China: Why we shouldn't get so close

: China's Ambassador Wang Lutong
 

 Jim Rolfe

Jim Rolfe

Part Two of Jim Rolfe’s analysis of China’s Belt and Road Initiative. (Rolfe is a senior fellow at Victoria University's Centre for Strategic Studies)

The Belt and Road Initiative (BRI) is an ambitious Chinese initiated and led attempt to connect Asia with Europe through the development of the infrastructure supporting seven land and maritime ‘economic corridors’.

This is the ancient silk road remade.

Policy coordination, financial integration, people-to-people bonds, unimpeded trade, and facilities connectivity across a range of sectors are also a part of the BRI rhetoric.

Latin American and African countries have joined the more than 70 countries (few of them from the developed word) associated with the initiatives.

New Zealand, through the signing of a Memorandum of Arrangement with China, is associated to the extent that it has to develop a plan of action (as does China) to bring the in-principle agreement to participate into practice.

 The plan of action is required by September 2018.

The BRI has had little public analysis, critical or otherwise, within New Zealand. This is surprising because the initiatives, if taken to their logical conclusion, will see an interdependent political, economic and social system different in kind to the forms of international relationship New Zealand currently enjoys.

Such an outcome, it should be noted, is not inevitable.

 BRI could be limited to a series of projects designed to enhance already existing supply chains in their physical manifestations and in the supporting processes that enhance the movement of goods, services and people along those supply chains.

This could be achieved without any of the wider political and social relationships that seem to be envisaged.

The potential benefits to New Zealand of BRI have been noted elsewhere in Politik.

There are many reasons why wholehearted participation in BRI should be avoided by New Zealand.

They may be grouped under three heads: ‘relevance’; ‘competition with existing relationships’; and what might be called ‘the China factor’, which involves a range of separate but inter-related factors. (Those undeveloped countries directly within the path of the economic corridors face different and probably more worrying risks, and individual businesses involved in BRI face their own risks).

On the face of it BRI has limited, if any, relevance to New Zealand.

The main effort is between Asia and Europe; the land routes are too far north for New Zealand to be able to take advantage and New Zealand already as adequate sea routes to Europe.

For New Zealand to commit to BRI would probably be to commit to a venture that produces little tangible return.The country would be putting its effort, with the consequent opportunity costs, into an area that is not central to New Zealand’s economy, or indeed to New Zealand’s society and only to a limited extent important to New Zealand’s international relations.If individual businesses want to bid for work that, of course, is an issue for their own analysis of costs and benefits.

Compounding the lack of relevance to New Zealand’s international relations is the fact that Belt and Road is, or could become, an integrated political, economic and social system based on values not generally held by New Zealand.

New Zealand is already a member of the western group of liberal democracies through a wide range of international organisations and relationships.

To become too close to the BRI could be, at best to cause confusion as to New Zealand’s commitment to western values. At worst, in the case of conflict (not necessarily or even likely armed conflict, but also economic or political), BRI could force New Zealand into the kinds of choices it has worked hard over the last decades to avoid having to make.

The reasons for a possible conflict sparked by the Belt and Road system are all related to perceptions about China, Chinese values within the international system and domestically, and China’s regional ambitions.

 If the Belt and Road system were to develop in the way it could, China would be at the centre of an integrated economic, financial, trading, social and thus political system, in which the individual components were linked.

China’s control of BRI funding and its control of much of the infrastructure would put it into a very powerful position, able to achieve its political and economic ends in ways that cannot yet be seen. This would be the return of the Middle Kingdom with China as the active regional hegemon..

China follows a quite different value set to that held by New Zealand in terms of dealing with its own citizens and to its dealings in the international system.

There are fears that China does not hold to the rules based international order, or at least to a set of rules recognised by western liberal democracies; its activities in the South China Sea and its state-led economic system are given as proof of this.

Greater Chinese participation in New Zealand’s economic, social and political activity give greater opportunities for China to subvert our processes to its own ends.

Fear of this has been a commonplace of recent media commentary about China and its activities in both Australia and New Zealand.

China’s citizens are subject to the will of the government, itself subject to the will of the Chinese Communist Party, in a way completely foreign to New Zealand. The danger is that if New Zealand becomes too close to the BRI system, New Zealand will be tarred with the same illiberal brush.

Compounding this is the lack of transparency around policy ends and processes within China. Without transparency New Zealand cannot be sure what it is signing up to (although China asserts strongly that transparency is and will remain a key part of BRI).

New Zealand can be sure, however, that the ultimate political ends are intended to benefit China rather than New Zealand.

There is a history of lack of quality control in Chinese led development projects. At best, this leads to poor work that has to be rectified at a cost, at worst, corruption can be rife.

Often projects are better described as symbols rather than as solutions to real needs. In the case of disputes, the Chinese legal system is designed to privilege Chinese concerns and Chinese partners are likely to profit at the expense of New Zealand.

All the issues within the China factor lead to significant risks for New Zealand.

 The risks are political, in terms of our relationships with the traditional friends and allies that hold our values, economic in that disputes are likely to be settled in favour of Chinese interests, and reputational.

These risks can be mitigated of course, without rejecting BRI in its entirety. Currently New Zealand is one of the few western states involved in BRI.

f New Zealand could persuade Western Europe (or Australia, or Japan) to be associated formally with BRI, there would be more voices within the system that sound like New Zealand’s. New Zealand as a state-entity could restrict itself to setting the ground work to allow New Zealand commercial interests to operate within the Belt and Road system.

Some risks would thus transferred to the market, where they should be.

 New Zealand could also ensure that any agreements allow for full decision transparency and for any disputes to be settled by independent arbitration rather than a Chinese led system as currently proposed by China.

No matter what mitigation strategies are undertaken, there are risks.

These are unavoidable.

The question for New Zealand is whether the potential benefits outweigh the costs associated with the risks.

That will require careful and nuanced analysis, which no doubt is occurring within the government, and public support, which is not yet engaged with the issue.

 

 

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