Photo by Jeremy.
China / Belt and Road

China’s Belt and Road Initiative, Or, The Most Expensive Thing You’ve Probably Never Heard Of

It’s September of 2013 and President Xi Jinping, China’s most powerful leader since Mao, is in Kazakhstan announcing his plans for his ambitious Belt and Road Initiative (BRI). Six months later, Xi Jinping is in Pakistan promoting the BRI as the new ”maritime Silk Road for the 20th Century” and selling this vision as being advantageous for everyone. As the initiative grows and the Red Dragon rears its head, intentions grow clearer that the BRI leans to benefit China primarily in the long run.

Simply put, the BRI is a trade route along the historic Silk Road designed to bring goods in and out of China. Since 2013, China has been responsible for the contracting and construction of a railway terminal in Kazakhstan, a seaport in Sri Lanka, a highway in Pakistan, a bridge in rural Laos and many more projects. All of this is part of Xi Jinping’s long-awaited vision of launching China into superpower status and domination of global trade. As of now, it stands to be the most ambitious infrastructure project in history, costing anywhere between $1 to $8 trillion and touching more than half of the world’s population.

The Belt and Road Initiative is designed in two parts: land and sea. The “belt” aspect of the route exists on land. It includes gas pipelines that span from the Caspian Sea to northern China and a high-speed train network in Southeast Asia, facilitating the movement of goods and cheap labor to and from Laos, Thailand, and Vietnam. It even features a freight train from London to Yiwu, China at a staggering 7,500 miles long. The maritime silk road portion of the BRI outlines a series of sea-ports spanning the South China Sea to Africa. Together they form the Belt and Road and solidify China’s efforts in directing trade through Europe, the Middle East, and Southern Asia. Seventy-eight countries have already signed agreements for these projects, and the list is growing due to the economic and political incentives China creates for countries to get on board.

A perfect example of the incentives China leverages on weaker countries is seen in Pakistan, the destination for one of the BRI’s most pivotal projects. Pakistan is a country, similar to many others in southern Asia, that is economically stagnant, chronically corrupt, and hungry for foreign investment— especially through direct investment in infrastructure. China needs Pakistan to serve as a crucial geographical corridor, connecting the Chinese-invested Pakistani port of Gwadar through highway, rail and pipeline infrastructure to the greater BRI. Pakistan has become China’s strategic $62 billion dollar passageway, where the maritime silk road meets the land-belt known as the “China-Pakistan Economic Corridor.” In light of Chinese loan-investments, Pakistan saw a 5.3% growth rate in 2017, while strengthening its relations with a major world power. The disadvantages of this arrangement included going into extreme debt, a cost some Pakistani politicians are willing to take. As for China, it secured an easier route for moving oil and gas from the Middle East; a move poised for long-term return on investment. But Pakistan is only one of many countries China targets to supposedly, “improve” through investments in infrastructure. Sri Lanka, Laos, Malaysia, Montenegro, and others are all destinations for the growing BRI vision.

The chief characteristic distinguishing Chinese investment from Western investment has been the lack of rules. To gain investment from the West, countries typically have to abide by strict ethical labor standards. China has offered billions of dollars in loans with far fewer conditions, opening up opportunities with countries that are economically and politically unstable, with corrupt governments, and countries with less democratic governments. All of these conditions contribute to the likelihood of remaining in debt to China. This style of laissez-faire loan financing of the BRI has fewer strings attached, but spectators have their concerns about debt sustainability and its implications on the world economy. Very recent backlash against BRI loan financing has also been expressed from numerous countries such as  Malaysia, who are currently pushing to elect leaders that stray from the Chinese influence that has resulted in crippling debt. Yet, Xi Jinping presses onwards, begging the question: why would China invest in countries that, due to their unstable economies, are less likely to pay back their debts? A reason could be that China benefits from functioning at a loss. Similar to how Amazon’s predatory pricing for years hemorrhaged profits in return for market share, China is prepared to make risky investments, putting weaker countries in debt in return for strategic dominance in those regions, both economically and possibly militarily.

For China, the BRI may not only be about securing trade routes. In 2017, when it became clear that Sri Lanka was unable to pay back its 1.5 billion dollar loans for its BRI seaport, China signed a 99-year lease with Sri Lanka’s president, Mahinda Rajapaksa, granting them control of the port. The port is an important stop along the maritime silk road, located right off of India’s southern tip. Xi Jinping’s willingness to dish out so much in shaky loans in return for influence should raise eyebrows. Suspicion has been raised that the port will be used for naval purposes—to station ships and protect trade routes. Similar agreements have been settled in Pakistan and Myanmar, as well as an actual naval base in Djibouti. This is all part of the geopolitical “String of Pearls” theory referring to possible Chinese intentions in the Indian Ocean Region. The theory, gaining in international clout, speculates that the network of Chinese military and commercial ports falling between the Chinese mainland and Port Sudan are part of a larger military strategy. The BRI, while not being directly related to the string of pearls, may play into Xi Jinping’s strategies for regional dominance.

In the past two years, the US has entered into a trade war with China as part of the Trump Administration’s turn towards a more insular economy. By contrast, the BRI paints a vision of Xi Jinping’s 21st century globalism, signifying an unprecedented paradigm shift. In this distinct era, China is straying from its history of isolationism and embodying a neo-imperialist strategy, reminiscent of a 20th century United States. As China gains influence in the East, the US will need to find new strategies for understanding the BRI and formulating ways to strike a counterbalance in order to avoid being nudged out of the region altogether. One thing is for certain: although you may have never heard of the BRI, its strategic implications make China a greater threat to become the world’s next economic superpower.