The Belt and Road Initiative (BRI) is arguably China’s most ambitious economic and diplomatic project since the founding of the People’s Republic of China. The brainchild of President Xi Jinping, the BRI is a strategic masterplan that envisions upgrading trade links along the ancient Silk Road economic belt and building a modern maritime Silk Road. These trade routes are to connect China to countries in Asia, Europe and Africa through a network of roads, ports, bridges, tunnels, pipelines and other projects involving 68 states, two-thirds of the world’s population, and about a quarter of total global trade.
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The ‘belt’ represents land routes that would run through Central Asia and the Middle East before reaching Northern Europe. The ‘road’ represents sea routes that pass Southeast Asia, South Asia and Africa, before turning northward up the Suez Canal and terminating in the Adriatic Sea near Italy.
What has been the progress thus far on the ambitious BRI and why is China investing so much political and financial capital in it? And does Singapore have a role to play?
Diplomatic Milestone: Belt and Road Forum for International Cooperation
In a diplomatic charm offensive to shore up support for the BRI, China held the high-profile BRI Forum in May this year and invited 29 heads of state and government as well as officials, business and finance leaders and media from over 130 countries. It was the largest multilateral diplomatic event China has held in modern times.
The forum reviewed a list of outcomes achieved so far – 76 consensuses comprising more than 270 results in key areas such as policy, infrastructure, trade, finance and people connectivity. That notwithstanding, Chinese President Xi also reinforced his vision for the BRI as he pledged fresh funds of approximately US$100 billion for projects under the BRI. However, it was noteworthy that leaders from Europe and the US largely did not attend the forum, suggesting underlying geopolitical considerations in play. What does China itself hope to accomplish through the BRI?
BRI: More than a ‘Road’ and ‘Belt’
One major reason is gaining international economic influence and leadership. With the US retreating from its global economic role under the Trump Administration, the BRI is a means for China to implement its vision of a new global economic order and to promote China as an alternative to the inward-looking US. China has the opportunity to become the new champion of economic globalisation and partner international institutions such as the World Bank in meeting the needs of developing and developed countries.
By investing in infrastructure overseas, China also seeks larger gains for its vast foreign-exchange reserves, most of which are in low-interest-bearing American government securities. The Chinese government also hopes to create new markets for Chinese companies such as high-speed rail firms, and to export some of its vast excess capacity in cement, steel and other metals. High-profile infrastructure projects in Asia include the Jakarta-Bandung high-speed railway in Indonesia, China-Laos railway and upgraded Gwadar port in Pakistan.
Economic influence and geopolitical power go hand in hand, both of which China is working to expand. By investing in volatile countries in Central Asia via the BRI, China aims to create a more stable neighbourhood for its own restive western provinces of Xinjiang and Tibet. Beyond its borders, encouraging more BRI projects around the territorially-contested South China Sea in countries such as Malaysia could bolster China’s claims in that area. Further afield to the West, extending the BRI to European countries like Czech Republic and Poland allows China to build its presence in Europe at a time when transatlantic ties between the US and its European allies are under strain.
The BRI is also designed to enhance President Xi’s international standing and showcase his domestic strength on the road to the Chinese Communist Party’s (CCP) 19th Party Congress later this year, where he hopes to make his mark on the composition of the new Politburo (the top decision-making body within the CCP) and strengthen his primacy within the leadership. In 2016, Xi was given the title of “core” leader of the CCP, placing him on par with past CCP luminaries such as Mao Zedong and Deng Xiaoping.
Bumps on the Road
Given the scale and complexity of the BRI, obstacles are to be expected. Securing financial pledges among partner states has been one such challenge. A crucial factor behind China’s economic miracle in the late 20th century was aggressive infrastructure investment. To create similar infrastructure improvements through Asia and Africa in the present day, annual investments of $2 trillion to $3 trillion would be needed. However, as of April 2017, only about $240 billion of funding had been raised, less than an eighth of annual requirements.
China also faces challenges in identifying profitable projects in many belt-and-road countries (Chinese businessmen in central Asia call it “One Road, One Trap”). Notably, it has faced backlash against some of its plans, with newly-elected governments in Sri Lanka and Myanmar rejecting or seeking to renegotiate projects approved by their predecessors.
Singapore’s Role in the BRI
Singapore continues to support the BRI despite recent friction in Singapore-China bilateral ties. Singapore PM Lee Hsien Loong not being invited to the recent Belt and Road Forum was cited by the media as a diplomatic snub by China as Minister for National Development Lawrence Wong attended the Forum instead. However, the Singapore-China relationship has proven to be resilient enough to withstand bumps as ties subsequently improved.
Pointing to a role for Singapore in the BRI, Singapore DPM Teo Chee Hean noted that “other dimensions and layers are also important to realise (its) full potential”. There is a need to go beyond just physical links to include digital and human networks, and leverage on international and institutional financial resources, an area where Singapore can prove a valuable partner to China. Singapore can work with China to address the previously mentioned challenges related to financing and internationalising China’s currency.
According to DPM Teo, there is also room for Singapore and China to collaborate with third countries along the BRI to develop their human capital in areas such as project management, port and airport operations, and administration of free trade zones. Already, both sides have agreed to develop the China-Singapore (Chongqing) Demonstration Initiative on Strategic Connectivity into a key demonstration project for the BRI, indicating that Singapore will have a mutually beneficial role to play moving forward.
Despite the numerous challenges and scale of effort and resources involved, the BRI is a momentous project that marks China’s continued ascent as a global power. More importantly, it provides a much-needed platform for global partnerships and greater connectivity at a time when protectionist and right-wing sentiments particularly in the West threaten to derail inclusive economic development and geopolitical stability.