China has achieved the status of being able to refute the myth that its containment is possible. On a two-day summit on May 14 and 15, 2017, the assembly of 28 heads of states and representatives from 110 countries of the world in Shanghai, China, was a single major myth-busting success of the foreign policy of Chinese President Xi Jinping. One portion of the initiative would pass through Pakistan as the China-Pakistan Economic Corridor.
In September 2013, Jinping laid out his vision for the Silk Road Economic Belt in a speech in Astana, Kazakhstan. In October 2014, China set up the Asian Infrastructure Investment Bank (AIIB) with 50 billion dollars in capital, and the (new) Silk Road Fund with 40 billion dollars. The AIIB is given the task of building infrastructure and promoting trade across the Asian continent.
The “one belt, one road” or the OBOR initiative can be divided into two halves. The belt part (or the “new Silk Road”) is China’s dream to revive the ancient trade routes between China and its western neighbours in South Asia and Central Asia to Europe. The road part is China’s vision to develop new trade routes in the seas around China, roughly along the routes that had once been sailed by the great admiral, Zheng He, during the Ming dynasty. The objective of the OBOR initiative – a combination of an overland belt and a maritime road – is to connect China with Asia, Africa and Europe through infrastructure developments including constructing highways, railways, pipeline, ports and power grids.
China joined the World Trade Organisation (WTO) in 2001 and then China did not look back. Kevin P. Gallagher writes on page 189 of his book, The China Triangle: Latin America’s China Boom and the Fate of the Washington Consensus, published in 2016: “China’s new development banks have arisen from at least two motivations. [First,] China has accumulated an enormous store of wealth and savings that it seeks to diversify by making big investments across the world. Second, China feels slighted by the West for not being given a greater role in the Bretton Wood institutions [such as World Bank (WB) and International Monetary Fund (IMF)]. In 2010, the IMF passed significant reforms that would have given China and other emerging economies a greater say. Those reforms, however, have been stalled in the US Congress. Since China wasn’t let into existing institutions, it has begun to create its own. These institutions now have levels of capital at their disposal that of the Western-backed development bank. The World Bank holds just over 200 billion dollars in capital and has just over 500 billion dollars in assets. The CDB [China Development Bank] holds 100 billion dollars in capital, and has over 1 trillion dollars in assets.”
Xi has pledged 124 billion dollars to the initiative. It is expected that the plan would funnel investment of 502 billion dollars into 62 countries over the next five years. Though China depicted its belt and road initiative as an effort to make a walloping unprecedented investment to benefit many, the initiative is having at least nine implications.
First, China is reshaping international trade. In the past, European traders used to visit Asia to get access to its resource- rich lands, followed by European armies occupying areas for long-term benefits. Now, Asian countries are making roads to connect themselves to European markets to sell their agriculture and industrial products.
Second, China is clamoring for opening international markets rather than closing them in the name of protectionism. Contrary to protectionist efforts of US President Donald Trump, China has tried to increase the number of stakeholders in its anti-protectionism effort by inviting 28 leaders from various parts of the world.
Third, China is trying to neutralize the Pacific pivot to Asia introduced by the US in the South China Sea in November 2011. Though the priority for the pivot plummeted in 2014 after the involvement of the US in Syria, the presence of any pivot in the South China Sea loses its significance if China finds an alternative path to connect with the world commercially through the belt and road initiative.
Fourth, China is cooperating with Russia. Contrary to the Cold-War era when China distanced itself from the former USSR, this time China is taking Russia along. Russia, which has already been rejected by Western Europe, has turned East. In the belt and road initiative, Russia finds not only an alternative path to connect itself to Europe but it also finds an unhindered access to the warm waters of the Arabian Ocean.
Fifth, China is promoting inclusiveness leaving no country of Asia out of the ambit of the belt and road initiative. In May 2014, in Astana, Kazakhstan, Russian President Vladimir Putin signed the founding treaty of the Eurasian Economic Union which today consists of Russia, Kazakhstan, Belarus, Armenia and Kyrgyzstan. The treaty came into force in January 2015, and is an attractive platform for the rest of the states that once comprised the former USSR. In December 2012, Former US Secretary of State Hillary Clinton denounced Russia’s effort for Eurasian integration as an attempt to “re-Sovietize” the neighbourhood and announced that the emergence of a new version of the Soviet Union under the ruse of economic integration would be discouraged.
Sixth, China is reinforcing interdependence. Compared to the past, when countries remained aloof from one another within their political boundaries, the belt and road initiative has the potential of connecting about 62 countries of Asia including Central and Southeast Asia, the Middle East, North Africa and Europe constituting about half population and more than half the resources of the world. The governing formula is a win-win partnership which will bring economic prosperity and peace to the countries inter-connected.
Seventh, China is yearning for economic globalization. Instead of greater political links based on political needs, China sees solutions for the problems in the world in greater economic links on the basis of economic needs: geo-economics is taking precedence over geo-politics. Nevertheless, the US still questions the political intent of China for its vision of economic globalization.
Eight, China is focusing on infrastructure development. Through offering an infrastructure connectivity, China is offering a chance to the developing countries of Asia and Africa to stimulate economic growth, spur development and reduce the gap of development between themselves and the developed countries of the world.
Ninth, China is developing an international clout. Contrary to the past when China remained self-contained, through its belt and road initiative, China is connecting three main regional economic blocs: Association of Southeast Asian Nations, African Union and the European Union. The clout is primarily in the economic sphere but will have a political impact.