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Li Xing - Mapping China's One Belt One Road' Initiative-Springer International Publishing - Palgrave Macmillan (2019)
Li Xing - Mapping China's One Belt One Road' Initiative-Springer International Publishing - Palgrave Macmillan (2019)
Mapping China’s
‘One Belt One Road’
Initiative
Edited by Li Xing
International Political Economy Series
Series Editor
Timothy M. Shaw
Visiting Professor
University of Massachusetts
Boston, USA
Mapping China’s
‘One Belt One Road’
Initiative
Editor
Li Xing
Department of Culture and Global Studies
Aalborg University
Aalborg, Denmark
This Palgrave Macmillan imprint is published by the registered company Springer Nature
Switzerland AG
The registered company address is: Gewerbestrasse 11, 6330 Cham, Switzerland
Contents
v
vi Contents
Index 291
Notes on Contributors
vii
viii Notes on Contributors
Justin van der Merwe is Senior Researcher at the Centre for Military
Studies of the University of Stellenbosch, South Africa.
Anastas Vangeli is a Doctoral Researcher at the Graduate School for
Social Research at the Polish Academy of Sciences and a Claussen-Simon
Ph.D. Fellow at the ZEIT-Stiftung Ebelin und Gerd Bucerius.
List of Figures
ix
x List of Figures
Table 4.1 Countries that have signed bilateral SWAP agreements with
China98
Table 5.1 Ease of doing business (with selected sub-categories) in
China, various years 125
Table 5.2 Import tariffs of China, compared to USA, the EU, Japan,
and South Korea 126
Table 10.1 The leverage framework 257
Table 10.2 Capital projects in the CEE region supported by China’s
loans258
Table 10.3 China’s investments in CEE, USD million 260
Table 10.4 China-CEE trade volume (USD billion) 262
xi
CHAPTER 1
Li Xing
The “One Belt One Road” (OBOR) initiative—Yi Dai Yi Lu Chang Yi, in the
Chinese language—is the standard term used within China. However, this is not
the case abroad: In light of the fact that the OBOR initiative covers both a land
belt that includes the countries on the original and historical Silk Road through
Central Asia, West Asia, the Middle East and Europe, and a maritime belt that
links China’s port facilities with the African coast, pushing up through the Suez
L. Xing (*)
Department of Culture and Global Studies, Aalborg University,
Aalborg, Denmark
e-mail: xing@cgs.aau.dk
the demise of the USSR and despite the end of the Cold War. The mani-
festo is of immense historical and contemporary importance with its
enduring insights into capitalism and the endless expansion of this. It pro-
vides us with a profound analysis and explanation of the most fundamental
phenomena on a global scale in the current era, that is, globalization and
transnational capitalism.
Seen from the global developments of the past decades and the direc-
tion toward which the world is moving, this is a historical moment in
which it is most appropriate to bring back Marx. As one prominent scholar
points out:
We’re living in a moment when, for the first time, capitalism has become a truly
universal system. It’s universal not only in the sense that it’s global, not only in
the sense that just about every economic actor in the world today is operating
according to the logic of capitalism, and even those on the outermost periph-
ery of the capitalist economy are, in one way or another, subject to that logic.
Capitalism is universal also in the sense that its logic – the logic of accumula-
tion, commodification, profit-maximization, competition – has penetrated just
about every aspect of human life and nature itself…. (Wood 1997: 1)
In line with culturalist and sociological studies (Weber 1958), the his-
torical advancement of market capitalism and its overseas expansion is a
historical process which includes cultural and religious dimensions (his-
torical, divine, spiritual, miraculous). However, as many scholars, includ-
ing this author, rigorously argue, the establishment of capitalism is not so
much the result of cultural and religious dynamism, but rather the out-
come of a political economy project (Li and Hersh 2004). The capitalist
mode of production was born in Europe, and its starting point was the
imposition of ruthless coercion through the compulsory enclosure and
enforced formation of new property relations and legal systems. With the
restrictive access to land accompanying industrial transformation began a
new form of production relations based on primitive capitalist accumulation.
Simultaneously, Europe’s expansion overseas, which began with conquests
Canal into the Mediterranean, the plural term “Belt and Road” initiative has
entered into common use. The different authors of this book alternately make
use of both the terms OBOR Initiative and “Belt and Road” Initiative. The
editor of this book would like to point out that the most recent international
expression to replace the OBOR Initiative is the “Belt and Road” Initiative.
CHINA’S PURSUIT OF THE “ONE BELT ONE ROAD” INITIATIVE: A NEW… 3
foresee the eventual conflict between the rise of China and the existing
powers (Krauthammer 1995; Mearsheimer 2006, 2010). China’s ascent is
seen as the repetition of a hegemonic transition during which a rising power
would ultimately become discontent with the rules and institutions defined
and set by the existing hegemon. Consequently, Chinese production and
outward capital expansion would unavoidably challenge the geopolitical
and geoeconomic status quo of the patterns of global relationships.
However, emphasizing the interdependence of states through economic
exchange and international institutions, and believing in positive- sum
international relations (Keohane and Nye 2012), liberal scholars tend to
acknowledge the fact that China’s economic rise is achieved on the basis of
its expanding and intensifying integration within the international system.
Hence, it is seemingly impossible for China to take a revolutionary depar-
ture from the existing capitalist world order. Liberalism tends to emphasize
the fact that China’s national interests and foreign policy behavior increas-
ingly reflect and embrace the status quo of the world order because its
economic growth and wealth accumulation are generated from within and
not without the capitalist world system (Ikenberry 2008, 2013).
The world system theory (Wallerstein 1979, 2004) sees the rise of
emerging powers from a long historical perspective. The modern world
system is conceptualized as a capitalist world economy, which is governed
by the drive for the endless accumulation of capital, also referred to as the
“law of value”. This world system has been expanding over centuries, suc-
cessively incorporating other parts of the world into its division of labor.
Capital mobility and production relocation result in geographical shifts in
accumulation and power, without changing the fundamental relations of
inequality within the system. The world economy today is characterized
by capital mobility, globally integrated circuits of wealth accumulation,
regional and international segmentation of production and merger of
national and global capital and investment. The emergence of a new global
economic geography and the changing pattern of economic interdepen-
dence, as well as a new international division of labor, are the results of the
cycles constituted by the rise and decline of successive hegemons of global
order, with each rising power having its own particular mode of gover-
nance. The ascendance of new rising powers will redefine international
relations and the international political economy in terms of upward
mobility or downward movement among core, semi-periphery and periph-
ery countries.
6 L. XING
communities see the OBOR initiative as a new platform for realizing the
objective officially stated by China, that is, to “inject new positive energy
into world peace and development”. Moreover, it is seen as an effective
instrument to achieve the “Chinese Dream”, a dream of restoring and
legitimizing the reemergence of China as a world power. In recent years,
the OBOR initiative has been one of the hottest topics both in Chinese
media and academia (Feng 2016; Zhao 2015; Zou 2015). One of China’s
most active academics in writing about and legitimizing the OBOR initia-
tive is Wang Yiwei (2015, 2016, 2017a, b, c), who sees the initiative as
China’s fundamental transformation from being a rule-follower to becom-
ing a rule-settler or norm-shaper. Wang sees the initiative as a global pub-
lic good created through international cooperation and anticipates that
the neighboring countries and regions will greatly benefit from China’s
economic outward expansion.
On May 14 and 15, 2017, the Chinese government held an interna-
tional summit on the “One Belt, One Road” initiative. Twenty eight
heads of state and top officials from more than 60 nations and a dozen
international organizations attended the summit, whose aim was to dis-
cuss China’s new Silk Road initiative. The summit, equally important as
the G20 and the APEC, was China’s major diplomatic event that year. The
Chinese President Xi Jinping first announced his grand idea of the “Belt
and Road Initiative” in 2013, followed by the launch of a series of infra-
structure projects across Asia, Europe and Africa. With the new OBOR
initiative, China is seeking to portray itself as a new champion for free
trade and globalization at a time when the world economy has been con-
strained by economic/financial crises as well as by the isolationist policies
and inward orientations of the new US administration. Summit partici-
pants expressed both hopes and fears. The prevailing questions in the
minds of Western leaders are “What are China’s strategic objectives for the
OBOR?”, “Are there any hidden Chinese agendas?”, “How will China
benefit from the OBOR?”. Their miserable experiences with Western
powers cause developing countries in Southeast Asia and Central Asia, to
wonder “Will the OBOR be another repetition of a historical colonial pat-
tern in the twenty-first century?” “Will Chinese cheap loans be payment
for submitting to China’s leadership and hegemon?” After all, the
consensual concern is that the potentials to realize the OBOR project
seemingly depend on the nature of China’s objectives.
Despite Beijing’s emphasis on the “win-win” prospect for the OBOR
project, this is still seen by the realist line of the IPE rationale as a strategy
8 L. XING
Drawing lessons from history, realist analysts argue that as a rising eco-
nomic power, China will unavoidably become a rising military power.
China’s extraordinary economic growth has been coupled with the
“world’s largest military build-up” (Economist 2012). A country that has
a large merchant fleet, that is, capital and production outward expansion,
definitely needs a military navy and support points (security for capital and
production) across land and ocean. The fact that China is expanding its
Marine Corps for deployment in Gwadar port in Pakistan and Djibouti
port in the Horn of Africa is seen as a repetition of the history of imperial
expansion (Financial Times 2017, January 12). The expansion seems to
be imperative in order to protect China’s maritime lifelines and its grow-
ing interests overseas, such as the OBOR initiative.
In many ways, the OBOR initiative does pose many challenging ques-
tions to researchers, academics, policy makers and think tanks. Does the
Chinese OBOR initiative further demonstrate the uninterrupted intensifi-
cation and expansion of global capitalism envisioned by the Manifesto?
Does Beijing’s “multilateral approach” to promoting development strate-
gies including the OBOR initiative aim to achieve “coercive power and
CHINA’S PURSUIT OF THE “ONE BELT ONE ROAD” INITIATIVE: A NEW… 9
political influence” (Moore 2008: 48) and to advance its own national
interests, as realist thinkers always believe? Or, does OBOR actually show
the world that through the integration with the “rules and institutions of
international order” China’s own success will be extended outward to
benefit the regions beyond its territory (Ikenberry 2013: 71)? Does real-
ism have a point in claiming that through infrastructures and trade agree-
ments with weaker and less influential states, the OBOR initiative will
place China in a position to dictate economic and political policies in the
OBOR countries/regions? Or taking a middle ground between realism
and liberalism, does the OBOR initiative represent the dual reality of
adopting a grand strategy to gain market access for regional growth while
maximizing the interdependent opportunity to increase China’s regional
influence (Economy 2010; Holslag 2004)?
Seen from the perspectives of the world system theory, the outward
expansion of Chinese production and capital is a continuous part of the
system’s “rhythmic cycles” in upward mobility. Accordingly, the Chinese
OBOR initiative reflects the endless systemic cycles of accumulation. By
paraphrasing Marx’s logic of capitalist production M-C-M’ (M’ must be
larger than M), Arrighi (1994: 33) develops the notion of “capitalist
logic”, in which he differentiates two opposing logics of power: T-M-T’
vis-à-vis M-T-M’. The former depicts the territorial logic of power, por-
traying territory (T) as a means of wealth accumulation (money is a means
to expand the Territory), whereas the latter treats money (M) as an inter-
mediate link aiming at the acquisition of additional territories (seizing ter-
ritory only in so far as it provides greater profits).
As described in the Manifesto, the history of the evolution of the capi-
talist world system shows that in different parts of the world, the expan-
sion of capitalism went hand in hand with territorial annexation and
colonization. China’s contemporary history itself also includes significant
events such as the Opium War and the Japanese invasion under the so-
called Greater East Asia Co-prosperity Sphere. In the current context of
China’s rise is the OBOR initiative packed with the abovementioned “cap-
ital logic” and “territorial logic” of power (Zhang 2017)?
While Liberalism believes that China’s outward expansion in the form
of OBOR will inevitably be shaped and molded by the system’s law of
value, and that OBOR is an extension of China’s internal economic, politi-
cal and cultural structures and it will not alter the core architecture of the
liberal world system, realism takes it for granted that through the OBOR
project, China will combine political, economic and socio-cultural innova-
10 L. XING
that the rise of China and its OBOR project will invariably “affect” and
“disturb” a number of existing “global relationships” and “global arrange-
ments” as well as the “structural power” of the existing world order.
The aim of this book volume is to join the global discussions on China’s
OBOR initiative, focusing on the implications and impact of this initiative
on China, its neighbors, the extended regions and the world at large. With
its chapter contributions, the book, intends to cover aspects that deal with
a number of burning questions: How to understand China’s OBOR initia-
tive? How will China’s OBOR initiative influence the global geopolitical
and geoeconomic environments across the Belt and Road countries and
regions? What opportunities does OBOR offer for the countries and
regions along the OBOR economic corridor, and what challenges and
constraints will they face in terms of security issues, for instance? What are
the possible barriers that will keep some actors from fully participating in
the initiative? And what can be done to address the tensions and conflicts
along the “Belt” and the “Road”, such as the Middle East turmoil and the
South China Sea crisis? What will be the reaction of the US and other
economic powers when OBOR inevitably brings about capital competi-
tion? The OBOR initiative will no doubt generate complex interactions of
opportunities and alternatives as well as challenges and contradictions that
will coexist dialectically and at the same time contest each other. Since
OBOR is indeed a multidimensional strategy linking all components of
power, how will OBOR help enhance Beijing’s hard and soft powers?
Chapter 1 (Introduction) by Li Xing, who is also the editor of the
book, places the OBOR initiative in the thematic context of the interna-
tional political economy discussions, which include the debates between
different schools of IR theories on emerging powers. It functions as a
general background setting, providing historical, IR and IPE frameworks
for a holistic understanding of the rise of China and the OBOR initiative
as an inherent part of the continuous expansion of the capitalist world
system driven by endless capital accumulation. One of the essential “mes-
sages” disseminated from this chapter is that the rise of China and the
OBOR initiative are altering the existing “global arrangements” and the
“structural power” that preserves those arrangements. Thus, the crucial
question raised in this chapter, which is also the central background ques-
tion for all chapters in the volume, is whether the OBOR initiative sym-
bolizes the emergence of a “new world order with Chinese characteristics”
by integrating the OBOR countries and regions into a Chinese model of
capital accumulation. The author sees the OBOR initiative as a representa-
18 L. XING
the object and logic of diffusion. The author argues that the OBOR initia-
tive serves as a medium of non-coercive diffusion of policy principles
rooted in “state neoliberalism”. These are principles of state-led economic
cooperation, that is, sovereignty-first, rule by law, “flexible means to a
common end” and priority of growth and stability but with the end goal
being to advance the world market. Normative, utilitarian and bounded
rationality in isolation, or in combination, create the demand for such
principles in countries along the OBOR initiative, which also contributes
to the process of diffusion. The study concludes that as a cumulative out-
come, the OBOR initiative is both inside and outside of hegemonic mar-
ket neoliberalism, seeking a way to advance economic globalization
through state-led cooperation. While respecting the national sovereignty
and the choice of development path, the OBOR initiative facilitates norms,
ideas and principles of policy-making that have the potential to affect the
behavior of others and alter their trajectories, contributing to a process
that Chinese scholars and policy makers often dub “diversification” of
governance, policy-making and legislation paradigms.
Chapter 4 by Feng Yuan relates the OBOR discussion to a broad global
discussion on the rise of China and its possibility of becoming a new hege-
mon, especially in terms of institution-building. The author contends that
the OBOR initiative is an important and comprehensive project that
touches many aspects of China’s international relations policies, including
the objective of constructing a new set of institutions in order to support
a new set of ideas and norms. By analyzing the relationship between the
OBOR countries, the Asian Infrastructure Investment Bank’s (AIIB)
founding members and China’s bilateral relations and multilateral institu-
tional arrangements, the chapter suggests that China is developing a
“multilayered multilateralism”, which is to become its institutional tool
for realizing the OBOR initiative. “Multilayered multilateralism” implies
an active combination of China’s bilateral relations and its newly estab-
lished multilateral institutions while emphasizing the active interaction
between the two layers. This China-led institutional arrangement is both
new and innovative in its international relations, marking Beijing’s adjust-
ment to a more proactive approach in its foreign policies. It also denotes
that China’s pursuit of the OBOR initiative through multilayered multi-
lateralism will consolidate China’s new role in norm-setting and norm
diffusion. At the same time, “multilayered multilateralism” is also a phe-
nomenon that relates closely to the rise of regionalism, especially among
China’s neighboring countries.
20 L. XING
SREB to illustrate the kind of commercial gains that will accrue to China
through OBOR; (2) the Chinese economy vis-à-vis the current global
economic situation and sentiment regarding globalization, in order to
determine to what extent OBOR as a policy is expected to drive forward
China’s “new normal”; and (3) the financing of the venture in order to
address the financial viability of the project. A frank appraisal of the eco-
nomics of OBOR will help determine, to the extent possible at present,
where the economics of OBOR stops and geopolitics begin.
Chapter 8 by Justin van der Merwe adopts a historical-geographical
materialist approach to illustrate how China’s Belt and Road initiative can
be understood as part of a broader system of accumulation based on what
may be called the government—business—media (GBM) complex. The
analysis follows a critical rewriting of China’s regional and transnational
relations as seen through the lens of the GBM complex, with special atten-
tion paid to its involvement in Africa and the Middle East. Thus, this paper
seeks to lay the foundations for an alternative understanding of China’s
political economy. The chapter suggests that through the provision of
China-led public goods, the OBOR initiative is an opportunity to reinte-
grate Africa and the Middle East into China’s system of accumulation,
arguably as a countermeasure or an alternative system to the dominant
Western-led system of accumulation.
Chapter 9 by Laurids S. Lauridsen applies a Chinese proverb saying that
“two tigers cannot occupy the same mountain” to describe the situation
related to the stronger participation of China in the evolving regional
order. For more than half a century, American hegemony in East and
Southeast Asia has remained unchallengeable, while Japan has been play-
ing a leading role as an investor, aid provider and promoter of regional
cooperation. During the 2000s, especially during Xi Jinping’s leadership,
China has been seeking to expand its regional influence by engaging in
regional rule-making and institution-building activities. The two-pronged
strategy of setting up new multilateral investment banks, especially the
Asian Infrastructure Investment Bank (AIIB), and playing active roles in
overseas infrastructure projects under the One Belt One Road initiative
have taken regional competition and infrastructure diplomacy to an ele-
vated level. By examining an empirical case of high-speed railway projects
in Thailand, the chapter seeks to analyze regional rivalry and the evolving
alternative regional order in terms of tangible forms of infrastructure
development. China and Japan are competing to secure overseas infra-
structure projects in Asia, and both countries are deploying considerable
CHINA’S PURSUIT OF THE “ONE BELT ONE ROAD” INITIATIVE: A NEW… 23
Notes
1. George Kennan was the former Head of the US State Department Policy
Planning Staff. His selective quotations are taken from the complete text of
the section of Policy Planning Staff/23 (Kennan 1948). The complete
paper was published in 1976 in Foreign Relations of the United States 1948,
Vol. 1, No. 2.
2. “Vision and Actions on Jointly Building Silk Road Economic Belt and 21st
Century Maritime Silk Road,” issued by the People’s Republic of China’s
National Development and Reform Commission, Ministry of Foreign
Affairs, and Ministry of Commerce of the People’s Republic of China, with
State Council Authorization, March 2015. Available at http://en.ndrc.gov.
cn/newsrelease/201503/t20150330_669367.html
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Li Xing
L. Xing (*)
Department of Culture and Global Studies, Aalborg University,
Aalborg, Denmark
e-mail: xing@cgs.aau.dk
The “One Belt One Road” initiative (hereafter the “OBOR” initiative)
covers about 65 percent of the world’s population and one-third of the
world’s GDP, and the central idea is to create viable economic belts: (1) a
land belt that includes neighboring countries surrounding China, espe-
cially those countries on the original “Silk Road”1 through Central Asia,
West Asia, the Middle East and Europe; and (2) a maritime belt that links
China’s port facilities with the African coast, pushing up through the Suez
Canal into the Mediterranean. The OBOR seems to revive the ancient Silk
Routes with a twenty-first-century twist.
The OBOR initiative is an ambitious project that aims to link interre-
gional trade across more than 60 Asian and European countries along a
new Silk Road. It is China’s most important and grand initiative and a
crucial component of President Xi Jinping’s foreign policy strategies.
Whereas the conventional hegemonic tradition sees the world through the
prism of the Atlantic, with the United States on the one side and Europe
on the other, the OBOR initiative attempts to provide a new prism that
will allow us to view the world economy and the global balance of power
as they relate to China and its nearby regions.
As the OBOR initiative gains momentum, international relations (IR)
and international political economy (IPE) scholars and policy makers
worldwide are engaged in passionate debate about whether such an initia-
tive could potentially reshape the world order. In historical retrospect,
rising powers repeatedly struggle to redefine the global economic and
political order, and each shift in the balance of power has been followed by
conflicts and wars. For many years now, global debate on the rise of China
and on Beijing’s relationship with the existing US-led world order has
been controversial and has divided realists and liberalists (Mearsheimer
2006; Ikenberry 2008). Early disagreement on China’s role and position
in international institutions as a “free-rider” or as a “stake-holder” has
now turned into a dispute about whether China is a “status quo power”
or a “revisionist power” when it comes to the current world order (Zhao
and Korbel 2016). The term “status quo power” refers to the extent to
which Beijing respects international relations as a system based on the
acceptance of the existing norms. On the other hand, “revisionist power”
is a concept derived from conventional power transition theory which
automatically assumes that rising powers are revisionist (Organski and
Kugler 1980; Gilpin 1981). Although it is not easy to put China into one
of the two categories, the country is nevertheless considered to have a
“revisionist orientation” (Åberg 2014).
UNDERSTANDING THE MULTIPLE FACETS OF CHINA’S “ONE BELT ONE… 31
Beijing’s revisionist orientation has already been linked with its proactive
engagement in financial “minilateralism”, which is an attempt to create
alternative global financial institutions, such as the BRICS Bank,2 the AIIB3
and the New Silk Road Fund.4 Some Western mainstream media see China-
led minilateral financial institutions as good examples of China’s move
toward revisionist power. They symbolize “China’s Great Game: Road to a
new empire” (Financial Times 2015, October 12). In a similar way, the
OBOR is seen as part of China’s own global “public goods” efforts in the
process of constructing a post-US economic order (Li 2016b).
Another heated debate on Beijing’s OBOR initiative is related to the
revived reincarnation of “dependency theory”. The debate touches upon
the most important question concerning China’s economic relations with
the developing world: South-South partnership or North-South depen-
dency (Li 2016a). Dependency theory posits that the underdevelopment
of developing countries is caused by unequal exchange imposed by exter-
nal mercantilist forces and driven by imperialism and colonialism. Thus,
much of the literature focuses on China’s external trade relations and
draws on the “unequal exchange” thesis of dependency theory. The thesis
is that “the economy of certain countries is conditioned by the develop-
ment and expansion of another economy to which the former is sub-
jected”, and consequently, “some countries (the dominant ones) can
expand and can be self-sustaining, while other countries (dependent ones)
can do this only as a reflection of that expansion” (Santos 1970: 231).
Hence, it follows that China’s economic relations with the developing
world replicate the historical North-South dependency and that the
Chinese government is mainly aiming at the strategic pursuit of resources
and raw material supplies. Both Africa and Latin America are seen as good
examples of “economies of dependency”: both are dependent on com-
modity export to the Chinese market (Ferchen et al. 2013; Pereira and
Neves 2011; Li 2016a). At a global level, China is perceived as “laying the
groundwork for potentially securing regional hegemony by creating a
neo-Sinocentric periphery structure” that will eventually lead to its objec-
tive for global hegemony (Durani 2016).
Fig. 2.2 The flying-geese model of East Asian division of labor. (Author’s own
figure)
UNDERSTANDING THE MULTIPLE FACETS OF CHINA’S “ONE BELT ONE… 35
Fig. 2.3 The gradual return of China’s historical position as the region’s gravity.
(cf Wong 2013: 288, Fig. 2.2)
Today, virtually all East Asian countries count China as their largest
trading partner and largest market (Fig. 2.4).
Figure 2.5 places China’s internal power constellation and its external
expansion (right) in the context of Cox’s historical structure of hege-
mony (left, Cox 1981: 136). The rise of China and the OBOR initiative
neatly reveals the structural connections between material capacities
(accumulated resources), ideas (collective images of social/world order)
and institutions (means of perpetualizing a particular order). It implies
Fig. 2.5 Reflecting the OBOR initiative from Cox’s historical structure of hege-
mony. (Left: Cox 1981: 136; right: author’s own figure to reflect the left side)
40 L. XING
that change can come from any one of the three spheres: for instance,
the rise of contending socio-political and socio-economic forces may be
linked to changes in production and lead to the transformation of state
and world order.
