Theresa May is right to be cautious over China’s Belt and Road plan
Theresa May inspects troops in Beijing on Wednesday. The UK prime minister has expressed reservations about backing Beijing’s Belt and Road Initiative, which is amorphous and involves a lot of propaganda © Getty
Once it has left the EU, and particularly if it detaches itself from the European customs union and the single market, the UK may feel itself in need of friends in the world trading system. This week Theresa May is visiting one potential partner, China. But the signs are that, despite the economic and strategic imperative of forging global links, the prime minister will maintain more distance from China’s trade and investment initiatives than did her predecessor, David Cameron.
In particular, she has expressed reservations about wholeheartedly backing the Belt and Road Initiative, China’s attempt to reshape the world economy along a Eurasian axis. Mrs May is right. The BRI is hugely ambitious but also inchoate and amorphous. Giving blanket political support will mean being associated with all sorts of projects which may never happen, could go badly wrong or might be used to further China’s sectional strategic interests rather than liberalise and expand world trade.
The official description and aims of the initiative have shifted several times during its short life — including, given it started off as One Belt, One Road, its name — and involve a lot of propaganda. So far it boils down to a series of infrastructure projects, focusing on but not limited to central and east Asia. That in itself could be problematic. Although China has done a lot of good building transport infrastructure, particularly in sub-Saharan Africa, it is frequently opaque about finance and management. The BRI has aroused concern in countries such as Sri Lanka, which has already racked up debts to China for infrastructure projects of questionable value.
China has also repeatedly demonstrated a willingness to ignore environmental and human rights considerations when backing projects. Moreover, it has not been above opportunistically throwing its weight around in the local politics of foreign countries to advance the interests of Chinese companies exporting to or investing in the economy — not to mention building the African Union a new headquarters in order to riddle it with listening devices.
Accordingly, other governments and financing institutions should hold back from giving a broad-based imprimatur to the BRI, as Beijing seems to want. The Asian Infrastructure Investment Bank, for example, has wisely said it will finance BRI projects on a case-by-case basis, and in accordance with its own standards on environmental and social issues. This is striking, given that China is the AIIB’s largest shareholder, and it is widely seen as a vehicle for Chinese interests.
Countries like the UK, whether through their membership of institutions such as the AIIB or bilaterally, should be cautious when becoming involved in any Chinese-led project and maintain the transparency standards that they would apply to any of their aid ventures. When they are attempting to encourage Chinese investment into their own countries, as the UK did with the Hinkley Point nuclear power station, they also need to make sure they do a better job of rigorously applying cost-benefit analyses and obeying rules on state aid.
Beijing says it has great ambitions to reshape world trade. But as long as it resists a major role in rulemaking (the trade deals Beijing favours are narrow and shallow), efforts such as the BRI will be limited to exporting China’s industrial capacity and unilaterally extending its strategic influence. The UK needs to engage with China. But Beijing is not interested in rules-based trade and it is an all but closed market for Britain’s key export — services. There is no need for the UK to play the supplicant.