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The Silk Belt and Road Initiative

Silk RoadThe Belt and Road Initiative (BRI), China’s ambitious international development program and President Xi Jinping’s brainchild, was launched in 2013 under the original name One Belt One Road. China is outspending the U.S. and other major powers by more than 2-to-1 on overseas development. In an average year during the BRI era, China spent $85 billion on their overseas development program as compared to the U.S.’s $37 billion.

Vladimir Ilich Lenin argued in "Imperialism: The Highest Stage of Capitalism" (1917) that capitalism "had escaped its three laws of motion through overseas imperialism. The acquisition of colonies had enabled the capitalist economies to dispose of their unconsumed goods, to acquire cheap resources, and to vent their surplus capital.... As capitalist economies mature, as capital accumulates, and as profit rates fall, the capitalist economies are compelled to seize colonies and create dependencies to serve as markets, investment outlets, and sources of food and raw materials."

On 12 December 2017 US Secretary of State Rex Tillerson said "... our policies do not seek to contain China’s economic development. But China’s economic development, in our view, should take place in the system of international rules and norms, and One Belt, One Road seems to want to define its own rules and norms."

Chinese firms need new markets for construction as their own becomes saturated or too competitive. The Silk Road Economic Belt includes all countries situated on the original Silk Road through Central Asia, West Asia, the Middle East and Europe. Furthermore, the route will include a new extension to South Asia and Southeast Asia. The second component is the Maritime Silk Road that connects the South China Sea, the South Pacific, and the Indian Ocean. It is aimed at investment and collaboration between countries in Southeast Asia, South Asia and East Africa by connecting these contiguous bodies of water.

In 2015, the Chinese government made “media and information cooperation” with the 10-member Association of Southeast Asian Nations (ASEAN) an essential part of the Belt and Road Initiative (BRI), Xi’s signature global infrastructure program to support trade with China.

Chinese companies and other entities use illicit means including high levels of corruption to achieve their ends. Corruption and elite capture is not a “bug” of Belt and Road Initiative [BRI] but an inherent feature of the program, with the goal of ensuring Chinese SOEs secure contracts with highly favorable terms to carry out projects financed by Chinese policy banks. The CCP cultivates “friends” among elites in many countries who are only too willing to sign up to opaque investment deals that undermine their country’s long-term prosperity in return for personal enrichment.

A series of studies, including those by economists David Autor, David Dorn and Gordon Hanson, suggests that Western countries and regions exposed to rising Chinese import competition see a major jump in unemployment, lower labor force participation and lower wages. Unskilled and manual workers are especially adversely affected.

The impacts "are most visible in the local labor markets in which the industries exposed to foreign competition are concentrated. Adjustment in local labor markets is remarkably slow, with wages and labor force participation rates remaining depressed and unemployment rates remaining elevated for at least a full decade after the China trade shock commences. Exposed workers experience greater job churning and reduced lifetime income," noted Autor, Dorn and Hanson in a paper for the National Bureau of Economic Research, an influential U.S.-based nonprofit.

Other recent academic studies have noted that the regions of the U.S. and Europe most impacted by trade with China are the ones which in recent elections and plebiscites have backed populist candidates and nationalist causes like Brexit, support fueled by anger at the effects of globalization. Brexit is Britain's decision to leave the European Union.

Little is known about the fine print in most of China's loan agreements with BRI partner countries. Researchers from the Kiel Institute for the World Economy (IfW) and Georgetown University in the US evaluated 100 BRI loan agreements and published them in a study entitled How China Lends. The study confirmed what critics have long suspected. "First, the Chinese contracts contain unusual confidentiality clauses that prohibit borrowers from disclosing the terms or even the existence of the debt," the study authors wrote. "The Chinese lenders also secured an advantage over other creditors by excluding BRI debts from being included in debt relief" coordinated by the Paris Club, a group of officials from major creditor nations who help countries in financial difficulty. The study also found that the "cancellation, acceleration and stabilization clauses in Chinese contracts potentially allow the lenders to influence the debtors' domestic and foreign policies." Apart from financing the construction of roads, rails and ports, the One Belt, One Road initiative also calls for the construction of oil and natural gas pipelines. Financing is expected to draw from a variety of sources. Spanning over two continents and connecting more than 60 countries, the trading routes are anticipated to cover a population of 4.4 billion people, and produce an economic output of $2.5 trillion.

