ESSAY
China’s Belt and Road Initiative
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Essay on
‘China’s Belt and Road Initiative (BRI) in a
way is going to be instrumental in giving the
word of ‘Globalization’ a true meaning
Outline:
1. Introduction
2. Introduction of Market reforms by Deng Xiao Peng and the spectacular economic growth
3.
China’s Belt and Road Initiative (BRI) – Huge investments encompassing four
continents, Asia, Africa, Europe, and Latin America.
4. The reasons behind the initiation of BRI
5. China’s mode of global economic engagement
6. Conclusion
Thesis statement: It is true in a sense that China’s Belt and Road Initiative (BRI) is going to
be instrumental in giving the word of ‘Globalization’ a true meaning as it is associating more than
100 countries of the world with respect to Chinese financial investment, infrastructural
development, and trade-related activities.
China is the world’s most populous country, with a population of about 1.4 billion out of
the world total of 7.2 billion. For centuries China remained a leading civilization in the fields of
arts and sciences, but in the 19th and early 20th centuries China went under civil unrest, famines,
military defeats, and foreign occupation. After World War II, the communists under Mao Zedong
established a state-controlled socialist economic system. China till 1980 was not considered any
considerable economic power though an atomic power. It, however, managed to feed its teeming
millions during Mao’s period.
It was during Deng Xiao Ping’s era starting from 1978 onward that laid the
foundations of the present day China. Deng Xiao Peng did so by introducing market reforms but
still under the state control. With the introduction of market reforms, China became the world’s
fastest-growing economy. China’s GDP growth rate which remained at around 5.3% (from 19601978) went up to 7 to 9%. Being a house of almost 1/5thof the world population, it also acted as a
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good market for consumer goods. The Chinese shipping industry also took significant advantage
of taking the finished products to various parts of the world. Accordingly, almost all the world
top companies from Japan and South Korea in the beginning and then from Europe and USA
started moving into China to produce competitive products. This phenomenon created a lot of
jobs in China but depleting the same in the countries of origin resulting in an economic downturn
there.
India also followed suit in the 1990s. The Transnational Corporations (TNCs) moving into this
part of the world were also attracted for the reason that South and South East Asia was a huge
market for their products as half of the world population was living in China, Japan, South Asian,
and ASEAN only.
Just within three decades of spectacular growth from 1980 onward, China surpassed Japan
in August 2010 to become the world’s second-largest economy behind the United States only.
The United States at present is a highly under debt economy (China’s estimated debt is $1.4
trillion against the United States’ $19 trillion economy. That's 29 percent of the total public debt
owned by foreign countries. Many are concerned that this gives China political leverage over U.S.
fiscal policy since it could call in its loan. (Source: "Major Foreign Holdings of Treasury
Securities," U.S. Treasury). Experts say China will pass the United States as the world’s largest
economy by the year 2030 or even earlier.
China’s One Belt One Road (OBOR) generally called Belt and Road Initiative (BRI)
announced in 2013 is being implemented under China’s 13th Five-year plan (2016-20). It will cover
International trade, International Infrastructure development, and Chinese financial investment. It
has two components one Silk Road Economic Belt originating from China’s Eastern coasts
stretching towards Northwest China, and from there through Central Asia into Europe, and the
Maritime Silk Road from Eastern coasts to Southeast Asia through the South China Sea, Strait of
Malacca to North Africa. The BRI initiative aims at encouraging and utilizing Chinese firms
enhanced capacity to invest internationally particularly in the emerging economies. This will also
help China’s massive foreign exchange reserve to be used in Foreign Direct Investment (FDI).
Additionally, it will enable China to transfer its technology and development know-how to the less
developed economies of Asia and Africa. The infrastructure development associated with BRI will
not only promote the economic development of the host countries but will help Chinese exportable
surplus (products/services/skilled human workforce) to be adjusted world around. The BRI is not
only China dependent project but a collaborative as well associating other TNCs from Europe and
America though mainly contributed by Chinese companies.
In April 2015, China signed a package of deals worth $46 billion to develop China
Pakistan Economic Corridor (CPEC) an economic corridor connecting China's northwestern
region of Xinjiang and Pakistan's Gwadar Port. This port will allow Chinese oil tankers from the
Persian Gulf to port and ship oil and gas to China's Xinjiang-Shanghai oil pipeline directly. Also,
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Chinese manufacturing products could also be shipped via land to Gwadar and then re-shipped to
the Middle East once the road and rail links are completed. Chinese, Pakistani and other
international companies will be involved in communications infrastructure and power generation
projects.
