Who’s afraid of China’s One Belt One Road Initiative?

A month ago China unveiled an action plan for China’s controversial One Belt, One Road initiative. The action plan introduces a series infrastructure development projects and trade related agreements along three Silk Roads emanating from China and reaching as far as Europe, Africa, and South America. It undoubtedly will be the subject of scrutiny as analysts and pundits on both sides of the Pacific chime in to make hasty comparisons to China’s 14th century maritime expansion and the more recent U.S. led Marshall Plan.  Some may even go as far to equate the One Belt, One Road to Japan’s pernicious WWII era East Asia Co-Prosperity Sphere – this analogy, to the Chinese, is ultimately insulting.

Scrutiny and false comparisons aside, China and the world will be made economically better off by a successful implementation of the One Road, One Belt initiative.  China estimates the total benefit stream for investors and firms that participate in the initiative to reach an astronomical USD 21 trillion. Moreover, the prospects of such benefits are particularly timely at a time when global aggregate demand is on a downslide.   During a series of fall 2013 visits to Asian neighbors, China’s president Xi Jinping first announced the One Road, One Belt proposal as an umbrella concept describing three economic belts extending westward from China toward Europe and Africa.  The three economic belts roughly follow historical trade routes linking China with the West and are known as the New Silk Road, South Silk Road, and the 21st Century Maritime Silk Road (See map).

One Belt One Road

According to the Chinese Foreign Ministry, the initiative seeks to strengthen economic collaboration, improve road connectivity, promote trade and investment, promote currency conversion, and bolster people-to-people exchanges.  The timing of the initiative is critical.  China’s current development trajectory requires an infusion of economic growth emanating from its under-developed interior using an outward focused plan to export its finished products abroad while importing much needed raw materials and foodstuffs from the rest of the world.

The catchword among the planners of the Belt and Road system is youwai zhinei (由外至内) or ‘to bring the outside in.’ This concept reveals the actual logic of the plan as an outward looking plan that fills domestic economic needs first. Xi Jinping is betting his political future, and by extension, the continued legitimacy of the Chinese Communist Party, on this plan to solve China’s economic woes and deliver successful reforms.  Thus, criticism should not pontificate on how the initiative is China’s grand strategy for global domination, but rather focus on assessing the efficiency of the various related project and prognosticating whether Xi can drive the initiative’s benefits home in time to stave off an economic slowdown.

To address current criticism, pundits are quick to draw historical comparisons to when Ming dynasty Admiral Zheng He, a court eunuch whose naval fleets, sailed as far as the east African coastline collecting tribute and expanding China’s sphere of influence.  To be sure, Zheng He’s ships were equipped with soldiers and were not simply diplomatic missions.  However, historian Jeremiah Jenne Executive Director of The Hutong in Beijing says, “Zheng was not trying to conquer or colonize in the name of the Ming Court. China gets into a lot of trouble in contemporary diplomacy because there seem to be elements in the foreign policy and military establishments and a whole swath of the general population who have trouble separating tributary arrangements from actual control and sovereignty.”

Jenne’s comments are generally made in reference to China’s historical claims to most of the South China Sea, many of which are based on Zheng He’s naval explorations.  However, on equal measure, Western detractors of the One Belt One Road plans should also not claim Zheng He as a world conqueror or challenger to the status quo.

Some analysts suggest the cheap financing and aid packages attached to the One Belt One Road plan are part of a political strategy for China to placate its neighbors over territorial disagreements with trade incentives and cash.  China indeed ill-advisedly attempted this strategy in the mid 1990s with its economic cooperation strategies vis-à-vis mainland Southeast Asia, but its track record with this strategy, particularly with Vietnam and Indonesia is spotty and has not produced desired results.

Yun Sun, resident fellow and Chinese foreign policy expert at the Stimson Center in Washington D.C. does not quite agree with the view that One Belt, One Road is motivated primarily by strategic and political calculations. She says, “The plan is primarily an economic campaign designed to serve China’s economic restructuring and export needs. It will benefit the region, as well as China.”  She admits the initiative will inevitably have a political impact and Beijing conceivably sees the political benefit as a part of the package.

“Using the counter-factual approach,” continues Sun, “China would still pursue One Belt, One Road without South China Sea disputes, so we can’t really say that the South China Seas or mending ties due to disputes there is the cause of China’s One Belt One Road.”

