New rules for investments under Belt and Road Initiative

BEIJING • China is drafting rules for overseas investments to be considered part of the Belt and Road Initiative (BRI), according to sources familiar with the matter, marking the first attempt to better define President Xi Jinping's signature policy.

The plan, which is not yet final, aims to stop companies from misusing the label "Belt and Road Initiative", said the sources.

They added that unchecked use of the name on projects has created confusion about the initiative's scope and damaged its reputation abroad.

One of the sources said the National Development and Reform Commission, or NDRC, is working on a list of legitimate BRI projects officially acknowledged by the Chinese government.

It would include both state-owned enterprises and private companies, helping authorities improve regulation of projects, the source said.

China is working to counter growing criticism of President Xi's signature programme as concerns grow that increased debt would leave governments vulnerable to Beijing's broader strategic goals.

In November last year, United States Vice-President Mike Pence warned Asia-Pacific countries against taking China's money.

The US said on Tuesday it will not send high-level officials to attend the Belt and Road Forum in Beijing later this month, citing concerns about financing practices for the initiative.

More than 40 world leaders will attend the summit, the second one to be held. The first summit in 2017 was attended by Mr Matt Pottinger, senior White House official for Asia. The US has no such plans this year.

Another source said Washington was considering sending a lower-level staff member from the US embassy to observe and take notes on the conference but not participate, though a final decision has not yet been made.

Governments around Asia are reassessing Chinese investments. Malaysia is in talks with China on a reduced price tag for a US$20 billion (S$27 billion) rail project it scrapped after Prime Minister Mahathir Mohamad took power.

Meanwhile, Myanmar has scaled back a port deal struck under its previous military regime, while heavily indebted Maldives booted out a pro-China administration last year.

Mr Xi has even seen recent successes tainted by scepticism.

A memorandum of understanding signed last month with Italy - the first Group of Seven nation to join the programme - led Deputy Premier Matteo Salvini to caution that it risked "colonising Italy".

Mr Xi unveiled the initiative in 2013 to rebuild ancient trading routes across Eurasia, and China's government has since poured billions into his plan from Africa to the South Pacific.

But uncertainty remains about what projects are considered part of the Belt and Road Initiative, turning it into a catch-all for everything Chinese investors do overseas.

"The BRI is better understood as a mission statement rather than a policy document, since it lacks a list of member countries and a precise definition of what a BRI project is," said a 2017 report from law firm Baker McKenzie.

China has sought to emphasise diversified participation. It has offered billions in debt relief to African countries in a bid to counter criticism that the programme's focus is on spreading Mr Xi's influence.

"Belt and Road is an initiative for economic cooperation - instead of a geopolitical alliance or military league - and it is an open and inclusive process rather than an exclusive bloc or 'China club'", Mr Xi told a symposium marking the programme's fifth anniversary in August last year.

BLOOMBERG, REUTERS

A version of this article appeared in the print edition of The Straits Times on April 04, 2019, with the headline 'New rules for investments under Belt and Road Initiative'. Print Edition | Subscribe