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How is China’s Belt and Road Reordering Asia?

How is China’s Belt and Road Reordering Asia?

. 9 min read

Yong Deng is Professor of Political Science at the U.S. Naval Academy, Annapolis, Maryland. He was recently Visiting Fellow at the Nobel Institute in Norway and Rajaratnam School of International Studies in Singapore. He is the author of China’s Struggle for Status: The Realignment of International Relations (Cambridge University Press, 2008).

The Belt and Road Initiative (BRI) has emerged over years since its announcement as President Xi Jinping’s signature diplomatic thought and the international strategy of today’s China. Xi unveiled the Economic Belt while visiting Kazakhstan and rolled out the Maritime Silk Road in Indonesia in 2013.  According to the State Council document issued in March 2015, “Vision and Actions on Jointly Building Silk Road Economic Belt and 21st-century Maritime Silk Road,”

The Silk Road Economic Belt focuses on bringing together China, Central Asia, Russia and Europe (the Baltic); linking China with the Persian Gulf and the Mediterranean Sea through Central Asia and West Asia; and connecting China with Southeast Asia, South Asia and the Indian Ocean. The 21st-Century Maritime Silk Road is designed to go from China's coast to Europe through the South China Sea and the Indian Ocean in one route, and from China's coast through the South China Sea to the South Pacific in the other.

The initiative has since expanded and evolved. The name changed from the original restrictive “One Belt, One Road” (OBOR) to a more open “Belt and Road Initiative.” A third maritime route, the Arctic-Europe passage, was later added to stake China’s claim to Arctic development and governance.

Geographically, Xi has stressed that, although focused on Eurasia and Africa, the BRI is open to all.  When Beijing hosted the first BRI International Forum in May 2017, over 130 countries participated, including heads of 29 countries and the International Monetary Fund, the World Bank, and the United Nations. The Asian Infrastructure Investment Bank (AIIB), a development bank designed to support the initiative, also grew from its founding membership of 57 in 2015 to 87 in 2018.  China has claimed that, much as the ancient Silk Road facilitated cultural and technological exchange, the Belt and Road will also spur global connectivity beyond business transactions. But skepticism abounds concerning the program’s intent and sustainability.

As the Harvard economist Albert Hirschman showed long time ago, expansion in international commerce inevitably creates asymmetrical dependence in favour of the powerful state. By the same token, for many observers, such “influence effect” is to be expected from the BRI. Edward Luttwak has framed similar issues using the phrase “the logic of war in the grammar of commerce.” But Beijing has rarely used the blunt instrument of economic sanctions. With no time frame, end goals, or even preset funding, BRI does not accord to a conventional strategy of coercion. Its transformative effect has proven much more complicated, subtle, and sustained than what Hirschman and others had conceived.

Interest Community

In tandem with BRI, Xi proposed the idea of an interest community while visiting Europe in 2014. Other Chinese officials have also since mentioned a “community based on common responsibility.” Eventually the Chinese leadership settled on the “the community of common destiny for humankind” as the vision of China’s world order. According to the Chinese foreign minister, Wang Yi, the idea represents a major theoretical breakthrough “transcending over 300 years of Western theory of international relations.”

The Belt and Road seems ideally equipped to build such a community. China has relied on tactics of interest realignment to affect the policy of its Asian neighbors. Countries such as Kazakhstan, Mongolia, Malaysia, Indonesia, Vietnam, Cambodia, and Laos have altered national developmental strategies to be in tune with BRI. In authoritarian states, strategic meshing is a relatively simple task, as Beijing needs only work with the leaders and ruling elites.

In democracies, Beijing may resort to targeted efforts to create pro-Beijing constituencies and pressure elected politicians. After the 2004 presidential election in Taiwan, Beijing deliberately opened its market to the fruit farmers in the island’s south, a pro-independence Democratic Progressive Party stronghold. By the same token, it awarded the pro-China Kuomintang leader, Ma Ying-jeou, the free trade Economic Cooperation Framework Agreement (ECFA) in 2010. Despite the backlashes against cross-Strait ties, like the 2014 massive student Sunflower movement, Taiwan’s economic fate is simply intertwined with the Mainland. Similarly tightening economic bond has by no means created an unbreakable interest community with advanced democracies like the United States, Europe, and Japan. But it remains the most resilient and enduring ballast holding the otherwise fraught relationships together.

