The Belt and Road Initiative (BRI), first proposed by Chinese President Xi Jinping in 2013, is a program through which China will spearhead the funding and construction of new infrastructure and trade networks across Eurasia and Africa. The centerpiece of the BRI is hard infrastructure: roads, railroads, ports, pipelines, and power plants. The scale of the proposed investment is immense: $1 trillion for projects spanning 75 countries.
The risk of corruption in such large-scale infrastructure is also immense, but at least initially, the BRI ignored corruption. When China’s National Development and Reform Commission (NDRC), the powerful government organ in charge of economic planning, issued the first comprehensive statement of the principles and framework undergirding the BRI back in March 2015, anticorruption principles were nowhere mentioned, nor did the published framework include any anticorruption measures. A later, more detailed policy document, published in 2017, also failed to include any mention of anticorruption. This posture is generally consistent with China’s traditional “non-interference” foreign policy, which makes Chinese authorities reluctant to go after overseas corruption.
More recently, though, Beijing has begun to respond to the BRI’s corruption risks. President Xi himself urged greater international cooperation on anticorruption at the June 2017 Belt and Road Forum. In September 2017, China’s Central Commission for Discipline Inspection helped organize a symposium called “Strengthening International Cooperation for a Clean Belt and Road.” And last December, the NDRC and other regulatory bodies issued new rules governing overseas investment by private Chinese companies, including a prohibition on “brib[ing] local public officials, or personnel from international organizations or related enterprises.” That same month, China’s State-Owned Assets Supervision and Administration Commission issued new guidance that requires state-owned enterprises to strengthen their anticorruption compliance procedures.
These are steps in the right direction. The question is whether the government’s newfound focus on corruption in the BRI is serious. Skeptics point out that Chinese authorities have never prosecuted a Chinese company or official for foreign bribery. Others suggest that the new regulations are more about controlling Chinese outbound investment than combating overseas corruption. I’m somewhat more optimistic, though, that Chinese authorities are serious about tackling corruption in the BRI. In my view, taking BRI corruption seriously is in the Chinese government’s interest for four reasons:
- First, a clean BRI is a more effective development program. Corruption is expensive. (See, for example, reports that Chinese officials expect to lose 80% of their investments in Pakistan.) A clean BRI means more Chinese money is used to build roads rather than bribe bureaucrats. More roads mean China’s trading partners develop faster, which in turn means larger markets for Chinese goods. Less corruption in the BRI, then, translates directly into greater economic gains for China. Additionally, a clean BRI has security benefits for China. China sees poverty and economic stagnation as a cause of unrest and extremism, especially in the countries that border Xinjiang in China’s northwest. A more transparent and efficient BRI means greater economic opportunity for China’s neighbors and, therefore, less cause for extremism and instability.
- Second, corruption undermines the BRI’s contributions to China’s soft power. The BRI’s success as a soft power initiative depends on the goodwill generated among local populations by new, useful, Chinese-built infrastructure. When a Chinese-built railroad breaks down because of construction defects born of corruption, China itself is liable to get the blame. And no goodwill is generated by vanity projects built for political elites that the public can’t access. These problems are only exacerbated when such projects leave a country saddled with debt. Additionally, international news outlets sometimes pick up BRI corruption stories (see, for example, recent Daily Mail and South China Morning Post stories about a Chinese company bribing a Bangladeshi official), and bad press can spread quickly across borders, tarnishing the reputation of President Xi’s signature foreign policy initiative. To the extent that the BRI aims to influence the hearts and minds of ordinary people, rather than just political elites, the effectiveness of that program is undermined by corruption.
- Third, efforts to stymie corruption overseas and at home are complementary. Tackling corruption in the BRI would link President Xi’s most high-profile foreign and domestic policy programs—the BRI and the anticorruption campaign—and would make the two rhetorically and substantively consistent. On the domestic side, it’s been argued on this blog that combating corruption abroad would lead to less graft at home, helping achieve one of the goals of the anticorruption campaign. Simultaneously, the domestic fight against corruption would magnify the effects of any active overseas anticorruption enforcement. Even a few enforcement actions brought against overseas bribery, seen in light of the domestic campaign, might dissuade Chinese corporations from offering bribes overseas and provide a compelling excuse when local officials seek bribes from those same companies.
- Fourth, a clean BRI will have greater international legitimacy. To date, the BRI is largely a Chinese project. This Chinese dominance has in turn fueled suspicion that the BRI is a mask for Chinese expansion or neocolonialism. Greater international participation in BRI projects might allay those fears, and implementing international best practices on anticorruption might encourage such participation. Companies based in countries that enforce foreign bribery laws would feel that they were competing on an even playing field and would be more likely to invest in BRI projects. Moreover, other governments would be less likely to take diplomatic exception to a development program that benefitted businesses back home. China’s experience with the Asian Infrastructure Investment Bank (AIIB)—which major economies such as the U.K., Germany, and Australia joined over U.S. objections—is instructive here. The AIIB example demonstrates that Chinese-led initiatives that adopt international best practices on transparency and accountability can garner widespread international support.
Of course, there are many reasons why Chinese authorities might not tackle corruption in the BRI. Psychologically, it may be difficult for a traditionally secretive Chinese state to embrace the transparency measures often used to fight corruption. Practically, there are ways in which corruption aids the BRI, rather than undermines it. Bribes to government officials grease wheels and may lead to more BRI projects overall. Additionally, to the extent the BRI is an attempt to provide an outlet for Chinese overcapacity and to pull established regimes closer to China, corruption helps accomplish these goals by paying entrenched officials to approve a larger number of infrastructure projects. Yet on balance, if China is serious about using the BRI to create a new set of Chinese-led international norms for the 21st century, it’s in China’s long-term national interest to make anticorruption one of those norms.