13 November 2018
The Belt and Road Initiative represents a fundamental play by China to reshape the world around it. In the latest instalment of The Debate Papers, we asked David Brewster and Elizabeth Ingleson whether the United States should be concerned about the economic and political influence these projects may bring for China.
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The Belt and Road Initiative (BRI) represents a fundamental play by China to reshape the world around it. It involves the expenditure of large amounts of money — more than US$1 trillion according to some sources — in developing connectivity and other essential infrastructure across Eurasia, the Indian Ocean region, Africa and South Pacific, and indeed much of the world.[^1]
Whether or not the initiative principally has economic motivations — something that can be fairly debated — it certainly has considerable strategic consequences. For the United States these consequences can go far beyond concerns about the control of infrastructure projects or the economic and political influence those projects may bring for Beijing.
Reshaping the Indian Ocean region
The strategic impact of the BRI is probably most evident in the Indian Ocean region (IOR), where it has the potential to fundamentally reshape the strategic dynamics of the region.
As a starting point, China has historically been almost entirely cut off from access to the Indian Ocean. The Himalayas and other mountain ranges that run the length of southern Asia create a formidable barrier across the continent, cutting off most of the Eurasian hinterland from the Indian Ocean. Until very recently there were no significant transport routes — roads, railways or rivers — connecting China with the Indian Ocean.[^2] This meant it had little or no regional presence and only limited interactions with Indian Ocean states. China’s attempts to promote the exploits of Zheng He, a Chinese mariner who made several voyages across the Indian Ocean in the early 15th century, only serves to underline China’s virtual absence from the region.
In the absence of major Eurasian powers such as China or Russia, and due to India’s weakness as a regional player, for the last 500 years the Indian Ocean has been dominated by a succession of extra-regional naval powers. The United States Navy became the latest extra-regional power when it more or less stepped into the shoes of the Royal Navy in the 1970s.
But the BRI has the potential to change all that. The maritime leg of the BRI, the Maritime Silk Road, involves building a network of ports and way stations across the Indian Ocean that will be available to Chinese commercial ships (and, according to some, potentially also the Chinese navy). That will facilitate the growing presence of the Chinese navy in the region, expected by some analysts to exceed 20 warships within the next five or so years (in the order of the Soviet naval presence in the early 1980s). This in itself would represent a challenge to the regional balance of power.
An even bigger strategic consequence will come from China’s growing land-based connections with the Indian Ocean. The BRI will carve several new overland transport routes and economic corridors between China and the sea: from Yunnan province in southern China across Myanmar to a Chinese-owned port at Kyaukpyu, and from Xinjiang province in western China across Pakistan to a Chinese-owned port at Gwadar. For the first time in history, people and goods (and, potentially, armies) will be able to move relatively freely between Chinese territory and the waters of the Indian Ocean.
This has many consequences. For one thing, it will effectively make China a resident power of the Indian Ocean. This could fundamentally change the nature of China’s relationships in the region, not only with Pakistan and Myanmar but countries throughout the IOR.
The great wall of the Himalayas previously ensured that China’s security interests in its Indian Ocean neighbours were quite limited. With expanding overland connections in the region, those interests will multiply. The most obvious example is in Pakistan, where the construction and operation of the US$62 billion China Pakistan Economic Corridor[^3] will involve hundreds of thousands of Chinese nationals. Now, China will care a lot about threats from, say, religious extremists or Baluchi separatists to Chinese people and property in Pakistan.[^4] The same could be said in Myanmar and other countries across the region.
China will now have a lot more reasons to involve itself in the affairs of its neighbours, and to create its own security presence in the region. The jostling for influence we have seen in recent weeks in countries such as the Maldives and Sri Lanka is only the start of a much longer and widespread game.
Losing friends and influence
There are a lot of implications for the United States of a step change in China’s role in the IOR. One of the key motivations for US opposition to the Soviet presence in Afghanistan in the 1980s came from fears that Russia would grab the ‘warm water’ port of Gwadar, allowing it to breach US efforts to contain the Soviet Navy in icebound or geographically restricted ports on Russian territory.
