China’s New Silk Road: An Emerging World Order 9780815354000, 9781351134354

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China’s New Silk Road

Much is being written about China’s new ‘One Belt, One Road’ initiative, but much of the writing focuses on China itself, on the destinations of the road – Europe and the Middle East – or on the countries through which the road passes, such as Central Asia. This book takes a different approach, assessing the views of East Asian and other countries on the Belt and Road Initiative, both from a transnational and multidisciplinary perspective. The book considers international visions and limitations of the New Silk Road as a new paradigm, explores economic and trade aspects, including infrastructure networks, financial mechanisms, and the likely impact for other countries and regions, and analyses the likely implications for regional and trans-­regional cooperation and competition. Western and Asian regional perspectives on the New Silk Road, including from India, Pakistan, Southeast Asia and Japan are considered throughout the book. Carmen Amado Mendes is Professor of International Relations at the University of Coimbra, Portugal.

China Policy Series Series Editor: Zheng Yongnian

East Asian Institute, National University of Singapore.

49 China-­Africa Relations Building Images through Cultural Co-­operation, Media Representation and on the Ground Activities Edited by Kathryn Batchelor and Xiaoling Zhang 50 China’s Authoritarian Path to Development Is Democratisation Possible? Tang Liang 51 Foreign Policies toward Taiwan Shaohua Hu 52 Governing Environmental Conflicts in China Yanwei Li 53 Post-­Western Sociology From China to Europe Edited by Laurence Roulleau-­Berger and Li Peilin 54 China’s Pension Reforms Political Institutions, Skill Formation and Pension Policy in China Ke Meng 55 China’s New Silk Road An Emerging World Order Edited by Carmen Amado Mendes 56 The Politics of Expertise in China Xufeng Zhu For more information about this series, please visit www.routledge.com/China-­ Policy-Series/book-­series/SECPS

China’s New Silk Road An Emerging World Order

Edited by Carmen Amado Mendes

First published 2019 by Routledge 2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN and by Routledge 711 Third Avenue, New York, NY 10017 Routledge is an imprint of the Taylor & Francis Group, an informa business © 2019 selection and editorial matter, Carmen Amado Mendes; individual chapters, the contributors The right of Carmen Amado Mendes to be identified as the author of the editorial matter, and of the authors for their individual chapters, has been asserted in accordance with sections 77 and 78 of the Copyright, Designs and Patents Act 1988. All rights reserved. No part of this book may be reprinted or reproduced or utilised in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers. Trademark notice: Product or corporate names may be trademarks or registered trademarks, and are used only for identification and explanation without intent to infringe. British Library Cataloguing-­in-Publication Data A catalogue record for this book is available from the British Library Library of Congress Cataloging-­in-Publication Data A catalog record has been requested for this book ISBN: 978-0-8153-5400-0 (hbk) ISBN: 978-1-351-13435-4 (ebk) Typeset in Times New Roman by Wearset Ltd, Boldon Colliery, Tyne and Wear

Contents



List of illustrations Notes on contributors Acknowledgements



Introduction: China’s New Silk Road

vii viii xi 1

C armen A mado M endes

part I

The general context

5

  1 New paradigms for the New Silk Road

7

S ean G olden

  2 Building a community of shared destiny: the Belt and Road Initiative in the political speeches of Xi Jinping

21

B eatrice G allelli and P atric k H einrich 

  3 Whose Silk Road? The Chinese, US, European Union and Russian strategic projects for regional integration in Central Asia

38

P aulo D uarte

  4 Sustainability implications of the New Silk Road: environmental and social planning D aniele B rombal

51

vi   Contents part ii

The economic dimension

67

  5 The political economy of new multilateral initiatives in Pacific Asia

69

W erner P ascha

  6 The New Silk Road: perspectives for EU–China economic cooperation

87

F ernanda  I lh é u

  7 The China–Pakistan Economic Corridor: lessons for the New Silk Road

104

M ario E steban

  8 Sino-­Pakistani axis of cooperation in China’s New Silk Road

120

J orge T a v ares da  S il v a

part iII 

The strategic dimension

133

  9 The roles of local governments in the New Silk Road

135

D omini k M ierzejews k i

10 The Maritime Silk Road, viewed from the South

153

R oger G reatrex

11 Locating China’s Maritime Silk Road in the context of the South China Sea disputes

165

E dyta R osz k o



Index

180

Illustrations

Figures 4.1 AIIB projects review and approval process 6.1 The Belt – inland development corridors 6.2 Silk Road Economic Belt and the 21st Century Maritime Silk Road 6.3 Cargo international railway routes from China to Europe 9.1 Sichuan foreign activities by country (January–September 2017)

57 91 92 93 143

Tables 9.1 Chinese migration to BRICS, Latin America and Caribbean and Central Europe (2015) 9.2 Sichuan’s export of major building materials in 2016 and 2017 (10,000 RMB) 9.3 Sichuan’s foreign trade by modes of transport (January–August 2017) 9.4 Sichuan foreign trade destinations (by continent)

141 144 145 146

Contributors

Carmen Amado Mendes is Professor and Coordinator of the International Office of the School of Economics, University of Coimbra (Portugal), Director of the programme on China and the Portuguese-­speaking Countries, former Head of the International Relations department. Her PhD is from the University of London (School of Oriental and African Studies). She is the author of Portugal, China and the Macau Negotiations (Hong Kong University Press, 2013). Sean Golden is Full Professor of East Asian Studies at the Universitat Autònoma de Barcelona (UAB), Senior Associate Researcher at the CIDOB Barcelona Centre for International Affairs and Associate Professor at the Institut Barcelona d’Estudis Internacionals (IBEI), specialising in Chinese thought, discourse, politics and international relations. Beatrice Gallelli is a PhD student at the Department of Asian and Mediterranean African Studies at Ca’ Foscari University in Venice. Her research interests include sociolinguistics, discourse analysis and China studies. She is the author of ‘Metafore di una metafora: La retorica del “sogno cinese” ’ (Metaphors of a metaphor: The rhetoric of the ‘Chinese dream’) (Annali di Ca’ Foscari – Serie Orientale, 2016) and 中国梦理论：中国国家话语的新形态 (The Chinese dream theory: The new shape of China’s national discourse) (Academics, 2017). Patrick Heinrich is Associate Professor at the Department of Asian and Mediterranean African Studies at Ca’ Foscari University in Venice. His research interests focus on sociolinguistics, language endangerment and language diasporas. He has written The Making of Monolingual Japan (Multilingual Matters, 2012). He has been awarded the annual research award by the Japanese Association of the Sociolinguistic Sciences in 2010 and is since 2014 an honorary member of the Foundation for Endangered Languages. Paulo Duarte is Postdoctoral Researcher at the Center for Research in Political Science. He has PhD in Political Sciences from the Catholic University of Louvain. He is the author of Pax Sinica (Chiado Editora, 2017) and La Nouvelle Route de la Soie chinoise et l’Asie Centrale: vers une (re)configuration

Contributors   ix de l’intégration régionale et globale (The New Chinese Silk Road and Central Asia: Towards a (re)configuration of regional and global integration) (Presses Universitaires de Louvain, 2017). Daniele Brombal is Researcher at the Department of Asian and North African Studies, Ca’ Foscari University Venice. His research focuses on China’s decision-­making processes in the field of environmental and social planning. His recent works are published in Environmental Science & Sustainability, Environmental Impact Assessment Review, Land Use Policy, Journal of Cleaner Production and China Perspectives. Werner Pascha is Professor of East Asian Economic Studies/Japan and Korea at the Mercator School of Management and the Institute of East Asian Studies (IN-­EAST) of the University of Duisburg-­Essen, Germany. His research interests include the political economy of institutional change in Japan and Korea, and international economic relations of the region. Fernanda Ilhéu is Professor and Researcher at the Centre for African, Asian and Latin American Studies, and Coordinator of the ChinaLogus, a Business Knowledge & Relationship Center with China, School of Economics and Management, University of Lisbon. Her undergraduate studies were in Economy at ISEG, and she received her PhD degree in Management and Marketing from Seville University. She is the President of the New Silk Road Friends Association, a think-­tank on B&R initiative. Mario Esteban is Professor of East Asian Studies at the Autonomous University of Madrid and Senior Analyst at the Elcano Royal Institute. His research on the foreign policy of China has been published in academic journals such as The Journal of Contemporary China, China Quarterly, African and Asian Studies, Journal of Current Chinese Affairs and Chinese Political Science Review. Jorge Tavares da Silva is Visiting Professor of Political Science and International Relations at the University of Aveiro and the Faculty of Arts and Humanities at the University of Coimbra (Portugal). He is a researcher at the Research Unit on Governance, Competitiveness and Public Policies (GOVCOPP) at the University of Aveiro, and founding member of the China Observatory in Portugal. His areas of interest include contemporary analysis of Chinese political, social and economic reality and its foreign relations. Dominik Mierzejewski is Professor in the Department of Asian Studies, Chair of the Center for Asian Affairs at the University of Lodz and a political scientist. He graduated from the University of Warsaw with his habilitation PhD entitled ‘Between Pragmatism and Morality. The Dezideologization of the China’s Foreign Policy Rhetoric in the Era of Reform’. His recent research projects include paradiplomacy in China with Guangzhou and Guangdong case study, and China’s three identity faces: culture, ideology and the state.

x   Contributors Roger Greatrex is Professor Emeritus at the Centre for East and South-­East Asian Studies of Lund University in Sweden, where he was Director from 2002–2016. He also served as President of the European Association for Chinese Studies (EACS) between 2010 and 2016. He has published extensively on China and Japan, principally regarding legal topics. Edyta Roszko is Postdoctoral Researcher at the Department of Cross-­Cultural and Regional Studies of the University of Copenhagen. She holds a PhD in Social Anthropology from the Max Planck Institute for Social Anthropology and Martin Luther University, Halle Wittenberg. She has published articles on religion, territorialisation, maritime disputes and governmentality in a range of journals, including Cross-­currents: East Asian History and Culture Review, Nations and Nationalism, and Journal of Contemporary Ethnography. Her monograph ‘Shifting Binaries: Navigating State and Religious Authorities in the South China Sea’ is forthcoming from NIAS. 

Acknowledgements

This book was inspired by the XVI EastAsiaNet (EAN) research workshop that I organised in Coimbra in 2016, on ‘The New Silk Road in the Context of East Asian Relations and Wider International Implications’. This was also the tenth anniversary research workshop of the EastAsiaNet (www.eastasianet.org/), a network of leading European research schools with a well-­developed social-­ science focus on East Asia, created by the Institute of East Asian Studies – University of Duisburg-­Essen and coordinated by Werner Pascha. I am very honoured to represent the University of Coimbra in this network and have learned a lot from the colleagues who meet to discuss and decide about common issues and projects every year. I would like to express my gratitude to EAN, particularly to Werner Pascha, and all participants of the Coimbra workshop. Sean Golden, Patrick Heinrich and Glenn Hook deserve special thanks for their help in moving this project forward.

Introduction China’s New Silk Road Carmen Amado Mendes

In October 2013, Chinese President Xi Jinping announced the creation of a ‘Silk Road Economic Belt and 21st Century Maritime Silk Road’, also referred to as ‘One Belt, One Road’ (OBOR). The scope of this project was made public by the Chinese government in 2015, in the document ‘Vision and Actions on Jointly Building Silk Road Economic Belt and 21st Century Maritime Silk Road’. The official translated name of this strategy was revised in 2017 to ‘The Belt and Road Initiative’ (BRI), mainly to avoid using the word ‘one’ as several land and sea routes are involved. In any case, China’s New Silk Road refers to the revitalisation of both land and sea corridors that once linked the so-­called Middle Kingdom to other peoples and civilisations. The People’s Republic of China has staked much of its credibility as a global power on the implementation of this highly promising project, which has turned into one of its major foreign policy goals and public diplomacy challenges, aiming to promote a positive image of China. Incredibly ambitious in its scope, running from Asia to Europe, it has attracted a great deal of critical attention. Much is being written about this initiative, mainly focusing on China itself, on the destinations of the road – Europe, the Middle East and Africa – and on the countries through which the road passes, such as Central Asia. This book takes a different approach, assessing the views of East Asian and other countries towards China’s New Silk Road, both from a transnational and multidisciplinary perspective. In order to do so, contributors go beyond applauding BRI, offering a critical evaluation of its merits and potential problem areas. The volume is organised in three parts, subdivided into chapters that deal with geopolitical implications of this initiative. Part I, ‘The general context’, presents international visions and limitations of the New Silk Road as a new paradigm and ideology. In Chapter 1, ‘New paradigms for the New Silk Road’, Sean Golden examines a shifting world order in which re-­emerging powers want to have a word in international affairs but face competition from conventional theoretical frameworks that dominate geostrategic thinking. This new paradigm presents an alternative to traditional strategies by supporting the idea of win–win relations through ‘building a community of a shared destiny’. This is analysed further in Chapter 2 by Beatrice Gallelli and Patrick Heinrich. They examine how this fits in the discourse on the

2   Carmen Amado Mendes ‘Chinese dream of a great rejuvenation of the Chinese nation’ by considering the political speeches of President Xi Jinping. This rhetoric of ‘national rejuvenation’ within the ‘Silk Road spirit’ is negatively perceived by other powers that fear the consequences of a Chinese-­dominated world order. In Chapter 3, Paulo Duarte argues that China’s New Silk Road challenges other projects for regional integration in Central Asia, such as those of the United States, Europe and Russia. After discussing these strategic and political implications, the book examines problematical environmental and social impacts of projects that are perceived as bringing benefits to the economy. Daniele Brombal contributes to this understanding, in Chapter 4 – ‘Sustainability implications of the New Silk Road’. Environmental and social policies applicable to projects funded by the Asian Infrastructure Investment Bank (AIIB) are analysed to assess progress made and the challenges ahead in ensuring sustainability. Part II, ‘The economic dimension’, focuses on economic and trade aspects, such as infrastructure networks and financial mechanisms. It begins with Chapter 5, ‘The political economy of new multilateral development bank and reserve arrangements in East Asia’. In this chapter Werner Pascha suggests that a detailed analysis of multilateral structures that appeared in recent years shows that (re-)emerging powers challenge the Western paradigm, not only in politics but also in the economic arena. In addition to AIIB, understood as a parallel institution to the Asian Development Bank, the New Development Bank of the Brazil, Russia, India, China and South Africa (BRICS) was arguably created to respond to the lack of equitable representation that these countries have in the World Bank, and the BRICS Contingent Reserve Arrangement. The New Silk Road is part of a broader Chinese strategy of creating multilateral initiatives with economic, diplomatic and geostrategic purposes. The impact of this strategy in other countries and regions is analysed in the following chapters. In Chapter 6, Fernanda Ilhéu presents ‘Perspectives for EU–China economic cooperation’, questioning the objectives of the New Silk Road regarding investment and trade. Themes include the removal of barriers and opening up of free areas and the EU–China 2020 Strategic Agenda. Chapters 7 and 8 look at cooperation between China and Pakistan. In Chapter 7 Mario Esteban addresses the strategic motivations and repercussions of the New Silk Road, illustrated by the nature of the China–Pakistan Economic Corridor: it must be a development corridor rather than just a transit corridor. Here, the focus is on the main challenges faced in the implementation of the corridor, including geopolitical rivalry, territorial disputes and security threats. These dilemmas, which may affect implementation of the New Silk Road are also considered by Jorge Tavares da Silva in Chapter 8. However, he underlines the Chinese and Pakistani interest in diversifying diplomatic partners and the growing bilateral trade and energy flows and issues of common concern, such as terrorism and independence movements. This geopolitical convenience arguably explains the high level of trust and stability in bilateral relations and the continuous political, economic and military interaction over the past years.

China’s New Silk Road   3 Implications for regional and trans-­regional cooperation and competition are analysed in more detail in Part III ‘The strategic dimension’. In Chapter 9, Dominik Mierzejewski discusses the evolution of the role of local governments in China’s foreign policy since Xi Jinping announced the BRI. He argues that it is an instrument towards a more centralised foreign policy and uses Sichuan province’s external interaction as a case study for the implementation of the New Silk Road at the local level. Provincial authorities can be seen to be convenient agents of the central government in foreign relations with political implications, conducting informal diplomacy. Chapters 10 and 11 provide insights on the twenty-­first century Maritime Silk Road envisioned by China. It starts from the Southeast province of Fujian, crosses the South China Sea and the Indian Ocean, reaching the Persian Gulf, East Africa and the Mediterranean, allowing the establishment of a viable and sustainable link between China and the European Union. Roger Greatrex considers it to be a central component of the Belt and Road Initiative and looks at the response of South Asian countries in Chapter 10. He concludes that, despite varying degrees of warmth of welcome, the problem of insufficient transparency appears to have been expressed as a concern in the media of India and the three main South Asian participants in the initiative: Myanmar, Sri Lanka and Pakistan. In Chapter 11 Edyta Roszko looks at the Maritime Silk Road in the context of the long-­standing history of commerce in East and Southeast Asia and of modern territorial claims in the South China Sea. Sovereignty over strategic dominance of the transport routes and natural resources in the Paracels and Spratlys is disputed by China, Vietnam and other Association of Southeast Asian Nations (ASEAN) countries. Although China’s investment in regional maritime infrastructures throughout the Silk Road is claimed to be economically motivated, the construction of overseas military infrastructures and the strategic control over important points and resources reveal geopolitical ambitions that go beyond the need to protect its merchant marine fleet. Overall, the following chapters reveal that, even if the economic dimension is more visible, China’s New Silk Road is not a mere attempt to expand access to foreign markets and deepen economic reforms in China. After exploring economic and trade aspects, including the likely impact for other countries and regions, this volume analyses the likely implications for regional and trans-­ regional cooperation and competition. By attracting much interest, the initiative threats the influence of other powers throughout the Silk Road. Western and Asian regional perspectives, including those of India, Pakistan and Southeast Asia, are taken into account throughout the book. The implementation of this initiative also presents major risks for China by interacting with countries in which there are tensions regarding sensitive issues. The project of the New Silk Road reveals geostrategic, security and military considerations that disguise strategic goals and implications. By presenting it as an opportunity, instead of a threat, to participant countries, Chinese leaders try to reassure countries about the benefits of China’s ‘peaceful development’. They also offer an alternative image of friendship and mutual benefit compared to the

4   Carmen Amado Mendes legacy of European colonialism in Asia and Africa. Furthermore, the BRI allows China to assume responsibilities expected from a major power at the centre of a new economic order, following the Chinese dream political slogan of President Xi Jinping. Thus, the New Silk Road is also a counter-­initiative to US-­led globalisation and has larger implications in the shifting world order. It may be a vanguard for a new non-­Western paradigm emerging from the geopolitical reconceptualisation of dominating traditional strategies and thinking.

Part I

The general context

1 New paradigms for the New Silk Road Sean Golden

The invention of paradigms in International Relations studies The study of International Relations (IR) in the Euroamerican context is dominated by a limited number of paradigms – especially Realpolitik – which tend to become ‘paradogmas’ that reflect an unquestioned or unproblematised Eurocentric or Euroamericacentric or even NATO-­centric bias. They lack intellectual and theoretical diversity. A geoeconomic power shift has occurred and a concomitant geopolitical power shift is occurring, but the paradigms that dominate Euroamerican political theory have not shifted.1 Does the West run the risk of falling prey to the Maginot Line Syndrome, preparing obsolete defences of political systems and paradigms based on Westphalian nation-­states for a post Bretton Woods world order that has moved the Rest into uncharted territory? Realism, based on naked self-­interest and (instrumental) rational choice theory, runs the risk of becoming an immune theory, a theory that is resistant to facts, in which any outcome must automatically confirm the theory, so that an allegedly altruistic decision must really be a selfish one because it affords some kind of benefit. An immune theory is not scientific by Karl Popper’s definition of the scientific method, because an immune theory cannot be falsified. North American Realism also tends to be ideologised and normative, while its European counterpart tends to rely on absolutism, essentialism and universalism. The amoral nature of Realpolitik makes it difficult to justify ‘Realist’ analyses or strategies on any other basis than pure naked national self-­interest, and from that point of view, the Rest are equally justified in promoting their own self-­interest. If the United States (US) accuses China of hacking American businesses for the purposes of industrial espionage, at the same time that the US hacks the offices of European Union (EU) negotiators of a trans-­Atlantic free trade treaty in order to find out what the EU strategy will be, on what basis can the Chinese be faulted? Is it simply ‘we are the good guys and they are the bad guys’? The fallacy of such an approach reaches its extreme in the ‘Make America Great Again (MAGA)’ or ‘America First’ philosophy of Donald Trump and those he seems to represent. From what objective point of view are US or EU self-­ interests inherently more justified or justifiable than Chinese or Russian or

8   Sean Golden Iranian self-­interests? Realists say that universal moral principles do not apply to IR (Morgenthau 1961: 10) but they also try to justify hegemonic dominance of the world order on the basis of providing (self-­defined and self-­serving) global public goods. When Vladimir Putin asks what the difference is between the Crimea and Kosovo, what is the objective reply? To put it more bluntly, when the Rest have enough weight to throw around, can the West maintain its pretence to superiority? And is the West’s confidence in the scientific objectivity and universality of its IR theories directly dependent upon the West’s ability to impose them on the Rest? The ‘emergent’ economies of the BRIC countries are due in fact to the re-­ emergence of two of the economies that had dominated geoeconomics before the nineteenth century (China and India) and to the partial recovery of the ex-­USSR. The G7 can no longer dictate to the G20. A geoeconomic and demographic power shift has already occurred, but the paradigms that dominate geopolitical thinking in the West seem not to have shifted. Of course there is a danger of exceptionalism in a more relativistic approach to IR Theory, whether it be Eurocentric or Sinocentric, but the West is not exempt from an accusation of reverse exceptionalism when it insists that its theories are the only acceptable theories, that is to say, when the West attributes the characteristic of ‘universal’ to its own  historically, socially, economically, politically and culturally contingent theories.2 In this context emerging new and alternative paradigms that are contingent on a shifting world order must compete with the prevalent conventional theoretical frameworks and strategies in order to shift the paradigms that currently dominate geostrategic thinking. Paradigms can generate path dependent analyses, strategies and policies. If the paradigm employed for the analysis and interpretation of a geopolitical situation is flawed, can a strategy based on that analysis and that interpretation avoid being flawed as well? If the paradigm defines another country as a rival, then the theoretical framework will be based on zero-­sum competition and will prepare a strategy for conflict, and perhaps provoke it. If the paradigm defines another country as a partner, then the theoretical framework will be based on win–win cooperation and will prepare a strategy for harmonious relations, and perhaps ensure them. The working hypothesis here is that the existing Euroamerican IR Theory paradigms are not only path dependent, but also based on an obsolete vision of the world order that has rendered them obsolete as well, and they could lead to self-­fulfilling prophecies that provoke unnecessary conflicts. The shift in geopolitical power that corresponds to a shift in geoeconomic and demographic power is evolving into a new world order that is still in flux, which is itself an example of emergent behaviour. Adequate responses to this emergent behaviour will require adequate paradigms, but these new paradigms are still emergent as well.3 This is the context for the geostrategic analysis and interpretation of the ‘Silk Road Economic Belt and Twenty-­first Century Maritime Silk Road’ (丝绸之路 经济带和21世纪海上丝绸之路 Sīchóu zhī lù jīngjì dài hé 21 shìjì hǎishàng sīchóu zhī lù) – known generally as ‘One Belt, One Road’ 一带一路 yị̄dài yị̄lù

New paradigms for the New Silk Road   9 (OBOR), although the usage preferred by the Chinese government is now the ‘Belt and Road Initiative’ (BRI).4 IR Theory and geostrategic practice are experiencing a paradigm shift. The problem to be faced now is how to bring about a paradigm shift in current thinking about IR Theory when the possible new paradigms are still emerging. China has its own set of paradigms that may also be an impediment to a more accurate assessment of the changing world order, chief among these a belief in the primacy of the role of a Leninist revolutionary political organisation and structure in a post-­revolutionary period of governance. Even so, there is also an IR debate under way in China, as well as the development of new forms of political and IR discourse. For the time being, China advocates a diverse and multipolar world as an alternative to US/NATO hegemony. A discursive strategy with Chinese characteristics is emerging that attributes to traditional Chinese wisdom the ability to have foreseen the problems of modernity and to have avoided them prior to the clash of the nineteenth century, while recognising at the same time its inability to compete with modernity successfully (Golden 2006, 2011, 2012, 2014, 2015). This discursive strategy suggests that China has tested Western models and discovered that they are not valid for Chinese circumstances and that they have also been disastrous for the West. It proposes Chinese solutions based on the renewal of a Chinese model that would serve both China and the rest of the world, and as a corollary, that China will regain its preeminent role in the world order. The major questions to be answered in any projection of the future are what would or will a world order with China as the preeminent power be like, and how will today’s preeminent powers respond? Depending on the paradigm employed, the approaches taken to Chinese territorial claims and activities in the South China Sea could exacerbate or reorient the situation. The total failure of attempts based on traditional security-­based diplomacy to deal with non-­state terrorism in the Middle East and North Africa is a further symptom of the obsolescence of the dominant paradigms in Euroamerican IR Theory. So too are the tendencies towards economic regionalisation and political regionalism that are emerging as a response to the inability of the individual nation-­state to control the dynamics of a supranational market economy. The proliferation of Bretton Woods-­style international organisations that legislate on a supranational basis is also a symptom of the obsolescence of the Westphalian world order. Strategy based on Cold War nostalgia that posits China as the inevitable rival in an inevitable conflict could become a self-­ fulfilling prophecy, as could post-­Cold War pragmatism that sees China as a partner in a new world order inclusive of the Rest. The same is true for Chinese strategists as they plot their course through a globalised capitalist market economy in which the Rest have begun an accumulation of capital at the cost of – or thanks to – the decline of the West.

10   Sean Golden

New paradigms for the New Silk Road Donald Rumsfeld famously spoke of ‘known knowns’ and ‘known unknowns’ but warned of the dangers inherent in ‘unknown unknowns’ (Rumsfeld 2002). Both the emerging world order and the correspondingly emerging paradigms are examples of unknown unknowns. Slavoj Žižek added a fourth category, the ‘unknown knowns’. In this case, people refuse to recognise something that they do know. They are in denial. Žižek defined unknown knowns as ‘the disavowed beliefs, suppositions and obscene practices we pretend not to know about, even though they form the background of our public values’ (Žižek 2004). Strategies of response to the changing world order that are based on obsolete paradigms or on unacknowledged or unconfessable hidden agendas fall into this category. The analyses and interpretations that are being applied to China’s ‘Rise’ or the New Silk Road evidence the dynamics at play among obsolete and emerging paradigms through the diverse nature of the strategic policy proposals that they elaborate for the emergent behaviour of the changing world order. The 2017 Global Trends Report of the US National Intelligence Council identifies the shifting nature of the world order from the point of view of US interests. An ever-­widening range of states, organizations, and empowered individuals will shape geopolitics. For better and worse, the emerging global landscape is drawing to a close an era of American dominance following the Cold War. So, too, perhaps is the rules-­based international order that emerged after World War II. It will be much harder to cooperate internationally and govern in ways publics expect. (National Intelligence Council 2017: ix) It also recognises a dwindling scope for action on the part of the US. It will be tempting to impose order on this apparent chaos, but that ultimately would be too costly in the short run and would fail in the long.… Although material strength will remain essential to geopolitical and state power, the most powerful actors of the future will draw on networks, relationships, and information to compete and cooperate. (National Intelligence Council 2017: ix) And it envisages three alternative scenarios for the emerging world order: ‘Islands’, ‘Orbits’, and ‘Communities’ that emphasise ‘alternative responses to near-­term volatility – at the national (Islands), regional (Orbits), and sub-­state and transnational (Communities) levels’ (National Intelligence Council 2017: x). The National Intelligence Council report is an acknowledgement of the obsolescence of Cold War and Westphalian paradigms and an attempt to imagine new paradigms for a changing world order. In his recent essay ‘The Return of Marco Polo’s World and the US Military Response’, Robert D. Kaplan5 also responds

New paradigms for the New Silk Road   11 to the BRI by problematising the Cold War approach but by making US interests the core of his analysis he still maintains Cold War-­style objectives.  The supercontinent [Eurasia] is becoming one fluid, comprehensible unit of trade and conflict, as the Westphalian system of states weakens and older, imperial legacies – Russian, Chinese, Iranian, Turkish – become paramount. Every crisis from Central Europe to the ethnic-­Han Chinese heartland is now interlinked. There is one singular battlespace … that the U.S. military now must grapple with.  (Kaplan 2017: 1, 3) It is doubly symptomatic of a conventional Realist approach that he frames the emerging situation in terms of security (military conflict) and from a Eurocentric point of view, taking the travels of Marco Polo (1254–1324) as the reference point for his analysis. Later in the essay he refers to ‘Afro-­Eurasia’ as a more accurate descriptive term for the tendencies emerging beyond the Euroamerican ambit (Kaplan 2017: 5). That being the case it might be more apt to look to Ibn  Battuta (1304–1368) or Ibn Khaldun (1332–1406) or 郑和 Zheng He (1371–1433) as reference points rather than Marco Polo. Both the time period and their travels overlapped, as did the geographical space of Afro-­Eurasia. Kaplan suggests that the BRI duplicates the routes that Marco Polo travelled because China wants to duplicate the ‘Pax Mongolica’ of Genghis Khan (1162–1227).  The Mongols … were, in fact, ‘early practitioners of globalization’, seeking to connect the whole of habitable Eurasia in a truly multicultural empire. And Yuan China’s most compelling weapon was … not the sword but trade: gems, fabrics, spices, metals, and so on.… Mongol grand strategy was built on commerce much more than on war.  (Kaplan 2017: 9) Kaplan also erects a theoretical framework based on the empires that dominated the Eurasian space in the past – Mongol, Persian, Russian, Ottoman and Chinese. He suggests that strategists look to the past for ideas to deal with new developments along the Belt and Road. ‘If you want to understand China’s grand strategy today, look no further than Kublai Khan’s empire’ (Kaplan 2017: 9). The paradigm he applies to the analysis of these Eurasian empires is also Eurocentric; he sees them as throwbacks to a pre-­Westphalian past. An alternative paradigm might be that being developed by Wang Hui, who points to qualitative differences in the nature of the much longer-­lived Chinese Empire in comparison with relatively short-­lived European empires and even suggests the necessity of an empire-­like state for supranational entities like the European Union and China, now and in the future (Wang 2010, 2011). Although he indicates some limitations intrinsic to Cold War paradigms in this situation, Kaplan still frames the changing world order from an American

12   Sean Golden point of view and in terms of US interests, as in his definition of globalisation: ‘Beyond the breakdown of economic borders, [globalisation] is the worldwide adoption of the American form of capitalism and management practices’ (Kaplan 2017, 4). This is also evident in his definition of the problem posed by the BRI: ‘For a century [the US] has sought to prevent any one power from gaining the same degree of dominance in the Eastern Hemisphere that it itself possesses in the Western Hemisphere’ (Kaplan 2017: 29). The dominance or hegemony he defends is under threat from the order that is emerging from the BRI:  Our interests … are mainly negative: … to prevent a Silk Road trading network from creating a demonstrably hostile Eurasian superpower or alliance-­of-sorts, with the same level of influence in the Eastern Hemisphere that the United States enjoys in the Western Hemisphere.  (Kaplan 2017: 33) Neither one power nor any alliance of powers must be allowed to threaten US hegemony. What complicates the US response – despite its superior military strength – is the fact that ‘powers on the same supercontinent find themselves more closely linked by trade’ (Kaplan 2017: 29). In Kaplan’s analysis, economic interconnectivity becomes a weapon aimed against the US because there will be  so many layers of horizontal linkages between one part of Afro-­Eurasia and another that it will be increasingly difficult for the United States to exert pressure on it. China, Russia, and Iran will be part of the same supply chain of trade and transportation that works to thwart U.S. influence.  (Kaplan 2017: 28) This focus on US interests leads Kaplan to suggest that the purpose of the BRI is to thwart US influence rather than the opposite purpose of mutually promoting modernisation and economic growth in Afro-­Eurasia, which is the point of view of China and its partners in the BRI. According to Kaplan, even the advantages of US power projection have been eroding, including  the advantage of having had a big internal market that for a long time protected its workers from the rigors of global competition. Our middle class was built on this internal market, and thus was willing and able for decades to support vast military expenditures.  (Kaplan 2017: 31) In this case he clearly is critical of the American geostrategic establishment’s clinging to Cold War paradigms – ‘techno-­optimists and those who inhabit the world of fancy corporate gatherings … wrongly equate wealth creation – and unevenly distributed wealth creation at that – with political order and stability’

New paradigms for the New Silk Road   13 (Kaplan 2017: 28–29). The emerging tendency of uneven wealth distribution in the US has so increased inequality and so reduced the size and role of the middle class that the gap between the 1 per cent and the 99 per cent has led to social protest movements and ultra-­rightist populist movements that call the American Dream and the American model into question, a tendency that may deteriorate further under Donald Trump, putting even US soft power projection at risk, as well as undermining US military power. Kaplan envisages a US isolated by the emerging world order that the BRI will power as ‘Europe itself becomes more fractured and less trustworthy’ (Kaplan 2017: 34). This is ironic because Trump’s ambivalent attitude towards US commitments abroad has led EU leaders to the opposite conclusion, with Angela Merkel warning them that as a result of Brexit and Trump’s isolationism, ‘The times in which we could completely depend on others are, to a certain extent, over … We Europeans truly have to take our fate into our own hands’ (Henley 2017). NATO itself could fall victim to the emerging world order, not through the failure of its military strength but through the irrelevance of its militaristic approach. ‘[T]he Westphalian model, with which the United States has traditionally been comfortable intervening and interacting, becomes increasingly less relevant’ (Kaplan 2017: 34). For Kaplan, the US will have to go it alone and avoid military intervention while maintaining a strong maritime military presence (avoiding land wars in Asia, as Dwight Eisenhower allegedly – and ineffectively – advised, because they require long-­term and costly state-­building and governance as well as short-­term conquest) – ‘an America that consciously seeks to keep its powder dry and maintains a degree of sea control in the Eastern Hemisphere will be, at least in geopolitical terms, relatively safe’ (Kaplan 2017: 34). It is interesting to contrast Kaplan’s US-­centred analysis of the BRI on the basis of adapting Cold War paradigms to a post-­Cold War world order with the kind of Asian point of view that Parag Khanna6 develops through the application of an alternative paradigm. He suggests that the law of supply and demand is the most powerful force in history, not the US, and that the East delivers more of what the world needs today than does the West (Khanna 2017a). The changing and emerging geoeconomic order has led to a change in perception of the Euro­ american ambit from the Afro-­Eurasian point of view. As a result, the twentieth-­ century accomplishments of Western democratic liberalism can no longer impress the rest of the world unless they can bring large-­scale benefits to the larger populations of the emerging economies (Khanna 2017a). For Khanna, American technology and creativity are worthy of imitation but not the model in which there are a few ‘haves’ and an increasing number of ‘have-­nots’ (Khanna 2017a). US-­centric analyses of the emerging world order are looking the wrong way. Like Kaplan, Khanna criticises the strategists of the Washington ‘Beltway’ who cling to Cold War paradigms and fail to see that what affords leadership today are infrastructure financing and technical assistance. Due to Indian and Chinese demand, Asian consumption – not US markets – is driving commodity prices that favour growth in Latin America and Africa; Asian and sub-­Saharan

14   Sean Golden African growth far exceed the economic losses of Near and Middle Eastern and North African conflicts (Khanna 2017a). As a result, for Khanna, the paradigms evolving in the rest of the world are leaving the US-­inspired ‘Washington Consensus’ behind: ‘Much of the world is moving towards market-­based economies with a strong role for the state, not the American laissez-­faire orthodoxy’, an orthodoxy which he suggests ceased to exist with the financial crisis, and an orthodoxy that is rejected by Trump (Khanna 2017b). The hard power of economic growth and foreign trade has replaced that of military strength. Europe is not a military superpower but it has an independent commercial mindset: Culture across the Atlantic now firmly competes with connectivity across Eurasia. Only the most myopic Washington mind would have believed that Europeans could be convinced not to join China’s Asian Infrastructure Investment Bank (AIIB) when it was inaugurated two years ago. The bank now has 70 members across Europe and Asia. Europe’s total trade with Asia – meaning the sub-­regions of India, China, Japan, South Korea, Southeast Asia, and Australia – already exceeds the $1 trillion total annual trans-­Atlantic trade, and this is the case before the EU even has free trade agreements with most of Asia or the proposed ‘One Belt, One Road’ infrastructures are even built! (Khanna 2017b) Europeans and Asians are converging across the Eurasian land mass for which the BRI promises an inevitable flood of investment that will create a flourishing Eurasian commercial system, but the sanctions that the US proposes against major Eurasian players like Russia and Iran will impede this process, to the annoyance of potential beneficiaries, and Khanna suggests that economic integration is a more effective motor of long-­term political change than is a short-­ term policy of sanctions (Khanna 2017b). He agrees that there are risks involved in this process – ‘the question at the very heart of Kaplan’s analysis is this: Can Europe and Asia steadily order the chaotic space between them?’ (Khanna 2017b). Although Kaplan envisages a kind of historical regression to what he calls a ‘medieval’ state of revived and competing Asian empires (Turkey/ Ottoman, Russia, Iran/Persian, China), Khanna sees China as opting for ‘tactical and neo-­mercantile supply chain control’ rather than ‘subjugation and colonial administration’ in order to provide infrastructures for ‘resource-­rich passageways, sources of raw materials and conduits to large markets such as Europe’ (Khanna 2017b) China does not have to compete militarily with the US to achieve these goals – ‘infrastructural neo-­colonialism is a benign approach to geopolitical domination that cannot be deterred through conventional military means’ (Khanna 2017b). Even as military budgets expand and nationalist rhetoric flares, Asians’ trade and investment intensity and supply chain linkages have expanded to

New paradigms for the New Silk Road   15 substitute for slower exports to the low-­growth West. When the US ill-­ advisedly pulled out the Trans-­Pacific Partnership (TPP) trade framework, all Asian participants (including American allies such as Australia and New Zealand) decided to move forward with it anyway, while rekindling efforts towards a super-­Asian Regional Comprehensive Economic Partnership (RCEP).… The legacy of the 20th century Cold War struggle and post-­Cold War unipolar moment is a historical amnesia about the patterns of geopolitical power distribution that characterize world history. There is no systemic requirement that we live in a hierarchical order in which US hegemony must either persist or be replaced – through either peaceful or violent power transition – by another hegemon such as China. (Khanna 2017b) Khanna finds that there is a ‘false subconscious assumption’ – an obsolete paradigm – that impedes US strategic thinking. ‘American officials and intellectuals speak about accommodating China’s rise as if the global system has an entrenched essence that prefers American leadership’ (Khanna 2017b). Conservatives believe that ‘either restraint or containment can ensure the longevity of American primacy’; liberals believe that ‘the binding character of Western institutions is the source of America’s de facto centrality to world order’ (Khanna 2017b). Neither approach is valid because they are ‘normatively focused on what the U.S. should do without first appreciating the dynamics driving the system, the forces beyond its singular control’ (Khanna 2017b). As an alternative paradigm, Khanna proposes ‘global strategic thought’ –‘the deepest attributes of our complex global system are a growing entropy (de-­ concentration of power) and rising connectivity across all regions. Globalisation diffuses power and resists centralisation. It is a world of symmetry, not hierarchy’ (Khanna 2017b). No single power can impede the dynamics of this system – ‘If America doesn’t do trade deals, others will. If maritime passageways such as the Suez Canal are blocked, shippers will use the Arctic. If the World Bank won’t finance a project, China will. If American banks won’t do business with Russia, Chinese ones will’ (Khanna 2017b). The paradigm defended by Khanna emerges from a more broadly based geographical, historical and cultural perspective. The churn of history has no regard for which power is the most connected, but the most connected power will have the most leverage. This is why when we map functional geography – layering transportation routes, energy grids, forward operating bases, financial networks, and Internet cables on top of our natural and political geography – we are mapping both globalization’s pathways but also the routes by which power is projected. Ethereal concepts such as ‘soft power’ are a pale substitute for the power of connectivity. (Khanna 2017b)

16   Sean Golden The Chinese BRI strategy would seem to be a large-­scale laboratory for testing the emerging paradigm that Khanna proposes for the emergent behaviour of a new world order that is replacing the one constructed at the end of the Second World War. That obsolescent order was based on a United Nations Organisation custom-­tailored to the (often conflicting) interests of the five victors and by the Bretton Woods institutions custom-­tailored by NATO allies to help to contain the Soviet Bloc. For Khanna, the Chinese BRI strategy will succeed because it responds better to the needs of Afro-­Eurasia than does the neoliberal Bretton Woods strategy of the Cold War. Unlike Kaplan, he does not see the success of the BRI as necessarily being a threat to US interests, and like Kaplan, he advocates a strategic move by the US away from security-­based hegemony towards becoming a strategic financial and commercial utility for the emerging world order. In a world where no single power dominates globally, America cannot influence what it is not connected to. Rather than the amateurish second-­guessing of the virtues [of] America’s global presence, US grand strategy should be doubling down on it. The world’s financial system still relies on the US dollar; the US military provides security and reassurance to allies while policing hotspots; America is the world’s largest oil and gas producer (even selling oil directly to China); America’s tech sector produces most of the world’s best software and social media tools; and American English has become a nearly universal language. These are the principal ways in which America is not a hegemon but a utility, an indispensable source and conduit for the connectivity that advances global society as a whole. Used wisely, these are the tools America can deploy to remain an anchor of the global system even as Eurasia unites. America can remain the smartest spider in the web.  (Khanna 2017b)

The bases for constructing new global paradigms With specific reference to the BRI, the twenty-­first century construction of a new Chinese discourse on IR Theory faces the same dilemma that Chinese intellectuals first identified in the nineteenth century – how to make Eurocentric sociocultural, economic and political theory and praxis compatible with Sinocentric sociocultural, economic and political circumstances. At the same time, among Chinese thinkers and strategists, there is a growing self-­confidence in the Chinese ability to lead a new post-­Western world order. Euroamerican faith in the convergence of all societies into a single economic, social and political model that is part of the heritage of the Enlightenment is challenged by the emergence of new economic powers outside the Euroamerican sphere that resist this model. As a result of the absolutism, universalism and essentialism that characterise thought in the West, many Euroamerican analysts conclude that China will seek to impose its alternative model as a new unique and universal

New paradigms for the New Silk Road   17 model, a conclusion that is symptomatic of a tendency to attribute the motives of one’s own behaviour to another, but the divergence between the ‘Beijing Consensus’ and the ‘Washington consensus’ is not necessarily an example of dichotomy or antinomy. As opposed to the mutually exclusive antinomies and dichotomies of Western thought, 阴 阳 yīnyáng, the ideal of maintaining plurality and diversity in a dynamic and harmonious interrelationship of apparently opposite poles, that can become an alternative to one track thinking and exclusive orthodoxy, is a fundamental component of the Chinese tradition, not the Euroamerican tradition. Marxism, whether Maoist or Dengist in tendency, has its origins in an absolutist and essentialist tradition of Enlightenment Western thinking. ‘Chinese characteristics’ are part of an ongoing historical process of trying to adapt Marxism (and its Enlightenment competitor – Adam ‘Smithism’) to Chinese circumstances. The fact that Chinese strategists often link their new IR theories to the ideas of ancient Chinese strategists demonstrates the continuity of a long-­term perception of political strategy with Chinese characteristics, just as they find inspiration for the BRI in the historical caravan routes that Europeans decided to call the Silk Road or the maritime trade routes navigated by Zheng He. In China, due to the Chinese propensity to rely on history for support, new changes often appear in the guise of old history. The Chinese employ old terminology to explicate new knowledge, pouring new wine into old bottles. They seem to be forever performing in an age old drama entitled ‘restoration’. In reality, though, their ‘historical memory’ is just leading China’s intellectual world to the expression of hitherto unknown orientations and attitudes through its connection to new intellectual resources. (Ge 2014: 40–41) Unlike the standard Euroamerican theory of ‘rational choice’, based on cost-­ benefit analysis or instrumental rationalism, Chinese culture has traditionally preferred make order (正 zhèng) and harmony (和 hé) compatible as alternatives to disorder (乱 luàn). It has preferred cooperation (合作 hézuò) to competition (竞争 jìngzhēng), as well as prioritising mutual benefit (互利 hùlì) and ‘win– win’ diplomacy (共赢 gòngyíng) in the development of strategies that suit China’s own culture and circumstances and in order to avoid the worst and achieve the best of any political order. During a historical period when the Afro-­Eurasian connectivity was at its height and Marco Polo traversed Eurasia, Ramon Llull (1232–1316) tried in his Ars Magna Generalis (c.1274) to develop a new common and consensual terminology of key terms and beliefs that would facilitate mutual understanding among Christians, Jews and Muslims. Shortly thereafter, in his Muqaddimah, Ibn Khaldun (1332–1406) elaborated a universal theory of history. Versions of the Pañcatantra, an ancient Sanskrit text on strategy, circulated in Persian and Arabic versions, centuries before Marco Polo travelled. Llull’s multicultural and consensual approach was the exception in Europe (even though his final aim was

18   Sean Golden to convert others to Christianity). If the centre of the twenty-­first century world order is moving from the ‘Western’ to the ‘Eastern’ hemisphere, as Kaplan and Khanna suggest, perhaps the recovery of an Afro-­Eurasian approach the development of new paradigms on a multicultural and consensual basis would be more apposite. A better understanding of the IR paradigms that are now emerging as China promotes the BRI requires a better understanding of the issues, the policies, the paradigms and the discourses that are replacing conventional IR Theory from all sides. This would require better knowledge of the non-­Euroamerican languages and cultures involved, and first-­hand knowledge of the policies being carried out in the Afro-­Eurasian context. It also requires more collaborative international and multicultural efforts to promote and build better mutual and common knowledge and understanding, perhaps along the lines of the Europe–China Cultural Compass or the Dictionary of Untranslatables (Cassin et al. 2014). Mutual respect requires mutual knowledge in order to construct a common and consensual multicultural civic discourse that could lead to more productive IR paradigms and more meaningful cooperation.

Glossary AIIB  Asian Infrastructure Investment Bank. B&R  Belt and Road. BRI  Belt and Road Initiative. G20  Group of Twenty: Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russian Federation, Saudi Arabia, South Africa, South Korea, Turkey, the United Kingdom, the United States, and the European Union. G7  Group of Seven: Canada, France, Germany, Italy, Japan, the United Kingdom and the United States. gòngyíng 共赢  win–win diplomacy hé 和  harmony hézuò 合作  cooperation hùlì 互利  mutual benefit jìngzhēng 竞争  competition luàn 乱  disorder NATO  North Atlantic Treaty Organization OBOR  One Belt, One Road RCEP  Regional Comprehensive Economic Partnership Sīchóu zhī lù jīngjì dài hé 21 shìjì hǎishàng sīchóu zhī lù 丝绸之路经济带和 21世纪海上丝绸之路  ‘Silk Road Economic Belt and Twenty-­first Century Maritime Silk Road’ yị̄dài yị̄lù 一带一路  One Belt, One Road; the ‘Belt and Road Initiative’, ‘the Land and Maritime Silk Road initiative’ zhèng 正  order

New paradigms for the New Silk Road   19

Notes 1 How many of the subjects taught in IR courses include in their bibliographies any of the following contemporary theoreticians of IR from an Asian perspective? – Amitav Acharya, Muthiah Alagappa, Giovanni Arrighi, Amy Chua, Arif Dirlik, John Gray, Takeshi Hamashita, Harry Harootunian, Martin Jacques, David Kang, Eric X. Li 李世 默, Kam Louie, Kishore Mahbutani, Pankaj Mishra, Qin Yaqing 秦亜青, Amrtya Sen, Wang Hui 汪晖, Xiang Lanxin 向兰新, Yan Xuetong 阎学通, Zhang Weiwei 张维为, Zhao Tingyang 赵汀阳, Zheng Bijian 郑必坚 or Zhu Majie 朱马杰, to mention only a few of the better known specialists in Asian IR. 2 As Marx and Engels wrote in The German Ideology:  each new class which puts itself in the place of one ruling before it, is compelled … to represent its interest as the common interest of all the members of society … it has to give its ideas the form of universality, and represent them as the only rational, universally valid ones.  (Marx and Engels 1970: 67) 3 For an over view of the contribution of non-­Western thinkers to the ‘Idea Shift’ or paradigm shift under way in the emergent world order, see Acharya 2016. 4 The official Chinese government Belt and Road Portal gives guidelines for the official nomenclature of the initiative in English: In diplomatic documents, the English version of ‘丝绸之路经济带和21世纪海上 丝绸之路’ is ‘the Silk Road Economic Belt and the 21st-Century Maritime Silk Road’. The English version of ‘一带一路’ is ‘the Belt and Road’, which can be abbreviated as ‘B&R’. In informal occasions, when ‘一带一路’ appears for the first time, it must be translated into the full English version, which is ‘the Silk Road Economic Belt and the 21st-Century Maritime Silk Road’. Except that, ‘一带一路’ can be translated into English flexibly, such as the ‘Belt and Road Initiative’, ‘the land and maritime Silk Road initiative’. Other versions are not preferred. https://eng.yidaiyilu.gov.cn/ztindex.htm (accessed 6 September 2017) 5 Kaplan is an expert with the Center for a New American Security (CNAS). 6 Khanna is an expert with the Centre on Asia and Globalisation of the Lee Kuan Yew School of Public Policy at the National University of Singapore.

