The Atlanta Journal-Constitution
China seeking to forge new trade ties
Infrastructure spending used to create new markets.
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 paying for power plants in Pakistan to address chronic electricity shortages, part of an expected $46 billion worth of 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 stateled development in a quest to create deep economic connections and strong diplomatic relationships.
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 knowhow 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 state-backed loans in the hope of winning new friends around the world, this time without requiring military obligations.
Xi’s plan stands in stark contrast to President Donald Trump and his “America First” mantra. The Trump administration walked away from the Trans-Pacific Partnership, the U.S.-led trade pact that was envisioned as a buttress against China’s growing influence.
“Pursuing protectionism is just like locking oneself in a dark room,” Xi told business leaders at the World Economic Forum in January.
As head of the Communist Party, Xi is promoting global leadership in China’s own image, emphasizing economic efficiency and government intervention. And China is corralling all manner of infrastructure projects under the plan’s broad umbrella, without necessarily ponying up the funds.
China is moving so fast and thinking so big that it is willing to make short-term missteps for what it calculates to be long-term gains. Even financially dubious projects in corruption-ridden countries like Pakistan and Kenya make sense for military and diplomatic reasons.
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.
But it is impossible for any foreign leader, multinational executive or international banker to ignore China’s push to remake global trade.
Germany’s minister of economics and energy, Brigitte Zypries, plans to attend the meeting in Beijing. Western industrial giants like General Electric and Siemens are coming, as they look for lucrative contracts and try to stay in China’s good graces.
And 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.
Influence via infrastructure
As the sun beat down on Chinese workers driving bulldozers, four huge tractor-trailers rolled into a storage area here in Vang Vieng, a difficult three-hour drive over potholed roads from the capital, Vientiane. They each carried massive coils of steel wire.
Half a mile away, a Chinese cement mixing plant with four bays glistened in the sun. Nearby, along a newly laid road, another Chinese factory was providing cement for tunnel construction.
Nearly everything for the Laos project is made in China. Almost all the labor force is Chinese. At the peak of construction, there will be an estimated 100,000 Chinese workers.
When Xi announced the One Belt, One Road plan in September 2013, it was clear that Beijing needed to do something for the industries that had built China’s new cities, railways and roads — state-led investment that turned it into an economic powerhouse. China did not have a lot left to build, and growth started to sputter.
Securing an economic partnership with Laos is a linchpin in Beijing’s strategy to chip away at U.S. power in Southeast Asia. After Trump abandoned the Trans-Pacific Partnership in January, U.S. influence in the region is seen to be waning. The rail line through Laos would provide a link to countries that China wants to bring firmly into its fold.