BEST MAP-China attempts to redefine global economic order

ON MAY 14, China celebrated its new global influence at the gathering of world and regional leaders, including the United Nations. By officially launching and showcasing president Xi’s One Belt, One Road initiative, China made a bold expression of its confidence. The One Belt, One Road initiative looms on a scope and scale with little precedent in modern history.

By promising more than $1 trillion in infrastructure investment spanning 60-plus countries, China aims to use its wealth and industrial know-how to create a new kind of globalisation. The goal of ‘globalisation mark 2.0’ is to dispense with the rules of the ageing western-dominated institutions and refashion the global economic order, drawing countries more tightly into China’s orbit.

Frustrated at western powers’ reluctance to reform institutions such as the International Monetary Fund and the World Bank to reflect the growing economic strength of developing countries, Brazil, Russia, India, China and South Africa earlier set up the BRICS Development Bank, with its headquarters in Shanghai. Despite faltering economic performance of some founding countries since its formation, the BRICS Development Bank is keeping the dream alive.

China itself set up the Asian Infrastructure Investment Bank. Western allies of the United States such as Germany, France, Denmark, Sweden, New Zealand and Finland broke ranks with the United States to join China’s AIIB. Australia, too, joined after dragging its feet. Only the United Kingdom and Japan, staunch supporters of the United States, remain outside.

On January 16, the AIIB celebrated its first year of operations after extending over $1.7 loans in nine projects across Europe, Asia and the Middle East. The AIIB unveiled the aim to rival multilateral lenders with its readiness to lend up $250 billion.

Critics feared that the AIIB would be used to advance China’s national interests, which would lower environmental and human rights standards. But happily, this has not happened. Instead, through the AIIB, China has been able to advance its economic interests using soft power.

President Obama attempted to thwart China’s growing geo-political advance with the Trans-Pacific Partnership and the Trans-Atlantic Transatlantic Trade and Investment Partnership. President Obama’s last state of the union address made this abundantly clear: ‘With TPP, China does not set the rules in that region, we do.’ But with president Trump’s ‘America first’ mantra, both ambitious US-led geo-political initiatives seem dead.

On the other hand, as can be seen from the map, China is investing in massive infrastructure projects across Asia, Africa and Europe to form the backbone of its ambitious economic and geo-political agenda. In a quest to create deep economic connections and strong diplomatic relationships, president Xi with his One Belt, One Road initiative is forging ties, creating new markets for the country’s construction companies and exporting its model of state-led development.

Chinese engineers are drilling hundreds of tunnels and bridges along the jungle-covered mountains of Laos to construct 260-mile railway lines, a $6 billion project that will connect eight Asian countries.

As part of its $46 billion investment, the deep-water port at Gwadar of Pakistan on the Arabian Sea will be linked by new roads and rail to western China’s Xinjiang region, creating a shortcut for trade with Europe.

To provide another artery for Chinese goods flowing into Europe through a Chinese-owned port in Greece, Chinese planners are mapping out train lines from Budapest to Belgrade.

China financed most of Africa’s $4 billion first transnational electric railway, which runs 466 miles from Djibouti to Addis Ababa.

China is financing more than a third of the $23.7 billion Hinkley Point C nuclear power plant on the Somerset coast of southwest England. This project in a major western economy will give added prestige to the One Belt, One Road initiative.

No doubt these projects essentially serve China’s economic interests. With growth slowing at home, China is producing more steel, cement and machinery than the country needs. So China is looking to the rest of the world, particularly developing countries, to keep its economic engine running.

But China’s geo-political interest is also paramount. The One Belt, One Road initiative is a more daring version of the Marshall Plan, America’s post-war reconstruction effort. Back then, the United States extended vast amounts of aid to secure alliances in Europe. China is investing hundreds of billions of dollars of state-backed loans to win new friends around the world, but without requiring military obligations.

India, another emerging regional power, is understandably worried. It skipped the May 14 summit attended by regional heads of state/government, including president Putin. India is particularly uneasy because Chinese-built roads will run through disputed territory in Pakistan-occupied Kashmir.

India is also upset over China’s refusal to allow its entry into the Nuclear Suppliers Group, a global cartel that controls nuclear trade, and over Beijing blocking a request at the UN to sanction Masood Azhar, the Pakistan-based head of Jaish-e-Mohammad.

In boycotting the Beijing summit, India said, ‘No country can accept a project that ignores its core concerns on sovereignty and territorial integrity.’ On the other hand, Pakistan’s prime minister Nawaz Sharif called for pushing forward the construction of the US$50 billion China-Pakistan Economic Corridor. President Xi said, ‘China plans to build it as a road to peace.’

The US decision to attend the summit marked a U-turn in its position. Seeing it as an attempt to globally promote Chinese influence, some western diplomats have expressed unease about both the Summit and the plan as a whole. But China rejects the criticism, saying that the scheme is open to all; is win-win for all and aimed only at promoting prosperity.

According to president Xi, ‘What we hope to create is a big family of harmonious co-existence.’ Let us hope that is the case.

Let us also hope that ‘globalisation mark 2.0’ will not be dominated by the interest of multinational corporations like the current globalisation drive. Instead, it will be more inclusive and beneficial for both people and the planet earth.

Anis Chowdhury, a former professor of economics at the University of Western Sydney, Australia, held various senior UN positions in New York and Bangkok.