BY: CLAYTON CHENEY
The Belt and Road Initiative (BRI)—also known as One Belt, One Road—while promoted as an economic development initiative, will have important implications for the global and regional international orders. As China finances large-scale transportation, energy and digital infrastructure projects across the globe, it seeks to expand its influence and alter the current global order. Through infrastructure investments, China could hasten its rise as a regional hegemon and global superpower by increasing its economic connections and influence. Financial investment in underdeveloped nations will result in governments supporting Chinese interests and, in some instances, becoming financially beholden to Beijing through predatory lending schemes.
As the U.S. reduces its engagement in multilateral institutions, China is more than willing to fill global and regional leadership voids. China has benefitted greatly, in economic terms, from the liberal global order, so through the BRI it will not seek to create new global or regional orders; however, it will aim to reshape such orders in a manner that conforms to its form of state-led capitalism. This may come at the expense of political liberalism, human rights and democracy, which will have harmful long-term consequences for international stability and security.
An implicit Chinese goal of the BRI is strengthening its diplomatic and military influence regionally and globally, though experts following the BRI closely have differing viewpoints on the ability of China to achieve this goal. Testifying before Congress, Ely Ratner from the Council on Foreign Relations stated, “The influence China is garnering from Belt and Road—and the ancillary effects on security and military matters of importance to the United States—far outstrip the actual economic value of the projects.” Conversely, Francis Fukuyama and others recently wrote, “If the actual objective of China’s lending programs is to build influence internationally, it has arguably been largely ineffective on that front,” adding that “nations in South Asia that are among the largest recipients of Chinese Belt and Road lending have shifted to realign strategically with India, Japan, or the United States.”
Increasing the likelihood of growing Chinese influence in Asia was the U.S. decision to withdraw from the Trans-Pacific Partnership (TPP). The TPP, which was at the center of then-President Obama’s “pivot” towards Asia, was a free trade deal that would have encompassed 40% of the global economy. Notably China was not a party to the TPP, meaning that the U.S. involvement served as a significant counter-balance to growing Chinese economic dominance in Asia. The free trade agreement signified the importance the U.S. placed on engagement with Asia and thus had strategic diplomatic and military significance. In essence, “A TPP inclusive of the United States would have buttressed America’s broader diplomatic and military rebalancing towards Asia by supporting the economic development of allies and reaffirming America’s commitment to the region.”
Through BRI projects, China is filling the leadership vacuum created by the U.S.’ withdrawal from the TPP, which places China at the center of regional economic activity in Asia. While China would have remained the most powerful economy in the region even if the U.S. had stayed in the TPP, the U.S. self-extraction from the agreement signaled to Asian countries that Chinese ascendency as the regional hegemon is a certainty. Developing countries in the region have little option but to engage in the BRI, even on terms that may be detrimental to their long-term financial stability. The U.S. suffered a self-inflicted geostrategic wound through pulling out of the TPP and “withdrawal from this important, high-quality trade pact has hobbled American strategy in Asia and provided an opportunity for the spread of Chinese influence.”
In addition to economic integration, China is attempting to increase its influence through more coercive financial measures. Numerous countries BRI countries are low-income nations that will be saddled with unsustainable debt because of BRI projects in their countries. These debt traps are situations where “China creates a relationship with a poorer country, puts that country in a financial position that’s somewhat untenable and then that forces that poorer country to support China’s geostrategic aims.”
Infrastructure projects are often financed through the recipient nation taking on loans with the sovereign itself as the debtor and when the creditor is another sovereign or banks with substantial ties to another sovereign, such as the China Development Bank (CDB) in the case of the BRI, which will impact the bilateral relations between these sovereign nations. A recent report by the Center for Global Development identified eight nations that are at acute risk of obtaining unsustainable debt through BRI projects. There are concerns that these countries, as well as other participants in the BRI, could be coercively subject to Chinese influence due to unsustainable debt owed to China or to Chinese state-owned companies. In addition to gaining diplomatic leverage, China may be using debt traps to “gain footholds in some of the world’s most strategic places, and perhaps even deliberately luring vulnerable nations into debt traps to increase China’s dominion as the United States’ influence fades in the developing world.”
The most prominent example of a BRI debt trap evolving into strategic gain for China is in Sri Lanka. China invested in numerous Sri Lankan infrastructure projects resulting in Sri Lanka being $8 billion in debt to China. In 2017, the Hambantota Port “was handed over to the control of a Chinese company for 99 years after the Sri Lankan government was unable to meet debt repayments. Such swaps fuel fears that China is building a network of strategic assets that could in the future be converted to military facilities.” While it is unclear if such debt traps are an explicit Chinese objective of the BRI, they can potentially provide China with significant strategic gains in the region. Regional powers have noted that debt-for-equity swaps are a threat to national sovereignty, with the Australian Foreign Minister stating, “They are sovereign nations. We want to ensure that they retain their sovereignty, that they have sustainable economies and that they are not trapped into unsustainable debt outcomes. The trap can then be a debt-for-equity swap and they have lost their sovereignty.”
