Despite an economic slowdown, China pursues the Belt and Road Initiative to capture a global leadership status in the process of their imperial expansion
The dark and bright shades of history tell us about the centuries-old dynamic play called ‘trade’, a process which assumes great significance in any socio-political context as it’s the single indispensable factor that drives the world forward. Trade coupled with investment is the most powerful phenomenon that rules societies, bringing the people together and connecting them with the idea of mutual dependence. But, rulers with expansionist and authoritarian ideologies use ‘trade’ and ‘infrastructure’ projects as a strategic means to stamp their mighty presence in foreign countries. We have seen the boots
followed by trade on the grounds of several countries, which marked the mix of political interference/invasion and unethical financial interests ruling low-income countries in a totally undemocratic way.
History reminds us about this hard yet bitter truth in frequent intervals with the course of time. When an authoritarian Communist state is taking up this again, the world should be cautious. Unlike Western democracies, China’s expansion of its footprints in low-income countries has multiple implications, for the single reason of its dictatorial and one-sided vision of the world.
The Dangerous Road
With the One Belt One Road project, China plans to increase its economic and political influence in Asia Pacific area and Central and Eastern Europe. As Donald Trump’s US has not all
interested in expansionism and global leadership, China’s president Xi Jinping is now utilising the opportunity with more enthusiasm than ever.
It was in 2013, Xi proposed this grand project, creating a network of railways, roads, pipelines, and utility grids that would link China and Central Asia, West Asia, and parts of South Asia.
The Belt and Road Initiative (BRI) (It was earlier known as One Belt, One Road project) is Xi Jinping’s mega plan to transform China into the new colonial power. He is engaged in the making of a global Imperialist-Communist China with super muscles in the guise of
development and soft power.
“Since introducing the OBOR
initiative, China has often been accused of attempting to wrest greater control over the developing world, and even to replace the United States as the
dominant global superpower. Some, pointing to the historical record, warn of the “Thucydides Trap”: a rising power will eventually try to challenge an
established one,” Keyu Jin, a professor of economics at the London School of Economics noted in her recent article.
China has some well-calculated vested political interests in the Belt and Road Initiative. It is using the low-income countries to achieve that. Developing countries need massive investments in roads, railroads, power plants and grids, airports, seaports and other infrastructure projects as part of their development. A UNESCAP (The United Nations Economic and Social Commission for Asia and the Pacific) report points out that infrastructure development needs in Asia are about $1.6 to $1.7 trillion per year on average in the years to 2030. China is well aware of this economic reality. This is reflected in the words of Xi Jinping. “World leaders gathered in Beijing over the past two days to hear China’s plan for global trade: the One Belt One Road initiative. Nearly 70
countries and international organisations have signed up for the mega infrastructure project, Xi Jinping said on May 15 as the ending note.
Aimed at building infrastructure to connect China to a range of Asian countries, it’s sometimes described as a Marshall Plan. But that analogy doesn’t go far enough. Infrastructure is how you dominate. Thus, Belt and Road is more like the 19th-century creation of railroads across continents—or an effort to build an Eisenhower Interstate System for an entire region of the planet.
China hopes for economic benefits, to be sure. But its geo-strategic ambitions are equally or more important to Belt and Road,” Bloomberg columnist Noah Feldman recently wrote. It’s intriguing to look at his observation of comparing Belt and Road with the 19th- century creation of railroads across continents.
China’s debt problem
But, there’s a serious question here is Xi Jinping’s dream
project a financially feasible one? China’s economic slowdown is becoming more evident now than ever. Global financial market experts are expressing pessimism on the outlook for the economy.
On May 24, 2017, the Moody’s Investors Service downgraded China”s long-term local currency and foreign currency issuer ratings to A1 from Aa3 and changed the outlook to stable from negative. This is a major setback for them as it was the first Moody’s downgrade since 1989 on debt risk.
It says that China’s financial strength will erode somewhat over the coming years, with economy-wide debt continuing to rise as potential growth slows. According to Bloomberg Intelligence, China’s total outstanding credit climbed to about 260 percent of GDP by the end of 2016, up from 160 percent in 2008.
“While China’s GDP will remain very large, and growth will remain high compared to other sovereigns, potential growth is likely to fall in the coming years,” stated the Moody’s Investors Service in their research report.
They observed that at least over the near term, with monetary policy limited by the risk of fuelling renewed capital outflows, the burden of supporting growth will fall largely on fiscal policy, with spending by government and
government-related entities rising. As the burden rising, China is reaching out to other nations with big ticket investments.
China’s GDP (Gross Domestic Product) growth has decelerated in recent years from a peak of 10.6 per cent in 2010 to 6.7 per cent in 2016.
Now, Just look at the size of the BRI it spans 65 countries representing 60 per cent of the world population and around a third of global gross domestic product. China needs to spend an amount of about $4 trillion for the project. The development of CPEC alone requires $46 billion. Along with this, also came the warning from a UN body to the so-called low-income beneficiaries of BRI.
According to UNESCAP China’s announced investment value under BRI is high compared to the relative size of the economy of the recipient countries in south and central Asia. Indirectly, China is dragging these developing nations into a nasty debt trap to use them politically. It should be noted that Sri Lanka has landed in big trouble after receiving big financial investments from China. The dragon has been playing the same infrastructure game in Nepal also.
One more factor will come to play. As most of the nations are incompetent to secure the trade routes, China will interfere in the name of protection. “Sea routes will have to be protected—and China’s expanding navy can be expected to offer that service. Land routes generate connections along the way, which in turn can justify expanded military presence,” Feldman observes. It’s a gradual process to make China a colonial super power. When the US is stepping back, China is stepping in. Communist China has no commitments to globalisation; basically, they are against free market and free speech. It is an irony that, now they‘re trying to project themselves as the new-age rescuers of globalisation. This is a strategic ploy to outsmart the US in their mission to emphasise their military presence in the world.
China is using infrastructure investment to gain a global leadership status in the process of their imperial expansion, to make a world with more inequality sans individual freedom. Beware of the dragon!
(The writer is the Founding Editor of Future Kerala business daily)