Explainer: The Belt and Road Initiative

Image taken from a contemporary Chinese scroll being used to promote the Belt and Road Initiative. The paintings depict the 15th Century journeys to the West made by Chinese explorer Zheng He.

What is the Belt and Road Initiative?

President Xi Jinping first proposed “One Belt, One Road” – now known as the Belt and Road Initiative – in 2013 as a construct connecting China to neighbouring countries and beyond. Whether it’s a risk or an opportunity depends on whom you talk to.

At a conference last month, the University of Auckland’s Stephen Noakes said he and other New Zealand-based China watchers had been attending every Belt and Road-related event they could in order to understand what it was. “I don’t think I’m closer to saying what it is.”

The project’s Chinese name is yi dai yi lu 一带一路  literally “one belt, one road”. It has spawned the acronyms OBOR and BRI. The belt part refers to the “Silk Road Economic Belt” on land, which will connect China to Europe by Central Asia. The road part is the “21st Century Maritime Silk Road” – connecting China’s southern provinces to Southeast Asia, the Mediterranean and Africa.  

“There is nearly no corner of the world that is untouched by this agenda.”
— Stephen Noakes

The BRI tends to be described in terms of infrastructure development – roads, railways, ports, bridges, and more. But it is not only about construction. It has five stated goals: policy co-ordination, facilities connectivity, unimpeded trade, financial integration, and people-to-people bonds.

It is arguably China’s “moonshot” – an audacious foreign policy vision that frames China’s engagement with its neighbours and beyond.

President Xi Jinping has referred to the “Silk Road Spirit”, embodying the spirit of “peace and cooperation, openness and inclusiveness, mutual learning and mutual benefit”. References to the Silk Road hark back to the centuries when China was at the centre of global exchange.  

At the 19th National Congress of the Chinese Communist Party in October 2017, the BRI was written into the party’s constitution, evidence of its primacy in China’s domestic and foreign policy. Virtually every initiative coming out of China at the moment is linked to the Belt and Road.

New Zealand China Council executive director Stephen Jacobi has said: “Regardless of where one stands, no one doubts the BRI is here to stay.”

Just how big is it?

Hard to say – but the World Bank has pointed out the Belt and Road Initiative will reach at least 65 countries, affect about 4.4 billion people, and account for as much as 40 percent of global GDP.

By comparison, the 10 economies included in the Comprehensive and Progessive Agreement for Trans-Pacific Partnership (CPTPP) account for 13.5 percent of world GDP. The 16 countries in the Regional Comprehensive Economic Partnership (RCEP) – which New Zealand is one of the countries negotiating – contribute about 30 percent of global GDP and account for nearly half the world’s population. The European Union accounts for about 17 percent of global GDP.

“There is no timeline to the Belt and Road — it’s going to go on forever, it seems.”
— Mary Boyd

Last year, Fitch Ratings reported US$900 billion (NZ$1.22 trillion) worth of projects were planned or underway as part of the BRI, and that most of the funding would come from Chinese banks, including the Asian Infrastructure Investment Bank (AIIB). It raised concerns about whether those banks could identify profitable projects and manage risks better than international commercial banks.

The International Monetary Fund and others have also raised concerns about the risk of indebtedness in partner countries – particularly developing nations with high infrastructure needs. 

Speaking at the Chinese Boao Forum for Asia on 11 April, President Xi Jinping said the BRI is “not a Chinese plot, as some people internationally have said”.

Who’s involved?

The Chinese government has emphasised the Belt and Road is open to all nations and not limited by geography. The initiative been described as a “hub and spoke” system – meaning China will be the centre “hub” and other countries are connected to it through bilateral ties. It’s inclusive, intentionally fluid, and it is not a trade agreement. 

The outlined projects touch on 65 countries across Asia, Africa, and Europe. But others can join as well. China lists a growing number of countries – including New Zealand – as participants in BRI, although the extent of their involvement varies widely.

Bonnie Glaser, director of Washington’s China Power Project, says there is an element of creating dependence on China by its neighbours. 

Canterbury University’s Anne-Marie Brady has described the BRI as a theme of the “Xi government’s foreign influence activities and can be thought of as more a massive propaganda campaign than it is an actual activity”. 

What does it mean for New Zealand?

New Zealand is still trying to find its place on the Belt and Road, and discussing what the risks and opportunities might be.

In May 2017, visiting Chinese Premier Li Keqiang and New Zealand Prime Minister Bill English witnessed the signing of a Memorandum of Arrangement to strengthen cooperation on the initiative. The arrangement is not a legally binding document; it gives both countries 18 months to develop a bilateral action plan. The two leaders also agreed to begin talks on an FTA upgrade.    

China’s Xinhua news agency reported that New Zealand had become the “first Western developed country to sign a cooperation agreement with China on the Belt and Road Initiative”. It noted New Zealand’s other firsts with China, including its decision to join the Asian Infrastructure Investment Bank as a founding member.

This year, Foreign Minister Winston Peters said the National government had signed up to the BRI vision too quickly. “I think the speed with which they did it showed a lack of, in the case of New Zealand, preparation and thought and consideration as to what it all means.” 

One of the challenges for countries in deciding the extent of their involvement is that the initiative is constantly evolving. Speaking at a New Zealand Contemporary China Research Centre conference in Wellington in March 2018, The Economist’s Mary Boyd noted: “There is no timeline to the Belt and Road – it’s going to go on forever, it seems.”  

At the same conference, Stephen Noakes noted: “There is nearly no corner of the world that is untouched by this agenda.”

“There is a leg of the Belt and Road transit network that extends south from China, through the Pacific, on to Fiji – our regional hub – and then to several small islands that fall in to what is technically the realm of New Zealand – being a final port of call through the bit of the Belt and Road that connects the Pacific to the Atlantic.

“There is greater geopolitical significance for this pocket of the world than would have been assumed four or five years ago. It has ripple effects for several countries.”

The New Zealand China Council has commissioned a report from PwC on options for New Zealand in its engagement with the BRI. The Asia New Zealand Foundation is one of the sponsors of the report, to be released in Auckland on 1 May.

– Asia Media Centre

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