A kind of new "Wild West" is opening up for China in Central Asia and beyond as Beijing pursues its ambitious Belt and Road Initiative across Eurasia. Policing this vast project may require a "sheriff" in the shape of a new multilateral institution.
The BRI, officially launched in May by Chinese President Xi Jinping -- at a ceremony in Beijing attended by 1,000 senior officials and heads of state and government from 130 countries -- involves projects in 68 countries, according to information released in May. As yet, however, there is no central agency or authority to coordinate these projects.
Each of the countries along the BRI's land and sea corridors has its own laws, regulations and business practices. Linking them through a vast nexus of road, rail and maritime connections could become an administrative and logistical nightmare.
Big money is already flowing. Some 50 Chinese state-owned enterprises have already invested in 1,700 BRI projects, according to the Beijing authorities. Flagship schemes include a $46 billion China-Pakistan transport corridor, a planned 3,000km high-speed railway connecting China and Singapore, and gas pipelines across central Asia. Turkey, Georgia and Azerbaijan this week inaugurated a new railway from the Caspian Sea to Istanbul costing an estimated $1 billion and aiming at providing the quickest train link between China and Europe.
In the four years since Xi revealed the BRI concept China has pursued it through a network of bilateral agreements at government level. But only Beijing has an overview of the entire initiative. Furthermore, it is becoming clear that some elements of the BRI involve trilateral or even quadrilateral relationships that can raise troublesome issues.
This has been illustrated vividly by the Indian government's strong objection to one of the BRI's half dozen "economic corridor" projects -- the China-Pakistan Economic Corridor -- which passes through territory disputed between India and Pakistan.
Washington has backed New Delhi. The BRI, said U.S. Defense Secretary Jim Mattis, "seeks to secure China's control over continental and maritime interests, in the eventual hope of dominating Eurasia and exploiting natural resources there." Even in less tense parts of the region, Beijing's bilateral agreements can have disturbing implications for neighboring countries.
So far, this issue has received very little attention. But it is gradually becoming clear that Beijing's ambitious scheme may have to be adapted to give other countries involved some say in overall planning and implementation. The obvious answer is to develop a multilateral coordinating organization that would give all the BRI countries a voice, allowing them to exercise collective authority.
"Multilateralizing [the BRI] process will be important," said Masahiro Kawai, a former senior Japanese finance ministry and Asian Development Bank official, as will "setting international standards with regard to matters like environmental and social sustainability and trade and investment and procurement rules."
There are some indications that Beijing is not deaf to these issues. Yuqing Xing, an internationally acknowledged authority on the BRI who is currently a professor of economics at Tokyo's Graduate Research Institute of Policy Studies, said China recognizes that the BRI may need to become more institutionalized and multilateral.
If China's partners feel it necessary for the BRI to be the subject of multilateral negotiations, then a coordinating institution could be established, said Xing, who has given presentations on the BRI at overseas institutions such as the Asian Development Bank Institute, and is regarded as having some insight into official thinking in Beijing.
Xing noted that "China has various multilateral dialogue platforms, but so far this kind of institution is missing," adding that the BRI forum held in May "could develop into an institutional framework." This would transform the BRI, which is currently under the supervision of three Chinese government departments -- the Ministry of Finance, the Ministry of Commerce and the National Development and Reform Commission.
Smoothing the path
Alternatively, said Xing, the Beijing-based Asian Infrastructure Investment Bank could play a role. "Development banks such as the AIIB often serve as a platform for multilateral negotiations" of the kind that might be required to smooth the path for BRI projects, he said.
In the early days of BRI planning it was widely assumed outside China that the AIIB would be a source of finance for the BRI, also known as the One Belt One Road project, and play a role in coordinating its development.
However, AIIB President Jin Liqun made clear in an interview that while projects aimed at improving regional connectivity would be given "high priority," the bank and the BRI must be viewed as separate entities. "OBOR certainly is related to the AIIB, but they are not the same thing," Jin said. "The AIIB is not created exclusively to finance OBOR projects."
Some see the AIIB's attempts to distance itself from the BRI as tactical, arguing that the bank's AAA credit rating from international agencies depends on its apparent independence from the BRI. However, Xi's plans for the AIIB and the BRI can also be seen as inextricably linked instruments of a new form of Chinese economic imperialism. The BRI may "allow China to expand its geopolitical and perhaps military sphere [of] influence," said Kawai.
Such fears may explain the AIIB's desire to avoid association with China's geopolitical strategies. Yet many of the 80 members countries of the AIIB in Asia and Europe joined the institution in the belief that it would give them access to the BRI's portfolio of project contracts.
To allay fears of Chinese dominance, Beijing has limited its voting strength in the AIIB to 26% -- sufficient to wield an effective veto, while not enough to confer overpowering authority. But this leaves open the question of who will dictate the strategies of the BRI if the AIIB maintains its arm's length policy.
Nor does it address the concerns of nations directly impacted by BRI projects. India did not attend the BRI launch even though it is the third largest shareholder in the AIIB.
If the BRI does not come under the AIIB's control, China could consider turning the BRI into a multilateral institution in itself. Some of its finance could then come from the AIIB, using funds raised from China and other AIIB members via AIIB bond issues. China and other BRI countries could contribute project finance on a bilateral basis, as some already have done.There are other reasons beyond the frictions surrounding specific projects why China may need to find new ways of pursuing the BRI. It could help, for example, to defuse anti-Chinese sentiment in some countries. The best approach might be if China presented the BRI as a package to be financed wherever possible by the AIIB supplemented by co-financing from bilateral official and private corporate sources.
There are also commercial risks in pursuing large numbers of projects simultaneously. As Xing put it, many Chinese companies have already "lost tons of money" in overseas ventures. They too need a sheriff.
Anthony Rowley is a Tokyo-based journalist who has been covering the Japanese economy and politics since 1993. He is a former business editor and international finance editor of the Far Eastern Economic Review, and a former Tokyo correspondent of the Singapore Business Times.