‘Chi­nese Dream,’ Global Am­bi­tion: Bei­jing’s Belt and Road Ini­tia­tive

Bei­jing’s Belt and Road Ini­tia­tive

Global Asia - - CONTENTS - Christo­pher H. Lim & Vin­cent Mack Zhi Wei

the BRI is a cen­tral com­po­nent of Bei­jing’s agenda to ce­ment its lead­er­ship in the world.

Much fo­cus on China’s am­bi­tious Belt and Road Ini­tia­tive has un­der­stand­ably been on the mas­sive scale of its in­fra­struc­ture projects and the im­pli­ca­tions for the economies of the coun­tries in­volved. But more is at stake than just build­ing rail­ways, ports and pipe­lines. As pro­po­nents of China’s ex­pand­ing global am­bi­tions, Christo­pher H. Lim and Vin­cent Mack Zhi Wei ar­gue that the BRI is a cen­tral com­po­nent of Bei­jing’s agenda to ce­ment its lead­er­ship in the world.

Is the WORLD ready to ac­cept a China-led de­vel­op­ment model through Bei­jing’s Belt and road Ini­tia­tive (BRI), which en­vi­sions mas­sive in­fra­struc­ture projects across a whole range of coun­tries? Hav­ing ad­e­quate fund­ing and tech­nol­ogy is nec­es­sary but not suf­fi­cient to en­sure the suc­cess of the BRI. Fun­da­men­tally, China needs to be able to in­spire con­fi­dence in its part­ners. If it wants the moral le­git­i­macy to lead the world us­ing the BRI, China will need to en­sure that its do­mes­tic so­cio-eco­nomic and en­vi­ron­men­tal is­sues are well man­aged. Fail­ing that, the af­ter­ef­fects would likely spill over to the economies within the BRI net­work.

China’s cred­i­bil­ity hinges on whether it can pro­vide con­crete and tan­gi­ble ev­i­dence that its ap­proach can ad­dress key do­mes­tic chal­lenges in an ad­e­quate and timely man­ner: tur­bu­lence in the Chi­nese stock mar­ket; the emer­gence of nu­mer­ous “ghost cities” all over the coun­try; ris­ing un­em­ploy­ment due to the im­pend­ing tech­nol­ogy tsunami; and en­vi­ron­men­tal is­sues such as high lev­els of pol­lu­tion that have oc­curred as a re­sult of rapid in­dus­tri­al­iza­tion.

tack­ling do­mes­tic Chal­lenges

the Chi­nese stock mar­ket, when it is well man­aged, helps se­cure fi­nanc­ing to fund eco­nomic de­vel­op­ment within China as well as the over­seas ex­pan­sion of Chi­nese en­ter­prises. more im­por­tant, the stock mar­ket is an ideal plat­form to raise fi­nanc­ing for some of the Bri’s projects. ac­cord­ing to pub­lished data, as of Fe­bru­ary 2016, the to­tal cap­i­tal­iza­tion of stock mar­kets in China was es­ti­mated to be Us$11.049 tril­lion (in­clud­ing Us$3.165 tril­lion from Hong Kong). this ac­counts for 15.9 per­cent of the Us$69 tril­lion cap­i­tal­iza­tion among the 60 ma­jor stock ex­changes glob­ally.1 yet it was es­ti­mated that Us$5 tril­lion in wealth was wiped out dur­ing the 2015 stock mar­ket col­lapse in main­land China.2 Given the mag­ni­tude of loss within such a short pe­riod, the in­ci­dent dam­aged public con­fi­dence in the abil­ity of the Chi­nese govern­ment to man­age the coun­try’s stock mar­kets. the Chi­nese stock mar­ket needs to be well man­aged or it will be per­ceived as the world’s largest de facto casino, which may have down­stream im­pli­ca­tions not just for China, but also the coun­tries con­nected to the BRI net­work.

the spread of ‘ghost Cities’

