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Analysis: U.S., Japan, Australia launch a new program to check China’s “Belt and Road”

  • November 17, 2019
  • , Nikkei , p. 5
  • JMH Translation

By Hiroyuki Nishimura, news editor

 

The United States, Japan and Australia have recently launched a new infrastructure certification program to check China’s “Belt and Road Initiative” (BRI). It is designed to size up the content of infrastructure projects mainly in the Indo-Pacific region and to endorse them if they are not found problematic. The objective is to prevent China from ramping up its influence via a “debt trap” approach, through which the country snatches infrastructure interests if aid recipient nations fail to repay excessive debts. If projects are endorsed, aid recipient nations will be able to procure funds from sources besides China, and project costs are expected to become more reasonable.  

 

The idea of the “Blue Dot Network” (BDN), which U.S. National Security Adviser Robert O’Brien calls a “Michelin Guide of infrastructure,” was presented to a public-private forum that took place on the sidelines of the annual ASEAN summit held in Bangkok in early November. Details will be filled after a steering committee is set up. The BDN will examine developing nations’ infrastructure plans based on its standards and will endorse them if they meet requirements.

 

Items that the BDN will examine include the transparency of infrastructure plans as well as consideration for the environment and labor. The program is expected to cover a swathe of emerging nations in South Asia, Central Asia and Africa.

 

The endorsement of projects will make it easy for aid organizations to extend financing. On the other hand, if projects are not endorsed, the procurement of funds will become costly as interest on loans will rise. This may make it difficult to carry out projects as a result. In the long run the BDN is expected to weed out problematic projects led by China.

 

The BDN appears to be a joint initiative by the U.S. Overseas Private Investment Corp. (OPIC), the Japan Bank for International Cooperation (JBIC) and Australia’s Department of Foreign Affairs and Trade, but it was spearheaded by the U.S. The idea was put together in a hasty fashion, according to people involved in the initiative, as the representatives of the three nations gathered in Washington for discussions only two weeks before the programs’s announcement. Some people say the U.S., Japan and Australia announced the BDN launch hastily to ensure President Trump’s absence from the ASEAN meetings would not create the impression that the U.S. is “making light of Asia.”

 

Thus far China has  invested over 90 billion dollars in countries that are financed by the BRI for the five years through 2018. Some people hail the BRI for helping build infrastructure in undeveloped regions, but China’s aggressive approach to broaden its “sphere of influence” is sparking criticism.

 

If the BDN becomes popular, China will be pressed to join. Will it ignore this initiative and face criticism?  Or will it review the BRI? China is wary of BDN. The Global Times, an outlet linked to the People’s Daily, said [the BDN] “should never be used as a shackle to hamper China’s cooperation with other regional members.”

 

China’s wariness is a response to the joint effort of U.S., Japan and Australia to regain lost ground in infrastructure diplomacy. To provide strategic aid, the U.S. will consolidate concerned organizations into the U.S. International Development Finance Corp. (IDFC) within the year.

 

In July, Australia established the Australian Infrastructure Financing Facility for the Pacific (AIFFP) in response to China’s growing influence in Pacific island nations. Japan is also stepping up the use of private financing to provide “quality infrastructure.” The BDN is aligned with these moves.

 

The BDN is also linked with the “free and open Indo-Pacific” vision, which is jointly pursued by Japan and the U.S. “The mechanism is aimed at giving form to the Indo-Pacific vision, which lacks an economic dimension,” said University of Tokyo Professor Masahiro Kawai, former dean of the Asian Development Bank Institute (ADBI). He also credits the BDN as “the first step to establish global standards to promote quality infrastructure projects.”

 

But it remains unknown how much the BDN can pinpoint problematic projects. The BDN will set up a secretariat but this office will only be able to examine a limited number of projects.

 

How to deal with China is another concern. Japan is taking the stance of cooperating with China in infrastructure projects on a case-by-case basis. “We aim to make the BDN a mechanism that includes Chinese aid organizations,” said a senior JBIC official. But if the U.S. Trump administration makes an overt move to turn the BDN into a mechanism to confront China, differences may emerge with the U.S. (Abridged)

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