OBOR: “Globalization with Chinese Characteristics”

Beijing is preparing to host a two-day meeting of business and government leaders to discuss the One Belt, One Road (OBOR) policy, a trade and development initiative that aims to link countries across Asia, Europe, and the Middle East. Sophia Yan of CNBC reports:

This is part of China’s push to increase global clout — building modern infrastructure can attract more investment and trade along the “One Belt, One Road” route. It could be beneficial for western China, which is less developed, as it links up with neighboring countries. And in the long run, it will help China shore up access to energy resources.

[…] Plenty [of OBOR projects] have launched thus far, including a 418-kilometer rail link with Laos, and a collection of infrastructure projects totaling $46 billion, named the China- Economic Corridor. A freight train service is linking China and Europe. And China and France are jointly developing the $24 billion Hinkley Point nuclear power plant in the U.K.

In reality, however, reports abound of delays and confusion. There are worries over due diligence — making sure the money is being well-spent — which is tough to track in other countries and remains a potent domestic challenge despite China’s anti-corruption crackdown. [Source]

The China-Pakistan Economic Corridor in particular has come under fire from local activists for its plans to build an international port in the Pakistan city of Gwadar in Balochistan, a region which has been the site of a long-running insurgency movement. Opponents have expressed concerns about security along a new trade route and Chinese funding going to Pakistani authorities who repress Baloch separatist groups.

Due to concern over CPEC, India has not taken part in One Belt One Road negotiations and will not participate in the Beijing meetings, despite Beijing’s efforts to woo them in. However, some in India believe that their country should participate in order to gain the benefits of economic cooperation. Nilanjan Banik writes in The Wire:

The CPEC has been the object of much ire in , since it traverses the disputed area of Pakistan-occupied Kashmir (PoK). But we should remember that in the CPEC, China has placed a huge bet of US$ 46 billion which it hopes will kickstart the process of prosperity and stability in Pakistan. too must hope that this gamble will work, for the prospects of failure will unleash a nightmare scenario in Pakistan with as its focus. But it is worth remembering that the real potential of the CPEC for the entire region lies in connecting with in the east, and with Iran and the Middle Eastern economies to the west. Pakistan can be a hinterland for the industrial hubs of western and, in time to come, could connect with the Delhi-Mumbai economic corridor. The sub-continent forms a natural geo-economic entity and must seriously pursue the goal of an economic reconnection with Pakistan, while keeping the political issues running on a parallel track. This is much like China and Japan maintaining an intense economic engagement whilst dealing with emotive historical legacies and territorial disputes. [Source]

So far, 57 nations have agreed to send representatives to the Beijing meetings; of the 64 OBOR nations, only 20 are sending heads of state. The U.S. decided at the last minute to send Matt Pottinger, National Security Council’s senior director for East Asia, as part of a series of trade deals including the export of U.S. beef to China. From Keith Bradsher at The New York Times:

The disclosure of the deals on Thursday evening — which included an announcement that the United States would be represented at a forum in Beijing devoted to President Xi Jinping’s ambitious “One Belt, One Road” international investment initiative — suggests that the Trump administration is trying to smooth relations with Beijing despite President Trump’s harsh anti-China language on the campaign trail.

Under the newly announced deals, China set a deadline for fulfilling its promises to allow American beef and said it would speed up consideration of pending American applications to offer bioengineered seeds in China. It will also allow foreign-owned firms to provide credit-rating services in China, publish guidelines to let American firms offer electronic payment services there, and issue licenses to two American financial institutions to underwrite bonds.

The United States, in turn, said that Matthew Pottinger, a National Security Council official who plays a central role in White House policy making on Asia, would travel to Beijing with one or more Commerce Department officials for the forum this weekend. Sending a delegation recognizes the importance of Mr. Xi’s signature foreign policy to build China’s economic, financial and political ties across Asia, the Mideast, Eastern Europe and East Africa. [Source]

With the meeting, the Xi administration is promoting its new global ambition which it refers to as “globalization 2.0.” Bloomberg News reports on the draft communique that outlines Beijing’s vision for the new global order:

The document includes a pledge to oppose all forms of protectionism, language which was removed from a communique issued by Group of 20 finance ministers in March at the insistence of the Trump administration.

