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Indo-Asia-Pacific

Deep Dive: The Second Belt and Road Forum 

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By Tuan N. Pham

China just concluded the Second Belt and Road Forum (BaRF) in Beijing 25-27 April. The theme was “Belt and Road Cooperation, Shaping a Brighter Shared Future.” The forum aimed to bring greater and improved cooperation under the ambitious and expansive Belt and Road Initiative (BRI) consisting of 126 countries and 29 organizations that have signed cooperation agreements with China, and generated a total trade volume of $6 trillion to date. 36 foreign leaders attended this year’s forum – up from 29 two years ago. However, notably absent were the heads of state or government from Washington, Tokyo, Seoul, Canberra, New Delhi, London, Paris and Berlin.

In the keynote speech, Chinese President Xi Jinping pledged to recalibrate the global infrastructure program and enhance transparency to ensure the financial sustainability of the many BRI projects and respond to the growing chorus of international criticism that they burden and exploit developing countries with onerous debt. The content and manner of the conciliatory speech marks an acute departure from past confident tones to promote and advance the program, and perhaps a tacit acknowledgement that his signature initiative lost ground and momentum in 2018 both abroad and at home, requiring a reset (BRI 2.0). What were the key takeaways, what has changed since the inaugural BaRF in 2017, and more importantly, what’s next for Washington?   

Key Points of Xi’s Speech

 Xi began his speech with a line from a classical Chinese poem – “spring and autumn are lovely seasons in which friends get together to climb up mountains and write poems” and an old Chinese proverb – “plants with strong roots grow well, and efforts with the right focus will ensure success.” Xi then proceeded to assure the audience and the broader international community with familiar BRI themes that were pervasive throughout Beijing-controlled media before, during, and after the forum, “we need to be guided by the principle of extensive consultation, joint contribution, and shared benefits; seek open, green, and clean cooperation; and pursue high standard cooperation to improve people’s lives and promote sustainable development.” Xi next promised structural reforms – similar to those discussed in the ongoing U.S.-China trade talks – “to expand market access for foreign investment in more areas; intensify efforts to enhance international cooperation in intellectual property protection; increase the import of goods and services on an even larger scale; more effectively engage in international macro-economic policy coordination; and work harder to ensure the implementation of opening-up related policies.” 

Xi concluded his remarks with another Chinese adage – “honoring a promise carries the weight of gold” – while making commitments to “implement multilateral and bilateral economic and trade agreements reached with other countries; strengthen the building of a government based on the rule of law and good faith; put in place a binding mechanism for honoring international agreements; revise extant Chinese laws and regulations to expand the opening-up of the country; overhaul and abolish unjustified regulations, subsidies, and practices that impede fair competition and distort the market; treat all enterprises and business entities equally; and finally foster an enabling business environment based on market forces and governed by law.” All in all, Xi’s 2019 speech was a sharp contrast from his triumphalist speech during the inaugural BaRF two years ago.

International Monetary Fund Managing Director Christine Lagarde welcomed the shift in Chinese rhetoric, telling the forum after Xi’s speech that the initiative could “benefit from increased transparency, open procurement with competitive bidding, and better risk assessment in project selection” while cautioning that the infrastructure program “should only go where it is needed and where the debt it generates can be sustained.” 

Behind the rhetoric was a laundry list of deliverables to demonstrate commitment to BRI 2.0 and stem the growing skepticism of BRI’s benevolence and benefits. The list includes 283 initiatives proposed or launched by Beijing – bilateral and multilateral agreements signed during or immediately before the BaRF, multilateral cooperation mechanisms under the BRI framework, investment projects and project lists, financing projects, and projects by local authorities and enterprises (supposedly $64 billion worth of deals).  

“Initial” ground assessments painted the BaRF as a “chaotic” diplomatic conference lacking a clear schedule and sufficient content, exacerbated by tight media control thereby making it difficult for the host to project openness (transparency) and falling flat for many of those attending. Television broadcasts of a roundtable discussion on Saturday joined by attending world leaders featured only the opening remarks by Xi and the livestream was cut abruptly before any of BRI countries had a chance to speak. “So basically this forum, to me, was a one-day publicity stunt for China…not enough content for a three-day event,” stated a person close to the forum’s organization. A European delegate added that the lack of a clear schedule often left attendees either waiting for hours on end or scrambling to catch up after an event started suddenly.

