Posted: March 13th, 2024

China’s Belt and Road Initiative: Geopolitical Implications and Economic Benefits

China’s Belt and Road Initiative: Geopolitical Implications and Economic Benefits
1. Introduction
China’s Belt and Road Initiative is one of the most significant and substantial infrastructure and trade developments in global economic history. The “Belt and Road” refers to the Silk Road Economic Belt. This is a modern vision of the ancient Silk Road which operated during the Han Dynasty around two thousand years ago which, at its zenith, enabled the exchange of the great riches of the Chinese Empire with the Roman Empire. The ancient silk roads were established routes and trading posts which were used not just for silk trading but for many other goods, religions, philosophies and technologies from the East. This initiative led by the Chinese government is multifaceted; with a focus on enhancing regional connectivity and embracing much broader concepts of trade and economic cooperation between countries in the East and the West of the world. This is a platform of cooperation that connects China and the Asia-Pacific region with the Europe and North Africa through land routes that run across the Central Asia and maritime routes that link the South East Asia with South Asia, Africa and Europe. The initiative was launched in 2013 and, up until now, more than sixty countries from Asia, Europe, Oceania and East Africa have signed the initiative and expressed their support. According to the initiative, each single project to be conducted under the Belt and Road is a cooperative project, meaning that a country’s own development strategy will be combined with that of the global initiative. The aim is to further economic growth and reform in the region and beyond, providing support for enhanced policy coordination and trade and financial integration that may support economic relationships and bolster connectivity. This will in turn support continued joint and shared progress on trade, knowledge and innovation between China and its partner countries. However, the initiative has not been so successful in the western countries where the free world ideal has long been promoted. Navigating the connections between ancient silk trading and the new modern initiative under such geopolitical complexities would not be a straightforward opportunity. The emergence of the Chinese-led modern Silk Road is accelerating global shifts but in complex and often still unquantifiable ways. It is with this backdrop that the research paper seeks to critically explore how the Belt and Road has the potential to shift the economic and political landscapes across significant portions of the globe and the opportunity it presents to the future of the world trade.
1.1 Background of China’s Belt and Road Initiative
To understand the significance and potential impacts of China’s Belt and Road Initiative (BRI), it is necessary to look at the aggression and the development paths pursued by some BRI partner countries, in addition to the strategic and economic considerations from the Chinese government. As Mao (1973) observed, international political and economic environments significantly shaped China’s policy behaviors concerning humanitarian, development, and security matters. Since the establishment of the People’s Republic of China in 1949, China suffered from isolation from the international community due to its ideological incompatibility with the West and a mass of China’s poor population. As a result, the Chinese top leadership, represented by the Chinese Communist Party (CCP), adopted a self-reliance policy which focused on state modernization, economic reforms, and technology advancements. Mao emphasized that China should not “listen to others and must go its own way well”. However, after the reform and opening up policy since 1978, Deng Xiaoping, the paramount leader at that time, proposed the concept of “seeking truth from facts” (CRIENGLISH.com, 2013), pointing out that more engagement with the international community and being skeptical about any kind of absolutism was essential for China’s modernization. This change in ideology led to an evolution in Chinese development strategy from self-reliance to an increasing open and proactive engagement with other countries. As Yiping (2016) noted, when China’s economy became the world’s second-largest in 2010 after surpassing Japan, the central government initiated the “Belt and Road” vision. The capital used to found BRI goes back to old times when China aimed to create a vast land and sea trade route leading to the Middle East, Europe, and Africa.
1.2 Objectives of the Research Paper
The objective of this research paper is to examine the geopolitical implications and economic benefits of the Belt and Road Initiative. China’s Belt and Road Initiative is one of the most significant and substantial foreign policy initiatives launched in recent years, as well as the most far-reaching and successful development plan in the world. It was announced by the President of the People’s Republic of China, Xi Jinping, in 2013, with the aim of enhancing regional connectivity and embracing globalization to achieve common prosperity. From a geopolitical perspective up to the 21st century, the extent of geopolitical impacts is largely studied globally. Geopolitics is the study that analyzes geography, history, and social science with a particular reference to spatial politics and patterns at various scales. However, the Belt and Road Initiative has not been studied extensively in the context of today’s dynamic in the global system. The initiative has two main components, which are the Silk Road Economic Belt and the 21st Century Maritime Silk Road. The Silk Road was established during the Han Dynasty in 206 B.C. to 220 A.D. The main objective of the road was to link the capitals of Chang’an in China and Baghdad in the Middle East, from which the road extended to Europe. The road linked the agrarian and commercial countries with the nomadic and agricultural areas. Moreover, it plays an important role in changing the agricultural revolution as a significant trade route in the world.
