The Belt and Road Forum in Beijing in 2017

Authors: Anton Bendarzsevszkij, Péter Klemensits, Eszter Polyák, Alexandra Zoltai

The first “Belt and Road Forum for International Cooperation”, which served as a summit of the members of China’s One Belt, One Road geopolitical initiative, was held on 14^th and 15^th May, 2017. Several Southeast Asian, Central Asian and European countries were represented in the Forum, the most important outcomes of which were bilateral agreements concluded at the event. Some of the significant powers were guests of honour, while others were absent, and their diverging viewpoints are also included in this summary.

• The first Belt and Road Forum was held in Beijing, which served as a discussion summit of the member countries of One Belt, One Road.
• At the multilateral meeting, several bilateral agreements were concluded, primarily these can be regraded the achievements of the Forum.
• In his speech, President Xi Jinping referred to their intention to build the New Silk Road a “road into peace, prosperity, opening, innovations connecting different civilizations”.
• In his speech delivered at the Forum in Beijing, Russian head of state, Vladimir Putin focussed on a larger Eurasian cooperation. According to Russia’s President, the potential of the integration projects should be combined.
• Russia and China agreed to set up a joint investment fund of $15 billion to promote regional investments.
• Kazakhstan, Belarus and Central Asian countries were important guests of the summit in Beijing, and conducted negotiations with China on trade and infrastructure agreements.
• Secretary-General of the Liberal Democratic Party Toshihiro Nikai of Japan conveyed Prime Minister Abe Shinzo’s message according to which the country could see an opportunity to join AIIB.
• Most Southeast Asian countries had the highest-level representation at the Forum, signing several economic agreements with China.
• India’s absence was due to its criticisms of the China-Pakistan Economic Corridor; furthermore, the Indian government does not want to participate in the Chinese initiative for geopolitical reasons, either.
• Most of the European countries attending the Forum welcomed the new initiative positively and with high hopes.
• In relation to the New Silk Road, Germany, however, wants more guarantees from Beijing on, among others, free trade and environmental protection.

The Chinese government organised the first “Belt and Road Forum“ on 14th and 15th May, 2017. The two-day event focussed on the concepts encompassing the country’s foreign policy attempts. The representatives of participating countries, some 57 states, take part as partners in the development and implementation of the projects of the Belt, divided into six major economic corridors, and those of the Road, connecting maritime routes. In China, the Forum was considered the highest-profile diplomatic event of the year, which was primarily a large-scale international celebration of the Chinese initiative, and, apart from the pledge to further boost funding, provided little new information during the history of the initiative.

SPEECH BY PRESIDENT XI

President Xi Jinping delivered both the opening and closing remarks, as the idea and launch of the “Belt and Road” concept is primarily related to the Chinese leader. He evoked the history of the ancient Silk Road, highlighting the characteristics that determine both the ancient and the renewing routes, such as peace and cooperation, openness and inclusiveness, mutual learning and mutual benefit. The President evaluated the four years that had passed since the announcement as productive, which he demonstrated by referring to the support of international organisations including the UN and more than a hundred countries  The primary pursuit of the initiative, President Xi highlighted,  was to leverage the comparative strengths of the various countries, and to link with existing economic plans, such as the concepts of the Eurasian Economic Union, the ASEAN, Turkey, Mongolia and other countries. A new Belt and Road cooperation on trade connectivity with some 60 countries and international organisations is expected to be announced in the near future.

The President said that total trade between China and other Belt and Road countries in 2014-2016 had exceeded US$3 trillion, which, to a great extent, was due to increased connectivity and the economic processes simplifying and accelerating in the wake of agreements. In addition, President Xi announced to raise the capital of several financial organisations related to the initiative, contributing an additional RMB 100 billion (almost $15 billion) to the Silk Road Fund, and also the China Development Bank will be able to lend RMB 250 (some $36 billion) more.

In addition to economic relationships, the Chinese President also highlighted the strengthening of relationships between peoples, which mainly applies to developing the social aspects of the “Belt and Road”, and is manifested in the growing number of exchanges in the field of education, science and culture. President Xi conceives the future along the following principles: he wants to make the new Silk Road a road into peace, prosperity, opening, innovation and connecting civilisations.

Although it was a multilateral meeting, bilateral agreements, concluded either before or at the event, have a prominent role. The successful examples mentioned in President Xi’s speech are mostly results achieved between China and other countries, such as aligning the infrastructure plans of Laos, Cambodia and Hungary with the Chinese agenda. President Xi attaches a significant role to railways and roads in creating prosperity, and he mentioned the Budapest-Belgrade railway line among the positive examples given. The free trade agreement with Georgia, energy deals with Saudi Arabia, Azerbaijan, and Russia, as well as other bilateral arrangements can be regarded as achievements of the Forum.

