Last month, Chinese President Xi Jinping (習近平) presided over the heavily orchestrated Belt and Road Forum for International Cooperation in Beijing. The two-day event attracted 29 heads of state, including Russian President Vladimir Putin, and 1,200 delegates from more than 100 countries.
Xi called China’s “One Belt, One Road” initiative the “project of the century.” The 65 countries involved comprise two-thirds of the world’s land mass and about 4.5 billion people.
Originally announced in 2013, Xi’s plan to integrate Eurasia through US$1 trillion of investment in infrastructure stretching from China to Europe, with extensions to Southeast Asia and east Africa, has been termed China’s Marshall Plan, as well as its bid for a grand strategy.
China’s ambitious initiative would provide much-needed highways, railway lines, pipelines, ports and power plants in poor countries. It would also encourage Chinese firms to increase their investments in European ports and railways.
The “belt” would include a massive network of highways and rail links through Central Asia, and the “road” refers to a series of maritime routes and ports between Asia and Europe.
Marco Polo would be proud. And if China chooses to use its surplus financial reserves to create infrastructure that helps poor countries and enhances international trade, it would be providing what can be seen as a global public good.
Of course, China’s motives are not purely benevolent. Reallocation of China’s large foreign exchange assets away from low-yield US Treasury bonds to higher-yield infrastructure investment makes sense and creates alternative markets for Chinese goods.
With Chinese steel and cement firms suffering from overcapacity, Chinese construction firms would profit from the new investment. And as Chinese manufacturing moves to less-accessible provinces, improved connections to international markets fits China’s development needs.
However, is the project more public relations smoke than investment fire? According to the Financial Times, investment in Xi’s initiative declined last year, raising doubts about whether commercial enterprises are as committed as the government.
Shipping goods overland from China to Europe is still twice as expensive as trade by sea. As the Financial Times puts it, the initiative is “unfortunately less of a practical plan for investment than a broad political vision.”
Moreover, there is a danger of debt and unpaid loans from projects that turn out to be economic “white elephants” and security conflicts could bedevil projects that cross so many borders.
Xi’s vision is impressive, but will it succeed as a grand strategy?
China is betting on an old geopolitical proposition. A century ago, British geopolitical theorist Halford Mackinder said that whoever controlled the island of Eurasia would control the world.
US strategy, in contrast, has long favored the geopolitical insights of 19th century admiral Alfred Mahan, who emphasized sea power and the rimlands.
At the end of World War II, George Kennan adapted Mahan’s approach to develop his Cold War strategy of containment of the Soviet Union, arguing that if the US allied with Britain and Japan and the peninsula of western Europe at the two ends of Eurasia, the US could create a balance of global power that would be favorable to US interests.