Is China's One Belt One Road a Dangerous Idea?


Australian defense expert Paul Dibb writes for the Australian an op-ed that is highly critical of China's Belt & Road Initiative. Please join the discussion.

The usual suspects in Australia (economists and business people) are already fulsome in their praise for China’s so-called “One Belt One Road” or “Belt and Road Initiative” (BRI) mega economic project. Over last weekend, President Xi Jinping mounted a massive propaganda campaign before 30 heads of state at a global summit to sell this $1 trillion economic proposition with its emphasis on infrastructure connectivity by building ports, railways and pipelines across Asia, the Middle East and Europe.

The One Belt idea is to connect by land China’s remote western provinces with Central Asia and then through the Middle East to markets in Europe. The One Road element proposes to link China’s maritime trade routes from the East and South China Seas and the Straits of Southeast Asia through to the Indian Ocean and East Africa.

Economic commentators see nothing wrong in this and are asserting that it is a key misunderstanding to describe the BRI as being prescriptive in nature and dictated by Beijing. Some go so far as to assert that “even the most negative will be encouraged to concede that China cannot be so easily cast as a belligerent, assertive and self-interested actor.” Oh really?

Such naive assertions fail to explore the geopolitical imperatives suffusing this idea hatched in Beijing, as well as the associated incredible assertion by President Xi Jinping in his keynote address on May 14 that we all share common values with China.

The geopolitics of this are simple: Beijing is seeking to use its huge economic wealth to secure the supply of energy and key raw materials from Central Asia, the Middle East and Siberia and improve its access to the European market for its exports by land. From a geostrategic perspective, however, this also involves China building naval bases in a “string of pearls” in such places as Pakistan, Sri Lanka and Djibouti – even though in the past Beijing has always asserted that, unlike Western countries, it would never build military bases overseas.

According to David Vines, a former professor of economics at Oxford University, many in Europe fear that China will use the BRI in ways that have strategic implications for Europe itself. They are suspicious that China will seek to create political and economic dependencies among the poorer eastern European Union 

states, using its massive infrastructure investments to exert political leverage. And in our region, India is certainly suspicious of the huge sums of money Beijing is pouring into Pakistan to build strategic highway from the western Chinese province of Xinjiang through Pakistan held Kashmir to its naval base on the Indian Ocean at Gwadar.

This then is not just some altruistic Chinese idea of economic cooperation and sustainable development of benefit to all, as President Xi would have it. There can be no doubt that China is looking to expand decisively its sphere of influence at a time when America is being diverted by President Trump’s isolationist and protectionist tendencies. The BRI initiative is part and parcel of Xi’s ambition to fill this vacuum and create a new international order with a hierarchy based on China’s wealth.

Then there is the rather stark attempt by President Xi to burnish his image as a global statesman by pronouncing that we all share common values. So, last weekend we witnessed the leader of the Communist Party of China espousing a litany of common values we all allegedly share, including: a mutual trust in a harmonious and peaceful world, embarking on a new journey together, a common vision of openness and inclusiveness, and building a big family with harmonious coexistence (he even cited the Five Principles of Peaceful Coexistence straight out of the Cold War propaganda lexicon).

These glib and soporific utterances were followed by these pledges:  President Xi promised that China will not follow “the old way of geopolitical games but create a new model of win-win”. Beijing would not rely “on gunboat diplomacy” but would respect other countries territorial integrity (presumably in the South China Sea?). And – most incredibly of all – “we have no intention to interfere in other countries’ internal affairs, export our own social system and 

model of development, or impose our will on others.” So there we have it, a completely reformed China. But, of course, there is a major catch: he wants to see “partnerships of dialogue with no confrontation and of friendship rather than alliance.” That should prove to be of great reassurance to Australia and Japan, let alone NATO Europe. All we need to do is get rid of ANZUS and we can rely on China’s peaceful and harmonious intentions.

As to Xi Jinping’s promise that China has no intention to interfere in other countries internal affairs, the Secretary of the Department of Defence Dennis Richardson in his speech to the National Press Club last Friday accused China of been “very active in intelligence activities directed against us” including keeping a watchful eye inside Australian Chinese communities and effectively controlling some Chinese language media in Australia.

So, how should Australia react to all this? I am not arguing here that we should reject out of hand participation in the BRI, but I am suggesting that we need to be sceptical about China’s motives and to proceed with great caution until we gain a better understanding of its geostrategic implications. It is not correct to assert—as some influential politicians in Canberra do—that the Chinese are businessmen, just like us. And that applies especially to any consideration of encouraging China to participate in the northern Australia infrastructure initiative, which is a region of great strategic significance to us and our defence policy.

Paul Dibb is emeritus professor of strategy at the strategic and defence studies centre at the Australian National University.

Panel Discussion


For some time now China has been seeking greater security with regard to its sources of food, energy and other raw materials, as its requirements in these areas increasingly out-strip its own production capacities. It has been looking for new ways of sustaining rapid economic growth, as its working-age population begins to shrink and its productivity growth rate continues to slow. And it has also been pursuing various means of expanding its influence in shaping regional and global institutions, including by altering ‘facts on the ground’, commensurate with its growing share of regional and global economic activity. The advent of the Trump Administration, pledged to put ‘America first’, and Europe’s increasing absorption with its own internal problems, has created a vacuum into which China has been able to move, asserting leadership in the defense of open trade and investment, the provision of development assistance, responses to climate change, and other global issues. China’s “One Belt, One Road” initiative should be seen in all of these contexts. It is, unashamedly, about promoting China’s economic and security interests, and about expanding China’s regional and global influence. It is about promoting economic development in China’s western regions, and about creating new commercial opportunities for Chinese companies. It is about procuring a pre-eminent position for China in regional and global trade linkages and value chains. In other words, it is similar in many ways to the objectives which the United States sought to pursue, through the Marshall Plan and other initiatives, in the decades immediately after World War II.

