China's Belt and Road Initiative

Changing the Rules of Globalization

Wenxian Zhang, Ilan Alon, Christoph Lattemann, Wenxian Zhang, Ilan Alon, Christoph Lattemann

• Publisher: Palgrave Macmillan
• Year: 2018
• Print ISBN: 9783319754345
• eBook ISBN: 9783319754352
• Topic: Business
• Subtopic: Business General
• Index: Business

Since the introduction of the One Belt, One Road initiative (OBOR), first proposed in late 2013, international scholars have begun to study this new policy and its implications in the global age. While OBOR provides new opportunities for China in terms of regional cooperation and global development, many also raise concerns about China's intentions of using economic means to achieve strategic and foreign policy objectives. Hailing from the West and the East, the authors reflect on the wide-ranging impacts of OBOR on specific countries, regions, economic policies, and geopolitical considerations. Including both theoretical research and empirical studies that explore opportunities and challenges related to OBOR, this edited volume will allow readers to gain a more comprehensive understanding of this ambitious undertaking and its long-term impact on the rest of the world.

© The Author(s) 2018

Wenxian Zhang, Ilan Alon and Christoph Lattemann (eds.)China's Belt and Road InitiativePalgrave Studies of Internationalization in Emerging Marketshttps://doi.org/10.1007/978-3-319-75435-2_1

Begin Abstract

1. Introduction

Ilan Alon¹ , Wenxian Zhang² and Christoph Lattemann^{3, 4}

(1)

University of Agder, Kristiansand, Norway

(2)

Rollins College, Winter Park, FL, USA

(3)

Jacobs University, Bremen, Germany

(4)

University of Agder, Department of Management, Kristiansand, Norway

Ilan Alon (Corresponding author)

Email: [email protected]

Wenxian Zhang

Email: [email protected]

Christoph Lattemann

Email: [email protected]

Keywords

Belt and Road Initiative (BRI)Global developmentRegional analysisChina

End Abstract

Altogether, the aftermath of the 2008 global financial crisis , the WTO’s Doha Development Round breakdown, the collapse of the Transatlantic Trade and Investment Partnership, and the Trans-Pacific Partnership, so-called Brexit, and Donald Trump’s promise to protect and “Make America Great Again,” mark a critical milestone for the global economy, trade, and the political order as determined by the United States over the past 70 years.

Since 2001, China has been emerging in the world economy; and more recently with the BRI, China is expanding its government-sponsored “Going Global” development programs in size and in scope as part of the global “China Dream” objective. The BRI, with its “Silk Road Economic Belt” and “the Twenty-First-Century Maritime Silk Road,” is now the largest platform for international cooperation, reflecting the new approach of China’s development and diplomatic strategy.

The basic idea of the Belt and Road Initiative (BRI) is to consolidate and upgrade a dense network of bilateral Free Trade Agreements (FTA) into a multilateral arrangement, anchored by China’s gravitational pull and vast open market (see Chap. 5). The BRI focuses on using the “belt” to link China to Europe through Central Asia and Russia; to the Middle East through Central Asia; and to Southeast Asia, South Asia and the Indian Ocean. The “road,” meanwhile, aims to connect China with Europe through the South China Sea and the Indian Ocean; and with the South Pacific through the South China Sea. Covering 65 countries and reaching more than 60% of the global population, accounting for nearly a third of global GDP and global merchandise trade, and 75% of its known energy reserves, the BRI is the most ambitious example of global economic statecraft in the twenty-first century.

The BRI is essentially a new global architecture designed by China to frame its new role as a leading world power. It is also a massive project involving the funding and construction of an infrastructure system of roads, railways, oil and natural gas pipelines, fiber-optic and communication systems, ports, and airports. But the BRI is far more comprehensive since it covers cooperation in all aspects, from policy dialog to trade, from financial cooperation to people-to-people exchange. The costs of the BRI, an estimated US$800 billion, will mainly be funded by China and supported by the Asian Infrastructure Investment Bank (AIIB) and the New Development Bank (NDB).

By May 2017, 22 countries had signed the BRI Memorandum of Understanding , and 29 heads of state attended the first BRI forum in Beijing. Most of the attendees were from small developing states in Asia, such ASEAN and Central Asian countries. This gives early signs of China emerging as a great power. Because BRI threatened the Western political framework, the major great powers—in contrast to the smaller and poorer countries—rejected or objected to the BRI , including the United States, the EU, Japan, India, and Australia (see Chap. 10). Their common primary concern is about the BRI’s strategic role and the political purpose of infrastructure building. Also raised are economic concerns about debt and financial risk, and environmental and social concerns.

This book is among the first to examine the BRI , or One Belt, One Road (OBOR, for consistency and to reflect the latest name change by the Chinese government, we will use BRI as the main term throughout), in a systematic, multiperspective, and politically and ideologically unbiased way. Authors from East and West present the most prominent facets of the BRI through geopolitical, economic, business, legal, and social lenses. Over 30 scholars with roots in five continents—Asia, America, Africa, Europe, and Oceania—analyze the BRI and provide insights to its past, present, and future, and its impact on the world economy, regions, and specific countries along the BRI.

This gives a comprehensive overview for practitioners, academics, and politicians on BRI in terms of: (1) major fields of interest; (2) purposefully selected countries; and (3) effects and their causes. This book can also be used as a multiperspective China-developed countries and China-developing countries case study for teaching in the field of geopolitics, business, economics—in particular on FTAs, foreign direct investments, and culture. Following this logic, the book is organized into four broad sections: Part I—Contextual Overview of the Belt and Road Initiative; Part II—Regional and Geopolitical Perspectives; Part III—International Trade, Foreign Direct Investment, and BRI; and Part IV—Financial, Legal, and Cultural Perspectives on the BRI.

