Silk Road Summit Comes Up Short on Consensus Agreement for Trade “Rules of the Road”

On May 14, China launched the Belt and Road Forum in Bei­jing.  As the forum drew to a close, there was an appar­ent effort to gather sig­na­to­ries and broad agree­ment on a trade com­mu­nique that, accord­ing to the Wall Street Jour­nal, was hur­ried in a man­ner that other such joint state­ments were not.  In this case, a state­ment on trade that Bei­jing hoped atten­dees would sign onto report­edly omit­ted impor­tant clauses on trans­parency and stan­dards for ten­der­ing con­tracts that Euro­pean atten­dees insisted should be included.  Accord­ing to the Wall Street Jour­nal,

’We felt this lan­guage was going back­wards’ from what China had pre­vi­ously agreed to, said one Euro­pean offi­cial, who sug­gested Bei­jing had drafted the state­ment to ben­e­fit Chi­nese com­pa­nies in future Silk Road con­tracts. ‘It’s about sell­ing their stuff,’ the offi­cial said.”

The state­ment appears to have rein­forced some of the pri­mary con­cerns shared by many around the world about the over­all “One Belt, One Road” ini­tia­tive (OBOR), which is that it is, at least in part, designed to project Chi­nese soft power and tilt the terms of trade and finance in the direc­tion of Bei­jing, under­min­ing West­ern stan­dards of qual­ity, gov­er­nance, trans­parency and fair­ness.

’Trans­parency about plans and activ­i­ties of all stake­hold­ers must be the basis for our coop­er­a­tion, together with open, rules-based pub­lic ten­ders and rec­i­p­ro­cal mar­ket access,’ said a state­ment by the French Embassy in Bei­jing detail­ing the Euro­pean Union’s posi­tion on the forum.”

The notion that cer­tain invest­ments by China inter­na­tion­ally have ben­e­fit­ted from ten­ders that were not trans­par­ent and, to some extent, rigged in its direc­tion as a result of geopo­lit­i­cal or other sweet­en­ers pro­vided on non-com­mer­cial terms is a seri­ous con­cern fac­ing those sign­ing onto Beijing’s archi­tec­ture that under­lies this grand design.

It was fur­ther reported that Bei­jing, after choos­ing to release a list of coun­tries that had sup­ported its “word­ing,” included Por­tu­gal on the list, despite the country’s later state­ments that it did not, in fact, sup­port the state­ment, cre­at­ing poten­tial awk­ward­ness in its rela­tions with other Euro­pean offi­cials and the EU.  As the Wall Street Jour­nal observed, “Beijing’s actions appeared to be an attempt to play off indi­vid­ual EU mem­bers against the wider bloc,” accord­ing to Euro­pean offi­cials.

Beijing’s push for trade and invest­ment on its terms as part of its objec­tives com­ing out of the forum were not alto­gether unsuc­cess­ful, how­ever.  In the final com­mu­nique of the event that was report­edly painstak­ingly nego­ti­ated over the weeks lead­ing up to the event and broadly adopted, the group com­mit­ted respect for “sov­er­eignty and ter­ri­to­rial integrity” and oppo­si­tion to “all forms of pro­tec­tion­ism.”  Each of these can be read as sup­port­ive of cer­tain core prin­ci­ples behind China’s for­eign pol­icy objec­tives.  The lat­ter phrase is likely an effort to under­mine the pro­tec­tive, secu­rity-related mea­sures being put in place in cer­tain coun­tries against Chi­nese invest­ment that threat­ens their national – and pos­si­bly eco­nomic – secu­rity via the acqui­si­tion of crit­i­cal infra­struc­ture or sophis­ti­cated indus­trial assets.  This poten­tially evokes such mech­a­nisms as that in place under the Com­mit­tee on For­eign Invest­ment in the United States (CFIUS) as well as sim­i­lar invest­ment screen­ing processes inter­na­tion­ally.

More broadly, the two-day sum­mit rep­re­sented a strate­gic pivot to shift the optics and per­cep­tions sur­round­ing China’s ambi­tious OBOR ini­tia­tive.  Attended by some 29 world lead­ers, includ­ing Rus­sian Pres­i­dent, Vladimir Putin, the sum­mit was designed to depict OBOR as a mul­ti­lat­eral, glob­al­ized endeavor, rather than solely a Chi­nese soft power pro­jec­tion strat­egy.  Despite Beijing’s efforts to “glob­al­ize” OBOR, cer­tain aspects of the con­fer­ence – as noted above – high­lighted the Initiative’s lack of cohe­sive­ness and per­sua­sive­ness within parts of the inter­na­tional com­mu­nity.