China’s Belt and Road

China’s ‘The Belt and Road’ plan is an economic initiative that if successful, will change the world’s geopolitical centre of gravity. China will be lifted from a regional to a global power.

The $4 trillion project will aim to connect land areas and sea routes into a single economic block. This will cover about;

“65 percent of the world’s population, about one-third of the world’s GDP, and about a quarter of all the goods and services the world moves.”.

What is The Belt and Road?

Belt and Road
Belt and Road. Source: Xinhua Finance Agency, 2015.

The Belt and Road seeks to emulate and extend the ancient Silk Routes. These routes made the region one of the world’s most important up to a few centuries ago. As a report by China’s State Council puts it:

“The Belt and Road Initiative aims to promote the connectivity of Asian, European and African continents and their adjacent seas, establish and strengthen partnerships among the countries along the Belt and Road, set up all-dimensional, multitiered and composite connectivity networks, and realize diversified, independent, balanced and sustainable development in these countries.”

The scale and ambition of the project is further detailed in the report:

“The Initiative is an ambitious economic vision of the opening-up of and cooperation among the countries along the Belt and Road. Countries should work in concert and move toward the objectives of mutual benefit and common security. To be specific, they need to improve the region’s infrastructure, and put in place a secure and efficient network of land, sea and air passages, lifting their connectivity to a higher level; further enhance trade and investment facilitation, establish a network of free trade areas that meet high standards, maintain closer economic ties, and deepen political trust; enhance cultural exchanges; encourage different civilizations to learn from each other and flourish together; and promote mutual understanding, peace and friendship among people of all countries.”

There are two elements to the Belt and Road, land (The Belt) and maritime (The Road).

The Belt

The Belt, aims to connect a region that encompasses China, Central Asia, Russia and Europe. It joins China with South-east Asia, South Asia and the Indian Ocean.

The Belt is deploying huge resources to develop infrastructure. These range from oil and gas pipelines, rail and road networks and cargo handling facilities.

As the China State Council report says:

“On land, the Initiative will focus on jointly building a new Eurasian Land Bridge and developing China-Mongolia-Russia, China-Central Asia-West Asia and China-Indochina Peninsula economic corridors by taking advantage of international transport routes, relying on core cities along the Belt and Road and using key economic industrial parks as cooperation platforms.”

The Road

The Road are sea lanes. They go from China’s coast to Europe. Through the South China Sea and the Indian Ocean. And from China’s coast through the South China Sea to the South Pacific. China’s State Council report describes The Road:

“At sea, the Initiative will focus on jointly building smooth, secure and efficient transport routes connecting major sea ports along the Belt and Road. The China-Pakistan Economic Corridor and the Bangladesh-China-India-Myanmar Economic Corridor are closely related to the Belt and Road Initiative, and therefore require closer cooperation and greater progress.”

Belt and Road projects

It’s worth getting an idea of the vast scale of the Belt and Road. So far there are some 900 projects worth in the region of $890 billion under way. These include the Khorgos Gateway. This is a strategically important hub which will serve cargo arriving from China and destined for Western Europe and CIS nations. Another ambitious project is a rail link from China to Iran stretching over 10,000 kilometres. This will connect China’s eastern Zhejiang province to Tehran that will cut journey times from the 45 days by sea to 14 days by rail. The reduced journey time will increase the variety of goods that can be transported as well as reduce costs.

Straits of Malacca oil route
Oil imports through the Strait of Malacca 2009. Source: Daniel Brutlag Tufts University, 2013

Another part of the Belt and Road project is the China-Pakistan Economic Corridor (CPEC). China plans to invest just under $50 billion over ten to fifteen years. CPEC is of particular importance. It will allow China to overcome the strategic vulnerability of the oil import choke point of the Strait of Malacca. Between 80 percent to 85 percent of China’s oil imports pass through the strait.

Shaping the rules of the global system

With the changing of the balance of economic power, a change in the world balance of power will eventually follow. Robert A. Manning, a former member of the State Dept. Policy Planning Staff (2003-08) and National Intelligence Council (2008-12), says of China’s rise:

“China is now in a position to shape the rules of the global system, as much as it is to accept them. China’s role in the Asian financial crisis of 1997-98, in the 2008 financial crisis, the creation of AIIB, its enlarged role in the IMF (with the RMB becoming a part of IMF currencies), its growing role at the UN and not least, its One Belt One Road initiative providing new connectivity in Eurasia are all evidence of this.”

The Belt and Road initiative also brings Russia into China’s sphere. It promises to be a mutually beneficial relationship that eases Russia’s economic dependence on European markets. Jan Masaryk writing in China’s Global Times comments that:

“A key priority for China must be maintaining the steadily warming relations with Russia. The Shanghai Cooperation Organization has proved an effective forum for building trust and confidence between Moscow and Beijing, particularly in the sensitive Central Asian region, critical for the progress of China’s One Belt and One Road Initiative.”

