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AsO: What do you believe will be the impact on China’s strengths as a trading force and as an international economic presence as a result of the Belt and Road Initiative? JB: It is difficult to isolate the impact of the BRI against other longer and more general trends, such as the opening up of the PRC economy, accession to the WTO in 2001 and the re-engagement of an economic giant in the global economy. The BRI works with the grain of these trends, whilst at the same time, there are concerns that the USA might be retreating from the world. AsO: To what extent do you expect the conjoined nations to benefit in the same vein and what do you gather states like Hong Kong’s feelings are towards the project? JB: It is too early to see what the benefits of the BRI will be, but so far trade data shows a mixed performance.
“I am no fortune teller, but a factor for success will be the quality of project preparation – specifically proper due diligence and a focus on sustainability”
Dam Srinakarin power plant in a mountain lake at Kanchanaburi
There has been little change in the pattern of merchandise trade between China and the 65 BRI countries. China’s exports to BRI countries grew by 1.8 percent CAGR 2013-16; but China imports from BRI countries fell by 7.5 percent CAGR 2013-16. This was largely driven by weaker China demand for BRI commodity exports and lower global commodity prices, but the stronger performance by China exports to BRI countries plays to the concern that the BRI might be tilted towards supporting the export of surplus capacity. China’s trade surplus with BRI countries reached an accumulated US$232 billion in 2016, similar to its US$251 billion surplus with the USA. However, China is aware of the sensitivity and this is one reason the country has proposed an ‘import trade expo’ for 2018. The manufacturing, commodities and construction sectors have all benefited, but PRC construction and related entities have been the biggest winners to date.
AsO: On a final, general note, if we were to speak again in say - three-five years, what would you anticipate the fallout from this initiative to be; not just from a Chinese perspective, but from a general Southeast Asian point of view? JB: I am no fortune teller, but a factor for success will be the quality of project preparation – specifically proper due diligence and a focus on sustainability. For example, I imagine projects that have a significant private sector investment component and / or have been subject to proper, independent due diligence are more likely to be a success. Also, where the lead Chinese entity has a long-term stake in the project it is more likely to be successful. However, we may see a number of white elephants, as a result of inadequate project due diligence and transparency, and some countries struggling to repay debts to the PRC.
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