The third Belt and Road Forum is likely to have a different atmosphere to the one in 2019 amid changing priorities and a darker global context. Developing nations could bear the brunt as China focuses more on smaller, targeted projects in geopolitically important regions.
The US has lagged behind in its efforts to engage with Pacific island nations, but recent action is attempting to reverse this trend. However, words will only be meaningful if they are followed by concrete action that genuinely involves engaging Pacific nations economically and diplomatically.
China’s ailing property sector is dependent on surging amounts of debt that are unsustainable. With over 40 per cent of local government bonds maturing in the next five years, authorities face a debt squeeze which, even if overcome, will recur without serious reform.
Both sides need to dial down military action, and return to the negotiating table in good faith. A Biden-Xi meeting is tentatively planned for November. The two leaders should focus on areas of cooperation, not bones of contention.
If threatened, Beijing could impose its own sanctions on American companies and cut off critical access to manufacturing capabilities and its huge consumer market. In a worst-case scenario for the West, Beijing could choose to openly supply Russia with military and economic aid.
The constructive engagement between the two countries goes back decades, and any damage to the bilateral relationship will hurt the global economy. Fundamental differences aside, the two must try to find common ground on core strategic interests.
