The Belt and Road Initiative from the Perspective of Global Governance

The Belt and Road Initiative from the Perspective of Global Governance Presented by: Professor Li Bin (Beijing Normal University) Date: October 12, 2021 China – Pakistan Economic Corridor - Regional Connectivity - Diverse Investment opportunities - Industrial Cooperation - Financial Cooperation - Agricultural Cooperation - Socio-Economic Development - Tourism including coastal Tourism - Educational linkage - Etc. Background  When visiting Kazakhstan and Indonesia in September and October of 2013, Chinese President Xi Jinping raised the initiative of jointly building the Silk Road Economic Belt and the 21st Century Maritime Silk Road.  In March 2015, the Chinese government published the "Vision and Actions on Jointly Building Silk Road Economic Belt and 21st Century Maritime Silk Road".  In May 2017, the first Belt and Road Forum for International Cooperation was convened in Beijing.  In August 2018, the fifth anniversary of the Belt and Road Initiative, President Xi said that in advancing the initiative, we should build a global community of shared future. Policy Priorities - Policy coordination - Connectivity of infrastructure - Unimpeded trade - Financial integration, and - Closer people-to-people ties. The Economic Dimension:  The case of AIIB (Asian Infrastructure Investment Bank) - A multilateral development bank focused on developing Asia, but with members from all over the world; began operations in Beijing in January 2016 and have since grown to 103 approved members worldwide - Capitalized at USD100 billion and Triple-A-rated by the major international credit rating agencies. - Investments in infrastructure and other productive sectors seek to foster sustainable economic development, create wealth and improve infrastructure connectivity. AIIB members Year End-2020 End-2019 End-2018 End-2017 End-2016 Total Approved* 103 102 93 84 57 Regional 50 50 50 48 37 Non-Regional 53 52 43 36 20 * Aggregated, including members and approved members. As of end-2020, AlIB approved membership totaled 83 with 20 more that have either signed the AIIB Articles of Agreement, pending ratification, or whose membership applications have been approved by the Board of Governors, pending their ratification of the AIIB Articles of Agreement and/or required payment for their subscribed capital stock of the Bank (commonly known as prospective members). Projects By Sector Yea r Energ y Tota 22 l (As Of Dec. 31, 2020 ) 2020 3 2019 7 2018 2 2017 6 2016 4 Transpo Wate rt r Finan ce Urba n Information And Communicati on Technology 18 11 18 5 5 Rural Othe Infrastruct rs ur And Agricultur al Developme nt 1 28 5 4 3 3 3 3 3 3 2 0 3 9 3 3 0 1 2 1 0 1 3 1 0 1 0 0 1 0 0 0 27* 1** 0 0 0 * Projects under the COVID-19 Crisis Recovery Facility: public health (8), finance and liquidity (7) and economic resilience (12). ** Sri Lanka: Reduction of Landslide Vulnerability by Mitigation Measures. The Political Dimension - Joint Statement of the High-level Video Conference on Belt and Road International Cooperation: Combating COVID-19 with Solidarity (June 2020) - Towards a Health Silk Road - Boosting Connectivity - Promoting Economic Recovery - Deepening Practical Cooperation BRI and Global Governance Global Governance  A process of governing around the world with the cooperation of states, intergovernmental organizations, transnational actors.  The sum of laws, norms, policies, and institutions that define, constitute, and mediate relations between citizens, societies, markets, and states in the international system.  The goal of global governance, roughly defined, is to provide global public goods. A Plural Global Governance Revue (Européenne Du Droit, Vol. 2, March 2021) - "A new world is already under way, a heterogeneous, unstable and unpredictable amalgam, whose features and fault lines could not have been anticipated. This trend is apparent in the new protectionisms and the crisis of multilateral cooperation, but also in the emergence of numerous alternative but sometimes incompatible political, social and economic models." - "The two pitfalls of globalization, the hegemonic order of a universal monarchy, on one hand, and the great disorder of a world that is not only divided, but fragmented, on the other" - "[a] true global governance of the commons, if possible, can only be plural and unstable, hybrid and flexible." A "China Model” That Would Fill In Leadership Vacuum Left By The Western Powers?  The BRI, while often suspected due to its unique and distinctive features compared to the Western benchmark, is regarded by China as a path towards the progressive reform of the current global governance based on traditional Chinese wisdom.  "promote the joint implementation of the Belt and Road Initiative towards a high quality development" and "actively participate in the reform of global governance". See, Press release of the fifth plenary session of the 19th Central Committee Chin Communist Party BRI's Policy Priorities  Policy coordination  Connectivity of infrastructure  Unimpeded trade  Financial integration  Closer people-to-people ties  Washington consensus vs Beijing Consensus?  The term Washington Consensus usually refers to the level of agreement between the International Monetary Fund (IMF), World Bank, and U.S. Department of the Treasury on those policy recommendations. All shared the view, typically labelled neoliberal, that the operation of the free market and the reduction of state involvement were crucial to development in the global South.  Williamson's Ten Points  Fiscal policy discipline  Redirection of public spending from subsidies  Tax reform  Interest rates that are market determined  Competitive exchange rates  Trade liberalization  Liberalization of inward foreign direct investment  Privatization of state enterprises;  Deregulation  Legal security for property rights. "China Is Still Not A State Under The Rule Of Law..."? - China deploys its BRI through infrastructure investment rather than through the transplantation of a legal culture, the imposition of law, or through the empowerment or the transmission of a specific model of society. China believes that the society of consumption may become similarly attractive to other countries. However, the BRI contains within itself the risk of keeping China away from the universally accepted norms and legal regulation. The very reason of such scenario is that China is still not a State under the Rule of law. - Eyal Benvenisti, author of The Law of Global Governance (Hague Academy of International Law, 2014), argues that - "Decision-making processes within international organizations and other global governance bodies ought to be subjected to procedural and substantive legal constraints that are associated domestically with the requirements of the rule of law". - The book explains why law - international, regional, domestic, formal or soft - should restrain global actors in the same way that judicial oversight is applied to domestic administrative agencies. BRI: A Combination Of Law And Political Arrangements 1. Distinctive features of the BRI - "Forums" as the form of inter-state cooperation (NOT an international organization) - "Non-legally binding documents (MOUS, etc.)" lay the general framework for further development of the Initiative (NO founding treaties or conventions) - Coordination between state and non-state actors (private and state-owned enterprises, etc.) - Up to 23 June 2021, China has signed 206 bilateral cooperation documents with 140 countries and 32 international organizations. 2. The thick version of "legal governance": the role of law at AIIB - AIIB is an international organization established by the AIIB Articles of Agreement (entered into force on Dec. 25, 2015), a multilateral treaty, the Parties to which comprise the Membership of the Bank. The Chief Negotiators' Report, adopted in tandem with the final text of the Articles of Agreement, summarizes these understandings, for future reference when interpreting the Articles of Agreement. - The Articles of Agreement and the Headquarters Agreement have been registered with the United Nations Secretariat in accordance with Article 102 of the Charter of the United Nations. - AIIB has also been granted permanent observer status by the United Nations General Assembly to promote cooperation with the United Nations (UNGA Resolution A/RES/73/216). - AIIB's Internal Legal Framework  AIIB does not possess general competence. In other words, it may only exercise those powers expressly or impliedly bestowed upon it by the Articles of Agreement.  The Board of Governors adopts the By-Laws of the Bank to complement the Articles of Agreement  Board of Directors supervises and is capable of delegating authority to the President.  President is the chief of staff and legal representative of AIIB.  Regulatory Mechanisms: These mechanisms were established by  ALLB's governing bodies at different levels; to ensure that the rules and procedures of AIIB are fully observed, and that good governance in accordance with the principles of transparency, openness, and accountability is realized.  Accountability and Redress Mechanisms: to ensure that adequate redress is accessible, and that accountability is attributed in the event of contravention or violation of AIIB rules  Office of the General Counsel: the legal department of the Bank. Its mission is to sustain the Bank's mandate-based multilateral development financing by protecting the Bank's international legal status, helping the Bank make good decisions, and safeguarding the Bank against legal risks through authoritative, actionable, and impartial legal advice and services. 