References Acharya, A. (2016) ‘Idea-­shift’: How ideas from the rest are reshaping global order, Third World Quarterly, 37(7): 1156–1170. Cassin, B. (ed.) (2004) Vocabulaire européen des philosophies: dictionnaire des intraduisibles, Paris: Le Seuil/Le Robert. Cassin, B., Apter, E., Lezra, J. and Wood, M. (2014) Dictionary of Untranslatables: A Philosophical Lexicon, Princeton: Princeton University Press. Europe-­China Cultural Compass, Goethe Institut (2011) Online available at: www. constellations-­i nternational.com/wp-­c ontent/uploads/2016/07/CULTURAL-­ COMAPSS_Europe-­China_EN_2011.pdf (accessed 2 August 2018). Ge, Z. (2014) An Intellectual History of China. Volume One. Knowledge, Thought and Belief before the Seventh Century CE, translated by M.S. Duke and J. Chiu-­Duke, Leiden, Boston: Brill. Golden, S. (2006) ‘Socio-­cultural aspects of the relationship between the EU and East Asia, with particular reference to China’, Asia Europe Journal, 4(2): 265–294.

20   Sean Golden Golden, S. (2011) ‘China’s perception of risk and the concept of comprehensive national power’, Copenhagen Journal of Asian Studies, Political and Economic Decoupling and Risk Assessment in Contemporary Asia, 29(2): 79–109. Golden, S. (2012) China en perspectiva. Análisis e interpretaciones, Barcelona: Edicins Bellaterra. Golden, S. (2014) ‘ “Power from the people, for the people”: The Communist Party of China and political reform with Chinese characteristics’, Notes Internacionals CIDOB, 103(December): 1–6. Golden, S. (2015) ‘Mao’s place in Xi’s “China Dream” ’, Notes Internacionals CIDOB, 130(October): 1–5. Henley, J. (2017) ‘Angela Merkel: EU cannot completely rely on US and Britain anymore’, Guardian, 28 May. Online available at: www.theguardian.com/world/2017/ may/28/merkel-­says-eu-­cannot-completely-­rely-on-­us-and-­britain-any-­more-g7-talks (accessed 6 July 2017). Kaplan, R.D. (2017) ‘The return of Marco Polo’s world and the U.S. military response’, CNAS – Center for a New American Security. Online available at: http://stories.cnas. org/wp-­content/uploads/2017/05/CNASSTORY-­MarcoPolo-Final.pdf (accessed 6 July 2017). Khanna, P. (2017a) ‘Asia is building its own world order’, CNN. Online available at: http://edition.cnn.com/2017/08/08/opinions/china-­and-the-­asian-world-­order-parag-­ khanna-opinion/ (accessed 6 September 2017). Khanna, P. (2017b) ‘Connectivity and strategy: A response to Robert Kaplan’, CNAS – Center for a New American Security. Online available at: http://stories.cnas.org/ connectivity-­and-strategy-­a-response-­to-robert-­kaplan (accessed 6 July 2017). Marx, K. and Engels, F. (1970) The German Ideology, C.J. Arthur (ed.), New York: International Publishers. Morgenthau, H.J. (1961) Politics among Nations: Struggle for Power and Peace, 3rd Edition. New York: Alfred A. Knopf. National Intelligence Council (2017) Global Trends: Paradox of Progress. Online available at: www.dni.gov/files/documents/nic/GT-­Full-Report.pdf (accessed 6 September 2017). Rumsfeld, D. (2002) ‘DoD news briefing – Secretary Rumsfeld and Gen. Myers, United States Department of Defense (defense.gov)’. Online available at: http://archive. defense.gov/Transcripts/Transcript.aspx?TranscriptID=2636 (accessed 6 September 2017). Teggart, F.J. (1939) Rome and China: A Study of Correlations in Historical Events, Berkeley: University of California Press, 1939. Wang, H. (2010) The End of Revolution: China and the Limits of Modernity, London: Verso. Wang, H. (2011) The Politics of Imagining Asia, translated by Theodore Huters, Cambridge MA: Harvard University Press. Žižek, S. (2004) ‘What Rumsfeld doesn’t know that he knows about Abu Ghraib’. Online available at: www.lacan.com/zizekrumsfeld.htm (accessed 6 September 2017).

2 Building a community of shared destiny The Belt and Road Initiative in the political speeches of Xi Jinping Beatrice Gallelli and Patrick Heinrich Introduction The initiative of the People’s Republic of China (PRC) to build the Silk Road Economic Belt and the twenty-­first century Maritime Silk Road (yi dai yi lu 一带一路, literally ‘One Belt, One Road’) has drawn much attention among political scientists and economists.1 In this chapter, we study some of the major speeches in which this initiative was proposed, rationalised and developed. Concretely speaking, we examine how this ‘new Silk Road’ is imagined to affect ‘borders’, ‘contacts’ and ‘communality’ between the states involved. We do this for four mutually interconnected reasons. First, in modern contexts, borders play a vital role for defining and constituting ‘nations’. Nations, in turn, are a key concept for aligning individuals to the objectives and interest of the state (Gellner 1983). Second, and as a direct result of this, any movements across ‘borders’ destabilises the modern order that is anchored in the existence of borders (Bauman 1997). ‘Building’ a road between states results in encounters between the national ‘We’ and the foreign ‘Other’. Third, ‘nations’ are ‘imagined communities’ (Anderson 1991) which are culturally and linguistically much more diverse than claimed in national ideology (Bauman and Briggs 2003). Hence, the confrontation between the national and familiar ‘We’ and the foreign ‘Other’ is more a construct than a reality. Much diversity exists within the nation. Fourth, there is cultural and linguistic continuity between states and this, too, actually softens the potential conflict between Us and Them. Such confrontation resides first and foremost in ideology. In that being so, the Belt and Road Initiative has the potential to unsettle established patterns of viewing oneself (‘Selfing’) and projecting views on all others (‘Othering’). These issues motivated us to study how a sense of communality is discursively presented in key-­speeches from the principal instigator of this initiative, Xi Jinping. We investigate three closely interrelated questions to show how the Belt and Road Initiative affects the modern arrangement of borders, national ‘Self ’ and foreign ‘Other’. In concrete terms, we seek to answer the following three research questions: 1

What defines the borders of the Belt and Road in the speeches of Xi Jinping?

22   Beatrice Gallelli and Patrick Heinrich 2 3

What is his rationale for including the chosen regions into the Belt and Road Initiative? Is there some sense of sociocultural cohesion sought after within the Belt and Road, and if so, on what grounds is this cohesion supposed to rest?

In order to answer these questions, we will first briefly delineate how borders, national imagination and Othering are related, and how mobility and the weakening of borders destabilises this arrangement. We will then discuss each of the three main questions in one sub-­chapter, respectively. We conclude with a discussion of our three research questions. The talks analysed are taken from the full transcriptions of Xi Jinping’s speeches as published in the section entitled ‘Important speeches’ (zhongyao jianghua, 重要讲话,) on the website of the Ministry of Foreign Affair of the PRC. Among all Xi’s speeches held between 2013 and May 2016, we selected those addressed in 2013, 2015 and 2017 and containing the following keywords: yi dai yi lu (一带一路, Belt and Road); sichou zhi lu jingji dai (丝绸之 路经济带, Silk Road Economic Belt); hai shang sichou zhi lu (海上丝绸之路, Maritime Silk Road). In this way, we created a corpus of 20 speeches. We added to these the respective official English translation of these passages. However, the analysis has been carried out on the original Chinese transcription of the speeches. In addition, the volume The Governance of China (Xi Jinping 2014) is another source we draw on in this chapter. This volume includes Xi Jinping’s major speeches, talks, interviews, instructions and correspondence from 15 November 2012 to 13 June 2014. In the following pages, the most pertinent results with regard to the above research questions are presented and discussed. In order to investigate the three research questions, we did several close readings of the texts to gauge the basic contents of each speech and each paragraph. We then analysed how the arguments are organised and linked to each other, and we then focused on studying how Xi employs linguistic and rhetorical devices to present his ideas. This method draws largely from critical discourse analysis as developed by Fairclough (1989, 1995).

Imagined communities are exclusive and require borders Let us start by briefly clarifying the core ideas that are investigated in this chapter. This allows us to grasp the range of possibilities available and the constraints delimiting the discursive construction of the Belt and Road Initiative. The ideas that are at the centre of attention here are ‘borders’, ‘community’ and ‘communality’. ‘Inclusive community’, to start, is a contradiction in terms. Any sense of ‘We’ requires an ‘Other’ and some criteria how to keep the two apart. Usually, some shared characteristics are emphasised, spread and institutionally supported and reproduced (e.g. national language, culture, history, attitudes), while differences in these fields with the ‘Other’ are highlighted. Of course, reality proves more

Building a community of shared destiny   23 complex than these ideas, and it is therefore not difficult to deconstruct ideologies of communality by either moving to the social and geographical margins (e.g. indigenous minorities) of the nation, or by tracing the validity of the ideological claims back into the past. It is however irrelevant whether claims of what define and constitute a collective ‘We’ are tenable or not. What matters is that these ideas continue to fulfil their function of binding individuals to a common cause. This common cause is, by and large, a desire to achieve ‘great things together’ (Renan [1882] no date). Since this is done collectively, boundaries are required, defining and delimiting the agents and benefactors of these efforts and the resultant benefits. In the modern period, these boundaries have been that of the nation-­state. The state, in turn, is tied to a specific territory, i.e. is defined by state borders. The nationals confined with the state’s territory are perceived as a clearly defined group who are familiar with each other, notwithstanding all existing differences between them. In other words, they constitute an ‘imagined community’. This is the operating system of distinguishing ‘Us’ from ‘Them’ since the onset of modernity, and its mechanism, remains valid until today. Building a road and a belt of the twenty-­first century thus involves bringing people into contact that are seen to be ‘alien’ and ‘unknown’. We are thus interested whether the Belt and Road project entails changes in this construction of ‘We’ and ‘Them’ and if so, how the regions involved in this project are seen to share some sense of communality. This prompts the three research questions formulated above. Before we turn to these questions, note that the ancient Silk Road – symbolically employed in promoting and rationalising the current initiative – existed in a very different sociopolitical setting. At the time there were no nation-­states but powerful cities such as Rome, Venice, Constantinople or Luoyang dominating vast, linguistically and culturally diverse empires, regions, republics or dynasties. There also were no ‘borders’ then. In their place were ‘frontiers’, that is, rather loose, flexible and ambiguous kind of boundaries with a fluid and gradual transition from the familiar to the unfamiliar. The world was ordered along a centre-­periphery continuum, most famous in the example of the Chinese ‘Sino-­ barbarian dichotomy’ (huayi zhixu, 华夷秩序). Throughout this continuum, no collective national identity existed. Society was divided into social ranks. In such a setting, trade and exchanges contributed not simply to economic development, but resulted in the development of civilisations through the spread of religion, philosophy and technologies. Connecting the Far East with Europe, in a nutshell, did not face the artifactual borders of today with its resulting juxtaposition of conflicting identities, cultures and institutions. Culture was flowing, unbound and gradual. Given these marked differences, the ancient Silk Road has vast limitations in accounting for what is at stake for the current initiative. With this in mind, let us next turn to an analysis of Xi Jinping’s political speeches.

What defines the borders of the Belt and Road? When Xi Jinping put forward the Belt and Road Initiative in 2013, it was framed as a project of regional cooperation between China and its neighbouring

24   Beatrice Gallelli and Patrick Heinrich countries. Ever since then, this initiative has gradually taken the shape of a global project. By and large, this development is an effect of the drastic transformation of the international environment such as a return of protectionism in the West (Huang 2017). Nonetheless, the central importance remains on an Asian, European and African cooperation and, only then, involves faraway ‘friends’: ‘一带一路’建设植根于丝绸之路的历史土壤, 重点面向亚欧非大陆, 同时 向所有朋友开放 (Xi Jinping 2017c) The Belt and Road Initiative is rooted in the ancient Silk Road. It focuses on the Asian, European and African continents, but is also open to all other countries. (Xi Jinping 2017d)2 Indeed, the initiative envisages two routes – one overland and the other maritime. Both connect the three continents of Asia, Africa and Europe. The two routes define the area to be included in the Belt and Road Initiative. However, even within these areas, the Belt and Road continues to be informed by the logic that not all ‘foreignness’ is on a par. There is gradual difference. The greatest importance is attached to China’s neighbouring countries, which makes them Beijing’s first ‘ring of interest’, so to speak. The regional nature of the Belt and Road Initiative is evident already from the organisation of the volume The Governance of China (Xi Jinping 2014). The volume is divided into 18 chapters and is structured according to different topics, covering both domestic and foreign policy. The first two speeches in which Xi puts forward the idea of the Belt and Road are collected in the section ‘neighbourhood diplomacy’ (zhoubian waijiao, 周边外交). Talks regarding powerful countries such as Russia or the US are gathered in the section ‘new model of major-­country relations’ (xin xing daguo guanxi, 新型大国关系). Based on the organisation of this volume, China’s own perception of the international order is clear. It sees itself as a ‘major-­country’ at the centre, whereas the neighbouring countries are placed at its periphery, as suggested by the expression zhoubian waijiao 周边外交, which literally means ‘peripheral diplomacy’ and not ‘neighbourhood diplomacy’ as in the official translation of Xi’s speeches (Xi Jinping 2014: 313). Russia, despite being a neighbour that shares more than 4,200 kilometres of joint border with China, is not included. The reason for this is clear. Russia is seen as another powerful country. The central role of ‘peripheral diplomacy’ is stressed several times in the talk at Nazarbayev University (Xi Jinping 2013a), where Xi Jinping introduces for the first time the initiative of jointly building the Silk Road Economic Belt. In this speech, it is defined as a ‘big regional cooperation’ (quyu da hezuo, 区域大 合作) (Xi Jinping 2013a) and Xi Jinping introduces this cooperation in the following way:

Building a community of shared destiny   25 远亲不如近邻。中国同中亚国家是山水相连的友好邻邦。中国高度重 视发展同中亚各国的友好合作关系, 将其视为外交优先方向 (Xi Jinping 2013a) A near neighbor is better than a distant relative. China and Central Asian countries are friendly neighbors connected by common mountains and rivers. China highly values its friendship and cooperation with these countries and takes them as a foreign policy priority. (Xi Jinping 2013b) ‘Neighbors are dearer than distant relatives’ (yuanqin buru jinlin, 远亲不如近 邻) is a Chinese idiom emphasising the pivotal role of neighbouring countries. This idiom is reiterated from time to time in different speeches. It seems to be recalling and revising the idea of a coexistence ‘all under heaven’ (tianxia, 天 下), where China is placed at the centre and is surrounded by ‘client states’ (fuyongguo, 附庸国), following the logic that the further one goes from the centre, the more foreign (‘barbarian’) people are. Despite the fact that ‘China goes global’ with its Belt and Road project (Shambaugh 2013), the initiative is still first and foremost a peripheral diplomacy strategy. In 2015, at the Boao Forum for Asia Annual Conference, Xi gave a speech imbued with a larger global vision, boosting a global approach to cooperation. Even then, the Belt and Road Initiative is introduced by the aforementioned idiom ‘neighbors are dearer than distant relatives’ (Xi Jinping 2015a). With the same aim in view, ‘good neighbours’ (hao linju, 好邻居), ‘good friends’ (hao pengyou, 好朋友) and ‘good partners’ (hao huoban, 好伙伴) are keywords of Xi’s argumentative strategy to introduce the project of the New Silk Road Economic Belt in Kazakhstan (Xi Jinping 2013a). The idea that those participating in the Belt and Road Initiative constituted a ‘community of shared destiny’ (mingyun gongtong ti, 命运共同体) was only introduced afterwards.3 More specifically, it was first mentioned in a speech held in Indonesia (Xi Jinping 2013c), where the Maritime Silk Road of the Twenty-­first Century was for the first time introduced. This idea of a ‘community of shared destiny’ was further developed at the inaugural Periphery Diplomacy Work Forum held in Beijing on 24 October 2013, when Xi placed this concept side by side with expressions made up of single written characters that all allude to Confucian ethics and values: ‘China’s basic policy of diplomacy with neighboring countries […] is characterised by friendship, sincerity, reciprocity and inclusiveness’ (Xi Jinping 2014: 326).4 The principles of ‘friendship’ (qin, 亲),5 ‘sincerity’ (cheng, 诚), ‘reciprocity’ (hui, 惠) and ‘inclusiveness’ (rong, 容) have since then become watchwords in the speeches that promote and develop the Belt and Road Initiative. The idea of a ‘community of shared destiny’ has then been gradually extended to now embrace all humankind, as conveyed by the expression ‘a community of shared destiny for all humankind’ (renlei mingyun gongtongti, 人类命运共 同体). However, even in a ‘community of shared destiny for all humankind’,

26   Beatrice Gallelli and Patrick Heinrich borders are not disappearing. Quite the contrary is true. What Xi has in mind are however not states but continents. Asia’s boundary is seen as the necessary step along the path towards the creation of a global community, and Xi stresses the importance of Asian identity: 人类只有一个地球, 各国共处一个世界。世界好, 亚洲才能好: 亚洲好, 世界才能好。面对风云变幻的国际和地区形势, 我们要把握好世界大 势, 跟上时代潮流, 共同营造对亚洲、对世界都更为有利的地区秩序, 通 过迈向亚洲命运共同体, 推动建设人类命运共同体 (Xi Jinping 2015a) We have only one planet, and countries share one world. To do well, Asia and the world could not do without each other. Facing the fast changing international and regional landscapes, we must see the whole picture, follow the trend of our times and jointly build a regional order that is more favorable to Asia and the world. We should, through efforts towards such a community for Asia, promote a community of common interest for all mankind. (Xi Jinping 2015b) Hence, although the mutual dependence between Asia and the whole world is stressed, regions are still ranked by order of importance for China. The construction of an ‘Asian community of shared destiny’ is the precondition for building a community involving all humankind. This brings us straight to the topic of how the inclusion of the regions that are part of the Belt and Road Initiative is rationalised.

What is the rationale for including the chosen regions? We have seen above that China’s main focus within the Belt and Road project lies on its nearby countries. In view of this, two questions arise. (1) Why does China attach such a great importance to its neighbourhood countries? (2) Does this simply reflect interests of economy and trade? In order to answer these questions, we need to consider the obstacles that need to be tackled to realise the Belt and Road. By looking at these, it is possible to make inferences on the reasons behind the borders drawn by this project. Many of the barriers that stand in the way of realising the Belt and Road project are of economic nature, such as, for instance, ‘trade barriers’ (maoyi bilei, 贸易壁垒) or ‘trade and investment costs’ (maoyi he touzi chengben, 贸易 和投资成本) (Xi Jinping 2013a). Removing or softening such economic barriers is crucial for China’s domestic policy (Huang Yiping 2016). At the moment, China is going through a phase of transforming its economic model. This is captured by the expression of ‘new normal’ (xin changtai, 新常态), and this ‘new economic normality’ is planned to be characterised by a slower but more sustainable economic growth. At present, one of China’s main economic problems is its industrial overproduction. The Belt and Road Initiative is therefore

Building a community of shared destiny   27 also a response to China’s very own economic problems. The Chinese economy needs to connect more firmly with other economies and open new markets for China’s products in order to alleviate its industrial overcapacity (Callahan 2016). China also needs to address a number of other political problems. Chief among them are ethnic conflicts and protests in its border regions, especially Xinjiang and Tibet, and disputes on territorial sovereignty and, on an international plane, maritime rights and interests with other Asian countries.6 Regarding the former issue, the Uyghur Autonomous Region of Xinjiang has been the stage of ethnic conflicts and pro-­independence terrorist attacks for many years. Xinjiang and all other Western regions also share the problem of economic underdevelopment. It is thus a noteworthy fact that Xinjiang is located on the boundary between China and Kazakhstan and that the project of jointly building the Silk Road Economic Belt was not coincidentally first put forward by Xi during a visit in Kazakhstan. The speech held on that occasion mainly focused on the ancient Silk Road, describing it as a place where ‘different races, beliefs and cultural backgrounds’ (Xi Jinping 2013b) could coexist and achieve joint common development at the time. It is not far-­fetched to conclude that Xi’s call for ethnic harmony has also been motivated by the persistent conflicts within China’s borders. The Belt and Road Initiative plays a key role in consolidating Beijing’s control over its frontier province by promoting its economic development and enhancing diplomatic ties with Kazakhstan and other Central Asian countries. In the following extract, Xi presents the three forces of ‘terrorism’, ‘separatism’ and ‘extremism’ as common enemies that must be fought by joining forces. At the same time, joint ‘economic development’ is depicted as the key factor to align Chinese people, of both Han and Uyghur ethnicities, and Kazakhs towards the cause of common wellbeing: 我们要坚定相互支持、做真诚互信的好朋友。在涉及国家主权、领土 完整、安全稳定等重大核心利益问题上坚定相互支持、是中国同中亚 各国战略伙伴关系的实质和重要内容。我们愿同各国在双边和上海合 作组织框架内加强互信、深化合作、合力打击’三股势力’、贩毒、跨 国有组织犯罪, 为地区经济发展和人民安居乐业创造良好环境 (Xi Jinping 2013a) We need to firmly support and trust each other and be sincere and good friends. To render each other firm support on major issues concerning core interests such as sovereignty, territorial integrity, security and stability is the essence and an important part of China’s strategic partnership with Central Asian countries. We will deepen trust and cooperation with Central Asian countries bilaterally and within the Shanghai Cooperation Organization (SCO) to combat the ‘three forces’ of terrorism, separatism and extremism as well as drug trafficking and transnational organized crime to create a favorable environment for the economic development and the well-­being of the people in this region. (Xi Jinping 2013b)

28   Beatrice Gallelli and Patrick Heinrich Kazakhstan and other Central Asian countries play a central role in China’s domestic and foreign policy. By enhancing diplomatic ties with these countries, Beijing aims to find a way to keep its Xinjiang province under control. Moreover, in recent years the influence of the US in Central Asia states has gradually weakened (Pantucci and Petersen 2013), which makes these countries a good starting point for developing a new global order. With regard to solving the ongoing disputes on territorial sovereignty that involve maritime rights and interests, the development of a new global order is of fundamental strategic importance (Xi Jinping 2013c). In particular, the East China Sea and the South China Sea are arenas of territorial disputes between China and its neighbours. In the aforementioned speech at the inaugural Periphery Diplomacy Work Forum held in Beijing on 24 October 2013, Xi advocates a new regional security order which should be informed by ‘shared beliefs and norms of conduct for the whole region’ (Xi Jinping 2014: 327). In other words, Asian affairs should be managed by Asian nations themselves. From this perspective, the Belt and Road Initiative – and other related institutions, such as the Asian Infrastructure Development Bank (AIIB) – involves the creation of an economic network among the countries involved. The function of this network is not only to strengthen economic cooperation, but also to prevent outside influence. It seeks to prevent political interferences from countries outside of the area covered by the Belt and Road. The Belt and Road Initiative is discursively constructed as a new international order based on cooperation and collaboration. China’s image worldwide is presented following the logic of a ‘we-­them’ contrast. This contraposition is based on a straightforward assumption: China, as well as other Asian countries, could overlook differences in ideology and political systems in order to establish relations aiming at the economic development of each single country. Differences in foreign and domestic policies should remain unaffected. While now China defines itself as a major country, it attempts to keep a distance from the policies of other major countries and their ways of dealing with the rest of the world, especially their ways of dealing with developing countries. 作为大国, 意味着对地区和世界和平与发展的更大责任, 而不是对地区 和国际事务的更大垄断 (Xi Jinping 2015a) Being a big7 country means shouldering greater responsibilities for regional and world peace and development, as opposed to seeking greater monopoly over regional and world affairs. (Xi Jinping 2015b) Without specifying which country Xi Jinping concretely has in mind, he implicitly juxtaposes China’s approach to international relations to that of the United States. The Belt and Road Initiative gives China a chance to present Beijing as the political and economic antithesis to policies pursued and alliances upheld by the United States.

Building a community of shared destiny   29 Through the Belt and Road Initiative, China promotes the idea of more inclusive global governance, where developing countries and developed countries join hands for a common objective. For example, in his speech at the Asian-­ African Summit, Xi Jinping highlights the need of deepening Asian-­African cooperation, expanding South-­South cooperation and, most importantly, advancing North–South cooperation (Xi Jinping 2015c). This last kind of cooperation is at the core of the new global order sought by China. 实现世界均衡发展, 不可能建立在一批国家越来越富裕、另一批国家长 期贫穷落后的基础之上。从建设人类命运共同体的战略高度看, 南北关 系不仅是一个经济发展问题, 而且是一个事关世界和平稳定的全局性 问题 (Xi Jinping 2015c) Balanced global development will remain elusive if a group of countries is allowed to get richer and richer while another group gets trapped in prolonged poverty and backwardness. From the strategic perspective of building a community of common destiny for mankind, North–South relations are not merely an economic and development issue but one that bears on the whole picture of world peace and stability. (Xi Jinping 2015d) This new vision of globalisation, sought through the introduction of new ideas in the speeches of Xi Jinping, should be based on the new values of mutual benefit and cooperation. All the while, national political systems and ideologies should remain under the sovereignty of each country involved in this project. In his speeches on the Belt and Road Xi underlines that accepting the political status quo is a must for achieving common development: 要尊重各国主权、独立、领土完整, 尊重各国自主选择的社会制度和发 展道路, 反对干涉别国内政, 反对把自己的意志强加于人 (Xi Jinping 2015c) It is necessary to respect the sovereignty, independence and territorial integrity of all countries, respect their independent choices of social system and development path, oppose any interference in the internal affairs of other countries and reject the behavior to impose one’s will on others. (Xi Jinping 2015d) While China promotes a new kind of diplomatic relations, informed by new values and ideas, it sticks at the same time to the standing principle of non-­ interference in internal affairs, at least rhetorically. These two aspects relate to one another. The principle of non-­interference paves the way for maintaining existing state borders. It also provides the basis for a new kind of alliance between the states. It is not by accident that Xi speaks of ‘individuals’ (ren, 人)

30   Beatrice Gallelli and Patrick Heinrich rather than ‘people of the country’ (guozu, 国族) or ‘states’ (guojia, 国家). The symbolic use of the expression ‘individuals’ can be read as having a two-­fold objective. First, it emphasises that the Chinese development path has been chosen by Chinese people themselves, rather than by the party-­state. Second, it fosters a sense of communality. In so doing, it is alluding to the idea that the aim of this project is to create a ‘community of shared destiny for all humankind’.

What binds the regions of the Belt and Road together? We have seen above that the Belt and Road Initiative is not simply a matter of economy and trade. It crucially involves geopolitical strategy, too. Following this logic, coherence among the states along the Belt and Road is sought to not be provided only by economic arguments. We must hasten to add that economic arguments do play the key role though. A sense of communality among the states along the Belt and Road is promoted in two ways. First, the Belt and Road is described as the only solution for the current economic and financial challenges. Second, the instrumental employment of a shared history and a shared cultural background plays a major role in fostering a sense of historical and cultural coherence. While the first argument addresses all countries, the second focuses only on the states along the Belt and Road. Let us consider these arguments in more detail. Starting with the first argument, the Belt and Road Initiative is placed against the backdrop of the ongoing global challenges. Almost all speeches of Xi Jinping on the Belt and Road follow a ‘problems-­solutions’ pattern. This highlights that, from the Chinese point of view, the current situation is problematic and requires some sort of intervention. His speech at the first session of the tenth G20 Summit on the 15 November 2015 in Antalya offers a representative example of his call for change and the argumentative strategy chosen to deliver this message. The whole speech is framed by a ‘disease metaphor’, that is, the world economy is conceived of as one ‘single body’ suffering from ‘illness’. Structuring the world economy as one single body sustains the logic of capitalism and economic interdependence across the globe. At the same time, the metaphor of disease helps define China’s place in today’s globalised world. China presents itself as being in possession of the ‘medicine’ to cure the world economy. 当前形势下, 亟需我们回答两个问题。一是‘怎么看’, 要精准把脉世界 经济形势。二是‘怎么办’, 要为促进全球经济增长和就业开出良方 (Xi Jinping 2015e) Under the current circumstances, we must answer two questions. The first is how to make an accurate assessment of the health of world economy. The second is what are the right prescriptions for boosting global growth and employment. (Xi Jinping 2015f )

Building a community of shared destiny   31 The disease metaphor helps to mould people’s perception of the current condition of the world, while also ‘hiding’ (Lakoff and Johnson 2003) what has caused this situation and who could be held accountable thereof. It leaves no doubt about the consequences that a lack of reforms and change would have on the world economy. In absence of transformations, the world economy is doomed to continue its decline. Action is needed, and it needs to start at the root. Therefore, the disease metaphor comes in very handy to boost a new way of ‘interpreting and [thus] changing the world’ (Carver and Pikalo 2008). The changes proposed by the initiative should result in building ‘an open world economy and reinvigorate international trade and investment’ (Xi Jinping 2015f ). This is consistent with the discourse of identifying economic barriers as a source of problems. This perception subsequently became the focal point of the now famous speech at the World Economic Forum, where Xi stated: 世界经济的大海, 你要还是不要, 都在那儿, 是回避不了的 (Xi Jinping 2017a) Whether you like it or not, the global economy is the big ocean that you cannot escape from. (Xi Jinping 2017b) The strategy employed in the Belt and Road Initiative seeks to strengthen and deepen economic globalisation. It is addressing the entire world. However, with regard to the states involved in this project, Xi Jinping draws on other arguments as well. In his attempt to promote cohesion between them, Xi alludes to history and cultural continuity. Concretely speaking, Xi emphasises a shared heritage mainly embodied in what he calls a ‘Silk Road spirit’ (silu jingshen, 丝路精神) and he highlights common ground between the civilisations involved. Before turning closer attention to these two strategies, it is useful to recall that allusion to the mythical past of the Silk Road is consistent with contemporary Chinese political discourse at home. It is congruent with the discourse on the ‘Chinese dream of the great rejuvenation of the Chinese nation’ (Zhonghua minzu weida fuxing de Zhongguomeng 中华民族伟大复兴的中国梦). Recalling the mythical origin of the Han and Tang dynasties – during the time of which the ancient Silk Road was set up and flourished – is part of broader strategy of moulding Chinese identity in the twenty-­first century. This helps define China’s role in the international arena and links its present-­day position to its past. Indeed, the rhetoric of ‘national rejuvenation’ – where the word for ‘national’ is minzu (民族, cultural nation, ethnic group) – was at the core of Xi Jinping’s argumentation in his first introduction of the initiative in Kazakhstan. Seeking to strengthen cooperation with Central Asian countries, he states: 中国和中亚国家都处在关键发展阶段, […]。我们的战略目是一致的, 那 就是确保经济长期稳定发展, 实现国家繁荣富强和民族振兴 (Xi Jinping 2013a)

32   Beatrice Gallelli and Patrick Heinrich Both China and Central Asian countries are at a crucial stage of development. Our strategic goals are the same, which is to ensure sustained and stable economic development, build a prosperous and strong nation and achieve national revitalization. (Xi Jinping 2013b) ‘National revitalisation’ alludes to the return of a ‘golden age’. This rationale underlies both the ‘Chinese dream of the great rejuvenation of the Chinese nation’, according to which China is about to regaining its position of prosperity, and the current Belt and Road Initiative, which is likewise imagined as a continuation of the ancient Silk Road. In other words, by emphasising the positive connotations of the ancient Silk Road, Xi attempts to create a ‘collective memory’ in order to underpin his call for change. The main expression linking the past and the present is ‘Silk Road spirit’. Xi Jinping defines it as a spirit of ‘peace and cooperation, openness and inclusiveness, mutual learning and mutual benefit’ (Xi Jinping 2017d). It is thus some kind of philosophical bond that ties states together and in so doing builds ‘the Belt and Road into a road connecting different civilizations’ (Xi Jinping 2017d). Xi Jinping talks of ‘civilization’ and then specifies ‘this will boost mutual understanding, mutual respect and mutual trust among different countries’. This type of rhetoric provides the image that the PRC is the heritage or quasi-­natural continuation of the Chinese civilisation and, most importantly for our study, it attempts to weaken the borders of those countries along the Belt and Road, at least from a cultural point of view. In reasoning about the values on which the initiative is based, some common cultural ground between the civilisations involved is emphasised. This is done, for instance, by means of ancient or popular sayings. Such rhetorical devices are a key characteristic of Xi Jinping’s verbal style, and manifestations thereof can be found across all the speeches analysed here.8 Of course, different popular sayings are used according to the specific context of the speeches. Hence, when addressing audiences in specific countries, such as on the occasion of his talk in Kazakhstan, Xi Jinping deploys Kazakhstan idioms along with Chinese popular saying, along with quotations from the classics (Xi Jinping 2013a). When approaching countries along the Belt and Road, Xi makes also use of Arabic and European popular sayings, such as in the following example: 中国古语讲: ‘不积跬步, 无以至千里。‘阿拉伯谚语说, ‘金字塔是一块块 石头垒成的’。欧洲也有句话: ‘伟业非一日之功’ (Xi Jinping 2017c) An ancient Chinese saying goes, ‘A long journey can be covered only by taking one step at a time’. Similarly, there is an Arab proverb which says that ‘the Pyramid was built by piling one stone on another’. In Europe, there is also the saying that ‘Rome wasn’t built in a day’. (Xi Jinping 2017d)

Building a community of shared destiny   33 Apart from stressing that the Belt and Road is a project that can only be built by joining efforts, these idioms provide the nuance that the involved ‘civilizations’ share a common popular wisdom, and hence similar cultural attitudes. Having now analysed the borders of the Belt and Road Initiative, the rationale for including specific regions and the claimed communality between them, we can now return to our main research questions.

Conclusions We have discussed the issue of borders, the rationale for including specific regions into the Belt and Road Initiative, as well as the arguments that are supposed to provide some sense of coherence to the region drawn up by the Belt and Road Initiative. On the basis of the insights on these issues from the speeches of Xi Jinping, let us now answer the research questions formulated in the introduction. In the introduction we wrote that any sense of ‘We’ requires an ‘Other’. The We is clearly articulated by Xi Jinping, albeit in an unusual way, namely with graded differences. China and some of its immediate neighbours constitute the inner circle with which ‘neighbourhood diplomacy’ or more aptly ‘periphery diplomacy’ is envisioned. This idea marks the start and the core of this initiative. Following these ‘near neighbours’, we find the idea of an ‘Asian community of shared destiny’ and after that ‘a community of shared destiny for all humankind’. There is no We without Others. The Other in this discourse are other ‘great countries’. The US in the first place, but also China’s neighbours Russia and Japan are Othered. Imagined communities are given coherence by a shared desire to achieve ‘great things together’. Developing prosperity and ducking any looming crisis is the central desire in this initiative. This message is, however, somewhat implicit. Front and centre in the speeches of Xi Jinping is his idea of ‘shared destiny’. Opaque in character as it is, this idea is presumably constituted by the aim to jointly maintain political stability and economic growth in the face of Others who may be threatening these objectives. Sticking together is presented as China’s solution to a risky future. In a globalised world, states can no longer act alone as they are intertwined on various levels. In the words of Xi Jinping, it forms ‘one body’. Partial pursuance of state interests is not a feasible solution – but cooperation under Chinese leadership is. In order to align the other states to this idea, such cooperation is declared to be firmly based in Chinese values such as ‘friendship’ (amity), ‘sincerity’, ‘reciprocity’ and ‘inclusiveness’. Attitudes and socioeconomic interests provide for a sense of communality, not political ideologies as in the US alliance or the former Socialist Block. Language, a prominent building block of imagined national communities, is also absent. In the place of political and national ideologies we find the idea of a shared ‘Silk Road spirit’, claimed to rest on and result in ‘peace and cooperation, openness and inclusiveness, mutual learning and mutual benefit’. In the speeches of Xi Jinping, achievements of the past and shared cultural traits are selected, connected,

34   Beatrice Gallelli and Patrick Heinrich emphasised and projected into the future. This is very similar as nationalist ideology, only that there is no ‘nation’, but a ‘community of shared destiny’ in its place. What, then, are the larger implications? First, based on our analysis the Belt and Road Initiative emerges as a new concept of globalisation. The global age, that is, a period of time ‘where people and groups of all kinds refer to the globe as the frame of their belief ’ (Albrow 1996: 4) has arrived in China. ‘China goes global’ indeed. It was therefore only a matter of time until China formulated its own vision of globalisation. As all new ideologies, the Belt and Road Initiative is a reaction to older discourses. In this being the case, the initiative incorporates a great number of ready-­made building blocks from former ideologies. Xi Jinping does not depart from a tabula rasa. The ancient Silk Road provides for little more than an incentive to propose this initiative. Beyond such rhetoric and the invented tradition of a ‘Silk Road spirit’, we find a proposal that is ultimately modernist. It is based on market expansionism and a social accumulation of wealth. It selects, connects and highlights similarities in order to create a We that is destined to cooperate in order to achieve prosperity. The real novelty of the Belt and Road Initiative is the idea of forming a coalition to battle and better control the risks that stand in the way of achieving prosperity. As a novel idea of globalisation, the initiative is intellectually not exactly path-­breaking. If you want, the Belt and Road is ‘a modernist vision of globalisation’ and a counter-­initiative to the US-­led globalisation. It is the product of late modernising economies and societies, and it will probably appeal for these reasons to countries that have similar trajectories (Central Asia and Africa), but this modernist vision of globalisation may make it also a source of concern or scepticism for everyone else included (Europe). This is an issue that calls for more research. In any case, the larger and more detailed consequences that the Belt and Road Initiative has on ideas about communality beyond the nation-­ states involved will continue to draw our interest also in the future.

Glossary AIIB  Asian Infrastructure Development Bank. PRC  People’s Republic of China.

Notes 1 China’s State media no longer uses the expression ‘One Belt, One Road’, opting instead for ‘Belt and Road Initiative’ (abbreviated then as BRI). 2 The translations of the speeches are taken from the English website of the Ministry of Foreign Affair of the PRC: www.fmprc.gov.cn/mfa_eng/ Home>Policies and activities> speeches. 3 For the idea of ‘a community of shared destiny’, see also Barmé (2014: xii–xiii). 4 Xi Jinping’s speech at the Periphery Diplomacy Work Forum was only published 1 year later in a pared-­down version. This version is included in the volume The Governance of China (Xi Jinping 2014: 325–329).

Building a community of shared destiny   35 5 Qin 亲 is translated as ‘friendship’ in the official English translation of the text, Literally, it means however ‘affinity’ or ‘amity’. 6 These disputes involve, in particular, Japan in the East China Sea for the Senkaku/ Diaoyu Islands, and Vietnam and the Philippines in the South China Sea. On the importance of ‘neighborhood diplomacy’ to solve these disputes, see Swaine (2014). 7 The use of the adjective ‘big’ (da, 大) is an example of the tendency towards abstraction and vagueness in contemporary Chinese political language (Link 2013: 246). It can either refer to countries’ geographic size or economic and military power. This strategic use of language leaves room for different interpretations, while letting speakers adjust their claims in the future. 8 Many books and articles on the rhetoric employed by Xi Jinping have been published recently. One of the most comprehensive is Chen Xixi (2014). It gathers Xi Jinping’s main metaphors, popular sayings and quotations from the classics.

References Albrow, M. (1996) The Global Age, Cambridge: Polity Press. Anderson, B. (1991) Imagined Communities: Reflections on the Origin and Spread of Nationalism, Revised Edition, London: Verso. Barmé, G.R. (2014) Yearbook 2014: Shared Destiny, Acton: Australia Nation University Press. Bauman, R. and Briggs, C.L. (2003) Voices of Modernity: Language Ideology and the Politics of Inequality, Cambridge: Cambridge University Press. Bauman, Z. (1997) Postmodernity and its Discontents, New York: New York University Press. Callahan, W.A. (2016) ‘China’s “Asia dream”: The belt road initiative and the new regional order’, Asian Journal of Comparative Politics, 1(3): 1–18. Carver, T. and Pikalo, J. (eds) (2008) Political Language and Metaphor: Interpreting and Changing the World, London: Routledge. Chen Xixi (2014) Ping yi jin ren – Xi Jinping de yuyan liliang [Amiable and Approachable: Xi Jinping’s Language Power], Shanghai: Shanghai Jiao Tong University Press. Fairclough, N. (1989) Language and Power, London: Longman. Fairclough, N. (1995) Critical Discourse Analysis: The Critical Study of Language, Harlow: Pearson Education. Gellner, E. (1983) Nations and Nationalism, Oxford: Blackwell. Huang, C. (2017) ‘How Trump gave China’s “Belt and Road” scheme a boost’, South China Morning Post, 8 May. Online available at: www.scmp.com/news/china/ diplomacy-­defence/article/2093060/how-­trump-gave-­chinas-belt-­and-road-­schemeboost (accessed 10 July 2017). Huang Yiping (2016) ‘Understanding China’s Belt & Road initiative: Motivation, framework and assessment’, China Economic Review, 40(3): 314–321. Lakoff, G. and Johnson, M. (2003) Metaphors We Live By, Chicago: The University of Chicago Press. Link, P. (2013) An Anatomy of Chinese: Rhythm, Metaphor and Politics, Cambridge: Harvard University Press. Pantucci, R. and Petersen, A. (2013) ‘China and Central Asia in 2013’, China Brief, 13(2): 9–11. Renan, E. ([1882] no date) Qu’est-ce qu’un nation [What is a nation?]. Online available at: http://web.archive.org/web/20110827065548/www.cooper.edu/humanities/core/hss3/e_ renan.html (accessed 21 July 2017).

36   Beatrice Gallelli and Patrick Heinrich Shambaugh, D. (2013) China Goes Global: The Partial Power, Oxford: Oxford University Press. Swaine, M.D. (2014) ‘Chinese views and commentary on periphery diplomacy’, China Leadership Monitor, 44(2): 1–43.

Sources Xi Jinping (2013a) Hongyang renmin youyi gongchuang meihao weilai [Promote friendship between our people and work together to build a bright future] (Speech at Nazarbayev University). Online available at: www.fmprc.gov.cn/web/ziliao_674904/ zyjh_674906/t1074151.shtml (accessed 5 July 2017). Xi Jinping (2013b) Promote friendship between our people and work together to build a bright future (Speech at Nazarbayev University). Online available at: www.fmprc.gov. cn/mfa_eng/wjdt_665385/zyjh_665391/t1078088.shtml (accessed 5 July 2017). Xi Jinping (2013c) Xieshou jianshe Zhongguo – dongmeng mingyun gongtongti [Join hands to build a community of shared destiny between China and ASEAN] (Speech at the Indonesian Parliament). Online available at: www.fmprc.gov.cn/web/ziliao_ 674904/zyjh_674906/t1084354.shtml (accessed 7 July 2017). Xi Jinping (2014) The Governance of China, Beijing: Foreign Languages Press. Xi Jinping (2015a) Maixiang mingyun gongtongti kaichuang Yazhou xin weilai [Marching towards a community of shared destiny and initiating a new future for Asia] (Speech at the Boao Forum for Asia Annual Conference 2015). Online available at: www.fmprc.gov.cn/web/ziliao_674904/zyjh_674906/t1249640.shtml (accessed 7 July 2017). Xi Jinping (2015b) Towards a community of common destiny and a new future for Asia. (Speech at the Boao Forum for Asia Annual Conference 2015). Online available at: www.fmprc.gov.cn/mfa_eng/wjdt_665385/zyjh_665391/t1250690.shtml (accessed 7 July 2017). Xi Jinping (2015c) Yongyang Wanlong jingshen tuijin hezuo gongying – zai Ya Fei lingdaoren huiyi shang de jianghua [Carrying forward Bandung spirit and advance win–win cooperation] (Speech at the Asian and African leaders summit). Online available at: www.fmprc.gov.cn/web/ziliao_674904/zyjh_674906/t1256933.shtml 1/ (accessed 7 July 2017). Xi Jinping (2015d) Carry forward the Bandung spirit for win–win cooperation (Speech at the Asian and African leaders summit). Online available at: www.fmprc.gov.cn/mfa_ eng/wjdt_665385/zyjh_665391/t1259844.shtml (accessed 7 July 2017). Xi Jinping (2015e) Chuangxin zengzhang lujing gongxiang fazhan chengguo [Innovative growth path and share development benefits] (Speech at the first session of the 10th G20 Summit). Online available at: www.fmprc.gov.cn/web/ziliao_674904/zyjh_674 906/t1315054.shtml (accessed 7 July 2017). Xi Jinping (2015f ) Innovative growth that benefits all (Speech at the first session of the 10th G20 Summit). Online available at: www.fmprc.gov.cn/mfa_eng/wjdt_665385/ zyjh_665391/t1315058.shtml (accessed 7 July 2017). Xi Jinping (2017a) Gong dang shidai zeren gong cu quanqiu fazhan [Shoulder together the responsibilities of our time and promote global development] (Speech at the World Economic Forum Annual Meeting). Online available at: www.fmprc.gov.cn/web/ ziliao_674904/zyjh_674906/t1461394.shtml (accessed 7 July 2017).

Building a community of shared destiny   37 Xi Jinping (2017b) President Xi’s speech to Davos in full (Speech at the World Economic Forum Annual Meeting). Online available at: www.weforum.org/agenda/2017/01/full textofxijinpingkeynoteattheworldeconomicforum (accessed 7 July 2017). Xi Jinping (2017c) Xieshou tuijin ‘yi dai yi lu’ jianshe [Join hands and carry forward the  building of the Belt and Road] (Speech at opening of Belt and Road forum). Online  available at: www.fmprc.gov.cn/web/ziliao_674904/zyjh_674906/t1461394. shtml (accessed 7 July 2017). Xi Jinping (2017d) Work together to build the Silk Road economic belt and the 21st century maritime Silk Road (Speech at opening of Belt and Road forum). Online available at: www.fmprc.gov.cn/mfa_eng/wjdt_665385/zyjh_665391/t1465819.shtml (accessed 7 July 2017).

3 Whose Silk Road? The Chinese, US, European Union and Russian strategic projects for regional integration in Central Asia Paulo Duarte Introduction Regional integration projects in Central Asia are a relevant topic today, driven by an essentially economic logic. In fact, despite the plurality of interests and actors, economics plays a central role in the way each player conceives of its own vision and strategy vis-­à-vis Central Asia. Based on a qualitative methodology (essentially hermeneutics), supported by the conceptual lenses of the Copenhagen School, in particular the word ‘securitise’,1 this chapter analyses the convergence, possible overlapping and/or competition of interests between China, the US, Russia and the European regional integration projects and initiatives in Central Asia. Its main postulate is that the term New Silk Road is in itself an ambiguous concept that encompasses different appropriations and views on Central Asian regionalism according to the nature and interests of each country. In fact, although one may use the expression Chinese New Silk Road, which is officially called the Belt and Road Initiative (BRI), the truth is that, for example, the US has also its own New Silk Road, officially proposed in 2011, by former Secretary of State Hillary Clinton. In turn, Russia’s regional integration project is called Eurasian Economic Union (EEU). Among the various projects that coexist in Central Asia, it is China that seems to offer the most promising proposal for regional integration. Judging by the failure of the previous Eurasian Economic Community  (also known as EurAsEC), the Russian project of the EEU seems not to have learned the lesson (Stegen and Kusznir 2015). The US New Silk Road, in turn, seems to have lost strength since it was announced in 2011. It is mere rhetoric, with a discourse of vague promises and achievements (US Department of State 2016). There is still the European Union (EU), whose fragmented foreign policy is hostage of the leverage of a France or Germany (Özyanık 2015). But overall, China’s march to the West may be complementary to the efforts of a EU seeking the Eastern way. The BRI has a lot to offer to Europe, and the latter very much to gain by revisiting Mackinder’s heartland,2 Central Asia, in a return to history, through a fusion of synergies with the Chinese project, where in the medium/long term, it will be possible to connect London to Beijing by rail in just 48 hours. China’s BRI aims to make the EU an important partner, as evidenced by Chinese investments in

Whose Silk Road?   39 Europe, the Chinese interest in collaborating with the Juncker Plan, the China– Europe railway links, or the good reception by several European states of the Asian Infrastructure Investment Bank (AIIB). To achieve the aforementioned objectives, this chapter begins by investigating the securitising logic of China’s BRI (because it has a more promising potential than the other projects). In the second part, attention will be paid to the way the remaining actors securitise their interests in Central Asia. In both cases, economics proves to be the great leverage of the various integration projects under analysis. However, it is important to start by situating chronologically the official launch of the major logics of securitisation. The EU has been the main pioneer, by initiating the Transport Corridor Europe–Caucasus–Central Asia (TRACECA) programme in 1993 (Özyanık 2015). This was followed by the US initiative, called the ‘New Silk Road’, in 2011. Subsequently, in September 2013, it was the turn of Xi Jinping to announce (as part of his visit to Kazakhstan) China’s BRI. And, finally, on 29 May 2014, Putin, as well as the presidents of Belarus and Kazakhstan, signed in Astana the Treaty on the EEU.

