China's Asian Dream

Empire Building along the New Silk Road

Tom Miller

• Publisher: Zed Books
• Year: 2019
• ISBN:
  9781786997449
• Edition: 2
• Topic: Politics & International Relations
• Subtopic: Asian Politics
• Index: Politics & International Relations

'China', Napoleon once remarked, 'is a sleeping lion. Let her sleep, for when she wakes she will shake the world.' In 2014, President Xi Jinping triumphantly declared that the lion had awoken. From holding its ground in trade wars with the US, to presenting itself as a world leader in the fight against climate change, a newly confident China is flexing its economic muscles for strategic ends. With the Belt and Road initiative, billed as a new Silk Road for the 21st Century, China is set to extend its influence throughout Eurasia and across the South China Sea and the Indian Ocean. But with the Chinese and US militaries also vying over the Pacific, does this newfound confidence put China on a collision course with the US? Combining a geopolitical overview with on-the-ground reportage from a dozen countries, this new edition of China's Asian Dream engages with the most recent developments in the ongoing story of China's ascendency, and offers new insights into what the rise of China means not only for Asia, but for the world.

CHAPTER 1

“ONE BELT, ONE ROAD”

FINANCING THE NEW SILK ROAD

New Silk Road (“Belt and Road”)

In November 2014, Beijing’s habitually smoggy skies turned a brilliant shade of blue. The clean air was engineered to coincide with the first full meeting of the Asia-Pacific Economic Cooperation (APEC) forum in China since 2001. With twenty top leaders flying into the capital, including US president Barack Obama and Japanese prime minister Shinzo Abe, the government was determined to show it at its best. Factories were shuttered; shops, schools and businesses closed; cars ordered off the roads; and residents advised to leave town. Farmers were told not to fire up their traditional stove-heated beds—or risk arrest.¹ Once the dignitaries flew out and the steel mills reopened, the sky returned to its familiar grey. Cynical Beijingers coined an expression to describe the fleeting phenomenon: “APEC blue” refers to anything too good to be true.

The APEC meeting in 2014 was the most important international event in Beijing since the 2008 Olympics, and the first big meeting of foreign leaders chaired by President Xi Jinping. If the Beijing Olympics was China’s opportunity to show the world that it had arrived as a modern global power, the APEC forum was President Xi’s chance to show that China was finally going to start acting like one. He did not disappoint, easily projecting the air of an international statesman and negotiating confidently with President Obama. Most significantly, he used the forum to intimate grander geostrategic ambitions for China, announcing plans to ramp up overseas investment to US$1.25 trillion over the coming decade. Placing China at the heart of Asian diplomacy, he proposed new initiatives that dovetailed with the signature foreign policy of his administration: building a New Silk Road.

Founded in 1989, APEC is supposed to champion trade and regional economic integration, but often comes across as little more than a talking-shop. President Xi attempted to inject much-needed vitality into the forum by floating the ambitious idea of a Free Trade Area for Asia-Pacific—essentially a more inclusive version of the Trans-Pacific Partnership (TPP) sponsored by the United States, of which China is conspicuously not a member. He also persuaded his counterparts to approve a new “APEC Connectivity Blueprint 2015–2025” involving the construction of new roads, railways and shipping lanes across Asia and the Pacific Rim. Xi presented these ideas as part of a grandiose vision for the future. “The development prospect of our region hinges on the decisions and actions we take today,” he told 1,500 businesspeople attending the forum. “We are duty-bound to create and fulfil an Asia-Pacific dream for our people.”²

No Chinese leader before Xi has had the gumption to talk of an “Asia-Pacific dream” under implicit Chinese leadership. China has traditionally been a passive player in the world of high diplomacy, preferring to hide behind a mantra of “non-interference” in other countries’ affairs rather than to shape global events. But under Xi, China is preparing to play a much more active role over its borders, and is ready to underpin its diplomacy with huge economic largesse. Just two weeks before the APEC meeting, Beijing hosted a launch ceremony for the Asian Infrastructure Investment Bank (AIIB), at which 21 countries agreed to become founder members of the first Chinese-sponsored multilateral development lender. And at the APEC meeting itself, President Xi announced the establishment of a US$40 billion Silk Road Fund specifically to finance projects along the New Silk Road.

