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China's post-pandemic shopping spree: how coronavirus strengthens the Belt and Road Initiative


“We are now only beginning to pick up weak signals of Chinese ambitions on the international stage,” she said. “We should not wait for them to be fully implemented to start thinking about policy options.”

The verdict, delivered by Lowy Institute senior fellow Nadège Rolland to the US-China Economic and Security Review Commission on Wednesday, carried with it an implicit threat: China is coming. Faster, bigger and more assertive, empowered rather than enfeebled by the pandemic that shut it down in January.

Right now, nations across the globe are focussed inwards on their health crises as the pandemic shuts down economies worldwide to save lives.

But most countries will emerge from their lockdowns cash-strapped and looking for investment lifelines. China, likely to be the first major economy out of the crisis, will be waiting. And it has a big sweetener - its signature $1.5 trillion Belt and Road Initiative. Who would resist?

Australia is standing its ground. The Morrison government was bold enough to persist in calls for a global international inquiry into the coronavirus. Viewed by Beijing as uppity, irritating and insignificant, Australia and its campaign was a distraction.

“[Australia] is a bit like chewing gum stuck on the sole of China's shoes,” said prominent Chinese commentator Hu Xijin, who runs the Communist Party’s international mouthpiece, The Global Times. “Sometimes you have to find a stone to rub it off.”

The scale of China’s global ambition can be measured in the length of its shopping list for the Belt and Road Initiative. Spanning Asia, Europe, the Pacific and South America, only $190 billion of that $1.5 trillion has so far been committed to a network that aims to tie the world’s post-coronavirus economic growth to China. The US and Australia, with the exception of Victoria, are noticeably absent.

A new $1.2 billion football stadium for Qatar, an $8.4 billion high-speed rail link between Jakarta and Bandung, light rail in Tel Aviv, a $1 billion cruise ship pier in Athens, a $2.6 billion bridge in Turkey. The poster-child: a $95 billion economic and transport corridor between Pakistan and China.

By the end of January, China had signed 200 cooperation documents on the construction of the Belt and Road with 138 countries and 30 international organisations, including 37 Asian countries and 44 African countries.

In April, as coronavirus ravaged the globe, China’s President Xi Jinping called the leaders of Nepal, Iran, Zimbabwe, Russia, Indonesia, South Africa, Turkey, Laos, Kyrgyzstan, Venezuela, Mexico and Belgium.

He told them the same thing: “In the face of unprecedented epidemic challenges, the international community needs more solidarity and cooperation than ever before”.

Xi Jinping has deflected domestic criticism by pointing at enemies in the outside world.

Photo: AP

From her home in Princeton, Rolland tells The Sydney Morning Herald and The Age the Belt and Road “is the spine of the new coalition that China wants to create”.

“It is the physical manifestation of the Sino-centric order that China wants to put in place,” she says. "In short, Beijing wants a world order less threatening to the Chinese Communist Party's regime’s legitimacy and survival and more aligned with its own values and principles."

Beijing’s clout is growing through investment and personal connections in countries that were already prone to resentment of the US. The campaign to divert attention away from China’s role in the coronavirus is gaining traction.

“Sometimes people miss the appeal of China's narrative,” Rolland says.

In Beijing, Wang Yiwei, the Jean Monnet Chair and Director of International Affairs at Renmin University, says globalisation had reached a turning point and China is directing the traffic.

“The new kind of globalisation is human-centric,” he says. “There is more focus on human cooperation and not just making the rich richer.”

Professor Wang, who is also the vice-president of the Academy of Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, points to China's "mask diplomacy".

The coronavirus has accelerated the roll-out of the “health silk road”, which will deliver telehealth services to countries in the middle east such as Iran and Syria and those in Africa with less developed medical systems.

Australia was hit with its own wave of unexpected mask diplomacy - 10 million tests sourced from China by mining billionaire Andrew Forrest. An Australian government source said it was the standard Chinese playbook, bombard a country with stuff that you make reasonably well and win friends.

He denies China has any ulterior motive or is stepping into a vacuum created by retreating US leadership.

“Belt and Road is nothing to do with ideology," he says. "It’s about infrastructure."

Aaron Connelly, a fellow at Singapore's International Institute for Strategic Studies, says it is not clear if mask diplomacy is simply remedial action to improve China’s image in the region or if, down the track, they'll be looking for quid pro quo.

He says the push could soften some countries' domestic opposition to Belt and Road.

