History is marked by radical changes and shifts, and with China’s most ambitious foreign policy project ever, a new geopolitical dynamic may be on the horizon with China at its epicenter. Known as the Belt and Road Initiative, or BRI, this plan seeks to rejuvenate the spirit of the old silk road trade routes by increasing Chinese trade with the rest of the world through substantial infrastructure investments on both land and sea. Spanning over 60 countries and with an estimated cost of over $1 trillion dollars, the BRI’s scope is unparalleled in modern history.
For comparison, the Marshall Plan, which the U.S. financed to rebuild Europe after World War II, is only 1/12 the size of the BRI. During its time, the Marshall Plan achieved substantial geopolitical goals as well as economic ones, where it played a significant role in solidifying the United State’s position as a global superpower. Chinese leadership today appears very eager to increase the country’s global influence, and if the success of the Marshall Plan is any indicator, the BRI could propel China to greater geopolitical prominence.
If history is any guide, the first step to achieving that level of global influence is for China to forge closer ties with other nations. The BRI provides an important avenue for developing these relationships by increasing Chinese trade with the rest of the world. Trade along the BRI is generally broken up into two main pieces, land infrastructure improvements which are collectively referred to as the Silk Road Economic Belt, and seaside developments known as the New Maritime Silk Road. Taken together, projects along these sections are estimated to remove days worth of travel time and cut costs by a significant margin, anywhere from 20% to 50% depending on the region. China is already the largest trading country on the globe, and therefore it’s in their national interest to reduce the cost of transporting goods as much as possible. About a quarter of the world’s trade comes from the countries directly involved with the BRI, and analysts predict worldwide trade may increase by as much as 12% from the initiative.
Another prime motivator for the implementation of the BRI is decreasing the Chinese economy’s dependence on domestic infrastructure projects, which have historically been a key component of the country’s financial well-being. The output by China’s construction industry is truly gargantuan and represents a sizable portion of the country’s workforce.
Of the top ten largest construction companies in the world, seven are Chinese. In 2016, Chinese companies had a record breaking number of new skyscrapers constructed, 84, compared to its closest competitor, the U.S. which only constructed 7 new skyscrapers. This tremendous engine of economic activity does come with some drawbacks though. Namely that it is very difficult to downsize without harming economic growth and stability. The industry employs over 50 million people, which could mean mass civil unrest if many of those people suddenly become unemployed.
However, the Chinese government may have found a viable short term solution. As China’s building boom has begun to slow in recent years, Chinese construction companies have been encouraged to look overseas for opportunities that will sustain their aggressive building portfolios. The BRI aims to aid Chinese construction companies in this endeavor by creating investment opportunities and new projects for companies to vie for. Many BRI projects even include a stipulation that Chinese companies, equipment, and workers must be used for a majority of the project, otherwise, Beijing can withhold funds. By doing this, the BRI can provide Chinese companies with enough work to avoid massive layoffs as the domestic construction industry continues its slow down. This is not a permanent solution though, and Chinese policy makers will be working on borrowed time as they scramble to reinvent China’s construction industry in a sustainable way.
While economic motivations drive the main narrative of China’s Belt and Road Initiative, there are also important military and geostrategic considerations that influence Beijing’s decision-making apparatus. Firstly, the BRI will allow China to diversify its trade routes for energy imports, and thus reduce its vulnerability to U.S. influence and allies in the South China Sea. This approach provides Beijing with the opportunity to curb the impact of the so-called “Malacca Dilemma”, a term coined by ex-Chinese President Hu Jintao to refer to the fact that over 80% of China’s energy imports pass through the Malacca Strait.
As the world’s largest energy consumer and largest net importer of oil, China is extremely vulnerable to any disruptions along this trade route, which also happens to be surrounded by U.S. allies. With the BRI, China will have a wealth of new options when importing energy, ranging from the overland routes in Central Asia and Russia to new sea lanes like the Thai Canal.
