Observers have been trying to work out what China’s Belt and Road initiative means ever since Chinese President Xi Jinping first announced it in 2013. Is it a massive geo-political play, explicitly underlining the end of the American century by replacing it with a China at the centre of old trade routes along the Silk Road and new ones through Asia, the Indian and Pacific Oceans and to Africa and Latin America?
Or is it simply a way for China to export its capital and businesses overseas, building new train stations, railroads and ports around the globe, as its economy slows from double digit growth to single digit? Then again, maybe it is just a way to rejuvenate western China, left behind by the massive development of its east Coast cities? Or was it simply a new trade initiative to stop China being squeezed out of the then encircling Trans-Pacific Partnership.
And, if it was difficult to understand what it meant for China it was even more brain-wearying to try to ascertain what it meant for New Zealand, distant from China but still enjoying the fruits of trade and kudos within Beijing for signing the Free Trade Agreement in 2008, the first by China with a developed country.
The disconnect was on display last year when a group of leading New Zealand economists met their counterparts in China in a tour organised by the Asia New Zealand Foundation. What does Belt and Road mean, asked one economist somewhat plaintively as a meeting wound on. “It’s like a Chinese painting,” said the Chinese economist, gesturing at paintings on the wall. “Western paintings are filled up with brush strokes and detail. Chinese paintings have splashes of strokes, but plenty of empty canvas.”
On Tuesday a report by the New Zealand China Council tried to fill in some of the empty canvas for businesses. It is the first concerted effort to offer ideas since New Zealand and China signed a Memorandum of Arrangement in March 2017 to explore ways to work together under Belt and Road.
The report is interesting first for what it doesn’t suggest. There is little discussion of infrastructure building in the New Zealand regions or Auckland transport; no Belt and Road light rail for Transport Minister Phil Twyford or an extended Northland port built in co-operation with China for Winston Peters or Shane Jones to consider. There was little discussion of the New Zealand equivalent of the gas pipelines, motorways, inland ports, train hubs and ports surrounded by economic zones under investigation, or construction, in central Asia, Guanxi, Thailand or Pakistan.
“The Belt and Road initiative is possibly best known for its massive infrastructure building. But actually it is only one of five main areas in the Belt and Road initiative,” New Zealand China Council executive director, Stephen Jacobi told business leaders at the launch today.
Where the report does put its focus is on “connectivity” in speeding up trade, in promoting New Zealand as a conduit between China and South America, in collaborations in the creative sector.
In a nutshell, the China Council argues the Chinese economy and the Belt and Road Initiative, now embedded in the Chinese Constitution at the same People’s Congress which granted Xi Jinping unlimited terms in office, will expand trade routes and trade flows and New Zealand is a good trader, born of years of sending goods offshore and bringing in what we need. Thus, we could benefit from being a partner in “trade facilitation”.
One example is to offer to apply New Zealand’s customs expertise to speed up customs clearance into China and across other Belt and Road economies. Another is to establish hubs within China or other Belt and Road signatories to speed up the transfer of goods which have been pre-cleared to enter the country. A hub in China could also speed up sending goods to Europe over China’s growing land routes. It was perhaps telling that one of the key speakers at the launch of the report at the PWC Towers on Auckland’s Quay St, overlooking the Ports of Auckland and the Waitemata, was Fonterra’s leader in trade strategy, Justine Arroll. Fonterra has set up a forward hub for goods, certified by the Ministry for Primary Industries, in Singapore to speed up access to markets in South-east Asia.
A third option floated was that of being a conduit to South America, especially building on existing flights to Chile and Argentina. While most airfreight from South America flows through Dallas -Fort Worth or Miami, in the US, New Zealand could ease the way for an alternative route from Shanghai to South America, using faster customs systems or a South America trade hub. It was also mentioned that New Zealand could pursue the option of being the landing point of a trans-Pacific data cable connecting China and Chile, an initiative Chile is pursuing.
“We are no longer at the end of the Belt and Road,” said Jacobi. “We are another bus stop along the way.”
There are risks. The Belt and Road initiative is determinedly bilateral with China at the centre of a web of agreements and trade routes. New Zealand, on the other hand, has generally preferred to be part of multilateral agreements; a small nation embedded in larger structures. There is a rumbling discussion in New Zealand about Chinese influence and how best to engage with a trading partner with different political values.
But, while raising the “skeptics and critics”, Jacobi also pointed out New Zealand is facing “greater competition for attention in China than ever before. The Belt and Road Initiative has been placed at the centre of China’s policy-making. If we want to expand our relationship, it has to matter to New Zealand as well.”
What is Belt and Road?
Newsroom’s Trade editor Sam Sachdeva has been a regular correspondent on China and New Zealand’s relationship through Belt and Road. Find out more here:
By the numbers:
2013: Xi Jinping first proposes a Belt and Road programme, tying together the old Silk Routes and new trade routes.
19: The 19th National Congress in October 2017 includes the Initiative as part of the Chinese Constitution as it adopts Xi Jinping thought.
US$2.5 trillion: Estimate of the worth of projects over the next 10 years
81: Countries, including New Zealand, have signed up to discuss ways to be part of it.
29 percent: Those countries cover more than 29 percent of global GDP
5: There are five priorities for Belt and Road – policy co-ordination, connect facilities, unimpeded trade, people-to-people bonds, financial integration
Find out more:
The New Zealand China Council has started a website for more information. Read the full report here.