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3. Discussion
In the context of problematic relations with other powers to its east and south, the longest land border in the world (bordering 14 nations) and a desire for influential relationships with neighbors across that border, energy security concerns, restive outer regions, uneven national development, fear of widespread domestic political unrest, the world’s largest foreign-exchange reserves, domestic economic transition, severe excess industrial production capacity and idle infrastructure production capacity, China’s new Silk Road initiatives creatively address a huge range of the challenges facing the country.
Just as the behavior of the US became more confident at the end of the 19th century, and again upon the collapse of the USSR, China’s new Silk Road strategies represent a country with increased power (that has overtaken its neighbor competitor Japan to become the world’s second-biggest economy and has overtaken the US in GDP per capita purchasing power parity terms) taking initiative that matches its status and also helps it fulfill its legitimate needs of providing for its population. China’s style of behavior is changing, but perhaps only insofar as it helps it achieve its core aims of defending its sovereignty and rejuvenating the nation. For the first time in its long history, China has become dependent on resources from across the world and it is now forever going to rely on external supplies for what it needs to grow
economically. It has so far had to accept that its supply and export lines are vulnerable to disruption by outside forces. With its greater power and wealth, China is taking perfectly understandable measures to attempt to increase its economic security, as any nation would, by securing its lifelines. At the same time, this has the potential to make it a peer competitor of the US and create a security dilemma in which the Chinese public expects the CCP to stand up to the US and protect its national interests and sensibilities.
Of course, it is not only the US that is concerned about China’s increasing power and assertiveness. In recent years, China has managed to feud simultaneously with a multitude of its neighbors who have then created alliances, trade deals and security efforts to balance against it.
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China has said that in formulating its new Silk Road initiatives, it had no intention of challenging the current international order. While it is true that OBOR can be
understood as a natural progression for a country seeking legitimate development strategies, it is also the case that China is aware of the possibly world-changing geopolitical implications of the project. It potentially has the capacity to transform China from the economic superpower it is today into a realized regional superpower.
And there have been clear statements that China now wants to create the rules of the game and the ground on which the game is played (Xi, 2014). It had no influence in the creation of the current system of rules and, even though it has been a major beneficiary of the current system, it wants to make its mark, make adjustments that will serve its purposes better and further legitimate the rule of the CCP. In terms of maintaining the supremacy of the party, the CCP certainly wants to make a big show of how far the country has come under its leadership and two dates stand out as being of particular importance: 2049, marking 100 years of the PRC, will be the really big event, but there is also the intermediate goal of 2021, which will mark the 100th
anniversary of the CCP, and OBOR can be expected to play a role in demonstrating to the Chinese people that the party is restoring China to the glory of its past.
There has been widespread agreement that for some time now the world has been witnessing a global shift in power from west to east, with China at the center of this transition. However, there is less agreement over what such changes could mean for the existing international order. The new Silk Road plan is at the center of a more expansive Chinese approach to foreign policy that positions China firmly as an economic center of gravity, both regionally and globally. Gone are the days of Deng Xiaoping’s “bide your time”; China has arrived and it is making its presence felt.
Rising states have opportunities to transform the structure and interrelationships of international institutions of global governance in ways that advance their interests. In recent years there has been a shift in the relative importance of the G20 and the G7, and many have raised questions about the extent to which the AIIB challenges the IMF, the World Bank and the ADB. Although China is a key player in the
international system comprised of these institutions, increased influence is something countries uniformly want if they have the chance and China has made it known that this is something it is working towards (Xi, 2014).
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Whereas in the past rising powers and established powers would most often end up going to war as their interests collided, with appropriate diplomacy, accommodation and balancing, such an outcome is far from inevitable in the current context.
Firstly, both the rising power and the established power are nuclear armed, and this makes the potential consequences of conflict so great that extraordinary lengths will be gone to in order to prevent aggression. This is a huge factor in preventing an escalation of conflict, however, an even more powerful deterrent is the nature of the existing international order. The existing order means that China and the US are deeply enmeshed in ways never previously known between such powers. Although Mearsheimer asserts that enmeshment has not prevented war in the past, the nature of the current context makes such escalation unlikely for reasons explained below.
