9 February 2017

China’s road to diplomatic dominance


China’s One Belt, One Road programme has reached Britain in all its majestic glory. First there was the train which made it from China’s east coast to London last month, and now Theresa May has been invited to attend a global summit on China’s vast industrial project later this year.

One Belt, One Road (OBOR) is China’s President Xi Jinping’s flagship strategy. Launched only a few months after he came to power, in 2013, the plan for a network of roads, high-speed rail and pipelines across Central Asia is a visible manifestation of China’s increasing regional dominance.

But is this a repressive regional dominance, as experienced by Tibet and Xinjiang? Or is it, as Chinese state media puts it, a great opportunity for its poorer neighbours?

Britain, at least, has certainly accepted the latter thesis. Even before Brexit put such importance on new trade deals, we were enjoying a “golden era” of relations with Beijing. Last year the UK donated £40 million to the Asian Infrastructure Investment Bank which supports the financing of OBOR projects.

There is plenty of evidence to support Britain’s positive point of view. When Xi Jinping addressed delegates at Davos last month, there was a logic to China’s Communist president espousing the joys of free trade.

President Xi is well aware that the Communist Party needs to maintain China’s economic boom in order to enhance the goodwill of the population – if the factories are operational, its people are employed. This means excess capacity needs to be exported, as international steel markets found out to their cost last year.

While China leads the world in exporting consumer goods – the iPhones and washing machines so beloved by Western consumers – they have a harder time exporting heavy machinery. But in the wastelands of Central Asia, that same machinery can be put to good use opening up the markets of the old Silk Road.

This then is the idea behind the OBOR. But it is not the whole story. For all the talk of disinterested trade, there remains a strong diplomatic element to the Chinese manoeuvres across Asia.

An editorial from the state-run Global Times, insisted that while the OBOR project is solely about co-operation and connectivity, its path through much of the Islamic world’s conflict zones might also help to replace the “Western-directed road (which) has guided the Middle East into a state of turmoil”.

Similarly, countries in the OBOR’s path have discovered that China’s largesse is not entirely altruistic. Gwadar Port in southern Pakistan which forms part of the China-Pakistan Economic Corridor – part of the OBOR – has not become the second Dubai its planners envisaged. It has, however, become a useful base for Chinese warships on the Arabian Sea, much to the consternation of China’s regional rival, India.

Likewise, China’s generous funding for Sri Lanka’s generally idle airport in Colombo, appears to have gone hand in hand with Chinese submarines docking at Sri Lankan ports.

US planners describe these as part of The String of Pearls, a chain of projects dotted around Asia, which could quickly become a noose.

It’s all part and parcel of China’s debt-trap-diplomacy approach to the world. When Argentina’s President Macri decided to roll back opposition to Chinese funded projects, he noted that, “Chinese finance is becoming a potent tool of coercion in global affairs”. Whether it is cricket pitches in Antigua, or nuclear power plants in the UK, it is hard not to escape the conclusion that Chinese investments come with certain strings.

Xi Jinping’s presidency has coincided with China abandoning Deng Xiaoping’s policy of “hiding one’s capabilities and lying low”. China is now very much out in the open. In recent years this has ranged from raids on the offices of Western companies based in China, or the abduction of dissidents from Hong Kong, to the militarising of large areas of the South China Sea.

At the same time, Western leaders have accommodated China’s growing clout, a spectacle which played out during President Xi’s state visit to the UK in 2015.

Cliché abounds when looking at Chinese infrastructure in Central Asia: the inscrutable Orient planning its future moves against the decadent West. But China isn’t about to annex its near neighbours, or turn the screws on the trading partners who accepted its financing – just yet, and there is still plenty of hay for businesses to make.

However, just as China’s international debtors have found that the surest way to pay off their debts is to accept yet further Chinese investment, there is a sense that with OBOR, it is very much the case for countries to buy now – and pay later.

Henry Williams is acting deputy editor of CapX