by Joel Sam, Contributing Editor

The Chinese government has announced nearly $900 billion in infrastructure projects as part of its Belt & Road Initiative (BRI) – an economic, land and maritime trading route which will span 64 countries on three continents. Foreign policy questions continue to dominate the discussion on Beijing’s true intentions and whether the talk of ‘more-open trade’ can be taken at face value. But to what extent are concerns over China’s foreign policy tendrils justified?

President Xi Ping’s 2013 announcement, of an almost unprecedented network of infrastructure projects across three continents, to revive the ancient Silk Road trading route and develop a 21st Century Maritime Silk Road, was couched in the language of ‘trade’ and economic ‘integration’. However, for various reasons over the past years, the foreign policy context has been hard to ignore: On one hand, a westward, land-based ‘Silk Road’ will extend into Central Asia, Russia’s traditional sphere of influence. On the other, China’s outward looking policymaking is contrasted with the more parochial ‘America First’ stance of the new Trump administration. Somewhere in the middle is the concern, felt by western European nations, that China is engaging Central and East European (CEE) countries on a new kind of platform that is ‘neither bilateral nor European’, as argued by Jikkie Verlare and Frans Paul van der Putten of the Netherlands Institute of International Relations. The impact of such a platform could be potentially dividing the cohesion of the European Union’s attitudes toward Chinese foreign investment.

“There is definitely a camp that would view this as a foreign policy outreach by China,” says Kevin Sneader, Senior Partner at the global consulting house, McKinsey & Company. “They would see it in a geopolitical context of a re-emerging China asserting itself on the global stage.”

Multilateral politics: The creation of a large multilateral policy bank, such as the Asian Infrastructure Investment Bank (AIIB), tasked with overseeing much of the fundraising for the $890 billion project, has also been met with suspicion in Washington. The United States and Japan have chosen not to sign up as AIIB members, despite the being the only two countries in the G7 not to have done so. The South China Morning Post reported the decision as a sign of Washington’s mistrust of the Chinese government and its perceived ambition to exert bigger, regional influence.

However, for many countries within the region, BRI has been largely embraced as an opportunity. With the election of Rodrigo Duterte to the presidency of the Philippines, vociferously more open to Chinese support than his predecessor, initial doubts over whether the disputes surrounding the South China Sea would block cooperation between the two countries, appear obsolete. Elsewhere, Indonesia stands to be the biggest beneficiary among the Association of South-east Asian Nations (ASEAN) economies, with approximately $87.4 billion identified in BRI-related pipeline infrastructure developments, according to The Economist Corporate Network analysis. Closely linked to this is the domestic economic drive behind BRI. China’s home-grown businesses, particularly in infrastructure and logistics, where there is an under-employment of capacity, are perfectly positioned to secure many of the overseas engineering projects, from ports and roads, to rail and underground pipelines.

AIIB outlook: In terms of funding institutions, while the AIIB’s broad membership can be viewed as an administrative and diplomatic success for China, it should also allay any fears that Beijing’s officials will be able to exert undue political influence on the investment bank. With only 26 percent of the voting rights, China’s is a voice among others at the board level, argues Dr Paul Armstrong-Taylor, Professor of Economics at the Hopkins-Nanjing Centre and China specialist. “The United Kingdom, Australia, India, South Korea (among other members) disagree with China on key political issues and would probably oppose China if it attempted to use the AIIB to pursue political goals.”

but2but1

RELATED POSTS