China’s Belt and Road Initiative The revival of China’s Silk Road is not only reminiscent of its history, but it also says a lot about the strategic direction of the country. Beijing sees the BRI as a way to find new markets, to reduce the imbalance of development between its coastal provinces and the poor interior, and to preserve national stability. Under the aegis of the BRI, Chinese political leaders have promoted the creation of important hubs in remote provinces, such as Chongqing, Kunming, Xi’an, Xining and Chengdu, which have modern logistics infrastructures that allow a quick connection to the major coastal cities of the country (Lim et al. 2016). Another important goal of the BRI is the issue of stability. And, in this sense, the BRI is largely led by Xinjiang’s development and stabilisation strategy, which Beijing wants to protect from any terrorist or separatist aspiration. Considering Xinjiang’s proximity to Central Asia, Chinese political leaders have adopted the ‘Go West’ policy complemented by what Rolland (2015) calls ‘China’s infrastructure diplomacy’. The latter is based on the construction of a corridor of interconnectivity, which aims to turn China’s remote provinces into economic and logistical hubs in the connection between Asia and Europe. Besides, such an achievement is intended to integrate China’s neighbours more closely with the Chinese economy, enmeshing them in a network of trade ties, transportation links and multilateral institutions that will have China at their centre. Such an idea is not thus very different from the traditional Tributary States’ strategy that maintained a Sinocentric world order in Asia for many centuries. Another reason that justifies the importance of the BRI, as an instrument for securitisation of China’s interests, is the momentum that this mega-­project will bring to the Chinese economy, regarded in a holistic way (i.e. not only at the level of the remote provinces). There are four economic areas in which the BRI

40   Paulo Duarte can be decisive: driving the internationalisation of its construction industry, encouraging exports, reducing risks in the supply chain and attracting investments towards the interior of the country (Esteban and Otero-­Iglesias 2015). The BRI is a two-­way route, either by means of the incitement to expansion of Chinese companies around the world, or in the invitation to foreign investors to bet on the Chinese market. Furthermore, the BRI can be an important lever regarding the slowdown in construction in China, providing Chinese construction companies with promising profitability opportunities abroad (Xu and Chung 2016). All these reasons are valid to understand why the BRI makes sense, although there is another reason, equally or more important: energy. The maintenance of the Chinese communist party in power is, curiously, hostage to the way the party proves (or not) to be able to securitise the aforementioned factors. In this sense, it is ‘ironic’ to realise that the party is the guarantor of the securitisation of the BRI’s aims, which serve, in fact, to securitise the maintenance of the Chinese political regime. Except for Mao, China’s leaders have sought to consolidate power around a narrative that explores the past of humiliation or the nostalgia of the glorious times when China was the civilisational and economic centre of the world. According to Wang (2014), the Chinese dream is simply a new way of legitimising what is old, that is, a sort of ‘old wine in a new bottle’, since the concept of dream fits in a logical continuum of other narratives advocated by leaders who preceded Xi. At the logistical level, BRI’s impacts are positive for Central Asia while linking East and West. The railway networks are an important logistic alternative, likely to help transport Chinese products more effectively into European and Central Asian markets. It is not, therefore, by chance that the Chinese government has recently made railway connectivity a central feature of its economic development strategy, which focuses on the development of inland connections to address the congestion in China’s Eastern regions (i.e. congested ports). The bet on railways is as, or more, important since they offer an alternative route to Chinese products, allowing them to reach European markets without crossing Russian territory. Chinese policy makers are aware that if relations between Russia and the EU worsen, or if the sheer trade volume between China and the EU forces them to resort to inland routes, Moscow’s power vis-­à-vis Beijing would increase significantly (Brugier 2014). Another point in favour of the railways has to do with the fact that Chinese goods shipped by train to Western Europe take only 16 days (from Chongqing) to reach their destination, whereas sea transport requires about five weeks, with significant delays. The only disadvantage regarding the maritime option is concerned with the (more expensive) cost inherent to the transport of a container by rail – about US$7,000 – which is almost three and a half times the cost by sea. The rail option allows a more effective logistics securitisation in the handling of goods, which are perishable or of high value and are not worth transporting by air because of their volume or weight (Esteban and Otero-­Iglesias 2015). Even if, at first sight, it is understandable that Beijing seeks to securitise logistical access to its Central Asian periphery, the Iron Silk Road does not stop

Whose Silk Road?   41 there. It consists of a global project, likely to revolutionise the infrastructure of communications across the globe, literally (Yang 2016). In this sense, even if it is a priority for China to begin by securitising its access to Europe – for the convergence of the Sino-­Central Asian High-­Speed Rail with the European railway network (which will link London to Beijing in just 48 hours) – Beijing aspires, in the long term, to more ambitious challenges, such as to connect China to North America by rail, by building an underwater tunnel, about 200 km long, at the Bering Strait (Lanjian and Wei 2015). Considering that Chinese engineers have proved, repeatedly, that they were able to overcome obstacles often considered as technically impossible, one can speculate that China’s strategy in the coming decades (not years) may not only include one operation of securitisation of the logistical links East and West, but, lato sensu, a securitisation of the logistical links connecting China to the rest of the world, making the country a sort of global hub, where all paths will tend to converge (Lim et al. 2016). The basic motivation behind China’s Iron Silk Road appears to be a long-­term vision of linking the country’s main trade routes with those passing through the Middle East and Central Asia in an attempt to create a unified network of complementary economies with China at the centre of gravity. Like the Iron Silk Road, the China–Pakistan Economic Corridor (CPEC) is another crucial component for the development of Central Asia and Xinjiang. Gwadar is one of the Indian Ocean ports with overland links to Western and Southern China that can help Beijing to avoid the ‘Malacca Dilemma’ (Xu and Chung 2016). The latter refers to the Chinese economy’s excessive reliance and  vulnerability to pressure at the Straits of Malacca. Much of China’s oil comes from West Asia and Africa and around 80 per cent of this passes through the Straits of Malacca. Should the Straits of Malacca be threatened or come under the influence of hostile states, China’s trade could be choked. The resulting energy crisis could paralyse its economy. The fear towards a maritime blockade – in vital chokepoints, as Malacca – by rival powers (US, Japan, India …), has led China to prioritise the energy issue, raising it to the level of threat to the national interest. This explains the ‘Going Abroad’ policy, whereby the Chinese National Oil Companies (NOCs) are encouraged by the government to acquire the maximum possible participation in consortia, oil exploration rights, equity oil and foreign oil companies. The Malacca issue, and lato sensu, the fears of a disruption in oil supply to China are the major reasons that explain Beijing’s interest in the construction of the CPEC. Although China has not, in practice, been the object, up to now, of a maritime blockade (something thus ‘more psychological’ than real),3 the threat of interruption of the oil supply lines is, in any case, a crucial factor in the development of Chinese foreign policy. Thus, Gwadar will be able to generate a ‘win–win’ result – as China advocates – for Islamabad, Beijing and Central Asia (Xiaohong 2016). In fact, for Beijing the  port could be the beginning of a Southern route for the BRI, through which  China can more easily exchange goods with Central Asia and the Middle East.

42   Paulo Duarte At the geopolitical level, China’s participation in Gwadar will also allow it to expand its influence in the Indian Ocean, a vital route for oil transportation between the Atlantic and the Pacific (Foreign Affairs 2015). Pakistan provides China with a trade and energy corridor, by Gwadar, through which the oil from the Middle East will get to China through pipelines and railroads. This corridor offers a shorter route between Western Asia and China, allowing considerable savings in time and shipping costs, since the current route for transporting oil and other commodities from Western Asia to Chinese ports, which is via the Straits of Malacca, is roughly 13,000 km long. It is another 3,500 km of overland travel from Chinese ports to Xinjiang. In comparison, the route from Gwadar Port to Xinjiang is just 3,000 km (Ramachandran 2015). To shed light on the other regional integration projects that compete with/ complement China’s BRI, the next sections will outline the way the US, Russia and the EU securitise, in turn, their economic interests in Central Asia.

The other actors vis-­à-vis the dynamics of the New Silk Road The US’ conception of the New Silk Road The US New Silk Road strategy came to life in 2011 when former US Secretary of State Hillary Clinton asked for the revitalisation of the ancient Silk Road (US Department of State 2011). The New Silk Road, as the US conceives it, aims to promote trade liberalisation, develop economic cooperation, increase trade volume and establish people-­to-people connections between and within South and Central Asia. At the first stage, the New Silk Road advocated by Washington includes the development of logistics infrastructure in Afghanistan, in particular the construction of an integrated network of roads and railways, but also a regional power grid. At the second stage, the priority goes to the reduction of trade barriers, as well as to enhance regional trade. Finally, the third and fourth stages include the construction of the Turkmenistan–Afghanistan–Pakistan–India (TAPI) gas pipeline and the promotion of the sharing of the region’s water resources, which are mainly concentrated in the two poorest states, Kyrgyzstan and Tajikistan (Rumer et al. 2016). Although, like China’s BRI, the aforementioned objectives require a securitisation of interests in the political, economic, military and soft power sphere, there is, however, an important difference between the American vision of the New Silk Road and Beijing’s. While Washington fashions its Eurasian strategy around the importance of Afghanistan (all routes and priorities lead to Kabul), China’s vision tends, however, to focus on Central Asia, by devaluing the importance of Afghanistan, due to the insecurity in which it is immersed (Rahi 2016). It does not seem unreasonable to observe that China has been much more active in implementing its New Silk Road than the US. In fact, the American speech that aims to account for the results in the context of the US New Silk Road initiative is often vague. Kucera (2013) enumerates, in this regard, certain expressions such as ‘the US has supported’, and ‘the US is working closely

Whose Silk Road?   43 with’, systematically imposed by those responsible for the American strategy towards Central Asia, who clarify very little about what has been achieved by it. In addition, it is curious to note that after she gave the ‘opening’ speech of the American New Silk Road, in 2011, Hillary Clinton never again mentioned the New Silk Road in a public address, nor did the US President or National Security Advisor. Despite its potential, there are several reasons behind the failure of the New Silk Road initiative designed by Washington. One is the inability to mobilise capital for the project, others include the logistical, bureaucratic and security obstacles to its achievement, as well as the determination to exclude Iran and China from the initiative. In the face of China’s emergence as an economic lever of the region, and given Russia’s economic decline, the situation is not favourable to the achievement of the American New Silk Road (Rumer et al. 2016). What about Russia’s New Silk Road? Russia’s conception Russia does not have, unlike the US or China, an official project in terms of the New Silk Road, the latter having been replaced, in the Russian case, by the idea of the EEU. The EEU is an economic union loosely modelled after the EU, founded in January 2015, having as members Armenia, Belarus, Kazakhstan, Kyrgyzstan and Russia. The creation of the EEU has an underlying new vision of wider Eurasian integration. Indeed, Russia considers its centrality within Eurasia as a precondition for its strong role in global politics (Svarin 2016). Therefore, considerably inspired in the (neo)Eurasian postulates,4 will the EEU have the conditions to succeed at the regional level? Will Russia be able to effectively securitise its interests in Central Asia? Judging by the experience of the organisation that was the embryo of the EEU (better known under the acronym EurAsEC), experts such as Tarr (2016) are sceptical about the securitisation potential inherent in the EEU. And why? Although the designation EEU indicates the economic essence that apparently characterises the functioning of this organisation, the real lever underlying its creation is geopolitical. Russia sees the EEU as a political project, whereas Kazakhstan and other members view it as a way to further their own economic interests, rather than as ‘any dream’ of forming a super-­state between Europe and Asia (Stegen and Kusznir 2015). Because, strictly speaking, Russia’s real goal by stimulating the creation of the EEU is to adapt the essence of economic and political cooperation (as well as the models of supranationalism in the EU) to the case of Central Asia, Belarus and Armenia. However, its member states are not willing to give up what they regard as their national sovereignty, to the detriment of a single currency, or a regional Parliament (inspired by the European Parliament), likely to dictate the rules of the game, as Moscow appreciates (Lane 2016). One of the main reasons for the failure of the previous EurAsEC, which imposed large costs on the Central Asian countries, is that they had to buy either­lower quality or higher-­priced Russian manufactured goods under the common

44   Paulo Duarte external tariff umbrella that favoured Russian industry (Tarr 2016). Having started with the Russian tariff – which, like the EurAsEC, protects the Russian industry – the EEU may suffer from the same error that caused the failure of the EurAsEC. On the other hand, the crisis in the Russian economy makes the EEU a ‘risky bet’ for the states of the region. Strzelecki (2016) is particularly critical about the way Russia uses the EEU to allegedly strengthen its influence in Central Asia, avoid the integration of the region’s countries with the West, contain China’s growing influence and legitimise the Kremlin elite to Russian society. However, (approximately) three years after its implementation, the EEU remains far from the initial expectations of its members. This is due, not only to oil’s falling prices and the sanctions imposed by the international community to Russia, but also to the fact that the EEU focuses its attention on the search for political influence, rather than on the promotion of free trade (Hartwell 2016). Given these reasons, this study shares Cooley’s (2016) vision, for whom the EEU and the BRI are ‘conceptually incompatible’: the EEU is about fencing in economic activity as a regional economic bloc, while the BRI is about transit and connectivity between regions. It is curious that, despite the considerable differences between the two, both China’s BRI and Russia’s EEU initiative are two narratives designed to induce and convince. And, in this sense, they can be considered a form of securitisation in terms of soft power. But while China is an apologist for the glorious past achievements, touting the universalist nature of Chinese culture as a way to sublimate the dissatisfaction regarding the party and the internal difficulties, Russia, in turn, evokes the civilisational distinctiveness of the so-­called Russian world (Russkiy Mir) (Strzelecki 2016). On the other hand, while the BRI narrative is used to appease the fears of the international community in what concerns Chinese intentions at the external level, in the case of the EEU it also aims to securitise (either nationally or in the post-­Soviet world) the stability of the Russian political regime. Finally, how does the EU securitise its interests in Central Asia? The European initiatives For Brussels, Central Asia is not a priority area as it does not belong to either its Southern or Eastern neighbourhoods. The recent instability in the Middle East, the increase in energy prices and the efforts to reduce the environmental impact in energy consumption have contributed to the conversion of energy supply securitisation into a key political priority of the Juncker Commission. Recognising the high levels of energy dependence, regarding the external supply sources, on 16 February 2016, the European Commission published a Sustainable Energy Security package that aims to minimise natural gas supply disruptions across Europe (European Commission 2016). But, despite Brussels’ efforts of energy securitisation in recent years (through meetings with Central Asian leaders), the results remain modest. The exception of Kazakhstan should be noted, however – compared to the other Central Asian

Whose Silk Road?   45 countries – in its exemplary contribution regarding the EU’s efforts to achieve economic securitisation in the region. The EU is Kazakhstan’s primary trade partner, its largest export market and its third import partner. In what concerns oil and gas securitisation, Kazakhstan has become a more and more important supplier for European markets. European companies participate in the exploration of its huge Kashagan oil field (European External Action Service 2015). Although, at the level of the logistical securitisation of the corridors between the East and the West, Brussels does not really have a vision so advanced and ambitious as that of the Chinese BRI, curiously, the EU was the prime external mover in the efforts to develop trade and transportation across Eurasia. Indeed, in 1993, as part of the Technical Assistance to the Commonwealth  of  Independent States (TACIS) programme, the EU has developed TRACECA, which, however, has failed to increase trade flows between Central Asia and the Caucasus (Patnaik 2016). In a context where the EU seeks to (re)boost its TRACECA project, this initiative has a quite promising potential, at the level of the logistical and economic securitisation between East and West. Such an enterprise is intended to connect the Kazakhstan–China border, via Central Asia with Turkey, through a ferry between Aktau (in Kazakhstan) and the port of Alat (in Azerbaijan), reducing the cost and time of transportation between China and Europe (Sárvári and Szeidovitz 2016). The TRACECA programme is fundamental because it is the only institutionalised initiative in the context of the revival of the historic Silk Road. Furthermore, it is a symbol of how the convergence of the economic securitisation resulting from a Europe that goes East may be promising, while China marches West. Therefore, it is imperative to examine how the EU can benefit from China’s BRI. Thus, a relevant question concerns the European Fund for strategic investments, called the Juncker Plan. How can a economic securitisation effort underlying China’s BRI answer help an EU that tries to foster investment among its member states, at the same time as it needs to attract foreign investment? After all, the Juncker Plan is an attempt of securitisation at the economic level, a plan that aims to revive the economy and to create jobs in areas ranging from innovation to research, education and logistics/transport. Covering three broad dimensions – financing (315 billion euro over a period of three years), pool of projects and environment conducive to investment – the Juncker Plan is the vector of a renewed European ambition (Marty 2015). China’s motivation to participate in the Juncker Plan raises, in turn, in Brussels, recognition of promising opportunities for Chinese investment in the EU. Indeed, the fact that China has extraordinary financial reserves (accumulated over the years through its trade surpluses), as well as the notorious expansion of Chinese banks (which have become important actors in the world), reveals a symbiosis of economic interests. Europe – although Eastern and Southern Europe have received greater attention by China’s investors – has emerged as a main destination for Chinese Overseas Foreign Direct Investment (OFDI), in line with a broader shift of Chinese investment from developing and emerging to high-­income economies. Chinese

46   Paulo Duarte investors are now interested in sectors such as technology, energy, automotive and even real estate (instead of the traditional and almost exclusive approach on raw materials). State-­owned investors continue to account for most of China’s EU OFDI. Chinese investment increasingly extends beyond German, French and British economies, fuelling the intra-­European competition for Chinese capital (Hanemann and Huotari 2016). Another fundamental element in the context of the synergy between the Chinese and the European economic securitisation is the creation of the AIIB. In other words, to talk about the impact of China’s BRI in Europe implies necessarily mentioning the extraordinary receptiveness that the foundation of this bank has earned on the part of different EU member states (European Commission 2015). Now, this allows many readings. One concerns the effectiveness of China’s economic diplomacy as part of its BRI, a diplomacy that skillfully combines economic capital and soft power. In this sense, experts such as Corr (2016) highlight the ‘urgency’ and simultaneous ‘incoordination’ that have characterised the accession process of several EU member states to the AIIB. Indeed, after the UK has made public its application for accession to this bank, it would be the other states’ turn to do it (China Daily 2015). The episode has raised criticism on the part of Washington, which is against the creation of such a financial organisation at China’s initiative (Anderlini 2015). How can China’s BRI contribute to securitise the interests of the EU at the regional and global level? At the regional level, the BRI is likely to be a complementary platform for the EU to stabilise its relations both with Russia and with the Eurasian states. The situation couldn’t be more relevant due to the many insecurity crises (refugees, terrorism and economic instability in countries such as Greece, for example) that together threaten the cohesion and the survival of the EU. That said, and considering that isolating Moscow will not help the EU, and the US–Russia rivalry must not be at the expense of the EU’s security and prosperity, Minghao (2015) proposes that the EU is supportive of the stabilising potential of China’s BRI, which will allow it to achieve more leverage to reshape international rules regarding trade and investments. At a more ‘macro’ level, the BRI can play a leading role in helping redirect the centre of geopolitical gravity away from the US and back to Eurasia. This is, perhaps, the greatest contribution that the BRI is likely to offer to Europe, providing a historical and geostrategic meeting with what Brzezinski (1998) had formerly called ‘Heartland’ (‘axis of the world’), which gives influence to the superpower that seizes it. Wang Yiwei (2015) believes that, by welcoming the BRI, it will be easier for the EU to be a player in the Asia-­Pacific affairs (even in terms of the economic securitisation). Besides, the BRI is likely to reduce the power asymmetry between Europe and the US, making Europe a stronger pole in transatlantic relations and, at the same time, in the Eurasian sphere. Wang considers that Europe cannot disregard Russia, highlighting the potential of China’s BRI as a platform for cooperation between Brussels and Moscow, which may enable the EU to interact in East Asia with players such as the Shanghai Cooperation Organisation and the EEU.

Whose Silk Road?   47

Conclusion As explained, there are not one but several ‘New Silk Roads’, each with its own agenda and priorities. However, they all converge insofar as they are based on securitisation, through the development of trade and logistics infrastructures in Central Asia. In this sense, the Chinese vision should not be understood as a competitor towards the Russian, the US conception, or even towards the initiatives that the EU has promoted in the region. On the contrary, these visions are rather complementary. But, for the moment, it is not sufficiently clear how the strategy of the Chinese New Silk Road converges with regard to others. It would therefore be appropriate that the Russian, Chinese, American and European leaders put more emphasis on the operability, the technical problems, the possible superposition, in short, on the complementarity of their initiatives in what concerns Central Asia. It is in the Central Asian republics’ interest to make the most of the BRI’s economic potential, at the expense of the EEU. It is in the interest of the Central Asian republics to always keep a pragmatism that allows them to avoid the emergence or persistence of any monopoly in the region, as has been until a few years ago the case of the logistical control of regional pipelines by Moscow, something that China has broken in the meantime. Western regional projects for Eurasia could perhaps learn from, or at least see some sort of inspiration in, the strength of Chinese diplomacy, in the way the latter has actively sought the reactivation of links and the modernisation of the routes connecting China to its neighbours and, in a broad sense, to the world. An Ankara–Tehran–Central Asia–China axis is an alternative corridor, possibly effective, linking the East and the West. But at the moment, the North Atlantic Treaty Organization (NATO) members and countries under the influence of Saudi Arabia are still reluctant to cooperate with Iran. Is it, therefore, China, Russia and India, who have the role of interlocutor with the West, in order to integrate Iran into Western logistics future projects? It eventually is. Nothing is, for the moment, defined. On the contrary, all paths and possibilities are open. The way in which the vision of the different actors towards Central Asia, and the initiatives associated with it, evolve may dictate (or not) the inversion of conventional theories that tend to consider the region as an ‘isolated island’ on the world map. In fact, this study concludes, like Khanna (2012), that within the reconfiguration of the role of Central Asia – which takes place in conjunction with the evolution of the balance of power in a world that the author calls post-­ American – the Eurasian heartland will tend to emerge, little by little, from its isolation. This says a lot about America’s future position in a world where more people may be travelling across Eurasia by rail than flying across the Atlantic and the Pacific to America. Such winds of change may give way, finally, to a beginning of an extraordinary geopolitical, geostrategic and, above all, geoeconomic world reconfiguration.

48   Paulo Duarte

Glossary EurAsEC  The Eurasian Economic Community (EAEC or EurAsEC) was the predecessor of the Eurasian Economic Union. Eurasian Economic Union  Russia’s regional integration project for Central Asia. Securitisation  According to the Copenhagen School, the securitisation is a process whereby a securitising agent tries to establish, socially, the existence of a threat to the survival of a unit. TRACECA  The Transport Corridor Europe–Caucasus–Central Asia (better known by the acronym TRACECA) has been developed by the EU in order to foster regional integration between Europe and Central Asia. US New Silk Road  The United States’ regional integration project for Central Asia.

Notes 1 According to the Copenhagen School, securitisation is a process whereby a securitising agent tries to establish, socially, the existence of a threat to the survival of a unit. When a subject is securitised, it leaves the scope of normal policy and moves into the scope of emergency policy, which usually legitimates the use of force (Buzan et al. 1998). 2 In the early twentieth century, the British geographer Sir Halford Mackinder (1904) was the first to highlight the importance of Central Asia, calling the region the ‘geographical pivot of history’, or ‘Heartland’. For the author, it is the ‘Heartland’ (where the land masses of Eurasia are concentrated) that serves as the pivot to all geopolitical transformations of historic dimensions within the ‘World Island’. 3 Nonetheless, one must acknowledge that the existence of the US 7th Fleet and the ring of US military bases associated with every point of access to the open sea that is available to China is a clear implicit threat of maritime blockade. US naval manoeuvres in the waters around China, including the South China Sea, are also clear reminders of the possibility of a maritime blockade. The Cold War concept of ‘the bamboo curtain’ and the Cold War strategy of ‘containing’ Communism were in effect forms of blockade, so China’s fear of a blockade has a basis in fact. 4 Contemporary Russian Eurasianists argue that the pivot area (i.e. Central Asia) and Russia are geographically the same reality (Matikeeva 2005).

References Anderlini, J. (2015) ‘UK move to join China-­led bank a surprise even to Beijing’, The Financial Times, 26 March. Brugier, C. (2014) ‘China’s way: The new Silk Road’, Brief Issue, European Union Institute for Security Studies, May: 1–4. Brzezinski, Z. (1998) The Grand Chessboard: American Primacy and Its Geostrategic Imperatives, New York: Basic Books. Buzan, B., Waever, O. and de Wilde, J. (1998) Security – A New Framework for Analysis, Boulder, Lynne Reinner Publishers. China Daily (2015) ‘More European countries to join AIIB’, 17 March. Cooley, A. (2016) ‘One Road, One Belt, many headaches: The economic, political and social challenges of OBOR in Central Asia’, 4–7. In Central Asia Program Institute for European, Russian and Eurasian Studies, CAP Papers 159.

Whose Silk Road?   49 Corr, A. (2016) ‘The US-­Europe split on China’, Forbes, 17 March. Esteban, M. and Otero-­Iglesias, M. (2015) ‘What are the prospects for the new Chinese-­ led Silk Road and Asian Infrastructure Investment Bank?’, Elcano Royal Institute, (23): 1–10. European Commission (2015) ‘The Asian Infrastructure Investment Bank’, European Political Strategy Center, Issue 1, 24 April. European Commission (2016) ‘Towards energy union: The Commission presents sustainable energy security package’, Press Release. Brussels, 16 February. European External Action Service (2015) ‘EU and Kazakhstan initial Enhanced Partnership and Cooperation Agreement’, Press release, 20 January. Foreign Affairs (2015) ‘A strategic Seaport: Is Pakistan key to China’s energy supremacy?’, 5 March. Hanemann, T. and Huotari, M. (2016) A New Record Year for Chinese Outbound Investment in Europe, Mercator Institute for China Studies. Hartwell, C. (2016) ‘How to cure the woes of the Eurasian Economic Union’, Russia Direct, 27 January. Khanna, P. (2012) ‘The new Silk Road is made of iron and stretches from Scotland to Singapore’, Quartz. Kucera, J. (2013) ‘The U.S. in post-­2014 Central Asia: New Silk Road or geopolitics’, Eurasianet, 20 December. Lane, D. (2016) ‘Going forward: The Eurasian Economic Union, The European Union and the Others’, LSE IDEAS – Dahrendorf Forum Special Report. Lanjian, C. and Wei, Z. (2015) ‘China OBOR in perspective of high-­speed railway (HSR) – Research on OBOR economic expansion strategy of China’, Advances in Economics and Business, 3(8): 303–321. Lim, T., Hui Tseng, K. and Lim, W.X. (2016) China’s One Belt One Road Initiative, London, Imperial College Press. Mackinder, H. (1904) ‘The geographical pivot of history’, The Geographical Journal, 23(4): 421–437. Marty, O. (2015) ‘Le plan Juncker, vecteur d’une ambition européenne renouvelée?’. Fondation Robert Schuman, Question d’Europe, Policy Paper 347. Matikeeva, S. (2005) ‘Mackinder’s legacy: Was it a prophecy?’, Central Asia and The Caucasus, 34(4): 17–35. Minghao, Z. (2015) ‘China’s New Silk Road Initiative’, Paper prepared for the Istituto Affari Internazionali, October: 1–12. Özyanık, S. (2015) ‘TRACECA: Restoration of Silk Road’, Journal of Caspian Affairs, 1(2): 1–12. Patnaik, A. (2016) Central Asia: Geopolitics, Security and Stability, New York: Routledge. Rahi, A. (2016) ‘China’s New Silk Road won’t have an Afghan lane’, Forbes, 21 January. Ramachandran, S. (2015) ‘China–Pakistan Economic Corridor: Road to riches?’, China Brief, 15(5).  Rolland, N. (2015) ‘China’s New Silk Road’, The National Bureau of Asian Research, Commentary, 12 February: 1–4. Rumer, E., Sokolsky, R. and Stronski, P. (2016) ‘U.S. policy toward central Asia 3.0. Carnegie Endowment for International Peace’, 25 January. Sárvári, B. and Szeidovitz, A. (2016) ‘The political economics of the New Silk Road’, Baltic Journal of European Studies, 6(1): 3–27.

50   Paulo Duarte Stegen, K. and Kusznir, J. (2015) ‘Outcomes and strategies in the New Great Game: China and the Caspian states emerge as winners’, Journal of Eurasian Studies, 6(2): 91–106. Strzelecki, J. (2016) ‘The Eurasian Economic Union: A time of crisis’, OSW Commentary, Centre for Eastern Studies, 195: 1–8. Svarin, D. (2016) ‘The construction of “geopolitical spaces” in Russian foreign policy discourse before and after the Ukraine crisis’, Journal of Eurasian Studies, 7: 129–140. Tarr, D. (2016) ‘The Eurasian Economic Union among Russia, Belarus, Kazakhstan, Armenia and the Kyrgyz Republic: Can it succeed where its predecessor failed?’, Eastern European Economics, 54(1): 1–22. US Department of State (2011) ‘Remarks on India and the United States: A vision for the 21st Century’, Speech by Hillary Rodham Clinton, Anna Centenary Library, Chennai, 20 July: 1–7. US Department of State (2016) ‘U.S. support for the New Silk Road’. Online available at: www.state.gov/p/sca/ci/af/newsilkroad/ (accessed 23 April 2017). Wang, Y. (2015) ‘One Belt One Road: Opportunities for Europe-­China cooperation’, Europe’s World, 13 May. Wang, Z. (2014) ‘The Chinese Dream in an international context’, Journal of Chinese Political Science 19(1): 1–13. Xiaohong, G. (2016) ‘Pakistan Ambassador: Belt and Road Initiative win–win for all’, China.org.cn, 10 March. Xu, Q. and Chung, W. (2016) China’s Energy Policy from National and International Perspectives: The Energy Revolution and One Belt One Road, Hong Kong: City University of Hong Kong Press. Yang, M. (2016) ‘Understanding the One Belt One Road Initiative: China’s Perspective’. In Sharma, B.K. and Das Kundu, N. (eds) China’s One Belt One Road: Initiative, Challenges and Prospects, Delhi: Vij Books India Pvt.

4 Sustainability implications of the New Silk Road Environmental and social planning Daniele Brombal

Introduction In early 2016, Mr Shaidurov, head of the Russian district of Kabansk, addressed a formal letter to Chen Jining, the Chinese Minister of environmental protection. In his missive the Russian official asked for the decision to build a series of hydropower plants upstream the Selenge river − a tributary to Baykal lake − in  Mongolian territory to be reconsidered (RwB 2016a). The reason why Mr Shaidurov appealed to Mr Chen was that the project was to be funded through a loan of the Export-­Import Bank of China and related works had been entrusted to Gezhouba Int. Co., a Chinese state-­owned enterprise. By the time the Russian official sent his letter, project preparation had been already going on for a few years. Preliminary works had started in 2015, when China and Mongolia committed to strengthen their cooperation under the Belt and Road Initiative (BRI). Mr Shaidurov took issue with the environmental and social planning carried out for the purpose of the hydropower plants. He claimed that proponents had violated international world heritage conventions − Baykal is on the UNESCO world heritage list − by not conducting appropriate impact assessments, overlooking negative effects on the natural and social environment. On this basis, Mr Shaidurov requested a careful evaluation of the project’s impacts and the public disclosure of its findings, in order to lay the basis for a fair debate on the sustainability of hydropower plants in the basin. Moreover, he called for a substantial engagement of UNESCO and International Union for the Conservation of Nature (IUCN) in the relevant decision-­making process. For the time being, Mr Shaidurov’s efforts have yielded their intended result: preparation works for the construction of the Egiin Gol hydropower plant − the first one to be built − has been since suspended and the entire hydropower programme on the Selenge is now subject to closer scrutiny by competent authorities (RwB 2016b, 2016c). Apart from local implications, this story from the remote region of Buryatia has a general significance. From a sustainability perspective, it shows the intrinsically contentious nature of large infrastructural projects. In fact, such projects usually respond to a logic valuing economic development more than the conservation of nature and of social and cultural capital. On a political level, it epitomises the common practice of overlooking public participation in early stages of

52   Daniele Brombal decision making, triggering negative reactions among concerned communities, the civil society and local authorities. In terms of regulatory and administrative structures, the Selenge’s story is representative of the fragmented nature of planning processes. A fragmentation that is particularly pronounced when impacts cross administrative and political boundaries. The implementation of the BRI is bound to face challenges related to all these issues. Its aim of enhancing connectivity across Eurasia and bringing about economic development will be served by investments in transportation, logistics, and energy, potentially detrimental to the environment and (Liu 2016; Ma 2014). BRI routes cross environmentally and socially vulnerable regions. Moreover, the initiative will be implemented in countries where the exercise of civil and environmental rights is curtailed. Activists have also warned against the poor environmental records of Chinese organisations involved in the initiative and the possibility that China may use BRI to delocalise polluting industries (Simonov 2016a, 2016b). Finally, the transnational nature of the initiative adds to its complexity. The capacity of BRI to cope with these challenges will depend upon the commitment of concerned organisations towards projects tuned with nature, responsive to social needs and respectful of local cultures.1 Organisations funding the initiative may play a key role in this respect, due to their financial leverage and their potential to foster institutional development in recipient countries.

Aims and structure The aim of this work is to appraise the progress made and challenges ahead in establishing environmental and social planning structures for a sustainable BRI. To do so, the chapter analyses the case of the Asian Infrastructure Investment Bank (AIIB). AIIB is a multilateral development bank (MDB) launched by China in 2015. As of September 2017, it comprised of 57 member countries and had a registered capital of 75 billion euro (AIIB online a, b). China is by far the bank’s main shareholder, detaining one-­third of the subscriptions and voting rights (AIIB online b). The bank’s pivotal role in funding and promoting the BRI was made clear by Xi Jinping during a Chinese Communist Party (CPC) Central Committee meeting in November 2014, 13 months before its formal inception (People’s Daily 2014). A large part of bank’s capital has hence been earmarked for projects under the BRI (Soong 2016). As for May 2017, the bank’s portfolio contained 23 projects, mostly in the sectors of energy (11 projects) and transportation (7 projects) (AIIB online c, d). The salience of AIIB’s case lies in that the bank will be among the main funding sources for the BRI and − more relevant to the scope of this chapter − that it has equipped itself with a framework of environmental and social safeguards which may constitute the reference standard for other organisations funding the initiative (Kim 2016). AIIB’s case can be therefore taken as representative as the state of the art of environmental and social safeguards applicable to BRI projects, and indicative of challenges lying ahead. Moreover, AIIB’s case is suited for wider comparisons with the  experience matured by other MDBs in setting environmental and social

The New Silk Road and sustainability   53 safeguards. This chapter is subdivided in four sections. The first provides the reader with a background on different forms of environmental and social planning for infrastructural projects. The second section focuses on the AIIB’s ‘Environmental and Social Framework’ (ESF ). The ESF is analysed in terms of its scope, decision-­making structures and integration with existing national standards in countries targeted by AIIB. The third section discusses findings of the case study against the wider background of challenges of sustainability planning, and the role MDBs may play in this respect. Finally, the concluding section summarises the main findings of the chapter.

Environmental and social planning: key concepts and the role of MDBs Environmental and social planning aims at assessing, mitigating and managing negative impacts of projects, plans or policies on the environment and society. The first forms of institutionalised environmental planning dates back to the late 1960s, when Environmental Impact Assessment (EIA) was introduced in the United States to inform decision making relevant to infrastructural and industry projects (Brombal et al. 2017). The introduction of EIA in the USA took place against the background of growing concern over harms caused by industrial activities. The publication of Rachel Carson’s seminal work Silent Spring in 1962 (Carson 1962), which documented the detrimental effects of pesticides, played an important role in creating awareness in this respect, both among the public and policy makers. During the 1970s and 1980s, EIA systems were introduced in all industrialised countries (OECC 2000). In Europe, community-­level legislation was enacted in 1985 to harmonise national regulations (Brombal et al. 2017; Moorman and Ge 2007). Over the years, environmental planning has been reshaped by the change in values, norms and rules orienting development. The conceptualisation of sustainable development by the UN (UN 1987), the logic of integrated planning put forward during the Rio 1992 UN conference (UN 1992), and the growing awareness about sustainability among the public, policy makers, and researchers all played an important role in this process. The development of earlier forms of environmental planning has followed two main directions: (a) the extension of their scope, to integrate also social aspects; and (b) the strengthening of their capacity to inform decision making, fostering the pursuit of long-­term goals of sustainability (OECC 2000). The integration of the social dimension into assessment has been pursued by either including relevant metrics into existing EIA processes, or establishing ad-­hoc social impact assessments. An important field of development in this respect has been the institutionalisation of public participation. Although public consultations have been carried out within EIA systems since their first inception, over time the importance attributed to participation of affected individuals, communities and organisations in decision making has increased, and relevant procedures developed. Despite efforts made, the issue still remain a source of debate, since participation is often used instrumentally, even in countries with well-­established environmental and

54   Daniele Brombal social planning systems (Glucker et al. 2013; Nadeem and Fischer 2011). With reference to the second aspect mentioned above (i.e. strengthening the capacity of environmental and social planning to influence decisions), the most important development has been the introduction of procedures operating upstream the decisional process. Strategic Environmental Assessment (SEA) is a typical example of this approach (Srinivas 2015). Whereas EIA operates at project level, SEA is used at policy, planning, or programme level, and integrates all dimensions of sustainability by making use of multidisciplinary approaches. Since it occurs at earlier stages of the decisional process, SEA’s potential in fostering comprehensive development is grater than EIA’s. Institutional transfer from countries of old industrialisation has greatly influenced the adoption of environmental and social planning in less-­developed countries. International development cooperation has played a key role in this respect. Projects funded by MDBs such as the World Bank (WB) and the Asian Development Bank (ADB) have been a key locus for policy dialogue, organisational reform and legal development. This occurred both as a byproduct of the prerequisites for loan disbursement, whereby project proponents had to comply with EIA and/or SEA standards set by donors, and as consequence of capacity-­building programmes, aimed at strengthening relevant planning institutions in recipient countries (Estevens et al. 2016; Kennedy 1999; Wang 2016). The adoption of public participation in China’s EIA is a typical example of this process. The concept was first introduced in China in 1991 through a training programme of the ADB. The lesson drawn by the programme was used by the State Council in drafting the ‘Decision on Several Issues of Environmental Protection’ (1996), calling for the adoption of public consultation in environmental matters. Eventually, in 2002, binding requirements for public consultation were provided for in the ‘Environmental Impact Assessment Law’ (Brombal et al. 2017). The Chinese case is not an isolated one: virtually every country targeted by development banks’ interventions has been engaged in similar processes, either establishing or strengthening environmental and social planning. As we will discuss in the following paragraphs, AIIB appears to be bound for the same direction.

AIIB’s environmental and social safeguards Rationale and scope As already stated in the second paragraph, in 2016 the AIIB enacted its ESF. The document puts forward the environmental and social requirements applicable to projects funded by the bank in recipient countries. Clients − a broad category encompassing both project proponents and any organisation involved in a projects’ execution − are required to comply with ESF provisions for the purpose of projects’ approval and loan disbursement. The ESF responds to a two-­fold rationale. First, it is instrumental to ensuring the smooth implementation of projects, by mitigating negative environmental and social impacts, and avoiding conflicts that may arise as a consequence of such impacts. This instrumental

The New Silk Road and sustainability   55 approach is inspired to the need of protecting the bank and its shareholders from investment and reputational risks (AIIB 2016: 2). On a substantial2 level, the framework relates to the establishment of decision-­making processes promoting the attainment of sustainable development objectives. The framework endorses the concept of integrated planning: it is therefore aimed at supporting decisions based on criteria of comprehensive sustainability (AIIB 2016: 2, 3, 7, 13). The ESF ’s scope is consistent with this logic. The bank’s clients are required to produce an assessment and a management plan of impacts on the environmental, sociocultural and socioeconomic dimensions. Specific criteria to be considered with reference to the environment include impacts on air and water environmental quality, environmental health, quality and quantity of land and water resources, ecosystems and habitats integrity, ecological functions and biodiversity. Social criteria include impacts on communities’ socioeconomic development, social vulnerability, gender issues, access to resources and traditional livelihoods, cultural resources and institutions, workers’ safety and health (AIIB 2016: 5, 27–28, 30–35). Particular importance is attached to the issue of relocation, often causing conflicts between communities and project proponents. The framework mandates clients to assess projects’ effects in terms of relocation and to take measures to avoid or mitigate relevant impacts to the maximum possible extent. The same logic is applied to impacts that project may cause on the access by local communities to sources of income and natural resources (AIIB 2016: 38–41). In this regard, the ESF requires clients to improve or restore the livelihoods of those who may be displaced by projects, also by means of vocational training activities (AIIB 2016: 38, 40). The framework contains as well ad-­hoc requirements relevant to indigenous groups, possessing specific ‘customary cultural, economic, social or political institutions’ (AIIB 2016: 42). Requirements focus on the preservation of cultural features characterising traditional societies (AIIB 2016: 42–43). Spatially, the assessment of impacts and relevant mitigation plans required by the ESF apply to both areas directly affected by a project, including its ancillary aspects, and any other area which may witness ‘unplanned developments induced by the project’ (AIIB 2016: 9, 27, 53). Role of environmental and social safeguards in the decision-­making process The ESF is an essential part of procedures regulating AIIB’s decision-­making process, relevant to projects’ review and approval, and loans disbursement. Projects submitted for funding are screened by the bank based on information provided by clients. Screening aims at categorising projects depending on their expected environmental and social impacts (AIIB 2016: 9–10). The following phases of the decision-­making process depend on the outcome of this screening (see Figure 4.1). Three categories of projects (A, B, C) are foreseen in the ESF. Projects falling under category ‘A’ are those having ‘significant adverse […] impacts that are irreversible, cumulative, diverse or unprecedented’ and that ‘may affect an area larger than the sites or facilities subject to physical works’

56   Daniele Brombal (AIIB 2016: 9). Projects with a ‘limited number of potentially adverse […] impacts […] [that are] not unprecedented; few if any of them are irreversible or cumulative; […] [and] are limited to the project area’ fall under category ‘B’. Finally, projects with minimal or no expected impact on the environment and society are categorised as ‘C’ projects. Projects that may imply severe negative impacts (‘A’ category) have to undergo a full Environmental and Social Impact Assessment (ESIA), complemented by an Environmental and Social Management Plan (ESMP) or an Environmental and Social Management Planning Framework (ESMPF )3 (AIIB 2016: 10). The ESF requires that for these projects the ESIA include also the ‘zero option’, i.e. a scenario under which the project is not implemented (AIIB 2016: 10). In the case of projects falling under category ‘B’, impact assessment and mitigation procedures are defined by means of further consultation between the clients and the AIIB (AIIB 2016: 10). The scope of the environmental and social planning may therefore vary from project to project. In fact, the bank ‘may determine that an environmental and social assessment or another similar instrument is appropriate’ (AIIB 2016: 10). As for projects in category ‘C’, the bank and clients can proceed directly to negotiation and contracting, with no need for any specific, binding measure for impact assessment or mitigation (AIIB 2016: 10). Consistently with the relevance attributed to issues affecting local communities, clients proposing projects that may cause involuntary resettlement or impacts on indigenous peoples are required to submit relevant assessment and management plans (AIIB 2016: 14–15). Public participation is an integral part of both impact assessment and the definition of mitigation measures and management plans (AIIB 2016: 21). It is the clients’ responsibility to ensure that affected individuals and communities receive adequate information of impacts and project alternatives. In the case of projects having social and cultural impacts on indigenous peoples, the consultation should be particularly extensive and provide ‘evidence of broad community support [to projects]’ (AIIB 2016: 22). The ESIA (or any complementary documentation for projects under category B), the ESMP and public consultation records have to be submitted by the client to the bank for review (AIIB 2016: 11). The review focuses on the degree to which potential impacts are reflected in submitted documents and the appropriateness and feasibility of measures for the avoidance and mitigation of impacts. Moreover, the bank assesses the appropriateness of public consultations carried out by the client (AIIB 2016: 11, 21–22). The clients’ commitment towards the enhancement of relevant technical and institutional capacities may be subject to review as well (AIIB 2016: 11). If the outcome of the review is positive, the two parties can proceed to negotiation and contracting. Otherwise, the inclusion of supplementary information, a further impact assessment or additional consultations can be required by the bank. This may also result in the preparation of a revised ESIA (AIIB 2016: 12). After contract signature, the client is required to provide periodical reports to the bank, relevant to the management of environmental and social impacts (AIIB 2016: 22). Failure by the clients to comply with environmental and social management plans defined in the ESMP (or ESMPF ) may results in the bank’s request for

Project identification

Project submission

Project screening and categorisation

A High impact

IP Indigenous peoples

B Medium low impact

R Resettlement

Environmental and Social Assessment (ESIA)

IP Indigenous peoples R Resettlement

C No impact

Ad-hoc assessment of social and environmental impacts and risks, and management plan

Environmental and Social Management Plan (ESMP)

Involuntary resettlement plan (RP) Indigenous peoples plan (IPMP)

Review of ESIA, ESMP (or relevant materials provided for projects of cat. B), IRP, IPP

Noncompliant

Additional information

Compliant

Negotiation and contracting Modifications required by client

Project implementation and reporting

Monitoring

Noncompliant

Compliant

Project conclusion

Figure 4.1  AIIB projects review and approval process. Source: Brombal 2018, based on AIIB 2016: 9–23.

Grievance mechanisms and redress

58   Daniele Brombal corrective measures. The bank may also resort to legal avenues, as established in the contract (AIIB 2016: 22, 24). Besides the bank’s monitoring process, the client is also required to establish grievance mechanisms, aimed at resolving conflicts that may arise during project implementation (AIIB 2016: 23).

Integration with country systems One important aspect of the AIIB’s review process is the possibility of employing environmental and social planning systems utilised in recipient countries. In fact, the Bank ‘may selectively provide the client the option of using all or part of such systems’, provided that they are consistent with the scope of the ESF (AIIB 2016: 4). If national standards are more stringent than the ESF, they should be applied to projects’ environmental and social assessment (AIIB 2016: 9). The complementarity of the ESF with other instruments of environmental and social planning applies also to other international organisations, whose procedures may be applied in case of co-­funded projects (AIIB 2016: 9). This may occur rather frequently, since a number of projects already included in AIIB’s pipeline are co-­financed by MDBs such as the WB, ADB and the European Bank for Reconstruction and Development (EBRD) (AIIB online c, d). The possibility to integrate the ESF with locally available standards is closely related to the commitment made by the bank towards the strengthening of country systems (AIIB 2016: 4,11). As we have already seen in the second paragraph, this commitment is consistent with the international practice in development cooperation, whereas MDBs have often supported the establishment or amelioration of environmental and social planning institutions in recipient countries. Clearly, the adoption of country systems and the support to their strengthening will depend on the context in which projects will be carried out, and in particular on the presence of EIA frameworks. In both the greater Asia-­Pacific region and in Central Asia, EIA systems were first introduced in the 1980s. The first countries requiring that projects affecting the environment undergo an EIA were Pakistan (1983), India (1986) and Indonesia (1986) (MER n.d.; Nadeem and Fischer 2011). During the 1990s and 2000s, EIA was adopted throughout the region (ELaw n.d.; Li 2008; MER n.d.; Dorjsuren 2010; Karimi 2015; WB 2002). The great majority of EIA systems in the region share three key features: (a) EIA is the major instrument employed to appraise negative impacts that private and public projects may have on the environment; (b) project implementation is subject to consent by a competent authority, in charge for verifying that impacts have been adequately foreseen and measures for their mitigation or avoidance taken; (c) public consultation processes are carried out during the EIA, and their results incorporated in decision making (ELaw n.d.; Li 2008; MER n.d.; Dorjsuren 2010; Karimi 2015; WB 2002). This last aspect applies also to countries under authoritarian or semi-­authoritarian rule, a common occurrence in the area targeted by AIIB’s projects. A typical example is Vietnam, where in recent years rather stringent requirements have been made for public participation during EIA procedures (Li 2008). Compared with EIA implementation, the adoption of

The New Silk Road and sustainability   59 social impact assessment procedures is more heterogeneous across the region. While in some countries it is conducted as an integral part of EIA, in others ad-­hoc procedures to assess social impacts have been established, particularly with reference to specific sectors, as in the case of India (ELaw n.d.; Li 2008; Shaikh 2014). Social Impact Assessment (SIA) procedures have been experimented in a number of countries as part of development assistance projects, while standards set by multilateral banks have been utilised to establish or improve local SIA practices (see e.g. the case of Bangladesh, in Momtaz 2003, and the one of Pakistan, in FATA 2012 (see also Zaman n.d.). In recent years, a SIA has been conducted for the China–Pakistan Economic Corridor, funded under the BRI Initiative (Zhang and Shi 2016). The heterogeneity of SIA processes is evident if their scope is taken into consideration. In general, a wide agreement is emerging over the importance of this tool to appraise socioeconomic impacts of involuntary resettlement and loss of livelihoods. However, its adoption remains fragmented with reference to individual and communitarian empowerment, and personal rights (IAIA 2015; Li 2008; Momtaz 2003). Also in the case of SEA, which as introduced above operates at a level of policies, plans and programmes, the adoption in the region is rather uneven and largely connected to the projects carried out by multilateral donors (WB 2009). This said, meaningful progress has been made in this regard in various countries: China, Vietnam and Indonesia have all established SEA systems that can be considered fairly developed. Wide experimentation has been conducted in Malaysia, Thailand, Philippines, Laos and Cambodia. Finally, strategic assessments are being conducted on a trial basis in Central Asian countries, supported by international organisations (OECD 2011; WB 2009). Finally, with regard to the assessment and management of transboundary impacts, the situation in the region is characterised by the lack of commonly agreed upon standards and regulations. Within the geographical area targeted by AIIB’s interventions, only Kazakhstan, Kirghizistan, Azerbaijan and Armenia have ratified the UNECE Espoo convention on transboundary environmental impacts (UNECE n.d.). In short, the context in which the AIIB is operating is characterised by: (a) widespread adoption of EIA, with limited heterogeneity in its rationale and scope; (b) increasingly large adoption of procedures for the assessment of social impacts, albeit characterised by a heteregenous scope; (c) presence of frameworks for the strategic assessment of plans, programme and policies; and (d) very weak presence of frameworks for assessing and managing transboundary impacts. The heterogeneity in practices for the assessment of social impacts, and the weak adoption of common rules for the assessment and management of transboundary impacts are going to constitute a major challenge in the implementation of AIIB’s projects throughout the region.

