When the Trump administration rolled out its budget proposal recently, politicians and U.S. media were largely focused on the domestic spending provisions. International media, however, noticed that buried in the budget proposal was a plan to revive the Obama-era “New Silk Road” initiative with two infrastructure projects in Southeast Asia.
Many international observers believe this is the Trump administration’s attempt to counter China’s “Belt and Road” initiative. To understand why the Trump administration chose to resurrect an old initiative from the previous administration, we have to understand the broader context of China’s “Belt and Road” initiative.
What Is China’s Belt and Road Initiative?
It’s not surprising that China’s “Belt and Road initiative” was originally an American idea. In a series of articles between 2000 to 2007, S. Frederick Starr, a professor at Johns Hopkins University, originated the idea to build infrastructure to promote trade and security along the ancient “Silk Road,” a network of trade routes that connected commerce between Asia and the West.
Based on his idea, Secretary of State Hillary Clinton announced the “New Silk Road” initiative in India in 2011. Unfortunately, since the Obama administration was more interested in fulfilling a campaign promise to bring troops home from Afghanistan, the original “New Silk Road” initiative quietly but quickly failed due to lack of support from the U.S. government.
China’s President Xi seized upon this American idea and announced China’s own “modern Silk Road” during state visits to Kazakhstan and Indonesia in 2013. Since then, Xi expanded the idea to a major foreign policy initiative called “One Belt and One Road” (OBOR). The initiative consists of building infrastructure projects along two physical routes: a Eurasian land route linking China and Europe, and a maritime trade route linking Chinese ports with Europe and Africa. These routes will cover more than 65 countries from East to West.
So far, more than 60 countries across Asia, Europe, and Africa as well as the European Union have either signed declarations of intent or memorandums of understanding to be part of the OBOR initiative. According to China, the initiative is a win-win for all nations involved because it will rejuvenate economic activity, increase connectivity and cultural exchange, raise standards of living for all people, and promote peace. Xi called the OBOR initiative “the project of the century.”
Such an ambitious initiative will require serious financial commitment. As the world’s second-largest economy and with more than $3 trillion in foreign reserves, China is one of the few countries that have the financial muscle to undertake such a massive initiative. China has wasted no time to set up special financing vehicles for OBOR. In 2014, it established the Asian Infrastructure Investment Bank (AIIB), with the stated objective to underwrite infrastructure projects as part of the OBOR initiative. Fifty-seven countries currently participate in AIIB.
In 2015, China set up a domestic New Silk Road Fund and committed $40 billion. At the most recent OBOR summit on May 14 and 15, 2017, President Xi pledged an additional $124 billion funding from China towards the OBOR projects.
What Does China Get Out of It?
China is not putting so much economic and political capital behind the OBOR initiative as an altruistic act. The country that will benefit the most from this initiative is China. Such massive infrastructure investments will provide a big market and consistent demand for China’s exports, especially those running into overcapacity issues such as steel and cement. Many countries along the “Belt and Road” routes are resource-rich. They could provide a steady supply of raw material and energy to support China’s long-term economic growth.
The OBOR initiative will also give China access to strategically important locations while providing additional security protection. For example, as part of the initiative, China recently completed an oil and natural gas pipeline from Myanmar’s Arakan coast in the Bay of Bengal all the way to Kunming, a major city in China’s southwest Yunnan province. This 1,100-mile pipeline helps China accomplish several goals at once.
First, it allows China to tap into Myanmar’s energy-rich fields, which granted a 30-year lease to a Chinese-led conglomerate. Second, it reduces China’s dependence on the Malacca Straits, through which about one-fourth of the world’s trade goods pass. China has long believed that in case of possible future conflicts with the United States, the United States and its allies could block the Malacca Straits and thus cut China’s economic lifeline to the outside world. The pipeline enables China to obtain energy security.
Last but not least, the starting point of the pipeline is at the Kyaukpyu deep-sea port in the Bay of Bengal, where now both China’s commercial ships as well as Chinese navy ships can establish a legitimate presence, much to India’s annoyance.
There’s no question that China hopes to leverage its newly gained financial power to greatly expand its geopolitical influence as well as its economic and military footing from Asia to Europe and Africa through OBOR. Ultimately, it is China’s signature soft power move to remake the world order, in which China, not the United States, is the world’s sole superpower. Ancient Chinese emperors believed that China was the center of the universe and all roads led to Beijing. President Xi’s “China Dream” is all about returning China to its historical glory, possibly by 2020.
Why Are Some Countries Concerned?
Not all countries are on board with the OBOR initiative. Even some countries that are involved harbor misgivings and concerns. Some countries worry that OBOR is a disguised empire-building project that will harm other countries’ sovereignty. For example, countries like Vietnam are concerned that while China portrays the OBOR initiative as about peace and prosperity, China has been building artificial islands in areas of the South and East China Seas where several other countries including Vietnam have territorial claims too.
Another example is the China-Pakistan-Economic-Corridor, a signature OBOR project. It passes through Kashmir, a disputed territory between India and Pakistan. India views this project as China taking a stand on Pakistan’s claim to Kashmir. It doesn’t help that China’s pipeline project with Myanmar basically allow Chinese ships into India’s eastern backyard. Some in India even called the OBOR initiative “a new kind of colonization.” Therefore, India didn’t send a high-level delegation to the OBOR summit. Indian Foreign Ministry spokesman Gopal Bagley explained, “No country can accept a project that ignores its core concerns on sovereignty and territorial integrity.”
China’s economic development record casts a long shadow on the OBOR initiative. Over the past few decades, China has greatly expanded into Africa, driven by its thirst for energy and resources. In Africa, China offered economic assistance to resource-rich nations through low-interest loans, expertise, and labor for infrastructure projects (very similar to what the OBOR initiative proposes), while turning a blind eye to those countries’ corruption and human rights abuses. In 2009, China surpassed the United States as Africa’s largest trade partner.
Surveys show that while more than 60 percent of Africans view China’s economic development as somewhat or very positive, some see China exploiting resources while doing very little to help local communities build a sustainable economy. There are many complaints about Chinese companies’ unfair business and labor practices, poor compliance with safety and environmental standards, and violations of local laws. Worst of all, China’s investment and financing have kept repressive regimes such as Zimbabwe going, which only benefits the ruling class without improving the lives of ordinary citizens.
China insists its foreign policy is based on a noninterference principle—how other governments treat their people is their internal affair and China won’t intervene. Given China’s own human rights record, it’s easy to understand why it takes such an approach. It’s troubling that President Xi made a similar promise at the OBOR summit on May 16 that the OBOR will be open to all, regardless of ideology. Translation: any repressive regimes are welcome.
Importance of Trump Administration’s ‘New Silk Road’
Given the broad context of China’s OBOR initiative, we can see why it’s important for the Trump administration to not only revive our own version of the “New Silk Road” strategy in central Asia, but also invite India to be a key player.
Many American soldiers shed their blood and even gave their lives in countries like Afghanistan. To maintain our hard-won security and promote long-term economic prosperity and stability in the region, the United States needs to play a vital leadership role in the region’s economic development. Otherwise, we are conceding central Asia and beyond to China and its sphere of influence.
By including in the new budget two infrastructure projects that connect Afghanistan and its neighbors, the Trump administration is taking a step in the right direction. But will it be enough to counter China’s “project of the century”?