Which path for the Development Assistance Committee down the Belt and Road?

By Philippos Pierros, EU Delegation Minister-Counsellor, & Elliott Memmi, Freelance Research Analyst

The Chinese Xiaomi Highway bridge, between Lao’s border town Boten, and Mengla, Yunnan, China. Photo: Shutterstock

At the April 2019 Belt and Road Initiative (BRI) conference in Beijing, a new life seemed to have been given to the Belt and Road project. After 2018, marked by increased foreign criticism, suspicion, and a subsequent reigning in of ambition by China, 2019 saw a renewed confidence — with President Xi Jinping himself stepping in to address the risks of unsustainable debt and corruption and promising a more “open, green, and clean” development co-operation model. In July, China endorsed the G20 Principles for Quality Infrastructure Investment. And the China International Development Co-operation Agency (CIDCA) was promoted as the new government organ that would unify the tangled web of Chinese development actors. 2019 saw a sudden surge in new BRI agreements.

In the meantime, world powers had already scrambled to create alternatives to the Belt and Road Initiative such as the EU-Japanese Eurasian infrastructure connectivity plan, the US-led Blue Dot Network to run quality checks on development projects and guide potential donors, or the EU’s plans for strengthened development partnership with the African Union. While there remains scepticism about the ability of these schemes to compete or even match the scale of the BRI, a turning point has been reached: the member states of the Development Assistance Committee (DAC), which oversees international development standards and norms, can no longer underestimate the rise of China. Even in 2019, however, DAC members had not been able to agree on the need for open dialogue and co-operation with China— a key partner in development and a major player in South-South and triangular co-operation. With infrastructure gaps in the developing world estimated to cost trillions and financing being a major challenge, the climate crisis can only be dealt with through an international effort that ensures a transition to low-carbon development models. Trying to find common ground and areas of co-operation in recognition of China’s enlarged role is common sense – and a necessity.

2020 will mark a more drastic shift in the development world. Already, sources have noted that China is increasingly focusing the BRI on Southeast Asia and its maritime “belt”. A region where China had already developed partnerships, presaging a shift away from the more difficult overland “road” infrastructure projects that would have benefited areas with more significant infrastructure gaps. The World Economic Forum goes further in believing that due to the COVID-19 crisis, China will reduce its interest in development activities, in favour of internal stabilisation.

On the OECD side, the world has yet to see whether previously announced development projects will become operational, although the EU is showing signs it wants to renew its projects once budget issues are settled.  Ultimately, the COVID-19 crisis has revealed the extent to which a lack of infrastructure— in this case for health— can wreak havoc. If this is how the world weathers a pandemic, things do not bode well for larger global crises, and un-coordinated development action now will only make this worse.

While development is more needed than ever and requires the responsible commitment and engagement of all, development actors should be careful when brainstorming ways to cooperate with the Belt and Road Initiative. The appeal of the BRI for policy makers in developing countries stems from the speed and size of the resources mobilised, with little or no strings attached, and minimal quality-control constraints or environmental and social safeguards. However, the experience of OECD donors shows that efficiency and sustainable impact rests upon building development effectiveness, anchored in principles such as country ownership, alignment to development goals, harmonisation of donors, transparency and mutual accountability, and long-term commitment to results.  Senior Chinese leadership typically issues “atmospheric” guidelines that are interpreted by the multitude of institutions that fund, plan, and implement the BRI in competing ways. A 2018 study by the US Centre for Strategic and International Studies notes that while many BRI projects are driven by China’s political objectives, much of BRI’s activity is “scattered and opportunistic”, difficult to oversee and control especially in the implementation phase. This in turn leads to duplication and waste. As Professor Yuen Yuen Ang noted, “guidance from Beijing on where investment should be made and what rules they should follow is also conspicuously lacking”. As there are no specific criteria for what qualifies as a BRI project, officials and interest groups use this flexibility to their advantage to expand what kind of funding counts as BRI.

The nature of Chinese political regulation and diffusion of development responsibility have already confused past OECD-country responses to BRI. For instance, many of the OECD countries who became founding members of the Chinese-founded Asian International Investment Bank (AIIB), joined with the understanding that the AIIB would play a major role in Chinese development and that it was their chance to introduce stronger standards. However, while AIIB-linked projects may do their utmost to satisfy SDG needs, by 2018 the AIIB’s loans to BRI amounted to $1,03 billion concentrated in only five projects (and even in those, it’s stake amounted to only 12%). Most other Chinese projects do not follow the same regulatory standards.

CIDCA, which DAC Secretariat staff visited in 2019, still does not have the kind of authority that was advertised when it was created in 2018. It was created to consolidate roles traditionally shared by the Ministry of Commerce (MOFCOM) and Ministry of Foreign Affairs (MOFA), particularly in strategic planning and coordination of development and the BRI. However, MOFCOM and MOFA still oversee significant portions of development politics. Here, DAC members could leverage their counsel and guidance to CIDCA just as they offered the AIIB. Past attempts by Chinese agencies like MOFCOM or the MOFA to issue concrete development guidance and regulation have rarely stemmed the kind of malpractice they were designed to combat. In light of this, outside help to the new planning agency may in fact be welcomed by CIDCA officials. There were signs in 2019 that Chinese development actors were interested in the DAC’s reporting and statistical approach to boost the credibility of Chinese aid. That would already be a good basis for a rapprochement on sustainable development between major aid donors.

The problem is that China appears to be in a new political phase and the combination of protests at home, global trade-tensions and the COVID-19 pandemic have only cemented this new, more assertive attitude abroad. Against this background, some OECD member states are increasingly second-guessing their business-as-usual models with China. However, given the scale of global problems and development gaps that still exist worldwide, development actors should be cooperating in good faith and exchanging best practices. Ideally, OECD countries and China would strive to better coordinate their ambitious connectivity schemes and help each other achieve high standards for development project quality. That would first require the actors at hand to demonstrate greater transparency and commitment to the global sustainable development partnership.

DAC countries, bound by like-mindedness and committed to sustainable development, cannot avoid engaging with China. Technical discussions on reporting and evaluation are good, but a broader discussion on perspectives on development co-operation is needed to expand mutual understanding and common ground. Where to start? There’s no need to look too far away. As Mary Robinson’s report A New DAC in a Changing World suggested “the DAC should work closely with the Development Centre to take advantage of the broader membership of Southern countries, to enhance experience sharing”.

The views expressed in this article are the authors’ own and do not necessarily reflect Development Matters editorial stance or the views of the OECD or the DAC.