“One Belt, One Road”: Xi’s Chinese Dream

“One Belt, One Road”: Xi’s Chinese Dream

Since the late 1980s, in response to anxieties over the fall of the USSR and the global backlash around China’s violent suppression of the 1989 Tiananmen Square protests, China followed a foreign policy doctrine of Taoguang Yanghui (Literally: “Keep a low profile”). Whereby China should: “Observe calmly, secure our position, cope with affairs calmly, hide our capacities and bide our time, be good at maintaining a low profile, and never claim leadership”.

Today, under the leadership of Xi Jinping, Chinese foreign policy has taken on a radically different character. While the economies of the West have been relatively slow to recover from the 2008 financial crisis, in recent years, China’s economy has boomed, and with it, its influence as a world power. In contrast to previous administrations, China, under President Xi openly seeks a more active role as a regional and global leader. The pressing of territorial claims and rapid building of military fortifications on island chains in the South China Sea demonstrates an increasingly self-confident China asserting its dominant position in the region. At the same time, no longer simply a destination for overseas investment, China has become a leading investor in foreign markets, particularly in Africa. Rising demand for raw materials to sustain Chinese economic expansion has led to China becoming Africa’s largest trading partner and an essential source of funding for infrastructure projects in the region.

The ‘New Silk Road’

One-belt-one-road.svg
By Lommes - Own work, CC BY-SA 4.0, Link

The “One Belt, One Road”, or “Belt and Road” Initiative (BRI), unveiled by President Xi in 2013, is the most precise expression of China’s new leadership ambitions. The far-reaching development project is one of the most ambitious in history, covering over 65% of the world’s population and expecting to involve over US$1 trillion of investments. It aims to create a trade network spanning Asia, Africa, and Europe through large scale infrastructure projects, trade policy coordination, and economic integration. The “belt” refers to the Silk Road Economic Belt, a series of overland trade routes, railways, pipelines, power grids and free trade areas connecting China to Europe, the Middle East, South Asia, Russia, and Central Asia. This roughly corresponds to the ancient “Silk Road” trade routes that historically linked China, Africa and Europe, while the “road” refers to the Maritime Silk Road, a network of ports and sea lanes spanning the South China Sea, the Indian Ocean, the South Pacific, and the Mediterranean Sea. Far from being confined to land and sea trade routes, the project will also include an “Information Silk Road” of undersea internet cables and the BeiDou satellite navigation system to help coordinate the project. Culture is another important dimension of the BRI. China has signed more than 300 cultural exchange agreements with participating countries, the project includes funding for theatres and museums, and China has engaged in archaeological cooperation with 15 BRI countries.

Building the Belt and Road

The ambitious initiative has received much interest from countries around the world wishing to participate; as of the 27th of March 125 countries and 29 international organisations have signed cooperation agreements with China

and many key infrastructure projects around the world are currently underway. In late March 2019, Italy became the first G7 nation to join the BRI and signed 29 trade deals worth €2.5 billion (£2.2 billion), opening up the ports of Triest and Genoa for Chinese shipping.

The Ethiopia-Djibouti electric railway began commercial operations in January 2018 after a US$4.2 billion (£3.2 billion) investment, cutting travel time from Addis Ababa to Djibouti from three days down to less than 12 hours. Djibouti itself received a US$590 million (£450 million) investment towards the Doraleh Multipurpose Port (DMP), a state of the art shipping port with the capacity to handle 8 million tonnes of cargo per year. The DMP is fully integrated with the Ethiopia-Djibouti railway, boosting Ethiopian trade by giving the landlocked nation access to the valuable trade routes around the Horn of Africa. The port is one of four financed by the Chinese as part of the Djibouti International Free Trade Zone (DIFTZ), intended to become Africa’s largest free trade zone and a centre for businesses wishing to access the growing African market.

Chinese money has also developed Gwadar, formerly a small Pakistani fishing village, into a global commercial hub and free trade area. This city constitutes an important part of the China-Pakistan Economic Corridor (CPEC), a trade route connecting China to the oil-rich Persian Gulf and Arabian Sea regions through Pakistan.

How has the international community responded?

Despite widespread interest and participation in the BRI, responses from those in the international community have varied significantly. The initiative has been endorsed by participant countries such as Hungary and Italy, who see the initiative as an opportunity to deepen mutually beneficial trading links with China and other growing economies in Asia and Africa. Speaking at the second Belt and Road summit in late April, Hungarian Prime Minister Viktor Orbán argued that the Western countries should recognise that “political and economic systems different from ours can sometimes be more successful and competitive”. British Chancellor Philip Hammond, keen to promote a healthy trading relationship with China as the UK prepares to exit the European Union, has praised the “truly epic ambition” of the project and expressed hope that the UK firms would be given an opportunity to participate and bring British legal, financial and technical expertise to the table. Despite this, most EU leaders remain tentative, voicing concerns about labour rights standards, the environment and the sustainability of debt burdens. While recognising the benefits that EU participation in the BRI would bring, Jyrki Katainen, Vice President of the European Commission stressed that the EU would only endorse the BRI if China adhered to principles of openness, sustainability and transparency. French President Emmanuel Macron argued that the Silk Road should not be a “one way” project that turns participant countries into Chinese-dominated “vassal states”. German Chancellor Merkel also voiced concerns that the BRI could lead to increased Chinese influence in the Balkans if the EU did not act with unity.

