A Better Tomorrow
Broader Belt and Road cooperation will unfold after pandemic blows over
TThe author is director of the Eu-china Program at the Centre International de Formation Européenne
he impact of the novel coronavirus disease ( COVID- 19) on the world economy is yet to be assessed. Estimations are particularly difficult because plans are being continuously reconsidered and priorities require adjustments. Life in some countries has returned to normalcy but concerns about a second wave and the psychological fear of citizens to go back to their 2019 daily routine remain natural obstacles. One of the critical questions is how the big economic shock caused by COVID-19 will be overcome in the future. It is here that the Belt and Road Initiative deserves special attention.
Until the COVID-19 outbreak, the initiative, consisting of the Silk Road Economic Belt and the 21st-century Maritime Silk Road, had emerged as the most successful integration platform for years on the world stage, guaranteeing common prosperity and win-win results. Despite the politicization of the issue—a recurrent feature in some Western circles—it is evident that countries across the globe benefited from the initiative and synergies with China.
This does not mean that problems did not occur. At the Second Belt and Road Forum for International Cooperation in April 2019, Chinese President Xi Jinping placed emphasis on issues such as debt sustainability and protection of the environment. China has sought to solve problems to safeguard the smooth continuation of the initiative.
Quality first
The pandemic temporarily interrupted the advancement of the Belt and Road Initiative. Workers on infrastructure projects could not easily access sites over public health concerns. Transportation networks have been seriously affected not only in China but also in other participating countries to stop the contagion. International demand for Chinese products dropped as a result of lockdown measures with the exception of necessary medical equipment.
The economic pain of the novel coronavirus has made it more complicated for recipients of loans by Chinese banks to normally serve them for some period of time. Obviously, this is the case for the serving of all loans irrespective of their source. Western airline companies, for instance, needed state support in order to economically survive. Under the extreme circumstances of the pandemic, the financing of new Belt and Road projects could not magically stay unaffected.
In response to challenges from COVID-19, China has improved its policies for Belt and Road cooperation. In his Report on the Work of the Government delivered at this year’s legislative session in May, Premier Li Keqiang reaffirmed the commitment to achieve shared growth through consultation and collaboration as well as by upholding market principles and international rules. The new normal of the national economy is based on the realization that quality is much more significant than quantity in the long-term for sustainable development. From the moment this happens domestically, it can also happen internationally as long as Belt and Road cooperation is advanced.
China does not overlook the new debt dynamics. It recently announced the suspension of debt repayment for 77 developing countries and regions. It has thus contributed to the Group of 20 debt relief mechanism for low-income partners. Song Wei, a research fellow at the Chinese Academy of International Trade and Economic Cooperation, the Ministry of Commerce, said China would not force repayments, referring to the eight principles governing China’s economic and technical assistance to other countries issued in 1964. Debt issues will be addressed with tailored plans based on discussions
between the creditor and the receiver. Though this is not always simple, it can prove to be an efficient method.
Promising prospects
Some Belt and Road infrastructure projects have already resumed work. Construction of bridges for the Jakarta-bandung High Speed Railway in Indonesia and laying tracks for the China-laos Railway are some examples. While safety measures are being taken, the progress is currently slower in comparison to the PRE-COVID-19 phase. The return to 2019 standards will be a gradual process. What now matters is that the Belt and Road Initiative appears as a safe and successfully tested growth engine for countries interested in taking part in it. It can give the world economy what might be described in the 21st century as Keynesianism with Chinese characteristics.
In the final account, the vision requires patience. In 2019, for example, the Port of Piraeus in Greece became the top port in the Mediterranean. This success is not a flash in the pan. On the contrary, it is the product of 12 years of careful investments by its Chinese operator COSCO that are still continuing and expanding. It is easy to criticize Chinese investments but difficult to replace them with another source of financing. This is the most important advantage of the Belt and Road Initiative.
Last but not least, the discussion about the Belt and Road Initiative should not revolve only around infrastructure projects. The initiative aims at fostering international cooperation in several sectors. Tourism and people-to-people exchanges have suffered a serious blow due to the pandemic. Nevertheless, there are other sectors which have the potential of contributing to interconnectivity. The first is the digital side of the initiative which has been elevated to new heights in the lockdown period. E-commerce and cloud computing have been widely used by the international community. China is not only the world leader in 5G technology but has already started research on the development of 6G.
The second is the Health Silk Road. An idea proposed by Xi in 2016, it has seen China provide medical assistance to numerous countries, principally in Africa. China also plans to make its home-developed COVID-19 vaccine a global public good when it is ready.
A recent global survey conducted by the Alliance of Democracies, a non-profit, indicates that over 60 percent of the respondents believed China’s response to COVID-19 has been good, whereas only a third held this view about the U.S. The Chinese Government is working hard and the results of its policies are appreciated by the world public opinion. This is also the case with the Belt and Road Initiative.
Critics of China have been vocal in anticipating a failure because of the initial disruption as the virus took everyone by surprise. A careful study of Chinese history suggests that China becomes stronger and more united when challenges arise. Policy commitments are not forgotten and yield results in the long run.
China Report ASEAN:
The development of relations between China and the Philippines has reached a new stage. What is your opinion on its current state? Huang Xilian:
Chinese President Xi Jinping and Philippine President Rodrigo Duterte have placed considerable effort on improving bilateral relations in recent years, so the two countries have maintained peace and friendship, expanded economic and trade cooperation and increased people-to-people exchanges. These efforts have propelled the steady development of our friendship.
