TwentyTwenty, Episode II: Tightening the Belt
Check out the second episode of our podcast series, TwentyTwenty; Your Podcast for (Un)Precedented Time, here! Find us also on Spotify, Apple Podcasts and Google Podcasts. For those who wish to read along, a transcript of the episode can be found below.
EDM: Unprecedented times. Such has been the clarion call of this year. But just how unprecedented are these times? Whilst a global pandemic might not be an annual issue, many of the crises we are facing, from the erosion of civil liberties to debt crises, or from fears around technology to the shifts in geopolitics as major powers flex their muscles, these other products of trends and concerns we know only too well in which a state of global emergency has amplified. Even the pandemic itself was no surprise to those in the know. So what are these trends? Where have they come from? And what kind of path can we expect them to put us on?
This is TwentyTwenty Vision, and I’m Elizabeth Dykstra-McCarthy with a podcast, brought to you by Foreign Brief in partnership with the Fletcher School, about how this year has accelerated global trends and the state of global crisis has made them that much more visible.
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EDM: The Belt and Road initiative or BRI is China’s flagship foreign policy project. Lauded as the New Silk Road by Chinese officials, the BRI is putting China en route to investing over a trillion dollars on infrastructure in 138 countries. Buying ports, building rails and roads, Chairman Xi Jinping wants the BRI to make sure all roads lead back to China. However, since its inception in 2013, this vision has expanded past traditional infrastructure to include soft projects like creating special economic zones, as well as building up healthcare and technological infrastructure under the banner of the Health and Digital Silk Roads. Seeing these investments as win-win projects, the Chinese Communist Party has made bold claims that the BRI will not only allow China to spread its wings and soar, but that it will take the developing world with it. All of this, Chairman Xi hopes, will push the US off the world stage and secure China’s position.
Yet, corruption, exploitation, mismanagement, and China’s worsening reputation have plagued the BRI from its inception. Going so far as to export Chinese police across Africa, the project has led China down a rabbit hole of scandal and spending. Even when Chinese officials began to learn from their tone deaf mistakes, COVID-19 stalled projects across the board. Now, though projects have slowly resumed, the world or more importantly, the EU, has begun to look upon China’s global ambitions with suspicion following Chairman Xi’s fascistic responses to dissent in Hong Kong, Xinjiang, and Inner Mongolia. Still, where there is a will, there is a way and the China-Pakistan Economic Corridor, the BRI’s flagship project, looks to be that 62 billion dollar way. Promising to give China access to Karachi’s ports on the Arabian Sea, a pipeline to Central Asian energy, and a route to European markets, China is minting Pakistan in a bid to overturn the current world order.
Today we will examine how the events of 2020 have put China’s flagship foreign policy initiative into question. At a crossroads, China’s actions moving forward will either set 2020 to be remembered as a bump on the New Silk Road or the disaster which dashed its challenge to America’s global hegemony. The real question is, which story will the Belt and Road Initiative tell us?
JH: It tells a story of China following in the footsteps of the great powers that have come before it and learning in some places, but in many ways repeating their mistakes.
EDM: This is Jonathan Hillman, Senior Fellow with the Center for Strategic and International Studies, and the director of the Reconnecting Asia project, one of the most extensive open-source databases tracking China’s Belt and Road initiative across Eurasia. His newly published book, The Emperor’s New Road, China and the Project of the Century, explores some of these ideas. Now, the introduction I have given might feel very vague, but that is something to be expected when we’re talking about this project. The BRI is a notoriously slippery foreign policy.
JH: This is an effort that was intentionally somewhat vaguely defined to begin with. They’re, you know, there’s no definition for what qualifies as a project. And finally, you know, this thing is changing. So the Belt and Road today is not what it will be tomorrow.
EDM: And that would have been true even before but how much of an impact has COVID had on the BRI?
JH: Right now we’re seeing, somewhat opportunistically, Chinese officials blaming all of the Belt and Road’s ailments on the pandemic, as if it was going very smoothly beforehand, which of course, it wasn’t. And on that count, I think the pandemic in many ways has exacerbated the Belt and Roads underlying or pre-existing conditions. There’s a lot of activity that has been essentially frozen by the pandemic. Chinese officials themselves admit that 20% of projects they say are at risk from the pandemic now, and another 20 or 30% are somewhat, you know, uncertain.
EDM: Now that means 50% of projects are either at risk or uncertain. Of course, China isn’t alone in feeling the economic pressure, but it may be the countries on the recipient end of the BRI who feel its impacts.
