries irresponsibly asked for projects that they can’t afford to pay down the debt on? Yes. But does that mean the whole programme is questionable?

“No.”

Hodkinson joined on the panel by Donald Kanak, Chairman of Eastspring Investments, who questioned whether there really was a global pushback against the BRI.

“If you get on a plane and go to other parts of ASEAN… if you go to Cambodia, to Laos or Indonesia, you wouldn’t hear that it’s become unpopular or that the wheels are falling off,” Kanak said.

While conceding that “there are definitely issues and there definitely problems,” he argued that there is a pressing need for a programme of the BRI’s scale and ambition if Asia’s yawning infrastructure gap is to be closed. “The concept of the Belt and Road and the need for massive infrastructure and financing in the region is absolutely indisputable,” he said.

Watch the discussion below

According to Goh Sui Noi, East Asia Editor for The Straits Times, the Chinese “do recognise that there are problems with the projects in host countries, that there is some unhappiness over the way these projects are managed.” Much of these problems are down to the lack of involvement of local labour, she said.

“The Chinese bring an entire production chain to these countries, even down to the cooks and cleaners, and so the sense is that the local community does not have a share from this economic activity. The local communities don’t benefit from it.”

Yet despite China recognising these issues, Goh was not optimistic about any major shifts in BRI policy happening any time soon. “It will be some time,” she predicted.

Also on the panel, moderated by Asia House Chief Executive Michael Lawrence, was Professor Xiang Bing, Dean of the Cheung Kong Graduate School of Business, who highlighted the need for infrastructure to create regional prosperity, using China’s own success as an example.

“Look at the experience of China. Without roads and bridges, there was no possibility to develop,” he said, adding that China’s capacity and vast experience in developing infrastructure quickly should not be of detriment to the BRI as a concept. Despite Chinese self-interest in the project, “the whole idea should be hugely welcome,” he said.

Kanak also drew on the Chinese experience to highlight the need for a programme like the BRI. “There’s a concept, there’s a need, there’s a capacity, there’s an incredible amount of experience of eliminating poverty for hundreds of millions of people in a very short period of time,” he said.

“But even in China there were breakages along the way. There were tremendous environmental consequences, sometimes bad-debt problems, sometimes execution issues.”

Kanak called for global engagement with these issues in order to resolve them. “Standing on the sidelines and criticising isn’t going to make it better.”

Hodkinson agreed, and outlined what that engagement could look like.

“Western institutions, Western companies have a contribution to make,” he said. “What we’ve got to offer is 50 years, 80 years, 100 years, 200 years in some cases, of company experience of working in the third counties in which these Belt and Road projects are happening.”

This includes knowledge of how things work in the third countries, as well as the understanding that these countries don’t operate in the way China does, Hodkinson said.

“If we work together, we can make it a success. I’m quite convinced of that.”

Watch the full discussion