China’s “Asian Dream”
“There is a Chinese saying,” Mao Zedong told his Soviet hosts in Moscow in 1957: “Either the East Wind prevails over the West Wind or the West Wind prevails over the East Wind.”
Mao predicted the East Wind would prevail. Sixty years on, Xi Jinping believes China is inching closer to fulfilling its destiny. His grand plan — what I call China’s “Asian Dream” in my new book — is to restore the Middle Kingdom’s position as the undisputed regional power. Donald Trump’s decision to bin the Trans-Pacific Partnership, a 12-nation economic pact that would have anchored the US’s economic and diplomatic presence in Asia, brings China a step closer. While Trump’s sidekicks huff about wielding a bigger stick in the South China Sea, China is transforming the facts on the ground.
Since Trump’s election victory on November 8, China has scored a number of diplomatic successes — notably in Davos, where President Xi defended globalisation and presented China as a protector of free trade. Xi’s promise to keep China’s “doors wide open” was disingenuous, as China runs one of the world’s most restrictive investment regimes. But President Trump’s abdication of economic leadership has created a void that China, if only rhetorically, is happy to fill.
The day after the US pulled out of the TPP, the China-led Asian Infrastructure Investment Bank announced that around 25 new members will join this year, including Canada. This will take the AIIB’s membership to 82, exceeding the 67 members of the Asian Development Bank. The AIIB was conceived by China to redress the iniquities in the US-sponsored Bretton Woods system and give it a voice in shaping global rules. Specifically, it was designed as a financing vehicle for the Belt and Road Initiative, effectively Xi Jinping’s diplomatic strategy to “Make China Great Again”.
Direct investments along the Belt and Road amounted to a substantial $30 bln in 2015-16, even if larger corporate acquisitions in the US and Europe made bigger headlines. More i mpressively, Chinese firms signed construction contracts worth $189 bln and earned revenues of $145 bln in 60-odd Belt-and-Road countries, according to Beijing’s records. Some planned projects will not come to fruition, and others will have little to do with the initiative’s core infrastructure push. But China’s economic statecraft continues apace, whatever label is attached to it.
Key pieces of the Belt and Road are being put into place, such as overland freight routes from China to Europe. In January, the first direct train to the UK arrived in London, carrying 44 containers loaded with clothes and consumer goods. Named “East Wind” after Chairman Mao’s famous quotation, it took 15 days to travel 12,000 km across ten countries, halving the time it would have taken by sea. Last year, 1,702 freight trains from China arrived in Europe, double the number in 2015.
The China-Pakistan Economic Corridor — an expensive ragbag of infrastructure projects that include a planned highway, railway and pipeline linking landlocked western China to the Arabian Sea — is also making headway. Gwadar Port, the gateway to the corridor, opened in November after being upgraded at a cost of $1.6 bln. Confirming India’s fears that the Chinese-run port will play a dual role, the Pakistani Navy has admitted that Chinese naval vessels will be deployed at Gwadar.
Doubts hang over the viability of many Chinese projects, for a variety of reasons. Pakistan has reportedly deployed 14,500 security personnel to secure the safety of some 7,000 Chinese nationals working on the economic corridor. Trains from China to Europe may not prove profitable, however much time they save. And in Sri Lanka, opposition to renewed Chinese investment is deepening, stirred by resentment that Chinese loans for infrastructure really amount to an inescapable debt trap.
Moreover, Beijing’s economic vision may be ambitious but it is narrowly focused. Build the infrastructure, it believes, and trade will follow. Xi Jinping has put his weight behind the AIIB and the Belt and Road Initiative, rarely mentioning the more complex Regional Comprehensive Economic Partnership, a 16-country Asian trade pact that is meant to be China’s alternative to the TPP. Persuading countries to contribute modest funds to a development bank is one thing; pushing through the world’s biggest multilateral trade deal is quite another.
Yet, for all its faults, China’s infrastructure diplomacy offers a positive vision. By contrast, Trump has nixed the promise of greater trade in the Asia-Pacific, weakened the US’s position there, and threatened to exacerbate regional instability. It is still too early to conclude that the East Wind will prevail. But until Trump comes up with policies that enhance rather than diminish Asia’s economic security, Beijing will increasingly hold the upper hand. For all the fear that China’s rise elicits, its Asian dream remains intact.