China’s Two Sessions Meetings And The Belt & Road Developments

Global Political and Corporate Questions Arise From China’s Challenges To World Governance & Trade

Op/Ed By Chris Devonshire-Ellis with research by Dorcas Wong, Dezan Shira & Associates 

China’s top leaders convened for the annual Two Sessions meetings at the end of May, following months of delays due to the Covid-19 outbreak. The Two Sessions refer to the annual meetings of the Chinese People’s Political Consultative Conference (CPPCC) – an advisory body of over 2,000 members – and the National People’s Congress, China’s top legislative body. They are China’s most important annual political meetings, highlighted by the delivery of the Work Report by Premier Li Keqiang, which lays out the government’s agenda and policy priorities for the coming year.

Having reviewed and translated the Work Report minutes, in terms of the Belt & Road Initiative we note that there were no specific developments, however the BRI remains a State level policy that continued to be mentioned as a priority for China. There are however important implications for global MNC’s to consider as a result of China’s overall stance. We can examine what was said, and what this means as follows:

The Belt & Road Initiative In The Work Report
The Belt & Road Initiative was mentioned numerous times by Premier Li Keqiang. In his Work Report delivered at the Two Sessions he reflected on the successes and the future goals for the BRI.

When Reviewing BRI Projects Completed in 2019
The Two Sessions transcript states:

“An important step has been taken in reform and opening up. Supply-side structural reforms continued to deepen, and new breakthroughs were made in reforms in important areas. Tax cuts and fees cut 2.36 trillion yuan (US$333.49 billion) exceeding the original scale of nearly 2 trillion yuan, and manufacturing and small and micro enterprises benefited the most. The task of reforming government institutions was completed. The reform of “deregulation and service” was advanced in depth. Established the Science and Technology Innovation Board. The joint construction of the “Belt and Road” has achieved new results. The implementation regulations of the Foreign Investment Law were promulgated, and a new area of ​​the Shanghai Pilot Free Trade Zone was added. Foreign investment in foreign trade remained stable.”

(For our review of the developments concerning The Shanghai Pilot Free Trade Zone, please see here)   

“The diplomatic achievements of major powers with Chinese characteristics have been great. Successfully held major home-level diplomatic activities such as the Second Belt and Road International Cooperation Summit Forum have taken place, while President Xi Jinping and other party and country leaders visited many countries and attended the G20 Leaders Summit, BRICS Leaders’ Summit, Asia Info Summit, Shanghai Cooperative Organization Summit, East Asia Cooperation Leaders’ Meeting, China-EU Leaders’ Meeting, China, Japan and Korea Leaders’ Meeting, the Far Eastern Economic Forum and other major events.”

(For our review of the BRICS leaders summit please see here. 

For our review of the Shanghai Cooperation Organisation summit please see here

For our review of the Far Eastern Economic Forum please see here) 

“China will actively participate in the construction and reform of the global governance system and promote the building of a community of shared future for mankind. Economic diplomacy and people-to-people exchanges have been very effective. China has made important contributions to promoting world peace and development.”

Belt & Road Initiative Goals for 2020
Chapter 7 of the Two Sessions Work Report is titled:

“Promoting A Higher Level of Opening to the Outside World and Stabilizing Basic Foreign Trade” and showcases the following aims:

“We must provide high-quality joint construction of the “Belt and Road”, and insist on mutual consultation, joint construction and sharing, follow market principles and internationally accepted rules, give play to the main role of the enterprise, and carry out mutually beneficial cooperation.

Guide the healthy development of foreign investment.

Promote trade and investment liberalization and facilitation.

Maintain the multilateral trading system and actively participate in WTO reforms.

Promote the signing of regional comprehensive economic partnership agreements, and promote China-Japan-South Korea and other free trade negotiations.

Jointly implement the first phase of China-US economic and trade agreement.

China is committed to strengthening economic and trade cooperation with other countries to achieve mutual benefit and win-win results.

 
CPCC Deliberations
Many political elite, directors and board members of Chinese MNC’s also met to discuss some key issues relating to the Belt & Road Initiative.

Listed are the key issues:

• How to increase financial support for the construction of BRI;
• Increasing support for companies to carry out third-party cooperation and investment, construction and business;
• Improve the competitiveness of China’s equipment manufacturing industry;
• Increasing the research and development and promotion of advanced intelligent agricultural machinery;
• Strengthening the logistics transportation support for equipment manufacturing products.

After The Two Sessions
Foreign Minister Wang Yi held a ‘Two Sessions’ press conference in Beijing, telling reporters that China is committed to working to build ‘healthy silk road’ with its belt and road partners. This took place on  May 24th, and was summarized on CGTN here

Statements concerning the Belt & Road Initiative in Wang Yi’s comments included:

• China will step up public health projects in belt and road countries in the wake of the Covid-19 pandemic;
• Wang said global efforts in containing the pandemic should be coordinated and promised to develop a ‘healthy silk road’;
• China will actively expand international cooperation on public health, and establish pandemic control mechanisms with more nations;

• “The epidemic situation did have some impact on the “Belt and Road” cooperation, but it was temporary and partial. From an overall and long-term perspective, after the test of the epidemic situation, the foundation for the joint construction of the “Belt and Road” will be stronger, the momentum will be more abundant, and the prospects will be broader.”
• “After the epidemic, the desire of countries to develop economy and protect people’s livelihood will be stronger, and the demand for cooperation in the field of public health will also increase significantly. China will work with the countries along the route to vigorously promote the construction of the “Healthy Silk Road” and hold a high-level video conference on the “Belt and Road” in a timely manner to better safeguard the health and safety of people of all countries. We will also work hard to promote the construction of the “Digital Silk Road”, create more new growth points for the economic development of various countries, and inject more new power sources for the global economic recovery.”

