Xi positions China at center of a new economic order

By Jane Perlez and Keith Bradsher  /  NY Times News Service, BEIJING

Thu, May 18, 2017 - Page 9

Chinese President Xi Jinping (習近平) on Sunday delivered a sweeping vision of a new economic global order, positioning China as an alternative to an inward-looking US under US President Donald Trump.

Xi, surrounded by autocratic leaders from Russia and Central Asia at a forum in Beijing, pledged more than US$100 billion for development banks in China that he said would spearhead vast spending on infrastructure across Asia, Europe and Africa. Noticeably absent from the gathering were leaders of major Western democracies.

Sparing no modesty for the plan, Xi called the initiative, known as “One Belt, One Road,” “this project of the century.”

The program, based on Chinese-led investment in bridges, railways, ports and energy in more than 60 countries, form the backbone of China’s economic and geopolitical agenda.

In a new twist for China, which has generally been skeptical of social programs by the World Bank, Xi said the initiative would tackle poverty in recipient countries.

He promised to deliver emergency food aid and said China would begin “100 poverty projects,” though he stopped short of providing details.

He portrayed the plan as “economic globalization that is open, inclusive, balanced and beneficial to all.”

China would invite the World Bank and other international institutions to join it in meeting the needs of developing — and developed — countries, he said, in a suggestion that he is seeking to forge new markets and export China’s model of state-led expansion.

Xi stressed the differences between the US system of alliances and his notion of commerce under China.

“We have no intention to form a small group that would dismantle stability, but we hope to create a big family of harmonious coexistence,” he said, with Russian President Vladimir Putin in the front row of the convention center where he spoke.

So far, China has spent only US$50 billion on the initiative that Xi announced four years ago, a relatively small amount compared with the vast domestic investment program.

However, Xi told the audience — made up of more than two dozen national leaders, envoys from more than 100 countries and officials from various financial institutions and businesses — that he was increasing the amounts available to China’s main policy banks.

The China Development Bank and the US Export–Import Bank would dispense loans of US$55 billion between them, and the Silk Road Fund would receive an additional US$14 billion, he said.

About US$50 billion more would be directed at encouraging financial institutions to expand their overseas yuan fund businesses.

The Chinese government has been planning the forum for months, introducing an extensive propaganda campaign on the initiative in state news media and squelching alternative views from skeptical academics and state company executives worried about burning money.

China, seeking validation for the project, pressed Western countries and US allies to dispatch their leaders, but most declined, sending lower level officials instead.

Among the attendees were British Chancellor of the Exchequer Philip Hammond and White House National Security Council Senior Director for Asia Matthew Pottinger.

In remarks to the forum, Pottinger urged China to insist on transparency in government procurement as projects began.

“Transparency will ensure that privately owned companies can bid in a fair process and that the cost of participating in tenders will be worth the investment,” he said.

US firms were eager to work on the projects, he said.

Indian Prime Minister Narendra Modi did not turn up, concerned about the significant infusion of Chinese money into its rival Pakistan.

Pakistani Prime Minister Nawaz Sharif, whose country has been a longtime ally of China, said he was proud to stand “shoulder to shoulder” with Beijing.

The Indian government said in a statement on the eve of the forum that the initiative risked “unsustainable debt burden for countries,” a worry expressed by some Western economists who have studied the program.

China is not giving aid, they say, but is asking countries to assume debt from Chinese banks to pay for the infrastructure.

Some officials from the US and Western Europe contend that China is spending abroad and corralling others to join it while keeping important sectors of its huge market at home off limits to foreign investors.

“The opening up of China for foreign businesses is still timid,” said Joerg Wuttke, the former head of the European Chamber of Commerce in China.

Hours before Xi was to speak, North Korea fired an intermediate-range ballistic missile.

Some delegates interpreted the test launch, the first since a new president took office in South Korea, as a deliberate effort to embarrass Xi.

Chinese news media were ordered to take down coverage of the launch an hour before Xi’s speech, Chinese reporters said.

Then, 30 minutes before Xi was to speak, the delegations from North Korea and South Korea met briefly, said a South Korean diplomat who spoke only on the condition of anonymity.

It was fairly normal procedure, the diplomat said, for those delegations to meet at international gatherings.

Still, the encounter seemed to symbolize China’s interest in arranging talks on the North among all the parties, including the US.

The South’s Yonhap news agency reported that Park Byeong-seok, a senior member of the South Korean Democratic Party, told the North’s delegation that his government “strongly objected” to the missile test.

The presence of the North Korean delegation, led by North Korean Minister of Economic Relations Kim Yong-jae at a highly choreographed event drew criticism from the US embassy in Beijing.

The Trump administration has asked China to exercise pressure on the North, but it is unclear what China has done to further cut its economic ties.

At Xi’s invitation, South Korean President Moon Jae-in sent Park to the forum, a spokesman for the South Korean leader said.

The two leaders shared a telephone conversation on Thursday last week, days after Moon was elected, setting the stage for tense relations between the countries to improve.

Park met former Chinese minister of foreign affairs Tang Jiaxuan (唐家璇) in Beijing on Monday, South Korea said.

Those talks were expected to center on China’s strong opposition to the deployment of a US Terminal High Altitude Area Defense system in the South, and how Moon plans to walk a fine line between the US, its security guarantor, and China, its biggest trading partner.

The Chinese Ministry of Foreign Affairs criticized the North’s missile launch, saying in a statement that it violated UN Security Council resolutions and asking for restraint.