JH: But as we, you know, are entering into a really challenging time financially for many of the countries involved, you know, over 100 countries seeking debt relief from the IMF, I think we’re going to find out that there are lots of projects that were pursued that probably shouldn’t have been.
EDM: Lots of projects that were pursued that probably shouldn’t have been. Now there’s a whole host of reasons why China might be pursuing certain projects, many of which have little or nothing to do with lucrative investments or regional development. Building an extensive seaport in Myanmar, for example, would reduce China’s reliance on the trading artery through the Straits of Malacca: straits militarily dominated by the US.
JH: There are projects that Chinese officials have made important for political purposes, you know, projects have taken on symbolic value that are worth watching, but might not be worth watching for commercial reasons. And so there’s activity in Pakistan for example that will probably continue even though some of it shouldn’t because the China Pakistan Economic Corridor has been made into a flagship corridor for the Belt and Road. And so no one I think is on either side is eager to have that brand tarnished.
EDM: Now don’t forget about the China Pakistan Economic Corridor. We’ll be coming back to that in just a second. But it is important to note that many of these projects are political statements: political statements, where the recipient countries, whether Myanmar, Sri Lanka or the Maldives, will have to bear the burden. And given all the criticism China has received for its debt trap diplomacy and the Belt and Road, this puts some of these countries at a bit of a fork in that road.
JH: I think there’s an opportunity for a lot of the participating countries in Belt and Road right now to have a sort of reassessment of their commitments, and I think many of them are eager to renegotiate some of their commitments. I think the challenge though, is that because China has really resisted efforts to handle debt obligations, multilaterally, it would prefer to deal with all of that on a case-by-case basis, which is, that’s code for we prefer to deal with it privately behind closed doors bilaterally. And so I think this puts recipient countries in a difficult position, but they do have an opportunity right now and there’s some urgency to sort of have a reassessment and to cut projects that are underperforming. Some of the recipient countries would be well advised to basically share information with each other about how these negotiations are going.
EDM: The BRI is an opaque enigma, not just difficult to understand from the outside, but difficult even for countries within the initiative to negotiate, collaborate and to organize. Projects that have been pursued that probably shouldn’t have been, projects that are going to continue because of their political importance, not their economic feasibility or value. Which brings us back to the China Pakistan Economic Corridor and Economic Corridor from western China to the Arabian Sea, by Balochistan, a corridor built on highways, rails and pipeline infrastructure. This too will reduce the pressure on the Straits of Malacca, a trading contingency plan as relations with the US grow increasingly more tense. It isn’t just trade though. Pakistan is China’s all-weather ally, with a bond that runs higher than the Himalayas, deeper than the deepest ocean, and sweeter than honey. Well, honeyed words are all very well and good, but Pakistan also counterbalances the Indian might in the region, and China wants to prevent it from becoming a fertile ground for weaker resistance. Now, that $62 million investment is beginning to make sense. Exact details on the project remain hidden from sight, but not some of its impacts. A Pakistani investigation in 2017 concluded that the CEPC’s plan envisages a deep and broad based penetration of most sectors of Pakistan’s economy, as well as its society by Chinese enterprises and culture. Given that it seems like China is holding all the cards, is it even realistic to suggest that Pakistan should attempt to renegotiate?
JH: I think it is. I think that renegotiating whether the China Pakistan Economic Corridor is a concept or an initiative is not on the table. I think that they’re stuck with that. I think, you know, renegotiating their participation in Belt and Road, not really on the table. But individual projects, sure. I think that there are probably Chinese officials and some of the lending institutions that are eager to have those conversations.
EDM: So China isn’t just looking for trade and security. This is a much deeper investment than dollars.
JH: Were China able to do what others have not been able to do in Pakistan, if China was able to do what the World Bank has not been able to do, what the United States has not been able to do, CPEC would be a really powerful signal of Chinese power and what China is capable. China also would benefit from having you know, that the stability and economic growth there on its border. But I just don’t see a lot of those underlying challenges being resolved anytime soon. But I see I see the changes that need to be made as ultimately changes that Pakistan needs to make. I think Pakistan in recent history has a lot more experience dealing with outside powers than China is acting as one.