Aside from reducing its energy vulnerabilities, Beijing is also taking steps to increase its military presence overseas. In a time when U.S. leadership abroad is being ignored in favor of an isolationist approach, Chinese President Xi Jinping has jumped on the opportunity to expand Chinese influence in the South China Sea. One way he’s managed to do so is by offering debt forgiveness on BRI projects, helping host countries which are having difficulty repaying. In exchange for this debt forgiveness, China is granted a lease on the infrastructure assets for a number of decades. In this fashion, China has gained new ports and airports in Sri Lanka, and soon even Myanmar. These new assets will become valuable military placements in the future and will allow Beijing to project power beyond its current capabilities.
Despite all the benefits that China stands to gain from the BRI, there are also immense challenges to overcome that may derail the initiative if they are not adequately managed. First and foremost, it’s undeniable that the nature of many Chinese investments for the BRI are risky. Of the over 60 countries involved with the initiative, many have terrible credit ratings and have high rates of default. In other words, there is a huge risk that many of these countries will be unable to pay back Chinese investments. It’s no surprise that the World Bank and International Monetary Fund have been reluctant when lending money to these countries, and likely never would have funded projects on the scale that China is proposing. While in some instances China has been able to make this work to their benefit, such as in the case of Sri Lanka where they received a strategically valuable port in exchange for debt forgiveness, if this type of default becomes the norm for countries involved in the BRI, China will be unable to maintain the initiative as planned. In fact, the most severe predictions by analysts claim that if the BRI collapses, the global economy could enter into another period of recession. With so much on the line, it’s important for Chinese officials to responsibly manage projects and minimize the total risk as much as possible.
On the same token though, it’s equally important that Chinese officials don’t become too personally involved with the finances of BRI projects. China’s bureaucracy is notoriously corrupt; from Village Officers to State Councillors, every level of government has its share of dirty hands. Numerous officials have been caught skimming money from disaster relief efforts and economic development funds, but that’s only the tip of the corruption iceberg. In reality almost anytime private business and government officials interface, money or gifts will be exchanged. According to a prominent Chinese businessman in the tech industry, “Your business can’t survive a day if you are not corrupt”. Even celebrated public officials like Liu Zhijun, the country’s Ex-Railway Minister, was charged with taking over $95 million dollars in bribes after an official inquiry took place regarding a catastrophic high-speed train crash that killed 85 people. Liu’s former Deputy Chief Engineer, Zhang Shuguang, was also caught up in the scandal when it was discovered that he’d funneled over $2.8 billion dollars into overseas bank accounts.
With an incredible combined budget of over $1 trillion dollars, the BRI is a massive draw for any corrupt officials hoping to cash in. Although President Xi Jinping has been focused on rooting out corruption in the Communist Party, his ongoing anti-corruption campaign has been accused of targeting his own political opponents, while ignoring illegal practices among his allies. For the initiative to succeed, China will be forced to deal with its demons and combat corruption wherever possible.
However, China isn’t the only country in the BRI that has a problem with corruption. Many of the partner countries in the initiative, especially those in Africa and Central Asia, have struggled to fight corruption for decades and may be a massive draw on the resources of BRI projects. According to Transparency International’s 2017 Corruption Perception Index, which scores countries from 0 (highly corrupt) to 100 (very clean), partner countries like Turkmenistan, Kyrgyzstan, Cambodia, and Myanmar all have an aggregate score around 20, putting them in the bottom percentile of ranked nations. President Xi Jinping appears to have recognized these problems as well and has called for a “stable, sustainable and risk-controllable financial security system” to watch over the BRI. For that system to be successful though, it’s imperative that Beijing reach an understanding with the Chinese corporations that will be supervising the brunt of the work for the BRI.