The One Belt, One Road initiative has several purposes:

  1. It provides a feel-good fan-fair of rhetoric when all else fails. The Silk Belt and Road initiative has generated an enourmous amount of "golly gee willikers" news coverage.
  2. It articulates the Chinese national fantasy that throughout human history, with the brief exception of teh century from the unequal treaties of the Opium Wars to the victory of the Revolution in 1949, the world was divided between the glorious Middle, and the small states of the outer barbarians, some of which were tributaries to the Celestial Empire, while others were not so blessed.
  3. It provides and outlet for Chinese hot money, now that the Chinese real estate market is completely saturated. Having over built China, the Chinese construction-industrial complex is determined to find outlets in other countries, with loans arranged through the Asia Infrastructure Development Bank.
  4. The maritime Silk Belt initiative provides an extension of China's "String of Pearls" strategy of establishing porta facilities under Chinese control that could be used to defend Chinese sea lanes in time of war, to prevent a blockade of oil shipments that might bring China to its knees.
  5. The land-based Silk Road projects provide China, historically a continental power, with internal lines of communication [pipelines, roads, railroads, etc] that would assure China of supplies of oil, gas, and other goods, even in the face of an un-breakable maritime blockade. This bastion would be far less vulnerable to peripheral commerce-raiding by adversaries such as the United States or India. This continental citadel would give China control of much of Mackinder's Eurasian "world island".

The action plan on the China-proposed Silk Belt and Road Initiative issued by the National Development and Reform Commission, Ministry of Foreign Affairs, and Ministry of Commerce of the People’s Republic of China, with State Council authorization, on 28 March 2015.

More than two millennia ago the diligent and courageous people of Eurasia explored and opened up several routes of trade and cultural exchanges that linked the major civilizations of Asia, Europe and Africa, collectively called the Silk Road by later generations. For thousands of years, the Silk Road Spirit-”peace and cooperation, openness and inclusiveness, mutual learning and mutual benefit”-has been passed from generation to generation, promoted the progress of human civilization, and contributed greatly to the prosperity and development of the countries along the Silk Road. Symbolizing communication and cooperation between the East and the West, the Silk Road Spirit is a historic and cultural heritage shared by all countries around the world.

Silk RoadIn the 21st century, a new era marked by the theme of peace, development, cooperation and mutual benefit, it is all the more important for us to carry on the Silk Road Spirit in face of the weak recovery of the global economy, and complex international and regional situations.

When Chinese President Xi Jinping visited Central Asia and Southeast Asia in September and October of 2013, he raised the initiative of jointly building the Silk Road Economic Belt and the 21st-Century Maritime Silk Road (the Belt and Road), which attracted close attention from all over the world.

At the China-ASEAN Expo in 2013, Chinese Premier Li Keqiang emphasized the need to build the Maritime Silk Road oriented toward ASEAN, and to create strategic propellers for hinterland development. Accelerating the building of the Belt and Road can help promote the economic prosperity of the countries along the Belt and Road and regional economic cooperation, strengthen exchanges and mutual learning between different civilizations, and promote world peace and development. It is a great undertaking that will benefit people around the world.

The Belt and Road Initiative is a systematic project, which should be jointly built through consultation to meet the interests of all, and efforts should be made to integrate the development strategies of the countries along the Belt and Road. The Chinese government has drafted and published the Vision and Actions on Jointly Building Silk Road Economic Belt and 21st-Century Maritime Silk Road to promote the implementation of the Initiative, instill vigor and vitality into the ancient Silk Road, connect Asian, European and African countries more closely and promote mutually beneficial cooperation to a new high and in new forms.

The initiative to jointly build the Belt and Road, embracing the trend toward a multipolar world, economic globalization, cultural diversity and greater IT application, is designed to uphold the global free trade regime and the open world economy in the spirit of open regional cooperation. It is aimed at promoting orderly and free flow of economic factors, highly efficient allocation of resources and deep integration of markets; encouraging the countries along the Belt and Road to achieve economic policy coordination and carry out broader and more in-depth regional cooperation of higher standards; and jointly creating an open, inclusive and balanced regional economic cooperation architecture that benefits all.

The Belt and Road run through the continents of Asia, Europe and Africa, connecting the vibrant East Asia economic circle at one end and developed European economic circle at the other, and encompassing countries with huge potential for economic development. The Silk Road Economic Belt focuses on bringing together China, Central Asia, Russia and Europe (the Baltic); linking China with the Persian Gulf and the Mediterranean Sea through Central Asia and West Asia; and connecting China with Southeast Asia, South Asia and the Indian Ocean. The 21st-Century Maritime Silk Road is designed to go from China’s coast to Europe through the South China Sea and the Indian Ocean in one route, and from China’s coast through the South China Sea to the South Pacific in the other.

Silk Road On land, the Initiative will focus on jointly building a new Eurasian Land Bridge and developing China-Mongolia-Russia, China-Central Asia-West Asia and China-Indochina Peninsula economic corridors by taking advantage of international transport routes, relying on core cities along the Belt and Road and using key economic industrial parks as cooperation platforms. At sea, the Initiative will focus on jointly building smooth, secure and efficient transport routes connecting major sea ports along the Belt and Road. The China-Pakistan Economic Corridor and the Bangladesh- China- India- Myanmar Economic Corridor are closely related to the Belt and Road Initiative, and therefore require closer cooperation and greater progress.

Being different from its literal meaning, the “Belt and Road” is more than one belt and one road. It is a broad initiative of China for economic cooperation across the Eurasian Continent. Some key proposals of this initiative, obviously, can be called “economic corridors”. At least two of them are closely relevant to Afghanistan.

