This year, Huawei will finalize the so-called ‘Pakistan-East Africa Cable Express, connecting Gwadar in Pakistan tot China’s new military base in Djibouti. We’re talking 13.000 kilometers, connecting South Asia and East Africa, with arteries linking Egypt, Kenya and South Africa.
China is (re-)creating global value chains at an immense speed and reshaping the way we look at continents and borders.
The Chinese like to see their ambitious Belt and Road project as a way to go from chaos – the West – to harmony: the Chinese world order. The Middle Kingdom sees global interdependence as an opportunity, where itself of course plays the role of benevolent and peaceful hegemon, advocating virtues as ‘honesty’ and ‘amity’. According to this mindset, the world has a shared destiny and the Chinese are ready to lead the way. The initial three years of the Belt and Road were about tiptoeing the water. It now clearly has become a geopolitical tool, forcing other countries to respond: will they join of or oppose the Chinese worldview?
The Belt and Road initiative was recently officially included in the Chinese Communist Party’s Constitution and has a clear goal: to build an expanded “factory floor” along the full economic corridor and across national borders. Bridges, tunnels, highways are linking Chinese cities to countries as diverse as Pakistan, Malaysia and Mongolia. The focus of development seems to be on Kazakhstan as China sees the central-Asian country as its gateway to Europe. Recently Portugal and Italy have joined.
The land component is just the start. The Maritime Silk Road is meant to build a new economic landscape for this century. There’s talks about an Arctic Route. Of course, the South Chinese sea is at the center of all efforts.
Where Mao Zedong’s reign is referred to as the era of “Standing Up”, the Deng Xiaoping era was about ” Getting Rich”. We’ve recently entered the “Becoming Powerful” era – led by Xi Jinping.
China wants to catapult itself to the top of the economic pyramid. Which is, by all definitions, a crowded place. This is why the Belt and Road is of great important to the Chinese: it is their global development policy. An ambition not without risks. In the words of President for life Xi Jingping : “We are now facing a historic opportunity that happens only once in a thousand years. If we handle it well, we will prosper. But if we screw it up, there will be problems, big problems”.
The immediate consequence is that no longer nations, but value chains, will face each other in the global market. German-led value chains will be competing against Chinese-led value chains. Efficient organization of the value chain may become more important than securing access to commodity markets.
And the fight is on. In August 2018, in a historical verdict, Germany decided to ban for the first time the sale of a German company (Leifeld Metal Spinning AG) to a Chinese competitor. Chancellor Merkel judged the transaction a danger to “public order and safety”.
Controlling global standards – an extremely profitable source of revenue – is another emerging battleground. Being able to develop new standards and have others accept them is something the Belt and Road strives to achieve. The Chinese are already successful in exporting key technical standards for high-speed rail.
Trump’s trade war may make, contrary to popular belief, an ambitious initiative as the Belt and Road harder to finance, as exports will decline and the value added in China makes up only small percentage of the final price. When Bill Clinton welcomed China to the WTO, in 2000, he argued that the country would import “economic freedom”. We now know, how blatantly wrong his dream of convergence was. Almost twenty years later China is still an authoritarian country and an inspires many to resist the Western model.
Clinton’s successor, Donald Trump, has made it clear he doesn’t believe in convergence. His administration’ strategy states assumes we live in a world where competition, not cooperation is the predominant reality.
Opposition comes form other sides too. Japan is investing heavily in initiatives as “Partnership for Quality”, meant to compete with China’s Belt and Road. Japan emphasizes its higher standard (financially, from a sustainability viewpoint, compliance-wise etc) relative to the Belt and Road. Although relatively unknown, Japan finances many projects bigger than the Chinese. Those include the Mombasa port in Kenya, the Nacala Port in Mozambique, the Mumbai-Ahmedabad high-speed railway in India and economic and digital projects in Myanmar, Bangladesh and Tanzania.
The Belt and Road demands tight control, as well as very deep pockets. Criticism now comes from participating countries as well. Malaysia is complaining that China is be prioritizing their own citizens over the local population, when it comes to land distribution or economic gains. And will China’s huge debt, the result of self-financing the Belt and Road, become too much of a burden?
Where does this leave Europe, besides at the other end of the Eurasian continent?
For a start, EU-Asia trade in goods is “by far the most important flow axis in global trade, peaking at $1,8 trillion in 2013”. This is double Transpacific trade and as much as three times Transatlantic trade. This is rather surprising, as the Eurasian axis has many obstacles and barriers, ranging from poor infrastructure to trade barriers. This means there’s a huge potential to be tapped into.
But, the longer the EU will wait with putting a coherent vision and answer forward, the further its ability to shape the Belt and Road will diminish. For now, the moral high way seems pretty much the only route the Europe is actively exploring.
The main question when trying to define China’s future place on the world stage is : will China succeed in reshaping the global order or will we end up with two opposing visions on how to organize our world? Are we entering a world of competition for spheres of influence or will cooperative relations between states keep prevailing? Bruno Macaes sees four scenarios.
1). China becomes a prosperous and successful economy, and converges to a Western political and social model. Like Japan and Germany have in the past. The US and China rule the economic world together, and China does not attempt to overthrow the US politically, militarily or culturally.
2). China converges to some variety of Western politics and is committed to the general principles of the liberal order. It succeeds in replacing the US as the center of political and economic power, but everything else remains the same. Not an entirely implausible scenario, looking at the current developments (US leaving the throne, Xi prepared to mount it, as he made clear in his now famous Davos speech.)
3). China will replace the US at the center of global power: the liberal structures and values give way to Chinese values. Beijing is in charge of the world.
4). China and the West will clash. Two vision of the world order will compete and need to find a balance. The Chinese values represent a direct challenge to the foundation of Western liberal societies as is clear from issues like the Internet, human rights, global trade and privacy. The Belt and Road offers a clear alternative: economic development without the West moralizing you. The result: two distinct spheres of influence.
The West now seems to understand, and accept, that Chinese values are different. We can no longer assume our values are universal. But, as China will increasingly push its national interest westwards, will the West – in this case Europe – be capable and willing to defend its interest? Can this be done, when its values dictate diplomacy and soft power?
Like the West never became an universal concept, nor will the Belt and Road. It will nevertheless have a tremendous impact on the world. Under the world’s sky – Tianxia – several competing systems will co-exist, each based on very different worldviews. Whereas the West believes in checks and balances, the pursuit of individual happiness, institutions and a neutral political space, the Chinese view is one of “togetherness”. Countries – and for that matter people – have relations of dependency, generosity, respect and retribution. Rituals and history play an important role. it’s fragmentation vs coordination. Iteration versus speed (China has doubled it industrial output in 12 years, whereas it took Great-Britain over 150 years.)
Finally, an essential difference is the West’s emphasis on transparency and public knowledge versus the opacity of Chinese power. As they like to say in government circles in Beijing: “Just as every individual has a right to privacy, so has the Party.” Never reveal all at once, go bit by bit.
It is to be feared that also the real nature of the Belt and Road will also reveal itself incrementally. How much do we value privacy? How sensitive is the West to the narrative of the future (China) versus the past (Europe), wherein China is the symbol of dynamism, and Europe represents the status quo? It is of vital importance to to the West to grasp the scope and impact of the Belt and Road and identify the core elements the Chinese will undoubtedly impose on us, before we are left with no other choice than to accept them.
Belt and Road, a Chinese World Order – Bruno Macaes, 288 p, Hurst, 2018