2. Geopolitical Implications of China’s Belt and Road Initiative
“Geopolitical Implications of China’s Belt and Road Initiative” is the main part of the research paper which highlights and specifies the importance of China’s Belt and Road Initiative on global politics. It evaluates how the initiative is going to affect global power dynamics and what the main issues are with regional security in the context of the project. It administers how the providers of the project, such as political institutions and enterprises, are going to adapt to the new development. It also gives special attention to describing the rationale of other countries regarding the project. According to Ritika Vattani, the writer of the dissertation “China’s Belt and Road Initiative: Changing the International Development Landscape?”, the motivation of the Chinese to come up with such a project is to increase its geo-economic links with the rest of the world, advance global security through mutual cooperation, and achieve stable development in the global economy. According to her ideas, the Chinese authorities have adopted a flexible approach for providing indigenous resources and local workforce in order to address the needs and concerns of the country where the project is currently ongoing. The construction contracts within the framework of the initiative are largely reserved for Chinese firms.
2.1 Influence on Global Power Dynamics
The Belt and Road Initiative can be seen as part of a mammoth spree of infrastructure projects that spans the globe. In this sense, it can be said that China has given shape to the concept of a global village in a manner that even the most developed countries in the world have not. The global power shift from the West to the East, as well as the rising of emerging economies, has led to the diminishing power of those traditional economic powerhouses. In the international community, there have been discussions and also concerns regarding whether the world is transitioning from a unipolar world, where one country possesses predominant power, to a multipolar world, where multiple countries share relatively balanced power, or China’s Belt and Road Initiative will end up establishing a Chinese-centric global order. This part, however, aims at illustrating how the Chinese perspective and the determination of China’s Belt and Road Initiative can be understood by applying one of the theories of International Relations, “the offensive realism”. This is not to say that other theories, such as the defensive realism – when we presuppose that states act to achieve security, and the liberal approach – when we claim that economic interdependence will lead to establishing peace and security – are not possible. However, regarding the speed, determination, and also enormous financial aid that China poured into the initiative, which is almost 4 times more than the United States’ Marshall Plan to Europe after the Second World War, these behaviors of China really match with the logic of offensive realism – a state seeks to maximize its power, which is the only way to ensure its survival in the international arena. In his essay, “The Rise of China and the End of the Liberal World Order,” Mearsheimer also argued that the gap between China and the United States has been closed rapidly, and the international structure is moving towards a bipolar world, since it is the human nature to be greedy and states will never trust each other.
2.2 Impact on Regional Security
To add to the already tense world situation, the furthering of regional security through economic and possibly military means in a key region has to have an impact, most likely negative, on that ever elusive state of universal peace and harmony worldwide. The reasoning behind such a statement is fairly straightforward: China is heading east and west at the same time with the initiatives and borrowing to fund the infrastructure of other nations. But it is heading more west than east and increasing the spread and reach of their military machine as it does so, hence the potential regional tensions. This means more of the land-based and sea trade routes traditionally linked to China are being added to the sphere of influence operated since time immemorial from Beijing while moving into newer oil and mineral markets also. The mainstay of the initiative to date has been on the land side. As of 2018, some 2.8 billion in infrastructure loans and 5.6 billion in foreign aid grants were provided to 23 countries along the routes. This does not mean that attentions are not also being focused on securing key routes across the Arabian Gulf to Europe, the Middle East, and the east coast of Africa, as demonstrated by the facility agreement in 2017 between China and the Djibouti government for the establishment of the republic’s first overseas naval facility and the continued Chinese military presence in this small African nation. The mere fact that there is a Chinese military presence at all outside of the long-suggested sphere of influence surrounding Beijing has to show that the policy currently known as the 21st Century Maritime Silk Road is not purely a policy of economic diplomacy for China.
