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Belt and Road and Its Limits

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The geopolitical processes in the world evolve quite torrentially. What’d be a result of the great Chinese Initiative ‘Belt and Road’? Only time will tell it. However, a certain well-argued skepticism takes place among many intellectuals.

On October, 17-19, the Forum was held in the Chinese capital for International Cooperation around the ‘Belt and Road’ Initiative project. This Forum was the third and the largest international conference since the project launched in 2013. Representatives of over 130 countries, largely from the Global South, attended the Forum including Xi Jinping. The ‘Belt and Road’ initiative (BRI) aims to connect China with Western Europe’s largest and richest markets. The grand plan foresees the building of global infrastructure and energy networks connecting Asia with Africa and Europe through overland and maritime routes, in accord with the saying “blueprints turned into real projects”. But senior EU figures were missing there, on the Forum. The only head of a state from the EU bloc was Hungary’s populist Prime Minister Viktor Orban. Undoubtedly, major construction projects have already been built and are partially functioning, especially in Asia and developing countries of the world; but essentially, the BRI is aimed at the trade in Chinese products in Europe. It is difficult to say, how China is going to implement the Initiative if the second and most important part of this Project is not reflected in the most important planned events. After all, it is obvious that if the Western European democratic countries – that are NATO members and the most trusted allies of the United States – would not give their consent to the market opening, – in this case, the BRI will remain just a project, just a dream and ink on paper.

Chinese President Xi Jinping warned against decoupling from China, criticizing Western efforts to reduce dependence on the Chinese economy. “We stand against unilateral sanctions, economic coercion, decoupling, and supply chain disruption,” Xi told in front of more than 1,000 delegates. Along with that, the Western leaders insist that their goal is to “de-risk”, not “decouple”, from China, saying they want to diversify supply chains that have become overly dependent on the world’s second-largest economy. Among the Forum participants, the list of leaders of the countries with large economic potentials was not impressive. Attending heads of state totaled just 23, compared with 37 at the previous forum in 2019. As a matter of fact, some decline in interest in the project is observed. The high expectations do not match the reality yet.

There are certain problems also inside of the highly advanced economy of China. Apparently, the forty-year period of continuous growth with an annual surplus above 10 percent is finally coming to an end. The structure of the international system gets transformed; the confrontation gets more intensive with the United States, the Global West, and regional super-economies located in Asia. China’s growth began with Henry Kissinger’s visit in 1978. In those days, the great diplomat “discovered” China to the Western world, established new economic ties and supply chains, and made the Celestial Empire of China an assembling factory of global importance. It was exactly Kissinger’s diplomacy, that contributed to the beginning of China’s golden era, the forty years of continuous and record-breaking economic growth. Well, and finally, Washington made China its ally in the Cold War against the Soviets. In his book ‘On China’, Kissinger wrote that throughout the 1970s, Beijing was more positive towards the United States and opposed the Soviet plans even more sharply than the majority of the American society or Congress.

In its scale, this event was similar to the arrival of Admiral Matthew Perry in Japan in the middle of the XIX century. In those times, the archaic political system of the Tokugawa Shogunate, which governed Japan from 1600 to 1868, isolated the country from the outside world, thereby ensuring a high level of political stability. However, it doomed the country to the economic and technological backwardness. American advisers contributed to the transformation of the regime in Japan and ‘the Meiji Restoration’ epoch began, which – within a few decades – changed the country so much that it became almost unrecognizable. The technological development process began. Once, in the middle of the XIX century, Japan was a backward, isolated country with archaic shoguns, samurai, and feudal relations; but by the beginning of the XX century, Japan became the first Asian country in history to win the shockingly brilliant and unexpected military victory over the great European power, which was the Russian Empire in 1905.

Taking into account China’s population, scale, and market structure, many economic science representative authors write that, in order to ensure political stability, Beijing needs stable and permanent economic growth. The current figures (4.9% of GDP per year) cannot be called steady growth. Analysts note a noticeable slowdown in China’s economic indicators by the end of this year. Problems are especially evident in the real estate sector, where, although a number of grandiose construction projects have unfolded, the sales volume has declined steadily. The Chinese ghost towns consisting of numerous skyscrapers, where nobody lives, have become a byword among economists. Upon that, the development giants are faced with heavy debts and thereby once again test bitterly the trust of consumers. Perhaps, soon, China’s largest real estate developer ‘Country Garden’ will be forced to admit its total default. The developer has already warned about his inability to make all the payments. Also another developer ‘Evergrande’ experiences serious problems. The economists compare the problems in the Chinese economy with the financial crisis in the United States in 2008. It was related to problems in the real estate area, too. Another circumstance is that the Chinese economy continues to work in debt. According to the Bank for International Settlements, as of 2022, China’s total debt exceeded that of the United States, reaching almost 300 percent of GDP.

