Risk management will be crucial to initiative

For China's trade route vision to be sustainable, it must be driven by strong commercial logic above commitment to public policy

The much-anticipated Belt and Road Forum for International Cooperation in Beijing on May 14 and 15 will help provide clarity on how the vision has progressed since it was first announced in 2013. One of the concerns form any Belt and Road countries is the lack of detail around the feasibility and planning behind some of the projects it is promoting, which has led to some wondering whether the initiative might increase risk, particularly in developing countries linked to the initiative.

Beijing should use the forum as a platform to explain how it assesses and mitigates the various risks prior to investing to ensure the viability and sustainability of the foreign policy vision. This will help add reassurance to the "win-win" talk behind the initiative.

The expectations of Belt and Road's impact on economic development, both at home and abroad, have been set high, and the forum will be somewhat of an assessment of how the initiative has been going. The concept's objectives are to promote common development and prosperity through cooperation, implementation of which has traditionally consisted of significant Chinese loans and contracts to build infrastructure in partner countries. However, investment and infrastructure alone will not achieve China's objectives unless strategic thought goes into coordination, good planning and strong governance. The forum is a perfect opportunity for China to explain in more detail how these issues will be addressed and the risks mitigated.

One risk is whether Chinese infrastructure will benefit the Chinese economy more than local Belt and Road economies. Here, it is useful to look at the well-developed economic relationships China has with Central Asia and Pakistan, which are key countries for the land-based Belt half of the initiative. The range of infrastructure investments there shows that it is not just about Chinese-focus infrastructure, such as transportation facilities to export Chinese goods to Western markets or pipelines to enhance Chinese energy security. It is also about building stable domestic energy supplies, investing in local industry and ensuring business is developed through special economic zones. Such initiatives will be crucial for stimulating local economies and markets rather than just generating transit fees or enhancing China's own energy security.

It is not just China's responsibility to stimulate such economic activity. To facilitate this, Belt and Road partner countries will need to respond with their own economic strategies to maximize Chinese investment and attract other foreign investment in order to account for their own economic growth. For example, Kazakhstan has been proactive in meeting China's Belt and Road with its own national "Bright Road" strategy, announced by Kazakhstan President Nursultan Nazarbayev in November 2014. The strategy sets out an economic stimulus package of $9 billion for 2015-19, also focused on infrastructure development as well as economic diversification. This offers a model as to how Belt and Road countries can have a say in where Chinese investment is directed.

Apart from proactive responses from countries along the routes, to minimize risks China and partner countries will need to assess and plan projects effectively to ensure they do not exacerbate existing economic vulnerabilities. This can be done through a deeper study of the countries that China is investing in and possibly cooperating with other foreign investors to ensure appropriate feasibility studies are done.

For the vision to be sustainable, therefore, it must be driven by stronger commercial logic above public policy. Although freight transportation is quicker than by sea, it is also far more expensive.

Good governance is another way not only to enhance effective fiscal management but also to attract other non-Chinese investment. This is certainly a two-way street, but China has the power to help mold good governance practices if it chooses through its investment. This could also help the commercial viability of some projects. For example, Khorgos is the best-known special economic zone in Kazakhstan, serving as a transportation and aspiring trade hub on the border with China.

With numerous opportunities, the initiative also presents many risks for Chinese investment and partner countries. However, more work can be done to anticipate and try to mitigate such risks. This will improve the clarity of the initiative as a whole and, in turn, contribute toward the trust China desires among its partners.

The author is a research fellow with the Royal United Services Institute for Defence and Security Studies in London.