Fol­low­ing the 2007/2008 global fi­nan­cial cri­sis, eco­nomic stim­u­lus mea­sures taken by China re­sulted in the build­ing of many “ghost cities” over the past decade. a pop­u­la­tion den­sity of 10,000 peo­ple per square kilo­me­ter is the stan­dard set by the min­istry of Hous­ing and Ur­ban­rural De­vel­op­ment in China. any pop­u­la­tion den­sity with less than half of this bench­mark is clas­si­fied as a “ghost town/city.”3 While it is hard to es­ti­mate the ex­tent of the ghost city prob­lem in China, a 2015 study by Baidu’s Big Data lab at­tempted to track Baidu’s users on a daily ba­sis over a pe­riod of six months in 2014 and 2015, and was able to de­ter­mine its users’ home lo­ca­tion with the help of a clus­ter­ing al­go­rithm.4 the re­sult showed that there are cur­rently more than 50 ghost cities in China.

Based on anec­do­tal ev­i­dence, the amount of con­crete con­sumed in China be­tween 2011 and 2013 was greater than the en­tire amount con­sumed by the Us over the whole of the 20th cen­tury. the money spent on con­struc­tion in these ghost cities is also re­spon­si­ble for swelling the Chi­nese govern­ment’s debt. more­over, these cities prob­a­bly won’t be suf­fi­ciently pop­u­lated in the long run, given China’s de­mo­graphic trends. the coun­try’s cur­rent pop­u­la­tion of 1.411 bil­lion5 is pro­jected to de­cline af­ter peak­ing at 1.415 bil­lion in 2030.6 If the ghost city phe­nom-

enon is not man­aged prop­erly, it could re­sult in a new asian fi­nan­cial cri­sis.

Per­haps a short-term mea­sure would be to trans­form some of these cities into cam­puses for tech­ni­cal uni­ver­si­ties and cre­ate sil­i­con Val­ley­like tech­nol­ogy parks for star­tups. In ad­di­tion, some of the cities could be used as cor­po­rate train­ing cen­ters and re­tire­ment towns to cater for the coun­try’s age­ing pop­u­la­tion.

Man­ag­ing jobs and the Com­ing tech tsunami

De­vel­op­ments in tech­nol­ogy are set to un­leash a dig­i­tal tsunami that could have a ma­jor im­pact on em­ploy­ment. the col­lec­tive ef­fects of 3D print­ing, ro­bot­ics, ar­ti­fi­cial in­tel­li­gence, Big Data and the Hu­man Cloud,7 among other trends, prom­ise to be a dis­rup­tive game changer for busi­nesses and job mar­kets in both man­u­fac­tur­ing and ser­vices, par­tic­u­larly for China as “the world’s fac­tory.”

If China is clas­si­fied by wealth dis­tri­bu­tion (i.e. the re­gional con­tri­bu­tion to gross do­mes­tic prod­uct), the eastern coastal re­gions pro­duce around 60 per­cent of to­tal GDP as com­pared to the re­main­ing three re­gions, namely, the Cen­tral, Western, and north­east­ern re­gions, which oc­cupy most of China’s land mass.8 In ad­di­tion, in terms of pop­u­la­tion dis­tri­bu­tion of the four eco­nomic re­gions, the com­par­a­tively poorer re­gions (Cen­tral and Western) have a com­bined pop­u­la­tion of 506 mil­lion.9 this is com­pounded by the fact that in these poorer re­gions, par­tic­u­larly in the Western re­gion, there is a higher con­cen­tra­tion of eth­nic mi­nori­ties with a higher fer­til­ity rate. at a time when there is ris­ing trade pro­tec­tion­ism and the global eco­nomic out­look is any­thing but cer­tain, the pres­sures of the tech­nol­ogy tsunami and the im­pend­ing ef­fects on em­ploy­ment will be a chal­lenge for China, given that it is the most pop­u­lous na­tion on earth.

