Foreign Affairs

Government warms to China’s Belt and Road

The Government has given its strongest indication yet that there will be a place for New Zealand in China’s Belt and Road Initiative.

Returning from the Belt and Road Forum in Beijing, Trade Minister David Parker said that changes in the framing of the project meant it was something New Zealand would be able to get on board with.

The Belt and Road Initiative is the flagship foreign policy of current Chinese President Xi Xinping. It’s title references the famous Silk Road, which once carried trade between China and Europe. Xi’s project is a series of massive infrastructure projects along the sea route to Europe and Africa (the "road"), and and other projects along the land route (the "belt").

The project has been hampered by allegations that it represents a new imperialism. Some projects have shouldered developing countries with onerous loans they could not repay, resulting in China effectively nationalising certain infrastructure. One such case is long term lease of Sri Lanka’s Hambantota port to China after it could not repay a loan.

But recent sounds out of China have suggested that the country is broadening the remit of the project.

A report released on the eve of the conference from China’s finance ministry said debt sustainability would need to be taken into account with new projects, according to Reuters reports. Debt sustainability was also discussed at the conference.

Parker said the Beijing forum helped clarify the nature of the project.

“The framing of the Belt and Road by China has broadened of late, it’s no longer just about infrastructure, it can cover other areas of cooperation,” Parker said.

“It was interesting to hear President Xi Jinping talk about the importance of not leaving onerous loans behind, to ‘green’ the Belt and Road and to make sure it was free of corruption,” he said.

Newsroom understands the "green" belt and road projects could leverage New Zealand expertise in pest eradication.

So far, New Zealand has only signed a non-binding Memorandum of Arrangement with China, the main focus of which was to upgrade New Zealand’s decade-old Free Trade Agreement, but which included a non-binding commitment to explore a “ pathway for cooperation and exchanges to support the BRI”.

Parker said that as a developed, first world country, New Zealand had little need for the infrastructure components of the Belt and Road. However he agreed a new-look Belt and Road was something New Zealand might be able to support.

“We’ve not yet completed an agreement to where we go next, but negotiations will continue,” he said.

Comments from Prime Minister Jacinda Ardern highlight the complex issues of trade at stake with the Belt and Road.

While the Government is clearly not keen on the infrastructure components of the plan, it does not want to shut the door on other forms of Chinese investment.

Ardern highlighted the potential to improve foreign direct investment without necessarily committing to Belt and Road infrastructure projects.

“We’ve had a memorandum of arrangement that New Zealand has entered into and it basically now requires us to flesh out what will be mutually beneficial for New Zealand but also China,” Ardern said.

“Of course we engage in foreign direct investment, and this might be an opportunity for us to talk in a bit more detail about what that might look like under our memorandum of arrangement,” she said.

Ardern reiterated Parker’s comments welcoming the broadening of the Belt and Road away from infrastructure.

“Historically there’s a view that it’s specifically about strategic infrastructure, I think the Belt and Road has evolved over time and of course we welcome foreign direct investment beneficial to New Zealand,” she said.

Parker and Ardern also appear to have Foreign Minister Winston Peters on side, who said he agreed with Parker’s line on the project.

“I’ve read Minister Parker’s comments, I’ve seen them all, they’re in line with what I’ve been saying for a long time, there’s no difference between me and Minister Parker, we know exactly what we’re talking about and this is a work in progress clearly as Minister Parker pointed out,” Peters said.