Chris Devonshire-Ellis Comments 
Of particular note are the statements: “China will actively participate in the construction and reform of the global governance system” and “Economic diplomacy and people-to-people exchanges have been very effective.”

The first is indicative that the CCPP believes that the current state of global governance – as headed by the United States – is broken, and needs adjusting. This has serious implications for Governments around the world in terms of their political relationships with both Beijing and Washington. President Trump appears in no mood to concede that the United States has any global shortcomings, a view that tends to filter down at all levels of American society. US media has been increasingly aggressive towards China, which again suggests that Washington does not agree with Beijing’s interpretation. On an international basis, the United States has recently been retreating from many important treaties and bodies, including the WHO (in the middle of a global pandemic) and has hinted the same as concerns the World Trade Organisation.

While Asia is more aligned with China, Europe is less so, yet appears unable to chart a navigable course between the two. The EU’s current lack of direction is also apparent, with internal issues distracting the bloc from attention to global dynamics. Meanwhile, Chinese and Russian dynamics appear to be merging and similar development and economic policies are being formulated in both. That means that the Belt & Road Initiative will become more important not just as a trade and infrastructure play but also in terms of political clout.

There is also the possibility that unless the United States can find a way to modify its position as concerns global governance, where it stands accused of weaponizing the US dollar and too willfully imposing sanctions, a schism is likely to be more, not less pronounced between the Western democracies and China over coming years. This will impact on trade, as we have already seen with the US-China trade war. Businesses will need to be more actively involved in both investing with a foot in both camps and work out how to navigate differing political alliances in order to remain competitive and multinational. The US Secretary of State, Mike Pompeo’s comments concerning a non-American business, HSBC, and criticizing it for its stance on its mainland China business in the light of Hong Kong’s social unrest is a taste of things to come.

The CCP’s second statement that “Economic diplomacy and people-to-people exchanges have been very effective” are somewhat ambiguous, however allude to the use of financial provision as a diplomatic tool and to the spread of social intercourse, including media coverage and educational and cultural exchanges to promote China’s vision.

In terms of economic diplomacy, this extends from BRI infrastructure loan provisions and as far as effectively purchasing sovereign states diplomatic relations at the expense of Taiwan, as occurred recently with Kiribati. It also extends to institutions, where China stands accused of ‘infiltrating’ the World Health Organisation. In reality, the WHO is a democratically structured entity which votes on its board members. (The WHO Rules of Procedures can be viewed here)

However, China has been actively placing academics into important educational institutions for many years, and at many important academic institutions overseas. This impacts upon the political nuances, directions and influences such sovereign, non-Chinese institutions possess. They are ‘being evolved’.

Again, China appears to have an upper hand here, while Western societies are showing signs of being socially degenerate. Recent examples include issues concerning Trans people and the Black Lives Matter protests, which while being reasonable causes, have often been manipulated into becoming rather more subversive in terms of being used as covers for more destructive societal elements. It is arguably useful to note that such attitudes tend not to be taken up in China’s population, with or without any political stigma or suppression being attached. These are not issues for example that concern the average Chinese farmer, who would be more likely to shrug them off as largely irrelevant. That is in contrast to the West, where mentioning of these topics can lead to extensive protests, including riots, and criminal damage.

It has to be contemplated at how effective China’s admitted use of people to people exchanges is, when by and large the mainland Chinese population remains well behaved. China’s state policies towards policing, the punishment of socially unacceptable and the fraying attitudes of populations in the West are not entirely co-incidental.

Essentially what is occurring is a subtle division between an organised and disciplined China coming into increasing contact with a complacent, more degenerate West. At present, while we note that the G7 meetings due to be held in the United States were cancelled, China managed to convene its Two Sessions meetings. The Work Report from those show the organisation and collective decision making involved. The results of this illustrate that not only is the Belt & Road Initiative alive and well, but that China is seeking to extend ‘economic diplomacy’, ‘people to people exchanges’ and confront the United States over the current methodology of global governance.

Both sides would do well to convene in order to temper down the more politically dangerous aspects of this. The problem is that personally, I just don’t see the West being able to provide this type of leadership or compromise at this juncture. It is also important to note that this is not China’s fault. Brussels and Washington are culpable.

In terms of what this means for businesses, more than ever, global companies need to be politically astute, and maintain a trade and diplomatic balance of being East-West compliant and sensitive. Tomorrow’s global leaders and their management teams need to have a foot in both camps, and be aware of, while remaining impartial to political pressures from either side.

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