China Is Qui­etly Re­shap­ing the World

The Diplomatic Insight - - Editor's Note -

he Pak­istani town of Gwadar dust-col­ored cin­derblock houses cliffs, desert, and the Ara­bian Sea, it was at the for­got­ten edge of the earth. Now it’s one cen­ter­piece of China’s “Belt and Road” ini­tia­tive, and the town has trans­formed as a re­sult. Gwadar is ex­pe­ri­enc­ing a storm of con­struc­tion: a brand-new con­tainer port, new ho­tels, and 1,800 miles of su­per­high­way and high-speed rail­way to con­nect it to China’s land­locked west­ern prov­inces. China and Pak­istan as­pire to turn Gwadar into a new Dubai, mak­ing it a city that will ul­ti­mately house 2 mil­lion peo­ple. China is quickly grow­ing into the world’s most ex­ten­sive com­mer­cial em­pire. By way of com­par­i­son, af­ter World War II, the Mar­shall Plan pro­vided the equiv­a­lent of $800 billion in re­con­struc­tion funds to Europe (if cal­cu­lated as a per­cent­age of to­day’s GDP). In the decades af­ter the war the United States was also the world’s largest trad­ing nation, and its largest bi­lat­eral lender to oth­ers. Now it’s China’s turn. The scale and scope of the Belt and Road ini­tia­tive is stag­ger­ing. Es­ti­mates vary, but over $300 billion have al­ready been spent, and China plans to spend $1 tril­lion more in the next decade or so. Ac­cord­ing to the CIA, 92 coun­tries counted China as their largest ex­ports or im­ports part­ner in 2015, far more than the United States at 57. What’s most as­tound­ing is the speed with which China achieved this. While the coun­try was the world’s largest re­cip­i­ent of World Bank and Asian De­vel­op­ment Bank loans in the 1980s and 90s, in re­cent years, China alone loaned more to de­vel­op­ing coun­tries than did the World Bank. Un­like the United States and Europe, China uses aid, trade, and for­eign di­rect in­vest­ment strate­gi­cally to build good­will, ex­pand its po­lit­i­cal sway, and se­cure the nat­u­ral re­sources it needs to grow. Belt and Road is the most im­pres­sive ex­am­ple of this. It is an um­brella ini­tia­tive of cur­rent and fu­ture in­fra­struc­ture projects. In the next decades, China plans to build a thick web of in­fra­struc­ture around Asia and, through sim­i­lar ini­tia­tives, around the world. Most of its fund­ing will come in the form of loans, not grants, and Chi­nese state-owned en­ter­prises will also be encouraged to in­vest. This means, for ex­am­ple, that if Pak­istan can’t pay back its loans, China could own many of its coal mines, oil pipelines, and power plants, and thus have enor­mous lever­age over the Pak­istani gov­ern­ment. In the mean­time, China has the rights to op­er­ate the Gwadar port for 40 years. Belt and Road is China’s big­gest for­eign pol­icy ini­tia­tive to date, but it’s no Mar­shall Plan. Beijing is not do­ing this out of al­tru­ism, or out of a de­sire to sta­bi­lize the coun­tries it loans to. So why spend such enor­mous sums on its neigh­bors? For one thing, China is too de­pen­dent on its east­ern seaboard and the nar­row Malacca Strait near Sin­ga­pore to get goods in and out of its vast ter­ri­tory; for ex­am­ple, over 80 per­cent of its oil goes through the Strait. So build­ing trade routes through Pak­istan and Cen­tral Asia makes sense. Belt and Road also helps China in­vest its huge cur­rency re­serves and put its many idling state-owned en­ter­prises to work. The ini­tia­tive also has a pos­i­tive side ef­fect for Beijing: Some Chi­nese that it’s about com­pet­ing with the United States. At a min­i­mum, it cre­ates lever­age to make many smaller coun­tries feel eco­nom­i­cally be­holden to China. So what does all this mean for the “lib­eral in­ter­na­tional or­der” that the U.S. did so much to cre­ate and up­hold over the past seven decades? The ef­fect is not all bad. If the point of that or­der was to se­cure peace and pros­per­ity, there are ways in which China’s largesse ac­tu­ally com­ple­ments it. Coun­tries that trade their trad­ing part­ners, but with the world in gen­eral. In its own way, China is thus help­ing to up­hold in­ter­na­tional peace. Yet even if there is less in­ter­state war un­der a “Pax Sinica,” an era when many small “donee” states are be­holden to China means that on a slew of other is­sues—from coun­tert­er­ror­ism to sanc­tion­ing coun­tries at odds with the im­pose its will. On the pros­per­ity ques­tion, China’s eco­nomic im­pact on the coun­tries it lends to so far seems mixed at best. While the 20 per­cent or so that China

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