A Chinese naval presence at Gwadar, or in Myanmar, Sri Lanka or Tanzania[^5] would be no less significant. The United States may not be trying to comprehensively ‘contain’ China in the same way as the Soviet Union, but the US Navy could nevertheless use the Pacific ‘island chains’ as unsinkable aircraft carriers to restrict Chinese naval movements out of its Pacific coast ports in the event of a conflict. That strategy will be severely undermined by a substantial Chinese naval presence in the Indian Ocean.
More importantly, overland connectivity between China and the Indian Ocean has the potential to substantially change the economic and political orientation of many Indian Ocean states. Again, the most obvious example is Pakistan, where Islamabad now looks first to Beijing for economic and political support. But it is also occurring to a greater or lesser extent with many countries on the southern Asian littoral (Sri Lanka, Maldives, Myanmar) and the coast of Africa (Sudan, Tanzania, Mozambique). The United States will find itself slowly but surely losing political and economic influence among those countries, and security relationships along with it.
The epicentre of US strategic influence in the IOR has always been the Persian Gulf, where the US Fifth Fleet rules the waves. This predominance may not be under threat at the moment, but China is already planning for the day when the Fifth Fleet moves on. This includes building close relations with Gulf states such as Qatar (which currently hosts the forward headquarters of USCENTCOM).[^6]
Some in the region are asking themselves how long will it be before an administration in Washington questions why the United States is spending untold billions securing oil headed for Shanghai? That day may not be now but it will almost surely come.
Washington’s limited options
Among the biggest reasons for Washington to worry about these developments is that its options to respond to them are limited.
Concerns among many Western analysts about the BRI centres on China’s ownership of ports (e.g. Gwadar in Pakistan, Hambantota in Sri Lanka and Kyaukpyu in Myanmar) and the consequences of ‘debt-book diplomacy’ for governments in the region.[^7] But Washington has shown only limited and belated interest in providing alternatives for Indian Ocean countries that want to improve infrastructure and connectivity as a key to economic development. It seems logical that the more alternatives that can be offered to states in the region, the better off everyone will be. Tokyo gets this and is prepared to open its checkbook,[^8] but Washington’s efforts haven’t cut through.
Of greater significance is the long-term change in patterns of trade and investment and strategic influence that the BRI is likely to cause in the IOR — essentially from east-west orientations to north-south, towards China. To be sure, the United States is facing similar pressures in East Asia. But at least in East Asia, the US role is buttressed by a web of bilateral alliances and relationships anchored by countries such as Japan, South Korea and Australia. That web is simply not present in the IOR where security relationships, and therefore US influence, tend to be much more fragile.
The US main regional response has been to develop a security partnership with India, which shares many interests in balancing China. That is important, but it does not provide an answer to Washington’s problems, especially given India’s own agenda in the region. The United States will need to fundamentally rethink its strategy in the IOR, which may include working with (rather than leading) diverse coalitions in response to specific threats. Ultimately, the United States will probably need to evolve towards a different security role in the region, perhaps closer to facilitator-in-chief than commander-in-chief.
Whatever the US response ends up being, the BRI will profoundly change the position of the United States in the region.
