Belt and Road may prompt international infrastructure rivalry - but that's no bad thing
 China, one of lucky few to have money to spend, appears bent on spending its biggest ever dream engineering project - the Belt and Road Initiative - the ultimate Asia-Europe trade promotion.
While it has become much more than that, encompassing intra-Asia, Africa and even expansion to the Americas, its core inspiration is Marco Polo's 14th century overland trade route bringing the silks and spices of old Cathay by camel train to the still barbarous kingdoms of Europe.
More glorious in conception than in execution, China's New Silk Road, as it is also called, is already facing a cash crunch as China urgently seeks financing for its multilateral global logistics projects. While China has money to spend and is prepared to spend it, it is not prepared to pay whole shot.
Meanwhile many of the powers involved are suspicious and are taking a wait-and-see attitude, and the more they see, the more they are inclined to wait.
Leaders from 29 countries and regions gathered in Beijing to hear the pitch. Infrastructure and other key projects in Belt and Road countries had "strong demand for financing," and support from the global market was "desperately needed," Yi Gang, vice-governor of the People's Bank of China told the People's Daily.
While the plan is designed to speed development in Asia, Europe and Africa, the Asian Development Bank says there is a US$26 trillion funding gap in the infrastructure projects that will be required in Asia alone by 2030.
Mr Yi's financial revelations on Belt and Road represent only one of the concerns raised by world leaders.
"Belt and Road will likely be [Chinese President Jinping] Xi's most lasting legacy," said Trey McArver, the London-based director of China research for TS Lombard, an investment research company. "It has the potential to remake global trade and economic patterns."
But as it stands Belt and Road is little more than a marketing slogan covering all or most logistics projects China has initiated worldwide over the years.
The global scope of Chinese ambitions implicit in Belt and Road worries strategic rivals like India, Russia and the US, as China increases military spending and becomes more assertive over disputed territory.
Chinese plans to spend more than $50 billion on an economic corridor in Pakistan, building a port in Djibouti and constructing oil pipelines in central Asia. To some, this is creates infrastructure that can challenge traditional powers, perhaps setting off something akin to an arms race in infrastructure. This is no bad thing, others say.
Said former US National Security Council Sino chief Paul Haenle: "China needs to recognise that the way it perceives the Belt and Road Initiative is not necessarily the same way others will."
Mr Haenle, who now heads the Carnegie-Tsinghua Centre in Beijing, said it was impossible not to view Belt and Road through a geopolitical lens, that is a strategic effort to build a Chinese sphere of influence."
In September 2013, when President Xi Jinping first broached the idea at an obscure Kazakhstan university, he focused on the Eurasia. Since then, it has changed names and expanded to include the entire world, but always promoting a child-like dream of rebuilding a trade route from China to Europe. China Daily even has a short video, showing an American dad and telling his five-year-old daughter the Belt and Road story as she plays with a camel, asking if they would make the trip again.
In some ways it is a gigantic fix-it plan: There's a stretch of road or rail that needs completing, a harbour that would be useful if de-silted, a cold storage shed that would make an airport useful to flower and fruit exporters, its all so reminiscent of the Mary Poppins movie when Mr Banks sings of
"Railways through Africa
Dams across the Nile
Fleets of ocean greyhounds
Majestic, self-amortizing canals
Plantations of ripening tea".
Such were Mr Banks dream for the British Empire in "1910 in the age of men", and it is exactly what worries others 100 years later.
Of course, the ostensible driver is commerce: China wants to spur growth in underdeveloped hinterlands and find more markets for excess industrial capacity. With more than $3 trillion in international reserves - more than a quarter of the world's total - China has more resources than developed economies struggling to hit budget targets.
The plan gained steam last year when the US presidential victory of Donald Trump turned the American mood against free trade. Bruit raised questions about the European Union's viability, while Trump's withdrawal from the Trans-Pacific Partnership gutted the biggest US push to enforce global economic rules.
Given the dark clouds over trade, to some see Belt and Road as a silver lining. Said Hong Kong's Value Partners Group chairman Cheah Cheng Hye: "It was very disappointing, and it makes us feel that there is a big vacuum that Belt and Road can help to fill. So all of sudden, we begin to appreciate this Chinese initiative."
Said JPMorgan Chase International chairman Jacob Frenkel: "One Belt, One Road - I think, it is potentially a plus. And we should not worry about it because what it does is basically connects hundreds of millions of people, hundreds of millions of markets. And you know what? If somebody gains from it, that's perfectly fine."
Echoing this benign view is General Electric, which has experienced Chinese construction and engineering companies ordering $400 million worth of equipment from GE to install overseas, overwhelmingly in the Belt and Road region. Last year, those orders totalled $2.3 billion, and GE plans to bid for an additional $7 billion in orders for natural-gas turbines and other power equipment in roughly the next 18 months.
"We have a laser focus on winning these," said GE China chief Rachel Duan. If enacted as planned, the initiative could lead to a global building spree; China has promised more than $1 trillion of investment over the long term.
In Europe too, anti-globalisation sentiment has grown among voters and the continent has been rattled by Britain's looming exit from the EU.
Said Chinese Foreign Minister Wang Yi: "There is a pressing need in today's world to have a shared, open and inclusive cooperation platform - to jointly tackle global challenges."
But EU ambassador to China Hans Dietmar Schweisgut said: "We hope China will implement domestically what it is preaching internationally. The Chinese market, when it comes to investment, is not as open as the European market to Chinese companies."
The European Commission now finds proposals to block Chinese takeovers “worth discussing”, welcoming German, French and Italian suggestions to stop China's buyouts in Europe in response to "limited access" to the Chinese markets suffered by Europeans.
Analysts are also sceptical that the China can take the lead in global commerce, while also cautioning that an integrated world trade system where its ruling Communist party sets the rules could come with serious risks and costs.
Today, the greatest material evidence of Belt and Road realisation is the train from China to Europe, which has become a substantial manifestation of the project, and of course, most closely represents its inspiration, the overland route Marco Polo took more than 500 years ago. Of course, there are jokes about the trains trade imbalance, which prompted the joke "One Belt, One Way", but these are early days both for the train and Belt and Road.
While the Chinese initiative may cause others to plunge into arms race-like rivalry, such an outcome would provide more value for money than any arms race man has entered and or endured since the dawn of time. |
