China begins work on $1T global agenda
Western leaders remain unsure of bigger, modern ‘Marshall Plan’
VANG VIENG, Laos — Along the jungle-covered mountains of Laos, squads of Chinese engineers are drilling hundreds of tunnels and bridges to support a 260-mile railway, a $6 billion project that will eventually connect eight Asian countries.
Chinese money is building power plants in Pakistan to address chronic electricity shortages, part of an expected $46 billion investment.
Chinese planners are mapping out train lines from Budapest, Hungary, to Belgrade, Serbia, providing another artery for Chinese goods flowing into Europe through a Chinese-owned port in Greece.
The massive infrastructure projects, along with hundreds of others across Asia, Africa and Europe, form the backbone of China’s ambitious economic and geopolitical agenda. President Xi Jinping of China is literally and figuratively forging ties, creating new markets for the country’s construction companies and exporting its model of state-led development in a quest to create deep economic connections and strong diplomatic relationships. Unprecedented size
The initiative, called “One Belt, One Road,” looms on a scope and scale with little precedent in modern history, promising more than $1 trillion in infrastructure and spanning more than 60 countries. To celebrate China’s new global influence, Xi is gathering dozens of state leaders, including President Vladimir Putin of Russia, in Beijing on Sunday.
It is global commerce on China’s terms.
Xi is aiming to use China’s wealth and industrial know-how to create a new kind of globalization that will dispense with the rules of the aging Western-dominated institutions. The goal is to refashion the global economic order, drawing countries and companies more tightly into China’s orbit.
The projects inherently serve China’s economic interests. With growth slowing at home, China is producing more steel, cement and machinery than the country needs. So Xi is looking to the rest of the world, particularly developing countries, to keep its economic engine going.
“President Xi believes this is a long-term plan that will involve the current and future generations to propel Chinese and global economic growth,” said Cao Wenlian, director general of the International Cooperation Center of the National Development and Reform Commission, a group dedicated to the initiative. “The plan is to lead the new globalization 2.0.”
Xi is rolling out a more audacious version of the Marshall Plan, America’s postwar reconstruction effort. Back then, the United States extended vast amounts of aid to secure alliances in Europe. China is deploying hundreds of billions of dollars of statebacked loans in the hope of winning new friends around the world, this time without requiring military obligations. American upgrade
The United States and many of its major European and Asian allies have taken a cautious approach to the project, leery of bending to China’s strategic goals. Some, like Australia, have rebuffed Beijing’s requests to sign up for the plan. Despite projects on its turf, India is uneasy because Chinese-built roads will run through disputed territory in Pakistan-occupied Kashmir.
Germany’s minister of economics and energy, Brigitte Zypries, plans to attend the meeting in Beijing.
The Trump administration just upgraded its participation. Originally, it planned to send a Commerce Department official, Eric Branstad, the son of the incoming U.S. ambassador to Beijing, Terry Branstad. Now, Matthew Pottinger, senior director for Asia at the National Security Council, will attend instead — a signal that the White House is enhancing its warm relationship with Xi by honoring his endeavor with the presence of a top official. Investor worries
China’s outlays for the plan have been modest: Only $50 billion has been spent, an “extremely small” amount relative to China’s domestic investment program, said Nicholas R. Lardy, a China specialist at the Peterson Institute for International Economics in Washington.
The investments could complicate Beijing’s effort to stem the exodus of capital outflow that have been weighing on the economy. The cost could also come back to haunt China, whose banks are being pressed to lend to projects that they find less than desirable. By some estimates, more than half of the countries that have accepted Belt and Road projects have credit ratings below investment grade.
“A major constraint in investor enthusiasm,” said Eswar Prasad, professor of trade policy at Cornell University, “is that many countries in the Central Asian region, where the initial thrust of the initiative is focused, suffer from weak and unstable economies, poor public governance, political stability and corruption.”