Man­ag­ing EN­VI­RON­MEN­TAL Chal­lenges

the eco­nomic suc­cess and trans­for­ma­tion of China in the last three decades is un­de­ni­ably im­pres­sive. How­ever, the speed and scale of China’s mas­sive in­dus­tri­al­iza­tion and ur­ban­iza­tion

The BRI will def­i­nitely face fund­ing chal­lenges, since it is a long-term ini­tia­tive with no fin­ish­ing date in sight. The Asian De­vel­op­ment Bank (ADB) es­ti­mates that in the Asia-pa­cific re­gion alone, in­fra­struc­ture in­vest­ments will re­quire US$1.7 tril­lion a year.

within such a com­pressed time has led to se­vere con­tam­i­na­tion and en­vi­ron­men­tal degra­da­tion of the land, wa­ter and air. In short, the state of the en­vi­ron­ment and public health are two hid­den costs for China’s eco­nomic achieve­ments.10

In re­cent years, with the fre­quent oc­cur­rences of smog in ma­jor cities, news re­ports of en­vi­ron­men­tal-re­lated dis­as­ters and ex­treme weather events have led China to ac­knowl­edge the im­por­tance of en­vi­ron­men­tal is­sues for its eco­nomic de­vel­op­ment.11

Per­haps, go­ing for­ward, it is no longer a choice be­tween eco­nomic progress and en­vi­ron­men­tal pro­tec­tion. What does one gain if one’s man­sion is lo­cated next to a garbage dump? even a coun­try

with the high­est GDP per capita and the largest for­eign re­serves would not be liv­able with­out safe agri­cul­tural pro­duce, clean wa­ter and fresh air.

China is Not alone

the four do­mes­tic chal­lenges iden­ti­fied above are not ex­clu­sive to China. With the emer­gence of penny stocks, day trad­ing, high-fre­quency trad­ing, short­ing and de­riv­a­tives found in de­vel­oped coun­tries, fi­nan­cial spec­u­la­tion in the stock mar­ket is es­sen­tially no dif­fer­ent from gam­bling or play­ing in casi­nos. since the on­set of the global fi­nan­cial cri­sis in 2007/2008 (which orig­i­nated in the Us sub­prime mort­gage cri­sis), most coun­tries around the world have suf­fered var­i­ous shocks, rang­ing first from a liq­uid­ity crunch and then from the ef­fects of quan­ti­ta­tive eas­ing with his­tor­i­cally low in­ter­est rates. this ex­ten­sive over­dose of fi­nan­cial mea­sures has cre­ated a dis­torted de­mand for ur­ban hous­ing in a num­ber of cities — a vari­ant of the ghost cities prob­lem in China. to­day, cities such as Van­cou­ver and toronto in Canada, auck­land in new Zealand, and syd­ney and mel­bourne in aus­tralia are suf­fer­ing over­priced res­i­den­tial prop­er­ties, with price-to-in­come ra­tios at his­tor­i­cal highs. as a re­sult, many pro­fes­sion­als are priced out of the mar­ket in these cities; while at the same time, a num­ber of in­vestors are pre­pared to own an empty house with the an­tic­i­pa­tion of fur­ther ap­pre­ci­a­tion in prices.

It is well doc­u­mented in both schol­arly ar­ti­cles and public me­dia that there are press­ing is­sues con­cern­ing global chal­lenges in­volv­ing the en­vi­ron­ment, rang­ing from cli­mate change to in­creas­ing de­mands for clean wa­ter, safe food, low-car­bon en­ergy, sus­tain­able agri­cul­tural prac­tices and bet­ter man­age­ment of fish­eries.

as for the im­pact of tech­no­log­i­cal trends, a study by The Econ­o­mist of 702 oc­cu­pa­tions looked at the prob­a­bil­ity of com­put­er­i­za­tion and the po­ten­tial job losses in the Us and es­ti­mated that 47 per­cent of jobs would be lost.12 sim­i­lar stud­ies on job losses in the UK and Ja­pan were 35 per­cent and 49 per­cent, re­spec­tively. the tran­si­tional pe­riod be­tween the death of past or ex­ist­ing oc­cu­pa­tions and the birth of new jobs can­not

In short, China, the world and the BRI are like three dif­fer­ent “pa­tients” suf­fer­ing from iden­ti­cal co-mor­bidi­ties of the same so­cial-eco­nomic ail­ments. If we push the med­i­cal metaphor fur­ther, all the three “pa­tients” will ur­gently need an “ex­per­i­men­tal drug” for treat­ment.