The post-WII Marshall plan which successfully lifted both the US and Europe out of its post-WWII economic woes and acted as the keystone to US led global restructuring models such as the Bretton Woods system indeed serves as a useful comparison to the One Belt, One Road initiative.   While we should be mindful that there is no guarantee the plan will deliver the local and global economic benefits that China hopes for, we should be more mindful that unlike the Marshall Plan, China has no economic restructuring model to offer the rest of the world, its stock of soft power is not necessarily improving, and this plan, still in its proposal stage, will be no easy sell.

To provide a comparison, China’s scorecard in regard to economic belt and road development in mainland Southeast Asia is murky and has contributed much to its current reputation rising regional power with unclear intentions.  Vietnam has stringently followed China’s export-led growth model and as a result is currently heading toward dire and inexorable economic straits unless it considers other alternatives.  Even in poor countries like Laos, where mid-to-high-value Chinese exports are not preferred to Thai or even Vietnamese products, scant evidence exists to demonstrate the “Made in China” image is improving.

The record of Chinese firms abroad in regard to environmental protection and labor practices is abysmal in countries like Laos, Myanmar, and Cambodia with no evidenced improvement in corporate social responsibility practices. Tied to this, Xi Jinping’s anti-corruption crackdown will reveal deep corruption and graft in many of China’s overseas infrastructure development projects.  Moreover, Xi Jinping is pledging to break-up the monopolies of many of China’s powerful state firms – construction and energy firms are already in his sights – thus, it is unclear who will build the One Belt, One Road projects.

To reiterate, these are the issues that deserve scrutiny and attention rather than the high-level rhetoric of China’s grand strategy.

Liu Jinxin, regional logistics expert and chief architect of the Bangladesh-China-India-Myanmar Corridor (a westward stretching leg of the South Silk Road – see map), says that the greatest challenge facing the One Belt, One Road strategy is in China’s public relations strategy.  “Too many out there misunderstand China’s intentions, and factions, particularly within democratic countries, will misinterpret the benefit flows that this plan will deliver.”  Liu also cites the need for harmonizing legal structures between cooperative partners in sectors related to trade, commerce, and logistics.  “China will learn the most from this process, specifically through interaction with countries in Europe where the rule of law is strong.  However, since China’s legal system is not based on rule of law, it will be difficult for China to emerge as a conversation leader on this initiative.  In many ways China’s role is passive.”

Thailand’s refusal to pass a regional cross-border transportation agreement sponsored by the Asian Development Bank (which China and other mainland Southeast Asian states have ratified) is reflective of Liu’s commentary.  The ratification of this agreement would require the break-up of many entrenched factions within Thailand’s customs and inspection agencies as well as the military – a move these powerful groups are unwilling to budge on despite Thailand’s overall enthusiasm for economic cooperation with China.

When applying a critical eye to the One Belt, One Road initiative, its best to begin with a consideration toward the feasibility of such a project and looking at China’s real capabilities. Many worthwhile questions arise amidst such an inquiry, and certainly no one should take for granted that China can pull such an endeavor.  The functionality of the initiative is to push China successfully through its next wave of economic reforms promising further stability to East Asia and delivering a substantial contribution to global economic growth.

2 Comments

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2 Responses to Who’s afraid of China’s One Belt One Road Initiative?

  1. “Vietnam has stringently followed China’s export-led growth model and as a result is currently heading toward dire and inexorable economic straits “.
    Baloney. Vietnam’s leadership were corrupt and incompetent. That’s what got them into trouble. Nothing to do with the non-existent Chinese ‘model’ -— which is not nearly as ‘export-led as, say, Germany’s.

  2. Dr. CHHORT BUNTHANG

    I would like to suggest that the China Silk Road should not only focus on Chinese’s benefit, but also sharing benefit with other countries and China should consider other countries as equal partners with China as well. Otherwise, China Silk Road will challenges with many obstacles.
    Questions:
    I’m very interested in the concept note of the Silk Road that has long been regarded as a symbol of unity, equality, inclusiveness, and cooperation, and always carries the spirit of mutual trust, mutual benefit, mutual learning, and win-win progress, how China and all countries as partners achieve this goal?

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