Belt and Road Forum shows China recalibrating after 10 years
Smaller projects, tech prowess appeal to Global South as Europe grows wary
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A sign for the Third Belt and Road Forum in Beijing. This week's forum underscored a new emphasis on "small yet smart" projects. © Reuters
CK TAN, Nikkei staff writer
October 19, 2023 18:02 JST
BEIJING -- The Belt and Road Forum concluded on Wednesday has provided a glimpse of China's future global engagement, likely focusing on smaller projects in developing economies of the so-called Global South, while other countries distance themselves amid high geopolitical tensions.
The forum celebrated 10 years of the initiative, launched in 2013 and inspired by ancient trade routes. Since its inception, China's infrastructure-centered investment blitz has spanned over 150 countries, stretching from Asia to Africa and on to South America. It has driven the "flow of goods, capital, technologies and human resources," President Xi Jinping said in his address to the event.
But the initiative has also stirred unease over Beijing's spreading influence, as well as risks to the environment and debt distress among countries saddled with the bills. With China facing its own issues as its economic growth slows, this week's forum underscored a new emphasis on "small yet smart" projects observed in recent years.
At the same time, Xi still vowed to accelerate connectivity between China and Europe over the next 10 years, integrating ports, shipping and trading services. He also pledged new financing and spoke of creating pilot zones for e-commerce cooperation.
Despite Xi's sales pitch, it was clear that European interest and involvement in the initiative is waning.
Except for Hungarian Prime Minister Viktor Orban and Serbian President Aleksandar Vucic, leaders from richer European economies were conspicuously absent at the two-day forum. Italy, the only G7 member to sign up to the Belt and Road, has signaled that it is looking at withdrawing. Other major European economies are taking stock of their dealings with China.
"There may be some movement on small scale specialized projects," Peter Buckley, a professor of international business at U.K.'s Alliance Manchester Business School, told Nikkei Asia. "Strategic considerations and environmental barriers are likely to rule out larger scale projects from China either via the [initiative] or, more generally projects with any involvement by Chinese state-owned enterprises or firms with state connections."
The Belt and Road Forum featured Russian President Vladimir Putin along with leaders from Congo, Laos, Indonesia, Papua New Guinea and other mainly emerging economies in need of development financing. All told, delegates from over 130 nations attended.
That sheer number "speaks to the continuing appeal of the BRI among developing countries in the Global South," said analysts at U.S. risk advisory Eurasia Group, while Western governments shunned the gathering.
The total number of world leaders in attendance declined to about 20, compared with 36 when the same forum was held in 2019. Several European countries that sent leaders in the past, such as Greece, Spain, the Czech Republic and Switzerland, did not do so this time.
Likewise, "the leaders of Singapore, Malaysia and the Philippines, for example, all declined to attend, though they had participated in the 2019 forum," Eurasia Group noted.
At any rate, Beijing's capacity to extend funding appears to have narrowed. On Wednesday, Xi announced that the China Development Bank and the Export-Import Bank of China will each set up 350 billion yuan ($48 billion) financing facilities to support future Belt and Road projects.
"In the grand scheme of things, the absolute values of these amounts over multiple years and multiple countries may not be significant," said Ammar A. Malik, senior researcher at AidData, a research lab at U.S. university William & Mary.
Malik added that Chinese development finance levels were around $85 billion per year during the early years of the initiative.
Another notable Xi proposal was to push for a global artificial intelligence governance framework to "promote orderly and secure development."
The AI initiative calls for other countries to respect "national sovereignty and strictly abide by their laws," indicating that AI products such as ChatGPT that do not censor their results in China will not be allowed into the domestic market, Eurasia Group said.
"It is consistent with Beijing's attempts to represent the interests of the Global South and oppose U.S. efforts at drawing ideological lines or forming exclusive groups to obstruct other countries from developing AI," the analysis added.
China's competitive edge, be it in AI or e-commerce technology, puts the country in a position of leadership over developing economies. This could pose yet another challenge to U.S.-led allies, if more developing countries reliant on Beijing's goodwill opt for Chinese technology.