be ac­cel­er­ated, and the so­cial con­se­quences re­lated to the tran­si­tional pe­riod could be dire for many so­ci­eties.

the bri is Not IM­MUNE

the BRI will def­i­nitely face fund­ing chal­lenges, since it is a long-term ini­tia­tive with no fin­ish­ing date in sight. the asian De­vel­op­ment Bank (ADB) es­ti­mates that in the asia-pa­cific re­gion alone, in­fra­struc­ture in­vest­ments will re­quire Us$1.7 tril­lion a year, or a to­tal of Us$26 tril­lion through 2030.

Be­cause the BRI cov­ers a wide range of coun­tries with dif­fer­ent po­lit­i­cal and eco­nomic cir­cum­stances, po­ten­tial in­vestors may con­sider the

BRI a high-risk in­vest­ment, even if it is dif­fi­cult to quan­tify these risks. Un­less China were to bankroll the en­tire BRI, or the cen­tral banks of BRI part­ner economies were to share some of that bur­den, these risks — be they real or per­ceived — would be a chal­lenge for China, es­pe­cially since the world is still re­cov­er­ing from the 2007/2008 fi­nan­cial cri­sis. In con­trast, in­vestors, whether pri­vate or public, might pre­fer short-term spec­u­la­tive gains, as was seen ear­lier in the emer­gence of high-fre­quency trad­ing in fi­nan­cial mar­kets.

Given the scope of the BRI, en­vi­ron­men­tal chal­lenges will be in­evitable. al­though the Bri’s high-speed rail net­works, when com­pleted, would re­duce the over­all car­bon foot­print, the con­struc­tion of rail­ways and other in­fra­struc­ture projects on this scale would have an un­de­ni­able im­pact on the en­vi­ron­ment.13 Po­ten­tial de­struc­tion to nat­u­ral habi­tats and en­dan­gered species, green­house gas emissions from con­struc­tion equip­ment, noise pol­lu­tion, dis­rup­tion to ur­ban ar­eas and nat­u­ral ecosys­tems, and pol­lu­tion of wa­ter bod­ies are un­avoid­able.

the BRI may also cre­ate a new ghost cities prob­lem, given that it aims to es­tab­lish a net­work of in­dus­trial parks, sci­ence parks, ports, and cities/town­ships. this in part has to do with the sus­tain­abil­ity of the BRI. For the project to re­main eco­nom­i­cally vi­able, the high-speed rail net­works need a suf­fi­cient base-load of pop­u­la­tion to keep de­mand and uti­liza­tion rates high enough to off­set the con­struc­tion and in­vest­ment costs.

Given the wide range of coun­tries that the BRI in­tends to cover, it is likely that in­fra­struc­ture will be built ahead of de­mand. But if that de­mand does not ma­te­ri­al­ize as planned, would we end up see­ing a lot of ghost cities or ghost in­fra­struc­ture?

the BRI is fun­da­men­tally premised on the eco­nomic logic of trade lib­er­al­iza­tion and economies of scale. yet, with the ad­vances in 3D print­ing, cer­tain goods can be man­u­fac­tured on site and on de­mand, elim­i­nat­ing the need for them to be phys­i­cally trans­ported via freight. Dig­i­tal­iza­tion, par­tic­u­larly ai, will re­place many jobs; and the out­sourc­ing of pro­fes­sional ser­vices via the Hu­man Cloud will dras­ti­cally re­duce the need for white col­lar work­ers to be phys­i­cally lo­cated in of­fices.

these de­vel­op­ments would re­duce the uti­liza­tion rate of high-speed rail net­works and other forms of trans­port, with the ex­cep­tion of the trans­porta­tion of raw ma­te­ri­als. In short, the ques­tion arises whether evolv­ing tech­nolo­gies will change the cal­cu­lus of the BRI.