The BRI’s geopolitical dividend for China was evident in the international reactions to the arbitration proceedings on the South China Sea. After the Philippines initiated the process in The Hague in January 2013, based on the United Nations Convention on the Law of the Sea (UNCLOS), forty-one countries publicly supported the independent panel’s judgments as legally binding. But, according to the Asia Maritime Transparency Initiative, after the final ruling on July 12, 2016, only seven countries called on Beijing to comply. Much of the support for China’s rejection to the proceedings and the ruling came from countries and international institutions under the BRI. After the UNCLOS ruling, European Union countries, such as Hungary and Greece, beholden to BRI opportunities, stood with Beijing, preventing a robust united EU position on the side of law. Similarly, in June 2017, Greece forestalled an EU statement censuring China’s human rights record at the U.N. Human Rights Council in Geneva, an unprecedented event in EU history.

The Xi government offered $25bn worth loans and infrastructural investment deals to the Philippine when the newly elected President Rodrigo Duterte traveled to Beijing in October 2016 and promised not to push for the UNCLOS ruling. Such a reward to good behavior spurred competitive bidding from other countries to win Beijing’s favor. On the heels of Duterte’s visit, then Malaysian Prime Minister Najib Razak promised to cement comprehensive ties with Beijing on his visit there lest his country lose out on the China boom. Beijing has also threatened to downgrade or cut off economic ties to sway defiant countries’ positions. After Mongolia invited the Dalai Lama for a visit in November 2016, Beijing’s threat of financial and trade sanctions quickly forced Mongolia to submit to Beijing’s demand promising never to do that again.

Not All Partners Are Equal

With the BRI, China sits at a new perch to dispense investment and largesse, allowing Beijing to cultivate loyalty and punish hostility.

Despite Western sanctions against Russia, in September 2015, China’s state-owned Silk Road Fund purchased 9.9 percent stake of the Yamal LNG in Russia’s Yamal Peninsula from Novatek. With the French company Total and China’s national petroleum company each holding 20 percent, the acquisition completed the minority foreign control of Russia’ second largest gas producer. Defying Western sanctions, China’s business dealings with Russia signaled solidarity with the beleaguered Putin regime. Such favoritism helped ease the structural sources of Sino-Russian rivalry in Central Asia.

Yet at the same, India was not granted the special position it demanded in the Chinese scheme. Only mentioned in reference to the Bangladesh-India-Myanmar economic corridor, India was placed in a less prominent position than its weaker South Asian neighbors and arch rival Pakistan. India is especially concerned that the China-Pakistan Economic Corridor (CPEC) would extend Chinese influence into the Indian Ocean, strengthen Pakistan, and intrude into the disputed territory of Kashmir. China, however, sees the CPEC as key to developing Xinjiang and Pakistan, addressing terrorism, and providing an energy route that bypasses the Malacca Strait. India was the only major country to boycott the first BRI forum in May 2017.

A country can fall out of Beijing’s favor too. When the BRI was inaugurated, Singapore, having invested in China $72.3billion during 1990-2014, was in particularly good standing with Beijing. But Beijing’s enthusiasm was soon dampened by displeasure with Singapore’s high-profile role in the South China Sea dispute and its tightening alliance with United States. Prime Minister Lee Hsien Loong did not attend the inaugural BRI forum in May 2017. Subsequently, however, both sides made an effort to re-position Singapore in an elevated role in the BRI.

In the past, as part of the diplomatic ritual in dealing with China, foreign dignitaries visiting Beijing would first articulate support for the “one China policy” on Taiwan. Today, foreign leaders are expected to declare support for the Belt and Road as recognition of China’s status and affirmation of friendship.

For those initially hostile to the initiative, getting on board with BRI reflects an about-face coming around to the idea of China’s rise. Thus, on high-level meetings between Chinese and Japanese officials, the latter are expected to publicly support BRI in order for relationship to move forward. The marker for Japan’s change of heart came when Japanese Prime Minister Shinzo Abe dispatched the ruling Liberal Democratic Party secretary-general Toshihiro Nikai and Abe's executive secretary Takaya Imai to attend the BRI forum in May 2017. Tokyo subsequently drew up a multi-agency guideline in November 2017 to support Japanese companies to participate in the economic belt projects, focusing on the environment, industrial development, and transportation network. As a result, Chinese Premier Li Keqiang paid an official visit to Japan in May 2018, the first in eight years for a Chinese premier to do, which also paved the way for exchange of visits between Xi and Abe. The Sino-Japanese relationship seemed to have since turned the corner.

