Skip to main content

The Belt and Road’s difficult embrace


 Graeme Smith

This article is based on episode 26 of the Little Red Podcast, featuring Peter Cai of the Lowy Institute, Dirk van der Kley of the Australian National University, and Louisa Lim from the Centre for Advancing Journalism at Melbourne University.

Last year my most decorated PhD student Colonel Peter Connolly, now Director of the Australian Army Research Centre (the DAARC), made a Belt and Road pilgrimage with me to the think tanks, universities, and bookshops of Guangzhou and Beijing to find out what the Belt and Road Initiative (BRI) was, and how it had been cooked up.

We heard various descriptions of the BRI, or, to give it its even less-catchy full title, the Silk Road Economic Belt and the 21st-century Maritime Silk Road: it was a bumper sticker for things that were already happening; a “grand strategy” (always in scare quotes); and a new approach to geo-economics. It was definitely nothing to do with neocolonialism.

We heard various conception tales. The BRI was a direct descendent of the Go West strategy of the 1990s, designed to stimulate the local economies of backwater towns in central and western China. It was the brainchild of Peking University’s Dean of International Studies Wang Jisi, who proposed a westward shift to Asia in response to US containment in the Pacific. And our favourite, delivered with a straight face by a Beijing-based analyst: “President Xi came up with the idea all by himself”. It’s an assessment shared by at least one senior Chinese leader.

In this episode of the Little Red Podcast, Peter Cai and Dirk van der Kley explain the motivations behind an initiative so broad that it seems to encompass everything China does overseas. Recently written into the constitution, the BRI is with us for the foreseeable future, even if Xi Jinping should decide that he needs a successor.

So much ink has been spilled on the BRI that it’s worth cutting straight to the most surprising findings. For Peter Cai, beyond the immediate economic concern of dealing with China’s staggering excess capacity – China’s surplus production of steel is more than the output of the US and Europe combined – there’s a longer play that most analysts overlook. In the long term, the BRI is about getting the world to adopt Chinese standards. Cai explains:

There’s been an obsession in China. It’s stretched back decades. Every Western industrial country sets the international standards. It doesn’t matter whether it’s an international law, or the technological standard, the industrial standards. The Chinese are basically the rule-takers, not rule-setters. But now China wants to write some of the rules of the next generation of technologies and goods. This is Made in China 2025.

Cai argues that this obsession dovetails with a willingness to fund scholarships targeting future leaders of Belt and Road countries:

[It’s] in China’s interest to invest in promising future engineers, technicians, decision-makers, and bureaucrats to build a constituency in the future to support procurement of contracts, when it comes to industrial policy, whether to adopt a Chinese railway engineering standard [or] a telecommunication 5G standard. Are you going to use Huawei or that [European] standard? If you have officials from Ministry of Telecommunications or Post training in China, how are you going to make that decision? It’s another way to influence the future.

It also helps address one of the trenchant criticisms of Chinese firms abroad: that they bring their own labour and fail to localise projects. On this issue, Chinese firms are facing pushback, even in the loosely governed central Asian states where Dirk van der Kley has been studying Belt and Road projects.

Van der Kley has found that for many unprofitable Chinese state-owned enterprises the BRI offers a lifeline, a chance to access finance denied to them for domestic projects. As discussed by Dinny McMahon in our previous episode, many Chinese state-owned enterprises are “zombie companies”, never turning a profit but kept alive because they provide revenue and jobs. The BRI has encouraged many zombies to lumber (or rather hop – yes, Chinese zombies hop) into Central Asia.

Rather than making a killing, zombies such as ShaanMei (Shaanxi Coal) are easy pickings for local officials. Van der Kley cites Hu Feng, chairman of the Federation of Overseas Chinese in Tajikistan:

You know how Tajik shoot pigeons? They scatter some food on the ground and then wait around the corner with a shotgun. When pigeons come, they just blast away from a short distance. That’s the dire situation facing Chinese businessmen here.

Failed overseas projects put China’s development finance providers – China Development Bank and China Exim Bank – on the hook for yet more non-performing loans. With China’s debt-to-GDP ratio reaching levels that even Australia’s normally cautious Reserve Bank governor felt moved to comment on, the banks’ reluctance to lend, rather than local opposition, may be the biggest check on Xi Jinping’s ambitions for the Belt and Road.



Popular posts from this blog

SSG Commando Muddassir Iqbal of Pakistan Army

“ Commando Muddassir Iqbal was part of the team who conducted Army Public School operation on 16 December 2014. In this video he reveals that he along with other commandos was ordered to kill the innocent children inside school, when asked why should they kill children after killing all the terrorist he was told that it would be a chance to defame Taliban and get nation on the side. He and all other commandos killed children and later Taliban was blamed.
Muddassir Iqbal has deserted the military and now he is  with mujahedeen somewhere in AF PAK border area”
For authenticity of  this tape journalists can easy reach to his home town to interview his family members or   ISPR as he reveals his army service number”
Asalam o Alaikum: My name is Muddassir Iqbal. My father’s name is Naimat Ali. I belong to Sialkot divison (Punjab province), my village is Shamsher Poor and district, tehsil and post office  Narowal. Unfortunately I was working in Pakistan army. I feel embarrassed to tell you …

China's Raise as a Maritime Power

China's Rise as a Maritime PowerOcean Policy from Mao Zedong to Xi JinpingTAKEDA Jun’ichiSenkaku IslandsApr 23, 2014 PDF Download1. IntroductionThe international community has been viewing China's recent moves relating to the seas as representing "maritime expansion," and the Chinese themselves have come to talk about making their country a maritime power. In the political report he delivered in the autumn of 2012 to the eighteenth National Congress of the Communist Party of China, which stands at the top of the country's power structure, General Secretary Hu Jintao declared, "We should enhance our capacity for exploiting marine resources, develop the marine economy, protect the marine ecological environment, resolutely safeguard China's maritime rights and interests, and build China into a maritime power."1 This was Hu's final report as the top leader of the CPC; after delivering it he stepped down from his posts as general secretary and chairm…

Guardians of the Belt and Road

Guardians of the Belt and RoadThe internationalization of China's private security companiesby Helena Legarda and Meia NouwensFollowing the build-up of infrastructure and investment projects along China’s extensive Belt and Road Initiative (BRI), private security companies from China are also increasingly going global – to protect Chinese assets and the growing number of Chinese nationals living and working in countries along the BRI, in sometimes unstable regions. Out of the 5,000 registered Chinese private security companies, 20 provide international services, employing 3,200 security personnel in countries like Iraq, Sudan and Pakistan.The impact of this newly developing Chinese activity abroad is analyzed in this MERICS China Monitor. Chinese private security companies’ international activities pose a challenge to European interests as they are often largely unregulated and their security staff are often inexperienced in dealing with serious conflict situations and combat. EU …