Sieren's China: A rocky silk road
September 20, 2019
Six years ago, Chinese President Xi Jinping launched the Belt and Road Initiative, also known as the New Silk Road project. One of the main concerns outside of China has been that countries participating in the project might sink into debt, become dependent on Beijing, and lose their sovereignty. China has even been accused of behaving in a neocolonialist manner in Africa.
Two recent Western studies present a more differentiated view. According to one conducted by Investigate Europe, there is no evidence of economic damage to participating countries or of extreme dependence because of the New Silk Road. On the contrary, it found that investments so far had, on the whole, had a positive effect on local economies and labor markets.
China has implemented over 3,000 projects around the world; from an oil pipeline in Myanmar to a railway line in Kenya. There has only really been great controversy over two projects in Sri Lanka, with China being accused of luring the former into a debt trap. However, China plays a small role in Sri Lanka and only holds 10% of its external debt.
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The West still gives plenty of money
A Bertelsmann Stiftung study found perhaps surprisingly that between 2013 and 2017 considerably more Western money had been invested into the countries along the Silk Road than Chinese funds. Despite this, there is a tendency to think that China is taking more of its fair share from the West.
Only in five countries was China considered a more important partner than Western countries.
Nevertheless, it must be said that Beijing is developing political capital from its investments, while Western countries, which do not act as a monolith, have a problem of coordinating their interests with each other. Moreover, Beijing is more interested in ensuring that politicians in partner countries incorporate Chinese investment into their success stories than Western governments have been in the past.
There is also another accusation that is not quite right: China is not trying to split the European Union. It is the governments of certain EU member states themselves which are using investments into the New Silk Road project to free themselves from Brussels' micro-managing. For example, the Hungarian government, although it receives large sums of money from the EU, is often happy to veto any EU attempt to issue a joint declaration criticizing China because it hopes to receive more money from Beijing in future. This approach also seems to goes down better with voters than trying to find a compromise with Brussels.
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Consolidating global status
Both the above-mentioned studies draw the conclusion that China is using its investments to consolidate its status as a global power and to spread the yuan around the world. As such, Beijing is no different from other governments but the difference perhaps is that the West has tended to export a particular system of values that Beijing is less interested in.
The greatest problem with the New Silk Road project is the lack of transparency. The loan conditions are often unclear and vary from country to country. China does not think that the bilateral agreements it makes with other countries should be of any interest to the West. On the other hand, the government must surely understand that there might be some concern and skepticism about its investments on the part of the West if it is unwilling to be transparent.
The Bertelsmann study indicates that China's investments are for profit while the West's investments are part of development projects.
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Through their eyes
What we underestimate in the West is that while we're worried about losing influence because of the New Silk Road, the perspective from the recipient countries is different. For them, the project represents hope and the opportunity to be connected to wealthier states. China seems able to better understand the perspective of these countries than the West and to exploit this for its own purposes. That's why it has built up a collection of bilateral trade and development deals.
The studies recommend that the West develops its own institutions, technologies, business models and sets of values to propose alternatives to the offers from China. They also say that the EU should attempt to set standards in third-party countries that Chinese investments also have to adhere to. This is easier said than done. The EU is currently not able to find a common policy towards China and this does not seem likely to happen any time soon.
The lack of unity in the West has less to do with China's rising influence than the fact that we cannot actually find compromises and work together.
Frank Sieren has lived in Beijing for over 20 years