What does Belt and Road have to do with Victoria?

The Morrison government stole the headlines on Thursday morning, announcing a motion to veto states’ agreement with foreign governments. In its sights was clearly Victoria’s “framework agreement” with China on the Belt and Road initiative.

What is Belt and Road?

The Belt and Road Initiative, also known as the Maritime Silk Road and the New Silk Road, is a Chinese initiative for transnational infrastructure construction. At its most basic level, Belt and Road is a large international development initiative, and like any other such initiative it has geopolitical and economic ramifications.

Belt and Road is primarily oriented toward Eurasian integration. Its flagship development is the China-Pakistan Economic Corridor (CPEC), a major expansion of the Pakistani port of Gwadar along with a trans-Himalayan road and railway connection to Western China. Importantly, the development allows for more trade – including oil and gas from the Middle East – to bypass Singapore and the South China Sea, which China cannot guarantee control of in a conflict with the United States.

The CPEC illustrates another key motivator for Belt and Road: the economic development of China’s poorer peripheral provinces. Some western provinces, for instance, are more than 3,000km away from China’s eastern ports, such that transport costs are prohibitive. China’s leaders hope that transnational infrastructure development will spur its provinces to become economic hubs for neighbouring countries.

In a similar vein, Belt and Road is promoting high speed rail connections between China and South-East Asia. The Lowy Institute has argued that this is also a matter of exporting Chinese standards, cementing its technological leadership and insinuating its companies into supply and management chains for the long-term. 

What Does Belt and Road have to do with Victoria?

Not seeing the relevance of Belt and Road to Victoria so far? Well, you wouldn’t be alone. Victoria is tangential to Belt and Road at best.

Daniel Andrews no doubt signed the memorandum of understanding on Belt and Road with an eye to concessional financing. For instance, in the case of the 142km Jakarta-Bandung high-speed rail line, China not only built the line but also financed construction itself at 2% p.a. terms. In the context of growing US-China rivalry, the Indonesian agreement is exactly the sort of playing one side against the other strategy a middle power should aspire to.

On the other hand, the conflict between state and federal governments is indicative of Australia’s so far poorly thought out approach to a rising China. In the end, it’s fair to argue that Daniel Andrews’ decision to sign the deal against the wishes of Canberra was a mistake that opened him up to the embarrassing legal shut-down Morrison executed.

Cover image sourced from Lowy Institute, “Understanding China’s Belt and Road Initiative,” available here.