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China’s Belt and Road Initiative and America’s Response

China’s Belt and Road Initiative and America’s Response

In the last 30 years, China’s economy has developed at a record breaking pace. According to the CIA, in 2015 92 countries counted China as their largest trading partner compared to only 57 countries counting the United States at the same rank. China has gone from the world’s largest recipient of World Bank loans in the 1980s and the 1990s to, in recent years, loaning more to developing countries than the entirety of the World Bank. China’s economic rise has supplanted the nation as a pillar of leadership in a globalized world, and China has only accelerated its dramatic rise to superpower status with its Belt and Road Initiative (BRI). The initiative seeks to ambitiously launch long-term land and maritime transport links between China, Europe, Asia, and the Middle East. With Italy becoming the latest and largest nation so far to join China’s BRI, the United States be cognizant about the BRI’s potential to elevate China’s economy to new heights and should strengthen economic alliances with nations that are increasingly looking to China as a major development partner.

Global Scope

China’s Ministry of Foreign Affairs envisions a set of maritime and land-based economic routes that links China to 71 countries in Central Asia, Europe, Africa and South Asia. Touted as “the most significant and far-reaching initiative China has ever put forward” by Wu Jianmin, member of the Foreign Policy Advisory Committee of the Chinese Foreign Ministry, the BRI includes infrastructure projects like the Yiwu-London railway and a bridge over Croatia’s Mali Ston Bay to strengthen economic and non-economic elements of China’s relationship with recipient countries.

The majority of the funding for the Global Belt and Road Initiative will come in the form of loans, meaning that if the recipient country cannot pay back its loans the Chinese government could own the infrastructure projects they are funding. While some posit the BRI as a challenge to the “liberal international order” the United States has pioneered over the last fifty years, China facilitating more trade, especially in developing nations, reduces the likelihood of interstate conflict and war. Even if war is less likely under a system where China is a leading partner with most of the important economies of the world, the United States realizes that it will be difficult to impose the will of the United States, like sanctions and counterterrorism measures, on countries that are now economically dependent on China. Chinese government sources maintain that the One Belt, One Road is compatible with the five principles of peaceful coexistence as laid out in the United Nations Charter: mutual respect for sovereignty, mutual non-aggression, mutual non-interference in each other’s internal affairs, equality and mutual benefit, and peaceful coexistence. Xi Jinping stated that these connectivity networks across Africa, Asian, and European continents are likely to tap market potential, promote investment and consumption, create job opportunities, enhance cultural exchanges, and enable trust, harmony, peace, and prosperity. The Ministry of Foreign Affairs also believes that One Belt One Road will accelerate the development of western Chinese provinces that lag behind eastern China industrially and infrastructurally. The Chinese consensus rejects notions that China plans to take complete control of existing global financial institutions as the United States did with the Marshall Plan immediately following World War II; Chinese sources in the Global Times delineate between the Marshall Recovery Program that excluded pro-Soviet European countries and the Belt Road Initiative which welcomes all countries to join regardless of their allies, their doctrine, or their past relationship with China.

In the last decade, Chinese foreign policy began to utilize soft power as a method to obtain economic and political goals, and cooperation rather than coercion as a foreign policy tool by China should concern a United States that has traditionally been the world’s foremost hegemon. Soft power scholars believe that because China has such a drastically different government from most of the Western world and developed economies, it has difficulty shifting the international narrative away from its focus on issues of human rights and repressive political system. While previous attempts at Chinese soft power, like Confucius Institutes which have been accused of compromising academic integrity, and Chinese think tanks, that rarely endorse ideas differing from official Chinese Communist Party ideology, recipient countries typically embrace Chinese grant aid. The most effective manner in which China can spread soft power and spur other nations to work towards China’s goals is through what the BRI claims to do, addressing economic needs of developing countries. A Singaporean senior foreign policy official explained that China’s appeal to Southeastern Asian nations over the United States comes from gifts like multibillion-dollar investment aid packages.

