At the second Belt and Road Forum, held in Beijing on April 25-27, Chinese President Xi Jinping indicated the need to take into account the debt sustainability of the countries it partners with on infrastructure projects. If China's push to build a massive, continent-spanning economic zone is to yield true benefits for all involved, Beijing must shift its policy course and embrace internationally accepted norms.
Critics are increasingly taking Beijing to task for setting "debt traps" in Belt and Road partner nations -- that is, extending loans for construction projects then confiscating key infrastructure if the country is unable to repay the debt. A case in point is Sri Lanka, which has handed over its port of Hambantota to China for 99 years in exchange for debt forgiveness.
In November last year, U.S. Vice President Mike Pence warned potential Belt and Road partners, "Do not accept foreign debt that could compromise your sovereignty." Tellingly, Washington did not send a high-level delegation to this year's forum. The new Cold War developing between the U.S. and China extends from the economic front to national security, and a country's stance toward the Belt and Road Initiative is now being used as a test of its allegiance to Beijing or Washington. The BRI is already a source of political conflict in some countries. This is a dangerous situation.
Also worrying is Beijing's apparent eagerness to export the Chinese model of growth underpinned by authoritarianism. Although it is a socialist country ruled by a single party, China has grown into the world's second-largest economy by partially adopting market economics. Likewise, the economic zone being forged under Beijing's leadership could take on many of the characteristic features of a Chinese-style system, where concepts such as liberty and democracy take a back seat to growth.
This problem is also at the root of the standoff between Washington and Beijing over alleged wrongdoing by Chinese telecoms equipment manufacturing giant Huawei Technologies. The possibility that Huawei was stealing trade secrets or posing a cybersecurity threat are not the sole causes of alarm in the U.S. Under the Chinese legal system, the government can order companies to provide information on national-security grounds. There are concerns that information amassed by Chinese companies operating in Belt and Road partner nations is subject to similar control by Chinese authorities.
In terms of economic clout, China is already on a par with the most advanced industrialized nations. As such, it has a duty to manage its Belt and Road projects transparently and in line with rules set by the Organization for Economic Cooperation and Development. By following this path, China can better ensure that its projects will truly benefit partner nations and yield high-quality infrastructure.
Japan, which is poised to cooperate on Belt and Road projects in third countries, should help China change its policy course by drawing on its own rich experience in overseas development assistance.