One Belt, One Road: China’s Plan to Dominate Global Trade

By Carl Blomberg, Sweden

Global trade and cooperation across borders has been shown to be crucial for nations all over the world. Ever since the Bretton Woods Conference in 1944, where 44 allied nations agreed on a new global monetary system, trade interdependence has benefited countries on all continents, causing expanding economies and improving standards of living. One of global trade’s most prominent players though, China, has for a long time remained low profile in international matters. The nation has implemented former leader Deng Xiaoping’s words ‘’hide your strengths, bide your time’’. Until now. With one of the largest and most comprehensive infrastructure projects ever, called the Belt and Road Initiative, China’s position in global matters is expected to move towards the very center. What is the Belt and Road Initiative, and more importantly; how will it impact the world and international relations?

In order to answer the above-mentioned questions, we will have to take a giant leap back in time, all the way to 130 B.C. and the introduction of the Silk Road – an ancient network for trade and commerce. The Silk Road stretched four thousand miles, from east and central Asia all the way to Europe, through India and the Middle East. The various routes that together formed the Silk Road promoted trade and had a large impact on participating nations. It brought great benefits in communication and movement of goods, services and ideas, and, as a whole, the network increased cooperation and commerce between nations significantly. From China, the Europeans received goods such as silk, spices and medicine. In return, the Chinese could trade for grapevines, horses and animal fur. Consequently, the Silk Road was an early example of globalization.

When Xi Jinping, general secretary of the Chinese communist party, first initiated the ambitious Belt and Road Initiative at the Association of Southeast Nations summit in 2013, it was with the idea of rebuilding the ancient trade network in a new modern take. According to the World Bank, the Belt and Road project, also referred to as the One Belt One Road Project or just BRI, ‘’is an ambitious effort to improve regional cooperation and connectivity on a trans-international scale’’. Furthermore, the World Bank explains that the large investment effort will involve multiple different trade routes, both on sea and land. Altogether, they aim to strengthen infrastructure, trade and investment links between China and approximately 70 other nations committed to BRI so far.

The population of the countries involved amount to 4.4 billion people. This, in turn, are equivalent to more than 60 percent and almost two thirds of the entire world’s population. Committed countries, coming from Asia, Europe, Africa and Oceania, together constitute one third of the global economy. According to ChinaPower’s article ‘’How Will the Belt and Road Initiative advance China’s Interests?’’, the estimated cost of infrastructure needs in the developing parts of the Asia-Pacific exceeds 25 trillion dollars through year 2030. Already in 2017 China had pledged 1 trillion dollars to the project.

Given the size of this broad and highly prestigious investment, it is not difficult to understand that opinions of both the positive and negative kind have occurred following its beginning. Proponents of the BRI argue that not only China will benefit from the deal, but also many of the less developed participating nations. During the past four decades China’s growing economy has enabled more than 800 million people to improve their standards of living, going from extreme poverty to a more stable economic situation. With the BRI China’s economy is expected to grow further. Also, BRI allows China to move up in the global value chain and gives the nation geostrategic advantages. On a bigger scale, BRI possesses the potential to help poor countries improve their infrastructure and enhance connectivity to the rest of the world. Thereby, they get a chance to increase commerce and enrich their relations to other nations.

Despite the mentioned benefits, there has been, and still is, strong resistance towards the project. United States, together with Germany and other European nations, are a few influential actors that have raised concern and opposition towards the BRI. But why? Well, one reason is that mentioned nations view the project as Chinese expansionism. The main controversy following the BRI has been that less developed countries, that are in deep need of infrastructure improvements, agree to large loans issued by China. That way they are are put in debt, which they, in turn, might be incapable of paying back. When borrowing nations are not able to return the loan, China gain access and ownership in the actual investments, for instance ports or railroads. Among others, this has been the case in Malaysia, Montenegro and Laos. According to Business Insider, Malaysian president Mahathir Mohamed even cancelled further Chinese-funded BRI projects in the country in order to prevent Malaysia from ending up in unsustainable debt.

The Belt and Road Initiative is a very versatile and complex project, and thus only time can tell whether it will be a global success or a vast failure. At present it is easy to argue for both cases. To date, questions remain for instance on how the US and the EU will treat the matter; European nations such as Italy, Greece, Luxembourg, Russia and Switzerland have all joined in to cooperate in BRI, but will there be more to come? Does Washington, with president Trump leading the way, have to oppose themselves to this project, or could the US actually take part in the BRI and gain economical benefits? And how will the BRI affect China, and other committed nations? These are just a few of all the questions following the development and progress of the Belt and Road Initiative. In all uncertainty, though, two things are for sure: One, that the BRI will change the economic environment and geopolitical relations in the world. Two, that China are done hiding their strength, and biding their time.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s