3. China's Pragmatic Use Of Legal And Non-Legal Tools - At International Level  Endorsement of international norms and rules  Leaders of the BRI counties endorse the UN Sustainable Development Goals and are determined to sustain cooperation "in line with internationally agreed principles and obligations"; to "work together in line with our national legislation, regulatory frameworks, international obligations, applicable international norms and standards", and called for "more international cooperation in line with our applicable respective obligations under international conventions, such as UN Convention against Corruption (UNCAC) and relevant bilateral treaties".  Belt and Road Cooperation: Shaping a Brighter Shared Future, Joint Communique of the Leaders' Roundtable of the 2nd Belt and Road Forum for International Cooperation, 27 April 2019, Beijing, China.  Chinese infrastructure projects holders in need of blended financing have to abide by the established international legal rules, instead of making new rules based on the "China model". Chinese enterprises are furthermore encouraged to strengthen the blended financing cooperation with multilateral development institutions, because of the positive political influence of multilateral institutions that helps projects to mitigate risks and increase credibility. - In Host States  "Instead of previous approaches to 'law and development', China is reluctant to engage in legal reform of host states that receive Chinese capital; rather, Chinese investors try to avoid local law. 'Chinese law and development' creates order through transnational law, which builds on legal infrastructures both from the United States and from China, supplemented by extralegal and nonlegal norms". (See, Matthew S. Erie, "Chinese Law and Development." Harvard International Law Journal, vol. 62, no. 1, Winter 2021, p. 51-116.)  Normative pluralism  Chinese ordering can be understood as reflecting the "normative pluralism" under the globalization context, i.e., "an ordering formed not only by international commercial law, but also by quasi-legal norms like soft law and nonlegal norms such as political intervention, civil society, digital infrastructure, bureaucracy, personal or professional networks, soft power, and even religion. The normative pluralism of China's global ordering is hardly uniform, static, or even internally coherent. In short, ordering may have disordering effects.". (See, China law and Development, ibid, p.20) - As Home State  Legal and nonlegal arrangements at the domestic level  Judiciary "innovation" China's Supreme People's Court (SPC) released in 2015 and 2019 two guidelines on the judicial service and guarantee that China's court system should offer to the BRI. The main objective is to enhance the trustworthiness of China's judiciary in settling the legal disputes related to BRI countries.  The "one-stop" legal dispute settlement with the diversified available remedies that coordinate judicial settlement, mediation and arbitration, offered by China International Commercial Court (CICC)  SPC's support for the participation of Hongkong International Arbitration Center (HKIAC) to the one-stop legal dispute settlement as designed by CICC. In addition, foreign arbitration institutions may establish their branches and have their arbitral situs at Lin Gang area in Shanghai.  In 2019, China signs the United Nations Convention on International Settlement Agreements resulting from Mediation,  In 2017, China signs the Convention of 30 June 2005 on Choice of Court Agreements.  China has expressed its intention to sign the Convention of 2 July 2019 on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters. State's Regulation And Guidance On Outbound Investment By Chinese Enterprises  Foreign Investment Law of the People's Republic of China, 1st Jan 2020  National Development and Reform Commission, Measures for the Administration of Overseas Investment of Enterprises, March 2018  State-owned Assets Supervision and Administration Commission of the State Council, Measures for the Supervision and Administration of Overseas Investments by Central Enterprises, July 2017  State-owned Asset Supervision and Administration Commission of the State e-Stateowned the Council, Guidelines to the State-owned Enterprises Directly under the Central Government on Fulfilling Corporate Social Responsibilities, promulgated on and effective since 29 December 2007  Ministry of Ecology and Environment, Ministry of Foreign Affairs, National Development and Reform Commission, Ministry of Commerce, Guidance on Promoting Green Belt and Road, April 2017  Ministry of Ecology and Environment, The Belt and Road Ecological and Environmental Cooperation Plan, May 2017