BRI thus appears to be a mutually beneficial, joint responsibility and a shared destiny. BRI
is going to span 68 countries even more with the passage of time, and China has so far invested
over $90 bn in projects ranging from highways in Pakistan to railway lines in Thailand. Western
TNCs are selling billions of dollars of equipment, technology, and services to Chinese firms
building along with it. Firms, such as Caterpillar, Honeywell, and ABB, global engineering giants,
DHL, a logistics company, Linde and BASF, two industrial gas and chemicals manufacturers, and
Maersk Group, a shipping firm, rattle off lists of BRI projects. Deutsche Bank has structured eight
trade deals around it and has an agreement with the China Development Bank, one of China’s
policy lenders, to fund several BRI schemes. This collaboration is for the reason that at the moment
Chinese groups have little experience abroad and that their Western counterparts offer a
technological edge and thorough knowledge of local conditions across the BRI region. However,
there is an apprehension in the developed world that BRI, in the long run, will open up new markets
for Chinese companies in areas which are currently dominated by Western companies, ranging
from engineering and telecoms to shipping and e-commerce.
The Economic recession of 2007-8 also had an adverse impact on China. As the
purchasing power of the European nations and even Americans went down affecting Chinese
exports. During the recession period and afterward, the Chinese GDP growth rate came down
to around 7% from the previous 9%. This forced China to universalize its economy differently.
It called the conference of 28 heads of states in May 2017 including Russian President Vladimir
Putin, Philippine President Rodrigo, Turkish President Tayyip Erdogan, Malaysian Prime Minister
Najib Razak, Indonesian President Joko Widodo, Vietnamese President Tran Dai Quang and
Myanmar’s leader Aung San Suu Kyi. Heads of state from some of the European countries also
attended along with African leaders from Kenya and Ethiopia to initiate the BRI project.
China and Kenya continue to forge new trade and economic partnership. According
to the American Enterprise Institute, China has invested more than $18 billion in Kenya since
2010. According to Financial Times, it built a $4 billion railway linking Nairobi with the Indian
Ocean port of Mombasa. It is not just Keya, China is investing billions across Africa. In 2018
China announced $60 billion in financial support to African nations. Around 66% of all Chinese
investment in Africa is being spent on transport and energy projects. According to the
Brookings Institute, a quarter of all Chinese investment in Africa goes to Nigeria and Angola.
In these countries, people are learning Chinese language Mandarin for better economic
prospects a slot of Chinese skilled labor is attached to these projects.
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As an emerging power, China has cultivated a cooperative relationship worldwide
particularly with Central Asia, Africa, Latin America, the Caribbean, and members of the
Association of Southeast Asian Nations (ASEAN). During a visit to Brazil, Argentina, Chile, and
Cuba in November 2004, Chinese President Hu Jintao announced the U.S. $100 billion worth of
investment over the next decade. Though China has long been a close ally of North Korea, it has
developed a valuable trading relationship with South Korea as well. Chinese trade between African
countries along with infrastructure development projects has surpassed $200 billion. To exhibit
solidarity with the world, China deployed around 1,500 soldiers under the UN peacekeeping
mission in Liberia and the Democratic Republic of the Congo. The Sino-Arab Cooperation Forum
had formally been established in January 2004. Its current trade volume with South Asian nations
is over the U.S. $20 billion a year. India, though considered China’s adversary, is China’s principal
trading partner. As regards Europe, China is now the EU's second-biggest trading partner behind
the United States.
The Belt and Road initiative led by Beijing is poised to promote a rules-based, nondiscriminatory trading system with the World Trade Organization at its core and to oppose
protectionism. Many more countries are showing their willingness to join the One belt One
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road initiative of China, testifying to China’s collaborative approach and not the confrontational
or coercive one. Even the USA has the highest bilateral trade with China with no direct hot issue
with China. India has also recently joined the Shanghai Cooperation Organization as a full
member. Italy from Europe and Peru from Latin Americal have also joined the BRI Forum.
The term ‘globalization’ though has wider meanings, but in the sense of economic
globalization, it is the mobility of capital, labor, products, and services all around the globe to
help it to assume the form of a well-integrated unit. When we examine China’s BRI in this context
we are constrained to believe that BRI in a way is going to be very much instrumental in giving
the word of ‘globalization’ a real meaning.
There is no blinking the fact that the colonial era is part of history now, and even neocolonialism is also becoming the matter of the past very swiftly. Now the markets of every country
are full of goods and services of all the countries where the products/services compete among
themselves on the bases of value and quality. This competition has given Chinese products a
competitive edge over other countries even compelling its adversaries like India and USA to be
the largest consumers and importers of Chinese products. Hence, Chinese economic expansion
and political influence associated with it has become an inescapable reality. The protectionist
strategy adopted by Trump regime in the form of Trade war with China by putting a lot of tariff
on imports from China will not be able to check this Chinese economic expansion.
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