In other countries, most notably the United States, the BRI has been met with strong criticism. In a speech on October 2018, US Vice President Mike Pence warned of an increasingly powerful China using “debt diplomacy” to expand its influence and secure geopolitical interests overseas, citing the example of Sri Lanka, which, after struggling to repay Chinese infrastructure loans, signed a deal in 2017 giving China control of Hambantota Port in exchange for US$1.1 billion (£837 million) of debt relief. Turkey has also raised concerns over debt diplomacy alongside China’s continued mistreatment of Uighur Muslims, being notably absent from the second BRI summit alongside Poland, Fiji, Spain, Sri Lanka and Argentina. Even Chinese officials have cautioned lenders to exercise restraint and good judgement to ensure investment projects are economically viable and that debts can be repaid. India has also been a vocal opponent of the BRI, particularly the CPEC, which passes through significant portions of Indian-claimed but Pakistan-administered Kashmir, citing concerns of “sovereignty” and “territorial integrity”. New Delhi is understandably worried that Chinese investments in Pakistan-administered Kashmir will further legitimise Pakistan’s claim to the region.

Opposition to perceived Chinese economic encroachment escalated into open violence on the 12th of May when armed gunmen from the Balochistan Liberation Army (BLA), a separatist movement fighting for independence for the Balochistan region of Pakistan, stormed the five star Pearl Continental hotel in Gwadar, killing five and wounding six. In a statement claiming responsibility for the attack, BLA spokesman Jihand Baloch said that fighters were specifically targeting Chinese and other foreign investors in response to what they see as increasing foreign exploitation of the resource-rich province.

What are the implications?

Regardless, if China can realise the far-reaching ambitions of the project, there will be fundamental changes to the balance of the global economy, which in turn will have implications for both regional and global power politics. Although China has made efforts to stress their desire for peaceful and mutually beneficial exchange with BRI participants, some countries will benefit more than others, and a pattern of winners and losers will emerge as the project progresses.

Xi Jinping and the Chinese Communist Party (CCP) stand to gain the most from the success of the BRI. The legitimacy of the Chinese one-party state depends heavily on its ability to deliver the continued economic growth necessary to ensure domestic stability and raise Chinese living standards. The BRI will, if successful, put China at the centre of a new global trade network, giving it access to the raw materials of Africa and the Middle-East, the financial centres of Europe, and rapidly growing markets for consumer goods in Africa and South-East Asia. As the BRI has become a centrepiece of Xi Jinping’s foreign policy, President Xi’s personal prestige in Chinese domestic politics, and his legacy in the long-term, will hinge on the initiative’s relative success. It is also likely that nations in South East Asia, seeking greater economic cooperation and integration with China, will be more willing to compromise over their territorial claims in the South China Sea.

Countries and cities that form key ‘nodes’ in the BRI will, as focal points for Chinese investment, likely experience a significant economic upturn. Cities such as Samarkand in Uzbekistan, which once enjoyed significant prosperity from its central position in the ancient Silk Road, will have the opportunity to develop into vital commercial hubs as their infrastructure and business sector develops. With Chinese investments, Djibouti, with easy access to major shipping routes in the Red Sea and the Gulf of Aden and connected to the new Ethiopia-Djibouti railway, is well positioned to become a global centre of trade and commercial hub for firms wanting to do business in Africa. Pakistan plays a particularly important role connecting China to the oil-rich Persian Gulf region, with the second phase of investments into Pakistan expected to total US$57 billion (£44.5 billion). Assuming that national governments remain cooperative and continue to sign agreements under the BRI framework, port cities, especially those in the Global South, have the opportunity to become global centres of trade and prosper from the wealth that passes through their borders.

The United States, the dominant global power since the end of the Cold War, has the most to lose if a new, China-centred economic order emerges. Being a vocal critic of Chinese trade policy since before his election as president, President Trump has been particularly keen to curtail what he sees as unfair trade with China. In 2018 tariffs were introduced on US$250 billion worth of Chinese goods. Earlier this month, US tariffs on Chinese goods were raised from 10% to 25% on $200 billion worth of goods. In January 2017, President Trump also signed an executive order withdrawing from the Trans-Pacific Partnership (TPP), a multilateral trade agreement intended as a counterweight to a rising China. There is no doubt that Trump’s trade policy will harm both American consumers, by artificially raising the cost of imported consumer goods, and American export-oriented businesses, as the inevitable retaliatory tariffs make American exports less competitive in foreign markets.

However, it seems increasingly likely that China’s outward-looking foreign policy will further secure its status as a significant global power, and by extension, a rival of whom the US and EU statesmen must be wary. In what seems like a strange reversal of the Cold War economic order, The US President’s trade policy is an explicit rejection of free trade and neoliberal globalisation, while the Chinese Communist Party under President Xi intends China not just to be a participant, but a leader in the global capitalist economy. To paraphrase a well-known campaign slogan, President Trump’s rejection of his predecessors” international commitments will allow China to fill the vacuum and allow Xi Jinping to “Make China Great Again”.

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