Cox’s theory of hegemony initially aimed to explain how the United
States, driven by domestic power relations and social forces, was able to
shape and lead the postwar world order. Cox’s empirical ground was his
study of how US hegemony was institutionally sustained by the US-led
international organizations (the Bretton Woods order) that enabled the
United States and its allied regimes to perpetuate their favorable position
in the world order and to shape the development of the system as a whole.
Multilateral international institutions are an important instrument through
which the norms and values of a global hegemony are expressed. They act
as legitimizing mediators of the hegemonic order and as an embodiment
of the essential norms around which the international order is constructed.
These US-led multilateral international institutions are in themselves sus-
tained by Western hegemonic norms, also termed “universal norms”,
which define the rules of behavior for both institutions and states.
In neo-Gramscian terms, the OBOR project can be seen as an attempt
to create an alternative historical bloc to challenge the existing order, with
China seemingly striving to assume ideational and material leadership
(Yilmaz 2014). The OBOR strategy reflects the Gramscian notion of “war
of position”,8 in that Beijing is developing alternative “multilateralism”
(China-led international financial institutions) as an institutional tool to
realize the OBOR initiative. This China-led institutional arrangement is
innovative in terms of international relations, marking Beijing’s adjust-
ment to a more proactive approach in its foreign policies. It also indicates
that China’s pursuit of the OBOR initiative through multilateralism will
consolidate its position as a new player in the game of norm-setting and
norm diffusion.
tional economic and financial institutions, where the core features of the
capitalist world system are produced/reproduced, maintained and expanded.
During the early reform periods driven by the “Tao Guang Yang Hui”
(韬光养晦) strategy, Beijing’s goal was to become a “good citizen” and a
“loyal member” of various international organizations that deal with eco-
nomic, political, security, cultural and environmental issues, and so on.
With its membership of the World Trade Organization from 2001, China
further integrated itself into the global economy and benefited from the
existing international economic and financial institutions. China has
learned to be more effective in utilizing international organizations to
advance its national interests as well as to extract what it needs from these
institutions. One Chinese scholar pointed out that “China’s growing role
in all kinds of international organizations is part of the story of China’s
rise” (Xie 2011: 85). As another scholar argued, “… globalization works
only because of a high degree of institutional and legal interdependence,
and China’s growing prosperity depends on tightening these bonds and
participating in those global and regional institutions” (Agnew 2010: 578).
However, since the devastating effects of the global financial crisis and
the stalemate of the “Doha Round” negotiation, the US-based institu-
tions—the World Bank, IMF and WTO—have been subject to criticism
and questioning about their authority, capability and legitimacy. More
broadly, the existing world order with these economic institutions as sup-
porting pillars is experiencing crises in four comprehensive dimensions:
functionality, scope, legitimacy and authority (Flockhart and Li 2010).
Ironically, while the United States and much of Europe were plunged into
a serious recession, China emerged to become a global economic power
and a pivotal stakeholder in international economic and financial institu-
tions: (1) the largest trading nation and the largest trading partner for a
global majority of countries; (2) an important source of aid and develop-
ment assistance; and (3) a relevant and attractive model of economic
development. Beijing’s presentations and roles are being increasingly rec-
ognized and appreciated:
dream” of maintaining domestic unity and stability; (2) the “new type of
great power relations” involving the search for alternative means of peace-
ful coexistence with major powers; and (3) the “community of common
destiny” to ensure a peaceful and stable neighboring environment, which
is essential for China’s continued rise.
Since soft power presupposes a value-laden identity capable of setting
certain standards of social and political behavior on the basis of external-
izing successful domestic norms and projecting them beyond national
borders, the OBOR initiative is a good way to export the Chinese model
of economic success. China’s economic success is generating global
rethinking on the question of whether economic development is more
conditioned by the political architecture of Western democracy or by the
professional management of Chinese governance. China’s economic suc-
cess as an alternative development model seems to be the major source of
attraction for developing countries; nevertheless, it is impossible to sepa-
rate hard material factors from soft attraction to values and worldviews
(Breslin 2011). The Chinese development experience invites multiple
interpretations and explanations regarding the mechanisms that cause
nations to grow and regarding the set of mutually dependent relationships
between property rights and economic growth, between the rule of law
and a market economy, between a free currency flow and economic order,
and, most importantly, between democracy and development. These
norms and values should not be defined by the existing hegemonic powers
alone, and they are becoming “interdependent”—open, less rigid, and
non-universal.
There are many underlined values that are diffused from the “Chinese
model” (Ramo 2004), such as adherence to national self-determination, a
strong role of the party and state, gradual reform and innovation to achieve
economic growth, and international non-intervention and so on. They
have been normalized as “Beijing Consensus”, which “has begun to
remake the whole landscape of international development, economics,
society and, by extension, politics” (Ramo 2004: 3).
The OBOR was conceived as an important test case for the universal-
ization of the “Chinese Dream” concept (Li 2015). The concept is claimed
to have universal relevance as a dream of peace, development, cooperation
and mutual benefit for all. It is connected to the dreams and aspirations of
the people of the Eurasian regions in which the OBOR aims to increase
economic wealth, and to strengthen cooperative relations by reviving the
legacy of the historical Silk Road era. The OBOR is argued to be “a key
44 L. XING
the system’s law of value. It will revitalize the continuous rhythmic cycles
of the world system in terms of “upward mobility” and enlarge the “room
for maneuver”. Through the lens of world system theory, we can under-
stand the multifaceted roles and benefits that the OBOR initiative can
bring to China and the rest of the world.
of a single world trust, which was driven to expand beyond the framework
of the nation-state by productive forces and financial capitalism. Today,
these familiar phenomena are known as globalization and global capital-
ism. As core capitalist countries competed to expand their capital
accumulation and exploitative sphere in overseas markets and resources,
their interests would intersect and conflict, inevitably leading to war.
To put China’s OBOR initiative in the context of the Kautsky-Lenin
debate (Fig. 2.6), we can observe the two faces of China. On the one
hand, many aspects of Chinese capital accumulation and economic
development resemble the historical experiences of most developing
countries in nineteenth-century capitalism: foreign penetration or domi-
nation of key industries, enclave patterns of unevenly distributed indus-
trialization, massive rural migration, rural stagnation and urban
overcrowding, environmental and ecological degradation, severe
inequality and exploitation and pervasive corruption. The economic rise
of China is derived from its participation in the global division of labor
and market competition in the US-led capitalist world system and from
its adaptation to the system’s mode of production and law of value.
China has been the site of capital relocation and production outsourcing
Fig. 2.6 The OBOR initiative in the context of the Kautsky-Lenin debate.
(Author’s own figure)
UNDERSTANDING THE MULTIPLE FACETS OF CHINA’S “ONE BELT ONE… 49
from core Western imperialist countries (the United States and EU) and
Japan. Foreign direct investment in China has reaped massive super-
profits from China’s cheap resources and labor power. Even though,
historically, China has enjoyed a trade surplus from its commodity
exports to the core countries, its share of the total profit percentage has
been very marginal due to its position at the lower end of the global sup-
ply chain. For a long time, China was a profitable destination for core
capitalist countries’ production outsourcing and capital relocation. Seen
from Lenin’s perspective, China was a victim of capital exploitation by
core capitalist countries and of the competition between them.
On the other hand, many characteristics of Chinese economic achieve-
ments may well place the country in the category of core capitalist coun-
tries: (1) China is the world’s second largest economy; (2) it is the world’s
largest trading nation (import-export) and the largest high-tech export
country (worldatlas 2017); (3) it is the largest energy and commodity
consumer; (4) its foreign exchange reserve was estimated at $3.20 trillion
in July 2016 (Reuters, August 6, 2016); (5) China owns $1.24 trillion of
American Treasury bills, notes and bonds (USgovinfo.about.com) while
it is financing American imports and spending; and last but not least, (6)
the Chinese currency (yuan) has recently become one of IMF’s major
SDRs.10 From these perspectives, China is no doubt a core country, a
“North” country, in the global financial system in terms of overseas lend-
ing and investment. Moreover, it is a “developed” country in the global
trading system in terms of unequal exchange (exporting manufactured
products vis-à-vis importing raw materials), as described by dependency
theory. China’s strong status as a vital part of the global capital “cartel”
was firmly established recently, when the IMF approved the Chinese
yuan’s Special Drawing Rights (SDR), making the Chinese currency a
major world currency. In these connections, the OBOR strategy aims to
provide new platforms to facilitate China’s emergence as a new generator
of production relocation and capital mobility in the capitalist world sys-
tem. This development will inevitably intensify global competition in
relation to production relocation, capital expansion and market share,
especially among the core capitalist countries.
China’s OBOR blueprint is supported by Beijing-led financial institu-
tions such as the Asian Infrastructure Investment Bank (AIIB) and the
New Silk Road Foundation. The situation reflects Kautsky’s ultra-
imperialism theory: Chinese and global capitals intersect and merge in
order to jointly exploit the rest of the world in a form of amalgamated
50 L. XING
finance. One scholar even convincingly argues that the rise of China/BRICS
will not lead to a substantial change in world order; rather, what the world
is experiencing is a process of adaptation and cooptation of the emerging
powers, especially their economic elites, by traditional core powers and
leading transnational economic classes (Taylor 2016). However, the incor-
poration of Chinese capital and its global expansions is leading the world
into a stage of oligopolistic imperialism in which core capitalist countries,
including China, are accelerating the conflict over profit distribution, mar-
ket share and resource security. In this context, China is obviously torn
between coalition and cooperation with the United States and other core
capitalist countries on the one hand, and competition and conflict with the
very same countries on the other.
Notes
1. The conception of the “Silk Road” refers to the ancient Silk Road, a his-
torical network of trade routes started during the Han Dynasty
(206 BC–220 AD) between Europe, China, Africa and many other coun-
tries on the Afro-Eurasian landmass. It had both land and sea routes, where
trade in goods and cultural exchanges between China and regions and
countries along the routes was vibrant.
2. China is the largest stakeholder of the BRICS Bank contributing 41% of
the total 100 billion US dollars capital base, at the 6th BRICS summit in
Fortaleza, Brazil. According to the official published Fortaleza Declaration,
“the BRICS Development Bank is designed to mobilize resources for
infrastructure and sustainable development projects in BRICS and other
emerging and developing economies” (BRICS – Fortaleza Declaration
2014).
3. It refers to the “Asian Infrastructure Investment Bank” (AIIB), an initia-
tive led by the Chinese government in 2015. It is an international financial
institution with a pivotal aim to support and finance infrastructural projects
in the Asia-Pacific region.
52 L. XING
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Anastas Vangeli
Introduction
In recent years, and in particular after the leadership succession in 2012,
Chinese policymakers have reconceptualized Beijing’s new global role
and announced a proactive approach on the world stage (Burnay et al.
2015; Zhang 2015). This in itself has been a surprise, as—prior to the
leadership succession in 2012—many believed that, given the domestic
concerns of China, the incoming leadership spearheaded by Xi Jinping
would not have an ambitious foreign policy. Yet, in the words of Yan
Xuetong (Yan 2014), in the last several years China underwent a process
of transition from “keeping low profile” to “striving for achievement”.
China’s proactive approach on the global scene is shaped, of course, in
accordance with the changing circumstances and the contradictions which
A. Vangeli (*)
Graduate School for Social Research, Polish Academy of Sciences,
Warsaw, Poland
emerge elsewhere. The shift in China’s global role comes at a time when
most developed countries are coping with the limitations of their own
models, a lack of competitiveness, and the eruption of mass discontent.
One of the central questions for the future trajectory of China as a
global power is whether China will successfully promote its own norms
and values, and whether they will be embraced by others. In a world with
an ever more active and relevant China, as Beeson and Li (2016) argue,
“nothing approximating global or even regional governance is no longer
possible without (its) participation and cooperation”. With the growing
number of problems experienced at home, key promoters of the hege-
monic liberal democratic normative blueprint—the US and the EU—have
backtracked in terms of their efforts to promote their values abroad
(Carothers 2015). This has turned the tables and enabled the proliferation
of non-Western, non-liberal democratic ideas of development and coop-
eration, and—in particular—opened a maneuvering space for China in the
process (Ignatieff 2014; Micklethwait and Wooldridge 2014). One of the
features of China’s new diplomacy is precisely that it is actively “offering
to the pluralistic world a non-Western alternative that features new think-
ing and practice” (Yang 2015: 7). This is, however, not an abstract phe-
nomenon, but a very concrete one: Beijing completes the “offer” by
establishing novel China-centered institutional mechanisms of interna-
tional cooperation and regional and global governance that supplement
the existing global order, while aiding China’s foreign policy core princi-
ple of “striving for achievement” (Heilmann et al. 2014).
Today, a central concept of China’s new diplomacy is the landmark
“One Belt One Road” (OBOR) initiative. It synthesizes and systematizes
a number of existing, as well as novel, foreign and domestic policies
(Pantucci 2016), and provides a focal point for China’s resources, institu-
tions, and ideas. After the OBOR International Cooperation Forum in
Beijing held in 2017, it is now clear that it is indeed a global vision that
covers not only Asia, Europe, and Africa but also Oceania and the Americas.
While the OBOR initiative has a significant political economic compo-
nent and can significantly affect the global economy and power relations,
this chapter emphasizes its potential to have a significant normative impact
as well (see Vangeli 2018b). Building upon the lessons of its own experience,
as well as highlighting the symbolic capital of the ancient Silk Roads not only
as trade routes but moreover as a historical platform for intercivilizational
dialogue and flow of ideas (Ma 2015),1 China has transformed its external
A FRAMEWORK FOR THE STUDY OF THE ONE BELT ONE ROAD INITIATIVE… 59
marily on the normative supply side of the process, but the process itself is
at least equally driven by the demand side, as well as by misrecognition
and bounded rationality.3 In other words, key to the impact of OBOR is
not only China’s “offer” but also what regional actors make of it.
The component of OBOR formally expressed as “policy coordination”
and “mutual learning” in the official documents (National Development
and Research Commission 2015) constitutes the apparent dimension of
diffusion. At the same time, the level of the political practice of OBOR—
the creation of new venues of interaction and the process of the exchange
of ideas and deal-making—constitutes the substantial dimension of that
same process of diffusion.
Diffusion under the OBOR initiative is largely a voluntary process, one
which depends on the demand side of the interaction. The dispositions
and logic of political and intellectual elites in countries that are partners of
China in construing the OBOR vision and its implementation determine
the scopes and characters of the diffusion processes. The chapter develops
a taxonomy based on the different possibilities for the manifestations of
normative, utilitarian, and especially bounded rationality among the vari-
ous political and intellectual elites, all of which lead to different processes
and outcomes.
One of the key questions in diffusion research is whether “the goal is to
improve the understanding of diffusion itself or to use diffusion research
to explain another phenomenon” (Gilardi 2016: 8). My project belongs
to the latter group—I use the concept of diffusion to contribute to our
understanding of the OBOR initiative and the ideational complex that
underpins it. To do so, I first briefly outline the context and the main fea-
tures of OBOR in this chapter. Then, I link some of the features of OBOR
with a more general theory of diffusion. I then discuss the particularities
of principle diffusion and answer the questions “principles of what” and
“what principles” are diffused by OBOR. I close the analysis with an over-
view of the varying logic of diffusion via OBOR. The chapter is conceptu-
alized as a guideline for future studies. Aside from theoretical literature on
diffusion and secondary literature on OBOR, the insights here are
informed through an analysis of primary sources issued by the Chinese
government, media sources, as well as a number of interactions within
scholarly and “track 1.5” forums in which OBOR cooperation has been
conceptualized and analyzed.
A FRAMEWORK FOR THE STUDY OF THE ONE BELT ONE ROAD INITIATIVE… 61
Changyi 倡议 simply means a call for action, usually in the name of a public
good. It is a unilateral move that requires willing cooperation from others
who also have stakes in the provision of the public good. […] By contrast, a
strategy is a deliberate plan of actions that aim to achieve specific goals, and
these goals are usually exclusive (such as security or free trade), as opposed
to public goods, which are inclusive. (Xie 2015)
(lu) and also a way of practicing (dao—in this case of pursuing develop-
ment); that in the OBOR framework, “Lu is the method to realize Dao”—
meaning that physical infrastructure is central to the development
practice (the development path) the OBOR initiative promotes (Chen
2016).
While rooted in China’s own experience, OBOR is conceptualized as
an “open-ended” and inclusive initiative, meaning that whoever accepts its
vision may become part of it. It is therefore a global initiative, even though
at the early stage of development it is primarily focused on Asia, northern
and eastern Africa, and Europe. In the process, aside from applying con-
cepts idiosyncratic to China’s development experience, Chinese policy-
makers have also applied their own taxonomies and mental maps, and (re)
constructed regions based on the country’s own convictions and
convenience.
In terms of its global orientation, OBOR was initially formulated in the
context of the post-crisis global recovery as a Chinese contribution to
efforts to alleviate the negative effects of the crisis itself. However, as
changes have occurred in the global political economy—primarily with the
rise of antiglobalist forces in the US and the UK, the beacons of liberal
democratic globalization—China has gradually assumed the role of a vocal
proponent of economic globalization. Symbolically, this transition was
marked with Xi Jinping’s speech at the World Economic Forum in Davos,
days in advance of the inauguration of the new American president Donald
Trump, a strong proponent of antiglobalism. Xi presented a vision for the
advancement of the process of economic globalization, drawing primarily
on China’s experience and achievements.
These new developments have also helped China to fine-tune the pre-
sentation of OBOR as a proposal for advancing global cooperation by
reinventing and revising some of the key tenets of economic globalization.
After all, OBOR is rooted in the normative assumption of the state-led
cooperation of sovereign nations. Developed in line with the tendency of
China’s new diplomacy to “deliberately target and address concerns and
policy gaps which could not be solved by existing international institutions
and multilateral arrangements” (Qiu 2015), OBOR has often been called
a proposal for an alternative pathway of globalization, or a Chinese vision
of globalization. Authors have referred to it as a blueprint for “inclusive
globalization”, a term originally coined by the former UN Secretary
General Kofi Annan, addressing the need for a more equitable global
order that would offer better provisions for developing countries. The
A FRAMEWORK FOR THE STUDY OF THE ONE BELT ONE ROAD INITIATIVE… 63
The role of political and intellectual elites and the transnational effects on
the agency of elites in (re) shaping normative blueprints and orientations is
central to the process of diffusion. Building on the seminal work of Levitsky
and Way (2006) on the role of external influence on domestic political
change, Tolstrup (2013, 2014) argues that political and other types of
national-level elites play a special gatekeeping role, which provides them the
opportunity to tune the level of linkages with global actors in order to steer
national development in a particular direction. While, in the literature across
various disciplines, authors have focused primarily on the US and the EU as
external actors who promote liberal democracy, based on the teleological
assumption of the “end of history” after the end of the Cold War, here we
adopt an “open-endedness” perspective: there are different kinds of exter-
nal influences, different ideologies, and a different direction of normative
change. National elites thus have the ability to tune the diffusion of external
ideas, in particular to choose the “role-models”, to select the specific ideas,
and to steer the direction of normative change in various directions. They
have the role of “double brokers” (Dezalay and Garth 2002)—they convert
policy practices into ideas to be discussed and presented in non-policymak-
ing settings (i.e. in think tanks or in popular media), and vice versa—they
convert domestic or external ideas into policies.
In such an approach, however, one has to account for the possibility
that different national elites (i.e. incumbents) may make different choices
based on structural predispositions at the international and national levels,
having different material resources, and having different intellectual and
ideological dispositions. Such framing is also in congruence with other
studies of diffusion, such as the one by Weyland (2007) which analyses
diffusion with regards to the cognition of policymakers and experts.
This also means taking into account Bourdieu(s)ian approaches to
global politics, and in particular to diffusion, that emphasize the role of
symbolic power, and symbolic domination, the (almost) subconscious
adaptation that results in the internalization of certain norms (Bigo 2011;
Adler-Nissen 2013). Asymmetrical institutionalized relationships are con-
ducive to symbolic domination:
Aside from being rooted in the scholarly literature, the approach that
emphasizes the actors and their relationships in studying diffusion is also
in accord with the practices of developing OBOR. The initiative is concep-
tualized as being aimed toward the alignment of development agendas
and at achieving policy coordination, which comes into being through the
signing of bilateral Memoranda of Understanding between China and
partner countries. The first and foremost measure the Chinese govern-
ment foresees in the promotion of OBOR therefore is “high-level guid-
ance and facilitation” with a pronounced role for national elites (Qiu
2015). Relationships between governments, often personified by
exchanges between Chinese and foreign officials and scholars have been
central in the development of China’s global relations, and play an impor-
tant role in the Chinese concepts of the global order. This logic of rela-
tionships is different from the depersonalized, rules-based logic of norms
typical for global players such as the EU (Kavalski 2013). The most impor-
tant implication of this is that while certain general rules exist, Chinese
policymakers try to tailor a unique approach based not only on their coun-
terpart’s objective conditions but also on the quality of their mutual rela-
tionship, which is also a goal worthy of being pursued in itself.
Political elites, as well as the think-tank elites who advise them and play a
role in the ideational grounding of OBOR, have a pronounced role in what
is known as “people-to-people exchange” in the Chinese discourse.5
Promoting “track 1.5” diplomacy, and the exchanges between mixed dele-
gations with participants both from government and think tanks (most often
68 A. VANGELI
official state-affiliated think tanks), has been one way to create so-called con-
tact zones that facilitate the diffusion of ideas.6 Indeed, think tanks play an
important part in China’s foreign policy (Shambaugh 2002; Jakobson and
Knox 2010), and this role has been amplified since 2012 (Menegazzi 2014).
Today they are perceived as being institutions at the intersection between the
political and intellectual elites in China. New think tank and expert associa-
tions that facilitate exchange of ideas, such as the Silk Road Think Tank
Association or the 16 + 1 Think Tank Network have been established in
recent years. The significant involvement of think-tank elites (or “intellec-
tual” elites) also matters for the processes of diffusion, as in the OBOR
framework they have particular venues to discuss existing ideas and conceive
new concepts, and at the same time, interact and potentially influence (or be
influenced by) policymakers, thus performing the role of double brokerage.
As a new type of institutionalized, organization-like international plat-
form, OBOR promotes a rather loose and voluntary mode of cooperation.
The partner countries all agree to the shared vision, the commitments to
OBOR, but in general, the level of interaction with China varies across
cases following the above-mentioned logic of relationships. At the same
time, the OBOR initiative does not foresee any explicit conditionality or
coercion mechanisms to ensure a certain normative blueprint is imple-
mented by the partner countries, even though, in theory, China has instru-
ments for pressuring others if it decides to, given that OBOR is
predominantly financed with loans made by Chinese or Chinese-led finan-
cial institutions. Nevertheless, the absence of explicit conditionality is why
the concept of diffusion is more appropriate than concepts of coercion or
the imposition of a certain world view.
Diffusion is a process that occurs at the intersection between the
national and international domains. OBOR, one must not forget, acts as
an extension of China’s Western development program and is a way of
engaging Western regions and provinces, and upgrading part of China’s
production capacity toward a more complex economy. However, in order
to understand the demand side of diffusion, the national contexts of part-
ner countries also matter. The countries that are so far involved in OBOR
have different characteristics in terms of their level of economic develop-
ment and complexity, type of political system, level of political stability, as
well as across the size of their territory, population, and economy—how-
ever the majority of them happen to be countries that have not greatly
benefited from neoliberal globalization. At the same time, while for many
countries there are some generally assumed benefits such as the flow of
A FRAMEWORK FOR THE STUDY OF THE ONE BELT ONE ROAD INITIATIVE… 69
home and abroad. In a more detailed division, the objects of diffusion can
include “(i) policies, (ii) institutions, (iii) ideologies or justifications, (iv)
attitudes and ideas, and (v) negative lessons” (Stone 2001).
A more collapsed approach divides the objects into two categories:
model diffusion and principle diffusion (Weyland 2007). The term
“model” here does not reflect a national development model, but rather a
concrete policy that is championed by one government, and later on dif-
fused among others. Model diffusion is the process of the “wavelike spread
of a compact policy model” (Weyland 2007) whereby the emulators
import a neat, concrete, well-defined blueprint, and the outcome largely
replicates the original model. The innovation spreads in a rapidly expand-
ing wave that sweeps across whole regions of the world. In reality, model
diffusion is less likely to happen, but it has gained a lot of attention in the
literature, as almost all studies on policy diffusion are studies of the diffu-
sion of certain models. Principle diffusion, on the other hand, happens
when there is an emulation of a new guideline, but it is enacted in various
concrete incarnations; the outcome is that there is a recognizable wave of
reforms, but specific design features and institutional characteristics differ:
the pattern of change is not as profound and uniform. This type of diffu-
sion is more common in practice. However, it is less researched in the
literature.