Destined for war. The end of engagement. A new Cold War. There is no shortage of ink being spilt on the current state of Sino-American relations and worries about its trajectory.[^9] While we are not entering a new cold war and Sino-American relations are not “destined” for anything, America’s policy of engagement with China — bedrock of the relationship since the 1970s — may indeed be coming to an end.[^10] The Trump administration has now declared America’s China policy to be one of “strategic competition.” In December 2017, its National Security Strategy — an administration-wide foreign policy blueprint — labelled China (along with Russia) a competitor.[^11] By October 2018, Vice-President Mike Pence doubled down on this position. Speaking at the Hudson Institute, he provided a long list of grievances and presented a narrative of Chinese aggression, calling for “defending our interests with renewed American strength.”[^12] Trump and Pence are not alone. American policymakers and commentators on all sides of politics are coming out in support of strategic competition.[^13]
The Belt and Road Initiative cannot be decoupled from this context. Pence listed it as one of the reasons for this new approach. While there are some specific issues that China should be called out for (flouting international law in the South China Sea and its brutal treatment of minorities in Xinjiang are the most obvious examples), the BRI is not one of them. And none justify a shift to strategic competition. The very fact that the BRI is included in the argument supporting strategic competition illustrates just how thin the evidence for this position really is.[^14]
The reasons the United States should not worry about the BRI therefore operate at two registers. First, simply because the initiative itself does not warrant such a response. Second, and even more importantly, the United States should not worry about the BRI because doing so provides a pernicious and misleading justification for the broader policy of strategic competition — a policy that should be critiqued not normalised. If the BRI represents anything about the bigger picture of Sino-American relations, it is that international trade — like international relations — should not be seen as a zero-sum game. And the history of the Sino-American relationship shows that when they are considered in such terms, no one wins.
Definitions are hazy, and that’s part of the problem
One reason the BRI has generated so much debate is that it is an evolving infrastructure program that is still years away from completion. Of the almost 70 countries and organisations involved, most have only signed memorandums of understanding. This makes it hard to assess the project as a whole. Indeed, there is no definitive list of each project or official map illustrating what the completed initiative will look like.[^15] Even the nomenclature has evolved. In 2016, China’s official bureau of translation changed the project’s English name from “One Belt, One Road” to “Belt and Road Initiative.” The former was a literal translation of the Chinese phrase, but implied one rather than multiple trade routes.
These shifting boundaries and definitions allow the BRI to be construed as many things at once. It has been seen as an infrastructure project providing participating nations with much-needed development, a means of providing China with new geopolitical bases, or a broader symbol of a world order being shaped by China.[^16]
There are reasons for critique, but not for US worry
Many critics argue that the BRI is fuelling a debt-trap: locking China’s partners into financial dependence to be exploited for geostrategic purposes. All the while, autocratic regimes get propped up with easy-access loans and local workers are sidelined as China brings its own labour. Sri Lanka is often used as prime example. In 2017, it granted Beijing a 99-year lease on its port in Hambantota. This came only after its leaders realised they were unable to repay the US$1.4 billion borrowed from China to build the port in the first place. Some see this as evidence that China’s real aim with the BRI is to foster debt in order to acquire more geopolitical leverage, such as a new port. In June 2018, the New York Times ran a full-page spread explaining such a position. “In Hock To China, Sri Lanka Gave Up Territory,” the headline proclaimed.[^17] In his October speech, Pence warned Hambantota “may soon become a forward military base for China’s growing blue-water navy.”[^18]
But signing a lease does not mean Sri Lanka has ceded territorial sovereignty. It is common for ports to be leased to foreign companies — both private and state-owned. Sixty per cent of all American ports are owned by foreign companies, including state-owned enterprises.[^19] It is also common for ports to be leased on long-term contracts. Most of Australia’s largest ports operate under 99-year leases.[^20]
In discussing Hambantota, many point also to Djibouti, on the other side the Indian Ocean. In May 2017, Djibouti unveiled a new port jointly built with China Merchants Holdings. As part of the deal, Djibouti permitted China to establish a military base nearby — China’s first overseas base. Djibouti is also home to America’s only permanent military base in Africa.
While the Chinese military base was tied to the building of the port, it tells us far more about the geopolitics of the region and far less about the BRI per se. It illustrates Djibouti’s own desire to balance the power play between the United States and China (and in the process gaining the benefits of a port). To reiterate: Djibouti now hosts key bases for both China and the United States.