In short, China, the world and the BRI are like three dif­fer­ent “pa­tients” suf­fer­ing from iden­ti­cal co-mor­bidi­ties of the same so­cial-eco­nomic ail­ments. If we push the med­i­cal metaphor fur­ther, all the three “pa­tients” will ur­gently need an “ex­per­i­men­tal drug” for treat­ment.

Fur­ther­more, it is in China’s na­tional in­ter­est to play a more ac­tive role as the chief so­cioe­co­nomic physi­cian in treat­ing these dis­eases. China could ex­plore, through in­ter­na­tional col­lab­o­ra­tion with like-minded na­tions, pos­si­ble ro­bust “ex­per­i­men­tal drug” so­lu­tions to ad­dress these com­mon ail­ments that stand in the way of both China’s do­mes­tic and global needs. at a later stage, such pol­icy so­lu­tions could be mod­i­fied for each in­di­vid­ual BRI part­ner econ­omy ac­cord­ingly.

China’s tra­di­tional pol­icy ‘Com­pass’

While many po­ten­tial BRI stake­hold­ers are op­ti­mistic about join­ing this trans-con­ti­nen­tal club, skep­tics have brought up the lack of clar­ity re­gard­ing how the BRI will be im­ple­mented, es­pe­cially re­gard­ing the lack of an of­fi­cial blue­print as to what the BRI ex­actly en­tails.

How­ever, those more fa­mil­iar with China’s his­tor­i­cal ap­proach to eco­nomic de­vel­op­ment will rec­og­nize this as the coun­try’s sig­na­ture “com­pass ap­proach.” as ar­tic­u­lated by Zhang Wei­wei, China’s de­vel­op­ment model is es­sen­tially based

on the in­tended di­rec­tion or ori­en­ta­tion but with­out any ex­plicit blue­print or mile­stones.14

since the BRI is a col­lec­tion of many long-term projects, it may lit­er­ally take years, if not decades, to ma­te­ri­al­ize. there­fore, to the Chi­nese, the phi­los­o­phy of us­ing a com­pass rather than a “pre­scrip­tive blue­print” makes more sense (see Fig­ure 1 op­po­site). But is this com­pass ap­proach ap­pro­pri­ate for the BRI? While it is con­sis­tent with Chi­nese be­hav­ior over its cen­turies of civ­i­liza­tion — en­abling China to morph and change with flex­i­bil­ity and flu­id­ity over time — the com­pass ap­proach is in­com­pre­hen­si­ble to those out­side of China.

the bri’s Ex­ter­nal di­men­sions

China needs to rec­og­nize that the ex­ter­nal di­men­sions of the BRI are equally im­por­tant if not more so than the in­ter­nal fac­tors in China. For the coun­try to suc­cess­fully de­velop and re­al­ize the full value of the BRI, it will need to rely on the full co-op­er­a­tion and will­ing part­ner­ship of its stake­hold­ers. With­out ex­plicit mile­stones and de­tailed blue­prints, this may be dif­fi­cult and even cre­ate un­nec­es­sary mis­un­der­stand­ings be­tween China and its BRI part­ners. the longterm na­ture of the project may present added dif­fi­cul­ties. For ex­am­ple, due to dif­fer­ences in their time ori­en­ta­tion, prob­lems aris­ing dur­ing project im­ple­men­ta­tion may be per­ceived as not ur­gent or im­me­di­ate by China, but im­me­di­ate and ur­gent to its BRI part­ners.

the ex­ter­nal na­ture of the BRI also re­quires China to ex­am­ine the ini­tia­tive from its part­ners’ per­spec­tive. this is more than just a high-speed rail­way, or glob­al­iza­tion through eco­nomic or trade ar­range­ments (the an­glo-saxon con­cept of glob­al­iza­tion). the BRI is also a hard-wired net­work link­ing China to the ge­ogra­phies and economies of its BRI part­ner coun­tries. there­fore, any eco­nomic, po­lit­i­cal, or so­cial per­tur­ba­tions — whether stem­ming from within China or from its BRI part­ners, or oc­cur­ring dur­ing or af­ter the Bri’s con­struc­tion phase — would have an im­pact on all mem­bers along this net­work.

