China’s new Silk Road promises trade and riches, with President Xi at helm

Reuters: Chinese President Xi Jinping and 29 other heads of state on Monday reaffirmed their commitment to build an open economy and ensure free and inclusive trade, under the ambitious Belt and Road initiative led by Beijing.

As a two-day summit on the project in Beijing wound up, the 30 nations also agreed to promote a rules-based, non-discriminatory trading system with the World Trade Organisation at its core and to oppose protectionism, according to a joint communique signed by their leaders.

In the communique, China and other nations underlined the importance of expanding trade and investment based on a level playing field.

“It is our hope through the Belt and Road development, we will unleash new economic forces for global growth, build new platforms for global development, and rebalance economic globalisation so mankind will move closer to a community of common destiny,” Xi said at the close of the event.

The inclusive tone of China’s Belt and Road push stands in stark contrast to US President Donald Trump’s “America First” policy, which included the scrapping of the Trans-Pacific Partnership (TPP) deal, a regional trade pact involving Pacific Rim countries but excluding China.

Xi on Sunday pledged $124 billion for the new “Silk Road”, which aims to bolster China’s global leadership ambitions by building infrastructure and trade links between Asia, Africa, Europe and beyond.

Some Western diplomats have expressed unease about the initiative, seeing it as an attempt to promote Chinese influence globally. They are also concerned about transparency and access for foreign companies.

Germany said its firms were willing to support the Belt and Road initiative, but more transparency was needed.

European Commission Vice President Jyrki Katainen told Reuters on Monday that EU member states would not be signing ministerial statements connected to the summit, though he downplayed the significance.

“The European Commission, who has a mandate, who has the capacity to negotiate on behalf of member states on trade-related issues, we were not given a chance to negotiate on the text,” he said.

“But it’s not an issue. The event, what Chinese authorities have organised here, and the joint understanding of what should be done and what must be done, is very positive.”

Australian Trade Minister Steven Ciobo said on Sunday Canberra was receptive to exploring commercial opportunities presented by the initiative, but any decisions would remain incumbent on national interest.

India refused to send an official delegation to Beijing, reflecting displeasure with China for developing a $57 billion trade corridor through Pakistan that also crosses the disputed territory of Kashmir.

A spokesman for its foreign ministry also said there were concerns about host countries taking on too much debt to fund Silk Road infrastructure.

Questions for investors in host countries include whether new infrastructure is useful for the local economy, what the recurring costs are and whether it creates opportunities for local suppliers of materials, labour and finance, Exotix Partners wrote in a note on Monday.

“And ultimately how much political sovereignty is sacrificed, and what is the risk to completion of projects in the event of a disorderly slowdown in the domestic Chinese economy,” said the US investment firm specialising in frontier and illiquid markets.

Inclusive tone

Earlier on Monday, Xi urged major multilateral institutions to join the Belt and Road initiative, stressing the importance of rejecting protectionism in seeking global economic growth.

“We need to improve policy coordination and reject beggar-thy-neighbour practices,” Xi told the forum.

Xi, seated next to Russian President Vladimir Putin, was speaking at a convention centre by a lake in northern Beijing on the summit’s second and final day.

“We need to seek win-win results through greater openness and cooperation, avoid fragmentation, refrain from setting inhibitive thresholds for cooperation or pursuing exclusive arrangements and reject protectionism,” he said.

Xi said China’s Belt and Road plan would be open to all. He said deep-seated problems in global development had yet to be addressed effectively, with international trade and investment sluggish, and economic globalisation encountering headwinds.

“In a world of growing interdependency and challenges, no country can tackle the challenges, also the world’s problems, on its own,” Xi said.

Philippine President Rodrigo Duterte and Italian Prime Minister Paolo Gentiloni were also at the meeting, as were the heads of the United Nations, International Monetary Fund and World Bank.

Xi said China would host the second Belt and Road Forum in 2019.

“We have every reason to be confident in the future of the Belt and Road,” Xi said. “That said, there is still a long way to go as the Belt and Road is a long-term undertaking.”

China’s Belt and Road communique 

pushes open trade centred on WTO

Reuters: Leaders at China’s Belt and Road summit on Monday agreed to promote a rules-based, open and multilateral trading system with the World Trade Organisation at its core, according to the summit communique.

The 30 heads of states who signed the document, including China, said that they recognised the challenges the world economy faced and welcomed the initiative to improve connectivity between Asia and Europe.

It was important to expanding trade and investment based on a level playing field, they said.

The countries also encouraged all signatories of the Paris climate change agreement to fully implement the accord.