Xi Jinping arrived in Italy today to sign a memorandum of understanding for the Belt and Road Initiative (BRI), a development that has already drawn criticism from the U.S.
The big picture: Washington’s frustration is understandable, but it plays right into Beijing’s hand. Publicly criticizing Italy’s decision gives unwarranted weight to vague documents that, like the BRI itself, overpromise and underdeliver.
If anything, these memorandums of understanding (MOUs) highlight some of the BRI’s biggest flaws:
Between the lines: Rather than inflate the importance of these documents, U.S. officials should continue to focus on the BRI’s specific failings. There are plenty to highlight — lack of transparency, contributions to corruption, unsustainable debt, environmental damage, bias toward Chinese firms — and many countries that have signed BRI cooperation documents have found the experience disappointing, even painful.
The bottom line: Ultimately, nothing speaks louder than better alternatives. Consider the difference between a BRI MOU and a high-standard regional trade deal. The former is weak, vague and bilateral. The latter is legally binding, specific, multilateral — and conspicuously absent from the U.S. economic playbook.
Jonathan Hillman is director of the Reconnecting Asia Project at the Center for Strategic and International Studies.
Italy is preparing to endorse China’s Belt and Road Initiative (BRI), according to the Financial Times, potentially handing Xi Jinping a major victory at a time when his signature foreign policy vision is under attack.
Why it matters: Italy is an unusual candidate for China’s BRI, economically and politically, since its membership in the EU means that it already has access to competitive financing for infrastructure projects without the strings and risks that come with borrowing from Beijing. As a member of the G7, Italy would be the largest economy yet to endorse the BRI.
Background: Most of the countries that have signed on to the BRI are smaller and have fewer options for funding their infrastructure needs, and Beijing is desperate for Rome’s endorsement so that Chinese officials can claim support in the West. But the EU’s three largest economies — Germany, the U.K. and France — have all resisted pressure to sign on.
Between the lines: While Italy’s decision sends an important political signal, the announcement itself is unlikely to change much on the ground: On paper, endorsements of China’s BRI are vague and do not carry real commitments for either side. That’s why, as the list of participants has grown, “membership” in the BRI has become almost meaningless.
What's next: Italy’s announcement could come at an opportune moment for Xi, who plans to visit Rome later this month and will host an international BRI forum in Beijing next month. But the political win might also come with longer-term costs, encouraging greater scrutiny of Chinese investments within the EU and a stronger response from the United States.
Jonathan Hillman is director of the Reconnecting Asia Project at the Center for Strategic and International Studies.
China and Malaysia are close to reviving a $20 billion railway deal, just a year after Malaysia’s new prime minister, Mahathir Mohamad, suggested the project might be scrapped.
Why it matters: The railway deal is just the latest example of how Belt and Road Initiative projects rarely die. As for leaders in Sri Lanka, Pakistan and elsewhere, Mahathir’s criticism of the BRI was not a rejection of it, but a bargaining strategy.
Background: There’s room in the deal for negotiation.
Yes, but: Counterintuitively, one of the smartest things China could do to change the narrative around the BRI is cancel more projects, getting rid of bad deals that have accumulated and raising the bar on the BRI.
The problem is that megaprojects are always hard to kill. After starting, they have strong constituencies to defend them, and few rewards for those who try to cancel them. Sunk costs can be a powerful, and dangerously misleading, justification for spending even more. It’s why management experts call megaprojects “Vietnams” — easy to begin and difficult and expensive to stop.
Chinese projects are even harder to kill because the Belt and Road is Xi Jinping’s signature foreign policy initiative. Large projects like Malaysia’s railway take on symbolic importance, and cancellation comes with a higher reputational cost.
What to watch: The political incentives on both sides encourage salvaging deals and saving face, creating the conditions for bigger failures later on. Keeping too many Belt and Road projects from the grave could come back to haunt China and its partners.
Jonathan Hillman is director of the Reconnecting Asia Project at the Center for Strategic and International Studies.
