Opinion: China at the vanguard of globalisation and the great paradox of our age
Richard Heydarian says there will likely be setbacks and controversies as the Belt and Road Initiative reshapes the global economy in China’s own image but the way forward is neither paranoia nor complacency
This week, China took a great leap forward in realising its grand vision of reviving the ancient Silk Road, which ushered in the first stage of globalisation in human history.
In his keynote address, during the mega summit for the “Belt and Road Initiative”, Chinese President Xi Jinping pledged US$113 billion to build a new network of transcontinental railways, ports and highways, which will transform the Eurasian and African infrastructure landscape as never before.
Addressing delegates from around 100 nations, Xi expressed his country’s commitment to “defend and develop an open world economy” against threats of trade protectionism emanating from the West. As the world’s largest trading nation, China has direct interest in ensuring the wheels of globalisation continue to grind on.
Xi’s latest comments echoed his high-profile speech earlier this year at the World Economic Forum, where he described globalisation as a “big ocean that you cannot escape from”, decrying trade protectionism as “locking oneself in a dark room”.
Underscoring the growing traction of the belt and road vision, as many as 29 state leaders, including Italian Prime Minister Paolo Gentiloni, Russian President Vladimir Putin and Turkish President Recep Tayyip Erdogan, attended what was dubbed as the biggest diplomatic event of the year in Beijing.
Hoping to cash in on new opportunities in the transcendental infrastructure landscape, Western industrial giants such as Siemens and General Electric also sent representatives to the summit,
Realising the importance of the event, the United States decided to upgrade its participation by sending its chief China hand, Matthew Pottinger, who is the senior director for Asia at the National Security Council in the White House. Also in attendance were heavyweights such as the director of the International Monetary Fund, Christine Lagarde, and UN secretary general António Guterres.
It is increasingly becoming clear to everyone that the initiative is more than just a pipe dream. Beijing has already set up an initial US$40 billion Silk Road Fund, with another US$50 billion coming from the Beijing-based Asian Infrastructure Investment Bank. Chinese policy banks such as the China Development Bank and Export-Import Bank of China are expected to play a central role in funding up to US$1.3 trillion in projects related to the initiative in coming decades.
In scale and ambition, it is like no other project in human history, as Beijing aims to connect its industrial heartland to Western Europe via mega land-based and maritime trade and transport routes. Though costly and highly risky, the initiative makes perfect sense, since it allows China to overcome unsustainable infrastructure overcapacity at home, reduce transaction costs on trade and redirect its huge savings towards more fruitful investment overseas.
Over the past decade, Southeast Asian countries such as Thailand and Malaysia were among top recipients of overseas Chinese infrastructure investment. More recently, however, larger Southeast Asian nations such as Indonesia and the Philippines have joined the ranks.
No wonder China’s near neighbours in Southeast Asia have been among the most enthusiastic supporters of the new Silk Road initiative. Malaysian Prime Minister Najib Razak, Indonesian President Joko Widodo and Philippine President Rodrigo Duterte, who also attended the summit, are known for placing economic ties with China at the centre of their commercial diplomacy.
The Duterte administration, in particular, recently launched the “Dutertenomics” initiative, an ambitious and unprecedented plan to overhaul the Philippines’ public infrastructure by spending up to US$167 billion over the next five years. Up to 12 big-ticket projects, worth a total of US$4.4 billion, will be financed and implemented by Beijing, which has rapidly emerged as a key partner for national development in the Philippines.
The initiative, however, also has its fair share of critics, who have raised concerns over China’s broader geopolitical intensions; the commercial viability as well as environmental impact of mega-infrastructure projects; the heavy reliance on Chinese labourers and engineers; and the possibility that many poorer nations, as in the case of Laos, Venezuela and Sri Lanka, may end up in a debt trap due to cost overruns and excessive borrowing.
So far, Western countries as well as Japan have kept some distance, largely viewing China’s infrastructure-focused projects with unease and suspicion. Across varying regions, one major concern is that the initiative may end up as a One Road, One Way project, further solidifying China’s position as the world’s leading exporting nation.
Notwithstanding lingering anxiety among prospective partners, no one can deny that China can play a central role in meeting developing Asia’s US$1.7 trillion infrastructure spending needs per year.
There will likely be setbacks and controversies along the way, as China reshapes the global economy in its own image. The way forward, however, is neither paranoia nor complacency, but mutually beneficial cooperation coupled with clear-eyed learning from past mistakes.
All of a sudden, communist China is emerging as the new vanguard of globalisation, as the West succumbs to bouts of economic nationalism. This is perhaps the greatest paradox of our age.
Richard Heydarian is a Manila-based academic and author