The possible long stagnation of the Chinese economy is discussed in the Foreign Affairs article written by Ian Johnson from the Council on Foreign Relations. According to the Financial Times, in China, negative reviews of the economic situation are forbidden now; local television does not allow remarks containing arguments about deflation and a capital outflow. The Wall Street Journal writes with no compromises, “China’s 40-Year Boom Is Over.” Perhaps, these estimates are somewhat exaggerated, and this has been repeatedly stated by Chinese officials. However, it seems that the Chinese economy is not the same as before. Beijing is kind of running out of possibilities to continue the construction projects. In some parts of China, there are bridges and airports staying idle; millions of apartments are empty; and the return on investment has sharply decreased. Well, as for China’s long-held ambitions to overtake the United States in the world table of ranks and leave behind the world’s largest economies, it’d be better to forget about it completely. Economists come to the conclusion that the Chinese economy can expect a recession similar to that that occurred in Japan at the end of the XX century, which resulted in many years of deflation. Some economists pay attention to the decline observed in China’s foreign trade.

As early as a few years ago, it became known about the purely economic problems encountered by BRI. There were a cumulative $1 trillion of loans made to about 150 countries over a decade as a part of the BRI. Now, 60 percent of those loans are held by countries being in financial distress, The Wall Street Journal wrote. Seemingly, many constructions being erected within the framework of the global Initiative and with the Chinese credit money are rather political or elitist projects in their nature. Many developing countries have difficulties while servicing these loans. It can be a common situation that in a country, its economy grows only in the short and medium term but only a political elite enjoys this, while the country does not strengthen its economy this way. So soon afterwards the problems begin.

Let me repeat, perhaps, the economic difficulties are just temporary and will not become an insurmountable obstacle to the major project implementation. Especially so, when the projects are of a geopolitical nature. Well, undoubtedly, BRI is the global geopolitical project aimed at establishing Beijing’s dominance over Eurasia in the future. Perhaps, this is the weakest side of the project. Here, let me deviate from the topic for a while. Fyodor Dostoevsky wrote not only great novels but deep journalistic arguments, too. In his monthly column called ‘A Writer’s Diary’, Dostoevsky used to comment on social and political events in the Russian Empire and the world. He had a remarkable thought about the Napoleonic Wars. That’s what he wrote. ‘Thank God that the Russian Empire did not defeat Napoleon alone but instead did it in the alliance with England and other empires of Europe. Russia’s victory at that time was ambiguous; it was reached through serious defeats and failures. If Russia did this confidently and alone, it would awaken the anger of all the major powers of the world, and then, certainly, they would establish a powerful alliance against Russia’. Now, return to the topic. So, often, extreme global ambitions and successes of a country in world politics lead to a fit of jealousy. Major states have to balance, restrain the growth of other global players, create alliances and unions, etc. That is why, maybe, the global geopolitical and economic ambitions of the BRI are not a strength but instead a weakness of China.

Of course, the implementation of such a large-scale grandiose project as the BRI is possible only in conditions of high political stability in China, in the presence of its strong will, and at high and stable economic indicators. Nevertheless, these are not the only possible obstacles to the successful completion of the BRI project. Furthermore, they are not the main ones. Probably, the economic problems can be solved; and as for the stability of the political system, currently, it does not cause serious concerns yet. But the main problem lies in the geopolitical plane and in the structure of the international system. The scale of the BRI is so global that if it is implemented, some transformations of the international system will occur, some changes in the world table of ranks will be inevitable, and changes in the priority of both great and regional countries. Such processes are not fast, they take time. However, inevitably, the potential of BRI will lead to fundamental changes, it’s for sure.

