Published in report on American Perspectives on the Belt and Road Initiative. By Institute for China America Studies, 2016.
It is now over three years since President Xi Jinping of China first announced his vision of a “Silk Road Economic Belt” during a major address at the Nazarbayev University in the capital city of Astana in Kazakhstan. Delivered in September 2013, President Xi’s speech came less than six months after his accession to China’s top office—very early in a tenure that is expected to run until 2023—showing the priority that Chinese leaders attach to this vision, and the extent to which Mr. Xi sees its optimal realization as a pillar of his personal legacy and China’s stature as a responsible and peaceful world power. A southern maritime extension, the Maritime Silk Route (MSR), was unveiled by President Xi during a speech to the Indonesian parliament in October 2013.
President Xi’s Astana speech was intended to set the broad themes of his multi-country tour of Central Asian republics, for whom China, now well ahead of Russia, has become the largest trading partner, as well as the paramount source of foreign direct investment and development support. The speech was laden with commitments to mutual trust and common values, emphasizing China’s respect for the sovereignty of Central Asian republics and their independent domestic and foreign policies, while vowing that it will “never intervene in the internal affairs of Central Asian countries, seek leadership in regional affairs, or operate a sphere of influence.” The values that guide this stated vision, at least ostensibly, are opposition to unilateralism and the use of force, while promoting rule by consensus and mutual benefit among a diverse array of peoples and cultures.
In line with Xi’s declarations, Chinese officials and scholars have since coined the terms “One Belt, One Road” (OBOR) and “Belt and Road Initiative” (henceforth called BRI) to describe a strategy that aims to promote economic integration by building transport and energy infrastructure and linkages, not only in China’s own neighborhood, but along historical routes much farther afield, all the way to Western Europe.
Through BRI, China aims to deepen and expand the surface, sea, and air linkages across the Eurasian landmass and Indo-Pacific periphery, further integrate its main centers of economic vitality, and provide development assistance to its poorer regions—in effect establishing a modern-day Silk Road, which, as early as 2,000 years ago, connected parts of Europe to West-, South- and East Asia in a web of commerce and interdependence.
In our era, over the past four decades, China has had unrivaled success in lifting some half a billion people out of abject poverty, and has exhibited exemplary prowess in building roads, railways, ports, airports, pipelines, refineries, bridges, tunnels, power stations, urban transit systems, and other infrastructure projects in far flung corners of the world, and in record time.
To better grasp the uniqueness of China’s meteoric rise in our time, it suffices to recall that in 1978, as China’s opening to the world was being inaugurated under the leadership of Deng Xiaoping, the country’s GDP per capita was around $155. Since that time, this figure has displayed an almost fifty-fold increase, a staggering number for a country that has a population of 1.3 billion people. Currently, given its slowing rate of economic growth and the restructuring of its economy, it seems natural for China to entice other (often much smaller) countries with offers of technical and financial support in an attempt to use its excess capacity in finance capital and construction to spur economic growth within China itself and in other economies with whom its fate is intertwined.
China’s ambition for leadership in the international development arena may seem as a natural progression of the country’s rising clout. Yet many American observers remain largely ambivalent about the Belt and Road Initiative. Even a cursory glance at the way government officials and opinion-leaders and influential Washington-based think tanks have approached BRI shows that they have more questions about it than answers.
The reasons for American ambivalence are easy to grasp as significant questions remain unanswered: What are China’s real motives? Will it uphold the values that it professes in the face of intense global economic competition and ongoing geopolitical rivalries? As China gets stronger economically and militarily, will it see itself as an exceptional nation that is above the rules that apply to smaller countries? During bidding for projects across the vast expanse of BRI, will China bring its huge state apparatus to exert undue pressure on potential partners, placing its quasi-private companies at an unfair advantage over competitors? Will China act transparently when bidding for infrastructure projects that have long-term strategic significance?
In a related vein, as it embarks on its BRI strategy, will China exercise greater care in environmental protection, even though its domestic record in this area has been wanting? China faces an air and water pollution crisis in its largest cities and most rapidly industrializing regions. Many millions of Chinese citizens don masks on a daily basis to cope with such air pollution. As per analysis produced by Tsinghua University in Beijing and the Asian Development Bank in 2013, seven of the world’s ten most polluted cities are in China, including Beijing, Taiyuan, Urumqi, Lanzhou, Chongqing, Jinan, and Shijiazhuang. Too many rivers in China have run black in the wake of the breakneck pace of industrialization over the past few decades.
