China’s “Belt and Road Initiative”, or as it is called in China, “One Belt, One Road”, is much better known under the name “New Silk Road”. It’s one of the most ambitious infrastructure projects of all time.
The initiative was launched in 2013 by Chinese President Xi Jinping, and includes a large set of development and investment projects aimed at connecting Asia and Europe through all forms of transport infrastructure. Over the course of a decade, the initiative spread to Africa, Oceania and Latin America, significantly strengthening the global economic and political influence of the People’s Republic of China.
The project currently covers 151 countries (with the potential to grow) and is considered a central pillar of Xi’s foreign policy that seeks to ensure China’s global dominance and make the 21st century China’s century. In other words, Xi wants his country to assume the status and role of the US in the world. China wants to become the most dominant country in the world, which will lead the world into new times.
The historic Chinese Silk Road was created during the westward expansion of the Chinese Han dynasty (from 206 BC to 220 AD). The ancient Chinese created a trade network across Central Asia (modern Afghanistan, Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, Uzbekistan) and modern India and Pakistan. Also, these trade routes stretched more than 6,000 km to Europe.
China was thus at the center of ancient globalization in those ancient times. It connected eastern and western markets, encouraged the development of economies and exchanged cultural and religious traditions. Valuable Chinese silk, spices, porcelain, and other goods moved west, while China received gold and other precious metals, ivory, and glassware.
Use of the Silk Road reached its peak during the first millennium, during the Roman and Byzantine Empires and the Tang Dynasty from the 7th to 10th centuries in China. But the Crusades, as well as the Mongol advance in Central Asia, weakened international trade.
Xi first announced the project to the public as the “Silk Road Economic Belt” during an official visit to Kazakhstan in September 2013. The project consists of two designations or abbreviations: belt and road. The “Belt” is a designation for proposed overland routes of road and rail transport through mainland Central Asia along known historical trade routes. “Road” is a designation for the “Maritime Silk Road of the 21st Century”, which refers to maritime routes from Southeast and South Asia through the Middle East and Africa to Europe.
The routes are modeled on Marco Polo’s maritime routes in the Middle Ages. The initiative was enshrined in the Chinese Communist Party constitution in 2017. The Xi administration describes the initiative as “an attempt to improve regional connectivity and embrace a brighter future.” The project has a set completion date of 2049, when People’s Republic of China should celebrate its 100th birthday.
In accordance with the vision of its creator, Xi Jinping, the infrastructure projects included in the project are: highways, railways, bridges, sea and airports, dams, tunnels, power plants, oil and gas pipelines, inland waterways. China has adapted to growing maritime traffic so it plans to invest in the development of ports along the Indian Ocean, from Southeast Asia through East Africa to European ports.
In addition to infrastructure, an integral part of the New Silk Road is the creation and financing of hundreds of special economic zones or industrial areas designed to create new jobs and introduce Chinese technologies such as the 5G network enabled by the giant Chinese telecommunications company Huawei. The initiative systematically avoids using the US dollar in order to reduce the dependence of China and other countries on the US and forces the use of the Chinese yuan. In this way, the Chinese currency is best asserted as an important global currency, which it should be given Beijing’s global aspirations.
Pakistan is without any doubt the key country on which the success of the entire initiative depends the most. It is therefore not surprising that the current largest project within the New Silk Road is the $65 billion China-Pakistan Economic Corridor (CPEC). CPEC is actually a mega project that connects China with the Pakistani port of Gwadar on the Arabian Sea. CPEC consists of a 3,000-kilometer network of Chinese infrastructure projects. In total, China has already spent about $1 trillion on infrastructure projects under the initiative. Although estimates vary, experts predict that the costs of the initiative could reach as much as $8 trillion.
The goals of the initiative are geoeconomic and geopolitical. Chinese policymakers want their country to be increasingly assertive internationally. The New Silk Road, together with the strategic plan “Made in China 2025” (transition from cheap production of low-quality goods to expensive high-tech goods) is a way for the domestic economy to continue to develop without major difficulties through healthy restructuring.
Namely, the Chinese want at all costs to avoid the fate of developed Western countries that fell into the “middle-income trap” in the 1960s. In this scenario, which plagues almost 90% of developed countries, wages rose and the quality of life improved as low-quality production grew. However, the problem arose when countries focused on the production of goods and services of higher value because wages and living standards stopped rising.
