The Making of a Modern Economic Powerhouse
Since China’s economic reformation into a free-market economy between the late 1970s and 1990s, its GDP growth has boomed, averaging an impressive increase 10 percent annually. Solidified in 2001 by its accession into the World Trade Organization (WTO), this quickly moulded China into one of the main global economic powerhouses. One particular trade enterprise, the Belt and Road Initiative (formerly One Belt One Road), began in 2013 and is reminiscent of the ancient Silk Road, a route that facilitated trade between the Roman Empire and China. However, do these similarities end there? And just how far does the new Belt and Road Initiative extend an ancient concept into the modern world?
The Silk Road
The ancient Silk Road between the Roman Empire and Asia was composed of a network of trade routes, active between 2 BCE and the 1400s CE. In 2 BCE, the Han Dynasty officially opened these routes with the Western Roman Empire. They were designed to streamline the transport, trade, and export of goods, whilst aiming to successfully facilitate economic, cultural, political, and religious interactions between the East and West, spanning over 6000 km. The trade route was officially closed in 1453 when the Ottoman Empire boycotted trade with China and shut them down. However, contemporaries of the Silk Road never referred to it as such. In fact, it wasn’t officially coined the Silk Road until 1877 when German historian, Ferdinand von Richtofen, used it to describe the ancient routes in retrospect. With the growing tendency of the media and politicians to compare these ancient routes to China’s recent Belt and Road initiative, how similar are they really?
The Belt and Road: A Modern Adaptation?
The Belt and Road Initiative is an economic mission started by the Chinese government in 2013, which is designed to redevelop trade routes connecting China to the rest of the world, effectively reconstructing a modern-day Silk Road. However, this initiative goes beyond laying down the infrastructure for trade. It functions to create the right conditions for China to build a high technology economy worldwide. Let’s deconstruct exactly what the Belt and Road initiative means. The ‘belt’ element concerns the rebuilding of ancient trade routes and refers to its overland transport links across China, Central Asia, and Europe. Whereas the ‘road’ element involves maritime connections from China’s seaports, introducing new sea routes into South-East Asia and the Indian Ocean. It has enabled China to exert greater influence on the rest of the world in terms of increased economic trade and Chinese implemented infrastructure.
Who Is Involved?
The initiative’s plans dedicate over $3 trillion of infrastructure investments in 68 countries throughout the next few decades. But which countries are on the receiving end of this economic initiative? Some regions which are highly involved in China’s Belt and Road initiative include South Asia, South America and Africa. Pakistan has established a Pakistani-Chinese economic corridor, with China planning to spend at least $60 billion on infrastructure developments throughout the country. Meanwhile, in Africa, myriads of gas pipelines and railways are being constructed through Chinese economic-related infrastructure in Nigeria, Uganda, Egypt and several other African nations. China is also South America’s top trading partner and is one of its key sources of foreign direct investment and lending in the energy and infrastructure sectors. In 2020 Chinese direct investment in Latin America equated to around $17 billion. And between 2005 and 2020, the Chinese government has loaned over $137 billion to countries in the region.
Friction from Abroad
In response to China’s Belt and Road Initiative and its new global goals, many countries are hesitant and concerned about the consequences this may have on international relations and power dynamics, both economically and geopolitically. For instance, due to its history of tension with Pakistan, India has decried the Pakistani-Chinese economic corridor and does not openly support the Chinese Belt and Road Initiative. This is said to be due to a fear of shifting power dynamics which this may cause in the Southern Asian and Middle Eastern regions. But from Pakistan’s point of view, they are greatly in favour of the initiative as the country has experienced an unprecedented economic growth of above 5% in 2017 and 2018 as a direct result of Chinese investment.
Many Western European nations and the USA are also said to be suspicious of the expansion of Chinese infrastructure and economic dominance, as they threaten the economic supremacy of the USA and the existing global order. China’s influence can be seen perhaps most prominently in Africa, where China has invested in 52 out of 54 African countries and at the 2018 Forum for China–Africa Cooperation in Beijing, China offered Africa US$60 billion for development financing until 2021. And it is this potential hold over a continent rich with such valuable minerals and resources which is perceived by some to challenge and threaten Western dominance moving forward. Will the Belt and Road Initiative lead to China snatching the crown for being the most powerful country in the world?
A Spanner in the Works?
Since the start of the COVID-19 pandemic, China has redirected a lot of its funds and support to domestic projects in a bid to reinforce domestic economic infrastructure, which has drawn funds from the Belt and Road Initiative. Overall, China’s investments abroad have significantly declined since their US$196 billion peak in 2015, to US$154 billion in 2020. However, looking forward, Russia has pledged its support to China’s economic programmes and Putin has linked his Eurasian vision with the Belt and Road Initiative specifically. It will be interesting to see how the 2022 situation in Eastern Europe involving Russia and Ukraine and the succeeding fall-out will affect this economic alliance. Ultimately, the Western fears of a complete shift to a Chinese global world order may be premature, but there is an overwhelming sentiment worldwide that the tide seems to be turning toward the East.
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