2.3 Challenges and Concerns for Other Countries
There are fears that the Belt and Road Initiative may result in debt dependency for the countries involved and that unsustainable loans will result in the eventual control by China of the infrastructure built by Chinese companies in these countries, a criticism that has been leveled at the Hambantota port scheme in Sri Lanka. And as the Initiative will inevitably require the strengthening of Chinese economic and political relations with certain neighboring countries in Central and South East Asia, this can cause alarm among other countries, leading to potential geopolitical tensions. For instance, the close strategic and economic alliance between Pakistan and China as part of the Initiative must be a concern for India, Pakistan’s neighbor and a regional superpower. This is especially so given the historical rivalry between China and India that has been further exacerbated by the recent military standoff between the two countries over the Doklam plateau region. The Initiative has not only the potential to deepen this regional rivalry due to the significant increase in Chinese presence and influence in Pakistan but it may also force India to re-evaluate its existing foreign policy, especially as India has so far declined to participate in the Initiative. Furthermore, the creation of a vast economic bloc could lead to a bipolar world with China and the BRI at one end (especially given the associated string of pearls naval strategy) and the USA and the developed Western world at the other, further escalating global tensions. It may also have long-term implications for the EU, in particular, the Indo-Pacific strategy and the potential isolationism of the USA so far under the Trump administration.
3. Economic Benefits of China’s Belt and Road Initiative
The benefits of the Belt and Road Initiative are economic and political as well. Through the development of new trade corridors and increasing connectivity between the participating countries, the initiative is expected to create favorable conditions for the development of international trade and economics. Creating new roads, railways, and ports can promote economic and trade integration and interconnection between Asia and Europe. This can consolidate the foundation of economic integration and achieve high levels of policy coordination and increased trade and investment internationally. There will be a considerable reduction in the cost of goods and services and the acceleration of the movement of factors of production. Besides, enhancing the connectivity and cooperation in geographical areas for the Belt and Road can bring about innovation and information flow between the BRI countries. The technological cooperation is mutually beneficial that different countries can share knowledge and work together to enhance their own industry. By bringing forth technology and innovation, this can enable more effective technological control, systems, and the development of new technology all over the world. This can lead to enhanced economic and social prospects and improved quality of life, investment, and production within the BRI. Also, the digital connection in the Belt and Road countries will be strengthened. As a result of the establishment of trade and economic cooperation, all countries will work towards a more effective digital development and the internet and telecommunication networks will be improved. In the Belt and Road areas and internationally, there will be more accessible, affordable, and more available digital resources so as to aid communication between countries and support faster integration of modern technology over the world. In conclusion, the economic effect for the implementation of the initiative will bring benefits to all countries involved and indirectly to the international community as a whole. Releasing the potential of economic and trade integration, technological innovation, and the development of digital society and different BRI countries will enhance connectivity and embrace a bright and prosperous digital future.
3.1 Infrastructure Development and Connectivity
The BRI aims to improve infrastructure across transit countries from Asia to Europe, such as sea ports and railways. In addition, it promotes the development of new transport routes. The improvement of infrastructure and transport networks will have a major impact on improving trade and creating economic growth. As Li Li, who acts as the Director for the World Economic Studies department at the Institute of Comprehensive National Development, notes that the BRI “will promote the largest scale of economic cooperation” and “bring the most promising market prospects” for the countries along the Belt and Road, especially in infrastructure construction and energy fields. Fast-growing economies highly depend on the transport infrastructure. For example, the economy of Kazakhstan – a country that is part of the initiative – “relies heavily on the transport and logistics services”. The modernisation of the transport infrastructure will help “the diversification of the economy and a stable development”, according to the Director-General of the Investment Department of Kazakhstan. This can create more work opportunities, contribute to the growth of the economy and bring sustainable development in Kazakhstan. The improvement of transport infrastructure in Central Asia, such as the construction of the 285km railway linking Uzbekistan and Afghanistan, has a significant impact on the connectivity between Asia and Europe. This is because the Central Asia will be more closely connected to the Middle East, Europe and the rest of Asia, which means goods can be more easily transported between different markets. As a result, the logistics between the trade partners is being underpinned. This has been strongly supported by the Head of Globalization in the World Economic Studies department – Ian Lee. He believes that the BRI not only provides “a huge opportunity for globalization and economic vitality”, but also “makes the success of globalization even more realistic”. He explains that the initiative leads to “the infrastructure and the connectivity being built up” which would help to foster more trade between countries and remove the barriers of geographical boundaries.
