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Editorial

Generous infrastructure programmes alone cannot transform societies

The Belt and Road Initiative (BRI) can only become long-term success if it is expanded to embrace values such as transparency and sustainability.

14 JUNE, 2019

Kristian Odebjer
Chairman
Swedish Chamber of
Commerce in Hong Kong
Lars-Åke Severin
Chairman
Swedish Chamber of
Commerce in China

The world’s second largest economy is engaging more actively with regions beyond its own borders, with a particular focus on Asia, Africa, and Central and Eastern Europe. Chinese money and technical knowledge are being invested into infrastructure projects spanning a gigantic “belt” from Indonesia to the Balkans. Due in part to lack of transparency of the Belt and Road Initiative (BRI), this has led to uncertainty, and sometimes fear. In order to understand the BRI better, Swedish companies need to learn more about and engage more with China.

China has much to offer the world. This was already clear in ancient times, when goods travelled back and forth between Xi’an (then Chang’an) and Rome, along the Silk Road. Today’s China has made a journey of its own, from poverty to relative affluence. When it comes to developing a backward country, China’s journey may be relevant to some – if not all – of the more than 100 countries that have signed up for the BRI. We assume that European countries that have signed up (such as Italy, for example) have done so more out of eagerness for Chinese investment, and less out of conviction that their country should adopt a “Chinese model”.

Countries in Asia and Africa that are now looking to China as a source of funding typically have only limited access to institutions like the World Bank. China is perceived as a more “flexible” partner in that it does not require much in terms of governance from recipient countries. In the short term, this may represent an irresistible offer for a ruler with autocratic instincts, but as has already been shown, the strategy is not without risk for China. In the case of Malaysia, China was forced to agree to a significant price reduction on a new high-speed rail line after Malaysian voters elected a new government that had campaigned on an anti-corruption platform.

Sweden and Swedish companies need to develop more nuanced BRI strategies. Any such strategy should recognise that the BRI target area is where much of the world’s economic growth during the 21st century will occur. Outdated world views that divide countries into “developed” and “developing” must be cast aside. We need to understand that most countries in Asia and Africa are now on a journey towards “middle income status” (if this comes as news to you, we urge you to pick up one of professor Hans Rosling’s books and get up to speed!). People living in the countries concerned are looking for improved infrastructure, healthcare and education.

In the Focus story of this issue and website, as well as in an Opinion article by Business Sweden’s Fredrik Uddenfeldt, you can read about the challenges encountered by Swedish companies competing for BRI projects. Even our largest companies are minnows when lined up against Chinese contractors. This means that coordinated efforts are needed across Europe in order to push forward the best of what the continent has to offer.

When it comes to service sectors like healthcare and education (and much else beyond physical infrastructure), Sweden and its European partners are at a level that most BRI countries aspire to reach. Our challenge is to explain that Sweden’s accomplishments are part and parcel of a system that includes values like transparency and sustainability at its core. Only if BRI is expanded to acknowledge such values can it become an unbridled success over the longer term.

This means that we need to engage more actively and confidently with recipient countries. If we believe in our values-based model, we need to explain to them how it works, and why it is an important alternative to the Chinese model. We currently do not see Sweden and Swedish companies displaying enough of the curiosity and risk appetite needed in this regard. We need to build an awareness that generous infrastructure programmes alone cannot transform societies. After all, China itself only started developing 40 years ago when it opened up and allowed its citizens to become entrepreneurs.