American Concerns

The BRI drew disdain from the West due to Chinese willingness to pump money into dictator-run countries, like Zimbabwe, Niger, Angola, and Burma, that have poor human rights records without aid conditionality of changing authoritarian government practices.  Despite America’s enormous military strength and reputation as the pinnacle of innovation, the Asian Infrastructure Investment Bank (AIIB) represents an concerning trend to Americans that the BRI follows. They are both noteworthy international financial structures that include many trusted American allies but exclude United States financial hegemony. The AIIB also supports the idea that American financial institutions are ill-equipped to adequately deal with the rapid rise of developing Asian economies. South Korea, a long-term ally of the United States, turned to China as its most important trade partner to rival Japan. The decision of President Trump to go behind South Korean leadership to meet with Kim Jong-Un and end large-scale joint military exercises with South Korea has also strained relations. As the United States finds themselves no longer alone as the sole superpower in the world, many American allies experience internal contradictions and friction within one another that complicates their relationship with the United States. Contrasting preemptive military interventions into Iraq and Afghanistan that have incensed regional conflicts and made American visions of “global peace, security, and stability” seem insincere, the official Chinese ideology behind the BRI is to sponsor peaceful infrastructure and economic development. China’s discourse of “peaceful development” may ultimately win the hearts of nations that grow wary of the Americanized doctrine of “security.” Herrero and Xu uncover that the Belt and Road Initiative would drastically reduce both railway and maritime costs for trade between European Union countries, especially landlocked countries, who are historically American allies.

The BRI is critical to transforming China’s self-identity from an East Asian country to a central country of Asia that includes the North, South, and the West; this reinvigorates China’s image into a world superpower that rivals the United States. What will drastically improve Chinese soft power is the feature of the BRI that allows for an open and inclusive commerce involving countries along the route that are not China, as introduced by Xi Jinping in the 2015 Boao Forum. The BRI fosters a new era of Chinese economics and foreign policy that encourages intensive cooperation and builds on win-win diplomacy endorsed by Deng Xiaoping throughout the 1980s and 1990s to ensure a peaceful environment where China could grow economically.

At best the BRI benefits every country that is willing to partake in a mutually beneficial trade arrangement and at worst the BRI is a nefarious, ideological plan to win over American allies and whose economic benefits are conditional on political requirements and military cooperation. Either scenario should be concerning towards the American policymakers who wish to solidify America as the world’s foremost economic hegemon. Western officials also worry that Chinese development money undermines governance standards of lending institutions like the World Bank, especially if that money goes towards China’s own companies or environmentally damaging projects. The argument that the Belt Road Initiative will better account for the experiences and interests of emerging economies than existing financial institutions like the World Bank does not necessarily need to be true to worry American policymakers either; the AIIB and BRI may bolster China’s global reach as a complement to existing financial mechanisms. Funneling money towards infrastructure, business, and educational opportunity throughout Western China can help assuage relations with China’s ethnic minorities, which takes away a key talking card by Western governments about China’s alleged human rights violations.

Effectiveness of American Countermeasures

In 2015, the BRI was expanded to encompass 70 percent of the global population and 55 percent of the world’s GDP. In 2015, China allocated a $40 billion fund solely dedicated towards funding almost 900 BRI projects, but recently China was estimated to increase total investment on BRI projects to $1.2-1.3 trillion by 2027.

