23 October 2016
China's One Belt, One Road concept embraces a sprawling grab-bag of economies that together are home to over 60 percent of the world’s population. Credit: Baidu
China's One Belt, One Road concept embraces a sprawling grab-bag of economies that together are home to over 60 percent of the world’s population. Credit: Baidu

One Belt, One Road: China’s bid to reshape world order

A couple of years ago I joined a small business mission to Beijing that met in the vast sterile opulence of the Great Hall of the People one of the Chinese leadership’s top figures – discretion suggests I should not say exactly who.

After usual pleasantries, hot towels, and liberal servings of tea, the leader began briefing: “China has had a challenging 100 years…”.

I choked into my tea in astonishment. What Western leader would ever begin a briefing asking us to recall the work of a century? You would be lucky to get any leader to focus on any longer period than five years – often much less.

I lost the next few sentences as I digested in awe what I had just heard. Only in Beijing will you get leaders with the vision, or inclination, to review and assess policy over such vast oceans of political time.

I had the same feeling last year when I first heard Xi Jinping drop on us the concept of “One Belt, One Road”. It is a concept tailored to those vast oceans of political time. It is nonsensical – or at least thoroughly mundane – when viewed through the prism of normal run-of-the-mill politics, where even a week is a long time.

Why nonsensical or mundane? The concept embraces a sprawling grab-bag of more than 60 economies at the last count, amounting to over 60 percent of the world’s population, and over 46 percent of global GDP, but sharing almost nothing in common.

It embraces the 10 ASEAN economies – with which China already has an intense trade and investment relationship. It embraces eight European Union economies where deep trade and investment links have already been forged. It includes Russia and India – colossal trade and investment partners whose relationships will continue to be pursued strongly on a bilateral basis.

And of course it includes China itself, which accounts for nearly one thirds of the group’s population, and two third of its GDP. So far, so business as usual – whether or not we have a Silk Road or a Maritime Belt.

But three things seem to make the concept distinct. First, the inclusion of the vast and neglected region of “stans” – from Kazakhstan to Turkmenistan to Uzbekistan – and the convulsive Islamic states around Iran and Iraq, and north Africa. Second, the clear priority of infrastructure-building, whether roads and railways, or gas and oil pipelines. And third, attention willfully turned away from the United States.

Bringing the “stans” into the world economy will be truly radical – but will take decades to amount to anything. Today the “stans” account for 12 percent of new “region’s” population, but just 1.7 percent of its GDP. Almost half of this GDP is accounted for by Kazakhstan’s oil and gas, which is already being piped in large volumes east into China.

The reasons the “stans” have been neglected are simple. First, they have neither people nor markets worth a dime. Kazakhstan may have a land area larger than India, but its 17 million people are spread mightily thin. And second, they have for most of the last century sat as a sterile “buffer zone” between Russia’s soft underbelly and the rest of the world.

If China’s policy to open up this region were to progress at speed, Moscow’s response would be predictable.

The commitment to improve infrastructure links across this vast neglected area to the west of China is also truly radical, and has been given powerful impetus by the recent US$100 billion establishment of the Asia Infrastructure Investment Bank (AIIB).

The push could be hugely beneficial, so long as it does not come to be seen as a modern-day equivalent of Nazi Germany’s “drang nach osten” – or “push to the east”. A Chinese-led “drang nach westen” could send shivers down many spines.

So, the fact that the “One Belt, One Road” concept is likely to be empty of short term significance from a strict trade and investment point of view does not in any way dilute its huge significance to Beijing leaders who view progress a century at a time.

This is an attempt to provide a new prism with which to view the world economy, and the global balance of power – not a prism hovering over the Atlantic, with the US on one side and Europe on the other, but one firmly over China, with the “stans”, Europe and Africa to the west, and the Pacific sea lanes going east. It is a concept wedded to global diplomacy, not global trade. Of course, that makes it no less significant.

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Executive director of the Hong Kong APEC Trade Policy Group

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