At the same time, Beijing is motivated to strengthen the economic position of its historically neglected western regions. More specifically, encouraging economic development in the western province of Xinjiang, where the population is historically distrustful of the central government in Beijing, is a top priority. Since the vast majority of China’s international trade passes by sea through the Malay Strait off the coast of Singapore, an important US ally, the Chinese want to find alternatives. In fact, they intend to ensure a long-term uninterrupted supply of energy and other necessities through Central Asia and the Middle East through safer routes that cannot be disrupted by the US military and its partners.
Externally, the New Silk Road is a way to further consolidate China’s global economic dominance. Through the initiative, new trade links are created, new export markets are found, the income of the Chinese state and the average citizen increases, and surplus goods are exported.
The New Silk Road is a good way to defend against the so-called of the American turn towards Asia, which was initiated by Barack Obama, and continued by Donald Trump and Joe Biden. The United States has spent billions of dollars and shown determination to build infrastructure and encourage cooperation between Asian countries, especially the less developed ones. America’s turn towards Asia in recent years has turned into an American trade war with China, rising tensions over Taiwan, as well as intensifying tensions in the South China Sea. There are also American attempts to create multilateral organizations aimed at isolating China: QUAD, the B3W initiative, as well as strengthening bilateral relations with Japan, South Korea, Vietnam, the Philippines, India and other countries in the region.
The initiative represents the political leverage that China has in relation to the countries participating in the project. For example in terms of Chinese loans (which are massively used by African and Latin American countries), Beijing often reserves the right to repay at any time. Thus, the Chinese have at hand the possibility of using the loans most often issued by the Asian Infrastructure Investment Bank (AIIB) as a political tool both in bilateral issues and in international crisis hotspots such as Taiwan.
Furthermore, China views the project as vitally important to securing its precarious borders on the Asian mainland. It shares land borders with 14 countries, including unstable states like Afghanistan and nations seeking new anti-American partnerships like Russia. Investments in the project are seen as a way to facilitate China’s “peripheral diplomacy”, i.e. to strengthen trade and infrastructure cooperation with countries along the vast land border.
As expected, the new Silk Road faced some obstacles and opponents. Former Malaysian Prime Minister Mahathir bin Mohamad campaigned against overpriced New Silk Road projects and canceled $22 billion worth of development projects, although he later announced his “full support”. Independent research shows that the total debt of some countries to China has grown significantly since 2013, exceeding 20 percent of national GDP.
Ever since the Covid-19 pandemic and Russia’s invasion of Ukraine wreaked havoc on global markets, a growing number of low-income countries have struggled to repay Chinese loans, fueling waves of debt crisis and fresh criticism. For example in Pakistan, imports needed to build CPEC infrastructure contributed to a widening budget deficit, ultimately resulting in IMF intervention.
In Ghana and Zambia, large debt that consisted in part of Chinese loans led to the default of those countries. Critics link the initiative to climate change. Although China has pledged to stop building coal-fired power plants abroad, in 2021 investments in non-renewable energy accounted for almost half of total consumption.
According to the UK-based consultancy Center for Economic and Business Research (CEBR), the Initiative is likely to increase global GDP by $7,1 trillion a year by 2040 and the benefits will be “widespread” as improved infrastructure reduces “frictions holding back world trade”. CEBR also concludes that the project is likely to attract more countries to join which is proving true as a new nation joins every year.
Studies by the World Bank estimate that the New Silk Road can increase trade in the 151 participating countries by 4,1%, reduce the costs of world trade by about 2%, and increase the GDP of East Asian and Pacific developing countries by between 2,6 and 3,9%.
Apologists of the New Silk Road praise it for its positive impact on increasing global GDP, especially in developing countries. However, critics cite issues surrounding human rights abuses and negative environmental impact, as well as concerns about debt trap diplomacy resulting in economic imperialism.
In any case, the New Silk Road is the most visible manifestation of the power of the Chinese state, and it justifies fears for American policymakers who want to preserve the status of the United States as the world’s leading power. How powerful the initiative is is best shown by the fact that the participating countries make up almost 75% of the world’s population and generate more than 50% of the world’s GDP. Just as their ancestors profited from silk, porcelain and spices, the Chinese expect to profit from the trade routes of the 21st century by exchanging every possible commodity from rice and oil to IT technology. There is no doubt that the intention of the Chinese is to make the nations participating in the initiative dependent on the Chinese economy and thereby build decisive economic and political influence.
The New Silk Road has similarities with the American Marshall Plan to help Western Europe after World War II, but with the important difference that China finances other nations solely on the basis of common economic interests. In their New Silk Road policy, the Chinese are not guided by the ideology of communism, but by the ideology of money and the motive to become the most powerful country in the world.
By Matija Šerić on August 3 2023 for the Eurasia Review.