It is important to say that such an approach to model versus principle
diffusion transcends the rhetoric of the so-called China Model. The
common-sense assumption in the study of China as a source of diffusion
is that what diffuses is the so-called China Model, where the object is a
comprehensive national model of development. Authors have theorized
the possible diffusion of the China Model (Ambrosio 2012) and have
pointed to OBOR as a platform for the “exporting of the China Model”
(Fukuyama 2016). However, a number of interlocutors from China have
stipulated that firstly, it is very hard to define the China Model, and sec-
ondly, even if we take it for granted, it is still an outcome of China’s par-
ticular historical, cultural, and societal context which is impossible to copy.
One inference, therefore, is that instead of copying China or anyone else,
policymakers elsewhere should themselves seek to design the models that
would be most adequate for their own circumstances.
The principle diffusion approach corresponds better to the case of the
OBOR initiative which discusses principles and foundations, but no spe-
cific measures; it is closer to the logic of the initiator (China) which
emphasizes the inability of concrete policy and legislative blueprints to be
A FRAMEWORK FOR THE STUDY OF THE ONE BELT ONE ROAD INITIATIVE… 71
Principles of What?
The principles diffused via OBOR are identifiable in the initiative’s core
documents and the practices associated with its conceptualization, imple-
mentation, and promotion—which means that they are principles that are
found, first and foremost, in Chinese policymaking and legislation.
However, rather than being associated with what we call the China Model
or the Beijing Consensus, they are better understood if it is taken into
account that, once they become the object of diffusion, they are not exclu-
sively Chinese and so carry a certain level of generalizability, that even
throughout the process they may be translated and thus adjusted to local
contexts, cultures, and practices (Clarke et al. 2015). Yet, policy principles
lie on a particular normative plane that has its own logic and taxonomy,
which transcends the national and cultural contexts of their practice.
In linking OBOR as a product of China’s new foreign policy orienta-
tion to a particular normative matrix, I build upon the work of Alvin Y. So
and Yin-wah Chu (2012, 2015; also see Chu and So 2010), who coined
the purposefully self-contradicting term “state neoliberalism” to describe
the normative grounding of China’s governance, policymaking, and legis-
lation. Taking into account the logic of Chinese Marxism in thinking and
policymaking, the self-contradiction here aims to capture the reality that
divergent—if not theoretically opposing—tendencies in practice not only
72 A. VANGELI
do not exclude each other (either/or), but are even in some ways mutually
complementary (both/and). The term “state neoliberalism” thus aims to
translate the idea of dialectics between market and state, or even the con-
cept of “socialism with Chinese characteristics” based on the idea of creat-
ing the optimal conditions for unleashing productive forces into the
non-Marxist terminology of Western social science. At the heart of the
concept of state neoliberalism is the contradiction, as well as the comple-
mentarity, between the neoliberalization of the development agenda on
one hand, and the supreme role of the political elite in the economy of the
other, and the “ongoing process of policy ebbs and flows between market-
oriented and state-oriented policies” (So and Chu 2015).
As a particular normative matrix, “state neoliberalism” is a more spe-
cific concept than the otherwise vague term “state capitalism” since it
encompasses not only the mode of production and distribution but also
the particular neoliberal governmentality, or rather political technology,
built into the web of laws, policies, and official discourses (Ong 2012). It
is distinct from the “developmental state”, as the state does not simply
subject the market to state guidance, but rather plays an active role in its
creation and maintenance. The main distinction between state neoliberal-
ism and market neoliberalism is that, in the latter, neoliberalism is “a class
project by capitalists to fight high taxation, regulation and redistribution”,
as well as national boundaries of capital through a “shift from state domi-
nation to market domination”, and as such it is an ideological product of
developed Western contexts (So and Chu 2015). In state neoliberalism,
however, the political elite are in the “driver’s seat” in the economy and
utilize the neoliberal agenda to build legitimacy and sustain their rule
through economic performance, and by embedding the national economy
in global capitalism, making foreign actors stakeholders in their survival.
By the same token, state neoliberalism is distinct from the neoliberalism
introduced in the post-socialist countries of Central-Eastern Europe after
1989 (which are often compared to China in terms of their reform trajec-
tory). Aside from these countries dedicatedly following the Washington
Consensus, and China for the most part rejecting it, the goal of the neo-
liberalization in transitional countries was dismantling the communist
party-state and removing former elites from power; in China the goal of
neoliberalization, in particular after Deng Xiaoping’s Southern Tour, was
for the party-state to survive and become stronger, but also to advance its
interlinking with foreign actors so that they have interest in a stable China.
State neoliberalism is, in essence, an etatist, sovereigntist concept. It
assumes a strong-armed state, prioritizes political stability, and discourages
A FRAMEWORK FOR THE STUDY OF THE ONE BELT ONE ROAD INITIATIVE… 73
What Principles?
Just as the China Model cannot diffuse as a comprehensive model of
development, neither can state neoliberalism diffuse as a wholesale ideo-
logical package. Principle diffusion works sequentially—first, some prin-
74 A. VANGELI
ciples are diffused, and then others follow. Through the OBOR initiative,
certain principles of state neoliberalism upon which the initiative rests
come to the forefront and are more likely to be diffused than others.
to steer balance with market forces, they have to retain a high degree of
sovereignty and immunity from other states and international organiza-
tions for doing so.
Rule-by-law The OBOR Action Plan speaks of law enforcement, and the
lawful rights and interests of investors, but does not mention the rule of
law or legal frameworks. This potentially reflects a functional understand-
ing of the law, whereby the law is a means in the hands of the authority
through which they govern (rule-by-law instead of rule of law, which
touches upon the ambiguity of the Chinese concepts 法制 and 法治 –
both pronounced fazhi) (Castellucci 2007). Law, in this sense, which
approximates to 法制, is the moral expression of political power. It is not
an outcome of proactive law-making, but rather a reactive one: it is not a
prescription of an ideal model, but rather the transcription of an already
existing reality. As such, it is devised only after a political framework has
been set. This, however, does not mean that laws are not enforced or that
they are ignored. The intensity and scope of law enforcement can also be
a matter of fine-tuning, and can vary from a selective manner of enforce-
ment to a thorough and consistent one.
the justification of national interests or special priority. So far, this has been
the case with many Chinese-financed projects in all parts of the world.
This principle reflects the neoliberal in state neoliberalism and the par-
ticular mentality or “particular political technology that actively seeks to
create optimal conditions for entrepreneurial activities” (Ong 2012).
Instrumental here is the use of “exceptions”—at one time, a particular rul-
ing elite may have an approach that seems to deregulate some sectors of
the economy, and (re)regulate others; it can overall regulate a number of
areas, but then create Special Economic Zones (SEZs) as spaces of excep-
tion. It may abruptly reverse its own policies, or disrupt policy sequences.
The only constant in the policymaking and legislation process is the pro-
nounced role of the state and its capacity to assert its will and to create
exceptions, regardless of the direction of reforms at a certain point in time.
This principle is visible in both the letter and the practice of OBOR, as it
heavily promotes the logic of exceptions and flexible means in pursuit of a
common vision, and it promotes the creation of SEZs.9 The SEZs also
combine the “flexible means” principle with that of rule-by-law, as they are
framed as a “way of resolving and overcoming differences” rooted in con-
flicting legal frameworks and cultures (Vasiliev and Shmigelskaia 2016).
ity). The latter “normative” dimension refers to ideas promoted and per-
ceived as legitimate.
In a similar fashion, Heinze (2011) provides a twofold explanation.
One path of understanding diffusion is the “rationalist” or “instrumental-
ist” one—to which the “material preferences, interests, and desires” of the
actors involved are central. This rationalist-instrumentalist explanation
assumes that policymakers are utility-maximizing, goal-oriented agents
who make certain pragmatic policy choices that better serve their own
predefined goals. Another way of analyzing diffusion is through the “con-
structivist” lens, which assumes actors’ interests are “constituted by social
expectations, values, and rule-driven behaviour”. According to this per-
spective, actors adopt innovations based on moral and situational interpre-
tations, where context, justification, and ideology play the key roles, with
less emphasis on actual outcomes.
Following this approach, one can argue that the principles of state neo-
liberalism as an innovation diffused through OBOR have a particular
appeal for those who consider alternative approaches, and who consider,
in the first place, that the hegemonic blueprint of market neoliberalism is
(a) ineffective, and/or (b) morally unjust. The crisis in and the relative
decline of the West has also encouraged actors who rejected the post-1989
consensus to use the opportunity to look outside of the West for inspira-
tion. This essentially is the normative-constructivist logic of diffusion
through OBOR. However, at the end of the day, policymakers have to
answer a concrete question: what policy approach is most efficient? If the
goals are growth, stability, and the pursuit of sovereignty, then one can
find answers in Chinese practice. This would be the basis of the rationalist
logic of diffusion through OBOR.
These two dimensions of diffusion, however, assume that actors behave
in an ideal-type way (they are smart, well-informed, responsible, etc.), and
that they have sufficient resources on their side to help them make
informed decisions. The normative-constructivist logic presupposes that
actors also have a rather solid set of normative convictions that they follow.
The rationalist-instrumentalist logic presupposes a well-informed and,
overall, very rational pragmatic reasoning on the efficiency of policies.
One blind spot of these two approaches is the power-centered, interest-
driven, and often corruptible nature of policymaking processes. Regarding
the former, it is useful to invoke the suggestion by Bremmer that “political
leaders looking to build wealth and micromanage markets” are particu-
larly interested in China-inspired policy innovations (Bremmer 2013).
80 A. VANGELI
Concluding Remarks
The global role of contemporary China is shaped by several contradictions.
In the last four decades, China has become an economic giant and has
achieved an economic growth that many consider “miraculous” but, at the
same time, China is threatened by an economic slowdown as a result of an
adjustment toward its new circumstances (or what analysts call the “new
normal”), making its policymakers pursue new ways of sustaining China’s
growth ever more vigorously. China’s success so far has been greatly owing
to its ability to gain from a Western-led market neoliberal global order, yet
China has been actively working on amending the very same order it ben-
efited from. China champions global trade, calls for a “community of
shared destiny”, and sees its own fate as interlinked and interdependent
with the fate of the rest of the world, but at the same time it insists on
A FRAMEWORK FOR THE STUDY OF THE ONE BELT ONE ROAD INITIATIVE… 81
Notes
1. It is also important to note that the concept of the ancient Silk Road is
itself a construct as well, dating to the work of nineteenth-century Western
European scholars.
2. Some relevant works on diffusion are those by Simmons, Dobbin and
Garrett (2008), by Ambrosio (2010), Gilardi (2010, 2013).
3. The supply-demand interaction in terms of the logic of legal transplants
has been discussed in Peerenboom (2013).
4. A particular work that has popularized the concept of diffusion is one by
Rogers (2003).
5. This concept was discussed at great lengths by Liu Zuokui (2015).
6. The concept of the “contact zone” was first developed by Pratt (1991). It
was introduced in policy translation studies by Lendvai and Stubbs in
Clarke et al. (2015).
7. On Trump and “national neoliberalism”, see Breger Bush (2016). On
Trump, neoliberalism and China, see Lagerkvist (2016).
8. Those are mutual respect for each other’s sovereignty and territorial integ-
rity, mutual non-aggression, mutual non-interference in each other’s inter-
84 A. VANGELI
nal affairs, equality and mutual benefit, and peaceful coexistence. For a
critical overview, see Panda (2016).
9. SEZs are explicitly mentioned in the Action Plan on the OBOR initiative.
10. For the effects of symbolic power and processes of symbolic domination,
see (Bourdieu 1989, 2000).
11. For the concept of “spokesperson” and “charisma” in international affairs,
see Williams (2013).
12. Or, what has emerged in a discussion with a former European diplomat
—“the variable of vanity.”
13. For a discussion on the link between bounded rationality and Bourdieu(s)
ian sociology, see Collet (2009).
14. National Development and Research Commission, “Vision and Actions on
Jointly Building Silk Road Economic Belt and 21st-Century Maritime Silk
Road.”
15. For “non-relational diffusion”, see Tarrow (2010); for “spurious diffu-
sion”, see Gilardi (2003).
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CHAPTER 4
Feng Yuan
Introduction
The second decade of the twenty-first century seems to have witnessed an
acceleration of world order change. The successful election of Donald
Trump as president of the US and the rise of populism have caused the
world order after the Cold War to become even more unclear. With the
rise of China and its possibility of becoming a new hegemon, the conflict
between different actors has appeared in many aspects of the international
community, but especially in institution building.
As indicated in Chap. 1, the One Belt One Road initiative (the OBOR
initiative in the following) represents the capitalist world system’s new
round of capital and production relocation, which will dialectically enlarge/
reduce the “room for maneuver” and increase/decrease the “upward
mobility” of the countries and regions along the Belt and Road. In this
F. Yuan (*)
Institut d’études Européennes (IEE), Université Libre de Bruxelles,
Brussles, Belgium
Chahar Institute, Beijing, China
e-mail: Yuan.Feng@ulb.ac.be
sense, the OBOR initiative has been one of China’s most important foreign
policy strategies since Xi Jinping became Chinese president. China has
deployed many political and economic resources to promote this initiative.
Within the context of the newly elected US president’s decision to drop the
Trans-Pacific Partnership (TPP) project, the process of regional economic
order led by the US is currently at a halt. In this context, the OBOR initia-
tive might obtain more opportunities and room to develop. However, one
of its most critical functions is to construct a new set of institutions to sup-
port a new set of ideas and norms for the new hegemon into which China
might develop. This makes the OBOR initiative a more valuable subject of
research regarding China’s foreign policy. What merits attention is the
question as to how China would realize the OBOR initiative.
In this chapter, I wish to discuss the multilayered multilateralism which
is emerging in the process of China’s promotion of the OBOR initiative.
This is a phenomenon to which attention should be paid as it is a new
model for China’s foreign policy. I will mainly include empirical material
to support the discussion, including Chinese government’s foreign poli-
cies and discourses of Chinese government leaders. I will also employ
some data concerning China’s trade and international relations to nurture
this discussion.
Fig. 4.1 The silk road economic belt and the maritime silk road route. (Source:
Xinhua News)
94 F. YUAN
The Maritime Silk Road, in combination with the Silk Road Economic
Belt and the Asian Infrastructure Investment Bank designed to finance
them, is an ambitious project aimed at establishing a regional economic
order. As the second largest economy in the world, China is attempting
to translate its economic power into political advantages by reshaping the
regional institutions and their economic orders. The reshaping of the
economic order in East Asia is an opportunity for China to establish an
economic order that complements the deficiencies and unsatisfactory ele-
ments in the global economic world order, especially the WTO. This
aspect has become especially prominent as the US has decided to with-
draw from the TPP following Trump’s election as the new American
president. The US’ withdrawal signifies that the US believes bilateral
negotiation would protect its interests better than multilateral negotia-
tions. This change in US foreign policy leaves many impacts on the world
order, especially that of Asia-Pacific. A direct impact is that it leaves China
as the strongest actor, capable of reconstructing a multilateral order in
this region.
Domestic Context
Besides the international context, the OBOR initiative is also an answer to
many domestic demands. Here are the main aspects of the domestic con-
texts of the OBOR initiative.
Table 4.1 lists 37 countries that had signed Bilateral Swap Agreements
with China by 2016. Among these 37 countries, 30 countries had signed
strategic partnership agreements with China. Some other countries, such
as Armenia, which currently share “partnership agreements” with China,
would probably upgrade into a strategic partnership agreement in the
future. As indicated in the table, many SCO members have also signed
Bilateral Swap Agreements with China. This shows that China’s bilateral
and multilateral networks are serving China’s domestic priorities.
Table 4.1 Countries that have signed bilateral SWAP agreements with China
(continued)
THE ONE BELT ONE ROAD INITIATIVE AND CHINA’S MULTILAYERED… 99
Table 4.1 (continued)
Partnership Networks
Writers of The Economist have quite reasonably and understandably sensed
that China has been trying to establish a new order, starting from Asia
(The Economist 2014). The relevant question is: By which means could
China create this new order? Since Xi Jinping took power, the number of
strategic partnerships has skyrocketed, and most of the new partners are
neighbouring countries.
Figure 4.2 presents the percentage of each type of Chinese partnership.
These types are defined by the Chinese government and are accepted by
each partner before their signing of the strategic partnerships. The Chinese
government has emphasized that no rankings exist among different part-
nerships. However, some types of partnership are certainly more honoured
than others. The figure shows that most of them are comprehensive strate-
gic partnerships and strategic partnerships. Countries which have their own
partnership title are often the most distinguished partners. These 59 coun-
tries include almost all the countries in the OBOR initiative.
Fig. 4.2 The percentage of each partnership type of China. (Author’s own figure)
THE ONE BELT ONE ROAD INITIATIVE AND CHINA’S MULTILAYERED… 101
Fig. 4.3 China’s different types of partnership (updated until May 2016).
(Author’s own figure)
102 F. YUAN
Multilateral Relationship
China has gradually become favourable to multilateralism since the
Opening Up and Reform in 1978 and has accelerated the embracement of
multilateralism since 2002, with the integration of “multilateralism as a
platform” into China’s foreign policy strategies. This phenomenon is
related to China’s attention towards institution building as a critical com-
petition factor in the new era.
As John Ruggie observed as early as 1993, institutions are “in demand”
because they are “robust and adaptive”, both in economic and security
affairs, and “a core feature of the current international institutional order
is its multilateral form”, which “appears to have characteristics that
enhance its durability and ability to adapt to change” (Ruggie 1983: ix).
Multilateralism has become “increasingly accepted as the modus operandi
in world politics” (Powell 2003: 3), as nations have gradually realized that
many issues pose challenges to several nations at the same time, thus
demanding multilateral cooperation to deal with them. Moreover, many
issues also have linkages with different aspects of human activities,8 requir-
ing multilateral cooperation to provide a comprehensive solution.
Keohane defines multilateralism as an “institutionalized collective action
by an inclusively determined set of independent States” and “persistent sets
of rules that constrain activity, shape expectations and prescribe roles”
(Keohane 2005), while Ruggie defines multilateralism as “an institutional
form that coordinates relations among three or more States on the basis of
generalized principles of conduct” (Ruggie 1993). Multilateralism has
developed through three different epochs: the nineteenth-century arrange-
ments and conferences within the context of the evolving multipolar con-
cert of the “Great Powers”; the institutionalized multilateral system set up
at the political and economic levels under the hegemony of the US after the
Second World War; and the heterogeneous and uncertain development of
multilateral cooperation following the termination of the Cold War and
within the multipolar world of the twenty-first century (Telò 2014: 35). It
has been believed that hegemony is a decisive factor in the formation of
multilateral cooperation, as it shoulders the responsibility of providing
public goods. Yet, in After Hegemony, Keohane has predicted that it is
possible to have multilateral cooperation without the coordination of a
hegemonic power: “International institutions help to realize common
interests in world politics” as the “complementary interests” make “certain
forms of cooperation potentially beneficial” (Keohane 2005). It seems
that the emerging multilateral institutions which are rising with new
THE ONE BELT ONE ROAD INITIATIVE AND CHINA’S MULTILAYERED… 103
Fig. 4.4 Main countries (The One Belt and One Road project is planning to
include 177 countries. In this chart I have included only countries that have agreed
to participate in this project) involved in “One Belt and One Road”, AIIB.
(Author’s own figure)
106 F. YUAN
Figure 4.4 presents the relations between (a) the partnership networks
established by China; (b) ASEAN+3 and the Shanghai Cooperation
Organization—the two most important multilateralist regional institu-
tions in which China participates; (c) the “One Belt and One Road”
project9; and (d) the Asian Infrastructure Investment Bank. This figure
gives a clear indication that the countries that have established partner-
ship relations with China are the most important ones that cooperate
with China in its new grand strategy. At the same time, almost all the
member-states in ASEAN+3 and SCO have already established partner-
ship relations with China. Partners also constitute the majority of the
founding members of AIIB.
“One Belt and One Road” was clearly designed to expand the realm of
cooperation and economic development of ASEAN+3 and SCO: hence,
West Asia, the Middle East and Europe are connected. China is building a
“horizontal institutionalized structure rooted in organized regions linked
to each other” (Hettne and Ponjaert 2014: 124) through the combina-
tion of different layers of relations: bilateral partnership networks as the
first layer, regional multilateral arrangements as the second and, most
importantly, the third layer of more expanded economic development
projects. I will use another figure to illustrate how the OBOR initiative
combines with SCO and ASEAN+3 in tackling the main issues in China’s
multilayered multilateralism development.
Figure 4.5 shows that AIIB is the economic part of the grand OBOR
initiative. It finances the infrastructure construction in the “Silk Road
Economic Belt” (One Belt, i.e. OB) region, which comprises the SCO
countries but may eventually reach Europe, and West Asia and the
“Maritime Silk Road” (One Road, i.e. OR), for which the centre is the
ASEAN+3 countries but may extend to Africa. The strategies that China
uses to reach the goals set by the four main issues are related to SCO and
ASEAN+3. The small circles at each intersection in the figure specify how
these main issues are connected with the two multilateral institutions in
Internationali
Domestic Energy Sea Power -zation of
Development Security Development Chinese
Yuan
SWAP SWAP
West Agreements Agreements
China
Development
Fishing
Resources
Extra ASEAN+3
Productivity SCO Energy
Malacca
in Central
Dilemma
Asia
AIIB
Loaning in
Yuan
Productivity OROB
Consumption
Fate Community
THE ONE BELT ONE ROAD INITIATIVE AND CHINA’S MULTILAYERED…
107
Fig. 4.5 The integration of ASEAN+3 and SCO with the OBOR initiative on China’s main issues of multilayered mul-
tilateralism. (Author’s own figure)
108 F. YUAN
It is not wrong to link Xi’s visit with China’s energy resources (The
Economist 2016), as the Middle East is an important oil supply region for
China (see Figs. 4.5, and 4.6).
However, concluding that China’s only motivation to maintain a good
relationship with the Middle East is its need for oil would compromise the
richness of China’s foreign policy. The guiding idea in China’s promotion
of its multilayered multilateralism in this region is that of a “community of
common destiny”, and the OBOR initiative serves as the main structure
to realize this goal. By combining energy supply and collaborations in dif-
ferent domains under the OBOR initiative, China is trying to develop new
common interests in this region. China’s provision of investment and
technology to its Middle Eastern partners is expected to retrieve energy
supplies and political support from them via diffused reciprocity. Another
clear signal is that China published its first Arab Policy Paper five days
before its president’s departure to the Middle East (The Ministry of
Foreign Affairs of PRC 2016). This states clearly that China is looking
forward to establishing a new pattern of collaboration based on the OBOR
initiative,11 which, if realized successfully, will greatly increase China’s
presence in the region.
China’s plan for its approach to the Middle East is a good example of
the multilayered multilateralism in formation: adopting the structure of
multilayered reaction (built on and supported by the partnership net-
work), following the principle of diffused reciprocity and aiming to
Conclusion
Chapter 1 discussed the theoretical framework of analysing the OBOR
initiative based on Cox’s historical structure of hegemony (the interrela-
tion between ideas, material capacities and institutions). In this chapter, I
have focused on the analysis of the institutional aspect of this structure,
and I have found that a multilayered multilateralism is forming. This com-
bination of bilateral and multilateral relations will become an important
tool to institutionalize the OBOR initiative.
The OBOR initiative is the most evident example of this multilayered
multilateralism in China. It is developing into the most exquisite design of
institutions that should enable positive interaction between the bilateral
and multilateral sides. China’s OBOR initiative combines its neighbouring
countries and expands the economic collaboration in order to reach out to
China’s “grand periphery”, and consolidates regionalization by nurturing
“mutual interests” based on China’s provision of infrastructure construc-
tion and coordinated financing. It is a cooperation model that is capable
of continual expansion and growth (as partnership countries can continue
to grow, and the AIIB model could well be replicated), and it represents
China’s approach of constructing multilateralism via economic spill-over
effects rather than values or forces. We can expect a new set of institutions
to be consolidated and new values and norms to be established, and public
goods will be provided in a different way as China becomes the regional
hegemon.