The closing document of the Forum is a joint communique that champions globalisation and free trade, and opposes all forms of protectionism in line with the WTO’s rules on the multilateral trading system. In the field of environmental protection, the Paris Agreement and the UN Agenda 2030 for Sustainable Development are adopted as guidelines.  In addition, the document includes an intention to make the initiative available also for Africa and South America.

China did not close the Forum with success in all regards, since several Member States of the European Union declined to sign a document of a trade statement as, in their opinions, China had failed to include commitments to sufficient transparency in trade and project tendering processes, and also the basic principles of environmental protection are compromised by disregarding the applicable rules.

JAPAN’S PARTICIPATION

On behalf of Japan, Secretary-General of the Liberal Democratic Party Toshihiro Nikai attended the meeting. Nikai presented a letter from Japanese Prime Minister Abe to President Xi, signalling that joining the China-backed Asian Infrastructure Investment Bank (AIIB) could be an option for Tokyo if governance questions were resolved. This step was triggered by the growing distance between Japan and its old ally under the current US presidency, and Japan is forced to make compromises with its rival in the region.

SOUTHEAST ASIAN PARTICIPANTS

The Southeast Asian region plays a key role in the One Belt, One Road project, with special regard to the 21th Century Maritime Silk Road. ASEAN countries have a stake in close cooperation with China, therefore most countries were represented by their heads of state or government.

Indonesia has been a committed supporter of the Maritime Silk Road from the beginnings, since China definitely supports the infrastructure developments scheduled by President Joko Widodo (Jokowi). The country was represented at the Forum by President Jokowi himself, the parties signed a series of cooperation documents during bilateral meetings to enhance their strategic partnership, including an agreement to build an economic connectivity corridor.

Malaysia’s prime Minister Najib Tun Razak also attended the event, which was hailed very fruitful for Malaysia, as Memorandums of Understandings (MOUs) worth up to over $7 billion were signed between China and Malaysia, mainly concerning infrastructure developments and agricultural. Chinese investment will contribute to the growth of the Malaysian economy; therefore, Kuala Lumpur is considered a major ally of China in the OBOR project.

President of the Philippines Rodrigo Duterte arrived in Beijing to engage his country in even closer cooperation with China after his negotiations with Xi Jinping in October, 2016. During negotiations, several economic and energy agreements were signed. Duterte stood up for increasing Chinese investments and the infrastructure projects planned in the south of Malaysia, which may also contribute to the resolution of the Moro conflict, enabling peaceful development as well as effective connectivity to remote markets through the new Maritime Silk Road.

Vietnam’s President Tran Dai Quang’s visit also served to strengthen the relationships between China and Vietnam.  China has been the largest trade partner of Vietnam for years, thus Hanoi expects the expansion of trade opportunities from joining the One Belt, One Road project, while also aligning it with Vietnam’s Two Corridors and One Circle plan.

Myanmar was given a significant role in China’s concepts, thus Beijing lauded the participation of State Counsellor Aung San Suu Kyi. During the Myanmar-China bilateral discussions 5 Memorandums of Understanding were also signed, which require a closer cooperation from the parties in economic development, health, and the preservation of historic monuments. From the viewpoint of Myanmar’s economy, Chinese investments are crucial, which was obviously proven by Suu Kyi’s visit.

Two smaller states of the region, Cambodia and Laos, were also represented by Prime Minister Hun Sen and President Bounnhang Vorachit respectively. Phnom Penh is regarded as a natural ally of China in the region, and, in addition to strengthening their partnership, both parties agreed that the South-China Sea issue should be solved through a dialogue by the countries directly involved. The expectation that bilateral trade between Cambodia and China should reach $6 billion by 2020 also reflects strengthened economic relationships. At their meeting, the Presidents of Laos and China after having agreed on Vientiane’s expected role in the New Silk Road—witnessed the signing of 9 documents related to economy and finance, health, hydropower and education.

Although Thailand was not represented on the highest level, a delegation including 5 ministers were absolutely supportive of the Chinese plans. Thailand wants to join the China-Indochina Economic Corridor by building the Eastern Economic Corridor and its ultimate aim is to ensure the connectivity of China and Southeast Asia with the help of OBOR.

The absence of the Prime Minister of Singapore—the country was represented at the Forum by National Development Minister Lawrence Wong—, however, indicates the city state’s attempts to have greater independence from its neighbours in shaping bilateral relationships, although it is seeking cooperation with China.

