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China’s Ambitious New Silk Road Project Faces Hurdles

By Saibal Dasgupta

China ConstructionChina is trying to connect more than 20 countries along the ancient Silk Road under a grandiose program christened “One Belt, One Road.” But the more than $140 billion program is facing challenges in many places over wars, territorial disputes and domestic unrest.

The plan involves expanding China’s economic influence by establishing two big foreign trade routes. One stretches overland from China through Central Asia and on to Europe, traversing many countries that are desperate for more trade options to grow their economies. The other route is a maritime trade link connecting Chinese ports with coastal trading hubs in Africa and the Middle East.

For many countries along the route, China’s ambitions could bring a welcome economic boost.

“China’s efforts to implement this initiative will likely have an important effect on the region’s economic architecture-patterns of regional trade, investment, infrastructure development-and in turn have strategic implications for China, the United States, and other major powers,” said an article published by the Washington-based Center for Strategic and International Studies.

Image courtesy of VOA.

Image courtesy of VOA.

Chinese Non-Interference Challenged By Ambitious Development Plan

But such an ambitious and far-reaching project also is vulnerable to becoming entangled in foreign disputes that Beijing has traditionally worked to avoid.

Those include the Ukraine crisis, island disputes involving six countries along the South China Sea, China’s border dispute with India, anti-China sentiment in Sri Lanka, instability in Myanmar’s border areas with China, terrorism in Pakistan and unrest in the western Chinese region of Xinjiang.

“If the territorial dispute cannot be solved, it is bad for the One Belt One Road program. If two neighbors are in conflict, there is no progress,” said Yao Peisheng, who earlier served as Chinese Ambassador to the Kyrgyz Republic, Latvia, Kazakhstan, and Ukraine besides the foreign ministry’s Department of European-Central Asian Affairs in Beijing.

Critics have described the program as a Chinese version of the Marshall Plan, which seeks to enhance Beijing’s clout across the globe. The Marshall Plan was a U.S.-backed economic aid program that helped rebuild European economies and fortify political alliances after World War II. Chinese officials do not like this description, and prefer to call it the “shared destiny” of China and the countries joining it.

“It is not Marshall Plan, which divided the world in two camps. We are going for mutual consultation and mutual construction,” said Hu Shisheng, director of the Institute of South and Southeast Asian and Oceanic Studies at the China Institutes of Contemporary International Relations. “We want build a stage, and after it is completed, we will invite all participants to sing and dance on the stage.”

Map: China's new Silk Road. Courtesy of Xinhua.

Map: China’s new Silk Road. Courtesy of Xinhua.

Some Countries Skeptical of Greater Chinese Political Influence

Countries that are extremely reluctant to join include Vietnam and the Philippines, according to Li Mingjiang, associate professor and coordinator of China programs at Singapore’s Institute of Defense Studies. Vietnam experienced anti-China riots last year after a Chinese oil rig parked in waters claimed by Vietnam. The Philippines has sought international arbitration in contesting Beijing’s claims to remote reefs that Manila claims as its own.

“There is also a feeling among ASEAN (Association of Southeast Asian Nations) countries that China’s influence will rise much higher through the Silk Road program. Singapore, Malaysia and Indonesia are concerned about this issue,” he said.

There are worries China would be able to overshadow the influence of ASEAN as member countries become connected by roads and sea routes financed and constructed by Chinese companies. Although it is a member of ASEAN+1, China has twice tried and failed to keep the sea dispute outside the agenda of ASEAN meetings in recent years. The Silk Road program could change that.

The territorial disputes in the South China Sea remain hotly contested, but Maritime Silk Road maps released by Chinese media have shown the route running through disputed areas. That could harden attitudes of regional countries such as Vietnam and the Philippines against the initiative.

Some Russian media also have been highlighting the dangers of the Belt and Road program conflicting with Moscow’s Eurasia initiative and helping China overtake Russia for influence among Central Asian countries.

The program may also face resistance in Sri Lanka, which recently went through an election that featured heated discussion about alleged corruption in Chinese backed projects. The new government in Colombo has suspended work on one such project for building a port city.

For now, analysts say Chinese president Xi Jinping appears to be using the One Belt One Road program as a litmus test to determine different countries’ level of cooperation.

Beijing also is expected to use its new Asia Infrastructure Investment Bank (AIIB) to build the transportation links and infrastructure improvements aimed at boosting the new trade routes. That initiative has gained the support of some 57 countries, including Britain, France and Germany to become members of the China-backed AIIB.

China-based analysts also say that Beijing is taking a flexible stance in negotiating with trade partners, pointing to Beijing’s open stance on India’s “Project Mausam,” an effort by New Delhi to develop trade routes around the Indian Ocean.

“We will use many platforms – bilateral, trilateral, multilateral, the AIIB–to overcome the problems. If there are differences on a project among two or three countries, they must sit down and resolve it,” Yao said.

China is making other amendments to attract participants. The Chinese foreign ministry has clarified that Beijing is not rigid about the route map, and the choice of projects will be left to countries as to where they are to be located. It has also rejected a map put out by the official news agencies saying that the route will be finalized in consultation with participating countries.

Development Plan Risks Funding ‘Expensive Boondoggles’

The ambitious project could end up as expensive boondoggles, said the CSIS article authored by Scott Kennedy and David A. Parker.

“Given Chinese construction companies’ poor track record operating in foreign countries (including frequent mistreatment of local workers), a major increase in the scale of their external activities increases the risk of damaging political blowback that could harm Beijing’s image or lead to instability in host countries-particularly if the efforts do not generate lasting benefits for local economies,” they wrote.

Li from the Singapore institute told VOA, “China has indicated it will find ways to finance projects in different countries. This is the biggest attraction for the One Belt One Road program in South East Asia as most countries need to improve their infrastructure”.

Central Asian countries are excited about the prospects of Chinese funding because their economics have been hit due to sliding oil prices and lowered remittances from local people working in Russia.

China has allocated $40 billion to a newly created Silk Road Fund, while the Asian Infrastructure Investment Bank is being created with an equity capital of $100 billion. But the actual fund made available for the program might be three or four times this amount, analysts said. Additional resources will include issuance of special bonds and low-cost financing by the Beijing based China Development Bank.

Even countries who have doubts are slowly being drawn towards the program for this reason. And despite U.S. criticism of the development bank and skepticism over the Silk Road Project, many countries are finding the promise of cheap loans and new infrastructure to be a power draw.

Courtesy of VOA News


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