By Sara Hsu
China’s One Belt One Road initiative is vast and promises to greatly expand China’s soft power in Asia, Europe, and Africa by creating much-needed infrastructure. The US stance on OBOR, however, is unclear, and the lack of a clear stance on OBOR, China, and Asia in general, will ensure a reduced role for the US in the region.
Introduction
China’s expansive One Belt One Road initiative stretches across the continents of Asia, Europe, and Africa and promises to bring a range of infrastructure to numerous developing countries, potentially covering half of the world. The purpose of the project is to engage the nation abroad. China’s Ministry of Foreign Affairs aims specifically to boost intergovernmental communication to promote regional cooperation, coordinate infrastructure plans to ensure connection of infrastructure networks, encourage soft infrastructure development, and improve human connections through international exchanges.1
This is a massive undertaking, and many foreign countries have chosen to participate in order to benefit from infrastructure investment directly or indirectly, despite protests in some areas against environmental and human rights violations. The US position on OBOR, however, is unclear, and a lack of a clear stance has left the US looking on helplessly at the sidelines. This represents a more general failure of US foreign policy in the Asian region.
OBOR Benefits China
Focus on infrastructure allows China to employ its construction firms abroad and generate investment opportunities, both for itself and for other countries. Excess capacity in cement and steel enterprises can be used to provide materials for OBOR projects. OBOR will also help China gain access to trade with less developed countries by reducing trade costs due to improved transportation networks and enhanced trade agreements between nations.
Politically, the project strengthens China’s soft power abroad, boosting China’s stature as a global power. China earns political points for providing assistance to poor countries. The deliverables specified during China’s May 2017 Belt and Road Forum provide an intense work agenda for China, but also promise to massively bolster China’s involvement in Asia and beyond. These include: coordinating development strategies and infrastructure development, expanding industrialisation and trade, increasing financial cooperation, and focussing on people to people exchange.2 All of these items require negotiations with neighbouring governments, understandings based on mutual respect and benefits.
To some, the mutual benefits are clear. China has noted that increased cooperation with Qatar in OBOR can boost Qatar’s National Vision 2030.3 Lao officials have celebrated the fact that OBOR will cause their country to transform from a “land-locked country” into a “land-linked country”.4 Malaysia released a report in October stating that OBOR would create benefits for all participating countries, including Malaysia.5 In addition, Russian President Vladimir Putin stated in June that the OBOR will benefit both Russia and China.6
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…Despite Criticisms Regarding Risk and Rights Violations
China’s state owned enterprises have participated in 1,700 OBOR projects, a staggering number that represents construction of highways, railways, dams, and more.7 As I have discussed elsewhere, it seems unlikely that all of these projects have undergone sufficient due diligence, and they face potential risks of failure over time.8
It also bears mentioning that OBOR appears to be carried out on Chinese terms, with relatively low levels of transparency and lack of specification regarding human rights or environmental considerations. This has gotten China into trouble at times, presenting barriers to completing some projects. For example, popular opposition to the creation of a large industrial zone in Sri Lanka, due to potential land losses, has stalled China’s construction in the area. Protests in Pakistan’s Gilgit-Baltistan broke out during the OBOR summit in Beijing to reject Chinese imperialism, or military occupation of Pakistan.9 Protests have also taken place in Nicaragua against China’s plans to build a second canal, due to the threat of pollution and land seizures.
Despite these caveats, many of the projects will succeed, and ones that do fail may stay afloat for years before they collapse. This will allow China to retain its power abroad for a long time. To date, there has not been a great backlash to China’s rights transgressions. It seems that countries with poor governance records have even welcomed China’s impartial stance toward investing in their economies. As a matter of course, China does not attempt to reprimand countries for human rights and governance abuses. Russia, Iran and Turkey, all authoritarian (or quasi-authoritarian) regimes, have embraced China’s aspirations abroad.
US Muddled on OBOR
The US stance on OBOR under the Trump administration is unclear. While President Trump agreed in April to send a delegate to the OBOR forum held in Beijing this past May, US Secretary of Defense James Mattis came out strongly against the OBOR initiative in October due to its operations in disputed territories. Secretary Mattis stated during a Congressional hearing that “in a globalised world, there are many belts and many roads, and no one nation should put itself into a position of dictating one belt, one road.”10 In response, China stated that it has followed “reasonable and transparent” investment rules.11
American companies are quite in favour of contributing to OBOR, and they often have a better technological advantage over Chinese firms. General Electric (GE) and Honeywell International, for example, are getting involved in selling equipment for OBOR designated projects. GE made $2.3 billion in equipment sales in 2016 for projects along OBOR. Honeywell has organised a sales and marketing team called “East to Rest” just to serve Chinese firms working abroad. Opportunities to provide integrated services for infrastructure projects can boost global sales.12
While the Obama administration never explicitly opposed the OBOR or OBOR-associated institutions, there was little said about directly favouring OBOR projects. In fact, the Obama administration revealed itself to be concerned about the the Asian Infrastructure Investment Bank, which aimed to support OBOR projects. The major complaints were that transparency and good governance may not be a central features of the bank. Reportedly, some American officials even quietly lobbied against the development bank at the time of its proposal.13
The US also proposed a policy very similar to the OBOR policy before OBOR was released. In 2011, the US developed its own New Silk Road policy, which focussed on maintaining stability in Central Asia after US and NATO troops withdrew from Afghanistan. The policy focussed on improving trade between India and Pakistan to Central Asia through Afghanistan by promoting infrastructure construction, with the aim of checking the power of Russia and China.14 In both its regional emphasis and its political orientation, the New Silk Road differed from that of OBOR. However, the US did not put much weight behind its program in the end, allowing China’s silk road proposal to overshadow its concept.
