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.