Notes
1. For more information about Silk Road Economic Belt, please refer to Xi
Jinping’s speech at Nazarbayev University, 7 September 2014. http://
news.xinhuanet.com/english/china/2013-09/07/c_132700695.htm
2. See China News: Xi Jinping’s new foreign policy idea: Community of inter-
est, responsibility and fate: http://www.chinanews.com/gn/2014/10-
10/6660509.shtml
3. See Xi Jinping’s speech: Community of common fate and a favourable
environment for China’s development: http://www.fmprc.gov.cn/mfa_
chn/zyxw_602251/t1093113.shtml
THE ONE BELT ONE ROAD INITIATIVE AND CHINA’S MULTILAYERED… 111
10. On 3 January 2016, Saudi Arabia announced that it would cut off its dip-
lomatic relationship with Iran because Iran had allowed attacks on Saudia
Arabia’s embassy. The attack was due to the anger aroused by the Saudia
Arabia’s execution of Iran’s religious leader as a terrorist (Fitch et al. 2016;
Al Jazeera 2016b).
11. China’s Arab Policy Paper states: “China’s proposed initiatives of jointly
building the “Silk Road Economic Belt” and the “21st Century Maritime
Silk Road”, establishing a “1+2+3” cooperation pattern (to take energy
cooperation as the core, infrastructure construction and trade and invest-
ment facilitation as the two wings, and three high and new tech fields of
nuclear energy, space satellite and new energy as the three breakthroughs),
and industrial capacity cooperation, are well received by Arab countries.
Both sides have broad consensus on safeguarding state sovereignty and
territorial integrity, defending national dignity, seeking political resolution
to hotspot issues, and promoting peace and stability in the Middle East”
(The Ministry of Foreign Affairs of PRC 2016). Also, it is worth mention-
ing that eight countries in the Middle East are founding members of AIIB,
which increases the possibilities of comprehensive collaboration (Jiang
2016).
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Journal] 22 (3): 66–76.
Zou, Li-gang. 2014. Zhongguo-Dongmeng Gongjian Nanhai Haishang Sichou
Zhilu de Zhanlue Sikao [Strategic Thinking on China-ASEAN Co-construction
of the Maritime Silk Route]. Hainan Daxue Xuebao Renwen Shehui kexue Ban
[Humanities & Social Sciences Journal of Hainan University] 32 (4): 39–46.
Zou, Lei. 2015. Zhong Guo “Yi Dai Yi Lu” Zhan Lue de Zheng Zhi Jing Ji Xue [The
Strategic Political Economics of China’s “One Belt and One Road”]. Shanghai:
Shanghai Renmin Chubanshe.
CHAPTER 5
Erja Kettunen
Introduction
Although China is the world’s largest trader and one of the largest recipi-
ents of foreign direct investment (FDI), since 2010, it has been facing
slower economic growth, combined with declining foreign trade (World
Bank 2017; WTO 2016a, 2017a).1 To tackle this, the Chinese leadership
is aiming to shift the base of the country’s economy from its reliance on
investments and external trade toward domestic consumption, as well as
from manufacturing toward services. A concurrent challenge has been
The author wishes to thank Claes G. Alvstam and Lucía Gómez for valuable
comments on an earlier version. Research funding from the Foundation for
Economic Education, Finland, and funding for fieldwork in China from the
Centre for International Business Studies, School of Business, Economics and
Law, University of Gothenburg, Sweden, are gratefully acknowledged.
E. Kettunen (*)
Centre for Collaborative Research, Turku School of Economics,
University of Turku, Turku, Finland
e-mail: erja.kettunen-matilainen@utu.fi
reviews, the World Bank’s Doing Business indicators, and the European
Chamber of Commerce’s business surveys from China. In addition, the
author conducted seven complementary personal interviews with core
informants on the topic (either on location or over the phone) in
2015–2017, namely the representatives of companies and support orga-
nizations based in Chengdu, Beijing, and Shanghai. The interviewees
are Finns, Swedes, or Chinese, and all are at the management level in
their respective organizations, such as general managers. They are
referred to anonymously in the text, indicating the type of organization
that they represent.
It is argued here that the OBOR-related changes in China’s regional
policies would have marked implications for the regional orientation of its
foreign trade. While nowadays most of China’s exports and imports pass
through the major ports in Eastern and Southern China that are the main
entry and exit points for foreign trade, the OBOR initiative might rather
shift trade flows to pass through the Eurasian continent, transported on
rail or land between China and Europe. This would positively affect com-
panies located in China’s interior—along the Belt—since they would have
an advantage because of shorter transport times.
In the section that follows, China’s trade policies are discussed first by
glancing at the regional development aims of the current five-year plan
(FYP) and the OBOR initiative, and then by analyzing the institutional
trade environment for foreign firms in China, regional differences, and the
case of Chengdu as a host city for foreign investment especially by
European firms. The chapter ends with sketching the prospective changes
in the regional emphases of China’s trade policy that will possibly affect
the geography of Asiawide international trade policies and trade flows.
the plan in Europe, the Middle East, Central Asia, and South Asia.2
Infrastructure development focuses on railways, roads, ports, and airports
to enhance transport between continents and to speed economic develop-
ment in the region. The initiative is backed by the newly established Asia
Infrastructure Investment Bank to finance the planned large-scale infra-
structure development (AIIB 2017; ECN 2016a, b; Tang 2015).3 The
OBOR plan is important in China’s national strategy, which intends to
connect China with its major trade partners.
Within China, OBOR is one of the major regional integration plans
that are China’s priorities for regional economic planning in the current
13th Five-Year Plan (2016–2020). The FYP delineates the plans to coor-
dinate regional development to achieve balanced growth by developing
infrastructure in Western China and shifting excess industrial capacity
from coastal cities to the western regions (PwC 2015: 6). Besides the
OBOR initiative, the other two plans are the integration of the Beijing–
Tianjin–Hebei region, and developing the Yangtze River Economic Belt,
all of which are presented in their own sections in the FYP for the first
time (ECN 2016a). The Yangtze River Economic Belt is particularly rel-
evant for the OBOR initiative, as it focuses on industry transfer from
coastal to inland regions, with the idea of enhancing differentiated indus-
trial clustering around key urban centers in 11 provinces: Guizhou,
Yunnan, Sichuan, Chongqing, Hunan, Hubei, Jiangxi, Anhui, Zhejiang,
Jiangsu, and Shanghai. The aim of the plan is to encourage collaboration
in economic development between provinces and a more integrated
approach to infrastructure planning in China (ibid.: 4). This is notewor-
thy, given the long history and the still prevailing state of competition
between the provinces.
These plans are being quickly followed in the provinces. China’s prov-
inces are currently putting forward different kinds of infrastructure and
other project plans “dressed in an OBOR gown” in order to receive
“political blessing” for them, as one of the interviewees put it.4 However,
it can be expected that the plans will be followed more on paper than in
practice. This is based on the earlier experiences of foreign firms on these
kinds of policies: for example, the European business circles in China
anticipate that the provincial bureaucracies will “demonstrate little will-
ingness to enact centrally-planned reforms” (ECCC 2016a: 30). In spite
of the central government aiming to coordinate cross-provincial planning,
the foreseeable availability of subsidies for particular sectors ensures that
local governments will compete with one another for resources, which
122 E. KETTUNEN
potentially leads to overcapacity and “price wars” (ECN 2016a: 15). This
is referred to by the Economist Corporate Network as “persisting local-
ism”, indicating that provinces will continue to compete rather than coop-
erate with each other. Previously, localism has been evident in industries
such as steel or solar panels and can be expected in the future in emerging
industries, such as cloud computing and semiconductors (ibid.).
In addition to developing the inland provinces, China also aims to
reform the foreign trade environment in major coastal cities and provinces
by establishing free trade zones. It launched the first national free trade
zone (FTZ) in Shanghai in 2013, and three others in Tianjin and the
Guangdong and Fujian provinces in 2015, and more are expected in the
future (ECN 2016a: 8). The 13th FYP intends to open up trade and
investment by adopting a “negative list” approach to market access. This
approach means that, if a foreign investment project is not included on the
negative list, it will be granted national treatment, that is, similar to
domestic firms. The reform is piloted in the FTZs until end-2017 with
nationwide implementation expected in January 2018 (ibid.: 9). However,
the response among foreign businesses still seems to be moderate. For
example, according to a survey among companies originating from the
European Union (EU) countries, about 15% of the over 500 respondents
had established a presence in the FTZs by 2016, indicating a somewhat
cautious interest (ECCC 2016a).
Furthermore, in order to overcome China’s regionally diverse practices
in trade facilitation, reforms are ongoing to eliminate regional differences
in customs procedures. China has worked on harmonizing customs clear-
ance across its 42 customs areas since 2012. However, “special customs
supervision areas” still exist, and different customs procedures are applied
in different areas—in some instances this is done on a trial basis to assess if
they work. In 2014, China started to integrate the 42 customs areas into
fewer larger clusters to harmonize the clearance processes. According to
authorities, this integration has taken place, resulting in the creation of five
clusters, including Beijing/Tianjin/Hebei, the Pearl River provinces, and
the Yangtze River Economic Belt (WTO 2016a: 48). The latter should
have implications in harmonizing trade facilitation between the Chengdu
and Shanghai customs points, for example.
THE ONE BELT ONE ROAD INITIATIVE AND THE CHANGING… 123
30
25
20
15
10
0
2011 2012 2013 2014 2015
Exports Imports
globally. It was the third largest destination for FDI inflows in 2015—
behind only the United States and Hong Kong— while it had ranked first
for the two preceding years, in 2014 and 2013 (UNCTAD 2016: 5). It
can be expected that China will retain this position also in the future.
According to an international survey on investment prospects, both mul-
tinational enterprises and investment promotion agencies regard China as
the second most promising destination for FDI for the years 2016–2018,
while in the previous year, it was ranked as the number one destination for
FDI (ibid.: 27–28.). This trend has been complemented by the more
recent rapid growth of outward FDI, China having become one of the
largest sources of foreign investment globally.
Therefore, as China is assumed to remain a leading foreign trader, the
institutional framework governing its trade—and the possible impact of
OBOR—is of key interest for business and policy alike. When analyzing
the institutional environment for trade, attention is paid here both to for-
mal and informal spheres of the trade regime. These refer to the laws and
regulations (i.e., formal institutions) governing foreign trade, as well as to
the everyday practices, norms, and social codes (i.e., informal institutions)
of the authorities in enforcing the regulations (cf. Holmes et al. 2013). To
put it briefly, institutions are “the rules of the game” (North 1990), and
the institutional approach to business studies maintains that the strategic
choices of companies are driven not only by their resources, capacities,
and industrial dynamics but also by the institutional constraints that they
face in a particular business environment (Peng 2003). Especially in
emerging economies, institutions have a strong impact on the perfor-
mance of firms (Peng et al. 2008; Meyer and Peng 2016). Next, formal
institutions are analyzed based on international comparisons of regulatory
environments, and informal institutions are discussed by drawing from
business surveys and interviews regarding business sentiment in China.
The latter refers to the experiences of foreign firms on how host-country
authorities implement laws, regulations, and policies and how local offi-
cials treat foreign firms.
Regulatory Framework
Regarding the formal institutional framework at the national scale, China
does moderately in international comparison, being in between the easiest
and the most difficult global regulatory environments. Since 2004, the
World Bank has assessed changes in national business environments globally
THE ONE BELT ONE ROAD INITIATIVE AND THE CHANGING… 125
Table 5.1 Ease of doing business (with selected sub-categories) in China, vari-
ous years
2011 2014 2017
N = 183 N = 189 N = 190
Overall rank 79 96 78
Starting a business 151 158 127
Trading across borders 50 74 96
Enforcing contracts 15 19 5
Table 5.2 Import tariffs of China, compared to USA, the EU, Japan, and South
Korea
China USA EU Japan Korea
Simple average tariff (%) 9.5 8.8 0.7 4.8 6.3 6.1 14.1
Agriculture 14.8 13.8 1.7 9.1 14.1 16.3 60.0
Non-agriculture 8.6 8.0 0.6 4.0 4.3 3.6 6.6
Duty-free tariff lines (%) 9.7 10.0 94.8 36.8 26.1 40.1 15.9
Note: APTA refers to preferential tariffs for imports under Asia-Pacific Trade Agreement. (Member-
countries: Bangladesh, China, India, Laos, South Korea, and Sri Lanka.) ASEAN refers to preferential
tariffs for imports under China-ASEAN FTA (Imports from Brunei, Cambodia, Indonesia, Laos, Malaysia,
Myanmar, Philippines, Singapore, Thailand, and Vietnam.)
Source: WTO (2016a, b, c, 2017b, c)
rate of over 14% (Table 5.2). In addition, tariff rates are the lowest in the
United States, and slightly higher in the EU and Japan. The share of duty-
free tariff lines indicates the percentage of zero-tariff product categories,
which is clearly highest in the China–ASEAN FTA. While China’s tariff
levels reflect it as being an emerging economy, there is an ongoing debate
over how its status is regarded in the WTO. When China joined the WTO
in 2001, it requested to be considered a ‘market economy’ after 15 years,
that is, in December 2016. However, this has been opposed by other
major WTO members, notably the EU and the United States who do not
regard it as feasible. Giving a trading partner market economy status
implies that its economy is based on open competition (e.g., domestic
prices are set by competition, not the government), which is not the case
in heavily subsidized Chinese export industries (FT 2016).
Overall, China seems to have moderate trade barriers when it comes to
formal policies and regulations affecting trade. This is especially so consid-
ering China’s level of economic development, its tariff barriers being nota-
bly lower than those of South Korea, for example. It can be expected that
the level of China’s overall tariff protection will be lowered because of its
newly negotiated FTAs and OBOR-related FTA initiatives that will add to
the volume of zero-tariff trade, and because of the simultaneous multilat-
eral processes in trade liberalization.
Enforcement of the Regulations
As noted above, it is not only the formal legislation but also the informal
practices of authorities in the implementation of regulations that affect
foreign trade. These refer to the social codes and norms of local authori-
ties in enforcing and executing trade policies, including how efficiently
and lawfully customs officials carry out customs clearance, how they
interpret the rules and regulations, whether they treat all companies
equally according to the law, and whether arbitrary practices—such as the
favoring of domestic companies, or the demands caused by corruption—
exist. These informal institutions are deeply culturally rooted in everyday
norms and social codes that often affect the business environment more
than the legislation itself, particularly in emerging economies (Peng 2003).
They may also have regional variations, as discussed later in this chapter.
Data on the enforcement of regulations can be acquired from, for
example, business surveys, as well as from directly interviewing representa-
tives of companies that operate in China. According to the latest business
128 E. KETTUNEN
increasingly attracting foreign firms, some have also moved to other loca-
tions in China. This may happen not only because of problems in the local
business environment but also because of changes in the organization of a
global production chain.7 In one case, a lead firm in an industrial cluster
was reorganized, which left some of its subcontractors to find new cus-
tomers, and some a new business altogether in another location in China.8
The challenges that foreign firms encounter in Chengdu’s business
environment are partly related to fast economic growth and partly due to
the regulatory environment. The major problems for European firms
include low air quality, a difficult regulatory environment, reduced com-
munication between firms and the local government, procedures in cus-
toms clearance, difficulties in healthcare services and registration processes
for foreigners, restricted government procurement, and slow Internet
speed and poor Internet access (ECCC 2016b). These inhibit the growth
of investments in many respects, such as attracting the necessary work-
force for innovation-driven businesses and research and development
operations. Yet it is noteworthy that, in comparison with other Chinese
regions, firms perceive Chengdu as an easier business environment, as
shown above.
For firms located in Chengdu, engaging in foreign trade involves trans-
porting goods to and from major port cities, such as Shanghai, passing
through several provinces. Most deliveries take place by road, as China has
invested heavily in the construction of highways in the midwestern region
for the last two decades.9 This is also backed by the government subsidies
for road and rail traffic that have resulted in partly concealed transport
costs. Other forms of transport include air and waterways, which are the
opposite ends of the spectrum where price and size of products are con-
cerned. Air transport is suitable for high value-added light and small
goods, whereas inland waterway routes are cost-efficient for bulky and less
expensive goods. Waterway transport along the Yangtze River is consid-
ered reasonably mature with related services, with the Luzhou Port as
Sichuan’s biggest port located between Chengdu and Chongqing.10 It is
also one of the aims of the 13th FYP and the OBOR initiative to connect
the provinces along the Yangtze River more closely to each other, which
would ease the moving of exports and imports across the country.
When it comes to sub-national trade barriers, there appear to be no
specific tariffs, fees, or bureaucracy when crossing provincial borders. The
question of interprovince transport and trade barriers were discussed in
company interviews in Chengdu and other parts of China. According to
132 E. KETTUNEN
force, namely Australia, China, India, Japan, South Korea, and New
Zealand. This agreement would increase China’s reach to markets and
regions within the OBOR initiative, while also strengthening its role in the
Asia-Pacific economy. In contrast, China is not a member of the Trans-
Pacific Partnership (TPP), and its latest FYP does not mention the
TPP. Instead, China has openly promoted only the RCEP (ECN 2016a).
The prospect for speeding up RCEP talks has since increased due to the
changes in the US administration and the withdrawal of the United States
from the TPP in early 2017.
As a result, several rounds of negotiations have been held for the RCEP
in 2017, with China and Singapore reportedly striving to speed up the
process even further (Reuters 2017). The RCEP would complement
China’s existing 15 preferential trade agreements, many of which were
signed with small economies that are not significant in China’s external
trade (e.g., Jiang 2010). During the last two years, however, China has
signed FTAs with Australia and the Republic of Korea, both important
trade partners (WTO 2016a; MOFCOM 2017). Some of the other FTAs
under negotiation that China might want to push forward with include
the China-Gulf Cooperation Council FTA and the upgrading of the
China-Pakistan FTA, as both are relevant for the OBOR initiative.
Furthermore, in recent years China has been one of the most active
countries in the world in concluding International Investment Agreements
that are highly relevant in light of the infrastructure investment projects
along the OBOR. The purpose of investment agreements is to liberalize
and protect cross-border investments, and to define procedures for dis-
pute resolution if mutual commitments are not met (UNCTAD 2016).
The most common type of these agreements is the Bilateral Investment
Treaty (BIT), which aims to promote and protect investments made by
enterprises or individuals from the respective countries in each other’s ter-
ritory. China has 110 such BITs in force, and several more signed but not
yet in force (UNCTAD 2017). The other type of agreement is called a
Treaty with Investment Provisions (TIP), such as China’s TIP with the
ASEAN countries. They can be treaties with limited investment-related
provisions, treaties that contain framework clauses only, or FTAs and eco-
nomic partnership agreements that encompass investment issues. Recent
examples of the latter are China’s FTAs with Australia and with the
Republic of Korea (UNCTAD 2016: 102).
In addition, China is working to negotiate investment agreements with
two major trade and investment partners, the EU and the United States
THE ONE BELT ONE ROAD INITIATIVE AND THE CHANGING… 135
(ECN 2016a). The possible agreement with the EU has the potential to
facilitate and protect investments made under the OBOR initiative for a
railroad connecting the two continents. The EU and China have been
negotiating a bilateral investment agreement since 2014, and they agreed
on the scope of the deal in 2016 (DG Trade 2016). The future agreement
would aim to ease the regulatory environment, including transparency,
licensing, and authorization procedures on FDI. Moreover, China’s activ-
ity in the OBOR initiative has been noted, and has gotten a reaction within
Europe. One such response is the EU’s launching of the EU-China
Connectivity Platform in order to counterbalance the situation so that
China does not “hurry alone with the initiatives”.16 The Connectivity
Platform aims to foster transport connections between the EU and China
based on the Trans-European Transport Network (TEN-T) framework
and OBOR, and to promote green transport with projects based on sus-
tainability (COM 2017).
which make the regulatory environment more difficult for foreign compa-
nies. Business surveys and company interviews indicate that firms perceive
the enforcement of regulations, informal practices, and the treatment of
foreign companies as more unfair than the legislation itself. This points
toward informal institutions being a more relevant constraint than formal
ones for foreign firms in the Chinese business environment. However,
there are distinct regional differences in China as to the firms’ perceived
business confidence. European firms located in southwest China, for
example, observe being “more welcome” than firms in coastal cities. They
perceive less protectionism, unfair treatment, and discrimination by the
local authorities than firms located in first-tier cities. This potentially
enhances regional development in China’s interior, especially in the trans-
portation hubs along the “Belt”, such as Chengdu. Being a significant air,
rail, and highway transportation hub, the physical infrastructure for for-
eign and domestic trade in Chengdu is developing fast.
Furthermore, it is argued that the OBOR-related changes in China’s
regional policies will have marked implications on the regional orientation
of its foreign trade. For the OBOR initiative, there are three specific devel-
opments that can be discerned with regard to the possible changes in the
multi-scalar governance of trade in China. First, economic activities—
including foreign investments—continue to shift from China’s Eastern
coast toward the FDI hubs in its interior, such as Chengdu. This will fur-
ther increase China’s internal transport and cross-provincial trade.
However, the first-tier cities remain important major hubs as well. Second,
cross-provincial trade barriers are at a notably low level, and will be further
reduced along with the development of the inland provinces and the
transportation routes to and from major ports. At the same time, China’s
formal trade environment continues to improve, while informal con-
straints remain. Third, trade flows between China and Europe through
the Eurasian continent are expected to grow because China and the EU
are the two biggest markets in the OBOR initiative. This is an opportunity
for firms in inland provinces as it reduces the transport time for exports
and imports between China and Europe when compared to existing mari-
time routes. However, the eventual operability of the “Belt” route will be
subject to geographical and potentially political challenges.
In addition, in line with the OBOR policy, China is pursuing new FTAs
related to its transboundary projects, which it will facilitate through inter-
national cooperation within the AIIB. These FTAs, if concluded, will pro-
vide a transnational framework for the initiative at both political and
THE ONE BELT ONE ROAD INITIATIVE AND THE CHANGING… 137
Notes
1. The growth rate of China’s real gross domestic product (GDP) was 7.8%
in 2013, 7.3% in 2014, 6.9% in 2015, and 6.7% in 2016 (World Bank
2017). China’s merchandise exports declined by 3% in 2015 and further by
8% in 2016, and, at the same time, merchandise imports declined by 14%
and 5%, respectively (WTO 2017a).
2. For the list of countries, see FBIC (2016).
3. The AIIB was established by China and 20 countries from Asia and the
Middle East in late 2014, and later extended to over 50 member-countries
including those from Europe (AIIB 2017).
4. Interview at a support organization, Beijing, October 19, 2016.
5. MFN is a tariff with Most Favored Nation status, that is, the lowest tariff a
country can apply to imports from another country. WTO members are
required to grant MFN status to other members.
6. Interview at a vehicle manufacturing company, Chengdu, April 9, 2015.
7. Interview at an IT services company, Chengdu, April 7, 2015.
8. Interview at a software company, Beijing, April 27, 2015.
9. Interview at a support organization, Shanghai, October 26, 2016.
138 E. KETTUNEN
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CHAPTER 6
Paulo Duarte
Introduction
This chapter aims to understand how China is seeking to promote its
economic, political, military and cultural objectives in this new century.
Based on the assumption that the Chinese New Silk Road (called the One
Belt One Road—OBOR) is the instrument par excellence used by Beijing
to achieve such goals, I will analyse the geopolitical and geostrategic con-
tours embraced by the OBOR in both its maritime and land components.
To this end, I have adopted, at the methodological level, the conceptual
lenses of the so-called Copenhagen School, in particular the term securitise.
Thus, through a qualitative analysis, which focuses on understanding rather
than quantification, this chapter approaches the concept of securitisation,
while making clear that according to the Copenhagen School, in this
respect “the securitisation and the criteria for the securitisation are inter-
subjective practices, whereby a securitising agent tries to establish, socially,
the existence of a threat to the survival of a unit” (Duque 2009: 477).
P. Duarte (*)
Centro de Investigação em Ciência Política, The University of Minho,
Braga, Portugal
regime is facing several disputes (the case of Hong Kong) and a perception
of vulnerability (as explained above). In the economic sphere, the threat is
as evident, or even more so: the OBOR aims, therefore, at exploring new
markets and maintaining the existing ones to improve the economy (Stone
2016). In the military context, the evolution of the economic situation is
presently uncertain: Taiwan, Xinjiang, the South China Sea, among oth-
ers, require a response ability (never attacking in the first place, it should
be noted), if national interests are compromised. It certainly makes sense
to speak of desecuritisation, but only when the threat disappears or, at
best, is substantially mitigated.
