Obscurity Smudges China’s Belt & Road

By

Frank Tian Xie

When Chinese president and CCP boss Xi Jinping visited Iran this month, he is no doubt giving the world a clear signal, that he is taking the “One Belt and One Road" (referring to the Silk Road Economic Belt and the 21st Century Maritime Silk Road）strategic plan seriously and rolling it into action. But, to what extent would the “Belt & Road” plan produce real and significant return on China’s proposed huge investment? That is a completely different proposition.

Simply put it, the “Belt & Road” is nothing but a new slogan parallel to the Great Leap Forward of the Mao era, where a three-year plan was put in place hastily in order to move China pass Great Britain and United States in a few years. Indeed, China surpassed the British, but not until decades later, largely due to its huge population base, and is still decades away from catching up with America.

In essence, the Belt & Road is mostly aiming at revitalizing the inner provinces of China in the northwestern regions, and at the same time funneling China’s hugely over capacity sector of construction material and steel and glass industries. In the plan, China even plans to offer credit and loans to the countries along the belt and road so they would agree to join and participate. The Belt & Road is in fact an attempt to connect southeastern Asia, central Asia, the Middle East, and part of Africa. But, any statesmen with a sense of geopolitics and global economics would naturally ask the questions like: “Why this route? Why now? And Why haven’t the British, Dutch, Spanish, or the American think of such an idea, if it’s such a great investment opportunity?” The answer is, quite simply, it’s not a good investment opportunity.

Xi Jinping’s recent visit to Iran is noticeably intended to strengthen a link on the Belt & Road, but such an act sends chilly signal to the rest of the world, and may deteriorate Beijing’s relationship with the West that Beijing can’t afford to let go sour. In the end, Beijing must make a decision to choose between the West and Iran, the archenemy of the West. When Iran’s nuclear ambition and its deadly stance against Israel is ever swelling, Beijing may not be able to stay too close with this new friend in the Middle East, as China’s own confrontation with Islam adherents in its Muslim-concentrated Xinjiang region is also a nightmare that bothers the occupants of Zhongnanhai Chinese government compound.

When the original Silk Road embarked on its first trades between East and West 2200 years ago, it had a real purpose, a profitable and mutually beneficial exchange among the parties involved. The Maritime Route, on the other hand, pioneered by early Europeans, also had huge profit margin on products and goods needed and wanted by people of the Orient and Europe. Where are the economic incentives of the new Belt & Road that China proposes? That could realize monetary potential that the Dutch and British did not envision? Virtually none! Take for example the logistics, should the Belt be composed of regular rail or the new high speed rail that China just learned from Japan and France and now aggressively marketing internationally against Japan? A regular rail link serves not much benefit over the long, stretched desert and unpopulated areas between China and Middle East. A high speed rail line is even worse given the pity number of potential passenger count and inclement weather along the line, just look at the first storm of 2016 when much of the high speed rail routes are shut down or slowed down in the calm and prosperous area of southern China.

While China may be able to benefit from building either the regular rail or high speed rail by utilizing its saturated construction sector, the final bill may not be willingly footed by those poor countries along the Belt, as this was not their original idea the first place. In the end, partner countries along the Belt and Road will be put to a test, are they willing to absorb and support China’s over-capacity construction sector and bear the financial burden? By then, the nightmare of the escalating debts of local Chinese governments will resurface, only this time, it’s the central government that will shoulder the debts of building the Belt and Road.

When China builds the Belt and Road, it irritates another partner in the region: Russia. Russians hope a link between China and Europe goes through its vast country, so the Russians can play a role and benefit from it. But the proposed Belt actually bypasses Russia’s central and eastern part, something China’s northern neighbor does not want to see happening.

The passage way of Belt & Road is, quite honestly, not a very peaceful real property. This is especially true with regard to intensified confrontations in the Middle East and current state of anti-terrorism by global community.

China may have the intention to use the Belt & Road as a way to strengthen the role of APEC and as a weapon against the impact of TPP. That purpose may not be fulfilled either, as even countries along the Belt and Road will have to consider the misconducts and misbehaviors China has had in WTO and other trade pacts, in deciding on how to do business with China, when China wants to dump its cheap consumer products to those countries and get raw materials in return.

As a part of the Belt, China’s ambition to use the Port of Piraeus of Greece as its naval supply base, has already alerted the US and NATO. While the Greeks may be hungry for cash and investment, its allies in the West may not want to face a potential Chinese incursion, given what happened in Ukraine and Crimea not too long ago.

Roads are meant to connect, they have been built since ancient times to connect people, land, wealth, and resources. Based on this criterion, the Belt & Road proposal of CCP really connects nothing but obscurity. There are not many people, not much fertile land, and not much resources that need to be transported along the route.  A Belt & Road that connects nothing substantial could, naturally, never be materialized and utilized.

In Chinese, Belt & Road is Yi Dai Yi Lu, or, Dai and Lu, in which Dai means belt and Lu means road. The character of Dai also has another meaning: “to lead”. In fact, that may be exactly what China is going to have to do in the end: lead the road with its own investment, only to find the party goers are poor neighbors who can’t afford to pay, and just want to be free riders along the way!

 (Dr. Frank Tian Xie is John M. Olin Palmetto Professor in Business and Associate Professor of Marketing at University of South Carolina Aiken, in Aiken, South Carolina, USA)