On the strategic risks to China, these are acknowledged in another article by Li Xing, a professor at the Beijing Normal University. Li writes that the benefits of tying Russia in as a strategic partner outweighs the risks:

“On the contrary, If Russia joins the project, it will be a stakeholder which shares economic risk, especially security risk, and has same or similar goals. It’s a good thing.”

Russia’s push to diversify

Russia is undergoing a push to diversify away from Europe. There are talks aimed at merging the Eurasian Economic Union regional trading bloc with the CPEC project.

The “Geopolitical and economic drivers of China’s regional integration strategy” was discussed in a European Parliament briefing on the Belt and Road. First of all, what brought the Belt and Road to life:

“Sino-US relations – for which President Xi Jinping coined the term ‘new type of great power relations’, implying mutual respect and win-win cooperation rather than confrontation and conflict – were marked by the military and political implications of the US Pivot to Asia, perceived by China as an encirclement and the major cause for problems with its emboldened neighbours.”

Its implications were also touched upon:

“OBOR [GH: One Belt, One Road] is likely to expand significantly China’s political and economic leverage over its neighbourhood, since most of the countries receiving Chinese funds for new infrastructure will ultimately be drawn deeper into China’s trade and finance orbit and be expected to support its rise in all respects.”

In a nutshell, China’s Belt and Road will pull the entire region into its economic orbit. And that will give it the springboard to shape the rules of the global system.

Military risks

Aircraft carrier Liaoning
Chinese aircraft carrier, Liaoning, on manoeuvres

With China’s rise as an economic power it faces the challenge of defending and extending its interests. By necessity it follows that it will have to develop as a military power. With this goes the risk of conflict with other competing powers.

China’s growing global influence, along with the resurgence of Russia, is signalling a shift from the uni-polar world of US hegemony to a multi-polar world.

The US current geopolitical stance is that there are no sphere’s of influence. This was summed up by Vice President Joe Biden in a lecture to a US think tank, “We will not recognize any nation as having a sphere of influence…”. The US’ Asian pivot, along with the accompanying military build up in the region, adds to a problematic relationship which is fraught with danger.

This danger is highlighted in a paper by Colonel Chris Mills, writing as Vice Chief of Australia’s Defence Force:

“…more than 90 per cent of China’s energy requirements traverse Indo-Pacific maritime choke points, including through the Gulf of Aden, the straits of Hormuz, Malacca and Sunda, and the South China Sea. From a Chinese perspective, increased US maritime forces in the region, combined with US defence-treaties with Japan, South Korea, Australia, The Philippines and Thailand, in addition to defence cooperation with Taiwan, Singapore, Indonesia and India, place its energy and trade security at risk of potential US intervention. Consequently, some would argue that China has been left with little option but to look to ways to balance a US policy framework which could constrain its future growth and interests in the region.”

China building facilities on the Spratly Islands

This is behind China’s building of facilities on the Spratly Islands in the South China Seas. This will extend the range of its navy and air force over these globally important sea lanes. $5 trillion of trade passes through these sea lanes annually.

The dispatch of the carrier USS Carl Vinson due to reach the South China Sea this month has raised alarm. Li Jie a Beijing-based naval expert warned that:

“The US will certainly continue to stir up the South China Sea issue. The waters are an effective maneuver to curb China, as 80 percent of China’s crude oil imports come through the South China Sea. If the US controls the waters, it will be a blow to China.”

The need to physically protect the Belt and Road infrastructure will compel China to build up its military. This raises the risk of conflict as it challenges US interests.

Annual trade between the China and the US stands at around $650 billion. In the short term this should act as a safety check against conflict. But over the longer term China’s continued rise and the US’ struggle to maintain a uni-polar world will lead to a collision of strategic interests.

Risks to the Belt and Road project

The EU Parliament briefing discussed above also details some of the risks that could derail the Belt and Road project. These include changes of governments, flare ups in conflict areas such as Burma/Myanmar, corruption and terrorism. There is also the problem of local scepticism regarding the true benefits of some projects. There are accusations that it is Chinese companies that gain the most or that they result in Chinese colonisation. The impact of global financial shocks such as the financial crisis of 2007-2008 would also pose a risk.

Transition to a new multi-polar world

We are witnessing the transition to a new multi-polar world order. In this world, recognising and working with the strategic interests of other powers will be in the strategic interest. The skill will be in accomplishing that without compromising one’s own interests. In China’s case this includes acknowledging its position on Tibet and Taiwan and its interests in the South China Seas.

For the lesser powers putting all their eggs into the US’ strategic basket will become a less viable option. They will find themselves in the gravitational pull of The Belt and Road. They will have to accommodate China’s strategic interests that flow from the project. Or risk the possible consequences, military and economic, of giving unqualified support to the US’ struggle to maintain a uni-polar world.

History turns a full circle

With the Belt and Road initiative the world is on the verge of turning a full historical circle. The region will again be at the centre of the world with China at its apex. This will be as in the days of the old Silk Road, this time on a higher level with China’s influence reaching into every corner of the globe…

Gary Hollands

This is an abridged version of an essay first published January 15th 2017