Discussion Two key aspects emerge from the analysis of AIIB’s environmental and social  safeguards. First, the ESF is consistent with international practices of

60   Daniele Brombal environmental and social planning, with particular reference to those applied by MDBs in recipient countries. The bank has endorsed the principle of integrated territorial planning, by integrating in its decision-­making process the appraisal of impacts on different dimensions of sustainability and over an area extending beyond the zone(s) used for project implementation. Safeguards for vulnerable groups − resettled individuals and communities, indigenous peoples − are in line as well with broader developments observed in the field. The ESF therefore confirms the growth in recent years of the awareness among policy makers, practitioners and the general public regarding the need to meet broad sustainability goals in the development of infrastructural projects. Second, the bank’s environmental and social planning will be highly influenced by the widespread presence in recipient countries of regulations concerning the assessment, mitigation and management of environmental and − albeit to a lesser extent − social impacts. The faculty of employing country systems to appraise impacts reflects the present state of advancement of the related planning institutions in the region targeted by the AIIB. Moreover, it represents the endorsement by the AIIB of the principle of ownership, another conceptual and operative cornerstone of current practices in international development assistance. This principle assumes the existence of a positive nexus between ownership, the capacity of self-­ improvement of recipient countries’ institutions, and sustainable development (Estevens et al. 2016). In consideration of the above, when it comes to environmental and social impacts, the focus of many observers over the presumed role of China in orienting outcomes of AIIB projects might be misleading. The discussion over the adequateness of planning instruments and the sustainability challenges lying ahead should be rather (re)framed within the debate on the MDBs’ role in fostering sustainable development and on their relations with institutions of recipient countries. In fact, AIIB’s operations are going to be characterised by the same contentious nature surrounding many large infrastructural projects funded by MDBs such as the WB or the ADB. While these projects are commonly seen as possessing a positive potential in bringing about benefits for the economy, they are inherently problematic when their environmental and social impacts are taken into account. As a matter of fact, historically, MDBs have supported projects characterised by a pro-­development bias, frequently resulting in severe damage to nature, society and culture (Rich 1985; on the potential of MDBs to promote development, see also Perry 2009). Given the similarity of the AIIB’s projects portfolio and review process to those characterising other major MDBs, it is likely that the newly established bank will face these contradictions too. Against this background, several of the critiques moved to organisations such as the WB and ADB are relevant also for AIIB. These critiques focus on the uncertainty in the attribution of responsibilities and on the vagueness of environmental and social safeguards. Uncertainty in competencies is to some extent a byproduct of the increasingly large degree of responsibility attributed to clients to ensure that projects meet sustainability criteria. According to critiques, this may lead to laxer requirements for projects’ approvals. A public debate emerged recently during the revision of WB’s ESF. According to the

The New Silk Road and sustainability   61 international non-­governmental organisation (NGO) Oxfam, the bank replaced ‘its own mandatory safeguards and accountability mechanisms with vaguely worded aspirational standards and an over-­reliance on borrowers’ national systems’ (Oxfam 2015). The same scepticism has been aired in the media with reference to AIIB (Qing 2015). Indeed, as we have seen above, this sort of uncertainty and vagueness can be found also in the bank’s ESF, with particular reference to projects falling under category ‘B’. From a procedural perspective, another critical issue − perhaps more important − is the one relevant to project screening, which leads to projects’ categorisation and therefore defines the subsequent steps of the decision-­making process. For the purpose of the screening, the provision of information is entirely in the hands of project proponents. It may therefore lead to overlooking environmental and social impacts. This is a common issue in development cooperation funded via loans, whereby the pipeline of projects is based on development priorities set by the recipient countries, consistently with available funding from donors. Since the ESF does not contain any clear provision over the bank’s involvement during the screening stage, this issue may arise also in AIIB’s activities.

Conclusion The capacity of the BRI to promote development in tune with the need of preserving nature, fostering social development and respecting local cultures will largely depend upon the criteria of environmental and social planning adopted by organisations supporting the initiative. The establishment of the AIIB’s ESF is clearly a sign that China and key stakeholders of the BRI Initiative intend to follow the international practices, by integrating procedures for the appraisal of environmental and social impacts into decision making. From this perspective, the AIIB’s ESF can constitute a first reassurance for those claiming that BRI might be simply a tool in the hands of the Chinese to replicate abroad the flaws of its development model, outsourcing environmental and social hazards to less-­developed countries (see e.g. Ma 2014; Simonov 2016a, 2016b). This said, the ESF itself shows some of the shortcomings present in comparable instruments employed by MDBs. Uncertainty in attributions, vagueness of assessment criteria, and the inception of environmental and social assessment only in a late stage of the projects’ review are all issues that deserve particular attention in this regard. This said, it should not be overlooked that not everything will be in the hands of the AIIB, or any or the other organisations supporting the BRI. In fact, these organisations are instruments to facilitate the replication of well-­established models of development. They are oriented first and foremost towards economic growth and the increase in material wellbeing. According to dominant discourses on development, this should be achieved through a more efficient extraction of value from nature, a selective increase in the mobility of goods and people, and the concentration of social capital in urban areas (on the topic, see Scoones 2016). Clearly this vision of development, which is widely endorsed by the international community, does not put the nature–society–culture nexus in the first place. Nor does the BRI.

62   Daniele Brombal

Glossary AIIB Asian Infrastructure Investment Bank  The AIIB is a multilateral development bank established in 2015 and heavily involved in the BRI. China is AIIB’s main shareholder. BRI ‘Belt and Road Initiative’  Formerly known as ‘One Belt One Road’ (OBOR). EIA Environmental Impact Assessment  IAs aim at appraising negative environmental impacts of projects. EIAs generally include measures for the avoidance and/or mitigation of said impacts. Environmental and social planning  Aims at assessing, mitigating and managing negative impacts of projects, plans or policies on the environment and society. EIAs and SEAs are among the most common procedures for environmental and social planning. SEA Strategic Environmental Assessment  SEAs aim at assessing and mitigating impacts of programmes, plans and policies on the environment and society.

Notes 1 On the importance of the role played by partner countries in shaping the BRI, see the insightful commentary by Professor Kerry Brown, published by China Daily in April, 2017 (see Brown 2017). 2 The distinction between instrumental and substantial rationale is based on scientific literature on environmental planning. See in particular Glucker et al. 2013. 3 An ESMPF is required when projects consist of a number/series of activities whose details are ‘not yet identified at the time the Project is approved by the Bank’ (AIIB 2016: 17).

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Part II

The economic dimension

5 The political economy of new multilateral initiatives in Pacific Asia Werner Pascha

There have been a significant number of multilateral initiatives recently to strengthen the institutional foundation of cooperation in the East Asian region and beyond. These include the Asian Infrastructure Investment Bank (AIIB), the New Development Bank of Brazil, Russia, India, China and South Africa (BRICS) and the BRICS Contingent Reserve Arrangement. A major player has been China, under the heading of the One Belt One Road (OBOR) framework, more recently rather called Belt and Road Initiative (BRI). The dynamism is not limited to Chinese activities, however. For instance, Japan’s Partnership for Quality Infrastructure of 2015 can be mentioned in this context. This chapter looks at the political economic rationale of such mechanisms and into its organisation principles, trying to derive expectations about its functionality. The perspective of this contribution can be summarised in four key phrases: First, one finds an interesting parallelism among cooperative initiatives in the Asia-­Pacific region. This parallelism can be explained by a lack of regional public good provision and by attempts to create leadership by closing such a gap. The necessary bridging between national self-­interest and contribution to the public good is achieved through innovative policy framing. The following chapter is organised accordingly.

The rise of parallel multilateral mechanisms in Pacific Asia In recent years, a significant number of parallel multilateral structures have originated from Pacific Asia and cover parts of the area, some reaching even beyond. They can be found in a variety of fields, including financial and monetary arrangements, trade and investment, but also security policy and technology. Many of them originate from China, and their creation has even been termed a ‘shadow foreign policy’ (Heilmann et al. 2014): •

For trade, China has been and still is a leading proponent of the Regional Comprehensive Economic Partnership (RCEP), which has become an even more important proposal after the withdrawal of Trump’s USA from the Trans-­Pacific Partnership (TPP);

70   Werner Pascha •

• • •

With respect to monetary cooperation, mention can be made of the Chiang Mai Initiative (Multilateralisation – CMI or CMIM) and, more recently, of the Contingency Reserve Arrangements (CRA) among the BRICS group of countries; In terms of global development finance, the New Development Bank (NDB) of the BRICS group to some extent tries to mirror the World Bank, with China a leading force among BRICS because of its financial prowess; The AIIB can be understood as an alternative or at least a supplement to the Asian Development Bank (ADB), with a somewhat different range of priorities and country focus, as will be further discussed below; The Shanghai Cooperation Organization tries to involve itself in security matters, following precedents of regional security arrangements in other world regions.

To understand these developments, it would be too easy to interpret them simply from a China-­focused perspective, namely to view them as attempts to raise the international standing of China, without openly charging against established institutional mechanisms arranged by the West in the post-­World War II era. Such a limited perspective could not explain why, for instance, Japan has also followed such a strategy in the very same region, although with less force than the current Chinese move. For instance, the CMI is an outflow of an earlier Japanese, albeit unsuccessful, attempt to create an Asian Monetary Fund during the Asian financial crisis of 1997/1998. Moreover, simply to focus on the geostrategic interest of a national player does not allow an evaluation of why the policy instrument of creating supplementary institutional mechanisms is being pursued and how successful it can eventually be. To better understand the background of parallel multilateral arrangements, it is important to understand their logic and specific rationale. In this chapter we focus the analysis on regional infrastructure support in the Asian region. While the Chinese OBOR aka BRI Initiative and the AIIB come immediately to mind, they are by no means the only initiatives that attempt to accompany the regional activities of the World Bank and the principal multilateral development bank for the region, the ADB. Other initiatives include the Asian Land Transport Infrastructure Development (ALTID) and the United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP), which started to operate already in 1959 and was revised in 1992. For Central Asia specifically, the ADB supported the Central Asia Regional Economic Cooperation (CAREC) from 1997, which includes, among others, the Xinjiang Uygur Autonomous Region and the province of Inner Mongolia of the People’s Republic of China (PRC). As for other proposals, the ADB suggested in 2010 a Pan-­Asian Infrastructure Forum (PAIF ) and an Asian Infrastructure Fund (AIF ) (for more detail see Bhattacharyay 2010). From 2011, the US sponsored an initiative actually called the ‘New Silk Road Initiative’, with its major goal being to integrate Afghanistan into the multilateral community. Other sub-­regional initiatives in Asia include, as already

New multilateral initiatives   71 mentioned, Japan’s ‘Partnership for Quality Infrastructure’ of 2015, reformulated in 2016 to cover a wider range of measures encompassing the whole world, but also earlier Japanese efforts like the ‘Eurasian diplomacy’ of 1997 and the South Korean Eurasia Initiative of 2013, a pet project of the impeached former president Park Geun-­hye.

Why new multilateral mechanisms? While extending national prestige and influence might be a ‘push factor’ motivating national governments to promote and establish new multilateral mechanisms, as will be explored later, this argument is hardly sufficient to explain the multitude of initiatives in recent years as outlined above. Indeed, an underlying ‘pull factor’ is the lengthening list of multilateral challenges, including issues of climate change, common security challenges like terrorism, investment needs beyond the scale of national boundaries and financing ability, the interrelatedness of financial markets with their inclination to create bubbles, runs and crises, etc. They are related to the internationalisation and transnationalisation of economic, technological, social and political phenomena as well as to the confusing complexity this creates. Many challenges of this kind have the character of global public goods or regional public goods (Kaul 2013; Sandler 2013). They have universal reach, like climate change, have wide-­ ranging externalities, or involve meritoric qualities, i.e. properties that are considered valuable by the world community, although they are under-­demanded by individual actors; such latter issues may encompass the protection of rare animals, for instance. Public goods in economics are traditionally defined as holding the properties of non-­excludability and non-­rivalry. External security is a case in point: nobody within a certain area, like the defence of national borders, can be excluded from profiting from the services of the armed forces, and this ‘consumption’ also does not rival the consumption of other citizens – it does not make a difference to the quality of the defence service, whether 15 million people live securely within the national borders or 16 million. Because of these properties, public goods cannot adequately be created through markets: an economically rational actor would not be willing to contribute to the scheme, as they could not be excluded anyway, and there is no marginal cost that an extra individual would cause and could be charged with. In a domestic context, the ensuing collective action problem is usually solved by the state and its ability to apply coercive power. For the general benefit, the state creates the public goods and finances them through resources taken from the population. Of course, it is an issue whether the state truly acts in the benefit of general welfare, or whether it follows a different agenda, for instance securing its rule. It should also be noted that pure public goods with full non-­excludability and non-­rivalry are rare. Usually, some exclusion is indeed possible, at least with high cost, and there may also be some rivalry of consumption, at least once a certain capacity-­related level of consumption is reached (for the basic economic

72   Werner Pascha arguments, e.g. Weimann 2009: Chapter 4). Nevertheless, the basic problem of how to reach decisions about provision remains. For many organisations, the duality of good provision has to be recognised. Once such an organisation exists, goods like a loan from a national development bank or from the International Monetary Fund (IMF ) are not public: the organisation can easily deny such a loan, i.e. exclude demand, and the provision encompasses rivalry, as the loan amounts are limited by the available capital. However, on the level of creating the organisation itself, i.e. producing its rules and capacities, the issue is one of creating a public good. In principle, this also holds for the global public goods as discussed, for instance, by Kaul (2013), even though they may not be pure public goods in the conventional economic terminology. In the international context, a coercive power in that sense does not exist. However, a hegemonic state may take over the function of providing global (or regional) public goods. Such an energetic actor could create reputation doing so, which that actor could utilise as capital in other arenas. Various strands of a hegemonic stability theory have been created to cover such phenomena (path-­breaking: Keohane 1984 et al.; Kindleberger 1973; limits: Snidal 1985). One important distinction is whether authors rather stress the coercive power of great nation states to set and enforce the rules of the global system to their liking, or whether they underline that following power interest can be quite compatible and actually reinforcing with providing rules and other goods on the multilateral level, from which all can profit. This contribution is based on the latter, neoliberal view, which takes an informed self-­interest as a point of departure. The current literature (Iida 2015) is rather interested in post-­hegemonic issues, following the decline of post-­World War II American hegemony. While authors like Ikenberry (2011) stress the legacy and stability of institutional regimes that were created during US hegemony, others, like Acharya, emphasise the growing role of regions (most recently: 2017). For him, multipolarity does not capture the current developments any more, as today’s ‘multiplex world’ does not only lack a global hegemon, but is characterised by proliferated major actors, including non-­state actors, well beyond the earlier idea of ‘poles’; the interdependence is thus complex, characterised by multilevel governance and different world views (‘multiple modernities’). It follows that the institutional structures are highly ‘fragmented’ (ibid.: 11), something that we have called ‘parallel’ above, with respect to the issues at hand. Acharya notes that the reasons behind this tendency are multi-­causal, with the key factors being ‘strategic, functional and normative’ (ibid.: 11). While this can hardly be denied, we argue that the issue at hand rather shows a very peculiar pattern within this broad range of multi-­causality, which might be helpful to explain other cases as well. Our point is that the decline of (American) hegemony has created an undersupply of global public goods, noticeable also on the regional level, that has created an opportunity for an emerging power like China to pursue its national interest, while at the same providing a useful service for the global (or regional) environment, thus guarding and supporting its self-­interested strategy through legitimatory capital.

New multilateral initiatives   73 It thus takes creative and effective strategy as well as strategy execution to realise these dual benefits in a multiplex world. The International Relations literature on leadership deals with such issues. Oran Young (1991) distinguishes three ingredients of successful leadership: • • •

Structural leadership through material resources; Entrepreneurial leadership based on political skills; Intellectual leadership based on ability to shape perceptions.

In the debate on the preconditions for such leadership, it was pointed out that both demand and supply conditions come together: According to Mattli (1999), both ‘strong market pressure for integration’ and ‘undisputed leadership’ must hold. In the latter context, leadership needs capability and legitimacy (Nabers 2008). From that point of view, one should add a fourth dimension to Young’s trio: legitimate leadership. The dual strategy hypothesised above relates exactly to this concern: a self-­ interested strategy of increasing power status in the world can backfire, as the pursuit of narrow national goals, as taken for granted by the old Realist school, would not lead very far in a complex multiplex world. At the same time, a leadership-­legitimacy gap has been noted for East Asia (Acharya 2014). It will thus be interesting to discuss whether the creation of parallel multilateral institutions is a reasonable approach under such circumstances. Below, we will take up the two perspectives in due course: the demand-­side, asking whether (regional) public goods are underprovided, and the supply-­side, looking into how regional players employ structural, entrepreneurial, intellectual and legitimate leadership qualities.

Underprovision of demand: the need for infrastructure and infrastructure finance in Asia For many years, there has been widespread agreement that there are major infrastructure needs in Asia that could yield significant benefits through supporting the strong growth of the region. There is also consensus on existing financing bottlenecks for such investment. An influential report of the ADB and ADB Institute, published in 2009, estimates the needs for the 2010 to 2020 period at almost US$8 trillion (in 2008 dollars). This encompasses roughly US$4 trillion for the energy sector, one for telecommunications, 2.5 for transport, and about 0.4 for water and sanitation (ADB 2009: 167). At the same time, the report notes the underfunding through existing internationally oriented public funding organisations. For instance, the ADB has only handed out US$91 billion between 1966 and 2007, the Japan Bank for International Cooperation (JBIC) 256 between 1995 and 2007, and the European Investment Bank 259 between 2003 and 2007 (ibid.: 181). The stated long-­term vision almost sounds like a blueprint for the statements announcing China’s OBOR initiative a few years later. According to the report,

74   Werner Pascha This study’s long-­term vision is the creation of a seamless Asia: an integrated region connected by world-­class environment-­friendly infrastructure networks that link national markets with distinct strengths, promote strong and sustainable growth, provide for people’s basic needs, and thus help reduce poverty.  (Ibid.: 26) Supplying infrastructure has direct positive effects on the private sector, so it may be asked at this stage whether there is a case for the public sector to get engaged, possibly in a multilateral format. Infrastructure does indeed possess considerable public good properties, while not being a pure public good. Up to the level of congestion, there is no rivalry of consumption, and for many infrastructure facilities, users can only be excluded at considerable cost. Moreover, there are considerable positive externalities in terms of raising the livelihood and personal freedom of movement for citizens. Such externalities are particularly noteworthy internationally, when the effect of cross-­border infrastructure is taken into consideration. If not for public and international cooperation, such infrastructure would be seriously underinvested in, particularly if the financing bottlenecks of poorer countries are taken into consideration. Does the public sector play its due role? According to widespread consensus in the years around 2010, this was not considered to be the case. Multilateral development banks, for example, make up only a small part of emerging world infrastructure development. According to estimates by Bhattacharya and Romani (2013), of an annual spending of US$0.8 to 0.9 trillion, US$150 to 250 billion are contributed by the private sector, while about 0.5 trillion are paid out of national government budgets. National development banks contribute a further US$70 to 100 billion, while multilateral development banks support with only US$40 to 60 billion. According to the authors’ estimates, writing in 2013, there is a gap in meeting infrastructure needs of emerging markets and developing countries of some US$1 trillion annually, which supports the case, in their view, of a new development bank. Looking at the changes over the last ten years, it is particularly striking that private infrastructure finance has declined after the global financial crisis, and multilateral development banks could not replace it. Combining the funding of the World Bank Group with that of the principal regional development banks, including ADB, infrastructure lending has declined from a level of some US$70 billion annually in 2009 and 2010 to some annual amount of 50 to 60 billion since, according to Bhattacharya and Romani (2013). It could be asked even more fundamentally whether the needs are ‘real’, in the sense of whether they would truly solve people’s needs, or in whose benefit it would actually be to create further financing, and whether national governments and their associates would not simply syphon off additional funds for their own benefit. This seems a legitimate question, given the problem widely discussed in the literature of how to solve the collection decision problems when supplying public goods (e.g. Weimann 2009: Chapter 5). Given the state

New multilateral initiatives   75 of political and business systems in many countries, including many emerging markets and developing countries in the Asian region, it cannot be ruled out that some multilateral funding would be misused, possibly even to the level of seriously impeding the positive effects of the ‘long-­term vision … of a seamless Asia’, in the words of the ADB. However, the point made here is a different one, namely that there is a widespread consensus among those working and engaged in the field of development finance that the gap of public and multilateral support for Asian infrastructure is serious, particularly given the great potential of the region. Any determined attempt to overcome such bottlenecks would thus automatically carry some legitimacy with it, based on the consensus view of the epistemic community of those involved in this arena. This is an important condition for realising leadership potential in a post-­hegemon framework, so we now turn to the supply-­side issues of leadership in the creation of multilateral mechanisms for development finance in the Asian region.

The Chinese OBOR initiative, a case of demonstrating leadership quality? In order to discuss, whether China can and does use the mechanisms of the OBOR Initiative as a means to develop and demonstrate leadership qualities, we will first summarise a few fundamentals of OBOR. The initiative was announced in October 2013 by Chinese President Xi Jinping, just when international calls for raising multilateral development finance for the Asian region had gained considerable momentum. The initiative derives its name from bold visions of creating a ‘belt’ across Eurasia with three routes and a maritime ‘road’ connecting East Asia and Europe via Southeast and South Asia, even passing Africa and Arabia with two routes; initially, 58 countries were identified as potential partners. The original idea was to base the international cooperation on bilateral Memorandums of Understanding with China. (Later, the initiative was multilateralised, however.) The lead thus clearly originated from China. Five links are stressed – policies, infrastructure, trade, finance, people – with initial emphasis on infrastructure, and certain roles are carved out for Chinese regions, particularly inland regions, which have so far not profited much from the spectacular growth of the coastal regions. The original ideas surrounding OBOR are quite vague, and many a potential partner hoped for more clarity of what OBOR meant quite concretely. Since 2016, the Chinese side usually speaks of the BRI in order to avoid confusion about the term ‘one’, as the initiative involves several land corridors and sea routes. The most important foundation document in an international context that is usually referred to by Chinese authorities is the ‘Vision and Actions on Jointly Building Silk Road Economic Belt and 21st Century Maritime Silk Road’ by the National Development and Reform Commission of March 2015, although there are other national agencies that compete for influence in defining the project.

76   Werner Pascha With respect to the role of financial cooperation, the document states: Financial integration is an important underpinning for implementing the Belt and Road Initiative. We should deepen financial cooperation, … . We should … open and develop the bond market in Asia, make joint efforts to establish the Asian Infrastructure Investment Bank and BRICS New Development Bank. (Ibid.) While mentioning the potential role of AIIB and NDB, no formalised or statutory connection to OBOR is established. The founding document is quite open in this context. AIIB was announced in 2013, like the OBOR initiative itself, by Xi Jinping, as a new multilateral development bank. It started work in December 2015 with 57 founding members, including Australia, South Korea, the UK and Germany. The US and Japan did not join at this stage, and they have not done so since, although Japan’s Prime Minister Abe has announced in spring 2017 that Japan would reconsider its stance. AIIB was to be founded with a capital stock of US$100 billion, of which US$20 billion to be paid-­in. Regional members were to have not less than 75 per cent of votes (China has 26 per cent). For major institutional decisions, a super majority of 75 per cent is needed. Already from this set up, China’s special role is visible: without its consent, no major diversion from its structural setting is possible. The bank is located in Beijing. Its operating language is English. Its first president is Chinese, as may be expected. He has a background as a former vice-­president of the ADB. Among the five AIIB vice-­presidents, there is a British and a German national. It is peculiar, but not unheard of, for multilateral development institutions, that the boards of governors and of directors are non-­ resident. How should one interpret this set up? Different observers have taken somewhat optimistic or pessimistic viewpoints. The predominance of Chinese capital contributions and share rights rather points towards potential governance issues, as there are little effective checks and balances against the use (and misuse) of the bank through the single dominant shareholder. Some Western observers are rumoured to have been somewhat consternated when they noticed during the first Annual Meeting in 2016 how the Chinese president of the AIIB behaved quite deferently towards leading representatives of the People’s Republic of China. AIIB President Jin Liqun is an expert on multilateral finance. At the same time, he has been involved in problematic projects in Central Asia, which potentially makes him dependent on the goodwill of his principals. Other characteristics of the bank are two-­faced as well. The non-­residence principle for directors and governors could weaken the role of voice when governing the organisation. At the same time, the principle is defended by its supporters on the ground that the bank can act more effectively and faster, as management is undisturbed by day-­to-day interventions. Depending on the

New multilateral initiatives   77 intentions of the principal actors such features can turn either way, supporting good governance or undermining it. It is interesting, however, that the founders have also introduced a number of self-­binding mechanisms: First, while it was feared in the beginning that a multilateral development bank dominated by China would disrespect environmental and social concerns that are often associated with typically Western sensitivities, the bank has introduced rather stringent stipulations on environmental and social standards. In its Environmental and Social Framework as of February 2016, the bank defines such standards and procedures on 54 pages. Second, the bank has introduced a strong role of co-­financing. The first two projects announced are co-­financed with ADB and with the European Bank for Reconstruction and Development (EBRD), for instance. This does not imply that the bank cannot deviate from such a path in the future, but it would face more headwind when trying to do so. Third, and as already mentioned, the bank has selected two of its vice-­presidents from Western countries, namely from the UK and Germany. While it goes without saying that de facto representatives of these countries are not ‘ethically superior’ compared to others, it is reasonable to assume that they will be under careful surveillance from environmentally and socially oriented actors. There is always the imminent threat of them stepping down in case of problematic AIIB policies, followed by public discussions that would be unpleasant for the bank. Negative reputation effects for China might even outbalance the expected advantages of running the bank in an environmentally or socially careless way. Summing up, willingly introducing self-­binding mechanisms that raise the opportunity cost of using the new multilateral development bank for problematic causes seem to lend support to a view that the new bank is not meant to undermine the existing development finance framework. Rather, it adds further capacity and thus strengthens the leverage of China as an international player, something that was so far not possible in existing multilateral mechanisms like the IMF, the World Bank or ADB, in which the incumbent players effectively limited the rise of China as an important actor. If China really wanted to engage in problematic endeavours outside of its borders, there are other means at its  disposal anyway, including finance through its sovereign wealth funds, i.e. by  means that are much less under public scrutiny than a multilateral development bank.

Applying the four dimensions of leadership qualities in a more narrow way It is helpful to apply the four categories of leadership qualities discussed above more carefully: structural leadership, entrepreneurial leadership, intellectual leadership and, in addition to Oran Young’s trias, legitimate leadership. China has a strong material background to back up its OBOR/BRI Initiative and ensuing projects (structural leadership). While the dollar reserves have somewhat weakened recently, they are still the world’s largest reserves. Indeed,

78   Werner Pascha one of the reasons for putting forward the OBOR/BRI concept is usually seen in creating a vent for utilising China’s accumulated reserves. In terms of entrepreneurial leadership, the Chinese authorities have skilfully put forward a policy agenda that serves three purposes at the same time: • • •

Economic interest: use idle production capacities for export and accumulated forex funds effectively; Diplomatic interest: gain in international standing by providing a public good that is underprovided, as has been discussed above in detail; Geostrategic interest: strengthening a sphere of influence and establishing China as a major multilateral actor, shaping regional and influencing global affairs decisively.

As the three contributions flow together, simplistic attributions do not fully capture the triple-­guided essence of the initiative. While some critics fear that BRI is only a cunning plan to develop hegemonic power, such views overlook the fact that BRI actually reacts to a widely felt deficiency in public good provision. If growing international status and solving real-­world issues go together, the basis for criticising the pursuit of geostrategic interests seems rather weak. At the same time and from the perspective of Chinese interests, BRI is not only about power relations in terms of geostrategic interests, but also about concrete economic benefits. This holds in macroeconomic terms – how to make use of the accumulated reserves that are related to the troublesome global imbalances – in industrial policy terms, namely to utilise surplus capacities, and in regional terms, namely extending the Chinese development to neglected inland and other areas. The third level of leadership is intellectual leadership. At first sight, it seems impressive that China has framed a strategy that is to serve its macroeconomic, industrial policy, regional policy and geostrategic objectives with a catchy phrase and concept like the ‘Silk Road’, giving it a contemporary twist through referring to the various (land-­based) belts and (naval) roads. It engages the imagination and carries positive images of seemingly peaceful historical encounters – although the actual trade volume may have been quite small, and although the ancient ‘Silk Road’ was not so much about ‘silk’ and not much of a ‘road’ either (Hansen 2012). What is striking, however, is that the idea of creating a ‘New Silk Road’ is actually not a Chinese invention, but that this imagery has been employed by other countries before, as briefly mentioned above, although with much less success. Intellectual leadership in this context is rather about making use of ideas effectively in terms of shaping perceived preferences, constraints and choice variables (Rodrik 2013). By opening various dialogue mechanisms, engaging with politicians and intellectuals, it was possible to open a new policy space, which allows for fruitful negotiations and mutual projects. What is so entrepreneurial about it may become more tangible when comparing it to similar initiatives that were and are not as successful. Below, we will

New multilateral initiatives   79 compare the Chinese initiative with Japanese endeavours and try to derive some (preliminary) conclusions. First, however, the fourth dimension of leadership should be mentioned, namely legitimate leadership qualities. Legitimacy of the OBOR/BRI Initiative rests on China’s promise to overcome the serious and well-­noted lack of (regional) public good provision that has not effectively been tackled by any of the incumbent leaders or the multilateral community. Issues of legitimacy are always very delicate, however. They depend on prevalent perceptions that may or not be well founded in reality – and they also depend on possibly rapidly changing perceptions, which may be well grounded in reality or not. In the case of China’s OBOR initiative, there seems to be two challenges to legitimacy in particular: first, the character of the initiative is still evolving. While several observers have compared it to the early postwar Marshall Fund-­support of the US for Western Europe, the Chinese leadership has argued that such a comparison would be ‘absurd’ (for instance, Xinhua Net 2015). If one sees the essence of the Marshall aid as having effectively supported the economic growth of (other) countries, by making one’s own resources available (and possibly also helping one’s own economy that way), then this is exactly what other countries seem to be hoping for from BRI. Denying this may raise doubts about the ‘true’ intentions of the initiative and breed frustration. However, the ‘absurdity’ remark was probably meant in a different way. According to Chinese perceptions, the Marshall Plan is seen as having ultimately been a military strategy to strengthen US allies vis-­à-vis the Soviet Bloc. From this perspective, its ultimate aim was to support the power base of the US against a competing group of countries. It was not, in this view, meant to provide mutual support, and this is what the Chinese leadership wants to distinguish itself from. Still, this episode shows how difficult it is to communicate successfully a format like BRI under the presence of differing perceptions and understandings. A second challenge to legitimacy stems from the fact that China does not only pursue the BRI strategy, but other, possibly conflicting strategies in economics and politics as well. For instance, it is difficult to reconcile the claims of BRI being about ‘peace, prosperity, opening up, innovation and connecting’ (Xinhua Net 2017) with activities like China’s move into the South China Sea or its investment activities in parts of Southeast Asia or Africa, which are often considered rather exploitative. Whether true or not, the multitude of Chinese activities on different levels of state and business involvement make it difficult to allow for a straightforwardly benign interpretation of BRI (or AIIB and related mechanisms), which after all are only some facets of China’s interaction with the world.

Chinese and Japanese approaches towards a ‘Silk Road’ initiative – a tentative comparison It is interesting to note that not only China has reached out across Eurasia – what  we would like to call a ‘Silk Road-­type strategy’, but other countries as

80   Werner Pascha well – although there may be considerable differences in details. This includes Japan, which is particularly interesting to compare with China, as it is its neighbour, to some extent directly competing with China for influence. Japan also has considerable financial resources, one can argue that it also aspires to be a regional leader (entrepreneurial dimension), and it has actually followed an outreach to Central Asia already in the 1980s, i.e. a Silk Road-­type strategy. One may note some intellectual leadership in comparison to China, which started much later with its move towards Eurasia. Still, arguably, it can be said that Japan was much less successful than China, at least in terms of raising regional and global interest, so it is indeed tempting to compare both. While we cannot do full justice to such a comparison here, at least we can sketch some important points that deserve further scrutiny. Two phases of Japanese activities can be distinguished. The first phase relates to the late 1990s under Prime Minister Ryutaro Hashimoto, followed by more activities during the next decade (Len et al. 2008; Öztürk 2006). A second initiative, which can also be considered a Silk Road-­type initiative, was announced by Prime Minister Shinzo Abe in 2015, extended in 2016. Based on earlier work in the Ministry of Foreign Affairs, in 1997 Hashimoto announced the plans of his government to focus more on the emerging Central Asian states, which had recently gained independence from the Soviet empire. The Japanese government called this perspective ‘Eurasian diplomacy’, while also mentioning the ‘Silk Road’ topos in this context. In an important policy speech, Hashimoto carefully grounded the new approach in his country’s enduring security relationship with the US, its policy towards Russia, mentioning the Northern Territories issue in this context, and the policy towards a China that was opening up (Hashimoto 1997). With respect to the ‘countries of the Silk road region’, he mentions three policy directions: First of all, there is political dialogue aiming to enhance trust and mutual understanding. Secondly, there is economic cooperation as well as cooperation for natural resource development aiming to foster prosperity. Thirdly, there is cooperation to build peace through nuclear non-­ proliferation, democratization and the fostering of stability. (Ibid.) It is interesting that, apart from economic cooperation, which is clearly the most interesting dimension for Japan’s prospective partners, the prime minister also mentions political dialogue with an interest in democratisation (and stability), clearly in line with Western concepts of supporting universal political ideas like democracy in the formerly socialist states. It took until 2004 before Japan announced a more concrete plan, called ‘Central Asia Plus Japan’. It involved policy dialogue, intra-­regional cooperation, business promotion, intellectual dialogue and cultural as well as people-­topeople exchange. It was never quite convincing, however, that Central Asia

New multilateral initiatives   81 really played an important role for Japan. For example, long-­reigning Prime Minister Junichiro Koizumi only visited the region shortly before he stepped down. Then Foreign Minister Taro Aso kept up some momentum through a strategy entitled ‘Arc of Freedom and Prosperity’. Policy had now taken a political turn as a ‘value-­oriented diplomacy’ (Yuasa 2008). However, all these initiatives quickly faded in the domestic political turmoil in Japan during 2007 and 2009, when several unstable governments followed each other. A second, quite distinct attempt was announced in 2015 under the term ‘Japan Partnership for Quality Infrastructure’ (PQI), which was aimed at Asia (MOFA 2015). Originally, it was to consist of four pillars: expansion and acceleration of development aid; collaboration with ADB as a multilateral partner; measures to increase funding for risky international projects; and promoting international standards that are relevant for quality infrastructure investment globally. Projects are to be based on each country’s development plan, differentiating it from OBOR (Szczudlik 2016) and making it attractive for countries like India (Bhagawati 2016) that find the powerful role of China problematic. A second point of interest is that PQI intends to collaborate with established institutions like Japan’s development aid agency, Japan International Cooperation Agency (JICA) and particularly with the multilateral ADB, in which Japan has a strong influence. Japan announced that it was to make US$100 billion available for these purposes by 2020. In 2016, during the time of the G7 Meeting in Japan, Abe announced that the financial commitment would be raised to US$200 billion (METI 2016). The revised plan envisions an extension also in other respects: the targeted area shifts from Asia to the whole world, explicitly mentioning Russia and Africa in this context; the new plan mentions a wide range of projects beyond infrastructure in a narrow sense, for instance energy; and it names other Japanese organisations involved in the effort beyond those, like JICA, already mentioned in 2015. Another more recent addition is the ‘Free and Open Indo-­ Pacific Strategy’ of August 2016, which is meant to strengthen the connectivity between Asia and Africa. It is difficult to avoid the impression that Japan’s PQI is to some extent meant as a reaction to China’s BRI, although it has achieved far less public interest than the latter, despite the announcement of a significant financial amount. A quick Google search for the number of links for ‘Partnership for Quality Infrastructure’ during the year before early August 2017 led to 12,400 hits, compared to 762,000 hits for ‘Belt and Road Initiative’. Less publicity does not necessarily mean less success (in whatever sense). While it is too early to evaluate both initiatives properly, some important differences between the parallel initiatives can be pointed out nevertheless: while the Chinese BRI seems to enjoy unwavering support from the top, Japanese initiatives have been much more dependent on shifting developments in domestic politics. This reflects to some extent the different goals that can be associated with development finance in the regional context: business-­oriented, macroeconomic, reputation-­oriented (public good provision), geostrategic or political (democracy- and stability-­oriented). China

82   Werner Pascha seems to have found a functional complementarity among them, as was discussed in the context of entrepreneurial leadership. For Japan, the priorities have not been so clear: from a geostrategic perspective, Japan’s involvement in Central Asia/Eurasia is not so central, and the value-­oriented positions taken earlier to some extent followed concerns as a partner of the West and of the US, not so much Japanese normative priorities. The current PQI involves strong ‘technical’ priorities, in terms of finding viable mechanisms to finance major infrastructure projects while reducing the associated risks, including moral hazard risks with respect to actors who are the beneficiaries of the support. While China stresses that BRI shall be benevolent for all partners involved, this somewhat downplays the very real risks involved and the concrete means by which moral hazard will have to be controlled at some stage, possibly including installing and invoking painful sanctioning mechanisms. China introduces new and untested mechanisms, of which we have discussed the AIIB in some detail, while Japan relies on established mechanisms that already have a track record of enforcing compliance. To some extent, this is also a reflection of the differing strategies discussed before. With the new AIIB and lofty talk about mutually beneficial cooperation, the image of a grand scheme that will contribute immensely to a new world order, with and thanks to an enhanced role of China, can be upheld for the time being. At some stage, however, tough choices will be unavoidable. For instance, with the US and, at least so far, Japan not contributing to AIIB, it is questionable to what extent AIIB can tap the major international financial markets for funding (Katz 2016). If the idea is to mainly rely on Chinese capital for the actual funding activities, the question is what strings will China will eventually be forced to attach in order to enforce compliance with the rules of using and repaying its funds. At that point, unless China is willing to accept huge losses in the name of international ‘friendship’, it may turn out that BRI may have to become much more conventional than currently envisioned. As discussed before, currently it is not obvious that mechanisms like AIIB will turn out as a dysfunctional mechanism, but the issue remains open. For Japan, the emphasis is on finding viable methods to finance major infrastructure projects in other countries. Available mechanisms like Public Private Partnerships (PPPs) have a mixed track record, and Japanese institutions like JBIC or the ADB Institute in Tokyo are currently searching for smarter mechanism designs to handle such issues (for instance, through ADBI’s Dean N. Yoshino, e.g. Yoshino and Abidhadjaev 2017). Apart from the economics involved, at some stage the political dimension of the distinctive Chinese and Japanese approaches will become more transparent. For China’s BRI, it will become clearer that, for instance, some countries will be involved more and others less, and that this is not unrelated to geostrategic conditions. This may lead to a noteworthy reappraisal of BRI in the public. For Japan, the PQI is much more narrowly focused on individual projects and how to execute them. In that sense it maintains a low profile, keeps expectations somewhat low, and thus reduces potential political fallout.

New multilateral initiatives   83

Conclusion In this chapter we have dealt with the political economy of the recent tendency towards parallel multilateral mechanisms in East Asia. We have focused on multilateral development finance, as in this field China’s OBOR aka BRI Initiative, including new mechanisms like AIIB, has gained a lot of prominence recently. The initiative mirrors the work being done by the World Bank group and regional institutions like ADB. Interestingly, there are not only Chinese, but also other endeavours like Japan’s recent PQI. Providing a new (or parallel) public good, a perspective chosen here, can be studied from two sides, from supply-­side and from demand-­side considerations. If both come together, we expect fresh developments. As for the supply-­side, a lack of appropriate mechanisms to finance the huge infrastructure needs of the Eurasian region, an area of strong growth potential, has been noted for many years. While we know from theory that taking the initiative of providing relevant public goods is always a problem, ‘demand’ for taking such an entrepreneurial stance is created through the post-­hegemonic situation the world if facing: incumbent leaders like the US lack enthusiasm or the political capital to supply such goods adequately, and this gives a chance to rising powers to create reputation capital in international affairs. Compared to other strategies, like upgrading the military posture, public good provision is considerably more uncontroversial, as it helps others as well and thus creates win–win situations. Such a strategy needs to be applied skilfully. Leadership involves structural, entrepreneurial, intellectual and legitimacy qualities. China has shown such qualities, although challenges and possible hazards remain. Legitimacy can be called into question when public good provision is not the only strategy employed by a rising leader. A more assertive strategic or military positioning can create contradictions that will not go unnoticed. Moreover, creating a frictionless image of a new mechanism, like the rhetoric employed when appealing to the ‘New Silk Road’, can lead to disappointment later, when some of the sobering implementation issues become apparent. Japan has followed a different approach. While it was not so successful to use its ‘window of opportunity’ during the past 20 years to present itself as a successful leader in infrastructure provision, for which there are reasons as discussed above, it now follows a more guarded strategy of improving the regional framework for development finance, the PQI, reaching out to the global level. It takes careful note, for instance, of the moral hazard issues involved, and avoids blue-­ eyed optimism. This may not be as publicly inspiring as other, grander visions, but it is open whether in the long run it could be a more sustainable approach. Summing up in an even more condensed way, a post-­hegemonic or ‘multiplex’ (Acharya) period creates opportunities for aspiring leaders to provide public goods and create win–win situations for themselves and others. Post-­ hegemonism does not have to involve military adventures; rather, there are mechanisms that can actually improve ‘welfare’ for the wider global community. The ways and means to achieve this involve considerable uncertainties.

84   Werner Pascha This leads to different approaches with some element of parallelism, and competition among such different concepts can actually create positive value. In that respect, we therefore close with the optimistic thesis that the parallelism of multilateral mechanisms in a post-­hegemonic, multiplex environment is not so much a waste of resources but a symptom of a welcome process of discovery for better multilateral solutions.

Glossary ADB  Asian Development Bank. AIF  Asian Infrastructure Fund. AIIB  Asian Infrastructure Investment Bank. ALTID  Asian Land Transport Infrastructure Development. BRI  Belt and Road Initiative. CAREC  Central Asia Regional Economic Cooperation. CMI/CMIM  Chiang Mai Initiative. CRA  Contingency Reserve Arrangements. EBRD  European Bank for Reconstruction and Development. JBIC  Japan Bank for International Cooperation. NDB  New Development Bank. OBOR  One Belt One Road. PAIF  Pan-­Asian Infrastructure Forum. PGs  public goods. PPPs  Public Private Partnerships. PQI  Japan Partnership for Quality Infrastructure. RCEP  Regional Comprehensive Economic Partnership. TPP  Trans-­Pacific Partnership. UNESCAP  United Nations Economic and Social Commission for Asia and the Pacific.

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New multilateral initiatives   85 Hansen, V. (2012) The Silk Road. A New History, Oxford: Oxford University Press. Hashimoto, R. (1997) ‘Address by Prime Minister Ryutaro Hashimoto to the Japan Association of Corporate Executives’, 24 July. Online available at: http://japan.kantei. go.jp/0731douyukai.html (accessed 15 June 2017). Heilmann, S. et al. (2014) China’s Shadow Foreign Policy, MERICS China Monitor No. 18, October. Iida, K. (2015) ‘What is the point of the Ikenberry–Acharya debate?’, Japanese Journal of Political Science, 16(3: 429–433. Ikenberry, G.J. (2011) Liberal Leviathan: The Origins, Crisis and Transformation of the American World Order, Princeton: University Press. Katz, S. (2016) ‘Financing issues: The Asian Infrastructure Investment Bank (AIIB)’. In Cho, L.-J. and Lee, C.J. (eds), Consensus Toward a Northeast Asian Economic Community, Conference Proceedings 16–01, Northeast Asia Economic Forum, Seoul: Korea Institute for International Economic Policy, 123–126. Kaul, I. (2013) ‘Global public goods: A concept for framing the post-­2015 agenda?’, DIE Discussion Paper 2/2013, Bonn. Keohane, R. (1984) After Hegemony: Cooperation and Discord in the World Political Economy, Princeton: University Press. Kindleberger, C. (1973) The World in Depression: 1929–1939, London: Allen Lane Penguin. Len, C., Uyama, T. and Hirose, T. (eds) (2008) Japan’s Silk Road Diplomacy: Paving the Road Ahead, Washington DC and Stockholm: Silk Road Studies Program.  Mattli, W. (1999) The Logic of Regional Integration: Europe and Beyond, Cambridge: Cambridge University Press. Ministry for Economy and Trade, Japan, METI (2016) ‘The G7 Ise-­Shima summit “expanded partnership for quality infrastructure” ’, Mimeo. Ministry of Foreign Affairs, Japan, MOFA (2015) ‘Partnership for quality infrastructure’, Mimeo. Nabers, D. (2008) ‘China, Japan, and the quest for leadership in East Asia’, GIGA Working Paper No. 67, Hamburg. Öztürk, I. (2006) ‘Development failures in Central Asia and the Caucasus: The role of Japanese “ODA” in the restoration of reform process, institute of developing economies’, Tokyo, V.R.F. Series No. 406, March.  Rodrik, D. (2013) ‘When ideas Trump interests: Preferences, world views, and policy innovations’, National Bureau of Economic Research Working Paper Series 19631, November.  Sandler, T. (2013) ‘Public goods and regional cooperation for development: A new look’, Integration & Trade Journal, 17(36): 13–24. Snidal, D. (1985) ‘The limits of hegemonic stability theory’, International Organization, 39(4): 579–614. Szczudlik, J. (2016) ‘Many Belts and many roads: The proliferation of infrastructure initiatives in Asia’, PISM Policy Paper No. 7 (148). Weimann, J. (2009) Wirtschaftspolitik: Allokation und kollektive Entscheidung, 5th edition, Heidelberg: Springer. Xinhua Net (2015) ‘Comparing China’s “Belt and Road” initiative with Marshall Plan absurd: Scholars’, 14 March. Online available at: http://news.xinhuanet.com/ english/2015-03/14/c_134066619.htm (accessed 1 July 2017). Xinhua Net (2017) ‘China Focus: Xi highlights peace, prosperity, opening up of Belt and Road’, 14 May. Online available at: http://news.xinhuanet.com/english/2017-05/ 14/c_136281648.htm (accessed in 1 July 2017).

86   Werner Pascha Yoshino, N. and Abidhadjaev, U. (2017) ‘An impact evaluation of investment in infrastructure: The case of a rail way connection in Uzbekistan’, Journal of Asian Economics, 49: 1–11. Young, O. (1991) ‘Political leadership and regime formation: On the development of institutions in international society’, International Organization, 45(3): 281–308. Yuasa, T. (2008) ‘Consolidating “value-­oriented diplomacy” towards Eurasia? The “arc of freedom and prosperity” and beyond’. In Len, C., Uhyama, T. and Hirose, T. (eds), Japan’s Silk Road Diplomacy: Paving the Road Ahead, Washington DC and Stockholm: Silk Road Studies Program: 47–65.

6 The New Silk Road Perspectives for EU–China economic cooperation Fernanda Ilhéu

China development model In 1978 China’s economy was closed and poor. Chinese economist Justin Yifu Lin, the former Vice President of the World Bank, says in his book Demystifying the Chinese Economy (2011) that in 1978 nominal per capita income in China was US$210 and states that the change in China’s destiny began in December 1978 when the 3rd Plenary Session of the 11th Session of the Central Committee of the Chinese Communist Party launched the Reform and Open Door policy to reform China’s economic structure with the goal of opening up abroad to achieve more foreign trade. Therefore, in China, this process was the result of a survival economic strategy, which recognised a fundamental condition to overcome it’s millenary delay in the form of attracting Foreign Direct Investment (FDI) in intensive, low-­cost industry oriented to exports. This economic strategy and the beginning of the first phase of globalisation of China were set in motion by Deng Xiao Ping in 1978. He used Chinese culture and proverbs to communicate the new model internally. The new model is commonly described as being experimentalist: ‘cross the river feeling the stones under the feet’, gradualist: ‘when you open a window enter fresh air and mosquitoes’ and pragmatic: ‘it does not matter if the cat is black or white since he hunts the mouse’, however the implemented policies were clearly aimed to attract the Transnational Corporations’ (TNCs) FDI with the objective of integrating China into their Global Value Chains (GVCs) and using it as an export platform. These policies were structured in terms of changing the physical and legal infrastructures of China, and it is important to mention the fundamental impact of some policies such as the Four Modernisations (agriculture, industry, defence, science and technology), the creation of Special Economic Zones (SEZs) which started in the late 1970s and early 1980s, the privatisation of Small and Medium Enterprises (SMEs) known as ‘Grab the Big Let Go the Small’ that was launched in 1990 and the Socialist Market Economy announced in South China in 1992. The implementation of The Go West and Go Global policies began in 2000, the first with the objective of guiding investors to the Western Provinces of China and the second to foster the globalisation of Chinese enterprises.

88   Fernanda Ilhéu However, if these policies were to be communicated by utilising cultural knowledge with popular Chinese popular, their content should be viewed in the light of the economic rationale of the GVCs and the Flying Geese economic models, as well as the FDI Eclectic Theory, currently known as Eclectic Theory. These models and theory are commonly used by economic policy makers whose objective is to attract foreign capital, technology, production and foreign buyers. These models and theories tell us that economic growth is related to the GVCs that contribute an average of 30 per cent of the gross domestic product (GDP) of developing countries. The GVCs establish trade flows of intermediate goods and services between different locations around the world and are incorporated at various levels of the production process, until they are delivered to the final consumer by the TNCs. In 2013, these companies coordinated GVCs that accounted for 60 per cent of global trade in goods and services. Of note is the progressive importance of GVCs in global trade in 2011, as their share grew from 36 per cent in 1995 to 49 per cent in 2011 (International Statistics 2015; UNCTAD 2013; World Investment Report 2013). This shows a growing trend in the progressive specialisation of countries at the stage of production of goods, This is known as vertical specialisation and results from the FDI decisions of these companies, thus creating new opportunities for international trade. The Akamatsu Flying Geese Model (Akamatsu 1962) concludes that in the development of industry and technology there is interaction between developed and developing countries, as investment, technology and production flies from the more advanced countries to the less advanced ones, using the international division of labour based on the dynamics of comparative advantages. In Asia, the leading goose is considered to be Japan, followed by the Dragons, and then by the Tigers, and then China, followed by Vietnam, Cambodia, Laos, etc. We also know that according to the Eclectic Theory (Dunning 1980, 1988) the markets choose companies to supply them according to the specific advantages of those companies, and those companies then choose the places in the world where they produce these products in accordance with the specific advantages of these countries, In doing so they will internalise the competitive advantages of those countries in their value chains.