My analysis is structured in four stages. I will start by investigating the
reason for a New Silk Road, and continue by highlighting the soft nature
of the Chinese strategy. In the third and fourth sections, I will seek to
understand the challenges of the land component of the OBOR, studying,
in the final section, the characteristics of its maritime component. In antic-
ipation of the main conclusions, I will try to demonstrate that the OBOR
is a strategy of hybrid securitisation, the fruit of the harmonious interde-
pendence between the land and maritime aspects, as well as of the soft and
hard powers inherent in them. However, it is not unreasonable to specu-
late that this will remain a project for decades, if not generations. The
latter aims at developing a high-speed connection between China and the
other world countries, by land and sea, allowing us perhaps, as in the
famous maxim “all roads lead to Rome”, to predict that, in the future, all
logistical ties will contribute to making China a global mega-hub.
Furthermore, we can anticipate a (re)union of Europe with the heartland,
with all the geoeconomic and geopolitical implications resulting from this,
to the detriment of the long transatlantic supremacy, which may thus be
weakened. This is, in fact, the great contribution of this chapter at a time
when studies on the Chinese New Silk Road are still scarce, since after all,
the Chinese project is itself of a recent date.
more than 2000 years ago, the economies of South, East and West Asia to
the Mediterranean and the European continent, as well as to a part of
North and East Africa (Duiker and Spielvogel 2015). Products such as tea,
porcelain and silk but also philosophies, religions and technologies left
Chang’an (today Xi’an, the capital of China’s Shaanxi province) and trav-
elled across Central and Western Asia to the European continent (Beijing
Review 2014), which explains why the Silk Road was an important eco-
nomic and cultural link between the different civilisations.
By constituting a bridge between East and West where traders, pil-
grims, monks and soldiers travelled, the Silk Road being the largest and
the most prosperous trade route of its time played a key role in the devel-
opment of the Indian, the Chinese, the European, the Egyptian and the
Persian civilisations, among others (Frankopan 2015). In fact, contrary to
the maritime routes, land routes enabled caravans to interact with differ-
ent cultures and communities until they reached their final destination,
thus facilitating the exchange of knowledge, experiences and beliefs
(Chanda 2015). Authors such as Sibal suggest that the ancient Silk Road
evoked “China’s role in world trade [of the past]” and also “China’s eco-
nomic superiority of long ago”, which the country wants to recover in the
current context (2014: para. 5–6). In this regard, Sibal stresses that “the
ancient Silk Road symbolised China’s connectivity to the outside world”,
which, according to the author, is today “the focal point of the current
economic and commercial strategy” of the country (2014: para. 7). In
modern times, trade along the Silk Road would gradually decrease, and
developments related to maritime transport would cause the cost of trans-
port by sea to become lower than that by land. On the other hand, the
political situation in the region was also decisive for the decline of the Silk
Road. All these factors dictated the gradual replacement of camels and
mules by vessels, concomitantly with the preference for sea routes over
land routes through Central Asia (Chanda 2015). Therefore, the Silk
Road crashed as a trade route around the year 1400, although some six
centuries later, as I will discuss below, the concept seems to re-emerge.
In practice, the aim of the revival of the corridors between the East and
the West is to achieve full and multiple securitisation in the political, eco-
nomic, military and soft power spheres. At the same time, Snelder’s
remark is interesting and relevant, stating that “the revival of the Chinese
Silk Road is not only reminiscent of the mythical history, but it also says a
lot about the strategic direction of the country” (2014: para. 2). Beijing
sees it as a way to find new markets (while preserving the existing ones),
148 P. DUARTE
a holistic way (i.e. not only at the level of remote provinces such as
Xinjiang). In this regard, Esteban and Otero-Iglesias identify four
economic areas in which the New Silk Road can be decisive: “driving the
internationalisation of its construction industry, encouraging exports,
reducing risks in the supply chain and attracting investments towards the
interior of the country” (2015: 6). Metaphorically, the New Silk Road is a
two-way route, either by means of the inducement to expansion of Chinese
companies around the world, or in the invitation to foreign investors to
privilege the Chinese market. On the other hand, Cohen and Dalton
(2016) predict that the New Silk Road might become an important alter-
native and lever for the economy at a time of a slowdown in the construc-
tion sector in China, in that it may provide Chinese construction companies
with promising profitability opportunities abroad.
A Soft Strategy
The idea—which remains in China—that “[soft power is] an aspect of the
“comprehensive power”, an important indicator of a state’s international
status and influence, and a tool for maintaining advantageous positions in
international competition”, (Sanguanbun 2015: 22) has gained in impor-
tance among Chinese strategic circles. It is in the light of this understand-
ing of soft power as an instrument “inseparable from China’s rise”, and
likely to help to achieve “a peaceful and stable international environment”,
that we understand the importance of this in Xi Jinping’s foreign policy
(Sanguanbun 2015: 22). In fact, it is President Xi Jinping himself who
recognises the soft power potential: “We should increase China’s soft
power, give a good Chinese narrative, and better communicate China’s
message to the world” (Xinhuanet 2014: para. 4). Xi Jinping’s message
assumes a holistic perception of soft power which is likely to include the
aspects of the Chinese foreign and domestic policies in an organic whole,
leading to the idealisation of the concept of a “harmonious society”
(Sayama 2016). This is the opinion of authors such as Sanguanbun,
according to whom “China’s development of soft power is an important
task in its highest development strategy of building comprehensive national
strength while ‘maintaining internal stability’” (2015: 22). Therefore, it is
in this perspective that Beijing has announced its New Silk Road to the
world, that is, in a holistic dimension, according to which the securitisa-
tion of the periphery (e.g. Central Asia) at the same time enables the
ensuring of access of the remote provinces (such as Xinjiang) to a network
150 P. DUARTE
securitisation of sea lanes, to the detriment of the choice of the railroad for
troop transport at the regional level. Among the reasons that seem more
plausible, I emphasise the fact that the overwhelming majority of world
commodities and, therefore, most of the Chinese exports and imports
circulate by sea, which explains why it is crucial for Beijing to maintain an
uninterrupted use of sea lanes. It must be acknowledged that the transpor-
tation of troops by rail (although possibly effective as Lin suggests),
depends on factors such as external authorisation (in particular of the issue
of sovereignty) for the construction of high-speed railway lines, and also
for the transit of troops and war material.
that “Chinese naval vessels have embarked on active diplomacy in the far
seas, with regular port calls and ‘show of flags’ in the Gulf of Aden where
it conducts anti-piracy missions, as well as in the Mediterranean Sea and
the Black Sea, where China has acquired various seaports in the littorals”
(2013b: 12). However, in the context of the Chinese New Silk Road, mili-
tarising ports means equipping them with a set of tools that allow them to
be used for “military operations other than war”. And what are these
tools? As regards the need of mobilisation of Chinese troops for a zone of
instability, as in Africa (where China has concluded, for instance, impor-
tant energy and commercial agreements with local countries), Lin (2011:
20) stresses:
The construction of secure, joint civil military use airfields with associated
support facilities (hangars, terminals, fuel storage, etc.) capable of support-
ing heavy lift aircraft (e.g., C-17, Boeing 777s etc.); modernisation of stra-
tegic port facilities, especially in central regions of both Africa’s eastern and
western coasts. […].
The “military operations other than war” have a double strand: “to
both defend China’s overseas interests and provide public goods to the
international community” (Ghiselli 2015: 14). When speaking of the mar-
itime New Silk Road, it is essential to refer to the “String of Pearls”. Why?
Because this is fundamental in the context of the militarisation of the port
network, as well as of the securitisation of the Chinese New Silk Road
maritime corridors. In the event of a conflict, China fears an oil embargo
by the United States (the action of securitisation),6 and therefore Beijing
has promoted the creation of onshore bases, responsible for the protection
of its supply routes (Holmes 2016). The “String of Pearls” is an “artificial
coastline”, formed by logistic and diplomatic support points along the
main navigation routes (from Myanmar to the Strait of Hormuz), which
allows China to monitor the Indian Ocean (Kleven 2015).
By negotiating such a project with the Indian Ocean states, that is,
ensuring permanent surveillance of the Indian Ocean maritime lines and of
the long distance of Chinese bases, China is, however, entering a sphere
that India considers as its near abroad. It follows that with every Chinese
attempt to securitise the access to key ports of the Indian Ocean, New
Delhi responds, in turn, through a diplomatic counteroffensive of soft
power, which often includes economic support to the states in the region,
in order to contain China’s logistic, energy and military securitisation
CHINA’S MOMENTUM: THE “ONE BELT ONE ROAD” TRIPLE’S… 155
(Pejsova 2016). In this regard, the “String of Pearls” is a sort of “cat and
mouse” game between China and India in which each power is seeking to
contain the advances of the other in the Indian Ocean. The main beneficia-
ries of this geopolitical and geostrategic competition are states such as
Myanmar, Bangladesh, Maldives, Pakistan, Sri Lanka, Seychelles, which are
seeking to maximise their economic interests (Mullen and Poplin 2015).
Authors such as Singh (2015) argue that Chinese maritime incursions
into the Indian Ocean are not recent, insofar as it has been a while since
China was seeking to expand its strategic presence in the region. However,
the operations to combat maritime piracy in the Gulf of Aden, as well as in
the other sea routes linking the Indian Ocean to the Suez Canal and, more
recently, the impetus for the expansion of economic ties between China and
the rest of the world (as advocated by the Chinese New Silk Road) explain
the increase of Chinese naval activities in the Indian Ocean (Philipp 2015).
Or at least in part, as for experts such as Struye, “this presence hides an issue
that goes beyond the fight against piracy: the domination of communica-
tion channels, because through this deployment, we notice a tacit dispute
between great powers to control the sea routes that go from the Strait of
Bab el-Mandeb to the Strait of Malacca, world trade arteries” (2009: 8).
Blasko believes that “the shift to a more maritime-oriented mindset and
force structure is an evolutionary step necessitated by growth in all aspects
of China’s comprehensive national power” (2015: 6). In fact, the securiti-
sation dynamics inherent in the String of Pearls in the Indian Ocean
reflects, in my view, the economic imperatives described by Blasko. That is
to say, China wants its Navy to be a guarantee that nothing fails at the
economic level, in such a way that the military securitisation of Chinese
incursions on land and at sea are complementary and intrinsic to the eco-
nomic, energy-related, political and cultural7 securitisation that underlie
the Chinese New Silk Road. Thus, any attempt at interpreting what China
wants from the sea, or the purpose of a String of Pearls in the Indian
Ocean or the reasons that lead Beijing to modernise its Navy or the con-
struction of artificial islands in the South China Sea or, in a broad sense,
the securitisation of maritime lines, should take into consideration the
evolution of the Chinese naval doctrine. In fact, we are witnessing today a
physical change, in the sense of an increasing modernisation of military
means, which is accompanied by an evolution of the strategic reflection
(Martinson 2016). This strategic reflection is inspired by, among other
theoretical contributions, the thesis of American Alfred Mahan. For him,
“the domination of the seas must be a priority given the freedom of the
156 P. DUARTE
seas and the exploitation of the commercial maritime routes: trade needs a
merchant marine and a navy to protect it, as well as support points (refuel-
ling and reparation) on the maritime routes” (cited by Struye 2009:
11–12). Within the framework of the securitisation efforts inherent to the
String of Pearls, which is, in turn, an important component of the Chinese
maritime New Silk Road, I consider it pertinent to speak of two “pearls”
which are particularly important: Gwadar and Djibouti.
By analysing the geopolitical and geostrategic contribution of Gwadar,
I expect, in fact, to understand how China is trying to securitise its energy
supply. Gwadar is one of the Indian Ocean ports with overland links to
western and southern China that would help the Middle Kingdom to
avoid the Malacca Dilemma. If, in logistic and energy securitisation, the
China-Pakistan Economic Corridor will include “the construction of high-
ways, railways, and natural gas and oil pipelines” at the geopolitical level,
“China’s participation in Gwadar will also allow it to expand its influence
in the Indian Ocean, a vital route for oil transportation between the
Atlantic and the Pacific” (Foreign Affairs 2015: para. 2). As explained by
Carriço, “Gwadar will be an interesting alternative to the flow of energy
reserves from Central Asian Republics, because the distance from Kusha
(to Turkmenistan) until Gwadar is 1200 km, compared to the 3400 km
which separate it from the nearest port of Odessa, on the Black Sea”
(2011: 497). It should also be noted that Pakistan provides China with a
trade and energy corridor by Gwadar, through which the oil from the
Middle East stored in refineries in Gwadar will travel to China through
pipelines and railroads (Bhattacharjee 2015). This corridor offers a shorter
route between Western Asia and China, allowing “considerable savings in
time and shipping costs”, since, as Ramachandran explains:
The current route for transporting oil and other commodities from western
Asia to Chinese ports, which is via the Straits of Malacca, is roughly 12
000 km long. It is another 3 500 km of overland travel from Chinese ports
to Xinjiang. In comparison, the route from Gwadar Port to Xinjiang is just
3 000 km. (2015: para. 7)
Final Remarks
Despite India’s apprehension regarding the so-called String of Pearls, I do
not consider this to be an “unusual” behaviour for a great power like
China. In fact, if we take into account the Chinese (re)emergence and the
strong nationalism that characterises today’s China, it can be expected that
the country conceives the ocean not only as an instrument of securitiza-
tion, since the great majority of the oil it imports crosses it, but also as a
means of power projection. And, in this sense, China adopts a behaviour
similar to that of other maritime powers in the past. Much has been specu-
lated about the nature of Chinese interests in the port of Gwadar and in
what will be the first Chinese naval base abroad (Djibouti). However, the
great “surprise effect” that this causes, in my opinion, lies not so much in
the desire to build overseas bases, but in the fact that the Chinese foreign
policy is, in essence, a non-interference policy. But, even in this context,
we must be prudent. Indeed, although the “new” Xi Jinping’s China has
already given evidence that its conception of International Relations is
dynamic and pragmatic, is it not acceptable for the country to worry about
protecting the diaspora and the Chinese interests worldwide? In this sense,
I consider Djibouti not as a real military base, or as a sort of war-mongering
provocation to military dominion of powers like the United States, but
rather as a logistics facility likely to serve military operations other than
war, and as a symbol of the legitimate interest of a power that is concerned
with securitising the energy flows in a region mined by maritime piracy.
Ultimately, the Chinese New Silk Road aims at the peaceful (re)emergence
of a China nostalgic of its past of glorious feats, though imbued with exac-
erbated nationalism and the pursuit for legitimacy of a regime whose con-
tinuity and credibility are worrisome. In this sense, the New Silk Road is
made not only of infrastructures and investments, connectivity and “thirst”
for resources but also of a narrative that the government is constructing
for “internal consumption” and in order to allay the fears of the interna-
tional community regarding China’s real intentions in this century.
It is essential that we begin by overcoming the bureaucratic obstacles
and mistrust between states, in addition to China, which are involved in
the revitalisation of all this network of logistic corridors so that this
extraordinary venture may result in more intense accomplishments. The
evolvement of the visions of the different actors towards Central Asia, and
the initiatives associated with this, may (or may not) dictate the inversion
of conventional theories that tend to consider the region as an “isolated
160 P. DUARTE
island” in the world map. In fact, I believe that, in the context of the
reconfiguration of the regional and world powers, the Eurasian heartland
will gradually emerge from its isolation, which is quite telling about
America’s future position in a world where more people may be travelling
across Eurasia by rail than flying across the Atlantic to the United States.
This may in fact be the beginning of an extraordinary geopolitical, geo-
strategic and geoeconomic world reconfiguration.
I encourage other works and researchers to investigate to what extent
Gwadar and the China-Pakistan Economic Corridor will help Beijing miti-
gate its dependence towards Malacca by operating a corridor which allows
Xinjiang’s logistic and energy access to the Indian Ocean. Moreover, it will
be interesting to understand what role the PLA can have within the
Chinese New Silk Road, as well as to know whether Djibouti will be an
“irreversible” precedent in the construction of several support bases for
the securitisation of Chinese shipping supply lines.
Notes
1. More recently, China has sought to expand its soft power through a series
of initiatives. Morrison, recalls, for example, that in July 2014 “China,
along with Brazil, Russia, India, and South Africa, announced the creation
of a $100 billion ‘New Development Bank’”, or that “in October 2014,
China launched the creation of a new $100 billion Asian Infrastructure
Development Bank”, or even that “in November 2014, China announced
that it would contribute $40 billion to a new Silk Road Fund designed to
improve trade and transport links in Asia”, and, that “in April 2015, China
announced that it would invest $46 billion in infrastructure development
in Pakistan” (2015: 42).
2. By building for this purpose an underwater tunnel of a length of about
200 km at the Bering Strait. According to Lanjian and Wei, “the whole line
shall total about 13,000 km, if built, it will eventually connect Beijing,
New York and even Washington D.C.” (2015: 318).
3. The Two Oceans Railway refers to a railway construction project of about
5000 km that passes through the South American continent, connecting
the Pacific and Atlantic coasts (Lanjian and Wei 2015).
4. I am obviously in an area of pure speculation, but in geopolitics, I believe
it is not inappropriate to exclude prospective scenarios, especially consider-
ing that the time scale for the implementation of global securitisation
would be generations or decades, and that China has been able, as an
ancestral power, to wait for its time.
CHINA’S MOMENTUM: THE “ONE BELT ONE ROAD” TRIPLE’S… 161
5. For this purpose, President Xi Jinping has focused, among ASEAN mem-
bers, his speech on a “win-win” strategy, on the apology of a “shared des-
tiny between China and ASEAN members”, explaining that “China is
ready to open itself wider to ASEAN countries” and to enable them to
“profit more from China’s development” (Wu and Zhang 2013: para. 11).
6. The perception of the threat, according to the theory of the Copenhagen
School.
7. At the cultural level, I underline the aspiration to China’s rejuvenation, as
advocated by Xi Jinping.
8. Whose area is less than that of the city of Chicago.
9. Sea denial is a military term that describes the attempt to deny, to the
enemy, the use of the sea (usually through maritime and/or port
blockades).
10. The term “blue-water navy” means a naval force capable of operating in
deep waters of open oceans.
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CHAPTER 7
Ritika Passi
Introduction
With the introduction of the One Belt One Road Initiative (OBOR),
Chinese President Xi Jinping heralded a new era of Chinese integration
into the global economy. The twin strands of the project, the overland Silk
Road Economic Belt (SREB) and the twenty-first century Maritime Silk
Road (MSR), beckon better connectivity across the Eurasian continent as
well as outreach to Africa. Together, they cover 65 countries that account
for 70% of the world’s GDP, are home to 60% of the world’s population,
and lay claim to 75% of the worlds’ energy resources. From its public dec-
laration in 2013, OBOR has seen ready traction: from the signing of the
first original OBOR project in April 2015, 900 (and counting) infrastruc-
ture projects are stated to be underway, valued anywhere from $890 bil-
lion to $1.3 trillion; more than 200 enterprises have committed to
R. Passi (*)
Observer Research Foundation, New Delhi, India
e-mail: ritikapassi@orfonline.org
16
14
12
10
4
2
1990 1995 2000 2005 2010 2015
Fig. 7.1 China’s annual GDP growth rate (%). (Source: National Bureau of
Statistics, China. Available at tradingeconomics.com)
170 R. PASSI
global”; and the beginning of the twenty-first century saw Chinese invest-
ments abroad dramatically increase. With an ample labor force, the result
was that China became the world’s workshop—from producing less than
3% of global manufacturing output by value in 1990 (Economist 2015), it
today accounts for almost an entire fifth of global manufacturing—predi-
cating its growth on this manufacturing-, labor-, and export-led economic
growth model. (It is, for instance, the world’s largest producer of Christmas
decorations, computers, shoes, and cement; plastics, stainless steel, solar
cells, and lubricant oils.) Its year-on-year growth reached double-digits.
Trade boomed—from its volume of trade contributing a mere 7% of its
national income in 1978 (Chow 2004) to accounting for 62.9% of the
country’s GDP in 2005 (Thakuri 2015)—and China became the world’s
largest exporter in 2009, and subsequently the world’s largest trading
nation in 2013, overtaking the United States for top spot. China increased
its investments abroad, and is today the second-largest cross-border inves-
tor, set to become the largest by 2020.
Following a spectacular GDP growth rate high of over 14% in 2007,
China’s economic growth dropped to 9.6% and started slowing down
from 2012 onwards, reaching what China’s president Xi Jinping called the
“new normal” in 2014: from averaging a 10% annual growth rate for three
decades, it fell from 7.7% in 2012 to 6.7% in 2016, with forecasts set at
near the same levels for 2017. Despite a slower growth rate, China became
the largest contributor to world growth post the financial crisis (in 2016,
it contributed to over 30%), as it and other emerging economies were
instrumental in drawing the global economy out of the post-crisis
downturn.
To note is the extent to which China’s economy is integrated with that
of the world’s. Flipped on its head, this means that Chinese growth is criti-
cally dependent on an open system of trade and investment.
China’s economic slowdown is not only a function of the protectionism
and low investor sentiment post-2008 that have resulted in slower global
trade growth relative to global GDP growth (WTO 2016) and the lowest
levels of cross-border financial flows seen in the past three decades. It is
also a function of the growth pattern China adopted, based on energy-
and resource-intensive investment, manufacturing, and exports (WEF
2016). It is in this context that Chinese Premier Wen Jiabao’s statement
made at the National People’s Congress in March 2017 must be under-
stood: “[t]he biggest problem with China’s economy is that growth is
unstable, unbalanced, uncoordinated, and unsustainable” (Saran 2016).
UNPACKING ECONOMIC MOTIVATIONS AND NON-ECONOMIC… 171
of a yet again bright period in China’s future just around the corner.) The
costs to social stability indicate the strong domestic political economy
(state-building) rationale for pursuing OBOR that is beyond the scope of
this chapter, but it suffices to conclude that, as China’s economy slows
down, it cannot afford to abandon the trade rationale that is meant to
nurture slower but stable growth, support faster reform, and eventually
engender a healthier economic structure that will buttress long-term
Chinese development and keep the Chinese population less inclined to
agitate against the ruling Communist Party.
In sum, the key economic driver behind Beijing’s pursuit of OBOR is
effectively its model of growth—the implementation of which has engen-
dered several problems which have worsened as the Chinese economy
slows down, and as it faces adverse globalization effects and anti-globaliza-
tion sentiment. Economically, therefore, OBOR is the second act in
China’s opening up and reform process;2 a contemporary tool to revitalize
its economy in the face of slowing growth; a policy prescription to foster a
continued open global environment conducive to its growth; and an
instrument through which to course-correct and restructure its economy.
tepid global economic recovery and the West continues to shy away from
globalization, strengthening the argument that Asian countries can no lon-
ger depend on traditional producer–consumer networks that peg the West
as the consumer of the last resort. As it is, post-2008 data show more trade
and investment among Asian economies than between Asia and the West.)
Second, overland transport infrastructure offers China the advantages
of shorter distances to these markets, faster transit times, quicker deliver-
ies, and increasingly lower costs. As other countries begin to experience
lower manufacturing costs, and as China is edged out as the most com-
petitive manufacturing nation,3 logistics and trade routes that reduce dis-
tances between consumption and production centres via improved
connectivity, such as through the China–Europe railways, allow Chinese-
made goods one means by which to retain manufacturing competitive-
ness. Rail freight between China and Europe takes on average 14 days,
one-third the time it would take to transport the goods by sea, and one-
fifth the cost of sending goods by air (Xinhua 2016a). Some lines boast of
four times the reduction in time taken for products to be shipped from
China to Europe, at a cost more than 65% cheaper than shipping by air
(Shepard 2016c) (Fig. 7.2).
But can these transcontinental rail lines be sustained on their economic
merit? Maritime shipping still accounts for 90% of all trade worldwide and
almost 60% of China’s trade by transportation mode (Garcia-Herrero and
Xu 2016: 4). It is still currently about five times cheaper to ship via oceans
than by railroads (JOC 2016). It has been estimated that the entire SREB,
with its gamut of transport corridors and rail routes, will only account for
1–2% of overall maritime traffic, although it may snag market share from
air cargo. For the moment, given advantages of higher frequencies and
Fig. 7.2 One container shipping cost and time from Chongqing in Western
China to Western Europe. (Source: Image reproduced from Kapan, Zeynep
(2016) “EATL: The Trade Prospects for EU and China.” Available at https://
www.unece.org/fileadmin/DAM/trans/doc/2016/wp5-eatl/WP5_GE2_2nd_
informal_session_Ms_Kaplan_1.pdf)
176 R. PASSI
the next four leading producers combined; its aluminium and cement pro-
duction accounts for over half of the global supply. Indeed, “the 20,000 km
of new railways…could create demand for as much as 85 million tons of
steel,” diversifying such exports to not just Southeast Asian countries,
Central Asia, and Europe, but also to Middle Eastern countries like Turkey,
Iran, and Saudi Arabia (Holslag 2017).