President Xi and President Duterte have met eight times since 2016, and high-level interactions between the two countries have been very frequent, giving powerful impetus to bilateral relations. China and the Philippines have properly solved disputes and maintained close cooperation in various fields including anti-terrorism, humanitarian relief, disaster mitigation and peacekeeping.
Meetings of the China-philippines bilateral consultation mechanism on the South China Sea have also proceeded smoothly. China and the Philippines enjoy fruitful economic and trade cooperation. China has become the Philippines’ largest trading partner, largest source of imports, largest source of foreign investment and third largest export market. In 2019, bilateral trade volume exceeded $60 billion, an increase of 9.5 percent year on year. The same year, Chinese companies signed new contracts for projects in the Philippines worth $6.24 billion and achieved a total turnover of $2.76 billion.
The people- to- people bonds have become closer. China is now the second largest source of tourists for the Philippines. In 2019, the total number of Chinese tourist arrivals to the Philippines reached 1.74 million, a year-on-year increase of 38 percent. China aided construction of 14 schools in Mindanao which now provide more than 50 classrooms for over 2,000 local students. More than 30 pairs of sister provinces and cities have been established between China and the Philippines, and the two sides are arranging dispatch of English teachers from the Philippines to China and the establishment of cultural centers on each other’s side.
The momentum for regional cooperation has stayed strong. Since taking over the role as a country coordinator for CHINA-ASEAN relations in August 2018, the Philippines has been actively promoting CHINA-ASEAN cooperation and making it a model for international collaboration under the Belt and Road Initiative. China and ASEAN countries including the Philippines have actively stepped up consultations on the Code of Conduct in the South China Sea to maintain peace, strengthen friendship and boost cooperation in the region.
During his visit to the Philippines in late 2018, President Xi agreed with President Duterte to establish a China-philippines relationship of comprehensive strategic cooperation and outlined the direction and new requirements for its future development.
Since I became Chinese ambassador to the Philippines in December 2019, my top priorities have been to implement the consensus reached by the heads of the two countries and ensure steady and enduring development of our upgraded ties.
What are some of the potential fields of cooperation shared by the Belt and Road Initiative and the Philippine Government’s Build, Build, Build development program?
Cooperation on infrastructure is the key link between the Belt and Road Initiative and the Build, Build, Build program. The Global Competitiveness Report 2019 published by the World Economic Forum ranked the Philippines 96th on infrastructure, citing its need to increase spending. At the same time, after over four decades of rapid development since its reform and opening up, China has created the world’s largest construction market and fostered a group of globally competitive construction
companies. Cooperation on infrastructure between China and the Philippines has also received policy support. In November 2018, China and the Philippines signed a memorandum of understanding on cooperation within the framework of the Belt and Road Initiative, a move demonstrating both sides’ determination to enhance cooperation on infrastructure. President Duterte attended both the first and second Belt and Road Forum for International Cooperation held in Beijing, showing his support for further cooperation in such areas.
Which sectors look most promising for economic and trade cooperation?
Under the strategic direction of the leaders of our two countries, tensions have eased, and bilateral relations have improved markedly, which has greatly boosted economic and trade cooperation.
The current bilateral trade volume between China and the Philippines has surged to more than 800 times what it was at the beginning of diplomatic relations.
China has been the largest export market for Philippine bananas since 2018. In 2019, coconuts from the Philippines were exported to China for the first time, and the two countries reached an agreement to bring Philippine avocados to China. According to the Department of Trade and Industry of the Philippines, Philippine companies reported orders worth around $300 million at the Second China International Import Expo in November 2019.
China and the Philippines have also made progress on investment cooperation. In July 2019, DITO, a joint venture between Eudenna Corp. and China Telecom, obtained its third license for operating telecommunications in the Philippines, and construction has progressed steadily. The Bases Conversion and Development Authority of the Philippines and China Gezhouba Group Co. Ltd. have entered negotiations on a series of cooperation projects in an industrial park in New Clark City. Panhua Group, a Chinese steel sheet company, has demonstrated interest in building factories in the Philippines.
Such projects could bring billions of dollars of investment and many good jobs to local people. The overall trend of China’s contracted projects in the Philippines has been generally positive, and inter-governmental and commercial projects are all progressing well. I believe more projects will play a significant role in facilitating bilateral economic and trade cooperation and people-to-people exchanges in the future.
What progress have China and the Philippines made on people-to-people exchanges? What kind of cooperation best enhances mutual understanding and trust between the two peoples?
In recent years, people-to-people exchanges have been gaining momentum thanks to support from both governments and communities. The wide range of fields and diverse types of exchanges between the two countries have continued to expand. For example, activities with various cultural themes highlighting Chinese and Philippine traditional cultures, Chinese movies and the Spring Festival have been organized to enhance cultural understanding. More than 1,000 Chinese students are studying in the Philippines, seeking degrees in management, medical care and education at prestigious universities. The Philippines now has five Confucius Institutes to provide Chinese language lessons for local people.
Next, the two countries will actively build new platforms for people-to-people exchanges based on traditional friendship. First, we will focus on increasing activities targeting a wider range of people and attracting greater local interest to consolidate foundation for cultural exchanges. Second, we will actively adapt to the development needs in the new era by strengthening cooperation in cultural industries and vigorously promote exchange and cooperation between think tanks, youths, media organizations and sports communities.
We will continue our efforts to pave a solid foundation for bilateral friendship to guarantee the long-term and stable progress of bilateral relations.