On behalf of Brunei, the Second Minister of Foreign Affairs and Trade attended the meeting, who negotiated on the expected role of the sultanate in the 21th Century Maritime Silk Road.

INDIA’S ABSENCE

The countries of South Asia—with the exception of India—expect significant results from participation in the project, therefore they attended the Forum, too. The China-Pakistan Economic Corridor, worth $46 billion, is one of the flagship investments of the One Belt, One Road initiative. Pakistan’s delegation, led by Prime Minister Nawaz Sharif, signed several pacts in Beijing, including one for building an airport at the strategically important city of Gwadar.

Sri Lanka’s Prime Minister Ranil Wickremesinghe also attended the multilateral discussions, although he does not intend to commit his country to China, as opposed to the former government, and also backed India’s concerns. Nepali Deputy Prime Minister Krishna Bahadur Mahara lauded the Chinese plans, and prior to the Forum, the two countries had signed a Memorandum of Understanding on infrastructure development to be built in Nepal by China.

Contrary to its prior announcements, India eventually skipped the Forum. For its geopolitical interests, it does not support OBOR, either. The China-Pakistan Economic Corridor is planned to go through Pakistan- occupied Kashmir, also claimed by India, and the Modi government believes that it ignores “India’s sovereignty and territorial integrity”.  In addition, India claims, the Chinese projects lack transparency, environmental protection and preservation standards, and the long-term running and maintenance of the assets created are not guaranteed, either. Due to Chinese loans, the indebtedness of the participating countries is also a serious threat, and here the case of Sri Lanka, which has become unable to repay its debts of $8 billion, offers an instructive lesson.

 

RUSSIA’S INVOLVEMENT

At the Beijing summit Russia was represented by its head of state, Vladimir Putin, who apparently was one of Xi Jinping’s distinguished guests. Putin had a separate meeting with the leader of the Chinese state, and reciprocated the invitation: he will welcome Xi Jinping in Moscow in early July, 2017.

In his speech delivered at the Forum, Vladimir Putin focussed on a larger Eurasia partnership.  The potential of all the integration formats must be added together and bring vitality to “the huge Eurasian continent”, the Russian President believes. This way the cooperation of the Moscow-led Eurasian Economic Union, Beijing-led One Belt, One Road, the joint Chinese-Russian project, the Shanghai Cooperation Organisation (SCO) and the Association of Southeast Asian Nations (ASEAN) would be ensured. Vladimir Putin would welcome the involvement of European countries in this Eurasian partnership project, which would create a common cooperation framework from the Atlantic to the Pacific.

In his speech in Beijing, Putin also hid criticism directed towards the United States: “Protectionism is becoming a common practice that manifests itself in unilateral illegitimate restrictions, including how technology is supplied and distributed. The ideas of openness, freedom of trade are often rejected even by those who supported them so vigorously in the past.”

In his speech, Putin laid great emphasis on infrastructure. He talked about the opportunities presented by the Northeast Passage, the development of Eurasian roads and the modernisation of the Trans-Siberian Railway, which, Russia’s President believes, can completely reconfigure transportation on the Eurasian continent. Putin stressed that in his opinion China’s One Belt, One Road brings stability to the world economy, considering current geopolitical trends.

The Forum in Beijing resulted in an important outcome for Russia: the two countries agreed to set up a joint investment fund to promote regional investments. China will allocate 100 billion yuan—approximately $14 billion— to this fund. This amount will be used to develop the cooperation between the Russian Far East and the Northern provinces of China.

Apart from Russia, most post-Soviet states in the region also attended the summit in Beijing. Kazakhstan had high hopes about the meeting regarding infrastructure development and Chinese investments. Kyrgyzstan and Uzbekistan had negotiations on the China- Kyrgyzstan- Uzbekistan Railway Line, a project predating the One Belt, One Road initiative but sitting idle for years. China signed a free trade agreement with Georgia, and Azerbaijan reached an energy agreement with Beijing. Ukraine, Turkmenistan and Tajikistan, however, did not attend the Forum on the highest level.

EUROPEAN PARTICIPANTS

Most European countries were represented at the Forum, as both the maritime and land component of the One Belt, One Road project will meet in Europe, therefore the new Silk Road is planned to stretch across the majority of the countries on the continent. The Czech Republic, Greece, Hungary, Italy, Poland, Serbia, Spain and Switzerland had highest-level representation at the Forum; the United Kingdom, Germany and Romania were represented by Ministers, and France by its former Prime Minister.