One is “China-Central Asia-West Asia” Economic Corridor. Starting from Xinjiang, this corridor overlaps with New Eurasian Land Bridge within China’s territory, and builds a new economic corridor which links Central Asian countries, Iran, Iraq and Turkey up and reaches the Persian Gulf, coast of the Mediterranean and Arabian Peninsula after stepping out of China’s border from Alataw Pass-Khorgos. This corridor is an energy passage in the route where China-Central Asia oil and gas pipelines must pass through. At present, this pipeline is now the longest natural gas pipeline in the world which starts from the border between Turkistan and Uzbekistan at the right bank of Amu Darya and enters into China from Khorgos via Uzbekistan and Kazakhstan.

The other major corridor is the China-Pakistan Economic Corridor. Chinese Prime Minister Li Keqiang proposed such vision of jointly building this corridor when he visited Pakistan in 2013. It aims at enhancing China-Pakistan cooperation in the fields of transportation, energy, maritime and so on, as well as advancing the connectivity between these two economies by creating a major economic artery from Kashgar of Xinjiang, China in the north to Gwadar Port of Pakistan in the south. Running through several key hubs of both Silk Road Economic Belt to its north and 21st-Century Maritime Silk Road to its south, China-Pakistan Economic Corridor is a trade route up to 3000 kilometers in its total length with various projects such as railway, highway, oil-gas pipelines and optic cable passageways.

Facilities connectivity is a priority area for implementing the Initiative. On the basis of respecting each other’s sovereignty and security concerns, countries along the Belt and Road should improve the connectivity of their infrastructure construction plans and technical standard systems, jointly push forward the construction of international trunk passageways, and form an infrastructure network connecting all subregions in Asia, and between Asia, Europe and Africa step by step. At the same time, efforts should be made to promote green and low-carbon infrastructure construction and operation management, taking into full account the impact of climate change on the construction.

With regard to transport infrastructure construction, the focus is on the key passageways, junctions and projects, and give priority to linking up unconnected road sections, removing transport bottlenecks, advancing road safety facilities and traffic management facilities and equipment, and improving road network connectivity.

In May 2017, Liu Qitao, Chairman of China Communications Construction Company [CCCC], said China had constructed 10,320 kilometers of highways, 152 bridges, 95 deepwater berths and 10 airports in the countries and regions along the "Belt and Road", and delivered 754 container traveling bridges. The total length of railways signed and under construction reached 2,080 kilometers. With Mombasa-Nairobi Railway, Gwadar Port, Karakoram Highway, Colombo Port City and other projects as examples, he introduced the important role of CCCC's symbolic projects in clearing up local traffic, prospering the local economy, improving local people's livelihood and promoting Sino-foreign exchanges.

The Karakoram Highway [KKH], the highest highway in the world, running 798 miles, from the verdant Pakistani town of Abbottabad to Kashgar, China. The highway represents an incredible feat of engineering: Chinese and Pakistani armies labored a quarter of a century at incredible cost to carve a road into what is for miles a sheer rock canyon wall jutting up from the Indus River. The road follows the fabled silk route.

A study released in September 2021 found under-reported debts of at least $385 billion owed by different countries to China in the past two decades, and that one-third of projects under the Belt and Road Initiative have run into major implementation problems. The hidden debts, which slipped through the scrutiny of international lenders such as the World Bank and the International Monetary Fund (IMF), and credit rating agencies, mean borrowing countries may have to repay more than they think. The findings are from a four-year study by AidData, an international development research lab based at William & Mary’s Global Research Institute in the United States. “Chinese debt burdens are substantially larger than research institutions, credit rating agencies, or intergovernmental organizations with surveillance responsibilities previously understood,” the study said. The reason is an increasing number of deals struck not directly between governments through central banks but through often opaque arrangements with a range of financing institutions, hence “the debt burdens were kept off the public balance sheets.” The study said that nearly 70 percent of China’s overseas lending “is now directed to state-owned companies, state-owned banks, special purpose vehicles, joint ventures, and private sector institutions in recipient countries” rather than sovereign borrowers which are central government institutions. According to Brad Parks, AidData’s Executive Director and a co-author of the report, “the hidden debt problem is getting worse over time.” The study also found that 35 percent of the BRI infrastructure project portfolio has encountered major implementation problems—such as corruption scandals, labor violations, environmental hazards, and public protests. Beijing has used debt rather than aid “to establish a dominant position in the international development finance market. Since the BRI was introduced in 2013, China has maintained a 31-to-1 ratio of loans to grants.” Beijing’s lending to low- and middle-income countries is provided on less generous terms than loans from other lenders and multinational creditors. “A typical loan from China has a 4.2 percent interest rate and a repayment period of less than 10 years,” compared to a typical loan with a 1.1 percent interest rate and a repayment period of 28 years from countries like Germany, France or Japan. “This is quite comparable to loanshark practices at the global level,” said Soumya Bhowmick, associate fellow at the Observer Research Foundation in Kolkata, India, who was not involved in the study.

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Page last modified: 03-10-2021 15:29:30 ZULU