In his work on the Thucydides Trap, Graham Allison concludes that war has resulted from great power rivalry in 12 of the last 16 occasions. John Mearsheimer also quotes these numbers. What Mearsheimer and Allison both fail to point out, however, is that no war has been the result on the three occasions since WWII. The lessons learned in that war, the presence of nuclear weapons and the present extent of transnational interlinkages have drastically increased the costs of conflict and massively reduced its likelihood.
It is precisely the existing order that has facilitated China’s rise and China has a huge interest in continuing to work within the current system if it hopes to be able to keep providing more for more of its people. The international order today is also much bigger than the two competing powers. The US is certainly the dominant actor in the world, however, it still overwhelmingly acts within certain limits set by the rules of institutions with shared leadership, such as the UN, the G20 and the WTO. The current system is working well for a majority of other nations, especially the likes of India and Brazil. These powers have considerable sway in influencing the direction of future changes to the international system, and they are reaping considerable rewards from the overwhelmingly win-win situation offered by liberal internationalism. If it acts wisely, the US and its allies are likely to be able to resist any radically
transformative challenges to the current system by building alliances in support of the
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rule-based liberal internationalist order, and challengers will be heavily incentivized to cooperate.
Of course a Thucydides Trap is not only created by a rising power’s challenging behavior, but also by the reaction of an established power to it. Of big concern in the current context is how the US might respond to any perceived challenge. This is an issue that has become of particular concern in recent months in light of developments in the US presidential race that have revealed an aggressive nationalist strain in the country. However, the evidence suggests that despite the potentially big impact of China’s new Silk Road initiatives and the increased power and influence they might provide, China faces enormous challenges, both internal and external, that will put a substantial check on its hoped-for rise to true superpower status. If the US and its allies act sensibly, they can accommodate China’s legitimate development strategies, which can act as engines of growth and as stabilizing forces in troubled regions, and still be confident of their ability to lead.
China currently faces seemingly insurmountable demographic and economic challenges that will put severe limitations on its ability to grow into the kind of superpower many have predicted. Whereas in 1979 China had seven working people to each retiree, by 2035 the ratio is expected to drop to two-to-one (Dibb and Lee, 2014). This issue will be compounded by the fact that only one-third of the urban population and 5 percent of the rural population have a pension (ibid.). Also posing problems is the expectation that by 2035, 60 percent of the workforce is expected to be over 55 years old (ibid.). These factors are set to have a seriously debilitating impact on the country, especially as they will hit before it has become wealthy in per capita terms.
A lack of overall robustness and future direction in the Chinese economy also
threatens the country’s potential. In the first decade of reforms, China benefitted from a demographic dividend and entrepreneurialism stemming from land reforms that allowed for the development of industrialization; China then drove growth through manufacturing and export and its enormous reserves of surplus labor (World Economic Forum, 2015). The export-driven model ran into problems following the financial crisis of 2007-2008 when consumers in wealthy economies stopped
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spending (ibid.). Since then, China has driven growth through government stimulus programs and through the government ordering owned banks to lend to state-owned enterprises without commercial justification (Financial Times, 2016). The majority of China’s growth for the past decade has come from capital input, primarily fixed investments, and not due to using inputs more productively. Corporate debt levels have increased from 147 percent of GDP in 2008 to 250 percent at the end of 2014 – an increase bigger than the entirety of the US commercial banking system (Dibb and Lee, 2014). The result was the biggest and most wasteful building program in history. The SREB is an important development strategy for China that should receive international support, but it is far too small to have any truly significant impact on China’s economic woes.
The SREB projects are also set to face complex logistical issues that will pose significant challenges to their success. Infrastructure projects by Chinese companies in Africa have increased confidence in their abilities to operate in other countries, but the geopolitical and geostrategic situations in Central Asia, with its potential
difficulties with Russia, and the Middle East, with all its complex divisions, are far more challenging.
Also is the concern that, despite China’s assurances, and in spite of its clear efforts to adhere to and indeed improve international best practice in investment projects (especially in the AIIB ((Dollar, 2015)), going by China’s past record at home and internationally, of both government and private companies, there are worries that investment projects may lead to environmental or human rights scandals, which would have negative consequences for China’s efforts to become a global leader (Fallon, 2015).
