In 2013, soon after coming into power, Chinese leader Xi Jinping announced a new plan to invest in a “Silk Road Economic Belt” to improve railways, highways and airports that linked China to its neighbors throughout Eurasia. Since then, this plan has evolved into the “Belt and Road Initiative” (BRI) and has expanded several times to include Africa, Latin America, and the Arctic, as well as improved maritime ports, telecommunication networks, oil and gas pipelines and much more.
To date, China has signed BRI cooperation agreements with 123 countries and undertaken over 3,100 projects. Chinese banks have invested more than $210 billion so far, and Chinese state-owned enterprises are getting most of the work, “more than 70 percent of the combined value of [the] contracts launched under the initiative.” And they are just getting started. The total cost of the BRI is expected to exceed $1 trillion.
Typical BRI projects includes highways and roads in India, Georgia, Tajikistan and Montenegro; railways in Thailand, Laos, Bangladesh, Malaysia and Saudi Arabia; ports in Sri Lanka, Myanmar, Djibouti and the UAE; hydroelectric power projects in Cambodia and Uganda; improved fiberoptic links with Pakistan; pipelines in Azerbaijan; and solar power in Kazakhstan. BRI has even expanded into outer space with the BeiDou Navigation Satellite System (BDS) which is scheduled to become fully operational this year. BDS will provide a Chinese alternative to the US Global Positioning System (GPS), which enables Siri to give you directions to the nearest Burger King, and US missiles to hit their targets.
Is there a giant map showing all of BRI’s planned projects? Nope. On the contrary, “The Belt and Road is not an entity with fixed rules; rather it is deliberately intended to be informal, unstructured and opaque… It is an idea, a concept, a process.” (Belt and Road, p. 35, 24). As a result, any maps of its major routes, including the one that appears below, are simply rough guides and very much subject to change.
Why would China invest over $1 trillion in other countries? According to a report from China’s Ministry of Foreign Affairs and its Ministry of Commerce, the official BRI goals include working with China’s neighbors to “jointly create an open, inclusive and balanced regional economic cooperation architecture that benefits all… It is a positive endeavor to seek new models of international cooperation and global governance, and [to] inject new positive energy into world peace and development.”
Critics have called the program “a dagger aimed at the heart of [Western] economies and societies” and noted that “Whoever is able to build and control the infrastructure linking the two ends of Eurasia will rule the world.” (Belt and Road, p. 11, 3)
However benign or malicious its intent, there can be no question that from the Chinese perspective, the BRI is an absolutely brilliant idea because it provides so many different benefits, including:
- Increased economic growth, by opening new markets to China and providing an outlet for the industrial overcapacity that resulted from China’s over-building boom.
- Support of a “‘going global’ strategy funded by Chinese banks… and staffed by Chinese workers”
- Increased trade by lowering transportation costs through improved infrastructure.
- Closer diplomatic and economic relations with BRI countries so that “Instead of gunboat diplomacy and coercive military power… China [can] use economic leverage both as an incentive to garner support for its interests… [and] as a means to punish recalcitrant countries.”
- Increased stability. For example, “By investing in volatile countries in central Asia, [Xi] reckons he can create a more stable neighborhood for China’s own restive western provinces of Xinjiang and Tibet.”
- Increased returns on China’s immense foreign exchange reserves, most of which are currently invested in low-interest US government securities. The interest rate on loans to finance BRI projects are higher.
- Increased use of the official Chinese currency – the renminbi – to replace the dollar in international trade.
- “Debt-trap diplomacy.” Countries that owe China money are less likely to challenge China on human rights or territorial disputes such as the South China Sea. And if countries are unable to repay, China can restructure or forgive the debts in return for strategic concessions. For example, “In 2011, China wrote off an undisclosed debt owed by Tajikistan in exchange for… 447 square miles of disputed territory.” Debt-trap diplomacy is seen as a particularly troublesome challenge to the US. “In September 2018, the head of the Overseas Private Investment Corporation (OPIC), a U.S. government international finance development agency, accused China of purposefully plunging recipient countries into debt in order to ‘grab their assets’ and to go after ‘their rare earths and minerals… as collateral for their loans.’” (I wonder whether China would forgive part of the growing US national debt if we offered them South Dakota. Just a thought.)
- And last, but definitely not least, no one should ever lose sight of the potential military benefits. As one expert put it: “If it can carry goods, it can carry troops.”
It is important to note that these benefits focus on BRI’s physical infrastructure projects. More broadly, however, BRI aims for “‘five connectivities’: policy coordination, infrastructure building, unimpeded trade, financial integration, and people-to-people exchanges. Taken together, these five links reflect the Chinese leadership’s vision for a region more deeply integrated around China… The ultimate objective of BRI is not only to enhance infrastructure connectivity across Eurasia but to ‘move toward a community of common destiny and embrace a new future.’”
Yikes. Guess what country would be the dominant power in this new future.
However, it is also worth noting that there is no lack of controversy about whether BRI will succeed. Critics outside and inside China believe the initiative “might easily fall short of the great claims made for it… It could [also] give rise to new problems for Chinese financial institutions, and debt service problems for countries with weak credit ratings.” (Red Flags, p. 175) According to a New York Times article, “The initiative has been plagued by allegations of corruption, overspending on vanity projects, excessive debt and other problems in countries like Malaysia, Sri Lanka, Pakistan and Uganda.”
If we wanted to review all of BRI’s main projects and discuss what will and will not work, we could be here for weeks. Indeed, the BRI has become “so big it is almost impossible for one person to have mastery of it.” (Belt and Road, p. 8).
But this post is designed to provide a five minute big picture summary, so let’s stop here and return to two of the BRI goals quoted above. Which seems more accurate? Is the BRI a “new model of international cooperation… [to lead to] world peace and development” or part of China’s attempt to “rule the world”?
Actually, from the Chinese perspective, it may be both.
If you ask me, the Belt and Road Initiative is still another example of China thinking long-term while the US thinks short-term. We are getting outsmarted again.
Pingback: Avoiding a US-China war | Understanding China, five minutes at a time