The leading players of the modern world seek to preserve the status quo and cannot agree with this, including the United States, the European Union, India, Japan, South Korea, Australia, the Philippines, Canada, and, of course, Taiwan, which has an incomplete sovereign status. It is important to keep in mind that neither representatives of these largest world economies nor their leaders attended the Forum in Beijing. The excessive growth of China causes concern and anxiety in the world capitals. In addition, this worry arises not only in Washington, London, Brussels, Paris, or Berlin. In Asia, there is no less and perhaps even more intensive concern about it. China’s efforts for dominance in the region and its overall complex and often conflicting history cannot but cause processes of opposition able to counteract the implementation of the BRI. At the Forum, many Asian countries were represented not by their leaders but instead by second persons in their governments. For example, Vietnam was represented by its young recently elected president instead of Nguyen Phú Trọng, the General Secretary of its ruling Party, the head of the Central Military Commission, and Vietnam’s paramount leader. By the way, Vietnam is passing through its economic recovery; in 2022, its GDP amounted to 8.02% in annual terms and was the highest since 1997. More than 40% of Hanoi’s export potential is accounted for by the United States and US allies (which brings the main GDP growth) and about 12% by China.

Next point. China has problems with alliance creation. In fact, the world’s second-largest economy has no real military and political allies. Xi uses the term “strategic coordination”; but this is not a military-political alliance at the NATO level and China has no bilateral military agreements, as, for example, between the United States and Japan. Beijing used to build its relations with countries on a utilitarian basis and has achieved considerable results in it. However, all these results are economic in nature. Today, China is the second largest trading partner of many countries in the world and the first partner of a very significant number of the major states. However, almost never had these relations (based on trade) moved into the political plane. China has no NATO or European Union of its own. Any of Beijing’s bilateral agreements with its close partners do not contain theses on common values of a political nature. While in the West, a countries’ partnership is an example of a civilized union/alliance based on common values, China has nothing like that. While the West is unique in its ability to create meanings, ideas, and concepts of development, China is excellent in ensuring apolitical economic growth. In general, China is quite alone in its international floating; meanwhile, the number of its influential and powerful detractors does not decrease over time but increases instead. Later, we still have to find out, what China is like in the global political struggle.

Small and medium-sized countries are ready to enter into economic cooperation with China. This partnership leads to economic growth and is associated with favorable sales propositions. Сhina financed and built a number of infrastructure projects in the developing world and used to buy third-world countries’ loyalty while enriching itself. It made a total of about $1 trillion in loans for infrastructure in poor countries in the past ten years. However, unlikely could it that any large and wealthy political system would go to the establishment of a political and military alliance with Beijing.

Another potential problem of China lies in the political plane, too. It is connected with the political order in the society. Serious changes and transformations are upcoming in Chinese society (like many other ones). This is due to the rapidly changing structure of the world, power, and the international system. The economic system of the Celestial Empire will change, too. The potential of the past has been exhausted to a certain extent and requires deep reforming. This is not just China’s problem. This will happen on the international stage. Usually, it is the transformation of the international system that results in reforms inside of states. For survival and successful development, all societies will change. In this regard, up to this day, there is nothing better than the classic of political science, the immortal ‘Political Order in Changing Societies’ by Samuel Huntington.

The simplest political system is one, which depends on one person. It is also the least stable one. As Aristotle pointed out, “a majority of all tyrannies were quite short-lived.” On the contrary, a political system with several different political institutions has much more opportunities for adaptation. The needs of one epoch can be met at the expense of one group of institutions and the needs of another one at the expense of other institutions. Such a system in its composition has the means for its updating and adaptation. In the American system, for example, the President, the Senate, the House of Representatives, the Supreme Court, and the state governments have played different roles in different periods of the USA’s history. When new problems arise, at first, one institution can take the initiative to solve them, then another one. Is the Chinese authoritarian system ready for change? The question remains open.

In any case, China is one of the most outstanding states and societies of the modern epoch. This country has achieved incredible success in both the economic and social spheres. Not only has China brought a record number of people out of poverty, created a large middle class, created an excellent technological base and industry, and built a stable, albeit authoritarian, political system. In addition, Beijing broke the record of continuous economic growth, which at the end of the XIX century belonged to the United States. Also, Beijing transformed the look of its cities and enriched the broad strata of its people. However, geopolitical ambitions are a very responsible and risky business. Is it worth joining this game? Is it worth standing up against the broadest coalition of powerful forces that do not want to have an authoritarian opponent equal to them? These questions will have to be answered by the Chinese elite and society.