The document also includes a statement of support for the Paris Agreement on climate change, another topic Trump officials asked to be removed from the G-20 communique. […]

The draft language, which is subject to change, also includes standard Chinese diplomatic appeals for signatories to respect the territorial integrity of countries and to consult with each other on an equal footing, phrases China often uses to discourage outside challenges to its territorial claims on Taiwan and the South China Sea.

The fact that China’s diplomatic priorities are central to the initiative shouldn’t be surprising, said [Dennis] Wilder, who is a senior fellow with the Initiative for U.S.-China Dialogue on Global Issues at Georgetown University in Washington. “The Chinese often go too far with these things, particularly when it’s an event on their own soil and when it involves a leader who has put their name to it.”[Source]

In The Diplomat, Jason Zukus further writes about how increased isolationism from parts of Europe and the U.S. may make room for China’s efforts to flourish:

China’s recent push for greater economic can similarly be coined “ with Chinese characteristics.” Rather than welcoming economic, political, and cultural , China has rejected the influence of these latter two international forces as destabilizing. Government campaigns against “Western values” have in fact gained new force under President Xi Jinping. Instead, China has embraced a narrower view that only economic is appropriate for its unique domestic context.

Other countries such as the U.S. have argued that economic liberalization should go hand in hand with social and political reforms around democratization, human rights, and civil liberties. So-called modernization theorists have even studied whether democratization is an inevitable result of economic development, demanded by a nation’s newly formed middle class.

China has so far bucked this trend towards democratization, with the communist party maintaining rigid one-party control of the country. It has resisted political and cultural globalization, restricting access to information on the internet through the “great firewall” and limiting the ability of foreign NGOs to operate in China.

[…] With the U.S. and Europe now focusing inward, China is poised to capitalize on this unique moment to spread its model of economic globalization detached from political and cultural openness. By ramping up international investment through the Belt and Road initiative, China is providing concrete proof to illiberal states in Southeast Asia, Central Asia, and the Middle East that there is much to gain from embracing “globalization with Chinese characteristics.” [Source]

Although Europe is a key part of the OBOR plan, the EU has been cautious in its approach to joining, according to Andrew Small in an interview with World Politics Review:

WPR: What potential risks and rewards, both economic and geopolitical, does OBOR pose to individual European countries and the EU at large?

Small: Although much of the focus is on Chinese investments in Europe itself, the greatest rewards arguably lie in the potential for the initiative to perform a stabilizing role in Europe’s broader periphery—the Middle East, North Africa, Central Asia, Afghanistan and elsewhere—as well as deepening European economic ties with these regions. There are more geopolitical sensitivities when it comes to Russia’s role as a Eurasian bridge, and the integration of OBOR and the Eurasian Economic Union. Generally, though, Europeans are inclined to see greater Chinese economic involvement in much of the developing world as at least potentially benign. There are evidently more problematic scenarios envisaged if China fails to adhere to basic environmental and social standards, loads countries with debt and worsens corruption problems. But part of the rationale behind European efforts to engage with Beijing on the initiative is to mitigate the risk of this happening.

A more immediate concern is the impact of Chinese financing on Europe’s willingness to maintain a coherent China policy. It was notable that, when the EU attempted to issue a statement urging China to abide by a ruling from the Arbitral Tribunal in The Hague concerning its activity in the South China Sea, the greatest difficulty in reaching an agreement came from prominent OBOR target countries Greece and Hungary. Europeans were already concerned about Chinese attempts to use divisive non-EU structures—such as the Chinese-European 16+1 initiative involving Central and Eastern European countries—to relate to EU members, and they don’t want to see OBOR used to deepen this approach. [Source]

In an effort to win OBOR fans among the youngest global citizens, Chinese propaganda authorities have released as series of cartoons explaining the initiative to children as well as a music video lauding its benefits.

For more on the ambitions and challenges of the One Belt, One Road initiative, see prior coverage via CDT. For more background and implications of the project, see Where Will China’s ‘One Belt, One Road’ Initiative Lead? from Knowledge@Wharton, and Globalization 2.0: How China’s two-day summit aims to shape a new world order, from Jessica Meyers at The Los Angeles Times.