The future of the Belt and Road Initiative in Australia

While the future of Victoria’s Belt and Road projects might seem uncertain, Australia has far more reasons to keep to its agreements than to turn away from them, Jon (Yuan) Jiang writes.

Since 2013, Australia has been at pains to adopt a cautious approach towards the Belt and Road Initiative (BRI). It is worth noting that during this period, the Australian Government has been led by the same party, allowing a level of policy consistency and continuity toward the BRI.

Early in the program’s evolution, the government wasn’t opposed the contribution of the BRI to infrastructure and economic development, but cited concern at its lack of international standards of governance and transparency.

Before 2017, while remaining prudent, Canberra was much more conciliatory towards the BRI. Discussions between Australia and China mostly revolved around potential alignment of Australia’s Northern Development Strategy with the BRI, and even direct participation in the BRI seemed a possibility for the Federal Government.

During former Prime Minister Malcolm Turnbull’s two meetings with President Xi Jinping in April 2016 and September 2016, Xi repeatedly proposed the alignment. In both instances, Turnbull did not accept the call directly, but also did not outright reject it.

Then, in February 2017 at a joint press conference between Australian and Chinese Foreign Ministers Julie Bishop and Wang Yi, Bishop explained that both countries “intend to link the BRI with Australia’s vision for developing Northern Australia” under conditions of “transparency, private sector engagement, and strong development outcomes”.

More on this: Australia, China and the Belt and Road Initiative with Jane Golley

However, in March 2017, just days prior to Chinese Premier Li Keqiang’s visit, the government refused to officially endorse an alignment with the BRI. The reported reason behind this was that it did not see tangible benefits from signing a Memorandum of Understanding (MoU) and claimed China’s BRI was short on details. This was a turning point for the BRI in Australia. After 2017, Australia’s federal BRI policy has been unambiguous, and direct participation off the table.

Accordingly, the government signed an MoU that approved Australian work with the BRI in third countries, but not on Australian soil. This essentially meant that BRI projects in Australia would not serve the country’s national interest. Importantly, BRI projects were not forbidden outright, and could be considered on a case-by-case basis in Australia. Individual Australian corporations were also allowed to be part of the BRI, since their involvement and growth would be beneficial to Australian employment.

Meanwhile, Australia began seeking other infrastructure project alternatives that met its demands regarding international standards of governance and transparency, and in November 2019, it joined the United States and Japan in the Blue Dot Network (BDN). The declared intent of the BDN is to bring together governments, the private sector, and civil society under open, inclusive, and transparent international standards for global infrastructure development.

In contrast to the Federal Government’s shift away from the BRI, the Victorian State Government signed two BRI MoUs with the goal of building local economic prosperity and employment, a choice that attracted fierce criticism from federal politicians.

In 2020, the Australian Parliament passed Australia’s Foreign Relations (State and Territory Arrangements) Bill to strengthen federal authority and foreign policy consistency over state and territory foreign affairs.

More on this: Just how efficient is China’s Belt and Road?

While the Federal Government has not said officially that one of the bill’s intentions would to cancel Victoria’s BRI MoUs in the future, some politicians have admitted that giving the government this choice was “one of the reasons the bill was necessary”.

As of the end of 2020, Victoria’s BRI deals have remained intact. Still, the Federal Government has the power to ditch concrete projects under the BRI framework, such as the Victoria-Jiangsu Program for Technology and Innovation Research and Development, and it may still exercise that power.

Even though this may make the future of the Victorian BRI projects seem gloomy, the government will likely keep from tearing up what is mostly just a piece of paper, at least for now. There are four main reasons for this.

Firstly, Victoria’s deal is a vague and non-legally binding document that does not actually commit the state to any specific projects.

Secondly, revoking Victoria’s BRI deal will potentially cause a much tougher response from China, as the Chinese embassy in Australia has been vocal its opposition against any such cancellation. This is because the BRI is linked strongly with the personal brand of Chinese President Xi Jinping, and with legitimacy an imperative of China’s foreign policy doctrines and culture, it would be an ill-advised move for Australia’s relationship with China to inadvertently damage that brand.

Thirdly, in response to such a slight, China may commit to an all-out Sino-Australian trade war, which would lead to the catastrophic loss of six per cent of Australia’s economic power.

Fourthly, Australia needs to keep its primary ally, the United States, happy. Newly elected President Joe Biden’s BRI policy is emerging, but still not totally certain, and it would be wise to wait this out given the geopolitical volatility in the region.

In all, rescinding these agreements is likely more trouble than it’s worth. Australian leaders should only consider it if what they want for the near future is even more testy and confrontational Sino-Australian relations than have characterised the recent past.