In the past, there have been numerous times when Chinese companies have been caught bribing local officials in countries where they were operating. This type of behavior only reinforces corrupt institutions and provides them with incentives to maintain the status quo. The Chinese government’s response to these findings have always been lackluster and hardly ever amounted to any significant changes. If Xi Jinping wants the BRI to be successful, the Chinese government needs to focus more on reigning in these practices instead of sweeping them under the rug.
But the greatest challenge to the BRI may be much more subtle, and that’s its perception worldwide. In order for the BRI to succeed, it needs partner countries to get involved; without these agreements, the entire plan falls apart. From the outset, President Xi Jinping has been very direct in articulating his vision for a greater Chinese presence worldwide. Under him, China has moved from a very cautious foreign policy to a more global-minded approach, which some nations have interpreted as more aggressive.
By 2050 Xi Jinping wants China to have superpower status, and an increased global role is necessary to accomplish that goal. However, China’s naked ambition has put a number of countries on alarm. Most notably the U.S. and India, China’s greatest rivals in the region. Both countries are extremely wary of China’s geopolitical ambitions and have so far provided minimal support for the BRI. If these countries decide to eventually pursue more aggressive containment policies for Chinese influence, then the BRI will surely become a prime target.
Already, India has seen increased tensions with China over a key part component of the BRI, the China-Pakistan Economic Corridor, which is planned to run through the disputed Kashmir region along the India-Pakistan border. As a result of the situation, India’s Prime Minister, Narendra Modi, refused to reconfirm his country’s support for the initiative at a recent SOC meeting. Out of the eight countries in attendance at the meeting, India was the only one that didn’t reaffirm its support.
The U.S., meanwhile, has started to take a more determined stance against China’s encroaching influence abroad. Secretary of Defense James Mattis has mentioned numerous times of a need to maintain a “free and open Indian-Pacific Ocean;” a thinly veiled reproach to China’s recent activities in the South China Sea and beyond. Mattis has also made statements supporting India’s position on the Kashmir issue. In a hearing before the Senate Armed Services Committee, he said this:
“Regarding ‘One Belt, One Road,’ I think in a globalized world, there are many belts and many roads, and no one nation should put itself into a position of dictating ‘One Belt, One Road.’ That said, the ‘One Belt, One Road’ also goes through disputed territory, and I think that in itself shows the vulnerability of trying to establish that sort of a dictate.”
The disputed territory in question is the Kashmir region. Direct rebukes like this are a rare occurrence in official U.S. statements on the BRI. Instead, U.S. leaders have generally opted to ignore the existence of the initiative whenever possible. This statement, along with similar comments by previous Secretary of State Rex Tillerson, may signal the dawn of a more aggressive U.S. foreign policy towards China. However, foreign policy change may come slowly with the Trump Administration. Top officials don’t appear to be in any hurry to change the overall status quo. Even after more than a year and a half into his presidency, many high-level diplomatic positions have still yet to be filled. With so many important diplomatic positions still without appointees, it will likely take some time before the Trump Administration formulates a concrete policy stance on the BRI. Until then, Chinese policymakers will have ample space to maneuver without fear of fierce American opposition.
It seems as if history is at a crossroads. If the Belt and Road Initiative can live up to its lofty goals then it may enable China to challenge the U.S.-led global order in a very significant way. Success would mean a Chinese economy that is both more resilient and more global than at any other point in recent history, truly harkening back to the days of ancient Chinese dominance of the Silk Road. Success would also bring an increased ability for China to project power worldwide, from new military bases to new strategic agreements. Still, there are many potential obstacles and China may yet succumb to the weight of its lofty ambitions.
With its trillion-dollar price tag, the initiative is especially vulnerable to corruption, which will likely be one of the project’s most persistent problems. Geopolitical challenges from the U.S. and India may also potentially limit the success of the initiative. As China’s prominence continues to grow, its rivalries with other nations will only intensify. However, if China can stay its current course, then we may see the emergence of a new global superpower and a new global dynamic along with it.