EDM: As well as the bricks and mortar, the BRI has become much more of China’s general foreign policy. In 2017 Xi Jinping spoke about the health Silk Road. In mid March of this year, he raised the notion of working with Italy to build a health Silk Road. Since then, China has doubled down on its efforts to recast itself as a responsible global health leader, launching a widespread public diplomacy campaign and sending medical aid worldwide. But can we really expect the health Silk Road to successfully pivot and continue the development of BRI in the face of a global health crisis?
JH: The health Silk Road was something that I think became more of a headline concept in 2017. There’s a policy document from 2015 that outlines what the Belt and Road is and all the things that it touches. And there’s maybe a paragraph of that, you know, 14-15 page document about health, I think it’s interesting that it does mention Belt and Road should help improve information sharing to prevent pandemics. So clearly that did not happen, right? It’s a little bit rich, I think after the fact, you know, now we’re living in a pandemic, the Belt and Road has taken on this increasing focus on health.
EDM: Did it ever have the capacity to make a positive difference to the countries it was working in?
JH: If health infrastructure had been a bigger focus of the Belt and Road? Certainly, I think that there could have been more positive health related outcomes. But I think the fact is that the Belt and Road has always reflected China’s preferences first and foremost, and there’s a long list of large Chinese state owned enterprises that want to build large transport and energy projects. You do see occasional examples of health related infrastructure. So examples that do exist don’t necessarily tell a flattering story, you know, the hospital in Gwadar, for example, you know, I think 70% of the patients using that hospital were Chinese workers. So you can understand why China would want to have access to health facilities in an area where it has lots of workers. But I’m not sure how much Pakistan benefits from, you know, the hospital in Gwadar.
EDM: Should we see the same cynicism and opportunism in the digital Belt and Road?
JH: I see some of the motives behind the health Silk Road as being political and being part of China’s response to the pandemic to try to cast itself as a responsible actor and provider of global goods. I see the drivers for the digital Silk Road as being even stronger, being both commercial and strategic. There’s really a business case now as more and more Chinese technology companies face scrutiny in advanced economies. In order to continue to grow they need to grow into these developing emerging markets. The Belt and Road is a convenient mechanism to help them do that. And I also think the pandemic has created its own demand for some digital infrastructure. Some of the Chinese companies that create surveillance cameras, for example, are repackaging their products, their surveillance technology as helping to identify, you know, people with temperatures and to do contact tracing. And from the recipient country perspective, these projects often cost less than large transport energy projects. They’re not cheap, but compared to large transport energy projects, they might cost a bit less. And so for that reason, they might also be a little bit more feasible given current fiscal constraints. So I do see the digital Silk Road accelerating, and so I don’t want to suggest that you know, all the digital activity is reflective of you know, some secret very highly detailed strategy. I think it is opportunistic and iterative, but I see the drivers behind that as being even stronger and somewhat more enduring.
EDM: So perhaps we can read a bit of regret: a few second thoughts into some of the choices made in the direction of China’s grand strategic vision. Given this, is that a fork in the road that BRI is going to come to? What would that look like?
JH: Well, one of the advantages of having, you know, not strictly defined the Belt and Road is that it can continue to evolve, at least domestically in China, you’re seeing, you know, fewer references to Belt and Road. It’s still on the agenda internationally when Chinese officials go to meet with participating countries. I think it’s going to be hard in the short term to forget about it. You know, it’s written into the Chinese Communist Party constitution. It’s Xi Jinping’s signature foreign policy vision. But if there was another leader, this could be renamed and reframed. But I think as long as China has the will and the wallet to do these projects, it’s going to have an interest in doing them.
EDM: So it might not be in death knell for BRI, but certainly some kind of revaluation is taking place.
JH: I always thought that Belt and Road is going to face this reckoning at some point as Warren Buffett says, you know when the tide goes out, is when you find out you know who’s been swimming naked. And so this is like a test for Belt and Road. We all know that there have been white elephant projects roaming along this thing, but we don’t know how many.
EDM: China, and Xi Jinping, have put the BRI forward as a landmark step for China to set itself up as a global power. Starting with roads and bridges, expanding into healthcare and digital networks, it looks to expand China’s influence across a growing network of developing countries – much like the US and European nations have in the past. Yet, although China’s investments into aid and development may have positive impacts on developing nations while building soft power, the insecurity of these nations poses just as much a challenge to China today as it does to the West. With investment comes expectations and despite China’s reluctance , it has found itself as a major stakeholder in complex conflicts the world round. Now, the world is getting a glimpse as to how exactly China manages its new found powers. Although China developed its economy under the American security umbrella, because of BRI, China now finds itself ostracized by the US and venerated by developing nations. Without security, BRI will be eaten alive by insurgency, piracy, and terrorism. Still, with Chinese security and the Chinese leadership’s penchant for resorting to brutal authoritarian crackdowns and censorship, China could alienate potential trade partners. How exactly will China toe the line between securing BRI and building multilateral ties?