American countermeasures emerged from China’s recent and rapid expansion of infrastructure. Rising anxiety in the American government about China’s assertive development abroad led to Secretary of State Mike Pompeo laying forth the “Indo-Pacific Economic Vision” to combat China’s rise. Pompeo also elucidated President Trump’s Indo-Pacific counterstrategy with a trilateral investment agreement among the United States, Japan, and Australia. The Indo-Pacific Economic Vision will funnel money into Southeast Asia through the US International Development Finance Corporation, which doubles the global spending cap for loans private companies can use for development projects to 60 billion USD. Pompeo’s language was far less combative and aggressive than Vice-President Mike Pence’s language in 2018 at the Hudson Institute that stressed a Chinese campaign undermining support for “our nation’s most cherished ideals.” Pompeo even offered an avenue for collaboration for China when stating “our Indo-Pacific vision excludes no nation.” Brian Hook, Pompeo’s senior policy advisor, implied that American efforts to expand US technology exports to the region and store energy resources by developing infrastructure would ensure “that America’s model of economic engagement is the healthiest for nations in the region.” These American initiatives still do not even scratch the surface of the billions of dollars of investments China is transferring into Southeast Asia.

The American response to the Belt Road Initiative under the Trump administration has flirted with bolstering ties with relevant allies in the Asian-Pacific region and has taken issue with China’s economic interactions with other Asian countries. While there are little doubts in the international community about America’s ability to uphold military commitments, investment in Southeast Asian countries could strengthen America’s image as upholding economic and political alliances especially after trust among Southeast Asian countries dwindled after President Trump incurred a withdrawal from the Trans-Pacific Partnership. The Trans-Pacific Partnership was an opportunity for the United States to strengthen its trades relationships with relevant Southeast Asian countries in the pivot against China, and the AIIB represents China’s largely successful response to the TPP with major economies like Brazil, India, Russia, France, and the United Kingdom joining membership.  In July of 2018, the American government also streamlined funding to prevent the termination of the Overseas Private Investment Corporation, an agency that offers political risk insurance and financing towards American companies interested in international development projects. Representative Ed Royce (R-CA) labeled Chinese development assistance as “predatory development finance models” citing the specific example of China acquiring a major port in Sri Lanka due to Sri Lanka’s inability to pay back China’s loans. Royce’s quarrel with China has more merit than it used to; Chinese loans are nearing up to 5 percent when they used to only be 2.5 percent.

The Belt Road Initiative can also be seen as proof that China is deeply cognizant of America’s “pivot” to Asia, implying a stronger commitment US military, trade, and development assistance to American allies to counterbalance China’s rise. Major General Qiao Liang stated that the BRI is a “hedging strategy against the eastward move of the U.S. pivot to Asia.”

Conclusion

Despite Chinese sources proclaiming altruistic goals, the BRI is first and foremost a tool to promote Chinese economic development by heightening exports, enriching access to natural resources, and providing support to domestic industries that experience overcapacity within China’s economy. China also stands to benefit from strengthening ties with Central Asian autocratic governments that have an abundance of energy resources and to reduce tensions among China’s western ethnic regions. China would not undertake such a grandiose project if it did not have the potential to propel China into the world’s most important economic power.

It is hard to deny that the BRI does provide China a valuable avenue in shaping the preferences of other nations in a manner that benefits China. Chinese sources will under-exaggerate and Western sources will exaggerate the difficulty of the BRI’s profitability with many nations that have underdeveloped economies, high levels of corruption, and limited knowledge on the project. The United States should also feel more at ease at the fact that coercion of nations involved in the BRI would result in political counterculture that would denigrate China’s soft power and destroy Xi Jinping’s new ideal for China.

While the American military is by far the most formidable force in the world, American supremacy of the economic realm is more at question currently than it has since before the Bretton-Woods Institution. The Institute for China-America Studies, China’s only DC based think-tank, argues that the West’s best option regarding the BRI is simply to accept and attempt to shape the potential $1 trillion bestowed upon the geo-economic stage. Either option of joining the BRI as a partner and using America’s premier economic influence of the last 50 years to exert political ideologies or remaining outside the BRI but bolstering economic and political support to Asian Pacific allies in our pivot against China is preferable to questioning the value of our alliances. Any approach by the Trump administration that ignores trends of globalization and free trade, like abandoning multilateral trade deals or questioning burden-sharing in alliances, is doomed for failure.

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