Yet there may be limits to the extent to which the vast trans-regional
effort can diversify export channels that can absorb China’s excess capacity:
David Dollar (2015) writes that OBOR, ironically enough, may not be
large enough to make much of a macroeconomic difference: “In steel alone,
China would need $60 billion per year of extra demand to absorb excess
capacity…However, the economies of Central Asia are not that large.”
Indeed, fears abound of “white elephant” infrastructure projects under
OBOR that see frenzied construction often left uncompleted or which
drum up no demand and thus reap no benefit. Sri Lanka’s Hambantota
that China has been developing shows particularly bleak prospects: the
deep sea port is running at severe under-capacity, and the nearby interna-
tional airport is the world’s emptiest. Some observers like Shepard (2016a)
believe that such “too big to fail” projects continue receiving government
support and funding “until they eventually come to fruition.” While the
situation in Sri Lanka is compounded by other factors, it bears contem-
plating whether “political exigency and investment hysteria [has] trumped
economic calculus” (Mallone 2016), or whether China’s offloading of its
industrial overcapacity in logistics and transport networks through OBOR
eventually pays off.
However, Cai (2017) offers a deeper insight into China dumping this
overcapacity:
OBOR is less about boosting exports of products such as steel and more
about moving the excess production capacity out of China. OBOR projects
are currently too small to absorb China’s vast glut of steel and other prod-
ucts. Instead, Beijing wants to use OBOR to migrate whole production
facilities. Beijing wants to use OBOR to migrate whole production
facilities.
This, then, becomes a manner in which China can move up the value
chain and help fulfil the aim of restructuring its domestic economy. With
China investing in countries like Poland and regions like Southeast Asia that
UNPACKING ECONOMIC MOTIVATIONS AND NON-ECONOMIC… 179
offer more competitive labor costs, China itself can focus on transitioning
from being the world’s hub of low-cost manufacturing to producing higher
value-added products. Better infrastructure connectivity to such places, like
Southeast Asia, could allow Chinese businesses to more efficiently offshore
manufacturing. Cai’s analysis, however, warns of pitfalls that echo the ear-
lier-mentioned concern of a lack of capacity to absorb China’s excess capac-
ity, adding a lack of desire to do so as another loophole.
Another major obstacle is the impact on Chinese labor. Along with jobs
cuts (including 1.3 million coal jobs and 550,000 steel jobs), employment
levels have already declined due to globalization effects (to say nothing of
technology effects). Several factories in Datang, China’s so-called sock city
that produced 26 million pairs of socks in 2014, have closed down as
garment-making has shifted to more cost-effective countries in Asia
(Economist 2016). Some low-technology, labor-intensive industries such
as T-shirts and cheap footwear have already left China (Economist 2012).
Pursuing a strategy of shifting labor-intensive manufacturing centres to
cheaper locations externally will exacerbate unemployment levels domesti-
cally. Moreover, numbers of Chinese exported labor at infrastructure sites
is nowhere near the number of jobs currently and eventually to be needed.
Transport infrastructure also provides momentum to Chinese eco-
nomic restructuring. The China–Europe iron silk roads, for instance,
could help foster domestic consumption in the longer run by providing
the means for the movement of goods from the West back to the East as
consumption patterns interchange. There is already “a growing hunger”
for European luxury goods among Chinese middle- and upper-class con-
sumers (Shepard 2016b)—the luxury market in China saw steady demand
in 2016, even amid falling consumption that is being driven by “rising
disposable incomes and consumers’ pursuit of luxury products, desire for
better quality and also the ability to showcase one’s social status”
(Euromonitor International 2016). By 2030, the Asia-Pacific will account
for 66% of the world’s middle class, a key driver of growth, with the
region’s middle-class consumption accordingly accounting for 59% of
total global middle-class consumption. China will account for a large share
of this boom: by 2030, over 70% of its population is expected to join the
middle class (from a mere 12% today), with consumption estimated at $10
trillion in goods and services. Not only will Chinese urban working-age
consumers with middle-class levels of disposable monthly incomes rise
from 4% in 2010 to more than 50% by 2030, these individuals between
the ages of 15 and 59 will also have larger shares disposable incomes to
180 R. PASSI
spend than their parents did (Kharas 2011). McKinsey estimates that
Chinese will account for 12 cents of every dollar spent by urban consum-
ers by 2030 (ICEF Monitor 2016). Development of Asia as a strong con-
sumer market may take time to gain a strong global foothold—currently,
only a few China–Europe routes operate in both directions, and on such
routes trains are currently returning from European cities with signifi-
cantly lighter loads; in fact, the Yuxinou train only began bringing back
goods two years into its service (Luo 2015). Indeed, as Shepard (2017)
notes, the first China–Europe trains returned with more than 90% of their
containers empty—not unsurprising, given China-favoring trade balances.
But the situation is slowly changing; with China now Europe’s fastest
growing export market (Smith 2017). Data reveal an increase in the num-
ber of returning trains bringing back goods to China—from 28 in 2014 to
264 in 2015 (Xinhua 2016a). Greater participation by European freight
forwarders, manufacturers, industries, and governments is expected in the
coming year and beyond as they begin to discern the trade potential:
“European pharmaceutical, chemical, automative [sic], luxury, and food
companies started jumping in throughout 2016—a movement that’s
expected to grow in the coming year” (Shepard 2016a). The problem
noted earlier of unsubstantial volumes on return journeys to China remains
valid; it remains to be seen which way and how much trade flows.
Second, the time advantage of overland transport can be taken advan-
tage of. Officials running various Europe–China train services recognize
the opportunity of becoming part of the “modern supply chain…charac-
terised by smaller orders, multiple dispatches and high-delivery frequen-
cies” (Chu 2016). Time-sensitive products like perishables are one answer.
More importantly, modern supply chains are also distinguished by higher-
end technology or high value-added industries, such as high-end fashion,
that value “speed over price when it comes to logistics.”
Thus, items like smartphones, ATMs, industrial printers, 3D printers,
robotic assembly arms, medical instruments, telecommunications, and air-
craft equipment all make for viable cargo on both counts of (a) goods that
can take advantage of the shorter distances, thus boosting economic via-
bility and longevity of trans-Eurasian transport corridors, and (b) China
climbing up the global industrial chain in terms of value. China has already
overtaken Japan to become Asia’s biggest exporter of high-tech goods in
2014, from a share under 10% to over 40% during 2000–2014 (LiveMint
2015). Even as it remains a key exporter of many lower-technology prod-
ucts, it can pursue an increased share of high-technology products in its
UNPACKING ECONOMIC MOTIVATIONS AND NON-ECONOMIC… 181
If you have an ATM out of order the customers start to complain and you
have to replace it as soon as possible, so you can only fly it. One ATM
machine is 800 kilos, so that’s going to cost you a lot of money. Now, you
can ship by our service and in three to four weeks you can have the ATM
machine ordered and installed. They don’t have to wait for a whole con-
tainer load, they can ship just one ATM machine. (Shepard 2016c)
in partner countries will also expand China’s foray and export of higher-
technology products in the field of telecommunications, such as fibre optics
and satellites. Just the satellite services market will be worth $60 billion in
the coming years, as per China’s Satellite Navigation Management System.
brands, it remains to be seen who conforms to which vision and what rules
of economic engagement become commonplace in the coming years.
Political/Strategic Gains
Another non-economic consequence is the political and strategic leverage
China gains from its infrastructure investments. China has been known to
leverage economic tools, such as trade, aid, and investments, to secure its
“core interests” (Blackwill and Harris 2016). Coming to OBOR, while
details of loans and rates of interests in the various projects remain largely
opaque, the UNESCAP report cited above has thrown light on the fact
that Chinese infrastructure investments in relatively poorer Central and
South Asian countries along the Belt and Road are creating unsustainable
debt situations in the recipient countries. This is leading to China holding
significant amounts of government debt: for instance, the Export–Import
Bank of China holds 49 and 36% of Kyrgyz and Tajik government debt,
respectively (Cooley 2016: 4). Worsening the likelihood of debt traps are
high-interest rates on Chinese loans or white elephant projects not gener-
ating sufficient income to help pay back debt. For instance, China spent
nearly $2 billion building the Sri Lankan Hambantota port, which has
already hemorrhaged more than $200 million; Sri Lanka owes over 10% of
its more than $60 billion debt—more than $8 billion at an interest rate of
more than 6%—to China, which will take the island nation “at least a
couple of generations” to repay (Meyers 2017; Sala 2017).
The consequence of poorer countries binding themselves tighter in a
relationship of economic dependency on China is Beijing potentially using
its economic capacity to continue funding projects, to forgive debts, or
renegotiate terms as leverage for political or strategic ends. These are
increasingly being appreciated as OBOR implementation continues full
force. Instances of gaining access and rights to resources, such as land and
minerals—“unofficial debt writing-off agreements” (Lain 2016); getting a
controlling stake of infrastructure placed in strategic geographies like the
Indian Ocean (note, for instance, claims of China being in the “driving
seat” in the negotiations to develop Myanmar’s Kyauk Pyu port in the Bay
of Bengal; Lee and Myint 2017); or large recipients of Chinese investment
taking courses of action in Chinese political interests—these have all been
noted in OBOR countries, patterns that have been long witnessed in other
parts of the world like Latin America and Africa. Case in point: land being
rented or sold by Central Asian countries; debt-equity deals like the one
186 R. PASSI
that has given China a controlling stake in Sri Lanka’s Hambantota port;
Greece and Hungary have blocked EU statements criticizing China’s
human rights record, actions Chinese representatives have openly appreci-
ated. (To note: this last example links back to the above-discussed conse-
quence of perpetuation of normative values in broader global conduct.)
In fact, China’s efforts to puppeteer events and decisions to suit its own
political and strategic interests are likely to become more hands-on.
Infrastructure investments have in the past been fed into the home grounds
of politicians China backs (as in Malaysia); it has been noted that in the
event infrastructure projects fail to procure expected returns, China may
begin to interfere in local politics more aggressively:
…when messy local politics begin to interfere with their construction and
operation, then how will China’s companies and governments respond? Will
they not blame the problems on failed local systems and attempt to correct
those systems, to bring them into greater harmony with the successful sys-
tem China has developed back home? (Sharma 2017)
Conclusion
This chapter shows that it is the Chinese economic model of growth that
is at the root of China’s economic problems. A slowing economy, global-
ization effects, and anti-globalization sentiment have aggravated the
degree of concern. Chinese economic motivations thus boil down to two
axes of action: further integration with the global economy, and course-
correction and economic restructuring. How OBOR is supposed to
address these motivations through its foundational layer—infrastructure
connectivity—has been demonstrated. Said infrastructure development’s
non-economic consequences have been explored, which turn out to be, or
respond to, specific political and strategic motivations cited independently.
Working backwards, this gives credence to the argument that the non-
economics are functionally pegged onto the economics.
There is ample scope to explore this argument further, particularly as
OBOR expands, evolves, and institutionalizes. First, other aspects of
OBOR economics need to be explored: namely, Chinese ability to finance
the venture. It is effectively Chinese deep pockets that are seeing OBOR
projects through, but the first section identified a number of concerns
UNPACKING ECONOMIC MOTIVATIONS AND NON-ECONOMIC… 189
Notes
1. An expression that began doing the rounds in 2016, after Xi Jinping 2016s
New Year message, and particularly after Xi’s remarks at the G20 Huangzhou
summit.
2. As expressed by several Chinese scholars during discussions.
3. As per Deloitte’s Global Manufacturing Index 2016, China remains the
most competitive manufacturing nation, but is expected to lose its edge in
the next five years. See: https://www2.deloitte.com/in/en/pages/manu-
facturing/articles/global-manufacturing-competitiveness-index.html
4. See, for instance: UNESCAP (2017) “A Study of ICT Connectivity for the
Belt and Road Initiative (BRI): Enhancing the Collaboration in China-
Central Asia Corridor.” Available at http://www.unescap.org/sites/
default/files/ICT-Connectivity-for-Belt-and-Road-Initiative-in-China-
Central-Asia-Corridor.pdf
5. See, for instance: Siddiqui, Quratain and Jahanzaib Haque (2017) “The
CPEC plan for Pakistan’s digital future.” The Dawn, October 3. Available
at https://www.dawn.com/news/1361176
6. In fact, Tom Miller argues just this: through OBOR, China wants to restore
what it considers “its natural, rightful and historic position as the greatest
power in Asia” (2017). China’s Asia Dream. London: Zed Books.
190 R. PASSI
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CHAPTER 8
Introduction
Adopting a historical-geographical materialist approach, this chapter illus-
trates how China’s One Belt One Road (OBOR) initiative can be under-
stood as part of a broader system of accumulation based on what may be
called the government–business–media (GBM) complex. The analysis fol-
lows a critical rewriting of China’s regional and transnational relations as
seen through the lens of the GBM complex, with special attention given
to its involvement in Africa and the Middle East. By so doing, this chapter
seeks to lay the foundations for an alternative understanding of China’s
political economy. This chapter argues that China’s OBOR initiative, as an
outward extension of the Chinese political economy, aims to reintegrate
Africa and the Middle East into a system of accumulation “with Chinese
characteristics”.
tinuation of China’s “going out” policy launched at the start of the cen-
tury to increase outbound capital and enhance the global footprint of
Chinese companies. Whether it will be able to achieve this is another ques-
tion, however (Rolland 2017: 130).
The land and maritime routes comprise a series of corresponding fea-
tures including the development and expansion of inter-continental rail-
way routes, freeways, ports, and energy pipelines. OBOR potentially
involves over 60 countries with a total population of more than 4 billion,
whose market share is approximately one-third of global GDP (Ferdinand
2016: 950). The underlying spatial and economic logic is that China will
work with member states to build industrial parks in which Chinese com-
panies can invest, especially as labour costs have risen in China (Du 2016:
31). These parks will then provide manufacturing “hubs” in areas closer to
target markets, with OBOR’s infrastructure facilitating easy onwards dis-
tribution along its many transport connections and pathways. OBOR
projects will largely be driven through Public Private Partnerships (PPPs),
with the standard financing model being the provision of Chinese credit
for Chinese contractors (Hayes 2017: 1). China’s GBM is, therefore,
attempting to position OBOR as a proverbial “conveyor belt” for goods,
services, and infrastructure said to boost economic development through-
out designated land and maritime trading routes, whilst the real intention
is to lock these countries and regions together into one big trade and
investment network or spatio-temporal fix (see Harvey’s definition below).
Africa and the Middle East were included in OBOR due to their natural
resources and, to some extent, to provide cheap labour for manufacturing
hubs along the OBOR circuit. The Middle East is also effectively the region
where the maritime and land routes connect. For example, the Arab States in
the Gulf region could be seen as a “crossing point” for the Economic Belt
and the Maritime Road (Wang 2016: 183–185). OBOR spans the Middle
Eastern countries via the Middle Corridor and through the Sea Route that
passes through the Suez Canal, thereby involving several regional actors
(Küçükcan 2017: 88). The Middle Eastern and North African interstices are,
therefore, of geostrategic importance to OBOR in respect of providing safe
passage for vital resources, ultimately over the Indian Ocean or the Arabian
Sea, or as a “crossing point” to European and central Asian markets via land.
In the instance of the maritime route, the major strategic chokepoints
relating to Africa and the Middle East are the Suez Canal and the Gulf of
Aden, with substantial levels of oil and gas moving through this route.
The international energy transport system is susceptible to interference at
THE ONE BELT ONE ROAD INITIATIVE: REINTEGRATING AFRICA… 203
Based on this, it would appear that China may be reconsidering its stance
on non-interference and non-intervention (Mustafic 2017: 117).
Without dismissing the potential benefits, a critical reading of OBOR
raises certain questions. Is OBOR an extension of China’s espoused neu-
trality, as some have suggested? Is it a bold attempt at inserting “Chinese
characteristics” into global public goods and broader capitalist develop-
ment vis-a-vis a challenge to the Washington Consensus? China has not
been the only country to suggest a revival of the Silk Road. A similar initia-
tive was launched under Hillary Clinton in 2011 as a way to reintegrate
post-war Afghanistan into trade networks. Comparing the aborted US
version of the Silk Road and the Chinese version, one paper suggests that
(Habova 2015: 66):
More official Chinese sources have attempted to argue that OBOR pro-
vides a “public product provided by China to the world” (Zhu 2016:
111), and generally, this seems to be a line of argumentation adopted by
Chinese state elites. Critics might argue that this is potentially a form of
affective labour. “Public goods” are goods which are consumed publically
or freely, and in a non-competitive and non-exclusionary manner, that is,
consumption by party X does not impact upon party Y directly, and both
parties have an equal opportunity to benefit (Kaul et al. 1999: xii).
Infrastructure such as bridge building, the building of roads and ports, and
other key transport links, as well as the provision of security, especially
where there is a history of its non-intervention, become decisive in allow-
ing and welcoming countries into foreign territories. However, China’s
systematized insertion into countries along the OBOR route will give rise
to exchange values and functional values, which are clearly not neutral and
not value-free—as exchanges in the international community are not with-
out consequences. OBOR may yield direct and indirect benefits for affected
countries. Who gets to consume the benefits accruing from security and
206 J. VAN DER MERWE
The major financial and economic institutions, which experts sometimes call
the ‘international financial architecture’, no longer correspond to the bal-
ance of power and the shifting centre of gravity in the world economy…
Some western foreign policy specialists have naively assumed that emerging
markets would become integrated into…western-dominated structures of
power and governance.
system and their track record in places like Africa (Van der Merwe et al.
2016). The chances that OBOR will do anything other than reinforce the
status quo concerning the broader systemic level and its preferred means
of accumulation are unlikely. The BRICS generally have risen to promi-
nence as supposed subverters of the prevailing global order, yet, in reality,
have been subsumed into it (Van der Merwe 2016a). The reality is that the
BRICS are positioned to support the system as agents of continued global
uneven development, much like their Western counterparts before them,
and the changes being rung in by OBOR are effectively style over sub-
stance, or just more of the same.
into the African hinterland via rail or roads (ZiroMwatela and Changfeng
2016: 12–14). A possible Eastern–Central–Western African Corridor or a
“great equatorial land bridge” could just about connect Sudan, the two
Congos, and Angola, an important oil partner to China, helping to move
goods laterally across the continent (ZiroMwatela and Changfeng 2016:
17). The ports in Kenya could also function as security installations, scan-
ning for potential threats along the Horn of Africa region.
As one of Africa’s most technologically advanced countries, the reach of
Kenya’s communications and the syndication of its media throughout the
region might help to “grease the wheels” through the spreading of pro-
OBOR stories, sometimes facilitated by engagement with, or events
hosted by, Chinese state-linked media. Similarly, the shaping of a pro-
OBOR outlook in Kenya would presumably be important, given its role in
shaping and setting agendas for regional discourses in academia and com-
mercial research.
Generally speaking, China’s GBM has focused much of its diplomatic
and financial resources within the East African space, further signalling its
attempted encirclement of Africa’s Horn (Kenya to the South, with the
Djibouti military base on the northern side). As the geostrategic impor-
tance of this region has grown, so has China’s troop contributions to
African Union and United Nations peacekeeping missions.
The bogus “Africa Rising” trope appeared to be closely related to the
rise of this region, with a country such as Rwanda regularly registering
growth in excess of 7 per cent. Ethiopia, with its large population and
widespread poverty, was a particularly willing recipient of Chinese capital
and infrastructure development.
To sum up, as China’s GBM engages with Africa and the Middle East,
we can expect the increase of information and official statements regard-
ing the plan. However, a critical pragmatic stance towards the initiative
should be adopted now, so that African and Middle Eastern citizens can
weigh up critically if they are to truly benefit. African and Middle Eastern
countries have cause for scepticism, as it appears that the initiative is a
“broad sweep” under which anything vaguely relevant can be placed,
exemplified by the iterative versions of the Action Plan, which grow in
mandate and scope from previous editions.
The overwhelming evidence suggests that the Middle East and Africa
were included in the initiative more as an afterthought and following the
logic of securing future energy supplies. Africa and the Middle East are
also attractive to Chinese companies seeking to relocate labour-intensive
214 J. VAN DER MERWE
industries. But, as was already alluded to, whether this leads to anything
resembling meaningful employment opportunities remains questionable.
The opportunities for countries to move higher up the global value chain
also remain limited (at best getting them stuck in a so-called middle-
income trap). Whilst in some places along the OBOR route countries may
be able to resist the power of Chinese capital and manufacturing, African
and Middle Eastern countries remain weak in their governance structures,
rendering them vulnerable to exploitation.
As argued, the relationship between China and Africa is deeply prob-
lematic for a number of reasons. Importantly, the OBOR initiative does
nothing to address the valid concerns surrounding the contentious link
between China’s infrastructure investment, on the one hand, and its inter-
est in African natural resources, on the other. Nor does the initiative deal
with Chinese companies’ socially and environmentally irresponsible con-
duct in Africa. Similarly, in the Middle East, involvement is likely to mirror
that of the more established patterns in Africa.
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CHAPTER 9
Laurids S. Lauridsen
Introduction
An old Chinese proverb tells us that “two tigers cannot occupy the same
mountain.” This should be borne in mind when it comes to the growing
participation of China in the evolving regional order. For more than half a
century, American hegemony in East and Southeast Asia has been unchal-
lengeable, and Japan has played a leading role as investor, aid provider,
and promoter of regional cooperation. In the 2000s, particularly under Xi
Jinping’s leadership, China has been seeking to expand its regional influ-
ence by engaging in regional rule-making and institution building. The
two-pronged strategy of setting up new multilateral investment banks and
overseas infrastructure projects under the OBOR initiative has lifted
regional competition and infrastructure diplomacy to a higher level.
L. S. Lauridsen (*)
Department of Social Sciences and Business, Roskilde University,
Roskilde, Denmark
e-mail: lsl@ruc.dk
This chapter seeks to analyse regional rivalry and the evolving alterna-
tive regional order in terms of tangible forms of infrastructure develop-
ment, focusing on a case involving high-speed railway (HSR) projects in
Thailand. China and Japan often compete to secure overseas infrastructure
projects in Asia and deploy considerable financial resources to win orders.
Railways, and especially HSR, are a key element, and the rivalry plays out
in the regional backyard of both countries. On the one hand, it is just
commercial competition between Chinese and Japanese firms that are
increasingly forced to look overseas for new markets. On the other hand,
political involvement is unavoidable in such big deals, and building rail-
road facilities abroad also serves as a way of extending strategic influence.
In recent years, the political leaders of both countries have travelled around
Southeast and Central Asia as “HSR salesmen” and entered high-speed
rail diplomacy. This Sino-Japanese competition leads to the question: can
these two tigers occupy the same mountain—and will they?
Rail is a major industry in Japan, and the country is famous for its net-
work of high-speed bullet train lines—the Shinkansen. The construction
of the Shinkansen started in 1964. Japan’s railroad industry is known for
its first-rate safety record, its original technology, and its high reliability, as
well as its comprehensive and integrated infrastructure solutions. China
entered HSR in 2004 and, seven years later, launched a campaign to build
HSR systems around the world. This involved overseas loan commitments
made by the China Development Bank and the China Exim Bank. China’s
competitive advantages are the low cost and fast construction of its railway
systems.
In Asia and Central Europe, Chinese infrastructure diplomacy became
a critical part of the OBOR initiative, which comprises a land-based Silk
Road Belt (SREB) and a sea-based “21st Century Maritime Silk Road”
(MSR). HSR is a cornerstone of the former and has, therefore, become a
central part of China’s infrastructure diplomacy. During the second Abe
administration, Japan used railway projects to counter China’s commercial
and geopolitical expansion and increasingly offered financial support
under its huge “Partnership for Quality Infrastructure” (PQI) programme.
Both China and Japan have economic and broader strategic interests in
infrastructure development in Indochina. Both bilaterally and through the
Asian Development Bank (ADB), Japan is engaged in improving infra-
structure in the Greater Mekong Subregion (GMS), while China, besides
being part of that sub-region, has also set up a new mechanism for sub-
regional cooperation, including infrastructure development.
CHANGING REGIONAL ORDER AND RAILWAY DIPLOMACY IN SOUTHEAST… 221
These notions all refer to “the region,” which here refers to a suprana-
tional subsystem. We follow Hettne (2005: 544) in stressing “that there
are no ‘natural’ regions: definitions of a ‘region’ vary per the particular
problem or question under investigation” and “that all regions are socially
constructed and hence politically contested.” We are more preoccupied
with regionalism than with regionalization. Regionalism is a top-down,
macro-level political process driven by a body of ideas and a cooperation
that promotes an identified geographical (or social) space as a regional
project (Mansfield and Solingen 2010: 146–47). Regional cooperation
may include some commercial preferences, as in Free Trade Agreements
(FTAs), but they may just involve functional cooperation in an issue area,
such as transport infrastructure and connectivity. East and Southeast Asia
has experienced a proliferation of FTAs, leading to “competitive regional-
ism” through a complex “noodle bowl” of trade and investment agree-
ments and a surge in the interest of regional powers in transport
infrastructure. Infrastructure projects are a way to develop market oppor-
tunities for indigenous construction and transport companies, but they are
also a way of becoming involved in linked economic corridors and expand-
ing regional production networks.