What Has Changed

China originally envisioned the BRI as a global network of ports, roads, railways, pipelines, and industrial parks, largely built by Chinese corporations. But as the initiative rapidly expanded beyond infrastructure construction to encompass additional underlying political and military objectives as evident by Beijing’s plan to build military bases around the world to protect its growing investments along the various Silk Roads, Western governments began criticizing the BRI for promoting and advancing opaque financial deals that give Beijing undue political leverage by encumbering developing countries with unsustainable financial burdens as well as engendering other risks to the recipient states. These risks can include the erosion of national sovereignty, disengagement from local economic needs, negative environmental impacts, and significant potential for corruption. The complaints steadily grew louder and gained traction over the years, culminating in an increasing number of Asian and African nations suspending, cancelling, or renegotiating BRI projects. Just last month, Beijing cut its price for a multibillion-dollar railway in Malaysia by roughly a third, reviving a project that had been stalled by concerns over debt and corruption.

At the onset of and throughout the BaRF, Beijing de-emphasized big-ticket infrastructure projects in its BRI public diplomacy (public relations) campaign and made more pledges to ensure sustainable (responsible) lending and fight corruption. As part of the recalibration, Chinese government officials negotiated with foreign governments to draw up lists of official BRI projects, promising more BRI transparency, and trying to attract more private-sector money to offset the disproportionate government funding, reduce the domestic fiscal risk, and diminish the perception that the initiative was just another political tool for global dominance. In his keynote speech at this year’s BaRF, Xi underscored the latter by inviting foreign and private-sector partners to contribute more funding and did not make any new pledges of Chinese financing.

What’s Next

China’s promises for a revamped BRI 2.0 will require further monitoring and scrutiny. Hence, Washington and the greater international community should be wary of the ubiquitous “rebranding” by the Chinese state-controlled media and of the vague, ambiguous, and uncertain assurances and deliverables that Beijing may be dangling as an effort to reframe the BRI. China may be presenting a kinder persona to stem the growing skepticism and avoid making longer-term structural BRI reforms, which Beijing does not want to do unless coerced to do so. From the Chinese Communist Party’s perspective, the structural changes will weaken the BRI, undermine China’s global competitive advantage, slow the Party’s deliberate march toward the Chinese Dream of national rejuvenation, and keep Beijing from realizing its strategic goal of achieving global influence and ultimately global preeminence. All in all, these promises and assurances are politically expedient but will remain empty without greater transparency and enforcement – the same points made in The Diplomat article “On Looming U.S.-China Trade Deal, Actions Speak Louder Than Words…Talk without the support of action means nothing. Enforcement will be the key to any deal.”

So how should Washington respond? Perhaps the best response is a BRI of its own as proposed by the Center for Strategic and International Studies, this author, and others. The United States could offer a compelling and alternate economic vision, resourced, and sustained over time. The world needs more infrastructure than any one state can provide, and dissatisfaction and disenchantment with the BRI provides a strategic opportunity for America to work with its allies and partners to deliver high-quality and affordable infrastructure without Chinese conditions. Washington should also start seriously thinking and preparing (contingency planning) for the possibility of a BRI collapse.

At the end of the day, the old Arabian proverb “a promise is a cloud, fulfillment is rain” is apropos. Trust but verify, and plan accordingly for contingencies. 

Tuan Pham is a seasoned China watcher with over two decades of professional experience in the Indo-Pacific and is widely published in international relations and national security affairs. The views expressed are his own.

Featured Image: Chinese President Xi Jinping speaks during the opening ceremony of the Belt and Road Forum at the China National Convention Center (CNCC) in Beijing, Sunday, May 14, 2017. (AP Photo/Mark Schiefelbein)

Indo-Asia-Pacific

Will the Revamped Xiangshan Forum Displace the Shangri-La Dialogue?

