Economy /
How Belt and Road is changing the world
In 2013, President Xi Jinping first introduced the idea of Belt and Road. The West failed to recognise its significance. But it quickly generated a sense of curiosity and expectation in East Asia and beyond. What was it? How would it work? What would it mean? They were not easy questions to answer. Belt and Road was not a plan containing a set of aims and deadlines. Contrary to the way major initiatives are usually launched, Belt and Road started off life as an idea. At its heart was the ambition to transform the infrastructure of the Eurasian landmass. Eurasia, a term which had largely fallen into disuse, certainly in the West, contains around 65% of the world’s population, bookended by East Asia in the east and Europe in the west. The idea began to take shape as it grew over time. It was like a living organism. There was no membership and no constitution. It consists of a multitude of bilateral agreements between China and a vast array of countries. It will in time probably spawn a range of regional multilateral agreements. There is really no precedent. It is a genuine original and very much a creation of its time. We should think of it as an entirely new kind of institution.
Eight years on, it has expanded enormously. 139 countries have formally affiliated with the Belt and Road Initiative, a huge figure given that there are only 193 member states of the United Nations. The two summits it has held so far, the last in 2018, attracted an extraordinary number of prime ministers and government leaders, especially from the developing world. No other country, the US included, could assemble such a representative gathering. All ten ASEAN countries are participants, many countries in Central and South Asia are involved, some in the Middle East plus Turkey, while many Latin American and African countries have signed up to BRI projects. The major absentees are the US, India, and Japan.
The term Eurasia, as we can see, is elastic. Eurasia is, in effect, a metaphor for the developing world, hence the presence of African and Latin American countries. At the heart of Belt and Road is the relationship between China and the developing countries which together account for 85% of the world’s population. China, while never considering itself to be a model for others, nonetheless believes that its own economic transformation does have lessons for other developing countries: that a combination of infrastructural investment, an activist state, and economic growth are the key to the transformation of developing countries. This lies at the core of the appeal of Belt and Road to the developing world: if China has done it, why can’t we?
Belt and Road has three main arteries: the land route, the maritime route, and digital connectivity. It is not inappropriate to think of it as a latter-day, multi-dimensional Silk Road, a way of connecting the east and west of Eurasia in a modern idiom. China has enormous advantages in this context. It is by far the largest trading country in the world, with the great majority of the countries involved in Belt and Road counting China as their biggest trading partner; Chinese companies now own, or partially own, many, if not most, of the major ports across Eurasia; while China’s digital capacity and reach have grown enormously over the last decade, putting it not far short of the United States in the digital world, and in some fields ahead.
The heartlands of the Belt and Road project might be described as the ASEAN countries, where there are a very large number of agreements, and Pakistan, which so far has seen the largest investment, but this is to greatly underestimate its scale and reach. The agreement with Russia, for example, to help fund and build a new pipeline from Russia to China underpins arguably the closest relationship the two countries have ever historically enjoyed and underwrites Russia’s involvement in Belt and Road. The Central Asia countries, crucial to the land route, are also heavily involved.
But what of the West? Europe might be described as a slow burn. Greatest enthusiasm has been shown by the sixteen countries of central and eastern Europe, hence the grouping termed 16 plus one, the one being China; since it was first launched Greece has joined while Lithuania left earlier this year. Southern Europe, in the form of Portugal, Greece (already mentioned) and Italy (the only member of the G7 to formally sign up to BRI), has shown growing interest in Belt and Road. Germany has the deepest economic relationship with China of any European country but has largely kept at arm’s length with regard to Belt and Road. It seems likely that Europe, a great trading continent, a far bigger trader than the United States, will increasingly need China and East Asia and the opportunities and possibilities that Belt and Road can offer. This process is being hastened by the growing distance that has opened up between the US and Europe over recent decades, which was greatly accelerated by the Trump presidency and has showed no sign of closing since.
Which brings us to the United States. From the outset it chose more or less to ignore Belt and Road, utterly failing to grasp its potential significance. When this became impossible to ignore, the US attacked the project on the grounds that it would become a debt trap for poorer countries and warned them not to sign up to it. This criticism also gained support in some European circles; in fact, the only evidence that anyone can point to is the Hambantota port in Sri Lanka, when China had to bail out the government in return for a 99-year lease on the port. At the G7 meeting in June this year, it became clear that the United States had finally come to a recognition that Belt and Road had achieved major traction in the developing world and in response proposed an alternative scheme for which it is seeking European support. The chances of this posing any serious challenge to Belt and Road are close to zero. The US enjoys nothing like the prestige and empathy that China commands amongst the developing countries. Infrastructural investment, furthermore, is enormously state-dependent and the US proposal depends heavily on private investment which is notoriously averse to funding infrastructural projects.
Belt and Road is still in its infancy. It should be considered as at least a fifty-year project, if not longer. Its impact, already considerable, will be colossal. It will literally reconfigure the world: it will hasten the rise of the developing world; it will consolidate East Asia as the epicentre of the global economy; it will draw Europe irresistibly eastwards; it will make the Eurasian landmass far more important than North America; it will serve to diminish the role and influence of the US in the global economy; it will greatly enhance China’s role in the world; and ultimately it will underpin the emergence of a new and different kind of global order. The immediate postwar Marshall Plan, which was on a much smaller scale than Belt and Road, remade the West and gave it a decisive advantage in the Cold War. Belt and Road will prove hugely more important and far more influential in shaping a new world.