The two leading economies of the EU, Germany and France, as well as the United Kingdom as already a non-EU country also attended the meeting. Former Prime Minister Jean-Pierre Raffarin said, France and China had the same visions of the future, both countries want a peaceful world in order to have peaceful development. Raffarin thinks that the great challenge for win-win international development is the struggle against protectionism and excessive nationalism, and, he claims, instead of closing down borders, we must carry out a win-win cooperation and promote peace through development in the world.

Germany was represented by Economy Minister Brigitte Zypries, who warned on the very first day of the Forum that Germany and other EU countries would not sign a joint trade statement unless they received more guarantees from Beijing on free trade, environmental protection and working conditions. Germany does want to take part, but tenders need to be open to everyone; only then will German companies take part, she said. It must also be clear what is actually going to be built, because at this point, it is not clear.

It is British Chancellor of the Exchequer Philip Hammond’s belief that Britain, lying at the Western end of the Belt and Road, is a natural partner in this endeavour. For centuries, Britain has been one of the strongest advocates of an open global trading system. Now they embark on a new chapter in their history, as they are leaving the European Union. He emphasizes, however, that they want to maintain a close and open trading partnership with their European neighbours, but at the same time, it is their ambition to secure free trade agreements around the world with new partners and old allies alike. Their ambition is for more trade, not less.

Three European countries struggling with economic difficulties (Spain, Italy and Greece) also attended the Forum. For them, the initiative can provide great help and an economic boost.

Spanish Prime Minister Mariano Rajoy highlighted the rise of the Spanish economy, as they managed to cope with a decline lasting for five years, and this can be greatly contributed to the export of the country. Furthermore, the head of government added, he appreciated the One Belt, One Road initiative and Spain is ready to strengthen its relationships with China in the fields of economy, investment and infrastructure, and deepen the European-Chinese relationships.

Greek Prime Minister Alexis Tsipras believes that the expansion of trade and investments may have a key role in the economic growth of nations. Therefore, they will actively support that the initiative pays due attention to strengthening scientific and technological innovation, as well as integrating small and medium-sized enterprises in global value chains. Then he added that his country, due to its location, is looking for new maritime trade routes, and sees great opportunities in the 21st Century Maritime Silk Road.

Italian Prime Minister Paolo Gentiloni congratulated on the initiative and sees great potential in it.  In his opinion, the Forum sent a positive message on promoting an open international economy and trade. He added that Italy attaches great importance to having good relations with China, and stands ready to keep high-level exchanges in such fields as economy, technology, agriculture, health care, education, tourism and small and medium enterprises, and commits to promoting the development of EU-China relations.

The five European countries of the “16+1 Cooperation” also participated in the Chinese event. This Cooperation was established in 2012 with the aim of coordinating and institutionalising the relationships between China and sixteen Central and Eastern European countries. The three countries playing key roles in the region (Poland, Hungary and Serbia) had the highest-level representation in the event.

In his speech opening the two-day Belt and Road Forum, Chinese President Xi Jinping listed Poland as an example of a successful economic initiative. China expects Poland to have a strategic role, by, among others, the railway connection between Łódź and Chengdu, which is currently a part of the New Silk Road. Prime Minister Beata Szydło believes that this cooperation will determine the conditions for development in the region in the coming decades. Then she pointed out that Poland finds it the most important to translate the cooperation into specific development projects.

Hungary’s Prime Minister Viktor Orbán believes that “the East has caught up with the West”, and the old model for globalisation has become obsolete. The head of government pointed out that great changes have taken place in recent decades: the engine room of the global economy is no longer in the West, and “nowadays in fact the largest amounts of money are accumulating in Asia”, which then flow back from there towards the West, he explained. China also assigns a key role to Hungary in the initiative, since goods can reach our country from Piraeus Port, of which the majority shareholder is China, through Macedonia and Serbia by rail—and from here, can be transported to the most important economic hubs of Europe. The Budapest-Belgrade railway line will be one of the most important elements of this phase, the modernisation of which was agreed upon at the already mentioned “16+1 Cooperation” summit in Bucharest in 2014.

Serbian Prime Minister Aleksandar Vučić noted that many things had been done and a lot was still ahead, and One Belt, One Road held a lot of opportunities for them. Then he added that the list of benefits from the initiative was very long and would get longer in the future because Serbia’s government always expects to do something more for their country but they can’t do it without China. In his opinion, the best words to describe this cooperation were links and being connected. Then he offered the next summit to take place in Serbia, although Serbia was one of the smallest countries that participated.