The BRI is not a Play for Global Dominance

 The Chinese Communist government started the Belt and Road Initiative (BRI) in 2013. The plan was to increase infrastructure across Eurasia and reinvigorate the ancient Silk Road. China plans to building railways, pipelines, roads, ports, and other supports in Afghanistan, Kyrgyzstan, Uzbekistan, Turkmenistan, Sri Lanka, Pakistan, Iran, and Turkey, among others (Chatzky). All this sounds very scary to a Western audience that fear a resurgent China. The BRI very much looks like a play to rearrange trade and pull control closer to East Asia. With this level of infrastructure and debt dominance across Eurasia, inevitably, the BRI must be the first step towards China becoming the number one world power. But that neglects the fact that BRI is one of the worst ideas to dominate trade in the world.   

Transporting product by sea is 1/12th the cost of transporting it by land, that is, if there is already a rail and road infrastructure in place (Grammenos). Without that pre-existing infrastructure, as is the case in the countries the BRI is planned to include, shipping by water becomes 1/50th the cost of transporting it by land (Grammenos). So creating an entire trans-Asian overland trading empire sounds like the stupidest idea in the world. I mean who builds a railroad through Afghanistan? The only economic benefit the BRI could offer China would be an increase in exports to Central Asia, but the Central Asian market is in no way large enough to justify the cost (Vakulchuk). President Xi Jinping says that the BRI is supposed to be a new Silk Road, but the only reason the silk road existed was that it was the easiest possible option since deep-sea navigation did not yet exist (Beckwith). But once the Portuguese, and later other Europeans, figured out how to sail around Africa, the Silk Road became more and more obsolete (Beckwith). So no, the BRI is not a tactical move towards global hegemony by the Chinese. But, they are doing it for a reason.

Chinese producers don’t work like American companies since they do not have the liberty to fire anyone (Bailey et. all). The Chinese government realized that if they leave people unemployed, many would have the time and motivation to gather in large groups, exchange ideas, and march on the government (Bailey et. all). This, honestly, should not have been a shock because that’s how the Chinese Politburo originally got their jobs. To solve the problem, the Chinese government decided to give out endless zero-interest loans to any company that can guarantee employment, but not necessarily profits (Bai et. all). For the past thirty years, the Chinese have been handing out free money like crazy, and it is starting to catch up with them. 

There are two significant reasons why these zero-interest loans necessitated the BRI: over production of industrial goods and general trade access. The Chinese have been producing industrial goods at an insane rate for almost twenty years now; think of Chinese steel dumping (Abrami and Zheng). But the international community  does not produce enough demand for China’s industrial products, and has learned not to trust the quality of the materials they do export (again think of steel) (Abrami and Zheng). Now, the Chinese can’t just shut down their forges because they need to keep people employed, so they have to do something with all the steel to keep demand up. And, totally coincidentally, it takes a lot of steel to build a railroad from Beijing to Istanbul.

The other primary reason for the BRI is a little more speculative but is slightly more compelling. It is indeed cheaper to ship by sea than by land, but what if a state doesn’t believe they will have the ability to send something by sea. Quick history lesson: in a time before World War 2, national economies were isolated. The imperial powers went out into the world to conquer the resources they felt were essential to guarantee access to them and keep them from rivals (Mäki). The imperial forces then protected these conquests with their navies (O'Brien). The British navy protected British trade between the British colonies and the British homeland. The French fleet did the same thing for French colonies and so on. This competition for resources and land culminated in World War 2 and only after the most destructive conflict in human history, the Americans gathered the allies together. They told them that the American navy, the only one to survive the war, would protect everyone’s trade and would guarantee everyone access to the American market, which was, coincidently, also the only one to survive the war (Eichengreen). In exchange, the imperial powers would dismantle their empires, and everyone would help contain the Soviets (Pollard). It was this system that the Chinese hooked into in the seventies, which later allowed them access to the foreign markets that gave them wealth. But what would happen should the US back out of protecting this system? America created the Washington Order at Bretton Woods with the exclusive purpose of containing and combating the Soviets. And the Soviets haven’t been around for thirty years, so the Americans are letting the system fall if not actively dismantling it. 

The Belt and Road Initiative suddenly makes a lot more sense under this lens. 19.5% of the GDP of the People’s Republic of China comes from trade, and the majority of that trade comes from the United States and Europe (World Bank). And China needs the ocean to trade with either of those markets. Or at least it used to. With the BRI, it is now possible to trade with Europe overland. It is horrendously more expensive and can not handle the scale of trade that the PRC needs, but it is better than nothing, and without the BRI, the PRC would get nothing. It is wrong to say that the BRI is not economic. It is, but it is a matter of economic survival, not economic hegemony. 

Bibliography:

Andrew Chatzky and James McBride (Jan. 28, 2020) China’s Massive Belt and Road Initiative. https://www.cfr.org/backgrounder/chinas-massive-belt-and-road-initiative

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Bailey, W., Huang, W., & Yang, Z. (2011). Bank loans with Chinese characteristics: Some evidence on inside debt in a state-controlled banking system. Journal of Financial and Quantitative Analysis, 46(6), 1795-1830.

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Grammenos, Costas Th. The Handbook of Maritime Economics and Business. Lloyd's List, 2010. 

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Pollard, R. A. (1985). Economic Security and the Origins of the Cold War: Bretton Woods, the Marshall Plan, and American Rearmament, 1944–50. Diplomatic History, 9(3), 271-289.

Vakulchuk, R., & Overland, I. (2019). China’s Belt and Road Initiative through the lens of Central Asia. Vakulchuk, Roman and Indra Overland (2019)“China’s Belt and Road Initiative through the Lens of Central Asia, in Fanny M. Cheung and Ying-yi Hong (eds) Regional Connection under the Belt and Road Initiative. The Prospects for Economic and Financial Cooperation. London: Routledge, 115-133.

World Bank. https://data.worldbank.org/indicator/NE.EXP.GNFS.ZS?locations=CN

World Bank. https://wits.worldbank.org/CountryProfile/en/Country/CHN/Year/2017/TradeFlow/EXPIMP/Partner/by-country#