Chatham House Podcast - China and the Future of the International Order

This blog post is based on Dr Mimi Zou's recent contribution to a Chatham House podcast on China and the Future of the International Order - The Belt and Road Initiative. The Asia Society Policy Insitute (ASPI) recently appointed Dr Zou as one of 12 distinguished international experts on its Belt and Road Initiative (BRI) Taskforce. Headed by former Prime Minister of Australia Kevin Rudd, ASPI is the policy arm of the Asia Society and ranked among the world's top think-tanks. The Taskforce will develop recommendations and advocate for best practices in BRI projects that will be presented to the 2nd Belt and Road Forum in Beijing in 2019.


Time to read

4 Minutes
The Belt and Road Initiative (BRI) has attracted much fanfare, scepticism, and concern since its launch in 2013. The BRI generally focuses on infrastructure, energy, and transportation projects from Asia to Europe along an overland ‘Silk Road Economic Belt’ and a ‘21st Century Maritime Silk Road’, with an estimated USD 1 trillion of Chinese investments committed and over 70 countries signed up so far. The concept of the BRI, as well as the direction of its strategy or agenda and its implementation, is rather malleable, fluid, and ever-evolving. Such flexibility is reflected in expanding patchwork quilt of ‘BRI projects’ that have proliferated across diverse sectors and other parts of the world including Africa and the Americas. The BRI's temporal scope is as nebulous as its functional and geographical scale. Even infrastructure projects before 2013 have been rebranded as a 'BRI project'.
The BRI is fraught with considerable obstacles and risks, notwithstanding the opportunities and benefits that infrastructure development can bring to many host countries under the BRI. There are growing concerns over the impact of poorly conceived or executed projects on host countries concerning issues such as the local environment, workforce, fiscal health, and political stability. These concerns have been especially acute with BRI projects and investments in ‘weak governance zones’, a term used by the OECD to describe host countries ‘where governments are unwilling or unable to assume their responsibilities’. 
At the same time, some are wary of China’s ambitions to expand its regional and global influence through the BRI, including a more prominent role in shaping the rules of the game in international economic, political, and legal structures and institutions. In the Fourth Plenary Session of its 18th Central Committee, the Chinese Communist Party clearly stated its desire for China to ‘vigorously participate in the formulation of international norms’ and ‘strengthen our country’s discourse power and influence in international legal affairs’. How Chinese firms are engaging with, defining, and implementing international norms under the BRI, have important implications for many areas such as transparency and governance, debt sustainability, labour, and environmental standards in host countries and globally.
In a recent podcast for Chatham House, I examined some of the key regulatory and normative challenges concerning labour practices and standards adopted by Chinese firms under the BRI, based on my ongoing research in this area.
  1. The internationalisation of Chinese firms investing and operating abroad has been a recent phenomenon (compared to Western multinationals). The Chinese government adopted a ‘Going Out’ policy in the late 1990s to promote outbound foreign investments. Since then, Chinese firms have encountered a variety of labour problems and disputes in their overseas operations, which have attracted global media attention. More controversial aspects have included the large-scale dispatch of Chinese workers for construction and infrastructure projects as well as significant violations of local laws or management practices that have led to (sometimes violent) disputes with trade unions and workers in the host country. 
  2. As the conduct of Chinese companies becomes subject to greater international scrutiny, Beijing has introduced a flurry of policies and guidelines in recent years that are directed at Chinese firms to act as ‘good corporate citizens’ abroad. The Chinese party-state has sought to exert influence on the operating environments of Chinese firms abroad, particularly in sectors where many of these firms are state-owned or state-connected. For example, the Ministry of Commerce and the Chamber of Commerce of Metals, Minerals and Chemicals Imports and Exports issued guidelines directing Chinese firms in outbound mining operations to strictly ‘observe the United Nations Guiding Principles on Business and Human Rights during the entire life-cycle of the mining project’. However, it is difficult to measure the actual effects of these measures and other pressures from the Chinese government or host countries on Chinese firms to take the ‘high road’ instead of a ‘race to the bottom’. Furthermore, in many BRI countries, legal and institutional frameworks may be quite weak to start with (both on paper and in practice). Host countries’ dependence on foreign investments may undermine regulatory attempts to enforce and improve labour standards.
  3. Labour, social, environmental, transparency and other standards under Chinese-invested BRI projects can have flow-on effects on domestic approaches to corporate social responsibility (CSR) or business and human rights (BHR). CSR and BHR issues (especially in relation to the BRI) have become more widely discussed in China. There is a growing emphasis on CSR/BHR education and training. Some universities have launched courses for students as well as professionals and managers of Chinese companies that operate overseas. However, it has been observed that there is possible tension between on the one hand Chinese firms operating abroad that are increasingly aware of the need to comply with international standards and legal obligations in host countries, and on the other hand, domestic firms in China that seldom engage with CSR or BHR discourse.
Further empirical research can shed crucial insights on whether Chinese firms will become ‘standard-makers’ in the context of BRI, the type of standards that will emerge, and the implications for existing international norms and standards in labour and other areas. Given the pliability of the BRI, there is an opportunity for stakeholders to advocate for taking the high road to labour and other standards. I am excited to be part of the Asia Society Policy Institute’s newly established BRI Task Force, which comprises international experts from government, business, finance, civil society, and academia. In the coming months, we will be evaluating case studies of BRI projects with the aim of extrapolating best practices and standards and developing recommendations with policymakers and stakeholders in China and BRI host countries. The plan is to present our recommendations at the 2nd Belt and Road Forum in Beijing in 2019. This will be a significant opportunity to engage with Chinese leadership on infrastructure and development practices, which would enable the BRI to mitigate a variety of challenges and risks and foster more sustainable and equitable development outcomes.

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Belt and road