While Sri Lanka is the most notable example of China using debt leverage to achieve geostrategic objectives, it is hardly the only example. China established its first overseas naval base in Djibouti and has control over Chinese-built ports in Pakistan and Myanmar. China is using debt traps to obtain long-term leases for strategically located ports to increase its ability to project maritime prowess. Through state-owned companies, China has obtained control or a controlling interest in at least 76 ports in 35 countries. These ports are primarily used for commercial purposes, but the vast nature of this maritime expansion combined with the growing Chinese naval capabilities creates geopolitical and security concerns among other nations.
An additional aspect of Chinese financing of large infrastructure projects abroad that causes concern is the fact that their bilateral lending practices are opaque, making it difficult to determine if their loans as part of the BRI are predatory. The little evidence that has been obtained regarding loans provided by the CDB for BRI projects indicates that the terms vary widely from interest-free loans to fully commercial rates. Because the financing of BRI projects lacks transparency, the international community assumes that China is attempting to achieve strategic objectives, such as debt-for-equity swaps, rather than having purely development-related objectives.
Further complicating the situation is the asymmetrical relationship in financial sophistication between China as the creditor and developing nations as the debtors. Western nations and multilateral institutions, such as the World Bank and IMF, should level the playing field to avoid situations of unsustainable debt. This can be achieved through providing consultation services to nations evaluating the terms of potential BRI projects. Western nations and multilateral institutions “must do more than nag poorer nations not to take Chinese money. At a minimum they should help BRI countries assess schemes and show them how to gain from transparency, high standards and formal contracts.” By assisting recipient nations during the negotiation process, lending and investment are more likely to adhere to international standards, which would decrease the probability of nations undertaking unsustainable debt burdens.
China would also benefit from operating BRI lending in a more transparent manner and on terms consistent with international standards. Many BRI nations in Asia and beyond have been closely monitoring what transpired in Sri Lanka, which has created pushback against BRI projects. In order for China to implement the BRI on the scale that it desires, it needs to avoid the perception that BRI projects result in unsustainable debt for the recipient nations.
Since the end of World War II, the U.S. has promoted a liberal, rules-based international order. This American-led order has been marked by free trade agreements, alliances with like-minded nations, international institutions, the promotion of democracy and protection of human rights. As China expands its economic, diplomatic and military influence through the BRI, the future of the previous global order is called into question. Foreign policy experts disagree on the extent to which China seeks to maintain the current global and regional orders, but there is consistent agreement that, as China rises as a global power, it will seek to have a greater role in reshaping these orders fit its interests.
The retreat of the U.S. from the region will “increase the likelihood not just of the crumbling of the U.S.-led order in Asia, but also the rise of a China-dominated region.” The economic and diplomatic integration accompanying the implementation of the BRI will shape the future of the regional order in Asia. There is growing concern that the regional order promoted by China will not adhere to liberal values that have been a key element of the previous order. Two Asia experts described these concerns stating, “By fueling debt dependency, advancing a ‘China First’ development model, and undermining good governance and human rights, the initiative offers a deeply illiberal approach to regions that contain about 65 percent of the world’s population and one-third of its economic output.” Other experts contend that China has largely benefitted from the open and liberal international order, which has “provided the conditions for China and other rising states to rise.”
These two views are not mutually exclusive, as China will preserve a liberal economic order, but simultaneously promote an illiberal political order. Under this model, “If Belt and Road proceeds as China envisions, it is likely that an illiberal regional order will develop in which democracy and individual rights are largely subservient to economic growth and social stability.” Through maintaining economic liberalism, China can enhance its economic integration with countries in Asia and other regions of the world, which is essential to maintaining a high rate of economic growth domestically. As Shiping Tang notes, “China’s ideal international order can be understood as a durable post-Westphalian order with economic and financial globalization. This fits well with the CCP’s principle of embracing economic liberalism without political liberalism.” In many ways, this type of economically liberal and politically illiberal order mirrors the governance architecture that China has created domestically.
True democracies in the region, the U.S. and other Western democracies should be concerned at the potential for political illiberalism being a part of any new regional order. This would be in stark contrast to the historical international priorities of the U.S., which has placed promoting democracy and protecting human rights as key components of its foreign policy. Kori Schake depicts the worrisome future world order should the U.S. continue to cede its leadership role, as a “Chinese-led world order would be one of privileges rather than rights, power rather than law, tribute rather than alliance.” This type of illiberal political world order would make it significantly more difficult for the U.S. to achieve foreign policy objectives, would have adverse impacts on individual freedoms, and would result in greater international instability. It is up to nations that value the current liberal, rules-based international order to “ensure that the illiberal values China is exporting under the guise of the [BRI] do not take root across the globe.” This will require constructive global leadership and engagement from nations that have benefitted most from the current global and regional governance architectures.
Clayton Cheney is an attorney and part-time student in the MS in Global Affairs program at New York University’s Center for Global Affairs. He has a background in international human rights law and his current studies focus on transnational security and energy issues.
Please note that opinions expressed in this article are solely those of our contributors, not of Political Insights, which takes no institutional positions.
Read Full Article China's Belt And Road Initiative: Reshaping The Global And Regional Orders - Political Insights : https://ift.tt/2PgXMyR
Bagikan Berita Ini
0 Response to "China's Belt And Road Initiative: Reshaping The Global And Regional Orders - Political Insights"
Post a Comment