By Clay Chandler and Eamon Barrett
April 27, 2019

In Beijing this weekend the big happening is China’s second “Belt and Road Forum.” A host of global luminaries—37 heads of state, International Monetary Fund managing director Christine Lagarde, United Nations Secretary General Antonio Gutierrez, and delegates from more than 150 countries—descended upon the capital to discuss president Xi Jinping’s signature initiative to expand transit, telecommunications, and trade links between China and countries in Asia, Europe, East Africa, and Oceania.

The tone of this year’s meeting is far less triumphant than that of the first forum, held in 2017. While visiting Beijing last week, I was struck by the conciliatory language of slogans on propaganda banners and billboards touting the gathering: “Peace and Cooperation; Openness and Inclusiveness; Mutual Learning and Mutual Benefit.”

In a speech to the confab Friday, Xi sought to allay concerns that the initiative will saddle cooperating countries with unmanageable debts, create a one-way street for Chinese exports, and damage the environment. “We must adhere to the concept of openness, greenness and cleanliness,” he declared. “Operate in the sun and fight corruption together with zero tolerance.”

Global press reports have portrayed Xi’s new rhetoric as part of a “repositioning” or “retooling” of the belt and road initiative. Some have called it an exercise in “damage control.” If nothing else, it offers a fascinating case study in the ability of Chinese leaders to change course without actually acknowledging they were headed in the wrong direction.

Xi unveiled the belt and road project in a speech in Kazakhstan in 2013. The initiative envisioned more than a trillion dollars of investment strewn across more than 60 countries, with the “belt” following the ancient Silk Road route from China to Europe, and the maritime “road” stretching from China to Southeast Asia and East Africa. The idea was to export China’s infrastructure-driven development model with Chinese finance and developers partnering with local and international enterprises on transport and energy projects at vast scale.

And yet, in one market after another, the belt and road project has run into trouble. In Malaysia and Pakistan, newly elected governments have sought to renegotiate terms of Chinese loan packages. Myanmar and Nepal are balking at proposals for China to build dams, ports and power plants. In 2017 Sri Lanka, struggling to meet debt payments, ceded China control the port of Hambantota. Trump officials have charged the belt and road program is part of a broader Chinese effort to create “debt traps” to control smaller economies.

At this year’s forum, Chinese and non-Chinese speakers alike affirmed the importance of making sure belt and road projects are “sustainable”—not just financially but also in their impact on the environment. Lagarde warned explicitly that belt and road projects must be green.

The environmental impact of belt and road projects is among the issues we’ll be discussing at the Fortune Global Sustainability Forum in Yunnan province this September. I’ll join Fortune colleagues and senior business executives to debate China’s role in tackling the world’s many environmental challenges at dinners in New York (May 7) and San Francisco (May 9). These affairs are invitation-only, but we have a few places left at the dinners and welcome CEO Daily readers.

Clay Chandler
@claychandler
clay.chandler@fortune.com

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