US Stance on OBOR Represents Greater Weakness in Foreign Policy
The US stance on OBOR is representative of a greater weakness in foreign policy in the Asian region. President Trump has failed to devise a clearly defined position toward Asia and has even failed to grasp the importance of existing protocol, such as the One China policy. Trump’s childish threats toward North Korea with regard to its nuclear programme and to China and South Korea in terms of trade have worsened relations in the region while raising the spectre of an American economic or military attack.
This can be contrasted to former President Obama’s stance on Asia overall. Obama refocussed US attention from Europe to Asia in a “pivot to Asia”. This policy was often construed to mean that the US would increase activity in the Asian region in order to counterbalance China’s importance in the region using both soft and hard power, via trade agreements such as the Trans Pacific Partnership and military deployments.
Conclusion
The absence of an Asia or China policy under President Trump is evident in the administration’s lack of clear position on OBOR. This deficiency only serves to highlight China’s potential gains from the expansive programme, and will allow for the eastern nation to increase economic and political power.
Photo Courtesy: © Peoples Daily China[/ms-protect-content]
About the Author
Sara Hsu is an Associate Professor of Economics at the State University of New York at New Paltz, and have published over six books and fifteen journal articles on the Chinese economy and financial sector. Hsu is a Forbes contributor and a frequent guest on CGTN.
References
1. National Development and Reform Commission, Ministry of Foreign Affairs, and Ministry of Commerce of the People’s Republic of China. 2015. “Vision and Actions on Jointly Building Silk Road Economic Belt and 21st-Century Maritime Silk Road”. http://en.ndrc.gov.cn/newsrelease/201503/t20150330_669367.html, March 28.
2. Xinhua. 2017. Full text: List of deliverables of Belt and Road forum. http://news.xinhuanet.com/english/2017-05/15/c_136286376.htm, May 15.
3. Xinhua. 2016. “China takes Qatar key partner for belt and road initiative: FM”. http://news.xinhuanet.com/english/2016-05/11/c_135351700.htm, May 11.
4. Hutt, David. 2017. “Laos is a key link for China’s Obor ambitions”, http://www.atimes.com/article/laos-key-link-chinas-obor-ambitions/, July 15.
5. Xinhua. 2017. “Malaysia says it stands to reap benefits from Belt and Road Initiative”, http://news.xinhuanet.com/english/2017-10/27/c_136710199.htm . October 27.
6. Baumgartner, Pete. 2017. “China’s Massive ‘One Road’ Project Largely Bypasses Russia, But Moscow Still On Board”, https://www.rferl.org/a/russia-china-one-belt-one-road-project-putin-xi/28579849.html, June 26.
7. Wu, Gang. 2017. SOEs Lead Infrastructure Push in 1,700 “Belt and Road” Projects. http://www.caixinglobal.com/2017-05-10/101088332.html, May 9.
8. Hsu, Sara. 2017. China’s New Silk Road Project May Be Too Big To Succeed. https://www.huffingtonpost.com/entry/china-silk-road_us_
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9. Agencies. 2017. “As China opens its One Belt One Road summit, anti-CPEC protests erupt in PoK”, https://timesofindia.indiatimes.com/world/pakistan/as-china-opens-its-one-belt-one-road-summit-anti-cpec-protests-erupt-in-pok/articleshow/58675499.cms, May 15.
10. Press Trust of India. 2017. “US Backs India On ‘One Belt One Road’, Says It Crosses ‘Disputed Territory’.” https://www.ndtv.com/world-news/on-belt-and-road-us-backs-india-says-it-crosses-disputed-territory-1758271, October 4.
11. IANS. 2017. “China says it’s not thrusting Belt and Road”, http://economictimes.indiatimes.com/news/international/world-news/china-says-its-not-thrusting-belt-and-road/articleshow/60971921.cms, October 6.
12. Trentmann, Nina. 2017. “Western Firms Bet Big on China’s Billion-Dollar Infrastructure Project”, https://www.wsj.com/articles/western-firms-bet-big-on-chinas-billion-dollar-infrastructure-project-1494790205, May 14.
13. Perlez, Jane. 2014. “U.S. Opposing China’s Answer to World Bank” https://www.nytimes.com/2014/10/10/world/asia/chinas-plan-for-regional-development-bank-runs-into-us-opposition.html?_r=0., October 9.
14. Kim, Younkyoo and Fabio Indeo. 2013. The new great game in Central Asia post 2014: The US “New Silk Road” strategy and Sino-Russian rivalry. Communist and Post-Communist Studies 46 (2013) 275–286
