China is advancing – are its measures thruthful?

The People’s Republic of China is indeed primarily promoting the ‘Belt and Road’ initiative as a strategy to develop neighbouring economies and to create better global trade connections between Asia and Europe (and to some extent Africa). Beijing has first tested the concept of a new silk road inside its own territory by trying to better connect its underdeveloped (south-)western provinces to the developed (north-)eastern parts of the country. Contradicting the mentioned claim that China is only targeting states with weak economies to later exploit them politically stands the fact that it has also invited economically strong players, such as the U.S. or Germany, to join the global initiative. The approach was simply neglected by these big influential economies of the world as they feared a larger interference in their domestic economies. Furthermore, other economic frameworks such as e.g. the European Union have reserved a critical stance towards the project as well, citing concerns over parallel financing structures.

Thus, the argument of Beijing’s selective grouping of members inside the BRI prevails. While the Chinese leadership has opened the inclusivity of the initiative aside from political lines in the last years, e.g. by inviting Australia to join although it plays no geographical role in Eurasian cohesion, the neglection of geopolitically problematic states such as Kosovo or Ukraine is still painting an image of regions that are artificially made up by China. By putting up a neutral and solely economic image of the initiative, Beijing has shown confusion regarding the overall goals of the BRI. This is neither supporting nor conflicting with the argument of China’s political motives which could be underlined by a growing expansionist rhetoric regarding Xi Jinping’s ‘China Dream’ or the development goals for the POC’s centennial in 2049.

Chinese investments inside the BRI largely seem to not fully play along the lines of a pure ‘win-win’ cooperation. While there are examples where China one-sidedly bargained from BRI projects such as the Hambantota port in Sri Lanka (which was never realistically manageable for Sri Lanka and had clear strategic incentives for Beijing in the first place), there are other investment cases that currently rather seem like long-term losses for the Chinese side, like the Pakistani Economic Corridor or the Montenegrin highway project.

Aside from the pure financial investment regimes, the side that is mostly profiting from the growing number of bilateral cooperation agreements are Chinese state-owned companies. Primarily targeting construction companies which are in need to find new service markets for their overcapacities, the economic and infrastructural development of BRI partner countries is at a later stage also profitable for more high-tech firms from China which are for example producing high-speed trains. These can easily beat other international rivals by price dumping through national financial funding from Chinese state banks and by relying on the formerly agreed political involvement of business elites in the cooperating states.

Finally, the terminology of ‘win-win’ must be assessed by the actual profiteers of the ‘Belt and Road’ Initiative. While few examples of Chinese investments over the last years (mostly in least developed countries and separate from concrete BRI framework) have proven to actually benefit local labour forces and societies, like the successful build-up of the Ethiopian shoe manufacturing industry and the connected export railway line, most other examples of pseudo-private shares from state companies and investors are remaining questionable and have even provoked internal consequences for many countries. This can be seen by e.g. the toppling of the former North Macedonian government over Chinese corruption allegations or the China-Taiwan dispute inside the Czech Republic.

The confronting political views and differing perceptions of business cooperation leave the whole concept of a ‘win-win’ cooperation rather questionable, aside from profiting local elites and Chinese state corporations. On the other hand, this doesn’t directly result in any concrete strategic leverage for the POC in most of its partner countries as the BRI is still largely coming across institutional hurdles, especially regarding national legislation and business rules or supranational frameworks like the European Union (see e.g. the Budapest-Belgrade railway dispute). While the ‘win-win’ aspect thus rather remains an ideological instrument of Chinese communication strategies and soft power, it must be mentioned that its appeal to many political leaders and businessmen largely stems from the lack of alternative global financing systems. This development is therefore also a direct consequence of the West remaining financially weakened by the aftermath of the recent banking and monetary crises while international institutions, such as the International Monetary Fund, are seemingly incapable of answering the development needs of weak and unstable countries.