EAI Commentary: Belt and Road Forum Strengthens Domestic and International Linkage Development Strategies

[Editor's Note]

The 'Belt and Road International Cooperation Summit Forum' was held in Beijing, China, from May 14-15. As the Moon Jae-in administration, launched on May 10, dispatched its first diplomatic delegation to this forum, domestic interest has also increased. During the two-day forum, President Xi Jinping advocated for the common development of Belt and Road participating countries and the strengthening of global free trade, announcing large-scale investment plans. This contrasts with the Trump administration's 'America First' policy and turn towards protectionism. The international community has shown considerable support for these Chinese initiatives, which are expected to serve as a boon for President Xi Jinping as he approaches the 19th Party Congress at the end of the year. However, as some Southeast Asian countries, including India, are protesting China's aggressive investment practices, securing the trust of neighboring countries remains a difficult challenge for the successful promotion of the Belt and Road strategy, according to Professor Min Gwi-sik of Hanyang University.

A Solo Stage Where China's Presence Was Highlighted

China's ambitious 'Belt and Road International Cooperation Summit Forum' concluded successfully on May 15. At this large-scale international conference, attended by 29 heads of state and approximately 1,500 participants from 130 countries, China fully demonstrated its leadership in the international community by acting as both director and lead actor. Here, Xi Jinping, by advocating for the common development of Belt and Road participating countries and the strengthening of global free trade, became a protagonist whose presence was further enhanced in contrast to Trump's anti-globalization and 'America First' stance. As a result, Xi Jinping achieved significant success in building an image of possessing the vision and stature of a global leader ahead of the 19th Party Congress, and the Chinese public seems to be filled with pride, experiencing the 'revival of the Middle Kingdom.' While the United States, India, and some Western countries disparage this event as a Chinese money fest, most countries have positively evaluated the values pursued by the Belt and Road initiative and its achievements. In particular, ASEAN, Central Asia, and impoverished nations in Africa eagerly praised the summit forum, showcasing their desire for Chinese assistance and thus highlighting China's power.

For us, experiencing the greatest conflict since the establishment of diplomatic relations due to the THAAD issue, this event is highlighted solely as an opportunity to restore bilateral relations, leading to a neglect in grasping the international political and economic implications embedded within this forum. This can be attributed not only to the fact that South Korea is not a direct beneficiary of the Belt and Road initiative but also to the unprecedented depth and breadth of the bilateral conflict, which has focused all attention on its resolution. However, if the Belt and Road initiative is successfully promoted, South Korea can leverage it to reap significant benefits; therefore, we must meticulously analyze China's ambitious plan and actively devise cooperation strategies. Cooperating with China's Belt and Road strategy will not only allow participation in projects pursued by the Asian Infrastructure Investment Bank (AIIB) but also create strategic opportunities to access Central Asia and Europe via the overland Silk Road.

The Spirit of the Belt and Road, Expanding Global Consensus

Since proposing the Belt and Road initiative in 2013, China has meticulously refined its concept and objectives. Following President Xi Jinping's emphasis on the principles of 'extensive consultation, joint contribution, and shared benefits' at the Boao Forum for Asia in March 2015, this forum further advanced to highlight the importance and effects of international cooperation in the era of globalization and free trade with the opening speech stating, 'One plus one is greater than two.' He defined the Belt and Road as a 'new engine for global economic growth' and expressed confidence in its success by quoting an ancient proverb: 'Peaches and plums do not speak, yet a path is naturally formed beneath them.' This also reflects the intention to build an economic network centered on the five major goals of the Belt and Road—'policy coordination, infrastructure connectivity, unimpeded trade, financial integration, and people-to-people bonds'—to realize a 'Chinese-style Globalization 2.0.' Through this, China now wishes to assert that 'the world is connected as one.'

These Chinese endeavors appear to have garnered considerable support and consensus from the international community thus far. For instance, Taleb Rifai, Secretary-General of the UN World Tourism Organization, commented, 'The world is currently facing immense challenges of 'cultural deficit, economic deficit, and peace deficit,' and the Belt and Road initiative is making significant contributions to managing these deficits.' Furthermore, the Belt and Road initiative, having passed UN Security Council Resolution S/2274 in March 2016 and subsequently included in the General Assembly Resolution A/71/9 with the unanimous support of all 193 member states in November of the same year, has achieved universal international support. Specifically, the Belt and Road initiative has contributed to the economic development of Afghanistan and the region, as well as to the establishment of a security environment. Additionally, to date, 56 countries or regional cooperation organizations have issued joint statements related to the Belt and Road, and nine countries, including Russia, Mongolia, and Pakistan, have indicated that their national development strategies are closely linked to the Belt and Road initiative.

This consensus was reaffirmed at the recent summit forum by the adoption of a joint statement rejecting protectionism and strengthening Belt and Road cooperation. The joint statement consists of five items: △ Combining national development with common global development, △ Strengthening cooperation based on the spirit of the Silk Road and realizing mutual benefit and win-win outcomes, △ Accelerating policy and development strategy cooperation, △ Determining key areas and modes of action for cooperation, and △ Seeking practical cooperation based on high-level forums. This declaration, sharply contrasting with Trump's protectionist tendencies, creates an environment where its resonance is further amplified. In that sense, this forum can be assessed as a highly successful event for China.