The Only Game in Town

The Belt and Road is as audacious as it is ambitious. According to the plan, China would invest in some of the most unstable regions in Eurasia and Africa and economies with high credit risk. By the same token, skeptics have also warned of struggling economies being snared in a debt trap that Chinese mega-projects create. China’s economic woes, coupled with the rapid pace of the initiative, have raised persistent doubts about the program’s sustainability. Yet, the initiative has proceeded to plan and has even expanded. In five years, China signed over 100 agreements linking BRI with the developmental strategies of over 90 countries as well as the economic plans of many global and regional organizations. Increasingly the Belt and Road has become the only game in town, the engine of global connectivity that no country can afford to miss. The aura of unstoppable momentum has powerfully reshaped other countries’ approaches to the BRI.

Xi and his government have staked their reputation on the success of the program. The 19th Chinese Communist Party (CCP) Congress approved on October 24, 2017 that BRI be added to the new party constitution. In this way, China has tied its fate to the BRI. Beijing cannot easily back out of the program. The Xi government has continuously ratcheted up funds through the Silk Road Fund and AIIB as well as the government controlled China Development Bank and Export-Import Bank.  The Belt and Road Initiative is here to stay, putting pressure on national leaders to overcome their trepidation and reconfigure national interests in order to position their nations favorably towards the BRI.

China has launched a diplomatic campaign to enhance BRI’s legitimacy as a global initiative. In 2016, Beijing signed a Memorandum of Understanding with the United Nations Development Program connecting the BRI to the UN 2030 Agenda for Sustainable Development. At the BRI forum in Beijing, UN Secretary-General António Guterres spoke of the BRI as sharing the same development goals “to create opportunities, global public goods and win-win cooperation” as the UN. In May 2017, Beijing inked similar MOUs strengthening BRI related cooperation with six multilateral development banks, including the World Bank. BRI has merged with the Shanghai Cooperation Organization, the most successful non-Western international organization. The AIIB has continued to expand and has received Triple-A ratings from the world’s top three credit rating agencies.

Beyond Geopolitics

Along the Belt and Road, Beijing’s geopolitical influence has grown greatly. China’s growing investment and infrastructural building in Djibouti led to the establishment its first naval base in the Horn of Africa country in 2017. Djibouti had long served as a de facto logistical support base for the Chinese Navy ships that have patrolled the Gulf of Aden since December 2008. The refurbished military base would facilitate China’s access to the Indian Ocean and a provide a permanent naval presence at a strategic chokepoint along the maritime Silk Road leading to the Mediterranean. Similarly, in 2017, China’s state owned Merchants Port Holdings paid over US $1bn to secure a 99 year-lease of the Hambantota Port of Sri Lanka. Beijing disavowed any military purpose. But the takeover in the in southern tip of Sri Lanka raised the specter of a Chinese “string of pearl” strategy of naval expansion in the Indian Ocean.

China has battled against what it sees as hostile attempts by foreign powers to derail BRI. But the biggest threat to BRI is its own unilateralism. Despite Beijing’s protestation of its commitment to openness, the Belt and Road remains a Chinese initiative dictated by a Chinese agenda and dominated by Chinese investment. Even in business practice and engineering, the Chinese often insist on doing things their ways and following “Chinese standards.” The initiative has reflected more “particularistic interests” than multilateralism, which according to John G. Ruggie must be based on “generalized principles of conduct.” The Xi government seems to begin to realize that to succeed as a win-win for China and others, BRI must follow transparent, generalized multilateralism.  Notably the 19th CCP Congress report even dropped the “initiative” in most cases referring instead  to the “construction” or “international cooperation” of the Belt and Road.

Similarly, sophisticated Chinese analysts are starting to see the perils of unilateralism in BRI. Ironically, their point of departure is to question the widely held notion in mainstream Chinese commentary that the BRI represents a global public good. They are worried that the notion invites free-riders, imposing financial burdens just on China. Couched in terms striking a balance between interest and obligation, the debate raises profound questions about how the BRI can marry China’s own national agenda and global connectivity. Can China resist the impulse to use BRI as an instrument of geoeconomics and turn it into a platform for economic globalization?  Ultimately only Beijing can find the answer.