Perhaps more so than in any other area, the initiative is designed to grow China’s economic and political clout throughout south-east Asia.

From expressways and fast trains to power plants, smelters and resorts, the growing list of projects in Cambodia, Indonesia, Laos, Malaysia and Thailand and Myanmar underscores the breathtaking scale of Belt and Road.

The absence of significant assistance from the US in this time of need is noted in regional capitals.

Local embassies regularly send out media releases highlighting the fact that the US has spent more than $5.4 billion on health projects in the region over the last two decades, but emergency funding to the ten ASEAN states to combat the current crisis totals a paltry $54 million.

Donald Trump’s America First policies are weakening US power and influence in the region.

Hervé Lemahieu, the director of the Lowy Institute’s Asian Power program, says ASEAN states are caught between China and the US, but the influence of the US is declining.

The negative backlash against China seen in the west, as the source of the coronavirus crisis, has been relatively muted.

“China has put a lot of energy into trying to bill itself as a saviour through mask diplomacy. I’m not sure south-east Asian countries are fully buying into that in the sense that they still harbour suspicions, but they have not decisively moved against China in the way we have seen the west do,” he says. “It’s not a decision they [ASEAN States] are taking,” he says, “but in the absence of a decision they are moving in a more Sino-centric direction.”

Physically, if not diplomatically, the spread of COVID-19 has slowed down the spread of Belt and Road because of new restrictions on the movement of people and capital at national borders.

Siwage Dharma Negara, a senior fellow at Singapore’s Institute of Southeast Asian Studies (ISEAS) who researches the initiative, says it is too early to say what long-term impact coronavirus could have on Belt and Road projects in the region.

“Covid has changed all the geo-strategic and political landscapes. In the short term, we see some postponement of construction, particularly because of restrictions on travel and labour that has to move from China to other countries. So it may affect progress on some projects, and this may cost China and also host governments.”

In the country of his birth, Indonesia, Siwage highlights the Jakarta-Bandung high-speed railway, a power plant in North Kalimantan province and a smelter project in Central Sulawesi province as projects all struggling to be completed on time because of the spread of coronavirus.

“Those projects that involve Chinese companies at the moment, because of government restrictions to not allow Chinese workers [face challenges],” he says. “Governments need to start thinking about Plan B or Plan C for all these Chinese projects.”

Merridan Varrall, director of geopolitics at accounting giant KPMG, says despite the economic challenges, the initiative has been introduced into China's constitution. “It’s not going to be something that is allowed to disappear.”

China's new agreements with Afghanistan and Italy, its pursuit of a war-torn Syria “as a historical opportunity for the two countries to achieve connectivity” and multiple billion-dollar power and bridge projects in Turkey show it has ambitions beyond its geographical sphere of influence.

Lowy Institute senior fellow Nadege Rolland warns that China's ambitions have not waned during the pandemic.

Photo: Supplied

Greece has signed on to redevelop the Port of Piraeus, Hungary has agreed to a power station project and in March 2019, Italy became the first major European power to sign up.

Rolland says we are all going to be damaged by the economic consequences of this pandemic.

“Many businesses are going to take a big hit in Europe and advanced industrial countries. China is still a relatively wealthy country. It is very possible that the government will use that money to seize on some of those businesses that will help China achieve another objective: to become a global leader in technology and innovation through its Made in China 2025 program.”

“I would not dismiss the possibility that Beijing is going to go on a shopping spree,” she says. “It used to be ports in Europe, it is possible it is now going to be companies in a difficult position.”

Australia moved at the start of the local coronavirus crisis in March to effectively force any foreign takeover of any company to be subject to review by the Foreign Investment Review Board. Previously, companies had to be worth a threshold value of $1 billion before the board got involved.

Varrall says Australia should not rule out broader participation in the Belt and Road.

“I think it would be worthwhile for Australia to assess projects on their merits. If we don’t want to sign up overall, we do want to have continued access to Chinese investment that is important for Australia's economy and wellbeing. Assessing projects on a case-by-case basis would seem like a sensible way forward.”

So far, only Victoria is showing any real interest. It signed a deal with China last year that will allow Chinese companies to bid for major projects. The coronavirus has only enhanced its appeal.

“The Belt and Road initiative will create opportunities for Victorian businesses and local jobs – opportunities that will be more important than ever as we rebuild from this crisis,” a Victoria government spokeswoman said.

With Sanghee

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