Belt and road: West should work with China to build infrastructure – not against it

After 10 years of the Belt and Road Initiative, the West seems to be finally getting its act together in finding financing for its infrastructure
But it would be a pity if the largesse was used to compete with China, when the global scale of the challenge calls for cooperation

Anthony Rowley

Published: 8:30pm, 28 Oct 2023

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What a great pity that China’s Belt and Road Initiative had to celebrate its 10th anniversary in an atmosphere soured by prejudice and misunderstanding. It should have been an occasion for general celebration.

This is not the popular view, I know, but as someone long interested in infrastructure (my first editorial on the subject was published in 1966), I have respect for China’s initiative, despite its initial shortcomings.

Building physical infrastructure, whether in the form of highways, railways, ports or power systems, is a very costly undertaking, especially when it crosses borders. Governments and private investors shy away from it.

This is why infrastructure has languished as democracy has progressed in post-war America and Europe. Politicians and investors either avoid the subject or challenge one another to take care of it, and little, if anything, gets done as a result.

This was the situation in 1994 when I acted as chief external editor of the World Bank’s World Development Report on infrastructure, when the Washington Consensus strongly favoured private, not state, initiatives.

Then along came Chinese President Xi Jinping in 2013, proposing a remarkably bold venture for a hemisphere-spanning network of highways, sea lines and ports. It was breathtakingly imaginative.

The initiative should have been welcomed with open arms, not least in Europe. Here was an emerging Asian power offering to build highways and railways linking East and West, across the vast expanses of Central Asia and at vast cost to itself. Which other power was willing or able to do that?

The United States and Europe seemed stunned into silence for a while. Caught off guard, they reacted defensively even though the Belt and Road Initiative promised to give new impetus to global growth and development. Reasons were quickly found to oppose it.

Well before former US president Donald Trump launched trade wars against China (and later, Joe Biden with his “security” wars), China was being accused of economic neocolonialism via the Belt and Road Initiative, and of “debt trap diplomacy”.

In reality, as one prominent Chinese academic explained to me at the time of the belt and road launch, Beijing felt that constructing an infrastructure network that would boost its international trade was a better use for its reserves than keeping them in US government bonds.

02:48

Chinese President Xi Jinping unveils 8-point vision for nation’s Belt and Road Initiative at forum

China was perhaps at fault, however, in not preparing the ground more fully, in that its initiative was not provided with an institutional structure capable of accommodating multinational partners.

A multitude of economic powers might agree to participate but could not sign on to it in the formal sense via an international treaty and enjoy the power of voting on the initiative’s course and content.

It was not until 2016 that China launched the Asian Infrastructure Investment Bank (AIIB), which had precisely the kind of institutional structure the initiative lacked, and the AIIB can now boast 109 members.

Conspicuous by their absence are the US and Japan. And AIIB president Jin Liqun has perhaps diminished their incentive to join by steering the bank away from only belt and road projects to avoid any impression of Chinese domination.

AIIB president Jin Liqun addresses the bank’s eighth annual meeting in Sharm el-Sheikh, Egypt, on September 25. This year’s theme was “Sustainable Growth in a Challenging World”. Photo: Handout via Xinhua

But if China did not optimise the launch of the belt and road and AIIB to support what has since become a global competition to become the world’s top infrastructure power, rival nations have done even less well.

A plethora of international infrastructure initiatives, more remarkable for their sheer number than their efficacy, have since emerged involving the US, Japan, India, Australia and European powers in various combinations, most of them marriages of convenience or China-countering alliances.

These range from the Asia-Africa Growth Corridor and the Trilateral Partnership (between the US, Japan and Australia) to the Blue Dot Network and Build Back Better World initiative. So far, it’s been “more fancy talk than finance”, as the Japan Times said in a recent editorial.

The issue of financing is absolutely critical where infrastructure is concerned because of the huge sums involved in cross-border ventures, especially on the scale of the Belt and Road Initiative.

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Indonesia’s flagship Bandung-Jakarta high-speed railway finally launches after series of delays

This realisation is finally dawning on Western powers, as evidenced by the belated conversion of key World Bank member governments to the idea that the bank should act as a leader, not a follower, of the private sector in infrastructure building.

As I observed in a recent column, the World Bank’s recently appointed president, Ajay Banga, seeks to direct some of the US$70 trillion held by the world’s leading pension funds and other institutional investors into building infrastructure.

This would give the (mainly Western) powers that control the World Bank, and some regional development banks, much more financial clout to tackle the global infrastructure challenge (as well as climate change and other big issues).

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But it would be a pity, even a tragedy, if the World Bank family of development banks were to use this potential largesse to compete with China on infrastructure and in other socio-economic development areas.

The AIIB and Chinese institutions such as the Silk Road Fund, China Development Bank and Exim Bank have invested up to US$1 trillion, according to various estimates, in belt and road-related projects. They have the resources and experience to continue making a major contribution.

Such is the scale of the challenge in providing the modern world – developing and advanced nations alike – with physical and digital infrastructure that we can hope to meet it only if national leaders stop playing politics with our future. They must be big enough to rise to the challenge in concert rather than in competition.

Anthony Rowley is a veteran journalist specialising in Asian economic and financial affairs