Harnessing the Belt and Road Initiative as a Platform for Sustainable Development: Opportunities and Challenges
06 Jul 2017
By Nicholas Rosellini - Last month the Belt and Road Forum for International Cooperation took place in Beijing, hosted by China with over 29 heads of state, the UN Secretary-General and many heads of international organizations and businesses attending.
I was fortunate to be part of the UN delegation, which helped me see more clearly the enormous potential of the Belt and Road Initiative (BRI) as a platform for enhancing regional and global trade and connectivity as well as its potential to act as an accelerator for the 2030 Agenda.
BRI represents a move away from standard development models that emphasize policy and institutional issues (and often accompanying conditionalities), towards a more investment-driven approach focusing on infrastructure, trade and jobs creation. It involves multiple sources of finance from the public and private sectors. While others are also looking at blended approaches involving public-private finance, BRI is by far the most ambitious. Realistically, both hard and soft investments are needed, but BRI responds to a strong interest in countries for more attention to infrastructure and economic development.
The numbers themselves tell a compelling story. By 2016, Chinese investment in BRI countries totaled RMB 51.1 billion, whilst in 2015 bilateral trade volumes exceeded RMB 1 trillion. Further, it was announced at the forum that the Silk Road Fund would be expanded by an additional RMB 100 billion. This investment in infrastructure and industrial projects can help jump start economic development in many BRI countries. However, will it also give a similar boost to human development and ensure environmental sustainability? The good news is that there was strong commitment at the Forum by the Chinese government and partner countries to making sure this happens. Nonetheless, putting sustainable development principles at the core of BRI will be a vast challenge, an area where the UN and UNDP can provide critical support and experience.
As summed up by UNSG Antonio Guterres “while the Belt and Road Initiative and the 2030 Agenda are different in their nature and scope, both have sustainable development as the overarching objective. Both strive to create opportunities, global public goods and win-win cooperation. And both aim to deepen “connectivity” across countries and regions: connectivity in infrastructure, trade, finance, policies and, perhaps most important of all, among peoples.”
The UN has already shown a strong commitment to cooperating on the BRI, and 11 UN agencies have signed agreements with the Chinese Government, including UNDP. UNDP has also been allocated funds to implement projects in Belt and Road regions, providing a direct opportunity to stimulate progress towards the Sustainable Development Goals (SDGs). There are however a variety of challenges facing implementation, of which addressing the negative perceptions surrounding Chinese engagement overseas could be most critical.
In April, I visited three countries in Africa, attending events and visiting project sites in Cote Ivoire, Ghana and Ethiopia. Through a variety meetings and discussions with a variety of stakeholders from government, media, the private sector and UNDP offices, it was clear that perceptions on Chinese foreign aid and investment in these and other countries form a mixed bag.
China’s foreign financing is a highly controversial topic. Foreign financing can act as a useful stimulant for development, but if a country relies exclusively or excessively on foreign loans, it could begin to develop an unsustainable foreign debt. Over the past 7 years, for instance, Africa’s debt has risen almost 50% to USD 416 billion, and more than 50% of that debt sits in China. However, this should not present a challenge if investments are successful and boost overall economic development. There is little hard evidence either way and more research is needed on the development financing dimension, an area where the UN’s experience could be useful.
In addition, the myth that Chinese companies only hire Chinese workers has spread and can inflame tensions, especially when set against the background of rapidly emerging young working populations in many African and Southeast Asian countries.
However, a recent report on the China-Africa relationship by Mckinsey & Company suggests that this is not the case. Talking to over 1000 Chinese companies, the report found that 89 percent of staff employed were African, totaling nearly 300,000 jobs for African workers. Furthermore, estimates suggested that scaling this up across the more than 10,000 Chinese-owned firms operating in Africa could put that number in the millions.
It is important to highlight that many negative perceptions stem from past issues. Previously, Chinese engagement abroad primarily focused on the extractive industries, building supply chains with recipient countries to secure natural resources for China’s industry. This naturally led to questioning of the sustainable conduct of Chinese actors engaging abroad, and these negatives have become mainstream in criticisms of Chinese overseas investment.
Currently, Chinese foreign engagement is taking a very different form, focused on international cooperation, developing infrastructure, stimulating manufacturing industries and promoting economic development in partner countries. These are all areas where active engagement can ensure mutual benefits, but again certain uncertainties around China’s goals and intentions could hamper effective cooperation.
Questions will continue to surround Chinese foreign investment until they are addressed through coordinated efforts and improved communication. The UN and UNDP has the experience and expertise to step in and help, facilitating an enabling environment for development finance and helping to mitigate externalities, addressing misconceptions and ultimately driving long-term sustainability along the BRI.
BRI represents not just an opportunity but also a responsibility for UNDP and its engagements in all countries signed up to BRI. By harnessing the platform BRI has provided, UNDP can be a partner in development for emerging economies, positioning itself as a key facilitator in both the creation of, and adaptation to, a rapidly changing enabling environment for sustainable development.
This will ensure that BRI can follow and maintain a course that accelerates the achievement of the SDGs, creating conditions that change communities and livelihoods for the better, leaving no one behind.