China development model and globalisation process China has already made a fundamental contribution to the present globalisation process and has also highly benefited from it. China’s development model strategy accepted that the added value that remains in China, although very small, was very important in giving jobs to millions of Chinese. In fact, according to the World Bank, in the first 38 years of China’s Economic Reform, 700 million people in China have left the absolute poverty line. The Chinese economic model was a huge success, especially since December 2001 when China joined the World Trade Organization (WTO), and on that date China began to change the global geoeconomy by opening up to the world, and reciprocally the world also opened up to China. A new world economic order began, placing China in the centre of it.

Perspectives for EU–China cooperation   89 By 2010, China was already the second-­largest world economy, after it overtook Japan, and by 2015, annual Chinese per capita income was US$8,278 in nominal terms, and US$14,300 in Purchasing Power Parity (PPP). China is now positioned as a middle-­income country. In this accelerated growth process China has dragged along and benefited the global economy of the South as a result of the integration of GVCs in China, which not only transformed China into the world’s factory – indeed we can truly say that it is the final stage of Asia’s production networks in an accelerated growth process – but also dragged along and benefited those less-­developed countries economies of Asia, Africa and Latin America that supplied China with the majority of its raw materials, semi-­finished products and energy. The Chinese model was also highly beneficial to the purchasing power of millions of middle and lower-­class consumers in Europe and the USA as well as other developed countries that could benefit from purchasing the low-­priced products that China produced. The economic model adapted by China over the last 38 years was very successful in terms of GDP growth and economic growth in general, however it also introduced many problems and imbalances, namely: an increasingly unsustainable growth in energy consumption; environmental problems, typified by cities where pollution reaches health-­threatening levels of toxicity, and; China has become a highly divided society with large disparities in the distribution of income with huge gaps between the poor and the rich, between levels and quality of life in rural and urban areas, and between the development of coastal and inland provinces. China is facing the middle-­income trap and is also suffering an economic downturn, with massive liquidity applied in speculative economy, housing bubble, excess capacity in the industrial sector (mainly linked to construction) and non-­performing bank loans. In September 2013, at the 7th edition of the World Economic Forum at Davos, Li Keqiang referred to the need to adapt a new economic development model, saying:  China is now at such a crucial stage that without structural transformation and upgrading, we will not be able to achieve a sustained economic growth. In readjusting the structure, the most important aspect is to expand domestic demand, and a major task is to pursue a balanced development between urban and rural areas and among different regions. We will rely mainly on industrialisation, new type of urbanisation, IT application and modernisation of agriculture and focus on developing the service sector which is of strategic importance. (Keqiang 2013) In fact since the Hu Jintao Presidency, the Chinese government has tried to correct these problems and has introduced a new development paradigm with the focus no longer being on rapid GDP growth, but rather on per capita GDP growth and other alternative sources of growth. The 11th Five Year Plan

90   Fernanda Ilhéu (2006–2011) outlines a new development model within Hu Jintao’s vision of a ‘scientific development’ and a ‘harmonious society’, with new priority areas, such as income redistribution, energy saving and green energy, a public health system, and environment and education systems. The 12th Five Year Plan (2011–2016) retains the same ideas and talks about the evolution of China from the world’s factory to China’s factory and from the world’s factory to the world’s services. As key to the economic transformation, this Plan points out the increase in domestic consumption, especially in services, energy conservation, environmental protection and a more balanced regional development, with greater linkage between the Central and Western provinces through high-­speed rail lines. The 12th Five Year Plan also prepares for future growth, based on quality and efficiency, with an imperative emphasis on technological innovation in the processes of management, governance and behaviour. At the 9th Davos Forum in 2015, in his opening speech, Li Keqiang stated: ‘The Chinese economy has entered a state of new normal’ … ‘This has made it all the more necessary for us to press ahead with structural reform. That means, the economy will enter a more advanced stage of development, with more sophisticated division of labour and a more optimized structure’ (Kequang 2015a). He linked the new Chinese model and all the required policies with the objective of overcoming the middle-­income trap and affirming his commitment to reform and to opening up the Chinese economy, and to encourage mass entrepreneurship and innovation, increase supply of public goods and services, and use these twin engines to ensure that the economy maintains medium-­to-high speed of growth and achieves medium-­to-high level of development. ‘As long as we succeed in doing so, the Chinese economy will successfully overcome the middle-­income trap’ he said. The 13th Five Year Plan (2016–2020) pursues this orientation, and aims to achieve an annual per capita income of US$12,000 by 2020, and greater urbanisation in order to increase consumption. But this Plan will introduce another important goal, which is the improvement of Chinese industry. The development of ‘Industry 4.0’ is intended through the implementation of the ‘Made in China 2025’ and ‘Internet Plus’ plans. 

A new stage of globalisation and the New Silk Road The 2008 crisis showed the weaknesses of world global economy and its effects are still felt; the world recovery is slow, with very uneven global development and many countries are not able to overcome their economic delay by themselves. Nowadays China feels that by being the second-­largest world economy, it has the moral obligation to actively enhance a new conceptual model of the world economic growth that is more integrated and is globally controlled. To enhance this new economic model and a new stage of globalisation, China launched a very ambitious initiative under the name of One Belt One Road and the 21st Century Maritime Silk Road known as OBOR or the New Silk Road. Basically two ways of linking China to Europe were chosen – one by land, the Belt, the other by sea, the Road – the 21st Century Maritime Silk Road.

Perspectives for EU–China cooperation   91 Chinese President Xi Jinping announced this initiative in September 2013 during his visit to several Central Asian countries, when he signed energy agreements worth $60 billion (Xi Jinping 2013). In Astana, at Kazakhstan’s Nazarbayev University on 7 September, in his speech entitled ‘Promote People-­ to-People Friendship and Create a Better Future’, he announced that the time has come to make economic ties closer, to improve policy communication, to promote unimpeded trade and to enhance monetary circulation while increasing understanding between people. He said that the time to build a Silk Road Economic Belt (SREB) had come, creating a ‘New Silk Road’, and he affirmed China’s commitment:  To forge closer economic ties, deepen cooperation and expand development space in the Eurasian region, we should take an innovative approach and jointly build an ‘economic belt’ along the Silk Road. This will be a great undertaking benefitting the people of all countries along the route. To turn this into a reality, we may start with work in individual areas and link them up over time to cover the whole region. (Xi Jinping 2013) He introduced the Chinese strategic vision of cooperating with other countries in the construction of economic development land corridors – a Belt – originating from different places in China and converging on Europe, and we can see now the creation of six Asia inland silk corridors: China–Mongolia–Russia; China–Pakistan; China–Bangladesh–India–Myanmar; China–Peninsula of Indochina; New Eurasian Earth Bridge; and China–Central Asia–Western Asia. This entire corridor’s final destination is Duisburg in Germany. These economic development corridors are designed to be cooperation platform hubs, with inland distribution logistic networks, infrastructures and industrial parks.

Figure 6.1  The Belt – inland development corridors.

92   Fernanda Ilhéu One month later, during his visit to Indonesia, President Xi Jinping announced the Chinese initiative of developing a new Maritime Silk Road starting in South China, then going to Indochina, Southeast Asia, encompassing Association of Southeast Asian Nations (ASEAN) countries, and then crossing the Indian Ocean, embracing Africa and passing through Lisbon on its Atlantic route to Europe – more precisely to Duisburg. This maritime route is of great importance for this project, as China’s economy is highly dependent on the ocean – 90 per cent of foreign trade is by sea, and China has 19 per cent of the global maritime transport market and 22 per cent of container freight. This is a long-­term initiative, which, although led by China, now encompasses more than 65 countries, involves 4.4 billion people, about 63 per cent of world population, and about 40 per cent of world GDP.  Mr. Xi hopes to increase the trade value with more than 40 countries for $2.5 trillion in a decade, spending about $1 trillion of government money. SOEs and financial institutions are to be motivated to invest abroad in infrastructure and construction.  (The Economist 2015) The form and place where the initiative was initially launched is often associated with a reductive explanation, reducing it to a strategy by China to integrate some Asian countries into a terrestrial energy distribution grid hub, hosted by Turkmenistan, Kazakhstan, Uzbekistan and Russia. It is known that one of China’s problems is ensuring its sources of energy supply for both oil and natural gas (including shale gas) and renewable energy sources, considering that, since 2010, China has become the world’s largest consumer, while since 2014, it is the world’s largest oil importer, and, despite the Chinese government’s efforts to develop its domestic sources of supply in 2020, it needs to import 66 per cent

Figure 6.2  Silk Road Economic Belt and the 21st Century Maritime Silk Road.

Perspectives for EU–China cooperation   93 of its consumption needs. The countries of this region are very rich in natural resources and are exploring this further. According to Frankopan (2015), only the border between Kazakhstan and Russia has 42 trillion cubic feet of natural gas and crude oil, and in this country beryllium, dysprosium and other rare minerals vital for manufacture mobile phones, laptops and rechargeable batteries are abundant, together with uranium and plutonium, which is essential for nuclear energy. Coal deposits of ten billion tons, 1.4 billion barrels of oil and 2.4 trillion cubic feet of national gas lie on Ukraine’s Eastern frontier with Russia and Southern Russia and Ukraine have important grain fields. Turkmenistan controls the fourth-­largest supply of natural gas in the word, while Uzbekistan and Kyrgyzstan have huge reserves of gold deposits in Tian Shan Belt, second only to Witwatersrand basin in South Africa. In tangible terms, it is an enormous project of construction of transport infrastructures and bases of production and logistics, and this feeds another explanation that is commonly appointed to the OBOR initiative regarding the resolution of the spectre of a Chinese economic slowdown in finding markets for its overproduction, overcapacity and excess products and commodities. A huge programme for improving railway lines, building new railway lines, constructing ports, logistic platforms, industrial parks, roads and pipelines has been announced and is being financed by the Asia Infrastructure Investment Bank (AIIB). The AIIB was created in 2015 by 57 countries and with an initial capital input of US$50 billion, although this will soon reach US$100 billion, with the objective of financing these projects in Asia, together with the New Silk Road Fund, which has US$40 billion to fund the promotion of private investment in the New Silk Road. In addition, the China Development Bank declared its intention to invest US$900 billion in these projects, and the European Bank for Reconstruction and Development (EBRD) was joined by China as a shareholder on 15 January 2015, which can also consider projects in Europe. Frankopan (2015: 516) refers to the Yu’Xin’Ou Cargo International Railway that links Chongqing in China to Duisburg in Germany and states: ‘Trains half a  mile long have started carrying millions of laptops, shoes, clothes and other

Figure 6.3  Cargo international railway routes from China to Europe.

94   Fernanda Ilhéu non-­perishable items in one direction, and electronics, car parts and medical equipment in the other, a journey that takes 16 days’ to stress that this can be a two-­way benefit for China and Europe. Other international cargo trains are linking locations in China with Europe, such as the China Europe Block Train from Yiwu to Madrid or Yiwu to London. Other analyses consider this ambitious economic diplomacy to be a foreign policy initiative intended to extend China’s influence into other regions in Central Asia and to counterbalance the Western sanctions on Russia, as well as to profit from the de-­Sovietisation of Central Asia, which offers a good opportunity for China to increase its influence in the region. However, as we delve into the development of this strategy, we can conclude that it is much more comprehensive and ambitious, and that it seems much broader and holistic than the abovementioned reasons, leading to a new world economic model and new geopolitics governance.

The economic cooperation objectives of the New Silk Road The justification presented by the National Development and Reform Commission for Reform (NDRC) of the Chinese government to create the project is centred on the complex and profound changes in the world and on the impact of the 2008 crisis that continues to affect the world economy and the slow world economic recovery. However, in reality, China links both objectives to the Chinese economic restructuring model and global growth resurgence. In his speech in Davos in 2015, Li Keqiang referred to that linkage when he said: China’s reform and development will bring more business opportunities to the world … China will explore new approaches to investment cooperation with other countries … China has put forward the initiatives to build the Silk Road Economic Belt and the 21st Century Maritime Silk Road. China hopes to work with other countries to advance these initiatives and ensure that they are brought forward in ways that meet the actual needs of countries concerned.  (Keqiang 2015a)  Maintaining the same vision, Xi Jinping made a very important speech at the beginning of his visit to London in October 2015 when he reported on the China–­Britain Belt and Road Report 2016 (Xi Jinping 2015), by saying, ‘A new era requires new thinking. The construction of the Belt and Road will bring huge opportunities for the common development of China and other countries along ancient routes’ and also, at a later stage in his speech, when he referred to the cooperation with the UK, saying that China seeks integration of connecting strategies. In summary he said:  The two countries should deepen cooperation by better intensifying their development strategies and industrial policies, China welcomes capital,

Perspectives for EU–China cooperation   95 technology and talents from UK to participate in the Belt and Road construction, the 13th Five Year Plan as well as the Internet Plus and Made in China 2025 strategies and will continue to offer relevant policy information and a sound investment environment to UK enterprises.  He added: ‘The two countries should advance such major projects as nuclear power, high-­speed rail and infrastructure construction … both countries should set up a long-­term effective mechanism to deepen bilateral economic and trade cooperation.’ The objectives of the New Silk Road, according to the Vision and Actions in Jointly Building Silk Road Economic Belt and 21st Century Maritime Silk Road (2015) are: • • • • • • • • • •

Recovery of the global economy; Better use of resources; Increase connectivity between China and the countries of Asia, Europe and Africa; Increase market integration and construction of a multipolar world; Increase application of information technologies; Make investments in infrastructure, transport, maritime cooperation and energy in the Asian region; Increase coordination of development strategies among countries included in the One Belt One Road project; Increase trade, investment and consumption; Create demand and employment opportunities; Improve cultural exchanges and communication between the various people.

These objectives only consider a new globalisation process; however, as shown in the analyses above, the conclusion is that they are intertwined with the Chinese economic restructuring model and global growth resurgence, as well as its domestic economic objectives, so as avoid the middle-­income trap and move the improvement of Chinese industry up the value chain. It is intended that the development of ‘Industry 4.0’ will be made through the implementation of the Internet Plus and Made in China 2025 strategies, for which China welcomes capital, technology and talents from European countries. China actively announced its own globalisation project, and senior officials of the Chinese NDRC argue that this project can play an important role in the recovery of the global economy through better use of resources and investment in infrastructure, transport, maritime cooperation and energy in the Asian region. In moving to this new model of development, China is entering what can be considered as the second phase of China’s globalisation, a more proactive phase, in which its mode of entry into other markets is in addition to direct active exports – Outward Foreign Direct Investment (OFDI). In a way we can say that

96   Fernanda Ilhéu the first phase of China’s globalisation was a passive one, where China wanted to be chosen and accepted by TNCs and multinational organisations and foreign governments. China is now leading a new dynamic in globalisation. In this new model China is proposing to develop its own GVCs led by Chinese companies and integrating companies from Africa, the Middle and Far East as main suppliers of resources, with Chinese companies as major global producers and the European Union (EU) as the world’s leading region of consumption of high-­quality products. Investment and trade cooperation is a major task in implementing this project and the removal of investment and trade barriers and the opening up of free trade areas are targets for unleashing the potential for expanded cooperation – as Angang Hu, Xing Wei and Yilong Yan (2012) concluded, ‘the more integrated the Chinese economy is, the more it will act as a global stabilizer’.

The New Silk Road: perspectives of EU and China economic cooperation China’s strategic partnership with the EU is presently under negotiation to move to a deeper cooperation level. The flagships of the EU–China 2020 Strategic Agenda are the Investment Plan (2016) in the EU and the OBOR initiative for Chinese government, both of which should be negotiated together and be a win–win situation for China and the EU. The Joint Statement of the China–EU Summit 2015 delivered during the EU– China 2020 Strategic Agenda for Cooperation mentions: • • • • • • • • •

Trade and market access facilitation, and raised the idea of creating China– EU Free Trade Zones; Mutual investment agreement in infrastructure and industrial parks; The New Silk Road – Trans-­European networks and One Belt One Road; The digital economy; The improvement of communication infrastructure and transport; Cooperation in the financial sector and funding sources; Cooperation on innovation; Cooperation in partnership in urbanisation, environment, energy, water; Improvements in the protection of intellectual property rights.

The Vision and Actions on Jointly Building Silk Road Economic Belt and 21st Century Maritime Silk Road states:  Investment and trade cooperation is a major task in building the Belt and Road. We should strive to improve investment and trade facilitation, and remove investment and trade barriers for the creation of a sound business environment within the region and in all related countries. We will discuss with countries and regions along the Belt and Road on opening free trade areas so as to unleash the potential for expanded cooperation.

Perspectives for EU–China cooperation   97 At the Beijing Belt and Road Forum held in Beijing on 14–15 May 2017, President Xi Jinping affirmed: ‘The aim is not to reinvent the wheel … Rather it aims to complement the development strategies of countries involved’ (Xi Jinping 2017). According to the Vision and Actions document, the cooperation priorities are: the coordination of policies to improve connectivity; to increase trade and investment; to achieve financial integration; and increased links between peoples. China proposes to build the SREB together with the other countries, which can be achieved through carrying on with the bilateral and multilateral negotiations, which means that China aims to negotiate this complementarity with the EU although it can also negotiate under bilateral agreements, providing that they do not infringe EU regulations. In a meeting in Beijing on 18 April 2017 between Li Keqiang and Federica Mogherini, the EU’s current High Representative for Foreign Affairs and Security Policy and Vice-­President of the European Commission affirmed that China and Europe should ‘jointly send positive signals of maintaining regional stability and world peace, facing global challenges, reforming and perfecting the international governance system and pushing forward economic globalisation and free and trade fair’. In return, Mogherini agreed, ‘The EU is willing to cooperate with China to handle differences constructively’. Before leaving for Beijing she had told the Xinhua News Agency that ‘the European Union and China share the view of a global order based on multilateralism and on UN system’ and she added ‘if we act together we can be an irresistible force for free and fair trade, and for multilateralism and sustainable development’ (Xiaokun 2017). Progress seems to have been made in the stage of EU cooperation with China in jointly building the OBOR initiative since Cecilia Malmström, EU Trade Commissioner visited the University of International Business and Economics (UIBE) Beijing on 11 July 2016 (Malmström 2016). She challenged the perspective of the Vision and Actions document on trade and market access facilitation and the creation of China–EU Free Trade Zones, by saying:  The free trade zones have made relatively limited progress or have been completely abandoned.… There are still real concerns about enforcement of intellectual property rights.… Discrimination against EU businesses remains a fact; which we are worried could be reinforced in the Manufacturing 2025 plan.… Keeping the EU market open, to the great benefit of China and the EU, requires us to be able to address these questions of reciprocal openness.  In other words, she required the same playing field for domestic and foreign investors for access to the Chinese market, and she also suggested the creation of one single agreement; at present there are 26 that cover all investment between the EU and China. Although some progress is underway, we could observe that in the abovementioned Forum held in Beijing on 14–15 May 2017, the EU did not respond with one voice but rather with several bilateral dialogues, which encouraged each country to make its own agenda, with some countries being represented by their Heads of State, such as Spain, Italy, Greece and others who

98   Fernanda Ilhéu were represented by high-­ranking officials, such as Germany, Portugal, France and the UK. In the European Think-­Tank Network on the China Report (2016: 26) it is obvious that Brussels had or has some concerns regarding the OBOR initiative, namely that it is mentioned that this Chinese initiative can bring opportunities for cooperation but also competition: ‘the project main objective is to develop China’s industries and exports in key sectors particularly railway, road, maritime and air transport and infrastructure, the telecommunication and digital sectors, and energy, but also clean technologies … to look for new markets’. The Report also states that the opportunities for cooperation with China could only be materialised if they are based on open and transparent rules. In this context the EU proposed the establishment of a Connectivity Platform as an instrument to exchange information on policies, cooperation and connectivity. The establishment of this platform was agreed at the High-­Level Trade Dialogue of September 2015. According to the Asia Deputy President of Roland Berger Consultants, Denis Depoux, it is possible to establish complementarity between China and Europe in combining an European approach to industrial upgrading with a Chinese approach to consumers, and he recommends the creation of a bridge between the Chinese innovation powerhouse and European markets to boost European companies (Denis 2017). This idea fits into the Chinese initiative ‘Third-­country Market Cooperation’ that complements the OBOR initiative and was introduced by Premier Li Keqiang during the 17th China–EU Leaders Meeting held in Brussels in June 2015 (Li Keqiang 2015b). Basically, it aims to combine China’s production capacity with developed countries’ advanced technology and equipment to jointly develop markets in developing countries. In September 2015, at the Summer World Economic Forum in Davos, Premier Li Keqiang affirmed: ‘it will also help countries overcome the difficulties in industrial development, upgrade their industries and integrate the high- mid-, and low-­ends of the global industrial chain. This will help businesses increase their presence in both the international and Chinese markets’ (Li Keqiang 2015c). According to China Outlook (2016: 26): ‘This would benefit: China, by facilitating the export of its production capacity and industrial products to the international market; developed countries, by creating new sources of economic growth; developing countries, by promoting their industrialization and economic development.’ It was decided at the abovementioned China–EU Leaders Meeting to find fields of cooperation for China and the EU between the Investment Plan for Europe – the so-­called ‘Junkers Plan’, the OBOR initiative and China’s 13th Five Year Plan (2016–2020). In the joint statement of the EU–China Summit in Brussels (EU–China Summit 2015: 1) both sides ‘confirmed their strong interest in each other’s flagship initiatives, namely the Investment Plan for Europe, and the “Silk Road Economic Belt” and “21st Century Maritime Silk Road” ’. At the Belt and Road International Cooperation Forum in May 2017, Xi Jinping suggested dovetailing the Belt and Road Initiative with the European Investment

Perspectives for EU–China cooperation   99 Plan and suggested four areas of cooperation: two-­way investment, construction of industrial parks, e-­commerce and innovation (Xi Jinping 2017). After this Forum progress could be seen in China’s bilateral negotiations with some EU countries, for instance, following the presence of Italy’s prime minister at the Forum, on the 12th Meeting of China Italy Joint Commission for Economic and Trade Cooperation held in Rome on 19 June 2017 a Memorandum of Understanding (MOU) was signed to strengthen cooperation between Italy and China under the Belt and Road framework, particularly in infrastructures, trade, sea transport, aviation, agriculture and public health, among others. Additionally, during the French President Macron’s official visit to China, a MOU was signed between the China Development Bank, Bpifrance and Cathay Capital to create a Fund (the Cathay Midcap II) to support mid-­capital companies with high growth and value potential in targeted sectors with high-­cross border synergies between China and the West. This fund is the first fund invested in by the European Investment Bank and the Silk Road Bank, which signed a MOU at the EU– China Summit on 16 July 2018 to co-­invest under the China–EU Co-­Investment Fund Program which was established with the objective of developing synergies between the Belt and Road Initiative and the Investment Plan for Europe. Cathay Capital announced on 6 August 2018 a first close of 600 million euro on its Fund Cathay Midcap II which targets 1.2 billion euro. On the occasion of the announcement Jyrki Katainen, EU Commission Vice-­President, affirmed:  We have been working towards this moment since we set up the EU–China working group in 2015 at the High Level Economic and Trade Dialogue in Beijing. I am very pleased that we are now seeing the fruits of that labour and that the Cathay Midcap fund will finance European and Chinese high potential mid-­cap businesses in strategically important sectors. This is a very good example of how private and public investors can work together. (European Union Press 2018) The Belt and Road Initiative and the Investment Plan to sustain long-­term growth sustainability in the EU, both give a hint of how complementarities can be established (MOFCOM 2017).  An important objective of the 13th Five Year Plan is the improvement of Chinese industry through the implementation of the Made in China 2025 and Internet Plus plans; this primarily means using the Internet of Things to connect small and medium-­sized companies more efficiently for global production. The Plan stresses the need to underscore the innovation-­driven approach by making the switch of emphasis from ‘Made in China’ to ‘Create in China’, from speed to quality, and from products to brands. The ‘Made in China 2025’ document, available at the State Council website, identifies ten priority sectors for China, highlighting areas of opportunity for cooperation with EU companies. The sectors include: advanced rail and equipment; aviation and aerospace equipment; agricultural machinery and technology; power equipment and technology; low and new-­energy vehicles; new materials;

100   Fernanda Ilhéu high-­end manufacturing control equipment and robotics; biopharmaceuticals and high-­end medical equipment; advanced marine equipment and high-­tech vessels; and integrated circuits and new generation information technology. The goals of Junker’s Plan are the increase of investment to support long-­ term growth in the EU and to face social challenges through the increase in competitiveness obtained by leading technologic industries and by excellence in science. The European Strategic Investment Fund (EFSI) gives priority to projects in infrastructures, energy, research and innovation, broadband and education and support to SME’s business globalisation. Ambassador Yang Yanyi, Head of the Chinese Mission to the EU, at the Luncheon of the EU–China Business Association on Brussels on 4 February 2016, affirmed:  Consensus has been reached between China and the EU in five new areas: drawing synergies between China’s Belt and Road Initiative and the EU Investment Plan, establishing a new Connectivity Platform; collaborating in digital economy and cyber security; launching a legal affairs dialogue, and; facilitating people-­to-people exchanges.  (Yang 2016) During the 13th meeting of the Joint Steering Committee of the EU–China Agreement for Scientific and Technological Cooperation that took place in Brussels on 29 March 2017, the EU and China agreed to continue to promote closer cooperation, based on reciprocity and mutual benefit. In particular, they agreed to develop a package of joint flagship initiatives to be launched in 2017, with co-­ funding from the EU and China. Areas targeted include food, agriculture and biotechnologies, environment and sustainable urbanisation, surface transport, aviation, and biotechnologies and biomaterials. Chinese and EU high officials in this Joint Steering Committee agreed to build an intergovernmental platform to facilitate in-­depth Science Technology Innovation (STI) cooperation, with extensive participation from different countries and institutes across Europe. Chinese Vice-­Minister Huang pointed out that China and the EU are highly complementary in science and innovation, and have cooperation potential in a broad spectrum of areas such as business–academia–research partnerships, joint research and development (R&D) activities and lab-­to-market translation. He stressed that STI cooperation has become an important and indispensable element of the China–EU comprehensive strategic partnership.

Conclusions It can be concluded there are many complementarities between the Chinese 13th Five Year Plan, the ‘Made in China 2025’ Plan and the Juncker’s Plan, and that if the EU and China reach a constructive agreement, focusing investment and trade with the removal of investment and trade barriers and the implementation

Perspectives for EU–China cooperation   101 of China–EU Free Trade Zones, then an important cooperation can be expected in sectors such as infrastructure projects, energy, advanced rail and equipment, aviation and aerospace equipment, agricultural machinery and technology, power equipment and technology, low and new-­energy vehicles, new materials, high-­ end manufacturing control equipment and robotics, biopharmaceuticals and high-­end medical equipment, advanced marine equipment and high-­tech vessels, integrated circuits, and new generation information technology. Cooperation could be promising in research and innovation, broadband and education, the Internet of Things, tourism, culture and SMEs, provided China and Europe can reach the right agreements and mobilise their populations for the importance of jointly building the Belt and Road Initiative and a new globalisation model that will be the outcome of it.

Glossary AIIB  Asia Infrastructure Investment Bank. ASEAN  Association of Southeast Asian Nations. EBRD  European Bank for Reconstruction and Development. EFSI  European Strategic Investment Fund. EU  European Union. FDI  Foreign Direct Investment. GDP  Gross Domestic Product. GVCs  Global Value Chains. NDRC  National Development and Reform Commission. OBOR  One Belt One Road and 21st Century Maritime Silk Road. OFDI  Outward Foreign Direct Investment. PPP  Purchasing Power Parity. R&D  Research and Development. SEZ  Special Economic Zones. SMEs  Small Medium Enterprises. SREB  Silk Road Economic Belt. STI  Science Technology Innovation. TNCs  Transnational Corporations. UIBE  University of International Business and Economics. WTO  World Trade Organization.

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102   Fernanda Ilhéu China Outlook (2016) ‘KPMG global China practice’, 26. Online available at: www. kpmg.com/CN/en/IssuesAndInsights/ArticlesPublications/Documents/china-­ outlook-2016.pdf (accessed 1 August 2017). Denis, D. (2017) China Daily, 24 March. Dunning, J.H. (1980) ‘Toward an Eclectic Theory of international production: Some empirical tests’, Journal of International Business Studies, 11(1): 9–31. Dunning, J.H. (1988) ‘The eclectic paradigm of international production, a restatement and some possible extensions’, Journal of International Business Studies, 19(1): 1–31. The Economist (2015) 12 September. EU–China Summit (2015) 29 June. 1. Online available at: https://eeas.europa.eu/sites/ eeas/files/eu-­china_summit_2015_joint_statement.pdf (accessed 8 July 2017). European Think-­Tank Network on China Report (2016) Online available at: www.ifri. org/en/european-­think-tank-­network-china-­etnc (accessed 15 July 2017). European Union Press (2018) 6 August. Online available at: https://ec.europa.eu/­ commission/news/cathay-­capital-completes-­first-closing-­cathay-midcap-­ii-eur-­600million-­2018-aug-­06_en (accessed 7 August 2018). Frankopan, P. (2015) The Silk Roads. A New History of the World, London: Bloomsbury, p. 516. International Statistics (2015) UN. Online available at: http://unstats.un.org/unsd/ methods/internatlinks/s5 d_intstat.htm (accessed July 2017). Investment Plan (2016) European Council European Union. Online available at: www. consilium.europa.eu/en/policies/investment-­plan/ (accessed 8 August 2017). Li, Keqiang (2013) 7th Edition World Economic Forum Davos. Online available at: www3.weforum.org/docs/AMNC13/WEF_AMNC13_TranscriptLiKeqiang.pdf (accessed August 2017). Li, Keqiang (2015a) 9th edition World Economic Forum Davos. Online available at: www.weforum.org/agenda/2015/01/chinese-­premier-li-­keqiangs-speech-­at-davos-­2015/ (accessed 8 August 2017). Li, Keqiang (2015b) 17th China–EU Leaders Meeting, Brussels. Online available at: http://trade.ec.europa.eu/doclib/press/index.cfm?id=1339 (accessed 8 August 2017). Li, Keqiang (2015c) A New Blue Print for Global Growth, Summer World Forum, Dalian 10th. Online available at: http://news.xinhuanet.com/english/2015-09/11/c_134615607. htm09/11/c_134615607.htm (accessed 5 August 2017). Lin, Y.J. (2011) Demystifying the Chinese Economy, Cambridge, Cambridge University Press. Made in China 2025 (n.d.) China State Council. Online available at: www.csis.org/­ analysis/made-­china-2025 (accessed 2 September 2017). Malmström, C. (2016) A Vital Relationship for Our Prosperity, UIBE Beijing, (July). Online available at: http://trade.ec.europa.eu/doclib/docs/2016/july/tradoc_154786.pdf (accessed 6 August 2017). MOFCOM (2017) 19 June, the 12th meeting of China–Italy Joint Commission for Economic and Trade Cooperation. Online available at: http://english.mofcom.gov.cn/ article/relevantnewsforpc/bilateralmultilateralrelation/201706/20170602595743.shtml (accessed 5 August 2018). Vision and Actions in Jointly Building Silk Road Economic Belt and 21st Century Maritime Silk Road (2015) National Development and Reform Commission. Online available at: http://en.ndrc.gov.cn/newsrelease/201503/t20150330_669367.htmlhttp:// en.ndrc.gov.cn/newsrelease/201503/t20150330_669367.html (accessed 11 July 2017). World Investment Report, WIR (2013) UNCTAD.

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7 The China–Pakistan Economic Corridor Lessons for the New Silk Road Mario Esteban

Introduction Even if the China–Pakistan Economic Corridor (CPEC) is a long-­term project, which is still taking its first steps,1 it is not just one of the seven economic corridors proposed by China under the framework of the Belt and Road Initiative (BRI).2 Announced in July 2013, the CPEC is by far the most developed of them, as illustrated by the US$62 billion already granted to CPEC projects (The Express Tribune 2017). This substantial financial commitment seems even more impressive when compared to the US$54.5 billion worth of the Silk Road Fund.3 Hence, it might be possible to acquire a deeper understanding of the BRI by looking at the way the CPEC develops and how it impacts on Pakistan and its neighbouring countries. Following the famous expression coined by Deng Xiaoping of ‘crossing the river by feeling the stones’ (mozhe shitou guo he) Pakistan is serving as a test site for the BRI. The CPEC aims to have a demonstrative effect for attracting foreign political and economic stakeholders to participate in the BRI to the extent that the Foreign Minister of the People’s Republic of China, Wang Yi, has described the CPEC as the ‘flagship project’ of the One Belt, One Road initiative (Ministry of Foreign Affairs of the People’s Republic of China 2015b). This privileged position of CPEC in the framework of the BRI makes it an excellent case study for finding some guidelines that could inform our analyses and Chinese authorities policies on this still relatively vague initiative. To fulfil this task, the present chapter is divided into four main parts, in addition to this introduction and a concluding section. The first section presents evidence extracted from the implementation of the CPEC to shed light on the heavily debated topic of the rationale behind the launch of the BRI. monodimensional explanations will be discarded, since the CPEC has economic and geostrategic implications, with strong synergies among them. Therefore, the CPEC is depicted as a multifaceted strategy. In the second section, the favourable conditions of Pakistan for having been chosen as the BRI test site are introduced, underlining the solid political foundation of the bilateral relation, the strategic benefits derived for China from a stronger Pakistan, the enormous complementarities between the needs of the Pakistani economy and

The China–Pakistan Economic Corridor   105 what the BRI has to offer, and the impact of CPEC on the stabilisation of Xinjiang. The third section analyses the main challenges faced in the implementation of the CPEC, including geopolitical rivalry, territorial disputes and security threats. In the fourth section, three different scenarios on the prospective effects of the CPEC are elaborated, distinguishing among the CPEC as a transit, an economic or a development corridor. The actual nature of CPEC will clear up what could be the potential effects of the BRI as a whole.

The CPEC, not just an economic initiative The objectives of the BRI have been the subject of strong controversy since this initiative was launched in 2013 (Godement and Kratz 2015; Swaine, 2015). There are three different views on this issue. Two of them depict the BRI as a unidimensional strategy either as a security or an economic mechanism, but the CPEC shows that even if the economic motivations are more prominent, this project also has strategic goals and implications that should not be neglected to make an accurate assessment of its impact (Zhou and Esteban 2018). Hence, it is more precise to characterise the BRI as a multifaceted strategy than as mere economic policy aimed to deepen economic reforms in China and foster economic growth in all the participant countries; or as a mere strategic manoeuvre to improve China’s geostrategic context. Those who only focus in the geostrategic, security and military considerations of the BRI tend to come together with a zero-­sum, conflictual assessment of this policy, which is depicted mainly as a reaction to Obama’s Pivot to Asia, to the extent of being labelled as China’s ‘Pivot to Europe’ (Fallon 2015). The BRI is even understood as a threat to the influence of traditional powers, either the US in the Asia-­Pacific region or regional powers such as Russia in Central Asia or India in South Asia (Overholt 2015). From this perspective, Beijing’s main objective for developing the CPEC is to break the US strategic maritime encirclement through guaranteed access to the Indian Ocean at Gwadar Port and to increase its presence in the Indic Ocean at the expense of India. The claims that Gwadar would host a Chinese military base have preceded the announcement of the CPEC and are popular both among the American and the Indian Security Studies communities (Ahmad et al. 2017; Scott 2008). However, 16 years after Beijing and Islamabad signed a memorandum of understanding to develop a deep-­sea port at Gwadar, and three years after CPEC was announced there is no sign of a potential Chinese military base in Gwadar. Not only Pakistani logistical support for the Chinese Navy still takes place at Karachi Port, but even the expected railway connection between Xinjiang and Gwadar Port, establishing an alternative supply and export route for Chinese trade, is not a priority for Beijing (The Dawn 2017).4 In other words, it seems that China is not as concerned as widely claimed about diversifying the supply routes for its oil imports from the Middle East (Qiang 2016). In addition, both Chinese and Pakistani officials maintain in private talks that since Gwadar Port will become a regional hub of shipping, commercial and industrial activities, if Pakistan agrees in the future

106   Mario Esteban to host a Chinese naval base that facility would be built in another part of the Pakistani coastline.5 Some other analyses share this focus on the security dimension of the BRI, but hold a more benign interpretation of this strategy, regarded as an instrument of Beijing for assuming the responsibilities expected from a major power, opening even the possibility of establishing a more cooperative relationship with the United States (Wang 2016; Zheng and Zhang 2016). From this perspective, in order to fully unleash the forces of economic cooperation embodied in the CPEC, Beijing needs a stable regional context that involves a political settlement in Afghanistan and a non-­confrontational relationship between India and Pakistan. Hence, after more than a decade declining to play an active role in the stabilisation of Afghanistan, since 2014 China has tried to mediate in a peace process led by Kabul and the Afghan Taliban, influenced significantly by regional actors such as India, Iran, Pakistan and Russia, and supported by the United States (Huasheng 2016; Scobell 2015). On the contrary, the official rhetoric both in Beijing and Islamabad defines the BRI and the CPEC as cooperative economic initiatives with potential for bringing enormous socioeconomic benefits for China and the other participant countries. At the same time, both governments reject the pertinence of analysing them using a geostrategic lens, since they are inclusive and non-­conditional and therefore not grounded on a zero-­sum-game mindset. Two examples of this narrative are the speeches of Xi Jinping to the Parliament of Pakistan on 21 April 2015 and of Nawaz Sharif to the plenary session of the Belt and Road Initiative for Economic Cooperation on 14 May 2017: The China–Pakistan Economic Corridor is a focal point of our joint efforts to achieve common development, and we should use this economic corridor to drive our practical cooperation (…) This initiative also reflects China’s commitment to sharing development opportunities and outcomes with more countries. We will strengthen cooperation with countries along the land and maritime Silk Roads and realize the connectivity of roads, trade, finance, policies and our peoples, so as to jointly build an open platform for cooperation and create new impetus to achieve sustainable development in the related regions. (Ministry of Foreign Affairs of the People’s Republic of China 2015a) OBOR signifies that geo-­economics must take precedence over geo-­politics, and that the centre of gravity should shift from conflict to cooperation (…) Pakistan believes that the most powerful impact of OBOR will be on the lives of poor and marginalised people, who would have higher incomes, better education and more health facilities. It would help in eradicating poverty and achieving Sustainable Development, leaving no one behind (…) Let me make it very clear that CPEC is an economic undertaking open to all countries in the region. It has no geographical boundaries. It must not be politicised. (Prime Minister’s Office Islamic Republic of Pakistan 2017)

The China–Pakistan Economic Corridor   107 Indeed, China has strong incentives to launch the BRI and the CPEC. After 35 years of high growth, China has entered what its authorities have labelled as the ‘new normal’, characterised by lower, but still significant annual growth rates around 6.5 to 7 per cent. In this context, finding new growth drivers is critical for social and political stability. To achieve this aim, the ‘Decision of the Central Committee of the Communist Party of China on Some Major Issues Concerning Comprehensively Deepening the Reform’ was published in November 2013, outlining a set of reforms that promise a major progress towards a better functioning and more open market economy. This document explicitly mentions the potential contributions of the Silk Road Economic Belt and the Maritime Silk Road ‘to form a new pattern of all-­around opening’ (Central Committee of the Communist Party of China 2014). The BRI can also contribute to spur global demand, promote the internationalisation of Chinese companies and of the renminbi (RMB), diminish excessive holdings of US dollars, and diversify trade routes (reducing China’s dependence on maritime routes), including for energy (Djankov and Miner 2016). Chinese exports to Pakistan have actually grown quite dramatically thanks to the CPEC from US$9.6 billion in 2014 to US$13.7 billion in 2016.This is almost a 43 per cent increase in hardly two years (UN Comtrade Database 2017). This upsurge in Chinese exports to Pakistan is fuelled by massive concessional loans that are financing energy and transportation projects. This is not only allowing China to alleviate part of its overcapacity problem, but also to facilitate the internationalisation of Chinese companies in promising and strategic sectors where they do not have much experience. An illustrative example of the latter is civil nuclear energy cooperation. China is actively promoting the advance of Hualong One, a third-­generation nuclear reactor design developed by the China General Nuclear Power Group. There are now four projects using Hualong One reactors under construction, three in China and the fourth at the Karachi Nuclear Power Plant, where two of these 1,100 MW reactors are supposed to begin commercial operations by 2019 and 2020 respectively. The aggregate cost of these two reactors is US$9.6 billion and its construction in Pakistan is being financed by a US$6.5 billion loan. The knowledge gathered in Pakistan could serve the Chinese involved in this operation as a springboard for entering more competitive markets (Thomas 2017). Chinese leaders are also eager to increase the internationalisation of the RMB in order to reduce the costs and risks derived from conducting trade and financial operations denominated in US$. The ‘Long Term Plan for the CPEC’ clearly states boosting the role of the RMB in the Pakistani economy as an objective that should be achieved through different means such as tripling the size of the swap mechanism between the RMB and the Pakistani rupee to 30 billion Yuan, diversifying power purchase payments beyond the dollar into RMB and rupee basket, tapping the Hong Kong market for RMB bonds, and diversifying enterprise loans from a wide array of sources (The Dawn 2017). These measures were already put on the table publicly in late 2016, although with less detail, by a Deputy Governor of the State Bank of Pakistan, Riaz Riazuddin (The Daily Times 2016d).

108   Mario Esteban However, even if geostrategic political considerations are not the main drivers behind the BRI, it would be incomplete to understand this scheme as a mere attempt to expand access to foreign markets and revive the Chinese domestic economy. Due to the size and dynamism of the Chinese economy, the implementation of the Belt and Road strategy would have significant geostrategic repercussions in the other participant countries. The two most substantial geostrategic effects of the BRI would be to entrench asymmetric economic relations among China and the other Belt and Road countries and to reassure those countries about the benefits of the rise of China. First, growing trade and financial links between Beijing and the other participants in the BRI will boost asymmetric economic interdependence among them, making the Chinese economy more important for the development of those countries than the other way around. While those states become increasingly dependent on Beijing in economic terms, China enjoys greater influence over them also at the expense of their traditional economic partners (Arase 2015; Fels 2017). Accordingly, Beijing increases its leverage for influencing those states according to accommodate to its strategic interests. When it comes to Foreign Direct Investment (FDI), the share of Chinese investment in Pakistan’s inward FDI amounted to a mere 6.6 per cent in Fiscal Year 2012–2013, but after the CPEC was launched rose swiftly to 53.6 per cent, on average, for the subsequent three-year period (The Daily Times 2016d). Second, Beijing uses the BRI to disseminate a narrative oriented to reassure other states of the peaceful and benign nature of the abovementioned growing economic engagement. China’s mounting economic clout has caused a great deal of anxiety in many countries throughout the world, fostering the China threat theory. The spread of this interpretation is detrimental for Chinese interests, since it makes the actors embracing this view less likely to cooperate with Beijing. To avoid that scenario, China emphasises the win–win nature of its engagement with other countries and has coined terms such as ‘community of shared destiny’ which disseminates through the BRI (Ferdinand 2016; Swaine 2015; Zeng 2016). Doing so, Beijing presents the BRI as an opportunity, instead of as a threat, to other states. CPEC plays a demonstrative role in this scheme, since is the part of the BRI in a more advanced stage of implementation and therefore is regularly defined by Chinese leaders as the ‘flagship project’ of the BRI (Ministry of Foreign Affairs of the People’s Republic of China 2014; Ministry of Foreign Affairs of the People’s Republic of China 2017a; Ministry of Foreign Affairs of the People’s Republic of China 2017b). This is the main reason the Chinese authorities have put so much emphasis on the success of the CPEC early harvest projects and have given priority to the Eastern alignment vis-­à-vis the Western alignment.

Why Pakistan? In 2013, the year when CPEC was announced, Pakistan ranked 10 in the Fragile States Index by the Fund for Peace and it was frequently defined in international

The China–Pakistan Economic Corridor   109 media as a rogue nuclear state and sponsor of terrorism (Fund for Peace 2014). However, Xi Jinping chose Pakistan as the test site for its signature foreign policy initiative. There are four main reasons to explain this decision: the high level of trust and stability in China–Pakistan relations; the strategic benefits derived for China from a stronger Pakistan; the enormous complementarities between the needs of the Pakistani economy and what the BRI has to offer; and the impact of CPEC on the stabilisation of Xinjiang. First, for a country that does not have allies, Pakistan is the closest that China has to an ally, taking into account both the high level of strategic trust between them and the stability in their cooperation for over half a century in a changing international and domestic context (Ali 2017). In addition, the deep level of trust built up over time between Beijing and Islamabad, epitomised by the key role played by China in the development of Pakistan’s nuclear and missile programmes and as a reliable weapons supplier, provides a solid political foundation for the implementation of CPEC. The stability of China–Pakistan relations, unaffected by the dynamics of the Pakistani party politics, is illustrated by the strong similarities in the way two political rivals, Prime Minister Raza Gilani and Prime Minister Nawaz Sharif, described China–Pakistan relations in December 2010 and July 2013 respectively: Pakistan China friendship is higher than mountains, deeper than the ocean, stronger than steel and sweeter than honey. (The Nation 2010) Our friendship is higher than the Himalayas and deeper than the deepest sea in the world, and sweeter than honey. (The Nation 2013) According to the opinion of China in Pakistan recorded in the Global Indicators Database of the Pew Research Center between 2009 and 2015 (there is no more recent data available) Pakistan was the first country or the second country with the highest share of its population holding a positive view of China (Pew Research Center 2009–2016). These positive views of China in Pakistan at the political and social level have paved the way for a warm reception of CPEC, which was defined as a ‘game changer’ in numerous occasions by Prime Minister Nawaz Sharif. This view has been echoed by its successor Shahid Khaqan Abbasi, who issued an official statement on CPEC just three days after taking office (China Pakistan Economic Corridor 2017) and by the main opposition parties (The Express Tribune 2015b). Second, since Beijing and New Delhi came apart in the late 1950s and early 1960s, due to the establishment of the Tibetan exile government in India and the intensification of their territorial disputes to the point of waging a border war in 1962, China and Pakistan have established an ‘all-­weather friendship’ grounded on their common interest in balancing India (Dixit 2003: 131–133,

110   Mario Esteban 333). Therefore, from a strategic standing, contributing to the development of Pakistan is positive in itself for Beijing, regardless of the economic stimulus CPEC may involve for China (Small 2015: 4–5). Third, the BRI offers an exceptional opportunity to Pakistan for tackling some of the main barriers hindering its economic development: energy bottlenecks, poor connectivity and limited attraction for foreign investors. There is a widespread consensus among the Pakistani military, political parties and society at large on the enormous potential of the CPEC for spurring economic growth in the country. According to the Agreement on the China–Pakistan Economic Corridor Energy Project Cooperation between the Government of the People’s Republic of China and the Government of the Islamic Republic of Pakistan, signed on 8 November 2014, 61 per cent of the CPEC investment will be allocated to energy projects aiming to improve energy system capacity and the transmission and distribution network. Thus, Pakistan may be able to terminate with what a Wilson Centre report labelled ‘Pakistan’s Interminable Energy Crisis’, which according to their estimates has cost its economy 2 to 2.5 per cent of gross domestic product (GDP) annually (Kugelman 2015). Only in the early harvest phase (2017–2018), CPEC projects are expected to add 10,400 MW to the Pakistani energy system. In addition, up to 36 per cent of CPEC funding will be devoted to infrastructure, transport and communication. It is evident that a greater connectivity will create new opportunities for development in Pakistan, since, according to the ADB Country Director, Werner E. Liepach, the poor performance of the transport sector costs the Pakistani economy 4 per cent to 6 per cent of GDP every year (Ministry of Planning Development 2017). The improvement in communications will be important both for a greater integration of the domestic market and for facilitating Pakistani exports. So far, before the completion of the early harvest projects Pakistani exports have declined from US$24.7 billion in 2014 to US$20.5 billion in 2016 (UN Comtrade Database 2017). CPEC is also expected to improve the confidence of international investors in Pakistan. In the words of the former Economic Minister of the Pakistani Mission to the EU, Safdar Sohail: ‘Pakistan has turned a page in terms of terrorism and regional integration and the Chinese investment is a way of sending that message’.6 Between 2013 and 2015, the stock of FDI in Pakistan rose from US$71 billion to US$76.7 billion in 2015 and the stock of Chinese investment in Pakistan grew from US$1.2 billion to US$2.9 billion (State Bank of Pakistan 2014, 2015). Fourth, the CPEC, linking Kashgar with Pakistan, could contribute to the economic development and the stabilisation of Southern Xinjiang, which is the most unstable part of this conflictive region. Although both the Chinese and the Pakistani authorities are aware that better connectivity could favour the mobility of terrorist operatives between the two countries, both agree this is a minor risk thanks to the effective border control they exert.7 The governmental strategy towards Xinjiang is based on the assumption that an improvement in the socioeconomic conditions of the Uyghur population could reduce their support for separatist

The China–Pakistan Economic Corridor   111 movements. Hence, CPEC and the BRI are expected to strengthen the integration of Xinjiang inside of China (Mackerras 2015). Four of the six economic corridors that comprise the Silk Road Economic Belt run through Xinjiang, which has been officially identified as one of the two hubs of the BRI and is presented as a logistical, financial, educational and cultural hub to boost relations between China and the rest of Eurasia (Chongyang Institute for Financial Studies 2016).