AA: The attack in late June this year on the stock exchange, underlined a growing uncertainty and insecurity in Pakistan for the Chinese investment.
EDM: Dr. Alessandra Arduino from the National University of Singapore is also the co-director of Security and Crisis Management International Center at the Shanghai Academy of Social Science. Right now. He’s referring to an attack that took place on June 29 of this year, where four gunmen from the Baluchistan Liberation Army stormed the Karachi Stock Exchange. All four were killed in a shootout, as well as two guards and a policemen in a full eight minute gunfight, where the insurgents were throwing grenades.
AA: The stock exchange in the port city of Karachi is owned more than 40% by Shanghai Stock Exchange and Shenzhen Stock Exchange. So it was an attack on Chinese investment.
Is China an enemy for the Baluchistan Liberation Army? Directly, I don’t think so. But China is supporting Islamabad. And then there are growing signs by the Baluchi and they expressed with this attack that China is basically using local resources without giving back to the local population.
EDM: The Baluchistan Liberation Army claims the attack and in their statement released after the event, emphasized that they had had ample opportunity to target unarmed civilians and didn’t. Their main aim, they said, was to attack because the Pakistan Stock Exchange was a symbol of the economic exploitation of Baluchistan that Pakistan and China are carrying out.
AA: These attacks are not the first attack on Chinese investment or Chinese personnel and workers in the area. It’s one of a series of attacks since the Belt and Road started to move from a blueprint in 2013 to a real project. And in 2017, if I recall correctly, there was an attack on a Chinese engineer with an ID. Then in 2018, there was a quite shocking attack on the Chinese Consulate in Karachi, in the same area when there was this attack on the Stock Exchange. And in 2019, there was an attack on a five star hotel in Qatar that was invested with Chinese money.
EDM: This is indicative of Pakistan and Imran Khan’s alignment with China: an alignment which has resulted in a new quarter of attacks against the strengthening of civil governance in Pakistan, tightly enmeshed as it is, in the economic and geopolitical web that it has created, China finds itself in a precarious position–one that will be tricky either to extricate itself from or balance. And this is all within one of the most conflict prone, volatile, and divided regions in the world.
AA: Pakistan always has been, let’s say, a pendulum swinging in between civilian power and military power. China’s interest in Pakistan is important to the relationship between China and Pakistan from a diplomatic point of view; it is one of the few relationships that is called an all-weather friendship. So we are not only talking about a transactional relationship, just a commercial one, but something with a deeper meaning and link. Then we have to say how the Pakistan military, the army and even the cooperation between the Pakistan private security company and the Chinese private security company operating now in Pakistan in areas like Lahore and Karachi and Islamabad, are going to sustain the Chinese and protect the Chinese investment in an area that is still mired by uncertainty and insecurity.
EDM : So do you think this is going to tell us quite a bit about how China is going to respond to this threat of terrorism and international turmoil?
AA: China in the past has been accused of free riding off the economic, off the American Security umbrella. China has to take into consideration the fact that the United States, for example, are reshaping their security configuration and position in the Middle East and Africa and also in Afghanistan. The problem that China has now is how to cope with terrorism and radicalization spilling over that can move kind of radical opposition even into China and the overall problem in the China Pakistan Economic Corridor. In the months to come, in the years to come, it will be more difficult for the People’s Republic to abide by the three decades old principle of non-interference. But definitely we are going to see a change in the security stance and this change can be looked not only on direct military intervention, if China is willing to do that, or is even able to do that, but also China is deploying a private security company in order to protect personnel and infrastructure along the Belt and Road initiative. But then how this company will coordinate, if they are going to coordinate with PLA, with the government, with the Ministry of Foreign Affairs of China–this is still to be seen.
EDM: The US is slowly withdrawing much of the military presence, which has dominated over the preceding decades in Pakistan and the region. As a result, China may have to take a more interventionist and active role in security methods. With neighbors like Pakistan, India and Afghanistan, security on its borders is nothing trivial. And we can see that as the shape of the Chinese security forces evolve.
AA: Power projection from the PLA is still limited compared to the United States or Russia, for example, but modernisation of the People’s Liberation Army has been quite substantial. But then the question is not only if China is going to be able to project this kind of force far from its border, but then even if it’s still going to be willing to project its force.