Cooperation Achievements Driven by Abundant Funding

Leveraging its vast foreign exchange reserves, China achieved several tangible results at the 'Belt and Road Summit Forum,' while participating countries secured substantial benefits by receiving significant support from China. Firstly, during the two-day summit forum, 68 countries or international organizations signed cooperation projects with China, and the agreements were highly comprehensive and specific, comprising 76 items across 5 fields and over 270 specific clauses. However, this success was achieved by offering substantial financial packages, including an additional contribution of 100 billion yuan (approximately $14.5 billion) to the Silk Road Fund and providing $60 billion yuan (approximately $8.7 billion) in aid to developing countries and international organizations. The Philippines, embroiled in a territorial dispute over the Nansha Islands, received $500 million yuan in funding in exchange for not raising the issue, with President Duterte remarking that it was a 'windfall.' ASEAN, Pakistan, and other neighboring countries actively participated in this feast of Chinese gifts.

Secondly, the decision to hold the second summit in 2019 suggests that the Belt and Road Summit Forum is likely to become a regular biennial event. This can be assessed as the Belt and Road initiative evolving from 'vision to reality, and from ideology to action.' This signifies the increased influence and execution capability of China, and serves as proof of the strengthening political and economic networks between Belt and Road participating countries and China. This growing influence is also evidenced by the expansion of the AIIB, which began with 57 founding member countries, to 77 member countries within two years.

Thirdly, China has secured external outlets for economic growth by increasing its economic contribution to Belt and Road participating countries. From 2014 to 2016, trade between China and Belt and Road participating countries exceeded $3 trillion, accounting for 25.9% of China's total trade. In 2016, the export growth rate to this region was 26.2%, significantly outpacing China's overall export growth rate. Furthermore, 56 economic and trade cooperation zones have been established in these countries, with Chinese companies investing over $50 billion, generating $1.1 billion in tax revenue and creating 180,000 jobs. The American consulting firm McKinsey predicts that by 2050, Belt and Road countries will contribute 80% to global economic growth, further encouraging China.

Deepening Domestic Development Strategies Linked to the Belt and Road

One of the starting points of the Belt and Road initiative was the establishment of an overseas expansion strategy to resolve overcapacity. Consequently, all local governments have adopted the Belt and Road as a means to address severe oversupply issues while simultaneously serving as a new engine for development, with 31 out of 32 provinces and municipalities establishing Belt and Road-linked development strategies. In line with the central government's 'Vision and Action,' competition is intensifying as each government seeks to secure advantageous positions by leveraging its comparative advantages.

This has transformed into competition for the selection of 'Free Trade Zones,' with 11 provinces and municipalities currently designated as Free Trade Zones, striving to pioneer the 'New Silk Road of the 21st Century.' China has strategically designated areas such as the southeastern coastal region, including Shanghai, the northeastern region represented by Liaoning Province, and the central region spanning the Yangtze and Yellow Rivers. This is interpreted as a measure to enhance the efficiency of the Maritime Silk Road while simultaneously strengthening the domestic regional economic network linked to the Overland Silk Road. Therefore, China, which is further increasing its level of openness to become a 'rule maker' in the global economy, will accelerate the establishment of domestic strategies to expand the Belt and Road centered on Free Trade Zones.

Indeed, the five areas agreed upon at the recent summit forum included not only central government-level agreements on international cooperation and policy/strategy but also a greater number of people-to-people exchanges and practical cooperation in various fields hosted by local governments. This indicates the active participation of local governments and lends credence to the prospect that their role will become even more significant in preparation for the regularized summit forums.

Overcoming the Hurdle of Securing Trust from Neighboring Countries

In relation to the Belt and Road initiative, China has already signed agreements with approximately 40 countries and 50 international organizations. Based on these achievements, President Xi Jinping has clearly stated his position: 'China will not be a bystander or a follower, but will play the role of a participant and leader.' This confidence is grounded in the reality that China's contribution to the global economy in 2016, at 33.2%, was more than double that of the United States. Instead of engaging in military competition with the U.S., China is countering by strengthening 'economic partnerships' with Belt and Road participating countries to expand its influence, a westward strategy. Thus, Central Asia and Southwest Asia become strategic regions for China. This is precisely why China is pursuing the 'Six Major Corridors' as a core project of the Belt and Road, and particularly why it is fixated on the construction of the 'Kashgar-Gwadar' route.

However, this project faces strong opposition from India. India was also the only major country to abstain from attending this summit forum. Furthermore, resistance to China's aggressive investment practices is growing, with Southeast Asian countries refusing to participate in the 'Kunming-Singapore Railway' construction. Some critics argue that this is a repetition of China's predatory resource and energy import practices seen in the 'China-Africa Forum.' Indeed, the fact that energy cooperation constitutes the largest portion of the agreements signed at this summit forum provides grounds for such criticism. While it is generally assessed that the Belt and Road initiative contributes to the common prosperity of China and participating countries, China still appears to have not yet earned sufficient trust from its neighboring countries. This is a difficult challenge that China must overcome as it expands its influence. In that sense, this summit forum demonstrated that while China stands under a brilliant sun, its shadow is also cast deeply. ■

Author

Min Gwi-sik_ Professor of Chinese Studies, Graduate School of International Studies, Hanyang University. He holds a Ph.D. in Political Science from the Chinese Academy of Social Sciences. His main research areas include Chinese economy, Chinese energy, Chinese politics, and Chinese thought. His major works include 'Korea-China Relations and Cultural Exchange' (2013) (co-authored), 'Chinese Traditions and Modern China' (2012) (co-authored), 'Beijing's Urban Planning and Changes in Residential Environment' (2015), and 'Changes in Township Governance in China in the Post-Agricultural Era: Focusing on Changes in the Interest Relations of Actors in Grassroots Government' (2015).

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