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By Tuan N. Pham

Earlier this year, the author published an analysis comparing and contrasting the 2017 and 2018 Shangri-La Dialogues (SLD) in terms of Chinese themes, narratives, responses, and outcomes; and more importantly, surmising what message Beijing was trying to convey and assessing what the message portends for the United States, the Indo-Pacific, and the world.

The author posited that Beijing views the SLD as a confrontational international forum used by Washington and its allies to unfairly criticize (and contain) China. But despite the critiques, Beijing may also see some value, but not the overwhelming need, to participate in these multilateral dialogues and perhaps begrudgingly accept criticism in these forums as a natural outgrowth and accepted cost of its rise as a global power.

That said, Beijing may one day conclude with respect to opportunity cost that the juice may not be worth the squeeze. Why bother with the seemingly biased and fading SLD when it can focus instead on building up its own Xiangshan Forum (XF)? The regional forum is widely regarded in Beijing as an increasingly viable and desirable counter to the SLD. The forum can function as the security component to the ambitious and expansive Belt and Road Initiative (BRI), and more significantly, an integral part of a strategic agenda (the Chinese Dream) to displace the extant Western-oriented world order with one lacking dominant U.S. influence. If so, one can expect soon a resurgent, revitalized, and revamped XF after an unexpected and self-imposed one-year hiatus. The decision to temporarily suspend the XF is not clear. If indeed Beijing did decide to use the XF in the aforementioned manner, then the pause may be a deliberate structural reset to re-orient itself to a new role.  

None had to wait long. On 30 August, the Chinese Defense Ministry announced that the China Association for Military Science and the China Institute for International Strategic Studies  will co-host the 8th Beijing Xiangshan Forum (BXF) in Beijing from 24-28 October, 2018. Therefore, it is useful to examine the “restated” goals and objectives and discuss what it may mean for America, the region, and the international community.  

Restated Goals and Objectives

The theme of this year’s forum is “building a new-type of security and partnership featuring equality, mutual trust, and win-win cooperation.” Participants include defense authorities, military leaders, representatives of international organizations, former military and civilian officials, and scholars from 79 countries. They will meet and discuss ideas for new approaches to international security governance, terrorism threats and countermeasures, prospects for maritime security cooperation, and United Nations peacekeeping operations. Participants will also exchange perspectives during various special sessions and panels on the new dynamics in Northeast Asian security, ways and means of addressing the security issues in the Middle East, military and security confidence-building measures in the Asia-Pacific, and artificial intelligence and the conduct of warfare. Beijing hopes the forum will “further strengthen strategic dialogue and communications, accumulate consensus, deepen practical cooperation, and find ways to jointly respond to global challenges and jointly maintain peace and stability.”

The theme of the previous 7th Xiangshan Forum held 11-13 October, 2016 was “building a new type of international relations through security dialogue and cooperation.” Participants from around 60 countries discussed the role of militaries in global governance, responses to new security challenges in the Asia-Pacific through cooperation, including maritime security cooperation, and counterterrorism policy. Additional panel discussions included major power relations and global strategic structure, globalization versus deglobalization and the implications for international security, latest developments in terrorism and creative approaches to cooperation, and maritime crisis management and regional stability. Beijing had hoped the forum would “strengthen mutual trust, accumulate consensus, promote regional security cooperation, and jointly maintain regional peace and stability.”

All in all, the language and tone of this new forum is more assertive and forward-leaning than previous forums – reflective of a more confident and insistent China, who seems determined to move forward from Mao’s revolutionary legacy and Deng’s iconic dictum of “hide our capacities and bide our time, be good at maintaining a low profile, and never ever claim leadership” and now to promote abroad “socialism with Chinese characteristics in a new era (Xi’s Thoughts).” The plenary and special session topics underscore Beijing’s aspiration to be a respected global leader who has a say (and sway) in world events and issues, and perhaps lay the groundwork to eventually displace the extant Western-oriented world order with one without dominant U.S. influence in accordance with its strategic plan for national rejuvenation. If so, the forum is a convenient and opportune platform to offer developing countries an alternative economic and political choice of Chinese “benevolent” governance involving mutual friendship but not encumbering alliances (economic development with supposed political independence). In other words, developing countries in Africa, Central Asia, South Pacific, and South/Central Americas should take heed and carefully consider the Chinese model – a rising power and growing economic juggernaut that feels it does not have to make political accommodations to others.

