At a May 2017 forum in Beijing, China’s President Xi Jinping expounded on the evolving opportunities for China’s Belt and Road Initiative (BRI)1 to connect with the development strategies of various other countries, specifically naming neighbors Russia, Kazakhstan, Vietnam, Laos, and Myanmar.
Far from just an economic strategy, BRI lays the foundation for far more extensive political and geo-strategic interaction between Eurasian countries than did the similarly ambitious U.S.-centric Trans-Pacific Partnership (TPP) and Transatlantic Trade and Investment Partnership (TTIP).
China is using BRI to solidify political relationships with neighbors like Brunei. Brunei’s presence in the BRI would give China more influence in ASEAN. Another ally in the region could give China more leverage in South China Sea discussions.2
The China-Pakistan Economic Corridor branch of the BRI would be comparable to the Marshall Plan, completely transforming the Pakistani economy and leaving the country geo-strategically intertwined with China well into the foreseeable future.3
A less discussed aspect of BRI is its potential to reshape the global financial system. Some argue that the Chinese-led Asian Infrastructure Investment Bank (AIIB) exists to supplant the existing Bretton Woods system. Valid or not, a successful BRI will ultimately raise the profile of Chinese banks and give them greater influence on how business is done globally.
Since 2010, China has increased its exports substantially to areas to its south and southwest, while trade with countries to its north and northwest like Russia and Kazakhstan has stagnated (Map).
BRI would create flourishing trade relationships with all these partners, potentially with strings attached, however. Countries like Vietnam and South Korea would prefer to strategically reduce their heavy reliance on the Chinese economy, the latter having recently suffered under Chinese sanctions following the deployment of the THAAD missile system.
With China’s promise of at least a trillion dollars in investment, passing up this opportunity to more closely enter China’s sphere of influence is itself economically risky. Can Vietnam afford to sit out of BRI while its neighbors reap massive benefits from trade and investment from China?
European leaders must ask themselves similar questions. While TTIP is in a comatose state, the EU could instead look east to grow its trade. The tentative plan is for BRI’s land and maritime routes to end in Rotterdam and Venice, respectively, and then link together.
Given recent U.S. rhetoric on trade along with the failures of TPP and TTIP, countries everywhere may have to consider the newer, less certain future of BRI as an alternative. This could mean concessions in areas like markets rules and international standards. As BRI is an entire framework rather than a few isolated projects, it could potentially rewrite those rules.
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