3.2 Trade and Investment Opportunities
Section 3.2 Trade and Investment Opportunities
Most countries that participate in the BRI are seeking to enhance their trade relationships with China as well as with other participating countries. Through trade and investment, countries can improve their economic output through access to new markets, technology, human capital, and innovation. Generally, the BRI presents unprecedented opportunities for interconnected and inclusive economic development, provided that trade strategies are rooted in sustainable and equitable growth. Bilateral trade between participating countries is likely to increase over time and support greater economic diversification. With stronger trade relationships between China and other countries, the BRI has the potential to enable more diverse and stable growth internationally. Additionally, since the BRI was launched in 2013, the level of trade between China and participating countries has expanded. A series of reports by international credit ratings agency Fitch Ratings reports that BRI countries are expected to increase their imports from China by 12% to 17% each year from 2018 to 2020. Meanwhile, almost a third of BRI countries are expected to increase their exports to China by more than 20% annually. In particular, participating countries in Central Asia are expected to benefit the most. For example, Fitch Ratings anticipates that exports from Kazakhstan to China will increase by over 30% annually, which will support the reorientation of the country’s economy towards non-extractive industries. However, Barr and Jiang (2018) reflect on the potential trade and economic opportunities available to northern Pakistan. They suggest that, given Pakistan’s high growth rates and geographical advantage as part of the BRI, there is potential for increased foreign direct investment (‘FDI’) from China and a shift towards balanced regional development within the country. It is to be noted that the development of the China-Pakistan Economic Corridor is a key BRI project, consisting of a package of transportation infrastructure, energy, and other projects. Following the entry into operation of the deep-sea Gwadar Port in 2016, the focus has now turned to the construction and development of industrial parks, the modernization of transportation infrastructure, and enhancing regional economic cooperation. This suggests that the BRI can realize opportunities for the sustenance of a developed and diverse economy, and most notably for what is a least developed country, Pakistan.
3.3 Job Creation and Economic Growth
So far, we have discussed the direct and indirect economic benefits that the BRI brings out, such as infrastructure development and the creation of trade and investment opportunities. Now, one more important benefit will be highlighted in this section, which is job creation. As for job creation, two aspects will be brought up in our discussion. The first one is in terms of how the local residents’ employment level will be raised due to the implementation of various development projects under the BRI. These residents include both the skilled workers, such as engineers, and the general laborers, such as workers in the construction field. The second aspect is the creation of jobs for the foreign workers that take part in any BRI-related projects. This can also be viewed as one of the objectives of China under the BRI framework, that is to promote Chinese investors to penetrate into the global markets. This section stresses how meaningful and how successful the work carried out under the BRI in bringing prosperity and wealth to the involved countries. Data by World Bank shows that for every US$1 billion increase in funding from the Chinese government for BRI projects, approximately 7,000 jobs are created for the participating countries. The job creations will not only benefit the employees themselves but also the country’s economy. For example, the gross domestic product/productivity of the country will increase. Such a parameter is essential for a country to assess the living standards of its residents. When people are able to earn more and lead a better life, naturally there will be a hike in the consumption level. However, it is not a surprise if some people have doubts on the true intention of China behind the BRI projects, as the job opportunities provided might end up benefiting the Chinese workers. Well, this is hardly the case. It is true that if you go such a large scale of projects, there will be a massive number of workers from the country initiating and sponsoring all these projects, but there are also many rooms for the foreign employers and workers as nowadays, a country normally does not have all the expertise or advanced technology in providing all kinds of solutions. So, foreign participation is always encouraged and this phenomenon can really be observed in many of the BRI projects nowadays. Well, there is no doubt on that, the so-called ‘Belt and Road’ is not a short-term initiative; it requires long-term commitment and close collaboration between the involved countries. For China, under this initiative, it seeks to enhance its capacity in terms of global economic leadership and provide new public goods to the world. This will mean China has to work hand in hand with the rest of the world, to maintain and justify its leading position as one of the global economic powers. For the neighboring countries of China, under the BRI framework, greater opportunity and funding from China can be obtained to improve their connectivity with the outside world and eventually promote and drive sustainable economic activities and development across the countries. For the rest of the world, such proposed massive scale of economic initiatives, such as the promotion of policy coordination, infrastructure connectivity, trade facilitation, and people-to-people bonding, will benefit not only the Asian continents but countries across Europe and Africa. However, it requires a high level of commitment, strong understanding, and close collaboration between the involved countries, regardless of its geographical location, size of economy, or political system.