In other words, the suc­cess of the BRI club is mea­sured be­yond China and its com­mit­ment to the BRI, but also rests on the con­fi­dence of all BRI club mem­bers.

the dif­fer­ence BE­TWEEN China and the rest of the world

One may won­der: why don’t China’s BRI part­ners adopt the com­pass ap­proach as well? While this ap­proach pro­vides flex­i­bil­ity — which has served China well in the past, es­pe­cially for projects with long ges­ta­tion pe­ri­ods — one needs to bear in mind that China’s suc­cess in us­ing the com­pass ap­proach is due to the in­her­ent sheer size of its ge­og­ra­phy and econ­omy, as well as the coun­try’s depth of so­cio-cul­tural and his­tor­i­cal cap­i­tal. With these in­her­ent and unique Chi­nese fac­tors, China has a band­width that other coun­tries do not pos­sess.

to il­lus­trate this point, let us con­sider the vari­able of time ori­en­ta­tion. metaphor­i­cally and cul­tur­ally speak­ing, the dif­fer­ence in their per­spec­tives of time as well as their ref­er­ence units would be in terms of hours for the Chi­nese mind, as com­pared to sec­onds or min­utes for other coun­tries. Be­cause the time ori­en­ta­tion of the Chi­nese is so dif­fer­ent and viewed in a pro­tracted time win­dow — not only over years, but decades or even longer — China is thus able to adopt this non-de­fin­i­tive ap­proach, be­cause it is able to off­set losses from fail­ures with im­mense re­serves and ride over rough patches.

In con­trast, most if not all of China’s BRI stake­hold­ers can­not af­ford such lux­ury. With­out the same re­silience and his­tor­i­cal depth that China has, stake­hold­ers may not be well equipped to han­dle the reper­cus­sions of these spillover ef­fects, es­pe­cially with the long-term na­ture of the BRI.

China’s global pos­ture

Fur­ther com­pound­ing the prob­lem is China’s pos­ture to­ward the rest of the world. af­ter the sec­ond World War, the world or­der as con­ceived by the an­glo-saxon pow­ers was based on the be­lief that a sin­gle set of uni­ver­sal rules could and should be ap­pli­ca­ble to all.

With the ex­cep­tion of China and other coun­tries with closed economies, the world af­ter 1945 be­came ad­dicted to the an­glo-saxon world or­der — where in­sti­tu­tions such as the World Bank, the In­ter­na­tional mone­tary Fund and the World trade Or­ga­ni­za­tion es­poused an eco­nomic man­age­ment phi­los­o­phy that ad­vo­cated ex­plicit de­vel­op­men­tal mile­stones, and that phi­los­o­phy has be­come well en­trenched.

In con­trast, China does not be­lieve nor ac­cept this ab­so­lutist philo­soph­i­cal frame­work. rather, it sub­scribes to a more rel­a­tivis­tic mind­set where each coun­try will ap­ply what it deems fit. While China be­lieves its sys­tem is ro­bust and flex­i­ble, it does not ac­tively seek to im­pose it upon oth­ers.

therein lies the prob­lem: at the core of the Chi­nese mind­set stems a sys­tem of be­lief rooted in rel­a­tivism, which is re­flected in the Chi­nese out­look and phi­los­o­phy. In­sti­tu­tion­ally speak­ing, the Chi­nese view of the global world or­der is in­clu­sive and fluid but non-dog­matic in na­ture. this is also re­flected in China’s non-pre­scrip­tive ap­proach to prob­lem solv­ing. By ex­ten­sion of this logic, the com­pass ap­proach is there­fore the most suit­able pol­icy tool for the Chi­nese, be­cause this al­lows China max­i­mum lat­i­tude to ac­com­mo­date any un­fore­see­able changes.

