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Globalization with Chinese Characteristics

Italy recently made the news with the announcement that it had decided to join China’s Belt and Road Initiative (BRI), making it the first G7 nation to do so. The BRI has become one of China’s signature foreign policy and economic initiatives. Many states in Central and South Asia, as well as some in Africa, have accepted Chinese investment and infrastructure spending, often in exchange for large debt loads or adherence to China’s geopolitical ideals, such as the One China Policy.

Picture courtesy of Xxjkingdom, © 2016

At the same time, the world is heading towards another multipolar era of great power competition. China is on the road to be one of the next great powers alongside the United States. As China increases its soft power initiatives, especially through its flagship BRI, the United States must be prepared to increase its investments abroad beyond traditional trade agreements to preserve its influence. This must be done in order to secure a level playing field for the time when great power competition resumes.

The BRI consists of two major components: the Silk Road Economic Belt and the Maritime Silk Road. The former is the land route between China and Europe via Central Asia, while the latter is, as its name suggests, the sea route that runs through the Indian Ocean and Red Sea. The primary buzzword that Beijing would like to associate with the BRI is “connectivity.” Namely, the Chinese government wants to increase the connectivity and trade capacity between Europe and China. The first step in increasing this connection is to expand the land infrastructure and port capacity of the countries along the way.

At first glance, this seems like a win-win scenario. China becomes more connected to Europe, and developing states along the BRI routes get new infrastructure investment. However, there have been concerns raised over certain aspects of the BRI, particularly the debt that many states have incurred in completing BRI projects. After accepting Chinese help in financing the expansion of Hambantota port in Sri Lanka, the Sri Lankan government was forced to turn control of the port over to Chinese interests when it could no longer repay its debts. More recently, several states originally preparing to start BRI projects have postponed or canceled these projects due to concerns over financing and the debt load with which these projects would saddle their economies.

Increased scrutiny of BRI lending has been a major source of the backlash. China advertised its BRI lending as “no strings attached,” which was in contrast to loans from Western lenders that contained conditionalities such as corruption controls and sustainability requirements. However, initial results of BRI investing are indicating that this “no strings attached” approach creates more opportunities for corruption in the misuse of funds. As a reaction, states such as Kenya and Malaysia have seen their voters hold their governments responsible for increased corruption from BRI projects by voting the responsible parties out of office.

Western alternatives to the BRI do exist in the form of organizations such as the IMF and the World Bank. As mentioned, though, loans from these entities often come with anti-corruption and sustainability conditionalities that can be difficult for developing nations to meet. Hence their initial attraction to BRI funds. The United States has programs such as those through USAID and the African Growth and Opportunity Act to promote lending and investment towards states in the path of the BRI. Again, their help comes with conditionalities that might be difficult to quickly fulfill.

The recent pushback against the BRI provides the United States with an opportunity to increase its influence. While the Trans-Pacific Partnership (TPP) would have been a good way to promote an economic bloc to counter China, the Trump Administration’s decision to withdraw from the agreement has left the United States out in the cold. Soft power influence is crucial to the United States’ ability to influence and partner with other states, without the use of military force. However, there are other ways to counter Chinese influence. The Trump Administration favors bilateral trade agreements over regional, multilateral agreements, such as the TPP. Increased and individualized outreach to states, whether through bilateral trade agreements or tailored aid packages, in the path of the BRI would be a good way to gain influence in Africa and Central Asia.

The recent pushback against the BRI provides an opportunity for the United States to make up some lost ground geopolitically. Providing an alternative to the BRI will be the best way for the United States to gain a soft-power edge over China, which will allow the United States to better compete with China diplomatically in a multipolar system. Regardless of how the United States decides to counter the BRI or Chinese influence, the United States must start acting now.

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John Ashley

John Ashley was the 2017 YPFP Nuclear Security Fellow; he holds a Master of International Policy degree from the University of Georgia, where his studies concentrated in CBRN nonproliferation, export controls, and international security. John also holds a B.A. in History from the University of Georgia, and wrote his thesis on the Great War in Africa. His career goal is to work on the committee staff for the Senate Foreign Relations Committee.

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