1 Part I: Contextual Overview of the Belt and Road Initiative

Chapters 2 and 3 are by political scientists and experts in international relations and provide the geopolitical context for this study. Francis Schortgen from University of Mount Union (USA) discusses how BRI marks a new era of Chinese economic global leadership. This leadership was created to some extent by a power vacuum left by Washington’s withdrawal from the TPP in 2017. Xi Jinping ’s defense of economic globalization at every major international event marks a new doctrine in a Chinese desire to rise peacefully and powerfully. Francis Schortgen concludes that the BRI is nothing less than a new global economic order with China at the helm, reflective of an underlying repositioning of great power relations.

Dovetailing with Shortgen’s research is Thomas Lairson’s chapter, which examines the interdependence of structural power in China’s relations. Thomas D. Lairson—a political scientist with both Jindhal Global University (India) and Rollins College (USA)—develops a framework of deep interdependence and structural power as a primary feature of the strategic environment affecting the design and eventual outcome of the Chinese BRI project. Deep interdependence is a result of the liberal global system established by the United States and is posited to create both opportunities and constraints on China, including the formulation of goals , the design of the BRI, and its ultimate success or failure. Lairson suggests that China needs to develop a nuanced and accommodative set of policies and actions relating to mutual gains, governance through accommodative rules and institutions, and management of internal and inter-state conflicts within the region. He compares the BRI to the post-World War II order of the Marshall Plan. Together with the AIIB, China has the potential to reorganize the Asian security apparatus and its relationship to India, Vietnam, Japan and the United States. Lairson asserts that the BRI project will succeed or fail in creating structural power for China based on its ability to operate within a system of deep interdependence and structural power.

Both Shortgen and Lairson provide a big picture analysis of global and regional geopolitical forces based on the BRI that have the potential to change the world for years to come. The third chapter focuses on China’s most important relationship, and perhaps the most influential one for the entire world. The China–United States relationship has been dubbed the G-2 , and is seen by some as the cornerstone for the G-7 . Xiaohua Yang, Don Lewis, and Steve Roddy from the University of San Francisco (USA), and Diana Moise from the Public International Law Advisory Group (UK) analyze the BRI in relation to the United States in Chap. 4, which examines US business connectivity with China’s BRI and provides insights into global cooperation between the world’s two largest economies in the emerging digital age. Informed by resource-based and institutional-based views, the analysis shows how potential US connectivity to the current BRI could provide windfall gains for US firms possessing a competitive ownership advantage with the advent of the Cyber/Digital and Maritime Silk Roads. Their analysis also reveals the potential costs and risks of such an involvement in the uncertainty of United States–China bilateral relations. Notwithstanding the geopolitical differences, nation-state boundaries, resurgent protectionist movements, and regional markets, BRI partner countries are likely to experience much deeper connectivity as a result of intensifying international trade and investment integration, and concomitant cyberspace developments in countries such as the United States and China.

2 Part II: Regional and Geopolitical Perspectives

Part II begins with a case study from Switzerland by Tomas Casas i Klett (China Competence Center, FIM-HSG University of St. Gallen, Switzerland) and Omar Serrano Oswald (University of Geneva, Switzerland) that shows how FTAs are used by the BRI as stepping-stones for multilateralism . They propose that China’s FTAs are part of a long-term multilateral approach with the potential to be included in the institutional infrastructure of the BRI. By developing a BRI Initiatives Dynamic Evaluation Framework, they emphasize that initiatives under BRI will be subject to decision and evaluation mechanisms that transcend China proper. This means that rather than being static, FTAs are dynamic. The key element in this iteration is the FTA upgrade, which includes trade impact analyses, business agent surveys, utilization rates, and signaling effects. The Sino–Swiss FTA is evaluated as part of this long-term strategy of upgrading bilateral relationships into a comprehensive system that relies on institutional outsourcing of the upward kind from nations with deep institutional building experience.

By analyzing a small but advanced and strategic set of economies (the Nordics), Camilla T. N. Sørensen, from the Institute for Strategy in the Royal Danish Defense College (Denmark), examines how BRI affects the Arctic and Northern Europe. Sørensen offers a much-needed analysis of how the development of the BRI links to China’s growing interests and ambitions in the Arctic, showing how China is using the BRI to further intensify and strengthen relations with the Nordic countries in the Arctic. By conducting a comparative analysis, Chap. 6 further draws attention to how geography and certain domestic circumstances and considerations play into how the Nordic countries’ see and engage with the BRI as it broadens to the Arctic and Northern Europe. She concludes with a critical discussion of why the Nordic countries are not cooperating to a higher degree, despite growing Chinese efforts in recent years to introduce a 5 + 1 mechanism high-level Nordic–China interactions.

Analyzing another strategic region for China, Jędrzej Górski, a research fellow at the City University of Hong Kong looks at China’s strategy toward Central and Eastern Europe (CEE) within the Framework of...

Table of contents

• Cover
• Front Matter
• 1. Introduction
• Part I. Contextual Overview of the Belt and Road Initiative
• Part II. Regional and Geopolitical Perspectives
• Part III. International Trade, Foreign Direct Investment, and BRI
• Part IV. Financial, Legal, and Cultural Perspectives on BRI
• Back Matter