As Breslin has suggested (2010: 729), regionalism in East Asia is glob-
ally contingent, so the dynamics of the changing regional order must be
seen in the context of bargains that involve the United States as global
hegemon. Japan has explicitly subordinated itself to the imperatives of US
hegemony and is a crucial node in US-sponsored regional security.
Regional initiatives are tied to a dollar-based global financial order, and
Japan is “the leading goose” in a regional foreign direct investment order
and a core provider of advanced technology to regional production net-
works. Goh (2013: 16) emphasises the resilience of US hegemony and the
complicity of regional powers (China and Japan) in sustaining it, but other
scholars argue that Goh underestimates the resistance of China to a US-led
regional order. Thus, Oba (2016: 571) states that the OBOR and AIIB
initiatives “show China’s intentions to construct a new regional order that
would at least weaken, if not replace, US hegemony.” Finally, Beeson and
Li (2016: 495) argue that OBOR and AIIB initiatives together “amount
to a sophisticated strategy that capitalizes on China’s economic strength in
ways that may permanently transform the region and China’s place in it.”
This is particularly the case because China’s ideational and institutional
efforts are underpinned by “very tangible forms of investment and infra-
CHANGING REGIONAL ORDER AND RAILWAY DIPLOMACY IN SOUTHEAST… 223
structure development that are likely to make its policy influence and
objectives more difficult to resist” (ibid: 497).
In this chapter, we briefly touch upon the issue of FTAs in the region but
the main focus is on overseas infrastructure export and regional competi-
tion between China and Japan for rail-infrastructure development in land-
based Southeast Asia. How are we to understand these regional powers
when commercial and security interests intersect? Competitive regionalism
between Japan and China is undoubtedly in a state of zero-sum rivalry in
the East China Sea disputes over the Senkaku/Diaoyu islands, but is this
also the case when it comes to overseas infrastructure export?
Economic and security aspects of regionalism are often tightly linked
and tend to be under-researched (Mansfield and Solingen 2010: 153). As
Jayasuriya has suggested (2003: 205), regional dynamics cannot just “be
located in the changing dynamics of inter-governmental relations”; they
are also rooted in the dynamics of the domestic political economy. This
implies that the huge competing infrastructure initiatives of China
(OBOR) and Japan (PQI) must be understood in relation to processes of
economic transformation and crisis in the domestic political economies as
well as in the different modes of internationalisation of capital.
In looking at the infrastructure diplomacy of China and Japan, we
might usefully distinguish between economic diplomacy and economic
statecraft. The former can be defined as decision-making, policymaking,
and the advocacy of broader nationally-defined economic strategies.
During the age of globalization, economic diplomacy has turned diplo-
mats into “agents of globalisation” and they are directly involved in the
creation and regulation of markets and capital as well as in trade and
finance diplomacy (Lee and Hocking 2010).
As opposed to the use of state power to develop market opportunities
and to support the global outreach of indigenous companies, economic
statecraft is the use of economic tools to achieve foreign policy objectives,
which in turn cover not just military security but also national strategic
goals, such as energy security, guaranteed supply lines, access to cutting-
edge technology, etc. (Norris 2016). Economic statecraft may take many
forms. In overseas infrastructure investment, regional powers may try to
outbid each other to obtain regional influence, regional stability, or a spe-
cial regional order—by economic means. Using economic leverage to pre-
serve and realize their national interests in the region may also involve the
provision of regional public goods (e.g., economic assistance and infra-
structure), where the regional power takes the lion’s share of the costs
224 L. S. LAURIDSEN
began to lose influence in the area, and the “War on Terror” reinforced this
tendency in Muslim states. Following these two events, China promoted its
own agenda and advanced or joined more closed forms of regionalism cen-
tred on ASEAN and East Asia and excluding the United States where possi-
ble. To lessen worries among ASEAN countries about China’s WTO
membership, China had already entered a “Framework Agreement on
ASEAN-China Comprehensive Economic Cooperation” (2002), leading to
the formation of the ASEAN-China Free Trade Area (ACFTA), which came
into effect in 2010 (Breslin 2010: 719ff; Beeson and Li 2014: 97).
Obama officially announced the “pivot” to Asia in November 2011,
and the Trans-Pacific Partnership (TPP) became a major component in
the rebalancing efforts. In his State of the Union address to Congress in
January 2015, Barack Obama emphasised that it was crucial that the
United States rather than China should “write the rules” (Obama 2015).
Besides shaping integration through the TPP in terms favourable to the
United States, Obama also tried to counter the Chinese model of capital-
ism by introducing advanced standards to suit highly developed countries
and by setting up rules that restrained subsidies to Chinese state-owned
enterprises—SOEs (Tow 2016: 37; Lin 2015: 589).
The Chinese reaction to Obama’s pivot was to make its own pivot to
the West (in China and beyond); just as China decided to set up the AIIB
partly because the US Congress had delayed even modest voting reforms
of the Bretton Woods institutions for years. With regard to mega-FTAs,
China eventually decided to support the ASEAN-driven Regional
Comprehensive Economic Partnership of East Asia (RCEP), which
excluded the United States. However, it is not the RCEP but the OBOR
initiative that constitutes the main Chinese template for a regional order.
The OBOR is linked to Xi Jinping’s vision of a China-centred regional
community. Xi Jinping became general secretary of the Chinese Communist
Party (CCP) in November 2012 and state president in March 2013. In
September 2013, he launched SREB, with the aim of building land-based
economic corridors connecting China to Europe as well as to Central Asia,
Southeast Asia, and South Asia. The following month, he launched
MSR. Together they constitute the OBOR initiative.
Embracing new forms of diplomacy, Xi Jinping’s new comprehensive
foreign policy was debated at two CCP meetings—the October 2013
Work Forum on Peripheral Diplomacy and the November 2014 Central
Conference on Foreign Affairs. Xi’s Chinese dream of a “the great reju-
venation of the Chinese nation” aimed to restore China traditional place
226 L. S. LAURIDSEN
and western provinces of China (Lin 2015: 589; Minjiang 2015, Arase
2015: 31; Rolland 2015: 3).
In a comparison of the United States and China between 2012 and
2016, two different templates of regional order emerge. First, whereas
China was oriented towards its neighbours in Asia and argued that Asians
should take care of Asian problems, the United States advanced a Trans-
Pacific template whereby it could shape the rules of economic interaction.
Second, in contrast to the Western emphasis on regional/global integra-
tion through free markets, private entrepreneurship and financial liberali-
sation, China advanced state-driven initiatives, which used state-owned
enterprises and financial institutions and which followed the principle of
“seeking harmony but not uniformity”; they were concerned with dia-
logue and connectivity between distinct national societal models on the
basis of respect for national sovereignty, diversity, and Sino-centrism.
Third, while the United States preferred deep economic liberalisation and
gave priority to services and investments via the TPP, China focused on
physical infrastructure linkages and policy-led trade facilitation with its
OBOR partners. Fourth, rather than seeking uniform and legal binding
trade and investment rules, China sought to deepen interdependence and
shape the preferences of its Eurasian neighbours through mutual respect,
mutual interests, and negotiated, flexible rules. This was to be done
through a mixture of regional institutions and individual case-by-case
negotiations in which China could demonstrate its leadership (Larkin
2015: 8; Arase 2015: 33–34; Ba 2016; Ferdinand 2016: 946–48; Min
2015; Dian 2016; Wilson 2015).
In early 2017, President Donald Trump decided not to seek ratification
of the signed TPP agreement, thereby indicating that the United States
would not take a leadership role in liberal trade and investment rule-making
but would instead negotiate so-called fair bilateral trade deals (Borger
2016). On the one hand, this gives China more space to advance its pre-
ferred version of regional order, but on the other hand, it is leading to a
more aggressive US stance on Chinese trade surpluses (Panda 2016).
Improvement of the Thai railway network has been high on the policy
agenda for many years and plays an important role in the country’s infra-
structure plans. Expansion to a double-track rail network is an important
priority, but another priority project is standard rail development, which,
in contrast to the existing meter gauge, has a so-called standard gauge of
1.435 m and will allow HSR transport. The Sino-Thai HSR project goes
from the Gulf of Thailand (the Map Ta Phut deep harbour) via Bangkok
to Nong Khai on the border to Laos and is linked to similar projects in
Laos and China. The Japanese HSR project will connect Thailand’s two
main cities, Bangkok and Chiang Mai, and Japan is also involved in two
East-West railways upgrading projects (see Figs. 9.1 and 9.2).
Fig. 9.1 Railway lines negotiated with China. (Source: Kunapdamraks 2016,
OTP/MoT)
CHANGING REGIONAL ORDER AND RAILWAY DIPLOMACY IN SOUTHEAST… 233
Fig. 9.2 Railway lines negotiated with Japan (Source: Attananda 2015: 71).
struction companies: the China Railway Group Ltd. (CREC) and China
Railway Construction Corporation Ltd. (CRCC). The third SOE was the
China Railway Rolling Stock Corporation (CRRC). The mode of coop-
eration would be based on the EPC (engineering, procurement, and con-
struction) system. China was generally in charge of high-tech complex
tasks, while the simpler low-medium tech jobs were left to the Thai side
(Attananda 2015: 67–68; Interview C).
The Sino-Thai project was a government-to-government (G2G) proj-
ect, and the negotiations took place in a joint committee on railway coop-
eration (hereafter the Joint Committee). During 2015, no less than nine
meetings were held, but there was little progress. The following spring,
Thailand started to backtrack, and at a meeting in China in March 2016,
the Thai Prime Minister Prayuth stated that Thailand would stop the joint
venture talks and go ahead alone in building the 253 km Bangkok–Nakhon
Ratchasima part of the line with full Thai funding (the red line 1 and the
blue line 3), while the remainder of the HSR line (green line 2 and line 4)
would be suspended (Nopparat 2016; Yoon 2016). To soften the Chinese
by showing less interest, the Thai government accelerated the negotiations
with Japan (see below) and decided to speed up two other planned HSR
lines—the Bangkok–Hua Hin line (211 km) and the Bangkok–Rayong
line (193 km). The Bangkok–Nakhon Ratchasima line (line 1 plus line 3)
was now split into four parts with different starting dates. The Sino-Thai
negotiations continued, and at the 14th meeting of the Joint Committee
in September 2016, an agreement was reached on the Bangkok–Nakhon
Ratchasima track at a total cost of Bt179bn (US$5.15bn). The construc-
tion of the first 3.5 km section did not start in 2016 as planned, but fund-
ing was included in the budget for FY 2017 (TN, July 30, 2016; TN,
August 24, 2016; TN, September 21, 2016; Parameswaran 2016,
Amornrat 2016a; TN, November 1, 2016).
The Sino-Thai negotiations were difficult, and they focused on several
issues: construction costs, burden sharing, financing costs, development
rights to land, rice-for-rail, and technology transfer. The Chinese were
reported to have suggested constructions costs well beyond the estimated
Bt400bn (US$ 11.7 billion) and closer to Bt500 billion. When it came to
burden sharing, the financing structure and shareholding structure were
repeatedly changed during the meetings. In the end, Thailand decided to
bear the total construction costs, but China would provide funds for the
technical systems (trains, signals, etc.). There was also disagreement on the
CHANGING REGIONAL ORDER AND RAILWAY DIPLOMACY IN SOUTHEAST… 235
followed a strategy of balancing its relations with the United States and
China and of adopting a pragmatic approach to suit specific circumstances.
However, this has become more difficult in the new millennium—and
with China’s increasing power. Thailand has clearly tilted towards China
in the aftermath of the military coup. Whereas the Western countries con-
demned the military coup, downgraded its political ties, and slashed mili-
tary aid, China welcomed the military junta, declared it would not interfere
in Thailand’s internal affairs, and even intensified its collaboration with the
junta. As well as cooperation on the HSR project, Sino-Thai defence col-
laboration developed, and Thailand decided to buy three Chinese subma-
rines. In relation to mega-FTAs, Thailand prioritised the RCEP. Thailand
did not join the TPP when the United States did, and the country had no
interest in participating in the United States’ containment of China (Storey
2015; Busbarat 2016).
China has gradually become a favoured and reliable partner that can be
trusted during crises. The military could remember the strong support
from China during the Cambodian Crises, and they have become increas-
ingly pro-China. By 2014, the senior civil bureaucrats were those who had
occupied junior positions during the AFC and had experienced how China
did not devalue the RMB, instead it provided the financial support. This
contrasted with the US, which had contributed little and had backed the
unpopular IMF austerity policy. Further, Thailand has no overlapping ter-
ritorial claims or maritime boundary disputes with China, and in China-
ASEAN matters, Thailand and Indonesia normally share the role of “the
middleman.” In short, Thailand considers China an important security
partner and a source of strategic stability (Storey 2015; Busbarat 2016;
Interview D and E).
The Sino-Thai HSR project can be seen as part of Thailand’s broader
move towards China as a reliable partner in terms of economy and secu-
rity. Against this background, the Thai junta had expected the Chinese to
be more concerned about security than profit in their approach to the
railway project, and thus to be willing to sacrifice profit to the achievement
of foreign policy objectives. During the negotiation process, however, it
turned out that the Chinese were much more business oriented than
anticipated. The 2016-agreement is not necessarily a bad business deal for
China. So far, it seems that the Sino-Thai HSR project will move forward
step-by-step and will involve minimal risk should the project prove not to
be financially viable. China faces no competition on the delivery of tech-
nology and rolling stock. Furthermore, Prayuth has promised that China
CHANGING REGIONAL ORDER AND RAILWAY DIPLOMACY IN SOUTHEAST… 237
will be invited to become involved in the coming phases of the HSR line.3
Although Thailand increasingly favours China, residual fragility in Sino-
Thai relations led to the non-invitation of Thailand to the Belt and Road
Summit in Beijing in May 2017 (TN 2017).
(Attananda 2015: 72; TN, February 11, 2015; EiU 2015; TN, May 26,
2015; EiU 2016a; interview A).
The lower E-W project is of great importance for both Thailand and
Japan. To the West, it can be extended to Dawei in Myanmar, where, in
collaboration with Thai and Myanmar authorities, the Japanese are plan-
ning to establish a huge special economic zone with a deep seaport. To the
East, it will link Thailand (and Japanese companies) with Cambodia and
with Vietnam’s coast, and, to the South; it will give better access for cargo
from the Bangkok area to be shipped out of Thailand’s main container
port Laem Chabang (see the red line 2 in Fig. 9.2).
In addition, ongoing negotiations at the bureaucratic level during
2015–2017 addressed the HSR line between Bangkok and Chiang Mai
(blue line 1 on Fig. 9.2). The trains are expected to run 300 km/hr on this
682-km long track and will use high-standard Shinkansen technology. In
contrast to the Chinese G2G approach, Japan prefers strong private sector
involvement (including private Thai capital, too), so the project uses PPP
financing and J/V company models. This HSR project was included in a
MoU between the two countries that was signed during the visit by Japan’s
foreign minister Fumio Kishida in May 2016. When the feasibility study
was presented in June 2016, Japan recommended that the line be divided
into two parts, so that the first phase would be a 386 km rail line from
Bangkok to Phitsanulok with a detailed construction plan ready by 2017
and with construction scheduled to start in 2018. By June 2016, there was
no agreement on who should operate the HSR service. As with the Sino-
Thai project, this HSR was included in the four HSR projects that Deputy
Prime Minister Somkid announced for accelerated planning and imple-
mentation in August 2016. The first phase, which will cost Bt224bn, was
also included in the government’s FY 2017 investment plan (Attananda
2015: 71, 76–78; BP, May 3, 2016; Amornrat 2016b; TN, August 2,
2016; TN, November 1; interview A).
It appears that the negotiations with Japan on HSR development and
railway upgrading in Thailand have moved smoothly, and that the final
extent of Japanese involvement will be larger than China’s. This is due to
several factors. First, according to Thai officials, negotiation with the
Japanese is easier because they are more flexible when it comes to solu-
tions. Second, it is easier to justify because the Japan-Thai HSR project
makes economic sense: the expected 2 hr and 46 min from the centre of
Bangkok to the centre of Chiang Mai can compete in speed and costs with
domestic flights. Third, the Japanese had already made a preliminary fea-
CHANGING REGIONAL ORDER AND RAILWAY DIPLOMACY IN SOUTHEAST… 239
sibility study of the Bangkok–Chiang Mai line several years earlier. Fourth,
the lower E-W project is easier to construct because it can run on tracks
that are already in place. Fifth, Japan has a competitive advantage in main-
taining and upgrading railway lines. Finally, the two countries had already
agreed to use a J/V model and to rely on private sector involvement
(Attananda 2015: 78; interview A, interview B).
However, Japan’s involvement in Thai HSR infrastructure is still being
negotiated. On the one hand, the Thai government has decided to press
ahead with the Eastern Economic Corridor to stimulate the stagnating
economy. This will encompass huge infrastructure development projects,
including the Bangkok–Rayong HSR project and the further improve-
ment of existing rail lines. On the other hand, there are still obstacles to
the Bangkok–Chiangmai HSR project. By early 2017, Thailand’s trans-
port minister had announced that he wanted Japan to shoulder part of the
investment in the JV and to lower the price (around Bt500 bn) by com-
promising on non-safety standards (Ono and Kotani 2017).
strengthen links to the Mekong countries (in particular Laos), and because
it is part of the prestigious Singapore–Kunming Rail Link (SKRL) within
the OBOR initiative. Of course, it is also a way of diversifying trade routes,
in that it is both a means of gaining access to the Gulf of Thailand for the
export of goods produced in Southwest China and an access point for the
import of food and natural resources from Indochina or elsewhere. This
gives China an interest in the future Bangkok–Kuala Lumpur section of
the SKRL.
The high degree of complementarity between Japan’s and China’s
involvement in the improvement of Thai railways is thus partly due to a
division of labour along different economic corridors. In turn, this reflects
structural differences in the investment patterns of the two countries.
Japan and China have invested in different sectors, often located in differ-
ent places. Japan has invested in the auto industry and in the electronics
industry, while Chinese investments so far have been directed into more
resource-seeking industries (e.g., natural rubber). Moreover, China has
focused exclusively on constructing new HSR lines, whereas Japan is also
involved in upgrading existing lines to double-track. Finally, the comple-
mentarity reflects the priority that Thai leaders have given to balancing
and leveraging the two regional economic giants.
Concluding Remarks
To find out whether “two tigers can occupy the same mountain,” we
asked two main questions: what are the rationales behind the Chinese and
Japanese HSR diplomacy in the region and to what extent and in which
ways is regional competition expressed in the case of Thailand?
Partly as a reaction to Obama’s pivot to Asia, but mainly to obtain more
flexible arrangements to accommodate its expanding economic interests,
Beijing decided to prioritise its relations to its Southeast Asian neighbours
and integrate them into the OBOR initiative. China’s use of economic
statecraft has also led to stronger regional rivalry concerning the future
regional order and in particular to rivalry with the United States about the
regional rules of the game.
Beijing’s growing economic and political influence has forced Japan to
match Chinese offers and to defend its position as the dominant regional
economic power. Both countries have intensified their infrastructure
diplomacy, and both utilise overseas infrastructure projects to serve for-
eign policy goals and to support and rejuvenate their own industries goals.
CHANGING REGIONAL ORDER AND RAILWAY DIPLOMACY IN SOUTHEAST… 241
Regional competition affects the GMS, where China has lost influence
in Myanmar to Japan (and to Western countries) but has retained
Cambodia and Laos as loyal allies. Competing regionalism is growing in
this sub-region, as China has established an alternative regional institution
(LMC) and Japan has followed-up by launching its MJC2015 strategy. At
the same time, however, we have identified a certain complementary in
infrastructure strategies along the different economic corridors, making it
easier for the “two tigers” to find a place on the “same mountain.”
The leaders of Japan and China are personally committed to securing
HSR projects abroad and have devoted significant financial and diplomatic
resources to support the internationalisation of their local state-owned or
private companies. The analysis of the Thai case undertaken here has
revealed some complementarity between projects from the two countries.
The case study demonstrated that it was economic diplomacy rather than
economic statecraft that prevailed. Thus, there were limits to Beijing’s
willingness to forego profit in the pursuit of its foreign policy objectives,
and the negotiations with Japan were also commercially oriented.
Conversely, we saw that security matters were important for the Thai
junta, but also that Thailand has been trying to turn Sino-Japanese com-
petition to its advantage.
Thailand is a front runner in China’s SREB-HSR strategy, but it is
probably not typical of the Sino-Japanese race for HSR rail-projects. Even
though the HSR competition is somewhat mitigated by the huge infra-
structure deficit in the region, HSR companies from the two countries
have been involved in cut-throat competition in other cases. The Japanese
lost out in Indonesia, and the Jakarta–Bandung HSR project was awarded
to Chinese (state-owned) enterprises. This setback led to an adjustment of
Japan’s infrastructure strategy, and both countries are using their rail
diplomacy in the attempt to win the Singapore–Kuala Lumpur HSR line.
Sino-Japanese competition in rail-infrastructure is not inevitable, and
under certain conditions, cooperation may even become possible. The
election of Donald Trump as US President has not just changed the mega-
FTA landscape; it has also created uncertainty about the broader regional
role of the United States. In this context of disorder, Japan has opened up
to the possibility of cooperation with China’s OBOR. On June 5, 2017,
Shinzo Abe gave a speech in Tokyo in which he declared that the OBOR
“initiative holds the potential to connect East and West as well as the
diverse regions found in between” and that under certain conditions
(open access, transparency, economic viability, and financial soundness),
242 L. S. LAURIDSEN
Japan “is ready to extend cooperation from this perspective” (Abe 2017).
Thus, it appears to be too soon to draw conclusions about the future
nature of high-speed railway competition with any degree of certainty, just
as it is difficult to predict the precise character of the competition between
China and the United States. Despite intensified Sino-Japanese competi-
tion in HSR, the two tigers may be able to occupy the same mountain—
not just in Thailand, but throughout the region.
Notes
1. In 2007, new economic corridors were added and special economic zones at
border areas were programmed. Of relevance for this paper was a new
Southern Coastal Corridor linking the Gulf of Thailand with the Andaman
Sea (JICA 2016; Mazza 2015).
2. This strange procedure was due public concern about high-speed (Interview
C). The following interviews were made during fieldwork in late February
2016: A: Dr. Pichet Kunadhamraks, Office of Transport Planning (OTP),
Ministry of Transport (MoT); B: Danucha Pichayanan, Senior Advisor for
Policy and Plan, Infrastructure project office, the National Economic and
Social Planning Board (NESDB). C: Former MoT public official; D:
Consultant George Abonyi; E: Professor Chulacheeb Chinwanno,
Department of Political Science, Thammasat University.
3. On the other hand, by having Nakhon Ratchasima as the terminus, the Thai
side still have some leverage in relation to China for whom the HSR line
makes little sense OBOR-wise if the Nakhon Ratchasima – Nong Khai HSR
route (yellow line 4 in Fig. 9.1) is not constructed.
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CHAPTER 10
Dragan Pavlićević
Introduction
The relationship between China and Central and Eastern Europe (CEE)1
has made great strides forward following the establishment of the China–
CEE Cooperation Framework, a China-initiated multilateral platform also
known and referred to hereafter as 16+1 in 2012, and the launch of the
One Belt One Road (OBOR) initiative in 2013.
The CEE region and 16+1 occupy an important place within
OBOR. OBOR rests on five pillars, namely infrastructure development,
policy coordination, trade facilitation, financial integration, and people-
to-people exchanges between China and the countries within the geo-
graphical space covered by OBOR.2 These same objectives have been
pursued through various corresponding measures, initiatives, and priority
areas defined under 16+1.3 Furthermore, at the time of writing, 13 out of
D. Pavlićević (*)
Department of China Studies, Xi’an Jiaotong-Liverpool University,
Suzhou, PR China
e-mail: Dragan.Pavlicevic@xjtlu.edu.cn
the chapter, I will draw on the available evidence to critically assess them.
