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2019 Camden Conference — Plans and Perils: China’s New Silk Road

The 12th-century Silk Road that Marco Polo traveled on his 24-year adventure from Italy to China was not exactly a road. It wasn’t even a path. It was a bunch of trade routes connecting the Mediterranean to Asia by land and by sea. It’s a rough model for the new Chinese Silk Road, called the Belt and Road Initiative, that was spearheaded by Chinese Premier Xi Jinping in 2013.

The Belt and Road Initiative is, in part, a massive infrastructure project of railroads, sea ports, fiber-optic cables, pipelines and power grids involving over 60 countries and connecting Asia, Africa, Europe, and the Central and South Pacific along different routes that go from the Arctic to the tropics. If established as envisioned, it will connect 65 percent of the world’s population by 2049, the hundredth anniversary of the founding of the People’s Republic of China.

“Build it and they will come” appears to be the Chinese approach. Since the Chinese plan was launched, the infrastructure focus has expanded to include education, investments and other projects and includes coordinating development projects between countries, according to Martin Jacques, the keynote at the 2019 Camden Conference, “Is This China’s Century?”

Jacques predicts that the Belt and Road project is big enough to shift global economic power eastward, away from the U.S. to Asia, with China at the core. Chinese currency, the RMB, will likely replace the U.S. dollar in China’s sphere of economic influence.

Xi says the goal is to connect the world economically and culturally to the benefit of all partners. If the initiative is successful, China will stand to benefit more than most. The Belt and Road routes would put China in the middle of Asian and European trade and give China influence over land routes and possibly maritime routes. China has shown no interest in exporting its political world view in the process, according to Jacques. Instead, China has demonstrated an economic and strategic prag-matism in the Belt and Road project that could benefit its economy back home through its capacity to control access to overseas markets without interference from the U.S., he said. Taking over countries does not appear to be in its view screen.

But the Belt and Road Initiative is also a way for the Chinese state-owned companies to use Chinese labor to build overseas ports paid for with low-interest loans from China. About 50 Chinese state-owned companies have invested in 1,700 Belt and Road projects so far, according to the Lee Kuan Yew School of Public Policy in Singapore.

Many countries, including some European countries, have signed on, but several countries, such as Japan and India, have not.

Yasheng Huang, an MIT economic analyst and another Camden Conference speaker, said he wouldn’t bet on the success of Belt and Road, noting that the investment money goes to developing countries that do not even have rudimentary institutions to support growth. These are, essentially, big projects in the middle of nowhere, he said.

Some question whether China is in the process of building the kind of boat that is just a big hole in the water to pour money into.

According to The Washington Post, Malaysia pulled out of two projects recently due to the high costs, Sri Lanka defaulted on loan payments for an underutilized mega-port that is now under Chinese control for 99 years, and Belt and Road-built airport terminals elsewhere in Sri Lanka are so under-used that they are being used to store rice.

“The Belt and Road project is a grand vision,” said Yuen Yuen Ang, a political science professor at the University of Michigan and Camden Conference speaker. Yuen digs deep into the Chinese bureaucracy to understand how it functions in the Chinese power structure. She pointed to the widely held view in the West that Chinese leaders want these port projects to fail in other countries so the Chinese state-owned companies can take them over.

That is not how it really works, said Yuen. The Belt and Road project is not micromanaged from the top. Chinese Premier Xi Jinping and the top rung of Chinese leaders do not have a big action plan for this ambitious project. They have a vision statement.

“The Belt and Road action plan is seven pages,” said Yuen. “Xi is very powerful, but the implementation is delegated to the grand bureaucracy, which can have short-term interests that can have big impacts. There can be a large gap between what the Chinese leadership intended and what is done on the ground.”