This article was written by Dorothy Grace Guerrero
The West have largely ignored or underestimated China’s New Silk Road Project, Beijing’s
most ambitious project to date. Now that it is becoming the biggest channel for outward
investments and creating a more connected Eurasia from Spain to Indonesia, governments
are waking up and jostling to get on board. In May 14, 2017, Chinese President Xi Jinping
addressed 1,500 high-profile delegates, which included twenty-nine heads of state and
officials from 70 countries and international organisations, of the Belt and Road Forum for
International Cooperation in Beijing. The summit was the global unveiling of China’s
multibillion dollar Belt and Road Initiative (more known to many as the New Silk Road or
earlier as One Belt, One Road project), a hugely ambitious foreign policy and infrastructure
enterprise that will connect Asia to Europe and beyond.
The project is linking China to Europe via multiple channels through major infrastructure
investments in high-speed rail, highways, ports, dams, bridges, gas pipelines, power plants,
IT connectivity and electric power grids. The links between countries across Central Asia,
South and Southeast Asia, Russia and Europe and China now count 66 countries. First
proposed in 2013 by Xi, Jinping, the BRI is estimated to reach $3 trillion and will also involve
trade agreements and investments. It is changing the contours of international development
cooperation and affecting the geopolitics of energy as well. The partner countries now cover
sixty percent of the world’s population (around 4.4 billion people) and almost thirty percent
of the global economy. The September 2016 “China Go Abroad” Report by Ernst & Young
Global Limited predicted that Chinese telecommunications enterprises will also develop
further through its investments in countries covered by the BRI.
The BRI has two components: the land-based "Silk Road Economic Belt" (SREB) and, second,
the oceangoing "Maritime Silk Road" (MSR). The 'belt' includes countries situated on the
original Silk Road through Central Asia, West Asia or the Middle East, and Europe. The
Maritime Silk Road, as a complementary initiative, aimed at investing and fostering
collaboration in Southeast Asia, Oceania, and North Africa, through projects around the
South China Sea, the South Pacific Ocean, and the wider Indian Ocean.
It is China’s key economic, political, diplomatic and developmental strategies rolled into
one. As an economic strategy, it addresses China’s domestic infrastructure overcapacity
while enabling Beijing to channel its huge foreign reserves, including low-interest US
Treasury Bills, overseas in a more profitable way. There is already an excess of huge and
lucrative infrastructure projects inside China constructed by state-owned companies and
local governments, the remaining way to use the funds is to build outside and expand
China’s supply chains and enable Chinese transnational corporations to access labour
markets overseas.
Investing in infrastructure overseas is also solving unemployment problem and prevent
massive layoffs of skilled workers in state-owned enterprises and affiliated companies. It is
no surprise that acceptance of Chinese workers is included in all current bilateral
infrastructure investment deals that China is negotiating with partner countries. According
to 2017 paper from China’s Ministry of Commerce, the number of laborers dispatched
overseas in 2016 alone was 970,000. The improvement of infrastructure in the linked
countries of BRI is beneficial to China as well, as improvements in facilities reduce
transaction costs of importing and exporting goods between China and the countries that it
is trading with.
Building China’s New Geopolitical Power
The more important agenda, which has a far bigger and more strategic importance than
economic motivation is political. The BRI is China’s foreign policy strategy to achieve parity
with the United States in Asia and Europe. It ensures the security environment and political
clout it needs for its continued rise as a superpower, which in itself is not bad as new actors
could always introduce new dynamics in international political economy. The new
infrastructures have geopolitical importance and creating leverage for China to avoid
encirclement of US allies around its borders and other strategic areas.
Chinese largesse is also strengthening Beijing’s global strategic influence through developing
debt-trap diplomacy with cash-strapped countries. Through loans and investment provisions
to partner countries in exchange of minerals and resources they supply, indebted countries
become long-term debtors. Beijing’s loans are attractive as they do not require partner-
states to change their domestic economies and China’s principle of non-interference allows
it to deal with states regardless of the indebted country’s national situation. This lack of
demands, however, is no different from what many rich countries actually practice in terms
of trading and investing in countries with appalling human rights situations.
What is interesting to note is that through the BRI, China is gaining back its historical place
as the world’s largest economy and superpower status prior to the colonial period. The
territories included in BRI correspond to the old road and maritime route of China’s trade
and diplomatic hegemony more than two centuries ago before the colonial capitalist
expansion of European countries.
Other developing countries have raised concerns over the quality of Chinese infrastructure
investments, as well as their compliance with good governance and environmental
regulations. Many of the BRI partner countries that are part of the two initiatives are also
members of the China-led Asian Infrastructure Investment Bank (AIIB). In early 2016,
Chinese financial institutions and companies have announced over USD 1.1 trillion of
funding for the ‘Belt and Road’ projects. This is in addition to the authorised capital of USD
100 billion for the AIIB (AIIB) and another USD 100 billion authorised capital for the BRICS
New Development Bank.
China is increasingly seen as a new leader of globalisation and the UK is positioning itself as
China’s close economic partner. Chancellor Phillip Hammond announced after his
participation at the Beijing Summit in May that the UK is a natural partner for China’s New
Silk Road Project.
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Dorothy Grace Guerrero formerly worked as China Programme Coordinator of the regional
organisation Focus on the Global South. Her published papers on China’s rise and
emergence as global economic power have been translated in several languages. She is now
the Head of Policy and Advocacy of Global Justice Now.
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