EDM: And when it comes to the projection of force and fears around security, the region as a whole is victim to the ripples and eruptions of insecurity in Afghanistan. Instability in Afghanistan runs the risk of permeating the borders through South and Central Asia and China’s Western province Xinjiang. China has long had an interest in rebuilding the Afghan economy, and through this, it says to build regional peace and stability. In February 2020, the US and NATO allies signed a deal with the Taliban to withdraw troops from Afghanistan within 14 months. The conditions of this deal require the Taliban to begin negotiations with the Afghan government and denying transnational extremist groups from operating in the country. But although increasingly China has played a prominent role in facilitating intra-Afghan dialogue, and cooperates with the Afghan government to conduct border security operations, doubts remain that the Taliban and the Afghan government will peacefully reach a deal. China’s most recent direct involvement in Afghanistan seems risky and, to many, inadvisable.
AA: Afghanistan is the graveyard of empires and China doesn’t have to follow the British Empire, at the time was the East India Company, the Tsars, Soviet Russia and, the latest, the USA would have been entangled in the Afghan conflict for more than 18 years.
EDM: But this isn’t just Imperial hubris. Geography alone suggests that China, to some extent, can’t sit this one out.
AA: China has more borders with Afghanistan, so China has been improving the capabilities of the Afghan military in that area with the mountain Brigade. But on the other side, China is still in a very good relation with the Taliban; they have been talking with the Taliban Special Envoy and on this respect, they can be an active force in promoting the Afghanistan peace project, even if there is a support from the Taliban in avoiding China to get attacked by other organizations that can use Afghanistan as a safe haven, and by this organization I mentioned the standard Islamic movement. Then there will be the problem with other terrorist organizations that are not under their control, especially like Islamic State, that it’s reorganizing its force in the Afghanistan area. Of course, and what are the three points that China is looking essentially to avoid? One is terrorism and radical movements–radicalized individuals spilling over from Afghanistan to the Chinese territory. Then we have, as I mentioned before, narcotics smuggling. The third point is the overall security of CPEC that can be endangered by severe Afghan instability.
EDM: When we talk about the rise of China then, how it sees itself in its own Empire, how it negotiates its foreign policy in this period, the Belt and Road gives us a glimpse of what that might look like. Nowhere could its own principles, its own philosophy, be more tested than in this region.
AA: If the peace process works in Afghanistan, Chinese investments are going to be critical in order to develop Afghan infrastructure. So I still think that China has interest in promoting the BRI, but its own Chinese interest. And when we are moving to what other countries expect from China, sometimes the perception between this expectation and what really China is going to do or even planning to do, it’s quite different.
EDM: So is it possible for China to expand BRI into Afghanistan with blue helmets or private security forces, whilst avoiding that overreach, which plagues both the US and the USSR?
AA: Definitely. History already told us that the security balance in Afghanistan is going to be the continuous rebalancing of power, continuous shifts that are going to be played not even in the long term but in a very short term. So in these respects, China is definitely going to be very, very careful in getting involved. But otherwise, it’s going to be another empire in the graveyard.
EDM: As China rises to reclaim its place as a global superpower on the world stage, the ripples its ascendance will create cannot be ignored .
Though, with 2020 forcing the tectonic plates of global power to quake and tremble will China be able to remain standing? The tumults of this year have been major, instantaneous and transformative; the outbreak of COVID-19; protests in Hong Kong; an ever escalating trade war with the US or the banning of Huawei in Europe. These tensions have pushed China’s relations with the world to the brink, closing the Middle Kingdom off as it raises its fists in the South China Sea and Indian border. And for these very reasons, it is necessary to keep an eye on the Belt and Road Initiative. BRI is the only road leading into the increasingly hermetic state, and as such, will define how China sees its own role and position on the global stage. Will that position be one which looks to find mutual economic gain, lifting the developing world out of poverty? Or will that position be one in which Xi’s authoritarian tenancies are exported worldwide along the New Silk Road?
TwentyTwenty was produced and presented by Elizabeth Dykstra-McCarthy, with the Associate Producer Max Klaver, and lead researchers Kevin Schwartz and Bilal Rahmani. The Editors were Elizabeth Dykstra-McCarthy with Jessie Newman. Many thanks to this week’s interviewees, Jonathan Hillman and Alessandro Arduino, and, until next week, goodbye.
