China struggles to ease concerns over Silk Road project as summit looms

By Ben Blanchard and Robin Emmott

BEIJING/BRUSSELS (Reuters) - China is struggling to ease worries about President Xi Jinping's signature plan to build a new Silk Road as it readies for a major summit in late April, especially among Western nations wary about debt, transparency and Chinese influence.

While China gained a major victory by convincing Italy to become the first G7 nation to formally sign on to the plan last month during Xi's visit to Rome, others in the West have been less keen to jump onboard, though many have kept an open mind.

The Belt and Road Initiative, as it is formally called, is aimed at building a vast network of infrastructure connecting China to Central Asia, Southeast Asia, Europe and beyond, much like the ancient Silk Road.

Following the first Belt and Road summit two years ago, in a luxuriously appointed convention centre in hills north of Beijing, the second one is scheduled for the same location in late April. China is billing it as the country's most important diplomatic event of the year.

The country's top diplomat, Yang Jiechi, said on Saturday that almost 40 foreign leaders would come, and also took a swipe at "prejudiced" critics of the programme who seek to besmirch it with concerns like "debt traps".

"The Belt and Road is open, inclusive and transparent. It does not play little geopolitical games," Yang, who runs the ruling Communist Party's foreign affairs committee, told the official People's Daily.

The United States, locked in a bitter trade war with China, has been a particular critic of the Belt and Road, calling it an "infrastructure vanity project" when Italy signed on.

Jonathan Cohen, acting permanent representative of the United States at the United Nations, last month slammed China's attempt to get Belt and Road language into a resolution on Afghanistan, saying it had "known problems with corruption, debt distress, environmental damage, and lack of transparency".

Wu Haitao, chargé d'affaires of China's Permanent Mission to the United Nations, said the rebuke was "contrary to the facts and fraught with prejudice".

In 2017, the United States sent White House National Security Council senior director for Asian affairs Matt Pottinger to the summit. This time, Washington said it will not dispatch high-level officials due to its concerns about the project.

Lower-level staffers, possibly from the U.S. embassy in Beijing, might go to the summit to observe and take notes, sources familiar with the matter said, though a final decision has yet to be made.

China says it always welcomes "like-minded countries" to take part in the project.

It has not disclosed a full list of the leaders planning to attend the event. But some of Beijing's closest friends have confirmed they will go, including Russian President Vladimir Putin and Pakistan Prime Minister Imran Khan.

EU WARINESS

The European Union, China's largest trading partner, has also been in a bind about how to respond.

Last week, Europe's top leaders told Xi they wanted a fairer trading relationship with China, signalling an openness to engage with the project if it meant more access to the Chinese market.

German Chancellor Angela Merkel, speaking at the EU summit in March, grumbled about Italian Prime Minister Giuseppe Conte's decision to join the project, although she said Germany will play in active role in the Belt and Road and called for reciprocity.

Conte is due to attend the summit. Rome says signing onto the Belt and Road will bring much-needed investment and boost trade and has pointed to the fact that a dozen EU countries have already signed memoranda of understanding (MOUs) with China, including Hungary, Poland, Greece and Portugal.

SAFEGUARDING INTERESTS

The EU last year proposed its own infrastructure scheme, but it has denied it is trying to counter China's ambitions.

"For China it is a question of power projection. China is corrupting what should be a level playing field by offering loans that send country debts soaring and create a culture of economic dependency on Beijing," one EU official said.

German Economy Minister Peter Altmaier, a Merkel confidant, is attending the summit, along with French Foreign Minister Jean-Yves Le Drian, with Altmaier saying they wanted to "safeguard European interests in co-operation with China there".

Several EU officials said the European Commission was still looking at who to send as a replacement for Vice President Jyrki Katainen, who attended 2017's Belt and Road summit and has cited a calendar clash with the EU-Japan summit for not being able to go this time.

China has been on a push to show that the Belt and Road remains popular, despite cooling enthusiasm from governments including in Pakistan, Sri Lanka, Malaysia and the Maldives, where new administrations are wary of deals struck with China by their predecessors.

The Chinese government's top diplomat, State Councillor Wang Yi, who ranks below Yang, last month touted the success of the $57-billion China-Pakistan Economic Corridor, a major Belt and Road scheme.

Wang said after meeting Pakistan's foreign minister that less than 20 percent of funding for the China-Pakistan Economic Corridor came from Chinese loans, with the rest made up of direct Chinese investment and free grants.

The corridor focuses on the interests of ordinary people, Wang said, citing as an example women truck drivers trained to work at a coal mine connected to the project, which he described as a "touching story".

Wang told reporters at March's annual meeting of parliament that the Belt and Road was about high quality, sustainable, green development.

"As President Xi has said, the Belt and Road initiative comes from China, but the achievements belong to the world," Wang said.

(Additional reporting by Michael Martina in Beijing, Andreas Rinke and Michael Nienaber in Berlin, Richard Lough in Paris, David Brunnstrom in Washington and Michelle Nichols at the United Nations; editing by Neil Fullick)