3.4 Potential Risks and Debt Sustainability
In contrast, scholars have pointed out a number of potential risks associated with the BRI, including those related to uncertain political and economic environments in host countries, the impact of increasing Chinese investment in a particular sector or area, and the poor rate of return and viability of the projects. To be specific, Chinese investment in some of the countries, especially in staple industries or strategic sectors, might affect the economic development of those countries. It is argued that once a huge amount of Chinese capital is poured into a certain sector, which is likely to eliminate the competition and local producers will find it difficult to survive. Also, as the BRI goes global and diversifies into a broad range of commercial initiatives, critics suggest that some strategically large-scale infrastructure projects that are supported through the BRI may put economic rent on the host country, as the realized value of the infrastructure projects may exceed the social cost of the construction. In addition, unclear local political environment may engender more risks to the BRI. For instance, with the economic development in Central Asia and the rise of the ‘Pyongyang’s cooperation’ approach, new railway lines and ports have been built both locally and as part of the BRI. Yet, the authors stated that Chinese and local companies have to face different degrees of risk and an unstable political environment. Because host countries with authoritarian governments may have preferred negotiations with a unitary state or a unitary company so that the contracts are less likely to be altered. But in fact, the authors think that under less political uncertainties and varieties of concerns, a multinational company may be a better choice to deal with the projects sponsored by the BRI. All of these claims indicate that the potential risks to the BRI are multifaceted and consist of an array of political, financial, and strategic issues. Last but not least, researchers and politicians pay special attention to debt sustainability. As the BRI mainly focuses on providing funding support to infrastructure projects in Asia, Africa, and Europe, it is arguable that the rapid increase in borrowing from China, which is used to finance those projects, may impose a burden on the financial positions of those countries. In a more complex term, debt sustainability should be a priority over time as the debt services and repayment in ‘each and every year’ shall be met without ‘creating a debt build-up’. However, the authors acknowledge that there are debates on the presence of the debt problems caused by the BRI and the researchers and politicians are warning against the harsh projects’ tactics of China. A study shows that the participating countries and the so-called ‘debt dependency of the land and Maritime Silk Roads’. This is because the researchers have realized that there is support for the claim that the crossing points of the BRI tend to cluster in high debt countries. Moreover, the great majority of appreciations and projects by China are situated in those high debt countries. It is now revealed by more evidence that China is seemingly willing to lend money and provide services to those countries with fund shortages and underdeveloped countries. However, it is criticized that the so-called ‘debt trap diplomacy technique’ by luring the host countries into ‘debt dependency’ in the long term. In reality, there are indeed a small number of countries distressed from the high incurred debts. For example, in early December 2017, Hambantota port in southern Sri Lanka was leased to China Merchants Port Holding Company for 99 years as a result of the failure to pay down the debt to China, which is estimated at 1.4 billion dollars.
4. Conclusion
The Belt and Road Initiative has been a subject of many debates and skepticism since it was first introduced in 2013. As portrayed by many analysts, BRI is a strategic and tactical game that is likely to change the global power structure. We argue that from the geopolitical point of view, the primary concern has been raised from its potential impact on the global power dynamics and the regional securities. But as we can see, different locations have different insights on the BRI projects. From Western countries, the BRI has been considered as an illiberal challenge to the rules-based order and an expansion of China’s authoritarian model. Some of these countries countered China’s attempt to project influence through infrastructure investments and have put up obstacles to BRI projects, such as politicizing Chinese involvement or rewarding the projects to local and international competitors. On the contrary, in Southeast Asia where countries are in pressing demand for infrastructural construction, many of the Southeast Asian leaders praise the introduction of the BRI and the Chinese investments. This may be due to the fact that the BRI comprises and emphasizes the connectivity and cooperation between different countries and regions. By aligning the BRI with the local development strategies and by mutual agreement on the BRI projects which could bring positive technological and management inputs, it is possible to optimize and facilitate the creation of more and more benefits from the BRI. Also, the soaring development on the BRI-related legal and institutional framework and practice have meaningfully shaped the vision and strategies of the BRI.

Check Price Discount

Study Notes & Homework Samples: The Challenges of Democratization in Southeast Asia »Challenges and Opportunities for Environmental Sustainability in China