What does China‘s One Belt – One Road Initiative mean for Europe?

_ Irene Signorelli. Brussels, 1 September 2017. Published for debate.

One Belt One Road Initiative, just Belt and Road, new Silk Road etc. are just some of the names used for labelling the same the gigantic project boosted by the Chinese Government since September 2013. It will involve 68 countries, most of them belonging to the less developed Eurasian and Middle East area, for a total of 4.4 billion of people affected, and up to 40% pf the global GDP encompassed.

Despite its dimensions, the all project is still wrapped around a fog of eulogistic propaganda, uncertainty and suspicious feelings. The main doubts still to dissipate are several: what will it really entails? Will China be able to foster a stable economic growth inside one of the poorest regions of the world? Who will beneficiate the most from it? What are the real Chinese intents behind this project?

The main project’s idea concerns the setting up of commercial corridors running both on the inland of the Eurasian continent and by the sea routes linking three continents shore: Asia, Africa and Europe. The first part is called Silk Road Economic Belt and entails billions of investments in infrastructures and economic linkages with the dreamed goal to move goods from China to Europe in 24 hours.

Harvard Professor J. Nye defined it as “Marco Polo Strategy”, other analysists consider it more as a Chinese “Marshall Plan”. Beside a more economic or a humanitarian accent, the new Silk Road will construct an impressive network of railroads, highways, pipelines and power plants badly needed inside the states involved. From the Ex-Soviet Republics to the Middle East countries, all these states have in common a potential treasure of natural resources, mostly oil and minerals, but at the same time, they share the same incapability to fully exploit this latent richness. Indeed, these countries are kept outside the most trafficked international routes by or to the absence of sea access (the former) or by the troubled economic and political environment (the latter). The new Silk Road will offer them a great chance for improving the access to international trades, thanks to both material ways in (infrastructures) and positive side effects (stabilization of the political environment).

The second part of the plan is focused on the development of new sea trade agreements, as well as the establishment of shipping lanes and port development projects, throughout the so called Maritime Silk Road, connecting the South China Sea, Pacific Ocean and Mediterranean Sea. The project is envisaged to cool down the animosity concerning the South China Sea (see the international dispute between China and Philippines), to boost trustworthy relations between AESEAN countries and China and to tackle down piracy affecting the Arabic Gulf.

The OBOR’ goals are impressive as much as the 1,3$ trillion foreseen to be invested in it. The potential stabilization and development of an entire region, the enhanced cooperation between countries throughout economic ties, the possibility of a new Chinese role as responsible geopolitical power stakeholders are just some of the valuable achievements that the OBOR Initiative is setting out to reach. Despite all the idyllic promises carried on, the project is about to face serious challenges and structural problems. Economically, such huge deployment of investments runs the risk to become what economist call a “white elephant”. The tremendous costs of realization could exceed the returns gained from the accomplishment of the venturous plan, deepening the already fast growing Chinese debt. Indeed, the project run along unstable and contentious areas, were border issues are mixed to identity conflicts and tribal wars. A clear example of the problem is the already finished China-Pakistan economic Corridor (CPEC), where more than 13,000 Pakistani troops have been deployed for protecting the project running across turbulent tribal regions. Beside the external factors endangering OBOR Initiative, analysists are in the same time worried about the real health of China’s economy. One of the first direct benefit, China aims to gain through the project, is a wide gate throughout which the national overproduction could flow away. However, OBOR fully functionality could be reached only in long terms, and that is not fitting into the pressing economic necessity to get rid of production excesses. At the same time, the current level of popular enthusiasm to the project, based on national pride, must be reinforced by material benefits. Otherwise, the huge portion of population living behind poverty line could refuse to further bear the costs of nationalistic ideals. Despite this urgency, the two plans implementation is slowed down by structural problems present even inside China itself.  The different regions that should host the most important construction sites are not ready to manage such level of investments. Local governments are lacking experience and resources to encompass OBOR top-down policy, while a spread xenophobia and conservatism are tackle down the cooperative and innovative spirit embodied inside OBOR. Moreover, Chinese firms and enterprises have already started to use the Silk Road funds for supporting their extra territorial expansion but without building up the external and mutual linkage envisaged by their central government.

Politically, OBOR Initiative raised a lot of contrasting feelings that China need to face if she really wants to succeed. Some neighbouring and underdeveloped countries, like Tajikistan and Kyrgyzstan, have immediately confirmed their adhesion to the project. Others, like Southern Asia countries, have raised concern toward the consequent high debt level the OBOR investments would chain them with, fearing to became just other China’s economic vassals. Even the other economic powers of the region (India, Iran, Turkey) are worried about the geopolitical strategy behind China’s proposal. According to analyst opinions, the narrative encircling the Initiative refers to the great Imperial past of the country. China seems to be hunting its delectable old status of Eurasian dominant power by forging an economic empire over the continent. Needless to say, other regional powers see the Chinese new external economic policy as a direct threat to their foreign interests. But, at the same time, refusing to join the project would mean for them a probable isolated position, from where would be impossible to defend their status. This dilemma, mixed with the latent border tensions running all over the continent, had already caused animosity and rancour: India, for example, accused OBOR to undermine country’s sovereignty, perceiving the new Sino- Nepalese and Sino -Pakistani agreements as a heavy intromission inside its difficult relations with the two neighbour countries.

The confusion on what this project will really entail is shared also by Western countries, while the European spectrum of opinions is divided as the Asiatic one. Some countries as the UK had already confirmed their participation to the project, by joining in 2015 the Asian Infrastructure Investment Bank (AIIB) and enlisting some of its previously started Sino-British projects inside the OBOR framework. The same interest is shared by Central and Eastern European countries like Poland, Hungary, Bulgaria and Slovenia, already participating inside the “16+1 mechanism” together with China, who promoted important infrastructure works over their national territory. Inside OBOR geo-economic strategy, this part of Europe is playing the essential role of entrance door for Chinese goods directed to the northerner and richer European markets, with Athens Piraeus port destined to be the main platform for Chinese companies.However, such east-south enthusiasm is not shared by the north-west Europe and by the European Union itself. As the Commission’s Vice-President Katainen has made clear, every agreement and joint project should respect the international trade and market law framework already existing. The Union is concerned about China dumping bad habit as well as the reciprocity issues, i.e. an equal level of economic penetration must be granted to European companies for facilitate their grip inside Chinese market, while the new France leadership is on the warpath for its core steel industries, which firmness has been put on a severe test by Chinese imports.

Both economically and politically a fully success of OBOR Initiative is likely to be undermined by internal and external challenges. The whole confusion over China real intentions is raising even more doubts. It could seem a clever Soft Power strategy, aiming to enhance Chinese global leadership position after the American retreat from the placement. Indeed, OBOR could represent the necessary step forward for the biggest world economy to become a responsible stakeholder, able to provide global public goods.  However, the urgent economic need for an overproduction vent-hole, classify OBOR more as an internal policy with external geo-strategy consequences, or with inverted terms, an external solution for a dramatic internal issue. Or again, the national pride and popular enthusiasm invested inside the project, describe it even in less idyllically way: the New Silk Road is no less than a New-Imperialistic policy aimed to restore the past grandiosity and dominant role China had over the continent, by constraining the underdeveloped neighbours to pledge (debt) loyalty to the new economic Empire. Only the time can reveal which of these sides will be the dominant one inside the multifaceted OBOR Initiative.

Source: http://www.euexperts.eu/

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