“As I stand here and look back at that episode of history, I could almost hear the camel bells echoing in the mountains and see the wisp of smoke rising from the desert,” said Chinese President Xi Jinping in Astana, Kazakhstan in 2013. Xi’s poetic pomp voiced a nostalgia for the second century BCE, when the Han Dynasty rivaled the Romans and the diplomat Zhang Qian pioneered the Silk Road. In his speech, Xi announced a vision that seeks to revive Zhang’s legacy via a two-part plan. Part one would involve investing in infrastructure connecting China to Central Asia, the Middle East, and Europe, and the second would develop maritime trade extending from Southeast Asia to the Mediterranean. Known as the Silk Road Economic Belt and the 21st-century Maritime Silk Road respectively, the two initiatives command a name that seeks to carry the weight of history.
The grandiosity of the “One Belt, One Road” program has unsurprisingly attracted skepticism. The land Belt, in particular, draws more questions than its maritime twin. In an interview with the HPR, Philippe Le Corre of the Brookings Institution speculated that the Maritime Silk Road, a mundane collection of shipping lanes and maritime trade routes, “will work.” On the other hand, the Belt, an initiative that seeks to connect Beijing and Budapest via high-speed railroads through Astana, Tehran, and Moscow, is significantly more ambitious. Indeed, critics have speculated that China has ulterior geopolitical motives, questioned the initiative’s feasibility, and lambasted the prospect of a China-led world order.
The current discourse, however, is still speculative. Despite considerable noise from China, OBOR has not yet concretized. According to Le Corre, who visited Astana in November, not much infrastructure building has started. Ben Simpfendorfer, founder of Silk Road Associates, a consulting firm advising businesses operating in Asia, wrote in Forbes that he felt “underwhelmed” by OBOR’s impact so far in Kazakhstan, which would theoretically be the project’s first stop. Tao Xie, a professor at Beijing Foreign Studies University, confirmed in an email to the HPR that “no specifics regarding investment, mileage of roads, or number of ports were [yet] mentioned” in the CCP’s cryptic bureaucratese. However, Le Corre explained that this is merely an indication that OBOR is still in the “planning process.” A more detailed course of action, according to him, will appear during the annual session of the National People’s Congress in March 2016.
But this lack of actual construction does not mean a lack of financing or lobbying. OBOR wields an arsenal of over $90 billion from the China-led Asian Infrastructure Investment Bank and the China-owned Silk Road Fund. Le Corre noted that Jin Liqun, the AIIB’s president-designate, has travelled globally to meet with international financial institutions. Over the past year, President Xi Jinping and Premier Li Keqiang have played salesmen in many key regions, from Moscow to London, and signed a pile of memoranda of understanding, non-binding declarations of goodwill, likely laying the groundwork for the Silk Road project.
China is moving quickly to translate its vision into real leadership, and such ambition unsettles many—often motivated by a knee-jerk Sino-skepticism. The United States notably declined to join the AIIB in March and sought to dissuade its allies from joining.
Realpolitik, however, would demand a closer look at China’s grandiose vision, rather than a swift dismissal. Indeed, OBOR could end up being as successful as the Marshall Plan (though Beijing avoids the comparison). The world should welcome “One Belt, One Road” and capitalize on China’s investment. Yet it should also tread with caution. OBOR presents a host of risks and obstacles, partly due to structural concerns within the PRC.
The Oasis Ahead
OBOR is more a loose confederation of initiatives than a unified agenda of establishing a Chinese world order. And the potential benefits are many. A westward march, Xie explained, would connect Beijing to Central Asia’s energy reserves and to the Middle East via land, bypassing the Malacca Strait. OBOR’s massive infrastructure construction could also absorb some of China’s industrial overcapacity, according to Anthony Saich of Harvard’s Kennedy School of Government, who spoke with the HPR. Furthermore, greater involvement in Europe would lessen Beijing’s economic dependence on Washington and diversify its investment portfolio, said Le Corre.
Furthermore, strengthened ties with Central Asia, an area oft-neglected by the United States and underinvested in by Russia, would heighten China’s international profile. Prosperity in Central Asia could also bring economic opportunity and stability to China’s troubled Xinjiang Province. Even domestically, Harvard history professor Michael Szonyi told the HPR, Xi’s allusion to the Silk Road could rally public support by appealing to China’s historical legacy.
