What is China's Belt and Road Initiative?

What is the Belt and Road Initiative?

China’s Belt and Road Initiative (BRI) is a President Xi Jinping policy aimed at improving China’s “connectivity” with the rest of the world. It is intended to help close the development gap between wealthy Beijing (pictured above) and China's eastern states, and the underdeveloped west of China. 

The idea is to promote development and “economic cooperation” along five corridors out of China: land routes through Central Asia to Europe; to the Middle East, and Southeast Asia; and sea routes connecting Chinese ports to Europe and to the South Pacific.

First mentioned by Mr Xi in speeches in 2013, the BRI’s import has suffered a bit from its confusing branding. The initial English name 'One Belt, One Road', was changed in 2017 after foreigners consistently misunderstood it; and the confusion was not helped by the fact that the 'belt' refers to land routes (evoking the old Silk Road through central Asia) and the 'road' refers to shipping lanes from the ports of East Asia to the Middle East.

At its simplest, it is a policy for Chinese investment in infrastructure including ports, rail, bridges, oil and gas pipelines, and roads within China, across Europe and Asia and throughout the Indo-Pacific to create, as the BRI’s English language website puts it, “a brighter future together”. 

But there’s a lot more to it than that.

The BRI is a combination of foreign policy and economic development strategy that has now been enshrined in the Communist Party of China's constitution, signalling that it is going to shape China’s engagement and investment with the world for many years to come.

According to a 2016 PWC report, the countries signed up to the BRI - mostly small states bordering China - cover close to half the world's population and around 30 per cent of the global economy, and a geographical area with demand for infrastructure investment of around US$5 trillion. Pakistan, Central and Southeast Asian nations (including Singapore) and some east African nations have signed up, but India and Australia are among the conspicuous holdouts. 

The concept is vast and complex, a work in progress, and details are hazy. It will take years for its shape and implications to emerge. It’s not a multilateral organisation, like the China-led Asian Infrastructure Investment Bank, nor a multilateral trade agreement like the defunct Trans-Pacific Partnership, but a plan for a series of bilateral projects, most yet to be figured out.

Some China analysts say it is a post hoc branding exercise that pulled together pre-existing projects and development plans under the BRI umbrella, chiefly to bolster President Xi’s claim to being China’s great rejuvenator. 

“The Belt and Road Initiative is now probably the most important thing in China's international policies,” Nick Bisley, international relations professor and the executive director of LaTrobe Asia, tells SBS World News. 

“It is a sprawling project that is intended to significantly enhance China's connectivity to the world but in particular to its western region.”

'Probably the most important thing in China's international policies'

And since its elevation to the Party’s constitution at last month’s National People’s Congress, Professor Bisley said the BRI is “a division one, grade A priority” for all levels of Chinese government.

“This is what China says it is,” James Laurenceson, deputy director of the Australia-China Relations Institute at UTS tells SBS World News. “It’s about improving connectivity across five areas: better infrastructure, policy coordination, freer trade, freer investment and enhancing people to people links as well. So you can see that’s incredibly broad.”

What is motivating the BRI?

The BRI is like a Swiss army knife: multipurpose. Professor Bisley said the BRI suits a range of Beijing’s interests: it’s designed to spur economic development in China’s poor western provinces; it is a way of putting China’s surplus capital and surplus capacity to productive use, as the Lowy Institute’s Peter Cai has argued; and it is also a “geopolitical exercise” designed to weaken US power and boost Chinese influence throughout its region and beyond. 

An example of one significant BRI project that has multiple purposes is the creation of an overland route from Xinjiang in China’s far west through Pakistan to its deep water Gwadar port on the Arabian Sea. US$54 billion of infrastructure is planned for this stretch, despite some of the route passing through territory disputed by India and Pakistan.

This route gives China cargo overland access to the Arabian Sea, will spur investment in Xinjiang, and opens up a new route into China for energy imports from the Middle East - a route that is not vulnerable to US maritime power like its east coast sea lanes.

What's more, the symbolism of building projects to connect people and cultures offers a pointed counternarrative to US withdrawal under President Trump.

"The messaging is very clear," Professor Bisley said. "We're building bridges, roads, ports, connectivity. America is looking inward and building walls."

'We're building bridges, roads, ports, connectivity. America is... building walls.'

Outside of China the BRI has been interpreted as a means of Beijing buying influence among its poorer neighbours. There are legitimate concerns, Professor Bisley said, about developing countries involved in the BRI taking on unsustainable levels of debt in the form of Chinese concessional loans for major projects - similar to the worst of the World Bank’s lending practices in the 1980s - making these countries beholden to China.

There is also a perception that China’s ownership of ports across the region will confer strategic advantage at the cost of US influence. Countries like Australia that have benefited for decades from the US-led world order are uneasy about the downgrading of American influence in Asia.

Chinese officials claim trade with countries along Belt and Road routes has increased almost 20 per cent in the past 10 months.