UK scholar Peter Ferdinand (2016) draws attention to the difficulty of ensuring that the many partners China needs to make the SREB work will be as cooperative as it hopes, and that they will maintain their cooperativeness over the long term. Ferdinand also raises concerns over China’s lack of experience with the tough political divisions in the Middle East and South Asia, and its lack of personnel with significant linguistic and cultural knowledge of those regions. China could well cause offense and have problems dealing with the consequences. And as much as China has touted the
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SREB’s potential to create opportunities for cooperation with the US, Russia and Europe, it could also run into significant problems in the form of competing interests.
The SREB relies heavily on the expectation that all of the many hoped for partners will respond enthusiastically, because without their active cooperation the project cannot work. In this regard, China may already have made something of a faux pas in that it reportedly had not discussed the SREB with any of the potential countries along its routes before officially announcing the project (Ferdinand, 2016).
Delegations were reportedly hurried off to convince hoped for partners with substantial economic inducements (ibid.).
Swaine (2015) writes that few Chinese sources address the practicalities of making the SREB operational. He also states that many of the nations in the SREB regions are very poor, with limited experience of big infrastructure projects, and considerable levels of corruption might be expected.
The Financial Times (2015) reports that, in spite of its lofty aspirations, the economic viability of the new Silk Road remains open to question, and quotes an expert who estimates that the railway transportation heading west from China is subsidized by up to 50 percent by local and regional governments. Some assess that China is building infrastructure with the idea that “making it economically viable is something you work on a bit down the line,” (ibid).
The widely esteemed Willy Wo-Lap Lam of the Chinese University of Hong Kong wrote recently that OBOR is a “sloppy and poorly conceived idea that Xi came up with on his own to serve his ego without any careful study and planning beforehand, and there are more and more signs in recent months indicating that this plan is simply financially unsound and unsustainable,” (2016). He goes on to call it “a financial black hole,” (ibid.).
Swaine (2015) argues that perhaps the primary danger facing OBOR is the strong tendency of the Chinese political system to overlook problems for the sake of pleasing the top leaders.
The road ahead may not be very smooth at all.
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Also working against China is the difficult neighborhood it finds itself in and the fact that it has far from excelled in building good relations with its neighbors to the east and the south. China has given these often strong states cause to be concerned about its increasing power, and they have allied with one another and also the US against Chinese assertiveness. The current international system is working well for these countries and they resent China rocking the regional boat. While still supporting China in development strategies such as the SREB and giving it incentives to act as a responsible stakeholder in the international system, the US and its allies are in a very strong position to ensure they remain economically and militarily ahead.
Although China has frequently made known its desire for a multipolar world, and has stated ambitions to be the leading power and create the rules of the game, it has done very well in the context of a rules-based, liberal internationalist order and currently offers no alternative model that can attract significant international support. John Ikenberry (2014) has said that in terms of challenging the current order, China employs more of a “spoiler” model, that is to say it can only cause upset rather than provide what will be seen by others as a route to advancement. The SREB can be seen to represent an attempt to change this situation, but its impact is likely to be limited.
The United States is still far and away ahead of China in soft-power terms, and this is likely to remain the case for quite some time. Joseph Nye (2015) has spoken of China’s surprise and concern that the international community put up so little
resistance to US actions in Iraq from 2003 and attributes this lack of resistance to the model the US offers as a world leader and the power it holds as a result of the success of its cultural products. Nye notes that most soft power is generated by civil society, and a problem China has is that it tends to think soft power can be generated by the government. China is making huge investments in attempting to increase its soft power, and such activities will be of huge importance in the SREB initiatives, but it is likely to lag far behind the US for quite some time. In the same piece from 2015, Nye relates an anecdote about asking Lee Kuan Yew what he thought about China one day surpassing the US. Lee reportedly responded that he thought the US would maintain its lead because:
China can call upon the talents of 1.3 billion people, but the United States can
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call upon the talents of seven billion people and what’s more it can recombine them in a diversity which leads to much more creativity than you can get under ethnic Han nationalism (p. 8).