I will look into economic, political, security, and normative aspects of the
relationship to evaluate whether China has accumulated leverage over the
CEE countries, in the process also drawing on comparisons to the region’s
relationship with the EU—the dominant power in the region. The study
then turns to the contextual analysis of the China–CEE relationship under
the OBOR framework. This entails discussing the drivers of OBOR and
assessing the China–CEE relationship specifically within the triangular
relationship with the EU. For the empirical aspects of this study, I rely on
the existing body of research and media reports on the topic.
CEE region is positive, hailing opportunities that may arise from closer
ties with Beijing. There are media reports and analyses that view develop-
ing relations with China as beneficial for CEE countries and wider Europe.
However, as the following paragraphs intend to illustrate, it is these “neg-
ative” perceptions that have established themselves as influential para-
digms for understanding China–CEE relations. By prioritizing questions
and issues that are discussed and providing the parameters within which
the interpretations take place, these paradigms provide the context for
thinking about China, shape the understanding of the China–CEE rela-
tionship, and influence the outcomes of policymaking. The authoritative
semi-official publications from China (Liu 2016a), and the notable adjust-
ments in China’s and the EU’s official rhetoric and policies over the time
(Reilly 2017), offer tangible examples of how these paradigms influence
the China–CEE relations.
Within “money for influence” and “divide and conquer” paradigms,
China is understood to be accumulating leverage over the CEE countries
by making them to a high degree dependent on the Chinese economy
through the financing of strategic projects, the extension of loans for
these, and growing trade and investment. In return for such economic
benefits, CEE countries are feared to be prone to “repay” them by follow-
ing China’s line on issues of concern to Beijing (Die Zeit 2017). Numerous
commentaries on China’s approach to CEE understand it as designed to
ensure and result in the CEE countries’ alignment with and support for
China’s policies and values.
Furthermore, China’s success in developing its economy while main-
taining the central role of the state and national interest in the formulation
of economic and political agenda has been seen as facilitating anti-liberal
and anti-democratic norms and practices within CEE. These span the re-
evaluation of the communist past, advocacy for the primacy of national
over EU-level interests, reliance on state-level instruments for both mak-
ing and implementing economic policies, and a disregard for clean and
transparent governance (Grgić 2017; Makocki 2017). All of these stand in
conflict with what is commonly perceived as the desired normative and
organizing principles these countries should adhere to, often referred to in
the relevant literature as “European values and norms”.
In the context of the China–CEE–EU triangle, CEE is understood as
space within which a geo-economic competition is played out between
EU and China. China is said to be “financially meddling” in Europe’s
A POWER SHIFT UNDERWAY IN EUROPE? CHINA’S RELATIONSHIP… 253
“backyard” (de Jong 2017). It is also feared and that CEE is turning into
“a contested geo-economic space between German and Chinese compa-
nies” (Pepe 2017).
Moreover, it is widely assumed that “China’s political and security
engagement in the 21st century is disguised in economic terms” (de Jong
et al. 2017). China is seen as having “dark motives” to “breach into
Europe” by establishing “inroads” and a “backdoor” to the CEE coun-
tries to exercise political influence in the EU (RTS 2017; Deutsche Welle
2017). Seduced by Beijing, and increasingly dependent on economic
exchange with China, CEE countries will take on lobbying for and pursue
policies that are beneficial for China, but oppose the interests of the EU as
a whole (Reuters 2016). Hence, CEE countries, whether current EU
members or those expected to become so in the future, are seen as provid-
ing a platform to Beijing to access the inner workings of the EU and influ-
ence the EU’s policymaking, in the process undermining the interests of
the EU as a whole, and its coherence and credibility (AlJazeera 2013).
Accordingly, the European “project” is under threat from China. A
German diplomat is on record saying that the “16+1 is a direct attack on
European sovereignty” (Reilly 2017), a sentiment that is widespread in
policy circles.8 Furthermore, China’s OBOR and engagement with CEE
are feared to be causing deep frictions among European countries. For
some, Beijing’s growing involvement “pits EU north against south”
(Euractiv 2017), while others worry that “China’s inroads into CEE could
become a dividing factor, one that may move the ‘German-Central Eastern
European manufacturing core’ away from the rest of the EU” (Pepe 2017).
At the same time, there are fears that some countries in CEE might use
China as a “balancer” against the EU, or more broadly a strategic alterna-
tive to the EU (Pepe 2017). As such, China’s engagement with the CEE is
feared to be a centrifugal force eroding the EU’s unity and integrity.
As of recently, it has been increasingly suggested that China is challeng-
ing the normative foundations of the region and the EU. For example,
Chinese projects in the Balkans—a part of the CEE region that has not yet
been integrated into the EU—are perceived as serving as “a conduit for
China’s political and normative influence” and as a vehicle for the “battle
of principles” between the EU and China (Makocki and Nechev 2017: 2).
China is “undermining the EU’s reformist agenda” while tilting “the bal-
ance between the market-oriented and the state-led model to the latter’s
favor” (Makocki 2017). Here, clearly, the China–CEE relationship is
understood as a battlefield for the ongoing “strategic competition of
254 D. PAVLIĆEVIĆ
Economy
An ability to provide or withdrew –S
ubstantial dependence of CEE on China as a
economic benefits, such as source of finance, investment, and trade
financing, investment, and trade
Politics/diplomacy
An ability to provide beneficial –S
ubstantive integration of CEE into China-
political arrangements and favoured organizations and mechanisms
diplomatic support –C
onsequential support from China on key
domestic and international issues
Security
An ability to provide beneficial –S
ubstantive integration into China-favoured
security arrangements and affect security organizations and mechanisms
counterpart’s security –M
ilitary capabilities and security presence sufficient
to increase or decrease CEE countries’ security or
alter related perceptions
Soft Power Resources
An ability to shape behaviour of –P ositive domestic perceptions of China
others through attraction of ideas, – A
pplication of norms and practices associated with
institutions, and policies China
Context
China’s capabilities are greater –C
hina outscores the EU on the above indicators
than the EU’s
Intention
China aims to establish itself as a – China’s objectives are to influence internal and
regional power external affairs of the CEE countries and weaken the
EU’s position in the region and the EU as a whole
Table 10.2 Capital projects in the CEE region supported by China’s loans
Country Project Value %GDP
Source: European Bank for Reconstruction and Development (2016), based on Intellinews, 2016 with
additional research by author based on various media reports.
Investments
Table 10.3 provides an overview of the investment trend between 2009
and 2015 for all CEE countries. It should be acknowledged that some of
the recent investment deals do not appear in the numbers, as well as that
260 D. PAVLIĆEVIĆ
the numbers alone may not capture the importance that some these invest-
ments may have for the recipient countries, as they are taking place at a
time of sluggish economic performance and widespread concerns that
EU-based investments are falling short of desired levels.
To illustrate, in 2016 China’s state-owned Hesteel acquired the Serbian
steel mill Smederevo, one of the major industrial assets in Serbia. When at
its full capacity, the steel mill is the second biggest exporter in the country,
making up 14% of Serbia’s exports, and is an important contributor to the
state budget. It was sold back to the Serbian state by its previous owner,
US Steel, for 1 US dollar in the aftermath of the Global Financial Crisis
and as the global demand for steel plummeted. Because of concerns about
the social instability, political consequences, and long-term economic loss
that may have resulted if the mill was closed, the Serbian government had
been subsidizing it with over 200 million US dollars annually in the years
which followed. In June 2016, Hesteel acquired it for 46 million Euros,
committing to invest around 300 million US dollars and significantly
increase its capacity in the coming years.
Among others, Chinese enterprises also secured airport operations and
oil exploration and production in Albania (2016), acquired an oil refinery
in Romania (2016), and announced ambitious investment plans for the
A POWER SHIFT UNDERWAY IN EUROPE? CHINA’S RELATIONSHIP… 261
Trade
Table 10.4 presents trade volume between China and CEE for the period
2009–2015. Overall, there is a sharp increase in trade volume, with a con-
tinuous increase of imports from China relative to exports from CEE.
However, the degree of China’s participation in the trade mix of the
CEE states also suggests that China is still a minor player in the region,
especially as compared to the EU, despite the substantial growth in trade
volume in recent years. For example, trade with the EU still accounts for
63.8% of Serbia’s total, while trade with China amounted to only 4.4% of
the total. Albania is among the three countries with the highest ratio of
trade with China in CEE, standing at 7%, yet her trade with the EU
accounts for over 67% of the total (European Western Balkans 2017). A
262 D. PAVLIĆEVIĆ
similar ratio is seen in the case of other CEE countries, where the EU’s
participation in the trade mix averages 64% in 2016 (Oehler-Sincai 2017).
In summary, contrary to widely held assumptions, the initial analysis
above suggests that the state of the economic relationship between China
and CEE is insufficient to provide Beijing with a structural leverage over
CEE, nor is it likely to do so in the short to medium term.
in 1949. With the exception of Albania, CEE countries did not have sub-
stantial relations with China during most of the Cold War era, as they
belonged to either the so-called Eastern Bloc or the non-aligned
Yugoslavia. This was followed by the almost complete absence of CEE
from China’s foreign policy during the 1990s and the early years of the
twenty-first century, as China focused on developing relationships with
developed European countries in search of the capital and resources nec-
essary for its economic development at home. At the same time, the CEE
region was occupied by political and economic challenges brought about
by the transition, and the integration with the EU: 11 out of 16 countries
have since become members of the EU, and five are expected to gain
membership in the coming years.12
However, the context of the China–CEE relationship has indeed dra-
matically changed since. Three CEE countries—namely, Serbia, Poland,
and Hungary—currently have a Comprehensive Strategic Partnership
with China in place, while the others have all intensified their diplomatic
exchanges with China, mostly due to the establishment and subsequent
proceedings under the 16+1 framework, followed by OBOR. As discussed,
13 countries have officially declared participation in and support for
OBOR, which established policy coordination among its main objectives,
and which appears to be developing in the direction of more formal insti-
tutionalization characteristic for other China-backed multilateral plat-
forms, including 16+1. Party-to-party dialogues between the Communist
Party of China and the political parties in CEE have also been intensifying
in recent years.
Notwithstanding these current developments, the mutual neglect over
the previous decades resulted in relatively weak political and diplomatic
links between China and the CEE countries. A shortage of personnel with
competencies and knowledge relevant to the CEE countries, and the
absence of developed networks in the CEE countries have a negative effect
on the ability of China’s diplomats and enterprises to push forward with
their desired policies and plans in CEE.13 In contrast, the EU and EU
member states have forged wide variety of links in CEE since the 1990s,
and particularly in the context of the process of the CEE countries’ inte-
gration into the EU, even if the historically deep and abundant intra-
European links were, in some instances, cut off during the Cold War.
More importantly, China’s ability to integrate the CEE states into ben-
eficial political and security arrangements, provide diplomatic coverage,
and act as a major political stakeholder in the region is limited by the
264 D. PAVLIĆEVIĆ
among others, create links between the media, higher education and
research institutions, and businesses from China and CEE—may lead to
the emergence of a more positive, or at least more evenly divided, view of
China in long term.
However, there is nothing at the moment to suggest that China will
reach the point where its ideas, institutions, and diplomacy can become
sources of leverage. On the contrary, the existing literature on China’s
other asymmetric relationships suggests that more engagement with China
may result in the “securitisation” of the relationship, diminishing China’s
soft power and complicating the overall prospects of the relationship in
the process (Reeves 2014). The perceptions of the China–CEE relation-
ship addressed in this article suggest that such a process may already be
underway.
“align our respective mid- and long-term development goals and the
China-EU 2020 Strategic Agenda for Cooperation” (Pavlićević 2014).
On an operational level, there are calls for the Chinese entities pursuing
opportunities in the CEE region to abide by the EU’s regulations, enlist
the cooperation of EU companies, and pursue a strategic three-party
framework, while addressing the EU’s “doubts” and “concerns” and seek-
ing cooperation. New rules should be put forward only if they are “accept-
able to both sides” and if they “satisfy the needs of Europe”. On the
project level, China has been promoting a tri-partite cooperation with the
EU and CEE, advocating that China and the EU should jointly and stra-
tegically identify and deliver projects in the CEE region (e.g., Zhen 2016;
Liu 2016b: 88–95). That China adjusted its approach to a couple of flag-
ship projects under 16+1 initiative in order to comply with the EU’s regu-
lations and preferences, testify that Beijing seeks engagement and
accommodation, not conflict (e.g., SeeNews 2017).
The EU and China’s agendas towards the region overlap to a signifi-
cant extent in their intentions to improve the region’s infrastructure and
exert a positive impact on local economies. On both the policy and project
levels, China’s plans also fit well with the EU’s. The pillars and objectives
of the so-called Juncker Plan and OBOR both prioritize investment in
transportation and energy infrastructure, among others (Pavlićević 2015).
For example, a recent study by the European Bank for Reconstruction and
Development (EBRD), one of the main actors and stakeholders in the
EU’s development agenda, has proposed six projects in the Balkans region
that could be co-delivered by the EU and China (EBRD 2016).
Furthermore, a joint loan programme between the EBRD and Intensa
Bank has been launched to support small and medium enterprises’ partici-
pation in China-financed projects in the Balkans (ANSAmed 2016).
Further illustration is offered by CELSEC (People’s Daily 2014), a
plan envisioned to establish a logistics corridor stretching from the port of
Piraeus to Budapest in Hungary. CELSEC corresponds to the route of
Corridor X of the Pan-European Transportation Network Plan (Politika
2013) which, in turn, aims to enhance connectivity across the European
continent through an improved network of railways and roads. In fact, the
transportation infrastructure projects that China is involved with, by rule,
correspond to the various links envisioned under this master plan, or to
the plans of the individual states put in place long before China expressed
an interest in the infrastructure works in the region.
Of note, 14 European countries joined the Asian Infrastructure
Investment Bank, while China almost simultaneously gained membership
270 D. PAVLIĆEVIĆ
metaphorical bridges with China more quickly. In China, there are also
influential proposals to focus on building relationships with a number of
selected countries as a springboard for a better relationship with the entire
region (Liu 2013). Studying developments between these countries and
China closely might provide clues as to where China’s regional policies
towards CEE are heading.
Finally, more methodological rigour is required to isolate the “China
effect” on the developments in the region and establish causal links
between China, OBOR, and China’s other policies on the one side, and
developments and trends in CEE on the other. Approaching related
research questions based on sound methodological tools is a challenging,
but certainly necessary, task for taking the research agenda on the subject
forward.
Notes
1. Central and Eastern Europe refers to the countries participating in the
16+1 framework: Albania, Bosnia and Herzegovina, Bulgaria, Croatia, the
Czech Republic, Estonia, Hungary, Macedonia, Montenegro, Latvia,
Lithuania, Romania, Poland, Serbia, Slovakia, and Slovenia.
2. “Vision and Actions on Jointly Building Silk Road Economic Belt and 21st
Century Maritime Silk Road,” issued by the People’s Republic of China’s
National Development and Reform Commission, Ministry of Foreign
Affairs, and Ministry of Commerce of the People’s Republic of China, with
State Council Authorization, March 2015, Available at: http://en.ndrc.
gov.cn/newsrelease/201503/t20150330_669367.html
3. See, for example: “The Riga Guidelines for Cooperation between China
and Central and Eastern European Countries” (2016), November 2016,
Available at: http://english.gov.cn/news/international_exchanges/
2016/11/06/content_281475484363051.htm
4. As relayed by Prof. Liu Zuokui, October 2017.
5. While some of the infrastructure projects in the region have been discussed
or implemented prior to the launch of OBOR, they have since been inter-
preted both in China and abroad within the context of the initiative.
6. See note 4.
7. Paradigmatic titles and analysis can be seen here: Worldcrunch (2016)
“Divide, Conquer, Aim East: China Has A Sharp New European Trade
Strategy”, November 11, Available at https://www.worldcrunch.com/
world-affairs/divide-conquer-aim-east-china-has-a-sharp-new-european-
trade-strategy; Stanzel, Angela, Kratz Agatha, Szczudlik, Justyna and
Pavlićević, Dragan (2016) ‘China’s investment in influence: the future of
274 D. PAVLIĆEVIĆ
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278 D. PAVLIĆEVIĆ
Li Xing and Paulo Duarte
Ever since Napoleon warned the West that it would be better not to wake
the “sleeping giant”, China has been a source of fascination and opportuni-
ties, as well as uncertainties and disturbance, for the existing West-dominated
world order. The great difficulty facing the West, especially the United
States—the order’s creator and key stakeholder—is how to perceive,
respond, and adjust to the global impact brought about by the rise of China.
The failure in the West, and in the United States in particular, in form-
ing a comprehensive understanding of Chinese development strategy,
motivation, policy, and objectives has been periodically translated into an
ailment—“China syndrome”. The ailment can be characterized by a mix-
ture of psychological anxiety, emotional hysteria, and emphatic demoniza-
tion against China, which has generated a spill-over effect to different
L. Xing (*)
Department of Culture and Global Studies, Aalborg University,
Aalborg, Denmark
e-mail: xing@cgs.aau.dk
P. Duarte
Centro de Investigação em Ciência Política, The University of Minho,
Braga, Portugal
parts of the world. On the one hand, in the past four decades either fasci-
nation or irritation with China has influenced Western scholarship and
journalism, which often produce abrupt sentiments ranging from exces-
sive approval and unqualified optimism to unwarranted revulsion and
deep pessimism. On the other hand, after four decades of economic inte-
gration into the existing world order, China still finds itself to be a “Middle
Kingdom” surrounded by jealousy, admiration, anxiety, worry, and even
resentment.
The theme of the volume, together with the chapters included in this
volume, covers a whole series of issues and analyses on China’s most recent
grand “One Belt One Belt” initiative, ranging from (geo)economic and
(geo)political competition to security and energy rivalry, and so on, and
from country-based, regional, and global perspectives. The chapters of the
volume display a clear gap between a strong awareness of a rising China
with the outward expansion of its political, economic, and cultural influ-
ences and, subsequently, an unpreparedness to respond to China’s ascen-
dance in general, and Beijing’s One Belt One Road (OBOR) initiative in
particular. Western perceptions of China are largely found in two “funda-
mental images”, a dichotomy between “China [as a] threat” and “China
[as an] opportunity” (Pan 2012). Such a set of “bifocal lenses” provides a
framework through which China is supposed to be conceptualized, and it
functions as a shared paradigm, defining “what should be studied, what
questions should be asked, how they should be asked, and what rules
should be followed in interpreting the answers obtained” (Ritzer 1996:
637 cf.; Pan 2012).
As this collection shows, the “worry/threat” paradigm tends to see that
China’s politics, economic activities, and foreign policies are wrapped with
worrisome and menacing calculations. China’s economic diplomacy (such
as the OBOR initiative) is largely perceived as having negative effects on
all but China. Historically, the “China threat” has been associated with
China’s market size and its integration in the world economy. This is
because the rise of China is seen to have contributed to many worrisome
uncertainties: its currency has been a subject of contention; its global trade
has raised concerns for workers and companies in both developed and
developing countries in connection with mercantilism, dumping, and
trade surplus; its hunger for energy has led to competition and price
increases; its policies on finance, currency, trade, security, environment,
resource management, food security, raw materials, and commodity prices
are increasingly seen as impinging upon the economies of millions of peo-
CONCLUSION: THE ONE BELT ONE ROAD IN THE POLITICS OF FEAR… 281
the same mountain”. This clearly indicates that the OBOR initiative is
identified by the regional rivalries as China’s move to restructure the
political economy of the regional order. This book acknowledges that the
OBOR initiative, together with its overseas infrastructure projects, has
elevated regional competition and infrastructure diplomacy.
To conclude, the diplomacy of emphasizing infrastructural projects
advocated by the OBOR initiative extends to all continents. There are no
neglected regions and the Chinese invitation is open to everyone. The
new “made-in-China” world order will continue to emerge. Based on the
assumption that the “world reordering with Chinese characteristics” will
be China’s “new normal”, this book invites readers to join the debates
between different international relations schools: Will China be a destruc-
tive or constructive world power? A status quo or a revisionist one? A force
for continuity, or a force for change? Liberal scholars, in general, see China
as a status quo power on the basis of the assumption that China is satisfied
with the existing capitalist world order and China’s economic success is
achieved through its integration in the world market (Ikenberry 2008,
2011), whereas realists firmly anticipate China to be a revisionist power,
and China will unavoidably seek to change, if not overturn, the regional
and the world order, bending and shaping it in line with its interests
(Mearsheimer 2006, 2010). For the time being, the OBOR initiative is
seen as a good test case to judge whether China is a “status quo” or “revi-
sionist” power.
Although there is no clear answer to the above questions, the editor,
Li Xing, is apparently right in his basic postulate, fundamental in this
volume (see Introduction ), namely that the rise of China and its OBOR
project will unavoidably affect and disturb a number of existing “global
relationships” and “global arrangements”, as well as the existing order’s
“structural power”. This book volume, as part of the editor’s series of
books on the rise of China and its emerging powers in recent years,
approaches again a promising topic–the OBOR, although this volume is
only a small contribution to help understand something extraordinary
and revolutionary that is under construction. The new emerging world
order with China as its central gravity is a project for generations.
Therefore, this work coordinated and edited by the editor is, in a sense,
visionary because it attempts to take a pioneering effort to interpret,
explain, and speculate the implications, opportunities, and prospects, as
well as challenges and constraints brought about by such a grand project.
Much new literature will certainly continue to follow this topic or other
288 L. XING AND P. DUARTE
Notes
1. According to the Copenhagen School, securitization is a process whereby a
securitizing agent tries to establish, socially, the existence of a threat to the
survival of a unit. When a subject is securitized, it comes out of the scope of
normal policy and moves into the scope of emergency policy, which usually
legitimates the use of force (Buzan et al. 1998).
2. This is a Chinese idiomatic expression which means “to hide brightness, and
to nourish obscurity”. Its underlined notion reflects an implicit strategic
choice, namely to wait for a time when China is ready to assert itself in the
global sphere and is ready to make a challenge.
3. This is also a Chinese idiomatic expression which is semantically connected
with the “Tao Guang Yang Hui” aphorism (see note 2). It stands for “striv-
ing for achievement” and “making a difference” after a period of accumula-
tion of physical and psychological strength.
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Index1
B CCTV, 150
Back to Asia, 99 Central Asian periphery, 145, 152
Bangkok-Chiang Mai line, 239 Changyi, 61
Bangkok-Hua Hin line, 234 China-Central and Eastern Europe
Bangkok-Nakhon Ratchasima line, 234 Cooperation Framework (CEE),
Bangkok-Rayong line, 234 249–254, 256–259, 261–273
Bangladesh-China-India-Myanmar China Centre for International
Forum for Regional Economic Exchanges, 212
Cooperation, 183 China collapse theory, 11
Beijing Consensus, 43, 59, 71, 76, China contribution theory, 11
184, 198, 282, 286 China Development Bank, 220, 230
Belt and Road, 4, 7, 17, 22 China dream, 42–43
Belt and Road Forum, 174, 183 China-Eurasian Economic Union, 133
Belt and Road Summit China Europe Land-Sea Express
Beijing 2017, 237 Corridor (CELSEC), 250, 269
Bilateral Investment Treaty China-EU 2020 Strategic Agenda for
(BITs), 134 Cooperation, 269
Bilateral Swap Agreements, 97 China Exim Bank, 220, 261
Boao Forum, 151 China-Gulf Cooperation Council
Bounded rationality, 60, 80, 84n13 FTA, 134
Brazil, Russia, India, China, and South China Model, 59, 70, 71, 73, 264
Africa (BRICS), 4, 11, 31, 50, China-Nepal-India corridor, 183
51n2, 198, 206, 207, 209 China opportunity paradigm, 281
Bretton Woods, 12, 40, 42 China opportunity theory, 11
institutions, 225 China-Pakistan Economic Corridor,
system, 183, 184 156, 160, 177, 186, 187, 282
BRIC, 125 China-Pakistan FTA, 134
BRICS New Development Bank China Railway Construction
(NDB), 4, 11, 96, 183 Corporation Ltd (CRRC), 234
China Railway Group Ltd.
(CREC), 234
C China’s Marshall Plan, 12–13
Capitalism, 2, 3, 8–10, 14, 18 China’s neocolonial designs, 251
Capitalism from above, 73 China’s New World Order, 1–24
Capitalism from below, 73 China solution, 172
Capitalism from the outside, 73 China’s One Belt One road initiative
Capitalist logic, 9 (OBOR), 1–24
Capitalist mode of production, 2 China’s Satellite Navigation
Capitalist world system, 32, 41, 44, Management System, 182
45, 48, 49 China syndrome, 10, 279
Capitalist world system-historical China threat, 280
development phases, 3 China threat theory, 11, 150
INDEX
293
Z
X Zero-sum game, 4
Xinjiang, 145, 146, 148, 149, 156, 160 Zero-sum rivalry, 223