The challenges ahead for the CPEC The CPEC faces potential challenges, including geopolitical rivalry, territorial disputes and security threats, which are shared by other corridors of the BRI. The geopolitical rivalry arising from China’s expanding role may pose a potential challenge to the CPEC. Since the BRI is regarded in some quarters as the grand strategy designed by Beijing to become a world power through the establishment of a Chinese-­centred order in its periphery, some global and regional powers, such as the United States, Japan, India or Russia have resisted its implementation, including CPEC in some cases (Bhattacharya 2016; Wang 2015). The latter is particularly true for India, where many voices have raised concerns about the CPEC, and even the Prime Minister, Narendra Modi, criticised the project as ‘unacceptable’ during his visit to Beijing in June 2015 (The Express Tribune 2015c). Indian reservations are mainly related to the implications of China’s easier access to the Indian Ocean and how that might affect India’s security and strategic context; the competition of the CPEC with New Delhi’s own aspirations of developing an energy corridor from Termez in Uzbekistan to Chabahar in Iran trough Afghanistan; plus to certain CPEC transport projects crossing Pakistani-­administered Kashmir (Hali et al. 2015; Stobdan 2015). These concerns were made explicit by New Delhi when the Ministry of External Affairs of India issued an official statement explaining their boycott of the Belt and Road Forum for International Cooperation celebrated in Beijing in mid-­May 2017: Expansion and strengthening of connectivity is an integral part of India’s economic and diplomatic initiatives. Under the ‘Act East’ policy, we are pursuing the Trilateral Highway project; under our ‘Neighbourhood First’ policy we are developing multimodal linkages with Myanmar and Bangladesh; under our ‘Go West’ strategy, we are engaged with Iran on Chabahar Port and with Iran and other partners in Central Asia on International North South Transport Corridor. BBIN initiative is aimed at enhancing logistics efficiencies in South Asian region. We are also actively considering acceding to TIR Convention (…) Regarding the so-­called ‘China–Pakistan Economic Corridor’, which is being projected as the flagship project of the BRI/ OBOR, the international community is well aware of India’s position. No country can accept a project that ignores its core concerns on sovereignty and territorial integrity. (Ministry of External Affairs of the Government of India 2017)

112   Mario Esteban There are claims in Pakistan that these misgivings have even led to cooperation between Indian security agencies and Pakistani militants, especially following the arrest in Balochistan in March 2016 of an alleged officer of the Research and Analysis Wing (The Dawn 2016c). This is not to deny that the CPEC can offer incentives for India to improve its relations with Pakistan, since the corridor could facilitate Indian access to Central Asia (Ranjan 2015). In other words, the CPEC is not only threatened by security conditions within and without Pakistan, but can also contribute to improving them. The potential contribution of the CPEC to regional stability is more evident at present with regard to Afghanistan. Peace in Afghanistan is a key factor for the success of the CPEC and the reduction of international support for the East Turkestan Independent Movement militants. These are the main reasons China has decided to participate in a joint effort with the governments of the US, Pakistan and Afghanistan to revive the Afghan peace process (Deutsche Welle 2016). Since CPEC and the BRI cover unstable regions, potential security threats might impair their implementation. Chinese public and private actors involved in CPEC are quite troubled by the security situation in Pakistan. The most well-­ known pro-­independence Baloch leaders have denounced the negative impact they believe CPEC will have in Balochistan and some have even warned China ‘to stay away from Gwadar’ (Baluch Sarmachar 2016; News Bharati 2016). Beijing’s concerns on this issue made the Pakistani authorities announce, during Xi Jinping’s visit to Islamabad in April 2015, the creation of a 12,000-strong force devoted to protecting Chinese interests and nationals in Pakistan (The Express Tribune 2015a). This is a key issue, since Beijing has become more sensitive over the past years to attacks against Chinese nationals on foreign soil.

What will the CPEC deliver? Although the CPEC provides an excellent opportunity for improving the economic and security situation in Pakistan and its neighbouring countries, such an outcome can far from being taken for granted. Moreover, a poorly managed implementation of the CPEC could bring negative effects for the participating countries. The actual impact of CPEC will depend to a great extent on whether it becomes a transit, an economic or a development corridor. Transit corridor A transit corridor connecting China’s Western province of Xinjiang with the Indian Ocean port of Gwadar in South Balochistan was first proposed in 2006 by Pervez Musharraf (Embassy of the People’s Republic of China in Pakistan 2006). The corridor’s completion would serve Beijing’s interests in many ways. On the economic front, the cost of Western and Central China’s international trade with Central Asia, the Middle East, Europe and Africa will be reduced. For instance, China would save around US$2 billion every year if it were to use the

The China–Pakistan Economic Corridor   113 CPEC to import 50 per cent of its current volume of oil supplies (Salman 2015). In addition, better connectivity and easier sea access will favour the development of Xinjiang, which in the eyes of the Chinese authorities is paramount for reducing terrorism in the region. Moreover, the transit corridor has significant geostrategic value, making China less vulnerable to US rebalancing towards Asia and an eventual blockade of the Malacca Strait; and it will also facilitate the projection of China’s influence in the Indian Ocean and in Eurasia. No wonder then that both the maritime and the land silk roads are expected to converge in the port of Gwadar. If the CPEC is finally merely a transit corridor, its potential for fostering socioeconomic development in Pakistan will be severely limited, to the extent that it could become a liability more than an asset. Even if China is offering financing through the CPEC to Pakistan in a volume and under conditions unmatched by other creditors, these are loans, not grants, and therefore Pakistan will be expected to repay them.8 In addition, the massive transport facilities that are being – and shall be – created, extended and renovated within the framework of the CPEC will demand a notable disbursement in security and maintenance once they are completed. These financial obligations could be offset by growing Pakistani exports, the development of roadside services and transit fees. Traditional exports such as textiles, agro-­food, sporting-­goods and mining are likely to benefit from the improvements in connectivity. However, more detailed sectoral analyses are needed, since some areas of the Pakistani economy, mainly the manufacturing industry, could suffer due to higher Chinese competition brought on by the CPEC, and also on the feasibility of transit fees for Chinese oil shipments and trade traffic and the eventual volume of income they could generate. Economic corridor Unlike transit corridors, economic corridors are explicitly designed to stimulate economic development. If Pakistan cannot overcome its energy crisis and articulate an industry and trade-­boosting programme, it stands to gain little from the CPEC in terms of additional business opportunities, apart from temporary jobs. The fact that the lion’s share of CPEC-­related investment will be allocated to projects in the energy sector is a solid indication that the CPEC honours its official designation as an economic corridor and if the National Electric Power Regulatory Authority is able to set prices that are acceptable to both investors and consumers, the spillover effect on the Pakistani economy should be colossal. Nevertheless, it is not clear at present how the CPEC favours the mobilisation of Pakistan’s industry and trade sectors. The government has proposed the creation of 29 industrial parks and 21 mineral zones, 27 of them to be granted the status of Special Economic Zones  (The International News 2015). The most advanced of these projects is the Gwadar Special Economic Zone, expected to be fully functional by the end of 2017 and to accommodate industrial units for mines and minerals, food

114   Mario Esteban processing, agriculture, livestock and energy (The Dawn 2016a). It is hoped that these initiatives might attract Chinese investment, technology and know-­how, which would translate into greater and more diversified Pakistani exports. However, the traditional perception in the Pakistani business community is that Chinese investors are not interested in investing in Pakistan as an export base nor in generating profits from Pakistan through joint ventures of private foreign ownership (Rahman 2010). Indeed, previous disappointing experiences with Chinese industrial parks in Pakistan and the absence of concrete financial commitments for most of the announced industrial parks and mineral zones are not very promising signs. Development corridor Without adopting additional measures to increase community capacity building in the less-­developed regions of Pakistan and the role of the small and medium size enterprises, the local actors that will reap most of the gains derived from the CPEC would be the most favoured regions of the country and the big corporations. This is currently illustrated by the priority given to the Eastern route at the expense of the Western one, and by the role played by certain Pakistani conglomerates such as the Dawood Group in the early harvest projects (The Dawn 2016b). That scenario could increase the gap between Eastern and Western Pakistan and materialise into opposition against the CPEC by the regions and groups less benefited by the initiative and could favour the country’s fragmentation. There are great expectations throughout Pakistan on the potential benefits of the CPEC, but if no sense of ownership is given to local governments and communities the situation could change. Influential voices, such as that of Maulana Fazlur Rehman, the leader of the Jamiat Ulema-­e-Islam, were raised against the CPEC when they thought that the project would not benefit their constituencies (The Express Tribune 2016). These precedents require a more committed participation by local actors in the CPEC through consultation and engagement. Another key measure is investing in education in order to entitle local communities to exploit the opportunities the CPEC might offer. Even if the infrastructure, logistics and regulatory framework are right, industrial parks will demand skilled workers. Establishing vocational schools is an excellent way to increase the educational improvement of the local labour force. Although this point is not completely neglected, a US$10 million Pakistani–Chinese technical and vocational institute is scheduled to open its doors in Gwadar by December 2017, a bigger commitment on this front would be very welcome. Furthermore, the federal government should also provide industrial policies and commerce and trade experts to provincial governments to develop local capacities in these areas and avoid a disconnection between the policies of the central government and local economic sectors. The implementation of these measures in Pakistan’s less-­developed areas participating in the CPEC, such as Balochistan and Khyber Pakhtunkhwa, would not only improve the living standards of the local populations but would bring

The China–Pakistan Economic Corridor   115 about enormous gains for Pakistan in terms of security and stability. New economic opportunities could help reduce criminal activity and make local communities into stakeholders in the success of the CPEC and therefore make them more willing to ensure security (Huang et al. 2017).

Conclusions Being the ‘flagship project’ of the BRI, the analysis of the CPEC has provided us some meaningful insight into the nature of the BRI as a whole. Taking the CPEC as a case study, it is clear that the BRI is an economic initiative with clear strategic motivations and repercussions for China, the participant countries and the whole region. This is illustrated by the reasons behind China’s choice of the CPEC as the flagship project of the BRI: the high level of trust and stability in China–Pakistan relations; the strategic benefits derived for China from a stronger Pakistan; the enormous complementarities between the needs of the Pakistani economy and what the BRI has to offer; and the impact of CPEC on the stabilisation of Xinjiang. The challenges faced by the CPEC are also considered to evaluate the prospects for a successful implementation of the BRI. Since the CPEC is at a very early stage and it is impossible to confirm at present what its actual impact will be, this chapter has presented different scenarios of the eventual economic and strategic impact that the CPEC might have. The dissection of those scenarios suggests that to fulfil its goals, the CPEC cannot be just a transit corridor, but an economic, or, even better, a development corridor.

Acknowledgement The author would like to thank the Spanish Ministry of Economy, Industry and Competitiveness for supporting this research (I + D project CSO2017-82921-P). 

Glossary BRI  Belt and Road Initiative. CPEC  China–Pakistan Economic Corridor. FDI  Foreign Direct Investment. GDP  gross domestic product.

Notes 1 The CPEC is made up by four phases: early harvest (2017–2018), short-­term (2020), medium-­term (2025), and long-­term (2030). 2 The seven economic corridors proposed by China are: China–Mongolia–Russia Economic Corridor; New Eurasian Land Bridge; China–Central and West Asia Economic Corridor; China–Indochina Peninsula Economic Corridor; China–Pakistan Economic Corridor; Bangladesh–China–India–Myanmar Economic Corridor, and China–India–Nepal Economic Corridor.

116   Mario Esteban 3 In the inauguration of the Belt and Road Forum for International Cooperation Xi Jinping pledged an additional US$14.5 billion for the originally US$40 billion worth Silk Road Fund. 4 Pakistani high-­ranking officials directly involved in CPEC negotiations with China have conveyed the same idea to the author in different occasions. 5 Interviews with Chinese and Pakistani officials in Beijing (March 2017), Islamabad (April 2016), Karachi (April 2016), and Madrid (July 2017). 6 Interview with Safdar Sohail, 6 April 2016, Islamabad. 7 Interviews with Chinese and Pakistani officials in Beijing (March 2017) and Islamabad (April 2016). 8 The loans include both concessional and commercial credit at an interest rate ranging from 1 per cent to 3 per cent and from 5 per cent to 6 per cent, respectively. Interview with Zahir Shah, Project Director/Coordinator CPEC at the China–Pakistan Economic Corridor Secretariat, Ministry of Planning, Development & Reform, 4 April 2016, Islamabad.

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8 Sino-­Pakistani axis of cooperation in China’s New Silk Road Jorge Tavares da Silva

The Islamic Republic of Pakistan (RIP) and the People’s Republic of China (PRC) have maintained over 60 years of political cooperation. During this period, there were moments of great cooperation and others of inactivity. This bilateral interaction involves partnership on economic, cultural and military issues, including relevant nuclear assistance. It could be said that a bilateral relationship is based on geopolitical convenience, proposing diversification on diplomatic interactions, increasing trade and energy flows, and combating terrorism and independence movements. Both countries share about 520 kilometres of border and have opened an important integrated network of infrastructure – the China–Pakistan Economic Corridor (CPEC) that will link Western China to the Arabian Sea and includes the construction of the deep-­water port of Gwadar. This axis of cooperation fits into the Belt and Road Initiative (BRI) designed by China at the beginning of the new century. It joins a 65-nation cooperation project that aims to create a modern Silk Road connecting the second-­largest economy in the world with Central Asia, Europe, and Africa (Sender and Stacey 2017). This initiative, which is considered by President Xi Jinping to be the ‘project of the century’, includes a complex network of railroads, power plants, ports, highways, and gas and oil pipelines, and, according to our understanding, aims at projecting Chinese power as a ‘trading state’ into the world (Rosecrance 1986). It seems undeniable that Xi Jinping intends to position China at the centre of a new economic order under his political slogan of the ‘Chinese dream’ (Perlez and Bradsher 2017). The point is that this axis of cooperation faces a number of security difficulties, particularly in Pakistani territory. This chapter confronts the BRI project in Pakistan and its main security dilemmas. It aims to clarify all factors that would affect bilateral relations between China and Pakistan and would damage the initiative with clear implications on regional security. How can the project be made unfeasible despite recurring threats in the region? Will Beijing and Islamabad be able to tackle security challenges? How have they faced this difficulty, and what progress has been made? The chapter is divided into three parts. First we analyse China’s current stance, its objectives and the model of international affirmation. Then, we intend to clarify various dimensions of Sino-­Pakistani cooperation, taking into account the regional geopolitical game, particularly the interests of India, Pakistan,

Sino-Pakistani axis of cooperation   121 China, Russia and the United States (US). Finally, we analyse some of the setbacks that are affecting Sino-­Pakistani relations. We argue that they are a detrimental factor for the two countries because they would become BRI-­unviable.

China as a trading state in the conquest of the world economy War is almost as old as the existence of humanity. Clausewitz (1982: 101–140) took up the idea that humans as political animals have natural impulses to make war. However, he was not able to acknowledge the idea that humans are thinking animals capable of finding ways to avoid war (Keegan 2006, 21). On the contrary, peace is a relatively contemporary phenomenon. China is regarded as a country that promotes peace, but we risk forgetting their very long experience of war. It is true that modern international relations are revealing less interstate conflicts, and even more of the world is based on trade and economic interactions. New conflicts are essentially intra-­state and motivated by resource competition, economic disruptions, political antagonisms and environmental degradation (Levinger 2013, 12–14). After China fought radical capitalism in the past, after 1978 – and especially in 1990 – it adopted an economic liberalism in its government policy inherited from the thought of Adam Smith. The Chinese government understands that trade and cooperation exceed gains obtained by military competition, revolutionary posture and territorial encroachment. In fact, history shows us that the rapid rise of some countries, including military expansionism, was disastrous. China aims to remove its image as a threat to the world and its associations with the consequences of the rise of Germany and Japan in the past. A negative image of China can undermine its growth. Basically, it is reinforcing its soft power in a way that makes its hard power less visible. Deng Xiaoping himself repeatedly warned China to take a discreet stance on the international scene: ‘Keep a cool head and maintain a low profile. Never take the lead’ (Zhao 2012: 192). Zheng Bijian, a Chinese Communisty Party (CCP) advisor and high official of the party’s Central School, prepared a slogan that would be adopted by Chinese propaganda: ‘peaceful rise’ (Leonard 2008, 88–93). It is a reserved posture in relation to foreign policy, whose outlines have been drawn since the time of Deng Xiaoping (Zhao 2012: 192). China seeks to counteract the prognosis pointed out by Napoleon in 1816 that took for granted the ‘shaking of the world’ in the face of a possible Chinese military emergence (Peyrefitte 1975).1 Closely following the concept created by Joseph S. Nye (2004), China seems interested in the promotion of its hard and soft power simultaneously. Beyond the modernisation of its military forces, China has used trade and business as a kind of dominance in a soft way. China has established subtle forms of approach and seduction with countries that have natural resources, considered in the African case to be a ‘new colonialism’ (The Economist 2008: 13; Li, 2008: 21–49). This is a trend that contrasts with the identity matrix of the  Middle Kingdom, millennially attached to a certain isolationism and

122   Jorge Tavares da Silva ‘Sino-­centrism’. This posture was in certain periods one of the main reasons for its failures. On the contrary, China’s new stance in the international system is increasingly characterised by a kind of ‘Sino-­globalism’ based on an intense multilateral cooperation strategy and the establishment of ‘strategic partnerships’ at all levels, including a cultural and linguistic spread of global aspirations. China’s strategy goes through an international affirmation – if not domination – through trade routes. Even the concept of ‘China rises’ was improved and changed to ‘peaceful development’, taking out the weight of the expression ‘ascension’. Later, the new slogan ‘harmonious society’ was adopted (Leonard 2008: 32–50). According to our understanding, China is above all following the trajectory of a ‘trading state’, giving priority to economic factors during foreign policy making (Rosecrance 1986). This means that war as a formula to obtain possessions, power and mastery over others was abandoned. The commerce formula is now in force, sometimes translated into a trend of neo-­mercantilism. In recent decades, China has exported massively, controls its currency, keeps exports cheap, curbs imports in order to benefit national industries, and protects employment. At the same time, China maintains a strong oversight of the financial sector to avoid external interferences and overexposure to toxic assets (Khanna 2011: 56). China not only accumulated wealth; it included high levels of foreign currency, particularly American treasury bonds. Many considered China as a ‘model’ for emerging countries, joining two of the best worlds: capitalism and authoritarianism. The historian Chen Yan (2002) infers that this hybrid model balances ‘between the invisible hand and the heavy foot’ (296). The imbalance in international trade relations has been a destabilising factor, cited often by Donald Trump in his election campaign. In Washington there are many who fear the Chinese alternative to global governance, with its own international institutions and influences, is a Sinocentric world order (Feigenbaum 2017: 33). China desires to reduce the hegemonic role of the US in the world by defending international pluralism. Although it does not intend to change the international structure, it seeks to offer alternatives to global governance. Various initiatives have been taken by China and other Asian countries to change the dominant international order. Since the Asian financial crises of 1997 and 1998 and after the refusal of the US to bail out Thailand and the inadequate rules of the International Monetary Fund (IMF ), China understands that Asia will develop its own institutions (i.e. the creation of an Asian Monetary Fund that became the current Chiang Mai Initiative). For many, this has been a new effort of Pan-­Asianism led by China (Feigenbaum 2017: 33). Another important interrelated initiative was launched in 2013: The Asian Infrastructure Investment Bank (AIIB). The main idea here is to create a new multilateral development institution that would finance infrastructures in the region. Washington refused to join the bank and (unsuccessfully) pressed its allies to do the same, arguing that the Chinese model of granting investments without requirements could undermine the existing system based on good practices (Feigenbaum 2017: 33).

Sino-Pakistani axis of cooperation   123 China as ‘the factory of the world’ is using trade as a way of spreading power abroad. Europe has been building a generous welfare system, but it became too heavy, losing the investment of a competitively emerging world. As Parag Khanna (2011) stated, ‘Who has the money makes the rules’ (55). Two dimensions seem to be expressed in the Chinese proposal: Beijing’s attempt to make the Asian region dependent on its economy and to become a global superpower, at least in economic terms. The BRI project is the clear manifestation of China’s intentions to dominate the world economy through trade, infrastructure and economic connectivity. It was first proposed by President Xi Jinping in Astana, the capital of Kazakhistan, and is one of the most important Chinese foreign policies to develop in the beginning of the new century. Its main focus is on Central Asia, implementing a project of economic development in this region that has been affected by serious structural problems. In 2015, the Chinese government outlined six economic corridors that would be included in the BRI project. Some are internal, less-­developed regions like Xinjiang and others belong to foreign countries like Pakistan. The project aims to improve regional integration, contacts and interdependence between China and other countries along the BRI Initiative. However, the challenges for the Chinese government include political transparency, reforms, and an articulation between the public and private sectors.

The Sino-­Pakistani level of cooperation in analysis The friendly Sino-­Pakistani relationship traces back to the early 1950s when Pakistan was among the first countries to recognise the PRC in detriment to the Republic of China located in Taiwan. The PRC was also among the first countries to recognise the newly formed Republic of Pakistan. Although both countries did not have the same ideologies, they shared the will to stop the advance of Indian influence on Central Asia and the Indian Ocean. In 1962, the Sino-­Indian border conflict reinforced bilateral cooperation (Small 2015). In 1965, during the Indo-­Pakistani War, China opened a corridor of cooperation with the Islamic state beyond the sphere of relations in the communist world. Since then, the Middle Kingdom has been one of Pakistan’s main suppliers of military equipment, including fighter aircrafts (JF-­17), frigates and light weapons. This permitted the avoidance of political isolation in the 1980s that was promoted by the US. This measure would only be lifted by Washington after the collaboration of the Pakistani regime on the ‘war on terror’ at the beginning of the new century. According to an official report prepared by George C. Denney in 1968, Pakistan would have allowed Chinese access to American supersonic fighter F-­104s in a clear violation of a previous agreement with the Pentagon. As compensation, the Chinese offered interest-­free loans (Denney 1968). The case did not gain greater proportions because at the time the Nixon administration was already working on an approach to the Chinese. In fact, at that time, Pakistani President Yahya Khan played an important role as a promoter of Henry Kissinger’s trip to Beijing, which would lead to the famous visit of President Nixon to China in

124   Jorge Tavares da Silva 1972. One of the most problematic issues of the China–Pakistani relationship focuses on nuclear cooperation that began in the 1970s and resulted in the signing of a formal treaty in 1986. At that time Prime Minister Zulfikar Ali Bhutto promoted dialogues with the communist giants – The Soviet Union and China. At this point, Pakistan wanted to take the leading role on the nuclear level in the Islamic world, largely due to the contributions of the controversial ‘father’ of its nuclear programme, Abdul Qadeer Khan. Bhutto sponsored a number of Khan’s visits to China, arguing that ‘friendship’ with Beijing would reduce the Indian threat’ (Corera 2009: 13). China helped Pakistan develop this nuclear programme, although they have denied this involvement for years. Apparently, Khan confirmed the secret partnership between Chinese and Pakistan when letters revealed that ‘a C-­130 Pakistani left the Chinese city Urumqi with a sufficient level of uranium for two atomic bombs’ (Ramana 2011). Sino-­Pakistani relations sometimes were not strong enough, although in 1989 Islamabad had been one of the countries that offered assistance to Beijing after the Tiananmen massacre. The propensity of Islamabad to follow a certain Islamic militancy attenuated China’s intentions to cooperate. Beijing did not want their involvement in religious radicalism issues to come into view. It showed a reluctance to allow the transactions of goods along the Karakoram Highway due to the incursions of radical religion and arms trafficking to their provinces in the West (Silva 2009: 234). The participation of Pakistan in multilateral organisations that involved diverse cooperation, particularly with the South East Asian Treaty Organisation (SEATO) and the Central Treaty Organisation (CENTO) that were not aligned with the interests of Beijing, also did not please the responsible Chinese political leaders. Pakistan was far from China in regards to the primary or exclusive relationship that it intended, justifying to the Pakistanis that the country’s entry into SEATO was aimed at national interests. The truth is that over the years Pakistan has also established a close cooperative relationship with the US, reflected in a favourable trade balance that gives them American investment and technical assistance. The fact that Pakistan supported the US in blocking communist China in an attempt to take its place on the UN Security Council until the 1970s is perhaps the most touchy historical aspect of the bilateral relationship. This situation would change with the arrival of President Ayub Khan. The 1990s started the efforts of China to strengthen diplomatic links with Pakistan in a set of important strategic objectives. Naturally, Islamabad revealed interest in the diplomatic dialogues. China represents almost 40 times more of the economy of Pakistan, which represents a huge opportunity in a political and economic sense. The reciprocal understanding leads to Pakistan supporting Beijing’s ‘one China’ policy and Pakistani political causes in the United Nation’s (UN) decision-­making process by China. For example, in the Security Council, China has used its veto power to prevent Bangladesh from entering the UN, requiring that they first release Pakistani prisoners of war (Siddique 2014). Sometimes it is not easy for Beijing to support Pakistan the same way it relatively supports North Korea, Myanmar, Zimbabwe or Sudan. These countries are

Sino-Pakistani axis of cooperation   125 negatively viewed as unsafe for international security. For this reason, it should not be surprising that Chinese diplomats have considered Pakistan as ‘our Israel’ (Aljazeera 2010). On the other hand, Pakistan supported China’s participation in the South Asian Association for Regional Cooperation (SAARC). China has the role of observer on that organisation since 2006 and Beijing supports the participation of Pakistan in the Shanghai Cooperation Organisation (SCO). The two countries cooperate in terms of building infrastructure, financial support, opening lines of credit, military training exercises, transfer of technology and nuclear assistance through the China National Nuclear Corporation. According to the Stockholm International Peace Research Institute, Pakistan is the biggest buyer of arms to China. Support from Beijing to Pakistan after the raid that led to the killing of Bin Laden in 2011 is symptomatic of the solidarity of the Chinese towards their neighbours (Siddique 2014). The new cooperative framework is centred on economic, trade and military agreements and is well accepted by public opinion in both countries. According to a survey by the Pew Research Centre (2014), the Chinese benefit from a positive image of Pakistan in about 60 per cent of the population, although it found a decreasing effect. For both China (36 per cent) and Pakistan (38 per cent), the major threat to each country is the US. The Pakistani media mentions very frequently the good relations between the two governments (pak-­China dosti). It is a note of importance that China was the foreign country that Prime Minister Nawaz Sharif visited first. It was thought that the first to be visited would be Saudi Arabia due the fact that this was the country that in 1999 had protected General Pervez Musharraf in exile. In the words of former Chinese President Hu Jintao, Sino-­Pakistani relations were ‘higher than the Himalayas, deeper than the Indian Ocean, and sweeter than honey’ – positive rhetoric that would be followed by his successor. On 20 and 21 April 2015, Xi Jinping visited Pakistan, intensified cooperation, and signed 51 Memoranda of Understanding, announcing a new package of US$46 billion in infrastructure for that country, including an increase in bilateral business. The trade balance weighs negatively towards the Pakistani side, and the volume of Sino-­Indian business is five times higher than Sino-­Pakistani business. Xi Jinping has frequently referred to how Pakistan had been on China’s side when it was internationally isolated; Prime Minister Nawaz Sharif publicly assumed that the two countries were ‘true iron brothers’ and that the security of China was an issue of theirs as well (Small 2015). During the Beijing and Belt Road Summit that joined 29 Heads of State in China’s capital in mid-­May 2017, the Pakistani Premier and Chinese President agreed to increase the budget devoted to the CPEC by more than US$56 billion (Sender and Stacey 2017). The CPEC aims to connect China’s Northwest Xinjiang province to Gwadar’s deep-­ water port. The port is located in the Arabian Sea and shares proximity to major oil production centres in the Persian Gulf and Middle East. This is very significant since Pakistan is relatively isolated in the international arena by its internal political instability and insecurity. The CPEC aims to make easy free trade agreements and business activities between companies on both sides by opening job opportunities particularly in the Baluchistan region.

126   Jorge Tavares da Silva

BRI and its discontents in Pakistan The Sino-­Pakistani axis of cooperation is framed by the BRI and the resurgence of ancient trade routes and includes the creation of economic corridors. However, it faces a lot of insecurity dilemmas in the region. The impacts of Sino-­Pakistani cooperation at a security level must be seen through two different points of view. The gradual way in to Chinese trade and investment in Pakistan has to do with the first factor of changing security in Pakistan and its periphery, particularly in the region of Baluchistan. Pakistan is marked by deep ethnic, cultural and political fragmentation that results in acts of extreme violence. The Baluchis, people of Persian ascendency that live in that region, claim a lack of opportunity in a country politically dominated by Punjabis and Pashtunsa despite its richness of natural resources in that land, which represent about 20 per cent of the country’s total energy. Baluchis continue to live in very poor conditions without proper education levels in a region fustigated by unemployment (Grare 2006). For instance, in the construction of the first phase of the port of Gwadar, only 100 Baloch workers were involved out of a total of 600, and most of them were daily workers (Fulcher 2006). Besides, Baluchistan produces 40 per cent of the country’s gas but only consumes 17 per cent. The remaining part is sold at a price lower than what is produced in other parts of the country. Although oil was discovered there in 1953 (Sui) the provincial capital (Quetta) only began receiving oil in 1986. At the same time, the best public positions are occupied by non-­ethnic Baluchi elements, even though they have thousands of engineers and technicians. Local leaders and the Baluch nationalist movements are against Chinese investment in the region, which, according to them, only serves the interests of the central government rather than local interests. The central government decided to build a military base in order to avoid possible popular uprisings (Haider 2005: 95–103). The presence of the Chinese in Pakistan is under pressure from the local people. Economic growth in Pakistan is running at close to 5 per cent a year, but it is not enough to reduce high levels of unemployment. Many fear that Sino-­ Pakistani projects might undermine national industry, causing massive imports of cheaper goods from China (Sender and Stacey 2017). While the Pakistani government supports the idea that the development of Sino-­Pakistani cooperation in Baluchistan is important for the development of the region, the local population does not welcome Chinese in the country. Currently there are about 13,000 Chinese people living and working in Pakistan, including many Uighur dissidents coming from the Xinjiang region. Although many Chinese Muslims are well implemented in the Karachi region – the ancient capital – and in Lahore, especially as shoe manufacturers, beauticians, dentists and small business owners of restaurants, many have been threatened (The News International 2014). The assassination of Chinese civilians in Pakistan has been a recurring phenomenon and does not improve Pakistan’s image in Chinese public opinion despite the growth of bilateral trade. Terrorist acts are common and Chinese workers and infrastructures are currently under threat. During the 1960s and

Sino-Pakistani axis of cooperation   127 1970s many Chinese were killed in Pakistan during the building of the highway from Karakoram to China; but now the Chinese victims in the country are essentially resulting from terrorist attacks. Among the authors of the attacks within the Baluchi ethnic group, there are the local tribes of Bugti and Marri, followers of the Hanafi school of Sunni Islam. The violence has been intensified by the emergence of new groups of insurgents, joining to consider acts of extreme violence, including sabotage and kidnapping. These groups claimed independence for the region and do not want the Chinese presence. This is a regional instability factor with frequent confrontations between government troops and tribal fighters. This is the most serious obstacle to all projects that involve both countries, particularly a serious setback to BRI and CPEC (Vandewalle 2015: 8–9). The Pakistani army seeks to counter terrorism, implementing an increasingly tight military control plan, but that provokes excessive violence. This includes cases of executions, disappearances, torture and military attacks. The military accused the Sardars, local leaders and former members of the Pakistani power structures, of encouraging violence. They say that they seek to maintain their power in the region, undermining the country’s economic development. Former President Musharraf tried to break the loyalty of the Baluch with Sardars by strengthening the Islamisation in the region and giving relative protection to Taliban and Mullahs. This was a promotion of Islamic fundamentalism that locals called the ‘Talibanisation’ of Baluchistan, aimed at the withdrawal of political and economic dividends (Fulcher 2006). This protection issued by Musharraf fostered national instability and formed the basis for his subsequent resignation. The Islamisation of Pakistan is precisely seen by China with great concern, particularly the possibility of the territory to be a kind of incubator for terrorist cells and independence movements. These groups would operate in the Chinese province of Xinjiang. Pakistan has denied any ties between Islamic separatists from the Chinese province and Pakistan’s Islamists, but it does not mitigate Beijing’s worries. Islamabad has been working with Beijing in order to tackle radicalisation in Uyghur. For example, in a 2002 raid in Southern Waziristan, the Pakistani army killed Hasan Mahsun, the leader of the East Turkistan Islamic Movement (ETIM). This terrorist organisation demands an independent fundamentalist Muslim state for the Uyghur ethnic minority in Northwest China. This is the most infamous militant group, frequently associated with Al-­Qaida (Reed and Raschke 2010: 1). Security assistance is unclear but involves selling billions of dollars of equipment to Pakistan, included ships to protect the Gwadar Port, maritime piracy, smuggling, human trafficking and drugs (Sender and Stacey 2017). The CPEC project, linked to BRI, put Pakistan in a new geopolitical position that brings geoeconomic advantages by interacting with South Asia, China and Central Asia. The Chinese Navy presence in the region is another consequence of these worries, but causes great concern in India, the archrival of Islamabad. The Chinese presence in the Gulf of Oman (Arabian Sea) is not well interpreted by India and Iran, and upsets some American strategists. New Delhi is concerned both about a Chinese advance into parts of Kashmir in

128   Jorge Tavares da Silva collaboration with Pakistani forces and a naval presence in the Indian Ocean. While India fears military cooperation would strengthen Pakistani military capacities, considering it a ‘vassal state’, Iran, due to the fact that Gwadar competed directly with the port of Chabahar, threatens the economic interests of Tehran. Mistrust between the various actors in the region has increased, intensified by the capture of Indian spies in Pakistan. India does not hide the fact that they have closely observed the Chinese moves within the region, especially on the coast of Makran. New Delhi authorities also say that Chinese guards watch Indian military movements (Haider 2005: 12). The Chinese project known as ‘String of Pearls’ is serving as a connecting shaft between the Asian land mass and the sea lines of communication. Since 2000, China has increased the potential of the People’s Liberation Army Navy, especially through a delicate technological modernisation programme known as ‘Maritime High Technology’. China has installed radars, intelligence systems, patrolling missions and security that can monitor all naval traffic through the Strait of Hormuz and the Arabian Sea (Zajec 2008: 12). China is preparing to become the leading shipbuilder in the world, supported by its two giant companies – China State Shipbuilding Corporation (CSSC) and China Shipbuilding Industry Corporation – while directing more effectively for the Navy. In addition, the seas of the area have become a central desideratum of Chinese strategists often disquieted with the Indian movements in the Indian Ocean, for they nicknamed it the ‘Ocean of Indians’ (Zajec 2008: 12). The port of Gwadar is only 400 kilometres from the Strait of Hormuz, through which passes one of the great flows of oil supply in the world (40 per cent; i.e. about 13 million barrels per day). However, China’s aspirations are not limited to the hinterland of the port, but look for the control and monitoring of a much broader area. A 2005 Pentagon report called ‘Energy Futures in Asia’ prepared by Booz Allen Hamilton under ‘order’ of Defence Secretary Donald H. Rumsfeld regards China’s String of Pearls strategy. This is a plan based on the creation and development of regional bases (with military capabilities) that can project power into the country overseas and secure energy supplies. According to the report, ‘[C]hina is building strategic relationships along the sea lanes from the Middle East to the South China Sea in ways that suggest defensive and offensive positioning to protect China’s energy interests, but also to serve broad security objectives’ (The Washington Times 2005). Like the behaviour of the great powers in human history, China is to engage in a maritime effort to control corridors and deep points of the deep-­water technology field, improve naval action, and influence vectors (Zajec 2008: 12). This strategy enables the maintenance of internal security through the use of energy sources, and according to the Pentagon, the undermining of the US presence in that setting. China is strengthening its military potential in the region since new ships, cruise missiles and submarines with diversified military capabilities create, according to the Pentagon, ‘a climate of uncertainty about the safety of all ships on the high seas’ (Gertz 2005). Beijing believes that in the event of an incident with the US over the issue of Taiwan, one of their vulnerabilities will be the predictable attack on its supply sources of energy.

Sino-Pakistani axis of cooperation   129 Many in Pakistan complained that the country is undermining its sovereignty. Not only are there thousands of acres of agricultural land handed over to Chinese companies developing their businesses, but the Chinese are also installing systems of monitoring and surveillance in cities from Peshawar to Karachi and are building a national network of fibre-­optic cables (Sender and Stacey 2017). Despite the relatively strong cooperation between Beijing and Islamabad, Sino-­ Indian relations today are better than in the past. Tensions between India and China have now lessened. The volume of Sino-­Indian trade is six times larger than the Sino-­Pakistani trade. For Beijing, the ‘Indian threat’ seems less than other challenges posed by powers like the US. India is still an important partner on a diplomatic level; the sharing of political and economic projects fits within the group of BRICS (Silva 2015). The fact that negatively weighs on India (Dharamsala) is that it is the refuge of the Dalai Lama, the spiritual leader of Tibet, to the displeasure of Beijing. Yet, the greatest tension lies between Islamabad and New Delhi, while a more intense military context may drag China into the conflict.

Conclusion China is transforming Asia and acquiring a pivotal position for the twenty-­first century, using its trade as a force to become the new centre of world economy. This proposal is using the model of a ‘trading state’ for assuming international power not through war but through business. For this reason, the economic factor has gained strategic importance, and energy resources and raw materials have become a geopolitical dimension that forces this country to project beyond its traditional areas of ​​influence. Disinterested in much of its history in the potential of the sea route for the spread of its ​​authority, the sea rises to meet China today as the means of excellence for the assertion of its power. Its BRI is one of the most extraordinary strategies to assume this objective. Its linkage to Pakistan is just one small fraction of a huge project that joins China with Central Asia, Europe and Africa. In the centre of this project is the port of Gwadar that the Pentagon described as a ‘pearl’, pertaining to a necklace that extends from the Persian Gulf to the South China Sea. This port helps Beijing project its power overseas and maintain its energy security. All Sino-­Pakistani economic involvement is under pressure. The new energy trade routes are viewed with concern by India, Iran and even the US. The political instability in Pakistan, particularly in the Baluchistan area, and the continued terrorist attacks perpetuated by Uighur separatist groups are some of the problems that have been undermining Chinese intentions in the region. There are recurrent terrorist attacks against the Chinese in Pakistan and the destruction of infrastructures. Insecurity is among the first difficulties in bilateral relations; businesses functioned as a factor of greater radicalisation. Somehow this is even a contradiction. China’s takeover of power in the international context as a trading state forces it to increase its military capabilities in order to secure its projects such as BRI in Pakistan.

130   Jorge Tavares da Silva

Glossary Asian Infrastructure Investment Bank (AIIB)  is a China-­led international multilateral financial institution that aims to support the building of infrastructure in the Asia-­Pacific region. Belt And Road Initiative (BRI)  is a Chinese economic and strategic agenda that includes a group of infrastructure investment in countries along the old Silks Roads linking it with Europe (Eurasia), as well as Africa and Oceania. BRICS  is an acronym that refers to Brazil, Russia, India, China and South Africa. China–Pakistan Economic Corridor (CPEC)  is a collection of infrastructure projects within Pakistan to improve trade with China and to further integrate the countries of the region. Chinese dream  is an ideological concept closely associated with Xi Jinping targeting the goal of a reasonably prosperous Chinese society and realise national rejuvenation. East Turkistan Islamic Movement (ETIM)  is an Islamic extremist separatist organisation based in the Xinjiang province in Northwest China that was founded by Uyghur jihadists who are ethnically Turkic and practice Sufi Islam. Peaceful rise  concept used under the leadership of Hu Jintao that refers to the exceptionalism of Chinese emergence. It had been driven by capital, technology and resources acquired through peaceful means. Later it was replaced by ‘peaceful development’ and ‘harmonious society’. Shanghai Cooperation Organisation (SCO)  is a permanent political, economic, and security intergovernmental international organisation created on 15 June 2001 in Shanghai (China). It joins Republic of Kazakhstan, the People’s Republic of China, the Kyrgyz Republic, the Russian Federation, the Republic of Tajikistan and the Republic of Uzbekistan. Sino-­centrism  refers to the ideology that China is the political and cultural centre of the world. Sino-­globalism  concept created by the author referring to the political and economic involvement of China in the all parts of the world. Strategic partnership  is a long-­term bilateral or multilateral cooperation that can be put into practice through different tools such as international agreements, expert and summit meetings, joint action plans or policy dialogues. Trading state  concept used by Richard Rosecrance that refers to giving priority to economic factors on foreign policy making.

Note 1 The alleged comment by Napoleon that ‘Quand la Chine s’éveillera … le monde tremblera’ [Let her sleep, for when she wakes she will shake the world] is not written in any document; it has only been transmitted orally through the testimonies of some people. Lenin also used the expression in one of his last writings, and Peyrefitte used it for the title of one of his books, giving a wider dimension of the quote (Peyrefitte 1975).

Sino-Pakistani axis of cooperation   131

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Part III

The strategic dimension

9 The roles of local governments in the New Silk Road1 Dominik Mierzejewski

The Belt and Road proposal delivered by Xi Jinping in 2013 as the Silk Road Economic Belt has drawn the attention of scholars and policy makers. From the academic point of view it provides the platform for an in-­depth discussion about China’s domestic and foreign policy transformation. The fundamental needs of the new leader to have his own slogan that differentiates him from his predecessors and the implementation of new approaches in domestic development should be given priority. On the other hand, the Belt and Road Initiative (BRI) presents itself as China’s new foreign policy project that places China as one of the global players among the United States and Russia. Local government’s involvement in BRI needs to be analysed from both theoretical and practical angles. Taking the paradiplomatical scope of research, this chapter attempts to answer the quandaries of theoretical discussions about the role of local governments in foreign policy and their independent actions, such as what the roles of local governments in China’s foreign policy under BRI are, how to understand the multilateral platforms for local government cooperation, such as the 16 + 1 format (China and Central Europe), Brazil, Russia, India, China and South Africa (BRICS), and China–Latin America and Caribbean Forum. The final question of how local governments like Sichuan perform within the framework of BRI will be discussed and answered.

Theoretical assumptions of paradiplomacy For two decades now bilateral cooperation has reached the level when local governments’ relations are demonstrated to be the important pillar that shapes interdependence in its paradiplomatical dimensions. In the Western literature the very first scholar to mention paradiplomacy was Ivo Duchacek, who published an article in the fall 1984 issue of Publius. In the beginning, ‘paradiplomacy’ was used as the twin of the previous neologism ‘microdiplomacy’, also created by Duchacek. Later other terms such as ‘protodiplomacy’, ‘subnational governments’ diplomacy’, ‘regional diplomacy’ and ‘constituent diplomacy’ appeared. This phenomena was also recognised also by Chinese scholars Chen Zhimin, Su Changhe and Zhao Kejun. In Chen Zhimin’s (Fudan University, Shanghai) book, published in 2001, he referred to the division of labour concept, discussed the

136   Dominik Mierzejewski level of autonomy of local governments and explored the roles that are played by local governments. Interestingly, he predicts that, due to the processes of globalisation and regionalisation, the role of locality will be strengthened. Chen Zhimin named this process a ‘new medievalism’. Nowadays, he said, as in the Medieval period, global affairs are approaching a period when cities and regions will play an increasingly important role in shaping international relations. The second Chinese scholar to publish on paradiplomacy was Su Changhe, currently based at Fudan University. In his papers he mainly discusses the phenomena of globalisation, regionalisation and cross-­border cooperation as the preconditions for paradiplomatic activities. Contrary to scholars from Fudan University, Zhao Kejun from Qinghua University in Beijing used the term ‘city diplomacy’ (Zhao Kejun and Chen Wei 2013). What should be noted is that Chinese scholars, e.g. Chen Zhimin and Su Changhe, failed to use paradiplomacy as a concept in their research papers. Paradiplomacy, understood as pingxingwaijiao (平行外交), is only used by scholars from Hong Kong, Taiwan and Macau. In Mainland China, paradiplomacy has been replaced by subnational governments’ foreign affairs activities (ciguozhengfuwaishihudong 次国政府外事活动) and local government actions in foreign affairs (difanzhengu dui waishixindong 地方政府对外事 活动). Paradiplomacy was mainly analysed in the frames of studies on federal systems and federal states. Due to this fact the development of paradiplomacy was analysed through the prism of the process of federalisation of a state’s foreign policy. Scholars focused rather on the changes that take place at the domestic level and push regions into a more active international presence (Kuznetsov 2015). Going into a more detailed definition, Alexander Kuznetsov defines paradiplomacy as: ‘a form of political communication for reaching economic, cultural and political or any other types of benefits, the core of which consist in self-­sustained actions of regional governments with foreign governmental and non-­governmental actors’ (Kuznetsov: 29–30). In the case of China’s official narrative, the role of local governments should rather be perceived as the division of labour approach. As discussed by Zhang Peng (2015) from Shanghai International University, the role of local governments in China’s external actions is limited. She developed the concept of ‘limited participation’ which has been rooted in the local governments’ role of executing foreign policy decisions and traditional subordination relations to the central government. Although ‘limited participation’ has been perceived as the main approach, local governments implementing the ‘go global’ strategy have increasing freedom to form their own moves and initiatives. As long as they work to produce economic and material benefits, central government cherishes their actions. Li Mingjiang (2017) goes even further, saying: ‘Local governments’ participation in foreign affairs is assigned, authorized, permitted, or encouraged by the central government’ (Li 2017). Moreover, in order to be more effective, the Chinese central government allows local authorities to open foreign trade offices. In Germany there are eight offices opened by Hong Kong, Jiangsu province (2), Shandong, Shanghai, Shenzhen and Shenyang. As a result, the central government, with then President Hu Jintao, proposed the concept of

Local governments and the New Silk Road   137 ‘bridgeheads’ (Zhang Peng 2015: 156). In 1999 the central government specified four areas of responsibility of local foreign affairs offices (waiban). First, they were to perform the role of policy watchdog in order to ensure that national policies and regulation on foreign policy were implemented. Second, they were to act as an advisor, responsible for carrying out research, policy analysis and recommendations for local government. Third, local offices were to handle administrative issues, e.g. organising of foreign visits, trip and expenses. Finally, they were charged with exploring new channels and opportunities for international cooperation to support local socioeconomic development (Li 2017: 214). From the abovementioned perspective, the BRI should be understood as a new mechanism of coordination relations between central and local authorities. Under China’s administrative system, tensions exist between whether the local leaders should be followed (kuai), or whether orders from the higher level, e.g. ministry or government bodies, should prevail (tiao). When conflicts arise the administrative efficiency is limited and reduced. As Donalson (2017) points out: ‘the dual stakeholders accountability becomes more difficult’. Since 1978, during the era of reforms, the system of kuai-­tiao has been used to enhance the power of local authorities. Under ‘soft centralisation’, the provinces possess autonomous decision making and have been more influential at the local level than the central government in the pre-­reform times. This approach was visible in the context of investment regime. In the period of the 1980s, unconditional loans for local governments sponsored the boom of investments and, at the end of 1980s, this became one of the important factors causing hyperinflation in China. As pointed out by Yeo (2017), in the 1990s, as a result of the need to rebalance the revenue reserve between the central and local governments, the reform of the tax-­sharing system was introduced. After the Asian financial crisis, the problem of recession loomed and the central government introduced long-­ term treasury bonds in order to stimulate local economy growth and to limit the possibility of economic slowdown. Similar steps were taken by the central government and, in 2004, the State Council passed a new regulation on ‘Investment System Reform’, emphasising the diversification of the investments sector, financial sources and the manner of investments as well as the marketisation of projects. This process of centralisation in investments was reflected in the new approach towards local authorities’ international activities. From this perspective, Guangdong foreign investments serves as an illustrative example. From 2003 to 2012, the total volume of import and export trade between Guangdong and Africa grew 14-fold and in 2015 it reached US$43.13 billion, accounting for about a quarter of all trade between China and Africa. Moreover, Guangdong hit a record 487.9 million yuan (US$73.03 million) in investment for 28 projects in Africa in 2015, up 137 per cent year-­on-year (China Daily 2016). In 2003 the Ministry of Foreign Affairs approved the special regulation on conducting foreign activities in China. First, as stated in the regulation, all international events should be organised according to guidelines from the central government. Second, special application forms should be sent to the upper-­level

138   Dominik Mierzejewski body responsible for organising international events. Third, delegations travelling abroad were to ask permission to be registered and allowed to travel (State Council 2003). In 2011 a new regulation was issued by the Ministry of Finance and Ministry of Foreign Affairs. The major issue touched upon was related to the budgetary problems. In order to have projects accepted the organisers needed to present a special itinerary. International events, e.g. conference, fairs, meetings etc., organised by local governments needed to be accepted at two levels, central and provincial, by (shenpi zhidu 审批制度) an examination and approval system. Moreover, the project must be held in accordance with 16 principles ‘serving economic development, giving prominence to the key points, regulating administration, downsizing and focusing on practical matters’ (MoF, MFA 2003). In debating paradiplomacy in the Chinese legal framework, one of the most important issues is the ability of subnational actors to set up their foreign offices. In 2004 the Shenzhen government passed a special regulation on establishing city trade offices abroad. Offices can be opened in accordance with the national and provincial laws and regulations. At the city level, the body that is responsible for supervising foreign offices is the Shenzhen Trade and Industrial Bureau. The foreign office might serve for five to seven years, and every six months the chairperson is obliged to send special reports to the local Trade and Industrial Bureau (Shenzhen 2004). From this perspective, two speeches delivered by Hu Jintao should be noted. In 2006 and 2009 respectively, Hu Jintao named two Chinese provinces Yunnan, Heilongjiang and the autonomous region of Xinjiang as a ‘bridgehead’ (qiaotoubao 桥头堡) in Chinese foreign policy. It is relevant to mention that the term used by Hu Jintao is of military origins and is used most commonly by staff during military planning. The second term recently used by the Chinese leadership and in common narrative is ‘paitoubing’ (排头兵) – the pawn. This was used in the particular context of the city of Guangzhou’s or Sichuan’s role in Chinese external actions. The growing role of Chinese provinces in China’s economic interaction with the external world required more coordination and even control. From this perspective the division of labour approach was taken by the central government and BRI serves as an umbrella for managing external actions taken by the provinces. The division of labour fits provinces’ geographical positions, historical experiences and access to the lives of the Chinese communities outside of China. All three issues are the preconditions to China’s central government ‘appointment’ of the roles taken by provinces under the BRI. From the abovementioned perspective, Chinese central government uses the bilateral and multilateral platforms for exercising its foreign policy goals.