Equally important, let’s consider that while eastern China, especially its coastal regions, have experienced phenomenal growth in recent times, the picture is far less rosy farther inland, especially so in the autonomous region of Xinjiang in Western China. The country faces notable challenges in its distribution of wealth with glaring disparities of income noticeably apparent, raising concerns in turn about equal opportunity and the rapid and undue accumulation of wealth among a well-connected minority.
Even for smaller, far less consequential countries that rely on trade for growth, these types of questions would matter, but China is not an ordinary country. The Chinese are heirs to one of the world’s oldest continuous civilizations, dating back at least 5,000 years, and it is natural for them to take pride not only in their unprecedented rise in recent times, but also their rich cultural heritage. Today, China is not only the world’s most populous and its largest creditor nation but on track to officially become the world’s largest economy, surpassing the United States. Thus, China’s standards of behavior and its current and evolving values will continue to have global repercussions, and will exert a major influence on the way China executes BRI in the years ahead.
A taste of American ambivalence towards China’s grand outward trade, aid and investment push was evident during the debates surrounding the establishment of the Asian Infrastructure Investment Bank (AIIB). A new Chinese-led and Beijing-based multilateral development institution, AIIB (which the U.S. has yet to join) was officially launched in 2015, and has already accepted 57 countries as members, accounting for some two-thirds of the world’s economic output in aggregate.
With an initial capitalization of $100 billion ($30 billion of which comes from China), AIIB is a small institution by the standards of China’s own “policy banks.” In stark contrast, the two largest Chinese banks focused on promoting domestic and global development, the China Development Bank and the China Export Import Bank, together hold assets of close to $2 trillion, a figure which is about three times the combined assets of all the Western-backed multilateral development banks put together.
But even the large Chinese capacity for development finance represents a mere fraction of the need for infrastructure investment in Asia, which the Asian Development Bank estimates to be above $8 trillion over the next ten years. In this respect, the demand for investment capital far exceeds supply, highlighting the need for the world’s main sources of investment capital to adopt a paradigm of cooperation and refrain from zero-sum thinking.
A Challenge and An Opportunity to Advance Values-Based and Sustainable Growth
While all the foregoing Western—and American—concerns about BRI are understandable, the question for American policymakers is how they can have the greatest level of positive impact on the choices that China makes as it further establishes itself as a global power, and the values that guide China’s rise. From this vantage point, BRI poses not only a challenge but also an opportunity to bring much-needed development to Eurasia’s and rimland Asia’s underdeveloped regions while also ensuring that China gives priority to being a responsible and transparent stakeholder as its clout grows on the international stage.
Numerous unprecedented developments in recent months have created a major opportunity for expanding US-China collaboration in advancing sustainable and inclusive growth. The most important of these came in September 2016 on the eve of the G20 summit in Hangzhou, when China and the US, the world’s top two greenhouse gas emitters respectively, jointly ratified the UN Paris Agreement on Climate Change, which is the most ambitious international effort ever undertaken to combat the causes and effects of climate change. The United States has pledged to reduce its greenhouse gas emissions by more than a quarter by 2025, compared with 2005.
China, for its part, has pledged that it will ensure that annual emissions will stop rising after 2030. Other countries have set their own targets, such as slowing deforestation and installing solar farms. Under the agreement, wealthy nations have pledged some $100 billion a year to help developing countries grow their economies using clean sources of energy. In a related vein, in October, 2016, 200 nations reached an agreement in Kigali, Rwanda to eliminate the use of HFCs in refrigerators and air conditioning units in the year ahead, since the chemicals have made an outsized contribution to global warming. Here, too, the leadership of the U.S. and China was indispensable in bringing other countries in the developing and industrialized parts of the world into compliance.
Clearly, international environmental considerations that overlap with international development considerations present a valuable space for the US and China to cooperate and chart a future that is equitable and sustainable. If such potential for cooperation is to be realized, however, many steps must be taken to improve transparency regarding BRI and to address American concerns about standards and the direction of Chinese leadership in international development. To help understand the contours of such a challenge, the body of this report surveys common reactions to BRI in the American foreign policy community, highlighting chief areas of American interest in the initiative along with apprehensions. This assessment aims to spur dialogue. In turn, BRI itself can become a focus of critical US-China cooperation in sustainable development in the 21st Century and beyond.