Spearhead Analysis – 29.05.2017
By Shirin Naseer
Research Analyst, Spearhead Research
During the recently concluded Belt and Road forum, President Xi announced an additional $125bn investment into the One Belt One Road initiative. At the beginning of this year, ratings agency Fitch revealed an astounding $900 billion in OBOR projects, underway or in the planning stages. Several participating countries encouraged the immensely ambitious development campaign and commended China for its efforts. But Australia remained fairly reserved and cautious in considering its investment in the OBOR. Australia reportedly refused to link Canberra’s A$5bn state infrastructure fund with China’s New Silk Road strategy.
At the end of the Belt and Road forum Australia’s representative, Trade and Investment Minister Steve Ciobo, issued a statement acknowledging the trade and investment opportunities the Belt and Road Initiative (BRI) can open up. He further added that the potential of the project can only be realized if a “transparent, collaborative, and planned approach is followed”.
To many, Ciobo’s statement reflects Australia’s ‘wait-and-see’ approach to the project, which errs more on the side of being cautious. Australia seems more interested in determining China’s regional strategy and its implications, before making any commitments to the scheme.
The fact that Australia is more inclined to guard its ‘observer status’ in the OBOR can be better understood in light of Canberra’s recent push for Washington to increase its presence in the region.
Most countries have welcomed Xi’s initiative with a mix of excitement and suspicion. America is no different—showcasing more of the latter than the former. In America, the Belt and Road initiative is perceived as a geopolitical gambit to increase China’s regional clout now that America is looking to pull back from its investment in Asia.
“It’s about making China the dominant country in the region,” notes Tom Miller, the author of a book called “China’s Asian Dream”.
Subsequently, in considering investment in the OBOR Australia fears it is risking damaging its relations with the US. Recently, Julie Bishop, Australia’s foreign minister, called on the Trump administration to expand US role in Asia to ensure stability and peace in the region.
Australia initially refused to join the Asian Infrastructure Investment Bank (AIIB) because the US labeled it as a “Chinese-led multilateral lender” with poor standards of governance. Later however the country followed suit as the UK and other western nations signed up to the AIIB. And US claims were soon dismissed and deemed baseless. This instance bears an uncanny resemblance to Australia’s present attitude towards the OBOR initiative where Australia is once again basing its stance on US reservations, this time against the OBOR.
There is very little evidence to support the idea that the OBOR is designed to counter US hegemony in Asia; the US has also been extended an invitation to join the multi-billion dollar project. At the 2015 Boao Forum for Asia in Hainan, President Xi announced that the OBOR is meant to be “open and inclusive”, focused on improving existing initiatives rather than creating new ones.
It is important for Australia to frame its own independent understanding of the Chinese initiative. Participation in the OBOR can boost its economic ties with China, which also happens to be Australia’s largest trading partner. It would also benefit Australia to not dwell on the lack of material currently available concerning the range of the operation of the OBOR.
As Jane Golley from Australian National University has also said, Chinese policy makers and the administration itself is currently debating the various aspects of the initiative, which means there is a lack of finality and various understandings with respect to the boundaries of the project.
Contrary to popular opinion, this can in fact be beneficial for the countries involved. For all participating countries, and especially for advanced economies like Australia, there exists a “blank page clause in the BRI” with the help of which projects can be worked on through “bilateral negotiations with participating countries”, after the signing of an MoA.
Jason Young, director of the New Zealand Contemporary China Research Center, in one of his articles explained that the Chinese approach to a “grand strategy, whilst highly aspirational has flexibility deliberately built in”.
Australia may be able to use this flexibility to its advantage. Australian companies have expressed an interest in the New Silk Road plan and business leaders in the country have set up a One Belt One Road advisory group to help the process. For all countries in the region, accepting the overarching OBOR concept is the only way to secure a place at the table and make sure individual concerns are heard.