Of note is the last panel topic on artificial intelligence. There has been plenty of reporting on robust Chinese investment in this emerging technology, particularly in the area of military applications. Some have even speculated that China has already surpassed the United States, and strongly urge Washington to make up for lost ground. If so, could this be Beijing trying to allay these growing concerns? China may be attempting to get ahead of the strategic issue by shaping and influencing international legal frameworks and accepted norms of behavior on the future development, deployment, and employment of artificial intelligence capabilities.

What to Expect

The BRI – Beijing’s trillion-dollar, transcontinental infrastructure enterprise to elevate Chinese global economic and political standing – needs an accompanying and complementary security framework with Chinese characteristics to guarantee the BRI’s continued expansion and future sustainment. The BXF is that security framework. The forum and the BRI (with its hidden nationalist agenda and subdued geo-strategic implications) promote and advance a new global political, economic, and security order under Beijing’s terms. Together, they constitute a new Chinese strategic approach that calls for the balanced integration of interests. These include long-term overseas economic development and concurrent domestic security reforms intended to safeguard and enhance the internal apparatuses of China’s socialist and authoritarian system until it can be the center of that new Beijing-oriented global order. 

Hence, in the coming years, expect China to subtly undermine the SLD while incrementally building up the revamped BXF as evident by the new competing theme to that of the extant SLD’s theme of “building confidence and fostering practical security cooperation by facilitating easy communication and fruitful contact among the region’s most important defense and security policymakers.” The scope, nature, and extent of China’s present participation in the SLD can best be summed up as taking the middle road (hedging). Beijing wants to respond to any policy criticism and challenge any narrative counter to their own at the forum, but does not want to openly endorse or promote the SLD. Beijing seems content for now to send a relatively lower rank delegation head to the SLD, limit its role in the special session, and reserve the right to speak at the higher visibility plenary session when warranted (only individuals of full ministerial rank can speak in plenary).

This hedging posture may transform over time to more of a balancing one that will directly challenge the SLD for regional preeminence. If so, Beijing will slowly draw down its participation in the SLD, while subtlety pulling away the other participants through a calibrated program of incentive (carrot) and intimidation (stick). First to go will be the regional countries already in China’s growing sphere of influence (Laos, Cambodia), and then other countries within region and the world, possibly similar to how Beijing picks off countries that formally recognize Taipei. Those that are contemplating withdrawal from the SLD may face increasingly forceful political and economic persuasion (coercion) to do so as part of a pressure campaign, while those that will continue to participate in the SLD will receive growing political and economic backlash as part of a retribution campaign. Countries saddled with BRI-related debts will face the most risk, and in time they may be given a stark binary choice – bend toward Beijing’s will or face economic consequences.

Beijing may also establish its own version of the Rim of the Pacific (RIMPAC) exercise to further advance the security component of the BRI. China and the 10 Association of Southeast Asian Nations (ASEAN) members states held the first-ever ASEAN-China Maritime Exercise (table-top) in Singapore on 2 August, with plans to hold a follow-on field exercise in China involving navies from all the participating countries later in October. If successful, Beijing may make this a recurring exercise and gradually expand its scope, nature, and extent of the exercise to eventually rival that of RIMPAC.

At the end of the day, the strategic conundrum for the United States will be whether or not to participate in the BXF if invited by China. There are two schools of thought on this matter.

Those in favor may argue non-participation would be a miscalculation. By not participating in the BXF, Washington would cede the strategic narrative and initiative to Beijing. Specifically, the United States would yield to China and like-minded nations a public platform to stake out their strategic positions unchallenged; and lose an opportunity to counter Chinese strategic messaging and further encourage China to become a more responsible global stakeholder that contributes positively to the international system.

Those not in favor may suggest that in the early years of the BRI, Washington policymakers faced political and economic pressures to join the ambitious Chinese infrastructure project over the worrying prospect of being left behind. Contrary to conventional wisdom at that time, the U.S. government resisted the clarion call and chose not to join. In hindsight, the decision was the correct call given the political and economic difficulties that have emerged from the project. The same logic and rationale should be applied to the BXF. Resist the strong temptation to join in the false hope of changing  or reforming the BXF from within, and instead challenge the forum by continuing to offer countries an alternative security framework (such as the SLD) to accompany the Free and Open Indo-Pacific (FOIP) economic strategy.