On the other hand, other BRI club mem­bers may not nec­es­sar­ily share this view, es­pe­cially if they have been con­di­tioned to the an­glo-saxon ap­proach. the in­sti­tu­tional in­com­pat­i­bil­ity of China’s com­pass ap­proach with her BRI part­ners may lead to anx­i­ety. While BRI stake­hold­ers wish to reap the ben­e­fits of the part­ner­ship, with­out a de­tailed set of rules and ex­plicit mea­sures to

ad­dress the un­cer­tainty of fu­ture chal­lenges and pro­vide a prob­lem-solv­ing guide, stake­hold­ers will have lit­tle as­sur­ance that they are not get­ting out of the fry­ing pan and into the fire — es­pe­cially with the mem­ory of the 2007/2008 global fi­nan­cial cri­sis.

What are China’s op­tions at this junc­ture? China needs to de­code its com­pass ap­proach, mak­ing it com­pre­hen­si­ble and ac­cept­able to the global com­mu­nity, and com­ple­ment it with a blue­print of de­tailed pol­icy mea­sures to han­dle dif­fer­ent sce­nar­ios.

China’s Mar­shall plan 2.0

Over the past decade, given the dis­trust in the ne­olib­eral an­glo-saxon in­ter­na­tional or­der, the slow­down in eco­nomic growth and the con­tin­u­ing re­cov­ery from the af­ter­shocks of the 2007/2008 fi­nan­cial cri­sis, it is un­der­stand­able that China’s at­tempts at evan­ge­liz­ing the BRI to the world has faced dif­fi­cul­ties and been met in some quar­ters with sus­pi­cion. China has faced its fair share of naysay­ers and de­trac­tors, cit­ing geopo­lit­i­cal con­straints, project scop­ing over­reach, mis­trust of China’s mo­tives and even com­pet­ing projects. re­gard­less of China’s in­ten­tions, the BRI does present an av­enue of mu­tual co-op­er­a­tion that ben­e­fits both China and the BRI club, es­pe­cially for many de­vel­op­ing na­tions strad­dled be­tween China and europe.

His­tor­i­cally, the Us-led mar­shall Plan af­ter the sec­ond World War al­lowed for the cre­ation of a sta­ble en­vi­ron­ment through the re­moval of in­ter­state trade bar­ri­ers, the re­duc­tion of reg­u­la­tions and the mod­ern­iza­tion of busi­ness prac­tices — nec­es­sary pre­req­ui­sites to re-es­tab­lish­ing a mar­ket econ­omy in europe. this led to the pros­per­ity of europe and the even­tual es­tab­lish­ment of the euro­pean Union.

In to­day’s con­text, what would be the most ideal equiv­a­lent of a “mar­shall Plan 2.0” that could po­ten­tially help over­come the global trust deficit? this mar­shall Plan 2.0 would not be a par­tic­u­lar coun­try-cen­tric plan, but one that would truly ad­dress cur­rent and emerg­ing global needs.

For China, the BRI could be the mar­shall Plan 2.0. But the plan that the rest of the world de­sires is more than the BRI.

China’s suc­cess in us­ing the com­pass ap­proach is due to the in­her­ent sheer size of its ge­og­ra­phy and econ­omy, as well as the coun­try’s depth of so­cio-cul­tural and his­tor­i­cal cap­i­tal. With these in­her­ent and unique Chi­nese fac­tors, China has a band­width that other coun­tries do not pos­sess.

We would rec­om­mend that China pri­or­i­tize and al­lo­cate re­sources to de­velop the “ex­per­i­men­tal drug” so­lu­tion to­gether with a de­tailed blue­print to tackle the four so­cial-eco­nomic ail­ments (or chal­lenges) men­tioned above for the three “pa­tients.” this would be equiv­a­lent to a mar­shall Plan 2.0 that would ad­dress the cur­rent and fu­ture needs of the global com­mu­nity.

Given the com­plex ecosys­tem of economies that will be con­nected to China as the BRI takes shape, an “op­er­at­ing sys­tem” ap­proach is para­mount es­pe­cially for the short-term fo­cused BRI stake­hold­ers who sim­ply do not have the same lat­i­tude and so­cio-po­lit­i­cal band­width to

adopt China’s com­pass ap­proach with­out clear and ex­plicit means to tackle any im­me­di­ate and po­ten­tial chal­lenges.