China’s multilateral platforms for local governments’ cooperation The need for cooperation from local government becomes an important factor in shaping multilateral platforms between China and developing countries. This

Local governments and the New Silk Road   139 phenomena has been visible in recent years when the majority of multilateral forums broadening the scope of cooperation and meeting of local governments took place. The administrative body responsible for managing cooperation at the local level is the Chinese People’s Association for Friendship with Foreign Countries (CPAFFC), established in 1953. The major goal of the association is rooted in China’s socialist rhetoric and is declared as a ‘supporting of action of socialism with Chinese characteristics’. The prominent goal of promoting socialism is realised by: conducting friendship relations at the central, regional and local levels; promotion of trade, investment, intercultural, science, academic exchange; and people-­to-people relations. According to the central-­level chart (article 22, 2012), CPAFFC can open local branches at the provincial and city levels (Statues of CPAFFC 2012). As a result of CPAFFC’s growing interaction with the external world, local governments have played a more important role in supporting China’s foreign policy. This platform of local-­to-local relations has been embodied into China–others multilateral cooperation. Illustrative examples are the multilateral cooperation within BRICS, the 16 + 1 format of cooperation with Central Europe and with the Latin America Forum. In the case of BRICS, the local governments’ meetings started in 2011. It started with BRICS Friendship Cities Forums held in Sanya, China (2011), and Mumbai, India (2012), and all sides emphasised the importance of managed urbanisation and opportunities for shared trade and exchange of good practices. Both forums recognised the growing role played by provincial and municipal agencies, private sector businesses associations and civil society organisations. In November 2013, the 2nd BRICS Urbanisation Forum and the 3rd Friendship Cities and Local Government Cooperation Forum were launched in Durban. The major discussed issues were referred to as the ‘need to address urban challenges linked to: Food Security, Poverty Alleviation, Rural–urban Migration, Water and Waste Management, Public Health and Sanitation’ (BRICS 2013). Following this approach, during the Delhi Summit BRICS countries agreed that the ‘Green BRICS’ agenda should contain the sub-­theme of sustainable urbanisation. The latest summit in Xiamen (September 2017) brought to light the institutionalisation of regional cooperation and as a result the Memorandum of Understanding on the Establishment of the Council of Regions of BRICS States was signed. In July 2017, a forum was held in Chengu (BRICS Friendship Cities and Local Governments Cooperation Forum 2017), and was organised by three institutions: CPAFFC, the China International Friendship Association (CIFCA) and Chengdu Municipal People’s Government. Apart from China, delegates from Russia and India represented the local governments of Khanty-­Mansiysk Autonomus Okrug-­Ugra of Russia and Greater Mumbai of India. From the Chinese side, not only did policy makers from Chengdu and Sichuan take part in the meeting, Wang Jiarui, Vice Chairman of the National Committee of the CPPCC and long-­time former Chair of the International Department of the Central Committee, and Li Xiaolin, President of CPAFFC and CIFCA, were also present (CPAFFC 2017). The ‘Chengdu Proposal’ was signed and called for more cooperation in people-­to-people exchange, educational cooperation and business exchange (Sichuan Ribao 2017).

140   Dominik Mierzejewski A similar situation occurred in the relations with Central and Eastern European countries with the 16 + 1 format. Cooperation at the local level was formalised with the signing of the Suzhou Guidelines in 2015 and the Riga Guidelines in 2016. Similar to the situation of cooperation within BRICS local governments, the 16 countries and China agreed to open the China–Central Eastern European Countries (CEEC) Association of Provincial Governors. The headquarters of this body were established in Prague. During the Summit in Tangshan in 2016 the Governors agreed to sign the Tangshan Consensus. Apart from the repeated slogans of mutual benefit and win–win cooperation, the Chinese side proposed production capacity cooperation (channeng hezuo 产能合作). As agreed, the Central European local governments were asked to help the Chinese side to find business partners in de facto exporting of overcapacity in steel, cement, glass, photovoltaic and petrochemical industries (Tangshan Consensus 2016). This kind of approach aroused suspicions among diplomats and policy makers from the Central European countries that China’s intentions were not clear and concern that China hoped to use the next available channel to export its overproduction.2 As highlighted by Zhu Xiaozhong (2017), the problem arises from subsidies sponsored by Chinese local governments, e.g. the transportation of products shipped by trains from Chongqing to Duisburg are subsidised by Chinese local government and this cooperation is not based on reciprocal measures. Serbia was to be a fulcrum in a trade network transporting Chinese manufactured goods from Piraeus, Greece to Central Europe. Li Manchang stated in March 2015 that officials from China’s Hebei province had visited Belgrade with the intention of investing in Belgrade’s automotive industry (Ramani 2016). In a document published in November 2016, ‘China’s Policy Paper on Latin America and the Caribbean’, a special paragraph was dedicated to cooperation between local authorities. Both sides agreed to actively support local governments’ cooperation based on friendly exchanges and cooperation, share experiences in local development and governance, and promote cooperation among local governments in relevant international organisations (MFA 2016). This declaration was embodied into reality in Chongqing where the first China–Latin local government cooperation forum was held in November 2016. The organisers said the forum enabled 65 foreign representatives from 20 cities of 16 countries and 15 international and regional organisations such as Argentina, Chile, Colombia and Mexico, and more than 180 people to explore the experience of Urban Cooperative Development together (Chongqing Investment and Promotion Agency 2016). Local government cooperation is classified in China as public diplomacy and people-­to-people relations as public diplomacy.3 For conducting and effective public diplomacy the most important issue is that human resources are properly managed. The Chinese overseas can provide the necessary information on legal framework for business community, can promote Chinese culture as well as use it to network (guanxi) for China’s future investment and business activities. As such, local-­to-local relations serve to connect and have better access to the Chinese community living in relevant countries. As estimated by the Inicio project (The Chinese community in Latin America, Inico Project 2008), 28

Local governments and the New Silk Road   141 million Chinese are scattered outside China, 24 million of whom live in Asia. However, in Latin America there are more Chinese than European, Oceanians and African combined. On the estimation of the number of Chinese living overseas there are different types of data. The Chinese Academy of Social Sciences (CASS) and the Center for China and Globalization indicated in 2012 that 87,436 Chinese workers travelled to Latin America that year for ‘labour or workforce related issues’. The biggest Chinese community is settled in Argentina, Chile and Colombia (Mazza 2016). Ten years after the initial Chinese migration boom between 1999–2000, the number of the Chinese migrants was between 10,000 to 20,000 in Hungary, around 2,100 in Poland, some 6,000 in Czech Republic, between 14,000 and 20,000 in Romania, some 20,000 in Bulgaria, some 20,000 to 30,000 in Serbia and Montenegro combined, only about 200 in Croatia and about 300 in Slovenia (Nagy 2011). In an interview in 2002, a Russian deputy minister of nationality policy stated, ‘If you ask me officially, there are 400,000. If you ask me for the real number, it is four million’ (Repnikova and Balzer 2009). The latest data presented by the International Organization for Migration (2017) stated that the biggest Chinese community lives in Brazil, Russia, India and South Africa (members of BRICS), then in Latin America and finally in Central Europe. But when we count it per inhabitants, the biggest Chinese community lives in Central Europe, then in Latin America and finally in BRICS members countries (see Table 9.1).

Sichuan’s role in BRI and cooperation with Poland In the context of the international activities of local government, Sichuan province’s external cooperation is part of local, regional and national plans for development taken under the BRI umbrella. In the case of the Western part of China, the external actions are part of the Great Western Development, the Yangzhi River Economic Belt and the 251 Executive Plan. The Great Western Development project was introduced by Fei Xiaotong in the mid-­1980s and was Table 9.1 Chinese migration to BRICS, Latin America and Caribbean and Central Europe (2015)

BRICS

Total number of Chinese overseas

One Chinese per one inhabitant (in regions)

111,608

1 per 15,900 (1,731 mln) Russia, South Africa, Brazil, India

Country with the largest number of Chinese communities

Latin America

74,341

1 per 5,900 (441 mln)

Panama, Argentina, Venezuela, Mexico

Central Europe (16 countries)

26,498

1 per 4,500 (120 mln)

Hungary, Romania, Czech Republic, Serbia

Source: the author’s own estimations according to the statistics from IOM. Available online: www. iom.int/world-migration (accessed 14 March 2018).

142   Dominik Mierzejewski undertaken by the then Party Secretary Hu Yaobang. The concept was discussed by the political circles in Beijing in the mid-­1990s and introduced by Jiang Zeming as Great Western Openness (Xibu da kaifa) in June 1999. The priority was to develop Western China’s less developed areas. Increasing economic disparities and lack of financial development created a threat to stability in China. From 1999 onwards the central government focused on building a welcoming environment for investments and the concept of the Yangtze River Economic Belt (YREB) was first raised by the State Council in September 2014. The economic belt comprises nine provinces and two municipalities, covering an area of 2.1 million square kilometres and accounting for more than 40 per cent of China’s population and economic output. According to the Guidelines passed by the State Council, the Chinese government, by implementing new policies, hopes to secure openness for Western China. The major points in the document focused on the development of new technologies in water (river) transport, modernisation of river ports (infrastructure), testing new solutions with ‘economic demonstration areas’, strengthening Yunnan as a ‘bridgehead’ in China’s foreign policy, connecting the Silk Road Economic Belt and 21st Century Maritime Silk Economic Road, building a YREB hub (shuniu 枢纽) in Chongqing and an international link (niudai 纽带) in the Sichuan province. The abovementioned plan is coordinated by the special Joint Committee on Development of YREB. This approach allows the Chinese government to properly manage urbanisation processes along the Yangzi River, including the Chengdu–Chongqing city cluster as well as the provinces of Guizhou and Yunnan (State Council 2014). In September 2016, further regulations (in outline) were introduced and three cities were named as ‘core’ for YREB’s development: Chongqing, Wuhan and Shanghai. Furthermore, the area of the Yangzi River became the inland-­sea platform for further opening up the western regions in China. Moreover, YREB became part of a new formula of building transnational regions in China (kuadiqu 跨地区 – spanning two or more People’s Republic of China (PRC) provinces). The project was described as: one axis – Yangzi River; two wings – Shanghai-­Ruili (border with Burma in Yunnan province) and the Shanghai–Sichuan transportations corridor; three poles – Yangzi River Delta, middle area of the Yangzi River and the Chengdu–Chongqing megalopolis, and many points related to small cities along the YREB. The interesting point is that the two areas are described as support for the Yangzi River Delta and Shanghai as the core of the YREB (State Council 2016). According to the 251 Executive Plan formulated in 2015, Sichuan needs to achieve the targets of US$2 million in infrastructural investment, 10 per cent growth per year in investment and US$3 million in trade. In this project, 20 countries along the BRI were chosen for cooperation with Sichuan: Russia, Singapore, Czech Republic, India and Saudi Arabia among others. Then 50 important investment projects, especially in emerging industry, but only above US$1 million, and infrastructural projects, but only above US$100 million, were selected. Moreover, 100 companies such as Changhong, Chengda or Honghua among others were chosen as the companies to implement China’s go out strategy (The People’s Government of Sichuan 2015).

Local governments and the New Silk Road   143 In 2013 the first ever meeting between Western China and Central Europe was held in Chongqing. This was a sign that the BRI was not only about central government action, but also allowed local government to be active in China’s external actions. In fact this was the continuation of the ‘Developing the West’ policy and provided the platform for more equal development in China. During the years of reforms gross domestic product (GDP) growth in the Eastern coastal region was 30 per cent more than in the central region, while per capita GDP grew 30 per cent more in the central region than in the Western region. The total difference in per capita GDP growth between the East and the West was 65 per cent (Dollar 2004). Since then, Western China has become an important pillar in China’s central government relations with Central Europe. From the perspective of further development under the BRI, Czech Republic and Poland were chosen for international cooperation between Sichuan and the external world. Between January and September 2017, the overseas activities of the Sichuan government involved relations with Czech Republic (25 per cent), Japan (15 per cent), the United States of America (13 per cent), Canada (10 per cent) and Nepal (10 per cent) (see Figure 9.1).

Laos 5%

Russia 5%

Poland 5%

Czech Republic 25%

Israel 6%

Germany 6%

Japan 15%

Nepal 10%

Canada 10%

USA 13%

Figure 9.1  Sichuan foreign activities by country (January–September 2017). Source: own assessment based on quantitative analysis of Sichuan government’s foreign activities (meeting, foreign visits) from Waiban webpage at www.scwqb.gov.cn/xwzx/yw/wsyw/index.html.

144   Dominik Mierzejewski According to the latest information published by the Sichuan Custom Office (Sichuan Custom Office Statistic 2017), the total trade of the province between January and April 2017 grew by nearly 100 per cent (compared to the same period in 2016). Export to the countries along the BRI grew by 110 per cent, and import by 70.6 per cent respectively (MOFCOM 2017). But the most important projects within the BRI are infrastructural projects. In this area China is the dominant supplier of magnesium, with approximately 80 per cent of the world market share. This element is used in the aircraft, automotive and electronics industries. The second product is flat glass that is commonly used for windows, glass doors, transparent walls and windscreens. For modern architectural and automotive applications, the flat glass is sometimes bent after production of the plane sheet. The export of flat glass grew by more than 1,100 per cent. Aluminium and quality steel and copper export grew by more than 871 per cent and 196 per cent respectively. It should also be noted that the export of polyvinyl chloride (PVC) grew by more than 670 per cent (see Table 9.2). From this perspective, the Belt and Road umbrella is useful for China’s export of building and construction materials, not only by the central government and State-­Owned Enterprises (SOE), but especially for local governments. Moreover, with the BRI, Sichuan province’s methods of international transport changed. Compared with 2016, the rail cargo, e.g. export of Chinese goods by the Chengdu-­Lodz railway route, grew by 664.7 per cent, while import of goods to Sichuan province grew by 287.8 per cent. At the same time the air cargo grew by 60.2 per cent, shipment by seas by 43.4 per cent and road transport by 65.3 per cent (see Table 9.3). As a result of the growing role of rail cargo, Sichuan’s export to Europe grew by 52.1 per cent and import by 118.9 per cent respectively. From this point of view trade growth to Europe was equal to that of Asia (see Table 9.4). Table 9.2  Sichuan’s export of major building materials in 2016 and 2017 (10,000 RMB) Name of products

Export in 2017

Export in 2016

Total growth (%)

Magnesium and its alloys Flat glass Granite Aluminium Polyvinyl chloride (PVC) Quality steel and copper Copper Tungsten Row steel Cement Sodium carbonate Na2CO3 Zinc oxide Steel strap

23,964 3,917 16,146 369 1,925 14,100 2,305 27,164 195,793 863 45 29 23

45 322 1,522 38 250 4,756 1,314 17,363 131,678 612 39 27 –

53,153.3 1,116.5 960.8 871.1 670.0 196.5 75.4 56.4 48.7 41.0 15.4 7.4 –

Source: author’s own research based on the Sichuan Custom Office statistic 2017 nian 1-7 yue Sichuan chukou zhuyao shanpin zhibiao (Report on the major products exported by Sichuan Province) (January–July 2017). Available online: http://chengdu.customs.gov.cn/publish/portal130/tab 63358/info861667.htm (accessed 14 March 2018).

2502,7459 158,65781 72,56601 10,80985 82,3840 217 36

59.1 60.2 43.4 65.3 621.4 –42.9 28.6

1343,9649 715,3481 477,2281 74,0852 77,2951 83 1

2017

2017

2016 (%)

Export

Import–export

53.7 60.7 27.6 63.6 664.7 –57.7 –

2016 (%)

1158,7810 871,2300 248,4320 34,0133 5,0889 134 35

2017

Import

65.8 59.8 88.0 68.9 287.8 –27.2 25.0

2016 (%)

Note Numerical table entries are formatted to reflect original sources of Chinese origin that use 10,000 as the unit of measure.

Source: author’s own research based on the Sichuan Custom Office statistic 2017 nian 1-7 yue Sichuan jinchu yunshu fangshi zongzhi biao. Available online: http:// chengdu.customs.gov.cn/publish/portal130/tab63358/info861669.htm (accessed 13 October 2017).

Total Air cargo Transport by water Road transport Rail freight transport Transport by post Other

Modes of transport

Table 9.3  Sichuan’s foreign trade by modes of transport (January–August 2017)

146   Dominik Mierzejewski Table 9.4  Sichuan foreign trade destinations (by continent) Continent

Total Asia North America Europe Latin America Africa Oceania

Import–export

Export

Import

2017

2016 (%)

2017

2016 (%)

2017

2502,7459 1235,1168 621,1676 4492,404 58,8943 49,9265 49,6242

59.1 76.1 31.4 76.7 27.6 39.6 60.8

1343,9649 691,5176 305,0336 243,8372 36,3745 40,9714 26,2297

53.7 92.0 9.2 52.1 24.8 40.8 61.3

1158,7810 65.8 543,5992 59.4 316,1340 63.6 205,4032 118.9 22,5198 32.3 8,9551 34.2 23,3945 60.2

2016 (%)

Source: author’s own research based on the Sichuan Custom Office statistic 2017 nian 1-7 yue Sichuan jinchu yunshu fangshi zongzhi biao. Available online: http://chengdu.customs.gov.cn/ publish/portal130/tab63358/info861669.htm (accessed 13 October 2017). Note Numerical table entries are formatted to reflect original sources of Chinese origin that use 10,000 as the unit of measure.

As mentioned above, the juxtaposition of the transportation services and logistics became vital for developing the BRI. Development of Euro-­Asia land bridge connections are increasing. Thanks to its location Poland can increase its service export to China. All existing China–Europe train connections pass through Poland, with one terminating in Poland, Chengdu–Lodz, which had a 40 per cent market share in 2013. It should be stressed that Polish logistics companies take advantage of this, and the abovementioned route is operated by a Polish–Chinese joint venture in the form of a local company from Lodz (Hatrans). Gdansk port facilities have also been upgraded and there are plans to build a logistics centre there dedicated to trade with China. The major issue for both sides of the relationship is to improve the quantity of mutual investment. Compared to other Central European companies, Poland’s intensive campaigns in China started relatively late. The government acknowledged the importance of China in the global economy and paid more attention to the country. A good indication that the approach was working occurred in December 2011. During the abovementioned visit of President Komorowski, Poland and China became strategic partners. The 2011 strategic partnership strengthened the role of local authorities in bilateral relations. Article seven stated that ‘both sides expresses their satisfaction with current stage of local governments exchange and will promote interprovincial and intercity cooperation, in order to deepen both countries society understanding, promote local economy development and cultural and educational exchange’. The central governments in both countries have acknowledged the growing role of cooperation between the local authorities (MFA 2011). Moreover, the regional forums within the strategic partnership of the Poland– China Regional Forum in Gdansk (2012) in Guangzhou should facilitate this kind of cooperation further. In Gdansk the meeting provided practical information for developing economic and trade cooperation between the two countries. The next

Local governments and the New Silk Road   147 Regional Forum was organised by the Lodz voivodship government and city ­governments (June 2015). Numerous local agreements were signed and it is worth mentioning that the first of this kind agreement between the Chinese local authorities and Polish central government was signed. The Henan province Governor and Polish Vice Minister of Higher Education signed the agreement in the area of mutual cooperation in the field of higher education. The fourth regional forum was held in June 2016 in Warsaw. The Vice Minister of Foreign Affairs stressed that the cooperation of the Lodz and Lodzkie region with the Chengdu and Sichuan province had became a symbol and vanguard of bilateral relations. Polish local governments, in cooperation with Chinese local authorities, are focused on a few specific areas. The priority is economic cooperation. Educational, cultural and tourism relations are also very important. However, the sphere that is becoming increasingly important is the sharing of management experience, including particular solutions in environmental protection and local transport improvements (Skorupska and Szczudlik 2014). In the case of the Lodz–Chengdu cooperation both sides have their own ambitions. Lodz is located in Central Poland and has ambitions to become a transport hub for the reloading of goods. This is a chance to increase trade volume, including Polish exports, because transportation by rail is quicker than maritime freight and cheaper than air transport. As a result of building its recognition in Western China, Lodz voivodeship’s governments promote local food products, beverages and other specialties from Central Poland. Some in the Lodz and Lodzkie region, the Sichuan province and Chengdu city hope to find a partner and distributor for products that are mainly ‘Made in Sichuan’. This approach would allow Chinese local governments to play a more important role overall in China’s foreign policy. In the document passed in September 2014 by the State Council on the ‘Yangzi River Economic Belt’, Chengdu was named as an ‘international hub’. This statement was treated as a signal and the Chengdu government became more active in the international arena. Needless to say that in June 2016 the official delegation, with the Party Secretary of Sichuan Province Wang Dongming, paid a visit to Poland, Czech Republic and Russia. The visit was organised by party channels of the International Department of the Central Committee and the Chinese delegation was not invited by Polish central or local government but by the Polish Peasants’ Party. The very fruitful talks started with the opening of the new rail terminal in Kutno, a city located close to Lodz. A similar approach was taken by the Law and Justice government. In the name of having better coordination and management, the Lodz Special Economic Zone, governed by the Ministry of Development, was dedicated for cooperation with Chinese counterparts. Local governments complain that visits by Chinese delegations often produce no tangible results. They argue that the Chinese side exerts pressure on signing cooperation agreements, which are not implemented, but only serve as proof of a foreign trip and are submitted to higher Chinese authorities. In the case of the Lodz and Lodzkie region cooperation with Chengdu and Sichuan province, one peculiar phenomena needs to be noted. In the early stages cooperation was driven by the private logistic company, Hatrans, who became the operator of Sichuan–Lodzkie railway (in Chinese Rong-­Oukuaitie

148   Dominik Mierzejewski – Sichuan–Europe Railway). This cooperation was attractive to the extent that the local self-­government of Lodzkie region was involved in the project. In June 2014 the Representative Office of Lodzkie and Lodz was opened in Chengdu. The major purpose of the office is to build commercial, cultural and educational connections between the two regions. The next step was taken by the Polish central government who decided to open a Consulate General in Chengdu. The cooperation prepares the ground for further investments in logistics and building a transportation hub in Central Poland. Moreover, under the BRI, Chinese local governments were allowed to carry out their own research and feasibilities studies on potential investment projects. From this perspective, Sichuan province and Chengdu municipality governments sent ‘study missions’ to Europe. In Chengdu, a few universities, such as the South China Transportation University, received special grants to carry out field studies in European countries. In May and June 2017, Lodzkie Province Government and Lodz Municipal Office received two study groups from South China Transportation University. The topics were mostly related to investment potential, cooperation in trade and regional policy, and public feeling towards China. The delegations from Chinese universities and think-­tanks travelled across Europe and, by comparing the investment environment, tried to access the best place for investments. This is related to Chengdu’s plan for the development of cargo connections with Europe. According to the plan passed by the local government in May 2015, Sichuan province was responsible for 48 logistic projects. Qingbajjiang district in Chengdu sponsored two international projects: ‘Sichuan– Europe’ (Rong–Ou) and ‘Sichuan–Europe+’ (Rong–Ou+) international railway connections. According to the plan, in 2016 Qingbaijiang logistics hub sent one train per day, in 2017 1,000 per year, and until 2021 plans to ship 3,000 per year. Following this decision, the Qingbaijian district government presented its plan of Free Trade Dry Port in Beijing (May 2015) and plans to visit Sri Lanka, Germany and Poland (China Information Service 2017).

Conclusions From the perspective of local governments’ involvement in China’s external policy, the BRI is considered to be an important tool in managing and centralising the external activities of China’s regions. This approach is especially visible when naming the role taken by local authorities, such as ‘bridgeheads’ in the case of Yunan, Heilongjiang or Xinjiang, or ‘checker’ in the case of Guangdong and Sichuan provinces. Moreover, the division of labour became an important part of the YREB when, in 2014, Chongqing was named as the ‘YREB hub’ and Sichuan province as the ‘international link’ for domestic development. Both became an important part of the BRI, but with different tasks to be taken within the framework of YREB and BRI. From this perspective, the BRI limits the negative impact of competition between local authorities in international competition. Following this assumption, the central government exercises its power over the provincial government, and the provincial legal and policy framework. This

Local governments and the New Silk Road   149 is visible when comparing the ‘251 Executive Plan’ of Sichuan province with its external actions. Czech Republic is named as one of 20 countries dedicated to cooperation with Sichuan and, in the first nine months of 2017, undertook 25 per cent of the whole province’s foreign activities. From this perspective, the BRI has strengthened the unitary system in China and has exercised the central government capacity for conducting foreign policy through local channels. After years of decentralisation, the BRI plays a role of centralisation of power over the local authorities. While retaining control over policy direction, in the areas of local foreign consular affairs, foreign media affairs, overseas Chinese affairs and receiving foreign state or government leaders, the central government relies on provincial governments to perform the actual administrative and operational work. As argued in this chapter, relations between local authorities and the Chinese overseas communities have became one of the most important parts of the local governments interactions with their counterparts within the multilateral platforms of BRICS, 16 + 1 and the China–Latin America Forums. The Chinese overseas community, mainly involved in local businesses, became an important part of China’s export-­led economy. On the other hand, foreign policy division of labour reduces the burden on the central government, while at the same time allowing it to retain leadership in terms of policy direction. In a way, the provincial governments can be seen as convenient agents of the central government in local foreign relations with political implications. Furthermore, local governments, as non-­sovereign actors in interstate relations, can also act as agents of the central government charged with conducting ‘informal diplomacy’ through direct contact with countries that have no diplomatic relations with China or in those cases when state-­to-state relationships are suspended. This serves as a very practical platform for conducting China’s foreign policy during the years of state-­to-state crisis.

Glossary 16 + 1 format  cooperation between 16 countries from Central and Eastern Europe with China. BRI  Belt and Road Initiative. BRICS  Brazil, Russia, India, China and South Africa (multilateral form of cooperation). CASS  the Chinese Academy of Social Sciences. CIFCA  the China International Friendship Cities Association. CPAFFC  the Chinese People’s Association for Friendship with Foreign Countries. MOFCOM  the Ministry of Commerce (China). YREB  the Yangtze River Economic Belt.

150   Dominik Mierzejewski

Notes 1 The research is supported by the National Science Center in Poland. Research project on ‘The role of Chinese local government in China’s foreign policy’, no. UMO-­2017/ 25/B/HS5/02117. 2 Conversation with foreign diplomats based in China, Tangshan, June 2016. 3 Interview, Foreign Affairs Office, Guangzhou, October 2016.

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10 The Maritime Silk Road, viewed from the South Roger Greatrex

Introduction The countries of South Asia are integral actors in the 21st Century Maritime Silk Road (MSR), a central component of the Belt and Road Initiative (BRI), previously known as the One Belt One Road (OBOR) initiative, set in motion by China. The MSR envisioned by China starts from its Southeast province of Fujian, traverses the South China Sea, crosses the Indian Ocean so as to reach the Persian Gulf, and also East Africa, and thereafter the European Union. The maritime highway created across the Indian Ocean is thus essential to the establishment of a viable and sustainable link between China and the European Union. Furthermore, the MSR will interlink with the land-­based Bangladesh– China–India–Myanmar Economic Corridor (BCIM) that is also under development. These two major projects, financed to a great extent by China through repayable loans to the recipient countries, are expected to result in greater connectivity, trade and people-­to-people contacts between China and the region. The expectations are that the MSR and BCIM will bring Chinese direct investment to South Asia, improve access for products from South Asian countries in China’s market, lead to infrastructural development and promote considerably increased bilateral trade. An example is the expectation that China–Bangladesh trade may develop so as to exceed US$30 billion by 2021. However, the Indian Ocean, as with the South China Sea, is a strategic zone as well as being an area for economic activity and transportation. Similarly, as with the South China Sea, the result of any shift in naval power in the Indian Ocean that might occur as a result of the BRI, could have serious consequences. The countries of South Asia responded initially to the MSR component of the OBOR initiative with varying degrees of warmth of welcome. Myanmar saw the MSR as a possibility to develop its energy sector through the construction of gas and oil pipelines from Kyaukphyu to the Western Chinese metropolis Kunming. Bangladesh looked forward to infrastructural development and greater connectivity. As a result of the infrastructural development that the MSR offers, Sri Lanka will have the largest port in South Asia, situated in Hambentota, and the vast Colombo Port City (CPC); all this will be made possible through the financing made available within the OBOR framework. Pakistan, in addition to the

154   Roger Greatrex Pakistan–China Economic Corridor or CPEC (including the Gwadar–Khunjerab Road Link), will have the deep-­water Gwadar Port and a free trade zone covering over 900 hectares. However, India remained deeply ambivalent to the MSR project, and saw augmented Chinese support for Pakistan as a direct threat in the region. Increased engagement with a region that has a history of colonisation and exploitation, and that remains embroiled in unresolved regional conflicts, can entail major risks for China. Furthermore, tensions regarding other sensitive issues, such as the uses of trans-­border water resources, could be expected to impinge on the MSR project, and even the BRI as a whole. Among the problems that China faces are the relative poverty of parts of the region, security issues (including ‘rampant transnational crimes’), a lack of consideration how existing programmes of border development in the region could be coordinated with the MSR project (Daw Chaw Chaw Sein 2015), and the abilities of South Asian actors to meet their deadlines for loan repayments. This last point is not negligible, even for a country as wealthy as China is in 2017. For example, Venezuela currently owes China US$23 billion for outstanding debts for loans. While the Chinese Foreign Ministry spokesman Geng Shuang 耿爽 recently stated that China’s cooperation with Venezuela was ‘proceeding normally’, and expressed a belief that the country could handle its debt repayment (Reuters 2017), in the eventuality that there were multiple cases of difficulty to repay debt among MSR beneficiaries, this could result in disruptions in the smooth development of the project. It appears that this predicament has already manifested itself. South Asian countries are facing debt crises that could mean repayment of MSR loans are delayed or threatened. The involvement of China’s government-­owned entities in OBOR as a whole is noteworthy: 47 of 102 such conglomerates participate in 1,617 OBOR projects. According to the Financial Times, the payback period is often long, and construction delays are common (Financial Times 2016a). Sri Lanka has an estimated US$8 billion dollars debt to China, and plans to hand over the Hambantota harbour to China under a debt equity scheme. In Myanmar, China is reported to have demanded a 70–85 per cent stake in the Kyaukphyu project, in which the 7.3 billion dollars cost is co-­funded by China and Myanmar (The Economic Times 2017a). In Pakistan, where China has pledged 56 billion dollars, the debt for Pakistan will peak at around US$5 billion by 2022 (Jorgic 2017). However, ‘Chinese officials privately admit that they expect to lose eighty per cent of their investment in Pakistan and fifty per cent in Myanmar’ (Financial Times 2016c). In the twenty-­first century, the risks involved for any nation in initiating, implementing and successfully achieving its goals in the framework of a geopolitical initiative are significant. In addition to the difficulties of the financing, planning, coordination, management and completion of the envisioned project, there are further dilemmas related to international public relations and the creation of a positive, acceptable image of the project. In the global Internet age of the twenty-­first century, the country initiating the project is wise to take into

Maritime Silk Road, viewed from the South   155 consideration how various media – in the country initiating the project, in the recipient nation, but also in relatively unaffected parts of the world – present and portray the project. The complexities, difficulties and constraints faced in the exertion of effective influence (or possibly control) by one nation over another sovereign nation and its interests are readily apparent. The ability of the initiating nation in seeking influence and control to translate its resources into influence, and to gauge correctly the degree of autonomous agency within other actors, themselves often competing stakeholders, are great hurdles to be overcome. The likelihood of the existence of competing forces in the discursive realm cannot be underestimated.

Goh’s framework for gauging geopolitical success A very useful and relevant framework to enable us to understand and gauge the degree of success of China’s recent and ongoing initiative to develop from a regional to a global player in large-­scale geopolitics though its OBOR and now BRI strategy has been formulated by Evelyn Goh (Goh 2016). Goh suggests an analysis based upon the concepts of a state being able to represent itself as a preference multiplier, being capable of mobilising discursive persuasion, having the ability to influence institutional shaping and ultimately be able to mobilise the power to prevail. The successful state has the ability to exploit structural positions for mutual benefit with its counterparts, using policies to generate deliberate collective outcomes. It makes use of discursive persuasion to tell a better story, to convince and assure its counterparts of its positive and beneficial intentions. In institutional shaping the successful state succeeds in setting the agenda, and is in a position to make or change norms to constrain others. Such a state has the power to prevail since it is able to ensure, by altering the preferences and behaviour of its counterparts with their agreement, that its self-­ interests and preferences are protected. A less successful state uses structural intensification, and possesses an impressive potential for attainment of its goals. In the field of discursive persuasion it mobilises persuasion and inducement, and has a mixed potential for its goal attainment. However, in the realm of institutional shaping, while using structural positioning, it experiences difficulty in achieving its goal attainments. As a consequence its power to prevail is advanced using coercion and inducement, with an overall unpredictable potential for goal attainment. In China’s case, during the Obama years, it was able to develop as a preference multiplier, promoting economic regionalism, advancing its own of version of ‘developmentalism’, and engaging in an impressive range of special interest projects. In the realm of discursive persuasion China had to exert efforts to counter the ‘China threat’ discourse, and advocated ‘joint development’ with an impressive degree of success. It engaged in institutional shaping, using various economic institutions and its role in the United Nations. However its power to prevail in regional tensions, such as the South China Sea disputes, border conflicts such as the Sino-­Indian border dispute, its disputes with Japan over the

156   Roger Greatrex Senkaku/Diaoyutai islands, and its apparent inability, for whatever reason, to exert any influence over North Korea’s military development, was noticeable. Goh concludes that, despite the power asymmetry between China and its neighbours, China is not as successful as it could be expected to be when dealing with its small developing neighbours. China has tried to make commercial and institutional investments to insure against regime change, but not always with success. While China may aim to ‘reshape the incentive structure and perception of its neighbours’, it has not achieved notable success in this field. Goh asks, ‘Might China’s experience be fairly typical of contemporary big powers?’ To this question could be added, with special reference to the position China feels itself to be in today, the issues of urgency and the need for speed in implementation, minor yet important points not taken up in Goh’s framework. Initially Western sentiments regarding OBOR were far from uniformly positive – an unnamed Western diplomat was reported as giving the opinion that, ‘They are just putting a new slogan on stuff they’ve wanted to do for a long time’ (Financial Times 2015). The fact of the matter is that increasingly China is facing the aftermath of a domestic investment boom that has left a vast overcapacity and a need to find new markets abroad. The solution is to export technological competence, ‘Construction growth is slowing and China doesn’t need to build many new expressways, railways and ports, so they have to find other countries that do […] One of the clear objectives is to get more contracts for Chinese construction companies overseas’ (Financial Times 2015). This should not be an impossible task. As Goh points out, the Chinese government, alongside its SOEs, ‘does not need to change others’ preferences, only to identify common imperatives, initiate policy action and commit resources to the issue’ (Goh 2016: 13).

Myanmar In Myanmar, local civil society opposition has emerged as a real constraint on Chinese influence, and this has been convincingly explained with reference to hydropower development (Yeophantong 2016). In the field of dam construction the Chinese government acts through its development banks and major state-­ owned enterprises (SOEs) such as Sinohydro, China Southern Power Grid (CSG), and China Power Investment (CPI). Over 30 Chinese companies have underwritten the development of over 300 dams worldwide, of which 34 per cent are in Southeast Asia. The total investment for the projects in Myanmar is estimated to be US$23 billion. The projects were welcomed by the Thein Sein administration as a means to alleviate Myanmar’s energy shortages. However, in addition to significant environmental concerns and the disruption caused by forced displacement, the electricity that the planned dams will generate will be exported primarily to China and Thailand (90 per cent), with only a small amount for Myanmar. With these projects China is able to simultaneously meet rising domestic energy demands and generate profits for Chinese corporations. To finance the projects the Chinese government approved in 2010 a 30-year

Maritime Silk Road, viewed from the South   157 interest-­free loan worth US$4.2 billion to help finance infrastructural development, and promote Myanmar’s ‘economic development’. Public awareness of the negative impacts of the dam construction was raised by the activities of civil society groups such as Salween Watch and Kachin Development Working Group. Focusing in 2007 on resistance against the Myitsone Dam, these actors began to lobby extensively and managed to turn a ‘local problem’ into a national issue. In 2011 Thein Sein suspended construction of the dam. Grassroots working under an authoritarian regime engineered a substantial shift in policy. However, CPI was not previously informed. CPI had already invested US$1.2 billion in the project but the project did not have political risk insurance, with the result that CPI experienced considerable losses. The CPI initiated campaigns in 2011 to promote the benefits of the project, an obvious exercise in discursive persuasion. The Chinese government further retaliated by suspending new Chinese investment in Myanmar, and framed the suspension in purely legal terms, demanding that Myanmar guarantee the ‘lawful’ rights of CPI and other Chinese companies. Furthermore in 2014 officials from Myanmar’s Ministry of Electric Power expressed a desire for more Western involvement in Myanmar’s hydropower section. Deputy minister U Maw That Htwe remarked in 2015 ‘[the] trend in hydropower project implementation is to turn to Western companies’ (Yeophantong 2016). Turning to industrial infrastructural development projects, in 2009, Myanmar’s Ministry of Energy signed a memorandum of understanding with China National Petroleum Corp. (CNPC) on the construction of an oil pipeline linking Maday Island in Kyaukpyu with Yunnan. The pipeline, which allows crude from the Middle East to be unloaded in Maday and shipped overland to China, bypassing the Strait of Malacca, was completed in January 2015. Also in 2009, CITIC Group signed a separate Memorandum of Understanding (MoU) with Myanmar’s Ministry of National Planning and Economic Development on constructing a deep-­sea port and railway network in the Kyaukpyu Special Economic Zone. Unlike the oil pipeline, the rail and port MoU failed to materialise. The railway MoU expired in 2014 without construction ever beginning. When the Kyaukpyu–Yunnan railway project was cancelled, Railway Minister Myint Wai said it was ‘in accordance with the public’s demand’ to not carry out the project. The port deal gained new life with the contract awarded to CITIC Group’s consortium. However, some people in Myanmar are raising concerns about the Kyaukpyu Special Economic Zone, which was approved by the country’s Parliament. Ba Shin, a lower house legislator from Kyaukpyu, shared his concerns with Reuters: ‘It isn’t known whose land will be seized and how they will be compensated […] Nothing is known about the potential developers and investors. There are growing concerns and doubts among the people due to lack of transparency’ (Tiezzi 2017).

158   Roger Greatrex

Sri Lanka During the presidency of Mahindra Rajapaksa in Sri Lanka the funding of two major infrastructural projects were agreed with the Chinese government, the 1.5 billion dollars Hambentota Port and the US$1.4 billion CPC. When the Hambentota Port on the Southern coast of Sri Lanka is completed it will be the biggest port in South Asia, able to accommodate 33 vessels at a time. The CPC involves the construction on 235 hectares of reclaimed land of a new city by the China Communication Construction Company (CCCC). Controversially, a decision was reached to assign 20 hectares (or alternatively 108 hectares) to be handed over to the CCCC on a freehold basis with complete rights. After the 2015 election, the new incumbent Maithipala Sirisena suspended the CPC project on assuming office, on the grounds of environmental concerns. China dispatched a special envoy Liu Zhenmin to seek assurances that the project would continue, but did not obtain any clearly positive results to its request. China repeated its urgent call for fast-­tracking negotiations on the project. When Chinese Premier Li Keqiang met with with Sri Lankan Prime Minister Ranil Wickremesinghe in April 2016 he is reported as having said that both parties should speed up the second phase (worth US$750 million ) of the Hambentota project, the first phase having cost US$361 million. Li Keqiang also welcomed the Sri Lankan decision to permit the CPC project to go ahead after its suspension (DeVotta 2016). Xiao Qian 肖千, Director General of the Asia Department of the Chinese Foreign Ministry, officially stated, ‘Both sides agreed to further speed up over all and comprehensive resumption of the work on the CPC project.’ Concurrently with the harmonious tone found in Xiao Qian’s statement, the state-­owned CCCC demanded US$125 million compensation as damages for the stalling of the project from the Sri Lankan government. This figure is based on estimated daily costs of nearly US$400,000. The reasons that the Sirisena administration chose to reverse its decision to shelve the CPC are debatable, yet a large part of the answer may well lie in the balance of payments crunch, a lack of alternative investors, and India’s proclaimed confidence in the strength of its position in Sri Lanka’s future. According to an official at the Sri Lankan Board of Investment, only China had come up with specific proposals for developing a Special Economic Zone (SEZ) in Hambentota, in conjunction with the port. If we return to the influence framework proposed by Goh, in the light of events in Myanmar and Sri Lanka, we obtain the following results. China was reasonably successful in the preference multiplier. China functions best under non-­transparent circumstances, or in absence of other stakeholders, but also functions since developing states have their own ambitions. Chinese discursive persuasion was generally unsuccessful, particularly when lacking a local base in the partner state. Similarly, China’s success in institutional shaping found to its cost that democratically elected governments are less easily influenced than single-­party states and dictatorships. When it comes to China’s power to prevail, the attempt to use legal measures and the threats of court proceedings is definitely questionable, and looks like simple bullying.

Maritime Silk Road, viewed from the South   159

Pakistan On the face of it the implications of the MSR for Pakistan are overwhelmingly positive. The country will enjoy substantial infrastructural development, and there has been an expectation that 4 per cent of China’s global trade will be transported over the Gwadar–Xinjiang Highway. The toll tax and rental fees that would be levied on transportation would generate an expected total of between 6 to US$8 billion annually by 2020 (Jorgic 2017). The development of the Gwadar harbour as a major port, and the construction of an international airport there, coupled with substantial assistance to agriculture and industry, will all be of major importance to Pakistan. Chinese enterprises are expected to play a leading role and establish factories throughout the country, and an official plan mentions Haier, ChinaMobile and Huawei, among others. However, security issues remain a concern, and a plan formulated by the China Development Bank includes mention of the creation of a national fibre-­optic backbone that will include electronic surveillance and control systems along major roads and in selected urban areas. This report is also said to have noted that high inflation is a major risk in Pakistan, averaging over 11 per cent in recent years that could result in ‘a rise of project-­related costs and a decline in profits’ (Husain 2017). Recent months in 2017 have seen the dismissal of Nawaz Sharif, and most recently it appears that the Diamer-­Bhasha dam project is going to scrapped. To cap this uncertainty, there were reports that China had decided to suspend funding for three major road projects within the CPEC temporarily (Dawn 2017b). On 11 December 2017 Minister for Planning and Development Ahsan Iqbal announced that China was reviewing the financial mechanisms for these projects and work would recommence after Chinese approval was given. Rather confusingly, a few days later Foreign Office spokesperson Dr Muhammad Faisal denied that there was any news from Beijing that there was a halt in funding (Siddiqui 2017). While this may be a simple misunderstanding, the existence of contradictory information regarding the funding mechanisms of CPEC is disturbing. The editorial in Dawn that first announced this unexpected news concludes on a somewhat pessimistic note that deserves to be quoted in full, As CPEC grows, its implementation becomes more complex and unwieldy given the small number of people involved in drafting the Pakistani position in the talks. The only antidote to the growing difficulties the government appears to be running into is greater transparency, which is becoming more urgent with the passage of time. (Siddiqui 2017)1 The issue of transparency is consequently revealed as a common concern in both Pakistan and Myanmar, as it is in the European Union. Questions regarding issues such as social and environmental sustainability, and transparency resulted in the EU refusing to endorse one of the three prepared texts concerning the BRI plan at the Beijing summit (Phillips 2017). Reservations regarding issues of

160   Roger Greatrex transparency and co-­ownership were shared by EU member states, and it appears that EU member states required guarantees that projects will be economically and environmentally sustainable and subject to fair tendering processes. In this context, we may note a Chinese report that, ‘Courts across the country are handling a rising number of foreign-­related lawsuits as the Belt and Road Initiative rapidly progresses … Chinese courts at all levels concluded 25,916 foreign-­ related cases of all types last year, up by 9.38 per cent year-­on-year’ (China Daily European Weekly 2017), a statistic that would appear to vindicate the EU standpoint.

India Turning to India and what could appear to be an aloof attitude towards BRI, it may be first useful to recall a report from the admittedly partisan Institute for Defence Studies and Analyses, quoting an article that had appeared in The Irawaddy in August 2009, that the Indian Coast Guard had intercepted fishing trawlers flying Myanmar flags off the Andaman islands (Goswami 2014). On inspection all the crew turned out to be Chinese nationals carrying radio and depth sounding equipment for submarine usage. Some years later, Senior Colonel Geng Yansheng 耿雁生, the official spokesperson for the Chinese Ministry of Defence, was able to state categorically on 27 November 2014 that a report, published in the Nambibian newspaper on 11 November of the same year, that China was setting up 18 naval bases in Sri Lanka, Pakistan, Myanmar, Djibouti, and other places in the western and Southern Indian Ocean was ‘utterly groundless’ (Africatime.com, Blomberg 2015; Taipei Times 2015; for a list of the 18 purported sites for naval bases, that includes Djibouti see The Economic Times 2017b; see also Chansoria 2017). Earlier, on 25 September of the same year, Geng Yansheng had similarly categorically denied that when a Chinese submarine docked in Colombo port it could be seen as any sign of China’s power projection in the Indian Ocean (ChinaDaily.com.cn 2014). It comes perhaps with little surprise that on 27 September 2017 the Pakistani newspaper Dawn was able to report that China had staged its first military exercise in Djibouti, in Eastern Africa on the Northwestern edge of the Indian Ocean, after opening its first overseas military base there in August (Dawn 2017a, 2017b; Indian media concern regarding this development may be noted in Hindustan Times 2017b). The reports of Geng Yansheng’s denials are perhaps a little reminiscent of similar dismissals of the existence earlier of any damming projects on the Yarlung Zangpo River; the reports were initially categorically denied by China when communicating with the Indian government over a period of three years, even after the contracts for the work had been allocated. India, as presented in the media, is certainly seriously concerned with Chinese naval presence in the Indian Ocean (Singh 2017c). India’s reluctance to participate in MSR and OBOR, most recently seen in its absence from the Belt and Road Forum in May 2017, has been explained by a high-­ranking Sri Lankan official Sarath Amanugama as arising from the CPEC

Maritime Silk Road, viewed from the South   161 running through the disputed area of Kashmir, rendering it difficult for India to be flexible. Amanugama has further been quoted as saying that Sri Lanka will not permit any foreign military operations in its port by any country including China, confirming reports that recent Chinese requests have been made for docking of its submarines (The Times of India 2017b). Thus we must understand that anxiety regarding possible Chinese strategic aspirations in the Indian Ocean was not dissipated by vigorous Chinese statements, without the slightest hint of irony, to the contrary: ‘Some countries seem to be obsessed with the idea of containment or game-­playing, and seem to be unable to see the truth in the mist of history’ (Bejing Youth Daily 2017). Without entering into the history of the complicated relationship between India and China since the Chinese army first crossed India’s border in 1962, the events of the 73-day border face-­off in Doklam plateau during the summer of 2017 that saw China and India accusing one another of trespassing on each other’s territory were remarkable. Even before the standoff began, Chinese media, represented by the jingoistic Global Times, chastised India for exaggerating concerns regarding the CPEC and ‘overly interpreting’ Beijing’s military development (The Times of India 2017a). Taking a high moral standpoint, the Global Times asserted that China advocates peaceful development and will never seek hegemony in the region. During the standoff, Indian media puzzled the reason for the conflict, wondering whether it could be retribution for the refusal of Prime Minister Modi to attend the BRI Forum hosted by President Xi Jinping (Aaron 2017). The Global Times chose instead to warn Chinese citizens of possible violent attacks in India and threatened the possibility of a slowdown in Chinese investments in India (Hindustan Times 2017a). After the conclusion of the lengthy standoff, during which no shots were fired and there were no serious casualties, Indian Army Chief General Bipin Rawat warned of continued threats of conflict on two fronts (Singh 2017a), and the Indian Centre for Joint Warfare Studies (CENJOWS) predicted that the Line of Actual Control (LAC) would be under stress ‘with increase in frequency, intensity and depth of (Chinese) transgressions leading to more and more standoffs’ (Singh 2017b). The Doklam standoff rendered the possibility of India participating in the BRI Initiative in the near future politically impossible. However, given India’s current economic weakness compared to China the likelihood of some sort of rapprochement in the future is far from impossible. China is India’s largest trade partner with bilateral trade at over 71 billion dollars, but the trade deficit for 2016–2017 of over US$51 billion is in China’s favour, and the trade deficit between the two countries has grown steadily from around US$30 billion in 2010–2011, and always been in China’s favour (The Times of India 2017c). Indeed the Doklam standoff may have had quite another rationale to the obvious answers. Throughout the Doklam standoff, and even after its conclusion, according to Indian External Affairs Ministry spokesman Raveesh Kumar, China failed to share any hydrological data with India about the water flows in the Brahmaputra/Yarlung Zangpo River. On 12 September, Geng Shuang stated that China ‘did not have the conditions to collect the relevant statistics of the

162   Roger Greatrex river’. When he was asked when China would provide data, he replied enigmatically, ‘We will later consider that’ (The Times of India 2017d). While there were alarmist suggestions voiced in the Indian media that China was refusing to provide hydrological data as part of a possible plan to induce flooding by releasing water from its dams (Kalita 2017), the real reason may have been much more prosaic – undisclosed dam construction on the upper reaches of the Brahmaputra/Yarlung Zangpo River, in Chinese territory. In the support of this explanation we may note that Assam State Finance and Health Minister Himanta Biswa is reported recently as having said that Siang River, i.e. the principal constituent of the Brahmaputra River, had turned black with pollutants, and that ‘the water contains a large amount of mineral properties. People have also reported cement mixture in the water’ (The Times of India 2017e). While it is conjecture, the likelihood that the Doklam standoff had as at least part of its purpose to distract attention from continued dam construction work, and the consequent easy denial of hydrological data, needs at least to be considered.