Conclusion

In terms of great power relations Beijing views itself as a destined rising power and Washington as an inevitable declining power. And both are seen as being interlocked in a strategic competition for regional and global preeminence. In this competition the Chinese BRI and BXF and its opposing counterparts – the FOIP and SLD – are the preeminent and enduring platforms in these contested economic and security battlespaces, respectively. The victor of this great power competition will determine not only the future course of the Indo-Pacific, but perhaps also the world.

Tuan Pham is widely published in national security affairs and international relations. The views expressed therein are his own.

Featured Image: Seventh Xiangshan Forum (South China Morning Post photo).

Indo-Asia-Pacific

Is the Belt and Road Initiative Too Big to Fail? Pt. 2

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What could and should the United States do if the Belt and Road Initiative collapses? 

By Grant Newsham and Tuan Pham

Part one of this two-part series discussed the growing concerns of a Belt and Road Initiative (BRI) bubble that may burst, and that China’s hurried and reckless BRI investments through the years are beginning to drag down its already slowing domestic economy.

So to advance the strategic dialogue, let’s assume that the BRI bubble has, or is close to bursting, and is exacerbated by a weakened Chinese economy and a destabilizing trade war. In part two, each author individually offers his perspective on what America could and should do (and conversely not do) as the result thereof. 

Opportunities – What to Do 

Pham: Make the most of the strategic opportunity and build more economic leverage on the issues of China’s unfair trade policies and practices, discriminatory trade barriers, unequal trade balances, forced technology transfers, and intellectual property rights theft. Leverage the recent U.S.-European Union agreement to ally against China which has nearly broken the world trading system. Then, convert the accumulated economic leverage into additional political leverage in the geographic spheres of North Korea, South China Sea (SCS), East China Sea, and Taiwan and contested domains of space and cyberspace – similar to how Beijing uses the BRI. When appropriate and expedient, rejoin the Trans-Pacific Partnership to complement the other U.S. instruments of national power; bind America to the other regional economies; blunt the other Chinese economic initiatives like the Regional Comprehensive Economic Partnership and Asian Infrastructure Investment Bank; and ultimately offer an enduring alternative to the BRI. From there, use the added influence to further encourage and challenge China to become a more responsible stakeholder that contributes positively to the international system and uphold the international rule of law and respect for global norms (human rights, freedom of navigation, etc.); and in the long-run, possibly consider a grand bargain to adopt mutual agreements and avoid another Cold War (no large-scale conflict directly between the two sides, but each may be supported by major regional “proxy” wars) and the Thucydides Trap (a rising power challenges a dominant power leading to a great power competition for preeminence).

Of note, the concept of the Thucydides Trap has detractors who understandably and fairly warn against the Chamberlain Trap (avoiding conflict through concessions) and cite the years of ill-advised U.S. acquiescence and accommodation (strategic patience and wishful thinking) in the SCS. Nevertheless, no matter which side one takes on this philosophical debate, the reality remains that China and America are interlocked in a strategic competition for regional and global pre-eminence. So, how best to contain and manage this competition and keep it from escalating into a “no-win” conflict?

Newsham: Recognize that China’s objectives with the BRI are ultimately political. BRI is one front in an existential, multi-front campaign to displace and overtake the United States – and America’s pernicious notions of individual liberty, rule of law, and equality among nations – that have served the world well for the last 70 years.

As such, the U.S. Government (USG) ought to do several things with the BRI in mind. First, develop and implement a political warfare effort that exposes the BRI as ultimately a combination of colonialism and loan-sharking. As often as not, BRI investments and projects are over-priced, poorly thought out, and shabbily constructed; and benefit China and Chinese companies more than the recipient countries. 