Australia’s response to the OBOR initiative should not be driven by fear – either fear of China’s motives, or ‘fear of missing out’ (‘FOMO’) on whatever benefits full participation in OBOR might bring. Rather, it should reflect a considered assessment of the way in which patterns of economic activity, and the strategic interests which accompany them, are likely to evolve over time – and how Australia’s own economic and other interests are likely to be affected by those developments.

Australia is not physically on either the ‘Road’ or the ‘Belt’. But Australia’s economy is already highly engaged with China’s. China is the largest market for Australian exports, Australia’s most important source of imports, Australia’s second most important source of tourists and most important source of foreign students, and seventh-most important source of foreign investment. Australia is one of only a handful of countries which runs a trade surplus with China – just as we are something of an outlier in running a trade deficit with the United States.

The patterns of trade and investment which have emerged between Australia and China reflect the complementarities between the two economies, and should continue to do so. There will no doubt be commercial opportunities for Australian businesses in a number of the major investments which will be part of the ‘Belt and Road’ – but they will probably be smaller than the opportunities which will flow from the ongoing transition of the Chinese economy to one increasingly based on household consumption and on services, and from the full implementation of the China-Australia Free Trade Agreement.
The B&R initiative is part of an attempt by China to challenge the existing G7-dominated global financial architecture by setting up rival multilateral financial institutions. It is also part of the strategy of using massive amounts of money and investment to expand China's footprint across the world. The problem the Chinese face is that they are not very good at managing either the quality of the investments or their PR/soft power aspects, and they will replicate the environmental/social/corruption problems they face at home on a global scale. Furthermore, such a massive investment in creating an intercontinental transportation network will require equally massive operating and maintenance expenses down the road--who will pay for that?. So, it is likely that both the Chinese and the recipient countries will face a rude awakening down the road.

Is it a chicken or an egg? Xi Jinping’s Belt & Road Initiative is a bold effort to solve China’s industrial overcapacity and credit woes. At the same time, it’s a single-minded, audacious gambit to establish China’s economic prowess astride half of the world.

Take your pick. Alternatively, you should feel free to choose both -- and if you do, you’re probably correct.

The evolution of what was initially known as the One Belt One Road Initiative and announced as a Eurasia-wide effort illustrates the extent of official ambition. Presented as a regional initiative, Xi proposed building a “Silk Road Economic Belt” to achieve closer economic ties, cooperation and joint development. He made the announcement on a state visit to Kazahkstan.

A month later when addressing the parliament in Indonesia, the Chinese president invited the countries of ASEAN to work with China in the project he then called the “21st Century Maritime Silk Road.”

Today, the Belt & Road Initiative is no longer regional. It is global and a full-fledged national strategy for shaping China’s development and international economic and ultimately political relationships. According to reports, it has five claimed goals -- policy communication, facilities connectivity, unimpeded trade and investment, financial integration and people-to-people bonds are nothing if not comprehensive with China at the core.

In railroad ties and concrete, goals translate into a triple-line, high-speed rail projected to connect China-Europe/Central Asia/Southeast Asia along with freight rail routes connecting trade across Eurasia. Prospectively, rail links plus the planned pipelines, bridges and roads, will connect nearly 60 percent of the world’s population.

Dawn, a leading Pakistan newspaper, claims to have gotten its hands on a detailed outline of a project cornerstone, a $57 million China-Pakistan Economic Corridor that will run from the Silk Road’s Kashgar in western China through Pakistan-administered Kashmir and then down the length of Pakistan to a Chinese-constructed port in Gwadar on the Arabian Sea. Development alongside the transportation links, according to the Dawn report, will include leasing agricultural land to Chinese companies; a roadway surveillance system; a national fiber backbone for internet traffic and television broadcast; industrial parks, tourism; and cheap loans.

Little wonder India that boycotted the mid-May summit in Beijing convened by Xi for representatives from 100 countries. The Pakistan Business Council is quoted as saying the projects could account for 20 percent of Pakistan’s GDP over the next five years and boost growth by as much as three percentage points.

Drawbacks are multiple. China has yet to publish a comprehensive list of its Belt & Road Initiative projects or deals which are said to include in addition to the China-Pakistan corridor, high-speed rail lines, including a link to Singapore, gas pipelines across Asia and projects even in New Zealand, Britain and even the Arctic. Descriptions to date are vague although Beijing officialdom is saying some 50 Chinese state owned enterprises are already invested in projects.

Funding is expected via three sources, the state-owned Silk Road Fund, launched in 2015, and the two Chinese development banks alongside two China-led multilateral institutions, the Asian Infrastructure Investment Bank and the Shanghai-based New Development Bank.

Constraints are multiple and include time, money and the need for extensive, cross-regional cooperation with potentially multiple complications around geopolitical issues, custom clearances and technology capacity and integration. According to a Goldman Sachs equity research report, projections suggest that more than two-thirds of the intended high-speed rail lines can’t be completed until after 2020 – but before 2040.

So, take your pick. Bet on the horse that’s in the stable or whether the one that’s on the track has the stamina to make it all the way around, more than just once or twice.