But for those worried about a new Sino world order, “One Belt, One Road” is far from a groundbreaking grand strategy. China “has invested in ‘OBOR regions’ long before President Xi coined the term,” according to Wen Wang, executive director at the Chongyang Institute, a think-tank based in Beijing, who spoke with the HPR. China’s motives in creating OBOR are not conspiratorial but rather mundane: OBOR is a catchy label for a vision that loosely knits together China’s already-existing economic and political interests. Vast, ambitious, and grandiose as it is, OBOR is neither focused nor revolutionary, and far from politically alarming. Any fantasized Pax Sina is unlikely to materialize, agreed Szonyi.
The economic impact of OBOR is generally benign as well. For China, OBOR will likely provide healthy returns. Wang estimated that “the proportion of ‘failed investments’—[existing investments in Belt regions, not necessarily Belt-related, that incurred losses]—is about 25 percent,” a risk that he called “average” for overseas investments. He further cited that “for the past 10 years, annual loans from the China Development Bank are in the trillions of dollars, of which only 1 percent went bad.” Since the CDB is one of OBOR’s key financing sources, he is optimistic about OBOR’s future profitability.
Key regions involved in the project, like Central Asia, Central Europe, and Eastern Europe, will also benefit from China-financed infrastructure, which is evident in the regions’ enthusiasm in welcoming Beijing’s cash. Kazakh Prime Minister Karim Massimov has pushed for greater ties with Beijing—a sentiment echoed by Kazakh communities of Chinese descent. Le Corre noted that Central and Eastern European countries also work closely with Chinese leadership in the “16+1 Initiative,” a coalition that coordinates OBOR-oriented development. Infrastructure—roads, railroads, airports, electric grids, and Internet connections—would spark economic growth but cannot be built without massive investment, the money for which most countries in the region lack. Through OBOR, China can supply the capital for these investments.
Of course, some observors, like James Evans of Harvard’s Fairbank Center of Chinese Studies, are rightly concerned that these grand, state-sponsored projects will only benefit socioeconomic elites. Saich acknowledged such skepticisms but affirmed the basic economic logic that “a better network of railroads and infrastructure” that connects to markets in China and Europe will boost the economies of all countries involved.
The same goes for Western Europe. Evans believes that EU states, plagued by persistent slow growth, are eager for Chinese investment since their own governments are too cash-strapped.
The “One Belt” collaboration could feature significant political benefits as well. Central Asia and the Middle East, both key players in China’s vision, have long been plagued with extremism. As China marches west, it will inevitably hold a greater stake in security and counter-terrorism. Not only could new economic opportunities help stabilize growing Islamic extremism along China’s own western border, but its heightened interest in security could also lead to Sino-U.S. collaboration that may contain jihadist violence in Pakistan and the Middle East.
Though ambitious, OBOR would not radically alter global politics, much less the world order. Instead, the project promises to stabilize precarious economic and political climates throughout the Eurasian continent while allowing China to expand its geopolitical clout—a win-win. However, none of this is to say that implementation of “One Belt, One Road” will be a walk in the park.
Roadblocks and Pitfalls
The typical Chinese foreign investment model could prove problematic if expanded to the Belt region. Past Chinese programs, particularly those in Africa, have featured massive inflows of Chinese labor and goods that locals came to resent. Though Wang disputes this claim, citing instead that “about 80 percent of jobs created went to local workers in past Chinese investments” from Nigeria to Ethiopia, negative perceptions of Chinese businesses amongst locals abound nonetheless. This poor perception of China could plague OBOR, warned Xie, unless the CCP revises its strategy to the benefit of local labor.
Furthermore, the top-down investment model that China frequently uses could prove inefficient. Many governments along the Belt, much like China’s own, are authoritarian and corrupt, and many OBOR-investments will be products of state-level interaction with these governments. Such top-down approaches, Evans warns, can lead to inefficient and inequitable results. While improved infrastructure, in principle, should bring economic benefits to all levels of society, other projects reek of kleptocracy: two upscale airports in Djibouti, for example.
But if Beijing manages to implement efficient, locally focused business models toward its grandiose “One Belt, One Road” vision, the benefits could be vast. Without threatening international geopolitics, China may actually resurrect the Silk Road’s faded glory with shiny railroads and freshly paved highways, bringing economic benefits and security to a vast swath of troubled territory.
Image source: Wikipedia/Severin.stalder