The founding of the AIIB and the Silk Road Fund are evidence of China’s deepening strategic ambitions in Asia. This first became apparent in 2013, when the new foreign minister Wang Yi announced that the focus of foreign policy would shift to China’s backyard. Among its neighbours, China would seek to build a “community of shared destiny”—a vision that not only encompasses greater economic integration backed by huge spending on infrastructure, but also mutual defence of national interests.³ China’s aim is to use economic incentives to build closer relationships with its neighbours, drawing them ever tighter into its embrace. In return for delivering roads and power lines, it expects its partners to respect its “core interests”, including its territorial claims in the South China Sea. This is what Beijing means by “win–win” diplomacy.

The shift to a more assertive foreign policy marks a fundamental break with the past. Since “Reform and Opening” began in 1978, Chinese foreign policy has been underpinned by the “Deng Xiaoping theory”, which holds that diplomacy must serve the greater goal of domestic development. In essence, this boils down to supporting China’s export growth model by attracting foreign investment and promoting a stable external trading environment. Deng laid down his famous dictum in the early 1990s, when he urged China’s leaders to “observe calmly; secure our position; cope with affairs calmly; hide our capacities and bide our time; be good at maintaining a low profile; and never claim leadership”.⁴ This strategy is abbreviated in Chinese to taoguang yanghui, which is usually translated as “hide our strength and bide our time”, but literally means “hide light, nurture obscurity”.

Before Xi rebooted its foreign policy, China was generally happy to stand on the international sidelines. Its leaders demanded shows of international respect and were quick to accuse countries of “hurting the feelings of the Chinese people” when they felt it was not forthcoming; but they rarely sought to lead.⁵ Instead they concentrated on economic diplomacy, pressing for trade agreements and supporting the overseas efforts of state-owned engineering and resource enterprises. They worked most actively with the Association of Southeast Asian Nations (ASEAN), hoping to allay fears that China was a competitive threat to its neighbours. They tried hard to present China as a responsible economic power: the decision not to devalue the renminbi during the Asian financial crisis in 1997 helped stabilize the region, and China provided billions of dollars of credit to Southeast Asian nations in the wake of the global financial meltdown in 2008.

With economic power, however, comes geopolitical clout. China’s foreign policy strategists have long debated how a strengthening China should assert itself on the global stage.⁶ In 2004, China’s leaders briefly began to talk about a “peaceful rise”, seeking to encapsulate the reality of China’s resurgence while reassuring the world that it remained a benign power. When this was deemed too provocative for foreign ears, they adopted the more innocuous-sounding term “peaceful development”. Calls for a more assertive foreign policy grew after the global financial crisis, when the weakness of the US and European economies was laid bare. Yet, after some vacillation, Hu Jintao’s administration officially stuck with Deng’s “bide and hide” dictum. In September 2011, the government released a “White Paper on Peaceful Development”, which reiterated that “the central goal of China’s diplomacy is to create a peaceful and stable international environment for its development”.⁷

The old tenets of foreign policy began to unravel after the leadership transition in 2012–13. At a Party work conference in October 2013 dedicated to regional diplomacy, Xi Jinping made a speech titled “Let the Sense of Community of Common Destiny Take Deep Root in Neighbouring Countries”.⁸ Following Deng’s line, he said that foreign relations must secure “good external conditions for China’s reform, development and stability”, but added that China must also foster a sense of “common destiny” in Asia. Implicitly rejecting Deng’s advice to lie low, he declared that China’s regional diplomacy should instead be fenfa youwei—an expression often translated as “enthusiastic” but better rendered as “proactive”. Foreign Minister Wang Yi used a similar term to describe the overall direction of foreign policy at his inaugural parliamentary press conference in March 2014.⁹

In November that year, two weeks after the APEC meeting, Xi chaired a rare Central Work Conference on Foreign Relations. This was the first such high-level meeting since 2006, when a restrained President Hu Jintao had called for China to take its place in a “harmonious world”. Xi presented a more muscular vision: China should carry out “diplomacy as a great power”, he said, and consolidate its leadership in Asia. Reiterating a line used by previous leaders, he said that a benign external security environment gave China a “period of strategic opportunity” to concentrate on internal development through 2020. But for the first time, he implied that maintaining the favourable environment depended less on good fortune than on China’s own diplomatic efforts. Finally, he explicitly linked the nation’s resurgence as a great power to the “Chinese Dream” of national rejuvenation.¹⁰

Deciphering China’s rapidly evolving diplomacy under Xi Jinping is tricky: smiles have frequently turned into snarls, especially in Southeast Asia. But his two work conference speeches give us a baseline to start from. Under the banner of the “Chinese Dream”, Xi Jinping is pursuing a newly assertive foreign policy that prioritizes China’s economic leadership in Asia. Simultaneously, he is seeking a “new type of great power relationship” with the US, demanding that China be treated as an equal. These ambitions have implications for global institutions: at a Politburo study session on developing a Free Trade Area for Asia-Pacific in December 2014, Xi said that Beijing should “participate and lead, make China’s voice heard, and inject more Chinese elements into international rules”.¹¹ China has long pressed for a “multipolar” world, but President Xi is the first Chinese leader in at least two generations to try to make this happen.