The problem lies in using the example of Djibouti to extrapolate a broader story about the BRI. America might not like what is happening in Djibouti. But conflating it with Hambantota or other BRI initiatives is misleading. It flattens key differences and only serves to unnecessarily escalate wider concerns about Chinese behaviour.
The fact is, in the case of the Hambantota default, Sri Lanka’s prime minister Ranil Wickremesinghe is shaping the situation very differently. He has explicitly said he will not tolerate a foreign military presence at Hambantota. With one eye also on easing India’s concerns as much as his own country’s critics, earlier this year he announced he was sending his navy’s southern command to the port to ensure this remains the case.[^21] These BRI projects are not top-down impositions by China but rather initiatives shaped by the participating countries.[^22]
There are certainly reasons to critique the way in which the BRI is being managed. But there is no substance to the extrapolated fears that China is reaping geopolitical gains from these so-called debt-traps. Some now point to the fact that Djibouti has now also accrued high levels of debt.[^23] But chronology is crucial here. This debt came months after Djibouti permitted the base. It is not an example of a coercive hidden-agenda on China’s part.
In fact, for the BRI to succeed China needs financially strong economic partners. The very same New York Times article on Hambantota later quoted Jin Qi, chairwoman of the Silk Road Fund who articulated this very point. Reflecting on Sri Lanka’s debt default, she noted, “if we cannot manage the risk well, the Belt and Road projects cannot go far or well.” As Peter Cai points out in a recent report, China has its own domestic economic interests that are driving the BRI — building infrastructure project in its own underdeveloped border regions, developing its industrial output to export higher-end technology, and finding an outlet for its excess industrial capacity.[^24] This can only happen if its partners pay back their loans, which is exactly why its recent deal with Japan to complete 350 joint infrastructure projects was so important.[^25]
History shows the perils of a zero-sum mentality
At the heart of concerns about the BRI are worries that it represents a power shift towards an international system shaped not by the United States but by China. Some even fear that China is using America as a model for doing so. A former CIA officer recently alleged that China’s leaders have conducted extensive research into America’s Marshall Plan.[^26] Established in the aftermath of World War II, the Marshall Plan provided huge amounts of American economic aid to Western Europe. It was an important aspect of America’s growing postwar empire. China itself is invoking a different period of history: the ancient Silk Road.
Yet perhaps the most important lesson is not from either of these historical moments, but instead from the history of Sino-American relations itself. During the 1950s and 1960s, at the height of the Cold War, the United States and China were similarly locked in a dynamic of competition rather than engagement. Using economic aid projects in countries throughout Africa and Asia, both tried to gain diplomatic and strategic leverage in the recipient countries. The Soviet Union also competed alongside them.[^27] As historian Gregg Brazinsky argues, Sino-American competition in what was then called the Third World brought little benefit to the recipient countries and ultimately propelled American involvement in the Vietnam War.
There are fundamental differences between today’s context and the Cold War — ours is not a bipolar system and not defined by an ideological struggle between capitalism and communism. But well beyond the cold war prism, nation states do compete. And when engagement ends, that competition can very quickly become zero-sum. For the United States to continue to frame the relationship in terms of strategic competition is to go down a dangerous and potentially self-fulfilling path: in which both sides increasingly shift further away from cooperation towards aggression, seemingly in response to the other. Political scientists call this the security dilemma. In Sino-American relations specifically, many talk of the “Thucydides trap.”
Yet theories can overlook contingency. In the simplest terms: policymakers always face choices. And right now, American foreign policymakers are choosing to present a narrative of Chinese aggression to justify their policy of strategic competition. Since abandoning the Trans-Pacific Partnership, the Trump administration has been searching for a new response to China’s growing power. Like with North Korea and Iran, Trump is hoping toughness will work. But the difference between China and these other nations is that its real threat to the United States is an existential one: China’s relative power in the Pacific is rising and seemingly undermining American hegemony in the region. Precisely because the stakes are so high, the United States should not abandon engagement nor should it use the BRI as a means of doing so.