President Xi’s legacy

Dr Merriden Varrall, director of the Lowy Institute’s East Asia program, says the BRI is an integral part of Mr Xi positioning himself at the centre of the party - and at the centre of China.

“Xi Jinping put his label on a bunch of things that already existed to try to create a legacy for himself out of something already there," Dr Varrall said. 

The BRI was written into the Communist Party's constitution in October 2017, along with Mr Xi himself (or at least, his ideology) signalling a push to ensure the vision is realised. 

“Now with it being enshrined in the party constitution along with Xi Jinping thought, he's achieved his stamp on the rejuvenation of China … It’s about bringing China out of its century of humiliation and regaining what it sees as its proper place in the world. So it has political and symbolic components as well as economic, and it has international strategic components as well."

It is clear that the BRI, as a key plank of Xi's legitimacy and legacy, will be a political imperative for all levels of Chinese government and Chinese business to be involved in.

What would it mean for Australia?

The BRI presents a range of economic and geostrategic risks and opportunities. But Australia, unlike dozens of other nations, has so far declined to get on board.

The first step in joining China’s BRI plans is to sign a memorandum of understanding. Some 60 countries have signed such MOUs as of October 2017, of varying specificity. New Zealand is among those countries that have signed up.

The next step, Professor Laurenceson explains, sees China and the partner country sit down together and develop a work plan over 18 months.

Professor Laurenceson sees only positives in Australia’s potential involvement, saying it would be a way to make progress on, for example, non-tariff or behind-the-border barriers that persist after the China-Australia Free Trade Agreement.

“I don’t understand why we’re not seeing more creative Australian diplomacy,” he said. “This is our largest trade partner by far, and increasingly important source of investment, we’ve got an excuse to sit down with them and nut out a detailed plan of operation in whatever areas we like.

'This is our largest trade partner by far, and increasingly important source of investment'

“If I was running the show, I would be using the BRI as a great excuse to talk to China and try to leverage the political capital they’re putting into the BRI to advance Australia’s interests in those areas.”

But others believe the risks outweigh the opportunities for Australia, and so far that is the argument that appears to be prevailing in Canberra.

Why hasn’t Australia signed up?

Signing up to the BRI would be a powerful symbol of support for China’s vision of the world, says Dr Varrall.

“[But] Australia has a few concerns, that idea of symbolic acceptance of who shapes the global order under what kinds of norms and practices, where Australia and its allies fit with that. There are also more practical concerns about the lack of detail and transparency. Australia is reluctant to sign up to something that’s so unclear.”

Insiders believe Cabinet previously discussed and rejected a proposal to link the BRI with the government’s dormant plans for developing the north of Australia due to security concerns. 

Dr Varrall claims Australia’s reluctance to sign up comes in part from a misconception that the BRI is a unified, China Inc.-style play for a geostrategic global takeover by economic stealth.

“I don’t think that analysis is necessarily correct,” she said. “The BRI has been cobbled together as convenient or expedient…. But I do think there are no clear wins for Australia in joining, and no particular disadvantage to holding out for a while.”

Professor Laurenceson suspects other hands are at work, that the US has privately expressed a view to Australian officials about the BRI.

“It’s hard to believe that Australia is not getting any US pressure on this,” he said. “We’ve seen it before, for the [China-led] Asian Infrastructure Investment Bank, President Obama asked [then prime minister Tony] Abbott not to join. Darwin port we saw the same thing. I think that’s got something to do with it, how much, I really can’t say.”

'It’s hard to believe that Australia is not getting any US pressure on this'

Professor Bisley said Australia’s reticence reflected a policy failure in one of its most important international relationships.

“For 20 years Australia has approached China with a policy of compartmentalisation. Wherever things are clearly on the economic, trade, business, finance side, we can have a productive, useful relationship. But there’s all these difficulties in the relationship - human rights, democracy, our relationship with the US - and we talk about those differences privately or we don’t talk about them at all.

But [the BRI] is in both boxes and Canberra is like a deer in headlights. It’s a much more difficult set of policy choices and we don’t know how to manage them.”

Will Australia change its mind?

Professor Bisley and Professor Laurenceson agree on one thing: a future Australian government is likely to shift its position and join the BRI.

“The basic economics are so compelling,” said Professor Laurenceson, pointing to the trillions of dollars’ worth of infrastructure funding needed in the Asia-Pacific region in the next few decades.

“The politics will interrupt things for a while, but in the end, I think the economic considerations will come to the fore.”

'The basic economics are so compelling'

By staying out, Australia has no influence on discussions; by signing up, it may have a little.

“In the long run, [the BRI] will significantly strengthen China’s geopolitical place in the world, and it will come at the cost of American influence,” Professor Bisley said. “And that makes Australia quite reasonably uneasy. The problem we have is there is not a lot we can do about it.

“We’ll never have a huge amount of influence, but not being part of the conversation means having zero influence.”