This ambition is underpinned by ever growing economic might. China’s economy may be slowing, but even 5% annual growth adds the equivalent of a mid-sized economy like Argentina to its gross domestic product every year. China already accounts for nearly half of Asian GDP, is by far the region’s largest trading partner, and is challenging Japan to become its largest investor. Beijing believes its financial resources and engineering prowess will prove irresistible, especially in countries lacking the capacity to finance and construct their own infrastructure. With the Belt and Road Initiative, it is effectively dangling a vast economic carrot before its neighbours. China’s leaders judge that few countries are in a position not to bite, especially weaker states that cannot provide basic services for their citizens.

Yet China will struggle to convince its neighbours to embrace a new regional order centred on Beijing, precisely because they fear its immense economic power. No one wants to become a Chinese vassal. Beijing’s pursuit of a “community of common destiny” is seen across the region to be as much of a threat as an opportunity—especially in the South China Sea. Here there is little doubt that China’s “win–win” diplomacy, a formula repeated ad nauseam by Chinese diplomats, is designed to serve China’s interests first. Even among countries with a friendly relationship with China, fear of economic overdependence is widespread. Like the blue skies enjoyed by delegates during the APEC meeting in Beijing, China’s fine words about mutual prosperity seem too good to be true.

BELT AND ROAD INITIATIVE

The centrepiece of Xi Jinping’s “proactive” foreign policy is the Belt and Road Initiative. Stretching from the South China Sea across the Eurasian land mass, it is arguably the most ambitious development plan ever conceived. Taking its inspiration from the ancient Silk Road that ran from China to Europe via central Asia, it envisages building roads, railways and industrial corridors across some of the wildest terrain on earth, and linking these to upgraded ports in Asia, Africa, the Middle East and Europe. Beijing says the initiative will dismantle investment barriers, create new trade routes, improve international logistics, and deepen regional financial integration. It even grandly claims that it will promote “world peace”.¹²

The initiative runs under a confusion of different monikers. President Xi first proposed building a “Silk Road Economic Belt”—a land route through central Asia and the Middle East to Europe—at a speech in Kazakhstan in September 2013.¹³ A month later, in a speech to the Indonesian parliament, he proposed creating a “21st Century Maritime Silk Road”—a web of sea lanes through the South China Sea and Indian Ocean.¹⁴ First called the New Silk Road, the scheme was later dubbed “One Belt, One Road” (yidai yilu), which sounds less clunky in Chinese than in English. After much internal debate, it is now officially translated as the “Belt and Road Initiative”. Beijing is adamant that it should not be called a “plan” or a “strategy”, lest it be interpreted as a ruse to build a vast economic empire. China claims no ownership over the initiative, which it says is about “mutual trust, equality, inclusiveness and mutual learning, and win–win cooperation”—though, in reality, it is very much a Chinese project.¹⁵

Beijing claims the initiative will run through sixty-seven countries, and Chinese media have published a number of maps purporting to show its route. In fact, there is no clearly defined Belt or Road: Chinese firms will help to lay new roads and railway tracks, linking them to new ports, wherever they can find willing partners. Some routes, such as the rail lines that lead from China to Europe via Kazakhstan and Russia, already exist; others are on the drawing board and may never leave it. For example, a potential southern route of the Silk Road Economic Belt through Iran and Turkey may or may not cross Kyrgyzstan, and may or may not have spurs through the troubled states of Iraq and Syria. Much like the ancient Silk Road, the Belt and Road will form a network of trading routes influenced by the competing demands of geography, commerce and geopolitics.

The initiative is motivated by a number of sweeping goals. In the first place, it aims to protect national security. China wants to create a network of economic dependency that will consolidate its regional leadership, enable it to hedge against the United States’ alliance structure in Asia, and diversify energy supplies. Beijing has few friends in Asia, but it is serious about helping its neighbours if they return the favour. This is a departure from the past, when Beijing did not try to cultivate close diplomatic relations, other than with the rogue states of North Korea and Myanmar.

Equally important are economic motivations. Beijing’s great hope is that state commodity producers, engineering firms and capital goods makers will find a lucrative new source of growth. The Belt and Road will require billions of tonnes of steel and cement, hundreds o...