Just like the op­er­at­ing sys­tem of a com­puter or a mo­bile de­vice, which in­ter­faces be­tween the soft­ware ap­pli­ca­tions and man­ages the com­puter hard­ware and re­sources, this Chi­nese op­er­at­ing sys­tem could be a clear set of rules or best prac­tices for how China will deal with prob­lems that may arise, so that stake­hold­ers can adopt and/or mod­ify them for their own spe­cific needs.

such an ef­fort to de­velop an op­er­at­ing sys­tem would be valu­able, be­cause China could use this to demon­strate a com­mon vi­sion and shared val­ues for the world, built around the China model. taken to­gether with the mar­shall Plan 2.0, this would pro­pel China’s lead­er­ship role fur­ther, en­abling it to be con­ferred with a “li­cense of trust” and en­able it to glue the world com­mu­nity to­gether through the BRI.

the world joins the ‘CHI­NESE dream’

If China does this well, it could at­tain Pres­i­dent Xi Jin­ping’s “Chi­nese Dream,” not just for the Chi­nese peo­ple but for all of the world. this is the miss­ing piece that could cre­ate a cat­alytic ef­fect and le­git­imize the lead­er­ship po­si­tion of China in the BRI. It could also ef­fec­tively lead to the Chi­nese Dream be­ing seen as morally and in­tel­lec­tu­ally su­pe­rior to the amer­i­can Dream.

For all of the coun­tries within its ge­o­graph­i­cal cov­er­age, the BRI is like a mem­ber­ship club to par­tic­i­pate in the Chi­nese Dream. the BRI net­work could thus be­come an ex­clu­sive pipe­line for these economies out­side of China to ac­cess, re­al­ize and en­joy the trickle-down ef­fect of the Chi­nese Dream, with­out the need to phys­i­cally re­side in China, un­like the many le­gal and il­le­gal im­mi­grants who have had to travel to the Us to re­al­ize the amer­i­can Dream. When the BRI is com­pleted, more than half of the world will ef­fec­tively be con­nected to China po­lit­i­cally, cul­tur­ally and eco­nom­i­cally.

to re­turn to the anal­ogy of com­put­ers or mo­bile de­vices, the com­mon vi­sion and shared val­ues work like an op­er­at­ing sys­tem with an “ap­pli­ca­tion mar­ket” plat­form that al­lows China to add or up­load fu­ture “Chi­nese Dream” soft­ware up­grades de­vel­oped by China or her BRI part­ners. Just like how ap­pli­ca­tion con­sumers need to have faith in the plat­form ser­vice provider and its app de­vel­op­ers, this can­not be done with­out com­plete trust in China’s moral le­git­i­macy and the ro­bust­ness of its ap­proach. this is crit­i­cal for the Bri’s suc­cess, be­cause only then will China and her BRI part­ners be able to cap­i­tal­ize on and re­al­ize the full po­ten­tial value of the BRI.

In clos­ing, if China is will­ing and able to ac­tively de­velop its mar­shall Plan 2.0 by turn­ing around the four chal­lenges it faces into op­por­tu­ni­ties and cre­at­ing an op­er­at­ing sys­tem so­lu­tion, there will be sig­nif­i­cant im­pacts on China, above and be­yond eco­nomic con­sid­er­a­tions. such a ro­bust op­er­at­ing sys­tem would mean that China has truly cre­ated a Bei­jing model of de­vel­op­ment. and this would be as if China were able to travel back in time to 1793 to make China great again,15 chang­ing the fate of the mid­dle King­dom and re­dress­ing the op­por­tu­nity missed by em­peror Qian­long. Christo­pher h. lim is se­nior fel­low at the s. ra­jarat­nam school of in­ter­na­tional stud­ies, Nanyang tech­no­log­i­cal uni­ver­sity, sin­ga­pore.

Vin­cent Mack zhi wei is as­so­ci­ate re­search fel­low at the s. ra­jarat­nam school of in­ter­na­tional stud­ies, Nanyang tech­no­log­i­cal uni­ver­sity, sin­ga­pore.

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