Conclusion In India’s case a lack of transparency is yet again a central point. When it comes to understanding India’s lack of enthusiasm towards active participation in BRI, it is based on extensive experience of repeated breaches of transparency, linked with periods of tension followed by optimistic spells of détente. India’s participation in BRI at the present is something that China does not really need if its vast investments in Myanmar, Sri Lanka and Pakistan pay off, reaping generous dividends for state-­owned enterprises, or at least functioning satisfactorily in securing China’s maritime trade routes to Africa and Europe. For the three main  South Asian participants in BRI – Myanmar, Sri Lanka and Pakistan – the view today must be one of hopeful optimism, tinged with increasing trepidation about looming debt repayments and continuing concerns regarding lack of transparency.

Acknowledgement The research on which this chapter is based was carried out during my employment at the Centre for East and South-­East Asian Studies, as part of a project concerning Sino-­Indian border relations. The author would like to express his gratitude to Professor Carmen Mendes for her invitation to contribute to this edited volume, and for her tireless work in bringing this volume to publication.

Glossary BCIM  Bangladesh–China–India–Myanmar Economic Corridor. BRI  Belt and Road Initiative. CCCC  China Communication Construction Company. CNPC  China National Petroleum Corp. CPC  Colombo Port City.

Maritime Silk Road, viewed from the South   163 CPEC  Pakistan–China Economic Corridor. CPI  China Power Investment. CSG  China Southern Power Grid. MoU  Memorandum of Understanding. MSR  Maritime Silk Road. OBOR  One Belt One Road. SEZ  Special Economic Zone. SOEs  State-­Owned Enterprises.

Note 1 Whether there is any link between this suspension and earlier reports on increased oversight on foreign investments by Chinese state-­owned enterprises, as reported for example by Emily Feng (2017) remains to be seen. 

References Aaron, S. (2017) ‘Is China punishing India for its Belt and Road stance while testing Modi and Trump?’, Hindustan Times, 4 July. Africatime.com, Blomberg (2015) ‘China looks at Walvis Bay Naval Base, Namibian Reports’, 20 January.  Aung, S. (2015) ‘Private investment to spark electricity boom’, Myanmar Times, 5 January, quoted in Yeophantong 2016: 186, note 44. Bejing Youth Daily (2017) 15 May. Chansoria, M. (2017) ‘China eyes 18 overseas naval bases’, The Sunday Guardian, 9 December. ChinaDaily.com.cn (2014) updated 26 September. China Daily European Weekly (2017) 17–23 March. Daw Chaw Chaw Sein (2015) Myanmar’s Perspective of One Belt, One Road (Internal Document for Silk Road Forum). Online available at: http://en.drc.gov.cn/DawChaw ChawSein.pdf (accessed 12 February 2016). Dawn (2017a) ‘China forges “strategic” ties with Djibouti after opening base’, 24 November. Dawn (2017b) ‘Editorial’, 6 December. DeVotta, N. (2016) ‘China’s Influence in Sri Lanka: Negotiating Development, Authoritarianism, and Regional Transformation’. In Goh, E. (ed.), Rising China’s Influence in Asia, Oxford: Oxford University Press, 129–152. Feng, E. (2017) ‘China tightens rules on state groups’ foreign investments’, Financial Times, 3 August. Financial Times (2015) 12 October. Financial Times (2016a) 9 May. Financial Times (2016b) Tom Miller, 9 May. Goh, E. (ed.) (2016) Rising China’s Influence in Asia, Oxford: Oxford University Press. Goswami, N. (2014) ‘China’s second coast: Implications for Northeast India’, IDSA Comment, 19 June, New Delhi: Institute for Defence Studies and Analyses. Hindustan Times (2017a) Global Times, quoted in Hindustan Times, 5 July. Hindustan Times (2017b) ‘5 reasons why India needs to worry about China’s military base in Djibouti’, 13 July.

164   Roger Greatrex Husain, K. (2017) ‘Exclusive: CPEC master plan revealed’, Dawn, 21 June. Jorgic, D. (2017) Nadeem Javaid, quoted by Reuters, 10 May. Kalita, P. (2017) ‘Assam appeals China for sharing Brahmaputra data’, The Times of India, 23 August. Phillips, T. (2017) ‘EU backs away from trade statement in blow to China’s “modern Silk Road” plan’, Guardian, 15 May. Reuters (2017) 15 November. Siddiqui, N. (2017) ‘FO denies China has halted payments for CPEC projects’, Dawn, 14 December. Singh, R. (2017a) ‘Army chief says China taking over territory gradually, warns of two-­ front war’, Hindustan Times, 6 September. Singh, R. (2017b) ‘Doklam to be new normal, warns think tank, calls for building military muscle’, Hindustan Times, 12 September. Singh, R. (2017c) ‘From submarines to warships: How Chinese navy is expanding its footprint in Indian Ocean’, Hindustan Times, 5 July. The Chinese community in Latin America, Inico Project (2008) Online available at: www.bcn.cl/observatorio/asiapacifico/noticias/chinese-­c ommunity-latin-­a merica (accessed 2 December 2017).  The Economic Times (2017a) 12 May. The Economic Times (2017b) ‘China denies reports to set up 18 naval bases in Indian Ocean’, 27 November.  Tiezzi, S. (2017) The Diplomat, 1 January. Taipei Times (2015) ‘China planning to build naval base in Namibia: Report’, 22 January. The Times of India (2017a) Global Times, 8 May. The Times of India (2017b) 17 May. The Times of India (2017c) ‘How China beats India hollow in trade and dominates Indian homes, markets and economy’, 16 July. The Times of India (2017d) ‘Can’t share Brahmaputra data for now; Ready for talks to reopen Nathu La pass: China’, 12 September. The Times of India (2017e) ‘China to blame for polluting Brahmaputra: Assam’, 6 December. Yeophantong, P. (2016) ‘China’s hydropower expansion and influence over environmental governance in mainland Southeast Asia’. In Goh, E. (ed.), Rising China’s Influence in Asia, Oxford: Oxford University Press, 174–192.

11 Locating China’s Maritime Silk Road in the context of the South China Sea disputes Edyta Roszko

Introduction In the last ten years the South China Sea (SCS) has come under the spotlight of the international media as a global geopolitical flashpoint with the potential for armed conflict regarding disputed sovereignty over natural resources in the Paracels and Spratlys – two archipelagos claimed in whole by China and Vietnam and in part by a number of Association of Southeast Asian Nations (ASEAN) countries (see Buszynski and Roberts 2015; Do Thanh Hai 2017; Hill et al. 1991). Militarisation, compounded by pollution, China’s massive construction of artificial islands in the Paracels and Spratlys, and the depletion of the fishing stocks in the entire SCS proceeds hand in hand with China’ new regional and trans-­regional initiatives such as the One Belt One Road and the 21st Century Maritime Silk Road initiatives. Beginning from Fuzhou in China and moving via the SCS, Southeast Asia, the Indian Ocean, and Africa and ending in Venice in Europe, the 21st Century Maritime Silk Road plays a strategic role in securing trading routes and undisturbed passage of Chinese vessels, thereby strengthening China’s military and economic position and interest in the disputed SCS. Historically, the SCS has for centuries been a zone of connection as much as a zone of separation or conflict, connecting China with mainland Southeast Asia, the Malay World and further regions through commercial, religious and ethnic networks. The Maritime Silk Road conditioned the rise and fall of political entities – states and empires – in Southeast Asia. In the contemporary post-­Cold War period this Maritime Silk Road has resurfaced as one of the axes of global trade but this, as the chapter shows, is compounded by modern territorial claims to the seas themselves. It is precisely against this backdrop – the long-­standing history of commerce in East and Southeast Asia (Reid 1993; Wade 2009) and of present-­day territorial claims to the SCS – that this chapter locates and analyses the 21st Century Maritime Silk Road. Drawing on the interconnected history of China and Southeast Asia, the first part of the chapter explores how China’s dominant narratives project Chinese mariners and merchants as those who started the Maritime Silk Route and connected China with the Indian Ocean, Middle East and Europe via ‘Malay World’. The second section of the chapter analyses how the fifteenth

166   Edyta Roszko century voyages by Admiral Zheng He to the Indian Ocean are portrayed by China to forge a positive image of historical friendship and mutual benefit in support of the 21st Century Maritime Silk Road. The final section builds on four months of ethnographic field research in 2015 in the fishing town of Tanmen, Hainan Island. Drawing on participant observation, interviews and media analysis, the section connects the image of Tanmen fishers as pioneers of navigation in the Paracels and Spratlys with strategic implications of the new Maritime Silk Road initiative.

Maritime Silk Road in historical perspective Addressing the Indonesian Parliament in October 2013, Chinese President Xi Jinping introduced the Maritime Silk Road to frame China’s new regional and trans-­regional initiatives that connects Asia with Europe – via the Suez Canal and Mediterranean – and with Eastern Africa via the Indian Ocean. In March 2015 – in his keynote speech at Boao Forum for Asia Annual Conference – President Xi expounded details of China’s vision for a New Silk Road that draw on the idea of ancient maritime trade routes passing through the SCS, the Malacca Strait, Indian Ocean and Mediterranean (Kwa 2016). At the banquet held in honour of the foreign guests attending the Belt and Road Forum for International Cooperation in Beijing in May 2014, President Xi called for ‘renewing the Silk Road spirit’. He drew again on the historical image of the road as a space of age-­old mutual cultural and economic exchanges: More than 2,000 years ago, our ancestors, driven by a desire for friendship, opened the overland and maritime Silk Roads and thus started a great era of exchanges among civilizations. Today, we gather here to renew the Silk Road spirit and discuss the Belt and Road development for international cooperation. This is both a continuation of our shared legacy and a right choice for the future. (Xinhuanet 2017b, emphasis added) According to this vision the Chinese mariners and traders were inventors of long-­distance navigation and developers of the sea lines that connected China with other parts of the SCS and the Indian Ocean (Kwa 2016: 3; cf. Roszko 2017a). But according to Kwa Chong Guan, what we are dealing with is the appropriation and politicisation of the idea of the historical Maritime Silk Road to serve contemporary needs. In this process the past is ‘mythologised’ and Southeast Asia reduced to the passive transit of maritime connections (Kwa 2016), while long-­term historical, cultural and ethnic connections and flows are simplified to produce the political effect of justifying contemporary territorial claims and economic power grabs (Roszko 2017a).

Locating China’s Maritime Silk Road   167 The early age and age of commerce in the Southeast Asia In A History of Early Southeast Asia: Maritime Trade and Societal Development, 100–1500 historian Kenneth Hall (2011: 44) asks: ‘Who provided passage from Southeast Asia’s port to China and India in the first centuries of the Christian era?’ Various scholars have shown that the pioneers of long-­distance navigation in Asia were Southeast Asian, usually Austronesian-­speakers (Hall 2011; Reid 2015). Archeological, genetic and botanical research provides further evidence that Austronesian traders not only reached the East African coast but that their maritime and trading networks operated between New Guinea and Fiji already 2,000 years ago (Reid 2015). These Austronesian seafarers linked Kalimantan, Java, Sumatra and the Malay Peninsula with each other and moved as far as Easter Island in the Pacific and Madagascar in the Indian Ocean (Reid 2015: 63–64). Some people from the Indonesian Archipelago entertained trading contacts with Madagascar between the first and second millennium ce (Reid 2015: 64). Recent archeological evidence from shipwrecks also suggests that the ships connecting the SCS with the Indian Ocean were Arab dhows and Southeast Asian lash-­lug vessels (Hall 2011; Heng 2009; 2013; Kwa 2012). Early Chinese records show that in the first centuries ce era Malayo-­Austronesian seaman known in Chinese as Kunlun and their ships known as kunlun bo navigated the maritime routes between Southeast Asia and China (Hall 2011: 4; Heng 2009: 28). Answering his question about the passage from Southeast Asia to China and India, Hall makes it clear that until the eleventh century ‘no Chinese ships made the voyage on a regular basis, and until the sixth century Persia-­based ships went no farther East than Sri Lanka’ (Hall 2011: 4; see also Manguin 1993; Kwa 2012). But from the seventh century onwards Persian seafarers and traders crossed the Indian Ocean and reached as far as Hainan and Guangzhou where they formed foreign merchant settlements operating monetised and commercialised economies. During the Tang Dynasty (628–907) Chinese merchants sailed mainly to Southeast Asia but they occasionally ventured much further to the Persian Gulf, Red Sea, and even to Somali and Ethiopian coast in East Africa to satisfy the foreign demand for Chinese ceramic and other trade goods (Howard 2012: 79–80). This was accompanied by the rise of ‘Hindu–Buddhist’ Southeast Asian polities such as Angkor, Champa, Pagan (modern-­day Myanmar), Srivijaya and a new polity of Đại Việt with distinct scriptural civilisation, a relatively stable capital and with a concentrated population growing irrigated rice (Reid 2015). During the early age of commerce between the ninth and thirteenth century ce (Wade 2005) the emergent new trading ports and trade networks sustained these polities that were further stimulated by the new enthusiasm for maritime trade in the Song Dynasty China (960–1279). Cut off from the Northern capital and overland routes through Central Asia the Southern Song Dynasty (1127–1279) turned its attention to the overseas links and maritime commerce. It was around this time that Chinese seafarers were encouraged to leave China’s ports and ventured into the Southeast Asia region to acquire foreign

168   Edyta Roszko goods in exchange for Chinese commodities such as silk and porcelain (Hall 2011; Heng 2008; Schottenhammer 2001; Sen 2016; Wade 2009). Consequently, they formed semi-­permanent diasporas in Southeast Asia’s ports and their trading networks stretched to the Philippines. An Arab geographer Muhammad al-­Idris (1100–1165) wrote in 1154 that a few large Chinese merchants ships carrying silk, porcelain, leather, sword, iron and other goods went as far as the trading centres of the Middle East (Howard 2012: 81). As the volume of the trade and entrepôt ports increased, there was no need anymore for traders to cover the entire stretch of long-­distance maritime routes, allowing them instead to specialise in only one section of the route (Hall 2001: 214). The early fifteenth century was the time of the Ming Admiral Zheng He’s voyages to the Indian Ocean whose seagoing vessels were mostly navigated by non-­Chinese, some of whom may have been descendants of Fujian Arabs (Wade 2005: 44). The sizable and impressive Chinese shipping fleets developed in the Eastern Indian Ocean disappeared at the beginning of the fifteenth century when the Ming government (1368–1644) turned its back on the maritime trade, banned the building of seagoing ships and restricted tributary missions (Hall 2011: 216). Trying to escape the Ming proscription of maritime private commerce and migration to Southeast Asia, Chinese merchants continued to flee China on junks through the entire sixteenth century, forming maritime diasporas around the ports of the present-­day Vietnam, the Gulf of Thailand, Java, Borneo and the Philippines (Hall 2011: 217). The period between the fifteenth and the seventeenth century – known as the Age of Commerce in the Southeast Asia – was the time when the Chinese control of the trade system was replaced by the European merchants whose arrival in the region created new market opportunities (Reid 1993). These changes led to the emergence of cosmopolitan port cities such as Hội An, Bandar Aceh, Makassar, Banten and Melaka that served the needs of international seaborne trade. The Qing (1636–1912) court’s restoration of maritime trade gave birth to the Chinese domination of shipping in the SCS that started from the seventeenth to the nineteenth century. These historical examples do not deny the significance of the Chinese merchants in the ancient maritime trading world, but a more complex historical picture problematises present-­day claims of Chinese as inventors of maritime sea routes and navigation by highlighting the maritime histories of Austronesian, Arab and Persian seafaring, and their transoceanic connections and interactions with China and other maritime worlds. During the Tang Dynasty a considerable number of Chinese ships sailed South from China’s coastal ports and numerous foreign ships came to the Southern coastal ports, of which Guangzhou was the most prominent. Many of these foreign merchants and sailors were Cham and Malays from Southeast Asia, Sinhalese from South Asia, and Persians and Arabs from the Middle East (Howard 2012: 78–79). Between the eighth and ninth century, shipbuilders of Southern China were in regular contact with foreign ships and this gradually led to the development of the large Chinese ocean-­going ‘junk’ that used Chinese techniques for river and coastal navigation and Kunlun people’s high-­sea nautical technologies (Manguin 1980). These technological

Locating China’s Maritime Silk Road   169 co-­evolutions of shipping were complex and multi-­scalar, as Chinese and Southeast Asian shipbuilding technologies often influenced one another through mutual exchanges and borrowings (Pham 2013; see also Manguin 1993). In sum, constituting a distinct trading circuit, the SCS did not exist in isolation but was connected with other maritime and trading worlds such as the Arabian Sea and the Bay of Bengal (Abu-­Lughod 1993). If seen from the Arabian Sea, the Maritime Silk Road was part of a wider Indo-­Islamic World defined by Persian language as the lingua franca of commerce and by Persian-­ Arab navigation, shipping and trading systems that flourished between the seventh and the seventeenth centuries (Kwa 2016: 19). If seen from the Bay of Bengal, the Maritime Silk Road was a ‘center of a network of trading routes linking the ports of the Arabian Sea’ with the Indian sub-­continent, encompassing the Burmese and Cambodian polities and various ports in the Malay Peninsula and Sumatra (Kwa 2016: 19). But, if perceived from Guangzhou and Quanzhou, the Maritime Silk Road covered the SCS and the Indian Ocean through China’s tributary relations with its Southern neighbours. The point is that this ancient route encompassed all three trading words that interacted, influenced and overlapped with each other through mutual exchanges of goods, ideas and human labour (Hall 2011; Kwa 2016). Within this exchange, Southeast Asia was not a passive actor but an important player that needs to be considered in her own right.

Forging an alternative image of friendship and mutual benefit through the 21st Century Maritime Silk Road In 2002, China officially presented South Africa with a replica of a map that it considered as the earliest cartographic representation of the entire African continent in the world. The origin of the map was traced to admiral Zheng He’s diplomatic expedition that reached the East African coast at the beginning of the fifteenth century (Akin 2017: 52). Both the map and the voyages of this famous Ming eunuch were framed into a narrative of a ‘distinctly Chinese approach to global relations, based on benevolence and mutual respect’ (Akin 2017: 52). But, as East Asia historian Alexander Akin (2017) shows, the map had been dissociated from its original context to suit modern needs and calm widespread anxieties about the supposed hidden motives behind the growing Chinese economic influence in Africa. In fact, having little connection with Zheng He’s voyages, the distinctive outline of Africa on Ming maps was based on a late fourteenth-­century predecessor as well as foreign sources that predated Zheng He’s voyages (Akin 2017: 63). This leads Akin to ask ‘[w]hy would China today be anxious to prove not only the current character of its connections to and solidarity with Africa, but also to cite an allegedly egalitarian and mutually beneficial relationship dating back centuries?’ Akin (2017: 66). China’s rapid development in Africa favours Chinese workers over local labour and in many cases alienates local business companies, dispossesses local populations in Africa and inflicts profound

170   Edyta Roszko changes within communities (Akin 2017: 66). China counters these negative perceptions by highlighting the ‘long history of allegedly non-­coercive and mutually beneficial relations with Africa, contrasting this narrative that of European colonialism on the continent’ (Akin 2017: 66–67). Indeed, in contrast to the European powers, Ming China ‘did not launch large-­scale occupation of foreign territories in the maritime realm’ (Sen 2016: 632). However, the present-­day China’s engagement in Africa based on resource extraction, energy, agriculture and fisheries has received heavy criticism in the international press for exploitative labour treatment even though there are some positive changes as a result of Chinese policies and developmental aid (Harvard Political Review 2017; New York Times 2017). Analogically, in the context of China’s territorial claims to the SCS, the 21st Century Maritime Silk Road can be seen as an attempt to rebrand China’s economic and military assertiveness by presenting an alternative image of eternal friendship, non-­aggression, mutual benefit and peaceful coexistence. Consisting of a massive network of maritime facilities in the SCS and the Indian Ocean, the new Maritime Silk Road initiative is envisioned to ensure undisturbed passage of China-­bound vessels and their steady supplies of raw material and energy (The Diplomat 2016). While China’s investment in regional maritime infrastructure is claimed to be economically motivated, new overseas military infrastructures in Djibouti in the Horn of Africa and the stream of Chinese workers suggest that China seeks to establish an enduring military presence in Africa beyond its immediate territorial influence zone. In this context Chinese historians and politicians project narratives of the fifteenth century expedition by the Admiral Zheng He to the West Pacific and the Indian Ocean as a historical analogy for contemporary geopolitical ambitions. By forging an alternative image of friendship and mutual benefit through the 21st Century Maritime Silk Road development project China differentiates itself from the violent legacy of European colonialism in Asia and Africa (cf. Wade 2005). In his 2014 speech at the opening ceremony of the Belt and Road Forum for International Cooperation, President Xi said: In the early 15th century, Zheng He, the famous Chinese navigator in the Ming Dynasty, made seven voyages to the Western Seas, a feat which still is remembered today. These pioneers won their place in history not as conquerors with warships, guns or swords. Rather, they are remembered as friendly emissaries leading camel caravans and sailing treasure-­loaded ships. Generation after generation, the silk routes travelers have built a bridge for peace and East-­West cooperation. Indeed, in early 1400s the seven maritime expeditions led by Zheng He and backed by Ming court covered nearly the entire Indian Ocean. (Xinhuanet 2017a, emphasis added) This projection of peacefulness flies in the face of the study by historian of China and Southeast Asia Geoff Wade that Zheng He’s expeditions to the Indian

Locating China’s Maritime Silk Road   171 Ocean were ‘military missions with strategic aims’ (Wade 2005: 47). Historical evidence suggests that these missions carried military men and the seagoing ships were armed with the most advanced firearms available in the world at that time to ‘shock and awe’ (Wade 2005: 47). Moreover, they used military ‘coercion, to obtain control of ports and shipping lanes’ (Wade 2005: 51). Wade explains that in a straight line the aim of the mission was not about the control of territory but rather about the control of economic lifelines, nodal points such as ports and networks that included imported trade routes. These ports and networks were essential in further dominance of trade and, particularly, for tributary missions and treasure-­collecting tasks – a kind of ‘maritime proto-­colonialism’ that took control of the main port-­polities along the sea routes to gain economic and political benefits (Wade 2005: 51). Historian of China and South Asia Tansen Sen (2016) provides a detailed account of the impact of the Zheng He voyages on local affairs in the Indian Ocean. Sen’s close reading of Chinese historical sources suggests that the Zheng He expeditions became involved in local conflicts generating ‘intense competition among contending local polities and rivals, each seeking alliance with the Ming court’ (Sen 2016: 612). These local polities were often intimidated by the emerging pattern according to which Zheng He’s missions operated, namely of installing friendly regimes in foreign lands, capturing or executing competitors and threatening rulers (Sen 2016: 614). Yet, Sen points out that whatever the strategic, security, military or economic aims of Zheng He’s expeditions were, they need to be also recognised for the qualitative and quantitative changes they brought into the Indian Ocean (Sen 2016: 632). Among the most remarkable changes was a sort of regional unity in the Indian Ocean forged by the admiral’s recurring visits and the travel undertaken by people across the seas from their native lands to China. Importantly, the Ming maritime missions also created new political opportunities and alliances that stimulated further flows of people, goods and ideas well before the enthusiasm for spices pushed Europeans into the Indian Ocean (Sen 2016: 632). One of the enduring legacies of Zheng He’s voyages worth mentioning was that they provided an impetus to Islam as the religion of trade (Reid 2015: 70). We know that Zheng He and many of his commanders were Muslim and many of the Chinese left behind by the eunuchs chose to assimilate into cosmopolitan Muslim communities that already existed in city-­ports along the maritime routes rather than into the Hindu–Buddhist or animist polities of the hinterland (Reid 2015: 70; see also Sen 2016; Wade 2005). Historical evidence also suggests that in the early 1400s Chinese Muslims played a role in the conversion of Melaka’s ruler to Islam in order to secure trade (Wain 2012). Around the same time, semi-­ independent Islamic communities were established in the ports of Java and Champa and even the elites of the clove and nutmeg-­producing Maluku Islands began to embrace Islam (Reid 2015: 70). In summary, the complex and multi-­dimensional impact of the fifteenth century voyages by Zheng He should not be underestimated. However, I argue that the modern narratives and projection of these missions underscore current

172   Edyta Roszko geopolitical claims envisioned in the 21st Century Maritime Silk Road. The Chinese government appropriated Zheng He’s story to shore up China’s contemporary image as a country standing in the centre of the world and a contributor to the ‘peace and development of mankind’ – whether it is in Africa or the SCS region (China.org.cn 2005). In support of historic rights to the SCS and the disputed Paracels and Spratlys, the revived story of Zheng He feeds modern territorial aspirations through the Maritime Silk Road.

The 21st Century Maritime Silk Road and its strategic implication In April 2013 – five months before announcing his plans for building the new Maritime Silk Road in in Indonesia – President Xi Jinping visited Tanmen, a prosperous fishing town on the East coast of Hainan. In the last few years, Tanmen fishers rose to fame as the best-­known maritime militia (Zhang and Bateman 2017; Roszko 2017a; Zhang 2016). During his visit Xi personally encouraged fishers to resign from the use of traditional wooden boats that put much pressure on already depleting marine resources in nearby coastal waters. Promising the state’s support, he addressed Tanmen fishers in the following words: The [Communist] party and our government will make more efforts to take care of you guys … and I wish you all the best when you go fishing – have good harvests and catch more big fish. (South China Morning Post 2013) As a token of this event, the giant billboard with the image of the President and a group of fishermen celebrating his historic visit was proudly displayed at the main entrance to Tanmen. Soon, this was followed by new big banners stretched along the walls in Tanmen port. Bearing the slogans such as ‘Manufacturing big ships to go far into the sea to catch big fish (zai dachuan chuang yuanhai bu dayu)’ or ‘Vigorously developing the ocean economy (zao da chuan chuang da hai dali fazhan haiyang jingji)’, the billboards exemplified the new state policy that promulgated the economic ‘development of the sea’. Yet, this new approach to the sea has not always simply focused on fishing. As I have shown elsewhere (Roszko 2017b), supported by lavish subsidies for steel-­hulled trawlers coming from central and provincial government funds, Tanmen fishermen became the best-­known paramilitary organisation benefiting from this policy and have been directly involved in major conflicts in the SCS (see also Zhang 2016). With financial support and authorisation from the state, these fishers operate in waters where they previously had only limited access. Furthermore, China has used narratives of the historical presence of Tanmen fisheries in the Paracels and Spratlys to back up its contemporary claims to sovereignty over the sea and its resources as state territory and thus to legitimise land reclamation and exclusive fishing zones (Roszko 2017b). Consequently,

Locating China’s Maritime Silk Road   173 fishers have been instrumentalised in the name of national sovereignty and maritime security (Roszko 2015). Although the Permanent Court of Arbitration at The Hague on 12 June 2016 refuted China’s claim of historical right and presence in the disputed zones of the SCS, Xi Jinping’s visit to Tanmen seems to be part of wider rhetoric strategy adding ideological legitimacy to his twenty-­first century Maritime Silk Road initiative. An information board for tourists installed on the main street of the town provided the following description both in Chinese and English language: The fishermen in Hainan have been the only group in the world history which has been fishing continuously in the South China Sea ancient time. (Emphasis added) Just as ancient Chinese mariners and Zheng He were imagined as those who opened the seas and contributed to the great era of the Maritime Silk Road, likewise the Tanmen fishers were projected by Chinese media as pioneers and vanguards of maritime navigation in the disputed archipelagos of the Paracels and Spratlys and those who bravely continued the ‘ancient tradition of cultivating the sea’ (Roszko 2017a: 26). Their logbooks, known in Chinese as Geng lu bu (Manual of sea routes), have been appropriated by the Chinese government as evidence of the Chinese presence in the disputed archipelagos that go back to ancient times and as a proof of China’s sovereignty over the SCS (Roszko 2017a: 28). Therefore, it should come as no surprise that in the last few years Tanmen fishing fleets have been given special significance as maritime militia to solidifying China’s position and maritime power in the SCS. Officially registered as fishing vessels, many Tanmen fishing ships operated as joint-­stock companies under the new policy of ‘opening up the sea’ (kaifa haiyang) but their activities went beyond fishing as they collected oceanic information and supported the construction of the artificial islands in the SCS. The actual policy of replacing traditional wooden fishing boats with steel-­hulled trawlers equipped with high-­ tech navigational and communication systems was believed to enable fishers to withstand collisions with neighbouring states’ less advanced fishing vessels (Erickson and Kennedy 2015), but it also allows them to expand their operations into the Pacific, Indian and Atlantic Oceans (Roszko 2017b; Zhang and Wu 2017). Since 2016, the number of Chinese vessels fishing in East and West Africa has increased rapidly to satisfy the demand for seafood in China, leading to clear erosion of marine resources beyond the SCS. One of the crucial questions addressed in the definitive ruling, issued on 12 June 2016 by the Permanent Court of Arbitration at The Hague, was the Philippines’ allegations concerning China’s environmental destruction in the disputed waters of the Paracels in the SCS. The marine ecologists who provided their expertise to the Tribunal were unanimous that the ‘widespread chopping of reefs by Chinese fishermen [who] us[ed] propellers mounted on small boats in order to poach giant clam shells’ together with a direct burial of coral reef habitat

174   Edyta Roszko during the construction of artificial island in the SCS inflicted ‘unprecedented’ harm and ‘exceeded’ anything previously seen regarding coral reef degradation.1 Indeed, in contrast to the narratives projected in the Chinese media, the cargo brought by long-­distance Tanmen fishermen did not contain fish but tons of centuries-­old giant clam shells, known in Mandarin as chequ, as I found during my ethnographic fieldwork in Tanmen between March and June 2015. Officially, the harvesting of giant clams was banned by Tanmen authorities in March 2015, just two weeks before the Forum for Asia Annual Conference in nearby Boao. In practice, however, fishermen and local authorities alike used a loophole in the regulation that allowed the sale of shells turned into artwork. Traditionally considered as one of the Buddhist seven treasures, giant clam shells were valued for their gemstone-­like metaphysical properties (see Zhang and Wu 2017) and for their fleshy meat that over time has become a culinary delicacy. The thick old shells buried in lagoons and shallow reefs in the disputed waters between China, Vietnam and the Philippines recently gained a new aesthetic value when it was discovered that they could be carved like jade. Turned into artwork in local workshops, those shells have become a great tourist attraction in themselves, known as ‘jade of the sea’. While in the past luxury ancient goods such as fragrant wood or Arab glass were carried on ships across the Maritime Silk Road to trade, today giant clam shells are carried overland to satisfy new demands of rich middle-­class customers in China and overseas, including Vietnam, Japan, South Korea, Hong Kong and Russia. Envisaged as a spiritual and secret treasury that was hidden for centuries at the bottom of the sea and only known to Chinese fishers, for many Chinese tourists the shells have become proof of Tanmen community’s superior maritime knowledge. Local response and strategy In Tanmen, the long rows of whitewashed and newly opened shophouses with spacious windows ran on both sides of the main street and offered a glimpse into a newly flourishing enterprise. Attractively polished, cream-­white shells from the Spratlys or from the Scarborough Shoal – which were most desired due to its warm rosy-­brown colour – tempted customers to walk inside. Some of those shells were large enough to hide a six-year-­old child and could easily reach a price of 2,000 or 3,000 euro. The fashionable hardwood furniture made from reclaimed traditional Chinese fishing boats encased relief sculptures with scenic or floral motives, grapevines intertwined with fruits, flowers, galloping deer and horses, ornate statutes, leaping fish, birds or cabbages – all carved in the organic material of giant clam shells. In addition, the shiny glass cabinets displayed white and creamy shell bead necklaces, translucent bracelets, pendants with Buddhas, peaches, golden fish, butterflies, lucky twin dragons and cicadas, just to mention a few examples. In one of such shops I met Hao – a young man in his late twenties who was from a local fishing family but spent some years in Beijing pursuing his education. Convinced by his late grandfather about the upcoming new opportunities,

Locating China’s Maritime Silk Road   175 he decided to return to his native village to try his luck in the business. Like many fishers in Tanmen, he set up an art workshop and opened a stylish shop selling giant clam shells. Hao attached great importance to his fishing heritage and was particularly proud of his grandfather whose photos and personal story of daring voyages to the Paracels and Spratlys were displayed on the Tanmen streets. However, he also tried to build a long-­term vision for his trade and looked for inspiration from various sources. One of them was a business course that referred to Chinese culture offered by Qionghai County; another source of inspiration was a recently published biography of China’s President Xi Jinping titled The Governance of China (tan zhiguo li zheng) (for the Mandarin language version see Xi Jinping 2014a; for the English language edition see Xi Jinping 2014b). As he stated, it was important for him to understand in which direction his country was heading and plan his business accordingly. He was well aware of the new Maritime Silk Road initiative and tried to tap its cultural potential for his business. At the time of my fieldwork in Tanmen, Hao was in the process of constructing a private museum of the SCS on the property of his giant shell workshop. Although the construction works were still in progress, one wall of the museum building was already entirely covered by a gigantic image of the SCS and the disputed archipelagos engulfed by a dotted U-­shaped line. In the right corner of the map, there was an image of logbook known as Geng lu bu or Manual of Sea Routes. Hao explained that he made the Geng lu bu a logo of his business because it highlights the superior navigational skills of Tanmen fishers and their ancient presence in the SCS. Hao also installed a small wooden fishing boat that in his view showed authentic local maritime culture and thereby more powerfully spoke to the imagination of his customers. For Hao, the New Silk Road imagination extended the maritime legacy of his ancestors into the present and – if only momentarily – opened new economic opportunities closed until recently to the fishing community. This short ethnographic vignette illustrates how the state project of the Maritime Silk Road and the national attention to Tanmen’s maritime legacy in the context of the SCS dispute opened up new economic opportunities for fishers who began to manifest themselves through local history, private museums and the collection, processing and display of precious maritime goods, such as giant clam shells. Tanmen thus became a place where fishers imagined a wide variety of future possibilities for themselves and for tourists coming from the mainland. President Xi Jinping’s visit to Tanmen and the central and provincial government’s attention to fishers and their activities led local people to grow self-­ awareness that Hainan is not just one of many Chinese provinces but an important and strategic location on the New Silk Road passing though the SCS.

Conclusions The international publicity given to the 2016 definitive ruling issued by the Permanent Court of Arbitration at The Hague – which refuted China’s nine-­dash

176   Edyta Roszko demarcation line used to claim sovereignty over sea features within the lines and its rights to marine and submarine resources – is one of the challenges to China. Furthermore, the Permanent Court of Arbitration drew attention to the fact that even when Chinese fishers’ operate in areas designated by their government they not only collect fish but also harvest and trade highly valuable and endangered marine species such as red coral and giant clam shells. Causing embarrassment to China, the ruling reinforced the country’s already negative image caused by the construction of artificial islands in the SCS, as violating its obligations to protect marine environment under the United Nation Convention of the Law of the Sea. The 21st Century Maritime Silk Road represents a counter-­narrative of outward expansion of China that should be seen as essentially friendly, non-­ aggressive and beneficial. Conveyed in narratives of ancient connectivity, peaceful exchanges between civilisations and in friendly merchants’ voyages led by the hero Zheng He across the seas, China claims to lay the foundation for the development of modern international trade and collaboration bringing prosperity around the globe as in the past it did in Asia despite ‘differences in race, belief and cultural background’ (Frankopan 2015). In this process, Tanmen offers another localised narrative of daring and hardworking navigators who developed and patiently cultivated ancestral grounds for centuries through their fishing ventures in to the SCS. Rather than offering awkward evidence of ecological destruction in the coral reef, giant clam shells are reframed in terms of a nostalgic imaginary of fishers’ ancient connections with the Paracels and Spratlys and turning massive exploitation of marine resources into a de facto territorial claim. Finally, the narrative of the historical presence of Tanmen fishers and the official claim that they exercised exclusive control over the waters and resources in the Paracels and Spratlys also contributed to conceiving and shaping the contour of the 21st Century Maritime Silk Road as a story of ancient sea lanes developed by a multitude of Chinese heroes – mariners, merchants, admirals and fishers. While bridging different maritime trading words via the Malay World, the SCS facilitated religious and knowledge exchanges through ethnic networks. Far from being a unilinear historical trajectory or homogeneous ethnic flow, this ‘Maritime Silk Road’ created opportunities and misfortunes for both individuals and states and empires. In the twenty-­first century the Maritime Silk Road has turned full circle – emerging as one of the axes of global trade based on connectivity and flows but punctuated by modern territorial claims that seek to contract the world through strategic control over important nodal points, resources and people.

Acknowledgement The research on which this chapter is based was supported by the People Programme (Marie Curie Actions) of the People’s Union’s Seventh Framework Programme (FP7/2007–2013) under REAfgrant agreement no. PIEF-­GA-2012–326795

Locating China’s Maritime Silk Road   177 and by the Danish Council for Independent Research in Culture and Humanities under agreement no. 0602–02917B/FKK. The author would like thank Carmen Mendes for her invitation to contribute to this edited volume.

Glossary ASEAN  Association of Southeast Asian Nations. SCS  South China Sea.

Note 1 See Award under Annex VII to the United Nations Convention on the Law of the Sea in the Matter of the South China Sea arbitration between the Republic of the Philippines and the People’s Republic of China, 12 July 2016. Online available at: www. pcacases.com/web/view/7 (accessed 4 August 2017).

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Index

2017 Global Trends Report of the US National Intelligence Council 10 Abbasi, Shahid Khaqan 109 Afghanistan 42, 70, 106, 112 Africa 75, 79, 81, 120, 129, 130, 165–173 Afro-Eurasia 11, 12, 13, 16, 17–18 Akin, Alexander 169 ‘America First’ 7 Arab 168; dhows 167; geographer 168; Fujian Arab 168; navigation 169; glass 174 Arabian Sea 120, 125, 127–128 Arc of Freedom and Prosperity 81 Asian Development Bank (ADB) 54, 58, 60, 70, 73–77, 81–83 Asian Infrastructure Fund (AIF) 70 Asian Infrastructure Investment Bank (AIIB) 14, 18, 28, 34, 39, 46, 48, 52–62, 69–70, 76–77, 79, 82–83, 122, 130 Asian Land Transport Infrastructure Development (ALTID) 70 Association of Southeast Asian Nations (ASEAN) 165 Austronesian 165–167 Balochistan 112–114; Baluchistan 125–127, 129 Baykal 51 Bangladesh–China–India–Myanmar Economic Corridor (BCIM) 153 Beijing 76, 120, 123–125, 127–129 ‘Beijing Consensus’ 17 Belt and Road Initiative see Silk Road Brahmaputra River 162 Bridgehead (concept in China’s foreign policy) 137–138, 142, 148 Boao Forum 25, 166

border 21–24, 26, 27, 29, 32, 33, 71, 77, 120, 123 Bretton Woods institutions 16 BRICS 8, 18, 129, 69–70, 130 BRICS Contingent Reserve Arrangement (CRA) 69–70 Carson, Rachel 53 Central Asia 58, 70, 76, 80, 82, 120, 123, 127, 129 Central Asia Plus Japan 80 Central Asia Regional Economic Cooperation (CAREC) 70 Central Treaty Organisation (CENTO) 124 Chabahar 128 Champa 167, 171 Chiang Mai Initiative (CMI) 70, 122 China 69–70, 72–73, 75–83; Chinafocused 70; China economic reform 88; China’s infrastructure diplomacy 39 China State Shipbuilding Corporation (CSSC) 128 Chinese dream 31, 120, 130 Chinese strategic thinking 17 Clausewitz, Carl von 121 co-financing 77 Cold War paradigms 11, 12, 13 Colombo Port City (CPC) 153 commerce 122, 165, 167–169; age of commerce 167–168 communality 21–23, 30, 33, 34 connectivity 14, 15, 16, 17, 81 Contingent Reserve Arrangement (CRA), BRICS see BRICS Contingent Reserve Arrangement (CRA) Crimea 8 critical discourse analysis 22 Đại Việt 167

Index   181 Dalai Lama 129 dam construction 156 debt repayment 154 Deng Xiaoping 121 dhow 167 Dictionary of Untranslatables 18 Djibouti 160 Doklam 161 East Asia 69, 73, 75, 83; East Asian region 69 East Turkistan Islamic Movement (ETIM) 127, 130 Eclectic Theory 88 economic interconnectivity 12 Eisenhower, Dwight 13 energy 52, 73, 81, 120, 126, 128–129 Environmental and Social Framework (ESF) 53–56, 58–61, 77 Environmental and Social Impact Assessment (ESIA) 56–57 Environmental and Social Management Plan (ESMP) 56–57 Environmental and Social Management Planning Framework (ESMPF) 56–57 environmental and social planning 51–58, 60–62 Environmental and Social Standards 77 Environmental Impact Assessment (EIA) 53–54, 58–59, 62 Espoo Convention 59 Export-Import Bank of China 51 Eurasian diplomacy 71, 80 Eurasian Economic Community (EurAsEC) 38, 43–44, 48 Eurasian Economic Union (EEU) 43–44, 46–47 Europe–China Cultural Compass 18 European Bank for Reconstruction and Development (EBRD) 77, 84 European Union: Connectivity Platform 98, 100; Initiatives in Central Asia 44–46; Investment Plan for Europe 96, 98, 99 exceptionalism 8 fishers 172–175 Five Year Plan (13th) 99, 100 flows 166, 171, 176 Flying Geese Model 88 Foreign Direct Investment 45–46 Free and Open Indo-Pacific Strategy 81 G7 8, 18, 81 G20 8, 18

geopolitical 120, 127, 129, 155, 165, 170, 172; strategy 30 giant clam 173–176 Gilani, Raza 109 global governance 122 global public goods 71–72 ‘global strategic thought’ 15 Global Value Chains 87–88, 96 globalisation 12, 15, 29, 31, 34 Goh, Evelyn 155 good governance 77 Great Western Development (concept of economic development) 141–142 Gwadar 41–42, 105, 112–114, 120, 125–129, 159 Hainan Island 166 Hall, Kenneth 167 Hambentota 158 heartland 38, 46–48 Hegemonic Stability Theory 72 historic rights 172 Hu Jintao 125, 130 hydrological data 161 Ibn Battuta 11 Ibn Khaldun 11, 17 ideology 21; national ideology 21 imagined community 21–23, 33; imagined national communities 33 immune theory 7 imperial legacies 11–12, 14 India 8, 13, 14, 41–42, 47, 58–59, 69, 81, 105–106, 109, 111–112, 120, 123, 127, 128–129, 130, 160–162 Indian Ocean 128, 153, 160, 165–171 infrastructural neo-colonialism 14 infrastructure 70, 73–75, 81–83, 122, 126, 129; needs 73–74, 83 International Monetary Fund (IMF) 72, 77, 122 internationalisation of the RMB 107 IR Theory 7, 8, 9, 16, 17, 18, 19n1 Iran 43–47, 106, 111, 127–129 Islamabad 120, 124, 127, 129 Japan 33, 35, 70, 73, 76, 80–83, 121 Japan Partnership for Quality Infrastructure (PQI) 69, 71, 81–83 Juncker Plan 39, 45, 98, 100 Kabansk 51 Kaplan, Robert D. 10, 11, 12, 13, 14, 16, 18, 19n5

182   Index Karachi 126, 129 Kazakhistan 59, 123 Khanna, Parag 13, 14, 15, 16, 18, 19n6 Korean Eurasia Initiative 71 Kosovo 8 Kunlun 167 Kublai Khan 11 Kwa, Chong Guan 166 Kyaukpyu 157 leadership 69, 73, 75, 77–80, 82–83 leadership-legitimacy gap 73 Li Keqiang 89–90, 94, 97–98 Llull, Ramon 17 Made in China 2025 90, 95, 99, 100 Maginot Line Syndrome 7 major-country 24, 28: new model of major-country relations 24 ‘Make America Great Again’ 7 Malacca 41–42 Malay World 165, 176 Malmström, Cecilia 97 mariners 166 marine resources 172–173, 176 maritime culture 178 maritime militia 172–173 maritime rights and interests 27, 28 Marshall aid 79 Marxism 17 mechanism design 82 Merkel, Angela 13 metaphor 30–31, 35 Middle East 125, 128 modernity 23; modern context 21; modern order 21; modern period 23 Modi, Narendra 111, 161 Mogherini, Federica 97 Mongolia 51 moral hazard risks 82 Muhammad al-Idris 168 Multilateral Development Bank (MDG) 52–54, 58–61, 69–70, 74, 76–77 multilateral initiatives 69 multiple modernities 72 multiplex world 72–73 Muqaddimah 17 Musharraf, Pervez 112 Myanmar 156–157 nation-state 23, 34 national imagination 22 national revitalisation 32 NATO 7, 9, 13, 16, 18

natural resources 121, 126 neighbourhood diplomacy 24, 33 networks 165, 167–168, 171, 176 New Delhi 127, 128–129 New Development Bank (NDB) BRICS 69–70, 76 new global order 29 new international order 28 ‘new normal’ 26, 107 New Silk Road see Silk Road new world order 82 ‘One Belt, One Road’ see Silk Road OBOR see Silk Road Pacific Asia 69 Pakistan: challenges 111–112; China– Pakistan Economic Corridor (CPEC) 41, 120–127, 130, 154; development corridor 114–115; rationale 105–108; relations with China 108–111, 104, 113–114, 120, 123–129, 159–160; results 112–115 Pan-Asian Infrastructure Forum (PAIF) 70 Pañcatantra 17 Paracels and Spratlys 165, 172–173, 175–176 paradigm shift 9 Partnership for Quality Infrastructure 81 path dependent analyses 8 ‘Pax Mongolica’ 11 Peaceful Rise 121, 130 perceptions 73, 79 Pentagon 123, 128–129 Permanent Court of Arbitration at The Hague 173, 175–176 Persians 168; Persian seafarers 167; Persian Gulf 167 political dialogue 80 political risk insurance 157 Polo, Marco 11, 17 Popper, Karl 7 post-hegemonic 72, 83–84 public good 69, 71–74, 78–79, 81, 83 Public Private Partnerships (PPPs) 82 Putin, Vladimir 8 railway networks 41, 120 Realism 7 Realpolitik 7 regional Comprehensive Economic Partnership (RCEP) 69 regional cooperation 23, 24

Index   183 regional public goods 69, 71–73 repayable loan 153 reputation 72, 77, 81, 83 rhetoric 83 Rumsfeld, Donald 10 Russia 7, 11, 12, 14, 15, 24, 33, 38, 40, 42–44, 46–47, 51, 69, 80–81, 105–106, 111, 121, 130 seafarers 167 securitisation 39–48 Selenge River 51–52 self-binding mechanisms 77 Shanghai Cooperation Organisation (SCO) 70, 125, 130 Sharif, Nawaz 106, 109, 125 Siang River 162 Sichuan: Sichuan Development Plan (251 Executive Plan) 141–142, 149; Sichuan’s role in BRI 141, 143–144, 146 Silk Road: Ancient Silk Road 23, 24, 27, 31, 32, 34; Belt and Road Initiative (BRI) 9, 21–35, 38–42, 44–46, 51–52, 59, 60–63, 69–70, 75–79, 81–83, 104–108, 110–112, 115, 120–123, 126–129, 130, 135–149; external actions of local governments 138–139; foreign policy concept 135, 137; local governments in BRI 148–149; Maritime Silk Road 21, 25, 27, 106–107, 113, 165; New Silk Road 21, 25, 38–39, 42–43, 47–48, 70, 78, 83, 90, 91, 93, 94, 95, 96; One Belt, One Road 8–9, 69; OBOR 9, 18, 70, 73, 75–79, 81, 83, 153; Sichuan’s role in BRI 141, 143–144, 146; Silk Road Economic Belt 21–22, 24, 25, 27, 107, 111; Silk Road Economic Belt and Twenty-first Century Maritime Silk Road 8, 75; Silk Road Fund 104; Silk Road spirit 11–14; Vision and Actions 75, 95, 96, 97 Sino-centrism 122, 130 Sino-globalism 122, 130 Smith, Adam 17, 121 ‘Smithism’ 17 South China Sea (SCS) 79, 128–129, 155, 165, 173, 176n1 South East Asian Treaty Organization (SEATO) 124 Southeast Asia 79, 165 sovereignty 165, 172–173, 176 Soviet Union 16, 124 Sri Lanka 154, 158

Strategic Environmental Assessment (SEA) 54, 59, 62 strategic partnership 122, 130 String of Pearls Strategy 128 Summer World Economic Forum in Davos 89, 98, 90 Taiwan 123, 128 Tanmen 166, 172–176 Tansen Sen 171 Technical Assistance to the Commonwealth of Independent States (TACIS) 45 territorial claims 165–170, 176 terrorism 27, 39, 46, 71, 109–110, 113, 120, 127 Tianxia 25 Tibet 129 TPP see Trans-Pacific Partnership Transport Corridor Europe–Caucasus– Central Asia (TRACECA) 39, 45, 48 trade 39–42, 44–47, 69, 75, 78, 120–126, 129, 130, 171, 174–176; trading state 120–122, 129, 130 transit corridor 112–113 Trans-Pacific Partnership 15, 18, 69 transparency 157, 159, 162 Trump, Donald 7, 13, 14, 69, 122 Turkmenistan–Afghanistan–Pakistan– India (TAPI) gas pipeline 42 Uighur 126, 129 United Nations (UN) 16, 124 United States 24, 28, 33, 34, 69, 105–106, 111–113, 121, 122–125 US see United States US-centric analyses 13, 17 US New Silk Road 42–43 USA see United States values 32; new values 29; Chinese values 33 Venezuela 154 vessel 168; Chinese vessel 165, 170, 173; fishing vessels 173; Southeast Asian lash-lug vessel 167 Wade, Geoff 170 Wang Hui 11 Wang Yi 104 ‘Washington Consensus’ 14 Westphalian paradigms 11 World Bank (WB) 15, 54, 58–60, 70, 74, 77, 83

184   Index Xi Jinping 21–23, 24–26, 27–37, 39, 75–76, 91–92, 94, 97–99, 106, 109, 112, 116, 120, 123, 125, 130, 161, 166, 172–173, 175 Xinjiang 27, 28, 105, 109–113, 115, 123, 125–127, 130

Yangzi River Economic Belt (YREB) 142, 148 Yarlung Zangpo River 160 Zheng He 11, 17, 166, 168–173, 176 Žižek, Slavoj 10