Toward this end, the USG might also profitably direct its vast intelligence resources toward exposing the corruption and payoffs that are part and parcel of Chinese business and government efforts connected with the BRI. The USG bringing charges against Patrick Ho, a former top Hong Kong official, for bribing African officials on behalf of a Chinese company shows what is doable. Locals who resent Chinese heavy- and under-handedness will welcome exposure of such improprieties.

Second, keep trade pressure on China in response to longstanding unfair trade practices. This pressure – and attendant reductions in the foreign exchange needed to keep the Chinese economy chugging along – reduces funds available for BRI activities – to include investments, bribes, and bailouts. It’s ironic that U.S. and Western businesses have effectively funded the BRI efforts – not to mention China’s military development.

But it’s not enough to criticize China and the BRI – even if well founded. Indeed, one must admire China and Chinese companies’ willingness to get involved in countries where American companies refuse to go. The USG needs to work closely with the private sector and change the “risk profile” for American companies so they might show some initiative and go where Yankee Traders of old used to go. And since this is ultimately a political struggle, why not link the public-private partnership effort with that of allied countries such as Japan, Australia, South Korea, the United Kingdom, and others?

In summary, recognize the BRI for what it is, expose its vulnerabilities and rapacious aspects, keep trade pressure on China and thus reduce the foreign exchange available for its BRI activities. And as importantly, the United States and like-minded countries need to offer a better alternative.

Challenges – What Not to Do

Pham: In light of the deepening economic stagnation, the present risk of domestic political instability may drive Beijing’s future foreign policy. Economic prosperity (purse) and nationalism (people) – buttressed by the People’s Liberation Army (gun) and propaganda (pen) – have long been the principal sources of legitimacy, credibility, and stability for the Chinese Communist Party (CCP). As the prosperity and nationalism wanes, President Xi Jinping (undisputed core leader of CCP) may increasingly rely on propaganda and security – tempered to a certain extent by fiscal constraints – to maintain the party’s (and his own) power and influence over the masses. In other words, make people look outward at the forest and not inward at the trees.

But here lies the strategic quandary for U.S. policymakers. The tricky part is to avoid strategic overreach and to find the right balance of making the most of the strategic opportunity without  triggering the CCP to a tipping point that elicits a strong nationalist response (including military confrontation).

Newsham: Don’t bail out Xi and China if they’ve been overextended on the BRI. They won’t appreciate the gesture. The more problems Beijing has with financially draining overseas ventures – and the inevitable local opposition they provoke over time – the less China can concentrate its efforts on military development and bringing its regional neighbors to heel while being able to take on its declared main enemy – the United States. It also dispels the image of inexorable Chinese domination.

Don’t try to calibrate just the right mix of pushback and engagement (to include on the BRI) that will make Beijing become a “responsible stakeholder.” Why should it? China has done well enough over the last 40 years without adjusting its behavior. Robert McNamara also tried “calibrated” pressure with North Vietnam. It didn’t work very well. Instead, stand up for America’s own interests and keep the pressure on.

Don’t consider the chance for a few American firms to make some money on BRI projects to outweigh the existential threat the CCP-led China poses to the free, liberal world order. And don’t forget that today’s China holds over one million people in internment camps and is trying to do the Uighurs what King Edward the First tried with the Scots. It is also a repressive security state along the lines George Orwell wrote about and where modern technology is creating new and unprecedented tools of oppression. At the end of the day, regardless of the highways, ports, and bridges it might build (for a considerable price and of questionable quality) in far-flung places, it should always be remembered that the BRI is an outgrowth of a staunchly authoritarian and repressive regime. 

Conclusion 

China risks big with the BRI, and accordingly, could lose big if indeed the declining trend lines are proven correct. If so, how does it impact Beijing’s strategic ambitions for national rejuvenation and ultimately global preeminence? But more importantly, how could and should Washington make the most of the strategic opportunity?     

Grant Newsham is a retired U.S. Marine Officer and a Senior Research Fellow at the Japan Forum for Strategic Studies.

Tuan Pham is widely published in national security affairs and international relations. The personal views expressed therein are their own. 

Featured Image: Officials attend the groundbreaking ceremony of the rail project linking Bangkok and Nakhon Ratchasima, on Dec. 21 in Nakhon Ratchasima, Thailand. (Photo by Yukako Ono).