Futurelearning

What ‘Belt and Road’ could mean for NZ

Victoria University of Wellington's Jason Young looks at the leading role New Zealand could play in China's Belt and Road Initiative 

Last week President Xi Jinping gave another speech about the curiously named Belt and Road Initiative (BRI). This one was delivered in the Great Hall of the People and celebrated five years since its inception.

The speech pointed to “solid cooperation” between more than 100 countries and international organisations and echoed a desire to use BRI to promote China’s role in the world. It reiterated the goal of increasing economic connectivity, infrastructure investment and economic cooperation in China’s surrounding region.

Xi is doubling down on BRI just as China faces a raft of internal and external challenges. These range from United Nations criticism of the mass internment of people in Xinjiang (a key part of the Eurasian economic corridor) to economic retaliation from the United States over perceived unfair trade and investment practices.

That BRI is linked to both issues underscores the importance of the change of tone in Xi’s speech.

On the one hand, it was clear he is personally committed to seeing BRI develop further to drive regional economic growth in China and to reduce Chinese dependency on consumers in advanced economies like the US through the development of markets in the developing world.

On the other hand, there is a tacit acceptance that China needs to strengthen consultation on BRI projects, improve BRI governance and oversight and take care not to let financing rise to unsustainable levels in countries with limited ability to pay back loans.

As a commercial endeavour (BRI is not a series of aid projects), loans should adhere to international standards, clear procurement rules and be commercially viable for debtor countries.

Hitherto, BRI has raised debt to potentially crippling levels across the developing world from Sri Lanka, Pakistan, Malaysia, Lao and Cambodia to the South Pacific.

Some commentators are now employing strong language, even a charge of neo-colonialism, to describe BRI projects in these countries and reporting stories that tarnish the reputation of China abroad even as the Chinese press presents BRI as a major success.

Where does that leave a country like New Zealand?

During Premier Li Keqiang’s March 2017 visit, New Zealand signed an agreement to seek areas of BRI cooperation with China. This presents an opportunity for New Zealand to forward its bilateral interests and to support the stated goals of promoting development and economic connectivity.

This could be achieved in three ways.

First, New Zealand should maintain precedent in its bilateral cooperation with China under BRI by adhering to existing international standards as outlined in the 2008 Free Trade Agreement, our joint commitment to the World Trade Organisation, our contribution to the Asia Infrastructure Investment Bank’s governance structure and our existing economic relations.

As an advanced economy, the value-add of New Zealand joining differs considerably to that of the mostly developing economies currently involved in the initiative. New Zealand will not, I imagine, present much opportunity for the usual infrastructure development projects, due to its level of development, but can contribute and cooperate positively in ‘soft’ areas such as trade facilitation, governance and environmental protection.

Second, New Zealand could facilitate a regional discussion of BRI by providing a forum for assessing how BRI projects impact the region as a whole. A combined Pacific voice may prove more audible than individual voices alone.

This will require an assessment that goes above and beyond a discussion of great power rivalry within the region and that takes seriously the interests of Pacific island nations, many of which have sought Chinese support for development and benefited greatly from China’s willingness to fund infrastructure projects.

Third, New Zealand policymakers, academics and commentators could strengthen reporting and feedback loops to ensure Chinese authorities are fully aware of the nature and perception of BRI commercial activities abroad.

This will require balanced and clear assessments of the economic stimulus BRI projects provide in the South Pacific, as well as exploration of a raft of issues, from labour contracting and land rights to debt sustainability and project quality.

The contribution of Chinese academics with the ear of Chinese policymakers will be important here. They should be encouraged to conduct high quality fieldwork and balanced assessments of China’s commercial activities in the Pacific.

At the moment, Chinese academia remains, perhaps understandably, more focused on frictions with the US and China’s growing economic and diplomatic footprint in Africa, Central Asia, Southeast Asia and Latin America.

We should be encouraging Chinese academics to also focus some attention on mapping the activities of Chinese commercial actors across the Pacific in the interests of developing more sustainable BRI activities in the region.

As Xi has personally committed China to pursuing BRI, it will be important for him and for China that BRI projects enhance China’s international reputation. This will only occur if they are viewed as having a positive impact on local development.

This provides the motivation for creating mechanisms for better feedback and for further refinement of the initiative. New Zealand, a country that has formally expressed interest in seeking areas of BRI cooperation, could play a leading role in this endeavour.

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