The Belt and Road Initiative (BRI), formerly known as One Belt, One Road, is a signature foreign policy priority of Chinese President Xi Jinping. BRI consists of two aspects: the Silk Road Economic Belt, a land route starting in western China that goes through Central Asia and on to the Middle East (SREB) ending in the European Union; and the 21st Century Maritime Silk Road, a maritime route that connects Southeast Asia , the Persian Gulf and the Horn of Africa (MSR) also ending in the EU. It outlines five major goals of the BRI: policy coordination, facilities connectivity, unimpeded trade, financial integration and people-to-people bonding. All in all, it includes more than two thirds of world population and more than one third of global economic output, and could involve Chinese investments that total up to $4 trillion.1
On 14–15 May 2017, China held a grand forum to burnish its international leadership credentials under the well-known but little-understood BRI. The Forum has provided Chinese leader Xi Jinping a stage to demonstrate China’s role in connecting with the world, while much of the West is looking inward, especially with United States President Donald Trump withdrawing from the Trans-Pacific Partnership and announcing his ‘America First’ posture to the rest of the world, and the European Union progressively reducing international reach. The Forum also reaffirmed China’s and the participating countries’ commitment to an open economy, inclusive trade and opposition to all forms of protectionism. One lasting implication of the Forum would be the economic power and influence accruing to China when the BRI’s objectives are fully realized. The Forum has clearly shown that the BRI, which had begun under Xi’s predecessors’ ‘March Westward’ (Wang) development of the Xinjiang Uyghur Autonomous region , can serve as an integrative platform for global connectivity (Gong 2017b).
In general, BRI is designed to meet Chinese objectives both at home and abroad. Domestically, Chinese leadership hope BRI will help ease industry overcapacity and spur growth in its underdeveloped border regions, especially the West. As the labour costs of China rise, BRI is expected to move its labour-intensive and low value-added manufacturing facilities overseas. Nevertheless, the promise of increasing efficiency and interconnectivity with low-volume, high-value good shipments by the BRI railway connections, from the Chinese western cities of Xi’an and Chongqing to the European dry ports of Duisburg and Lodz, still have to be fulfilled. Further promises of sustainable development and cooperation in infrastructure building are facing reality checks.
BRI is also one of the economic diplomatic tools through which China can wield its economic power to advance diplomatic and strategic objectives (Li 2015; Blanchard and Flint 2017; Blanchard 2017). Such considerations fan existing fears in the region that BRI will help China accrue influence and leverage on these countries. In this logic, China is expected to exploit economic power for political objectives at the cost of autonomy of other countries. For countries that are suspicious of China’s BRI, such as India , Japan and the United States, BRI is considered as a threat to their regional interests (Palit 2017). Although China has intended to downplay the strategic dimensions of this initiative, many scholars, including Chinese scholars suggest that the plan is indeed a response to the US strategic rebalance to Asia. It is a reflection on the ‘Look Westward’ proposal made by some foreign policy elites in China a few years ago (Li 2015).
The Chinese leadership have paid close attention to how the initiative itself is marketed and perceived in the region and have adjusted their approach accordingly. In the Forum, Xi reiterated that ‘BRI would not repeat the old geopolitical competition game but open the new approach for win-win cooperation’ .2 However, implementing BRI will not be easy and the geopolitical challenges will be the biggest hurdle in the region. For example, along the SREB route, Central Asia as a regional grouping in political and security terms remains widely divided with serious internal conflicts caused by unresolved boundary, water and energy disputes, regional rivalry, deep mistrust and differences in political, diplomatic and security policies (Zhang 2015). In MSR , China finds it more difficult to implement projects as geopolitical concern is more serious, particularly reactions of Southeast Asian countries towards China on the disputed South China Sea .
For most countries participating in BRI, they are motivated more by a practical recognition of its relevance for advancing their own economic and development goals. It is especially so in promoting foreign investment or improving infrastructure in their own country. Following the financial and economic crisis that has forced the European Union and the United States to look more inward, China is among only a few countries that are able to provide financing without many requirements.
Security Challenges
Despite China’s aspirations to provide an open economy and trade system, there are numerous challenges ahead. While the Chinese State-Owned Enterprises (SOEs) are expanding their international reach capabilities, they still do not have the capacity to assure adequate security along the Belt and Road. As countries along the route are either unstable or fraught with ethnic and religious tensions, and there is a lack of legal protection for investors to uncertainties regarding local regulations , Chinese infrastructure and personnel could be subject to political risks and criminal violence. While the threat related to the use of violence is not common over all the BRI, several other crises may arise, such as social confrontation, environmental degradation and an overall lack of corporate social responsibilities. The rise of new models of risk assessments, prevention and mitigation, Corporate Social Responsibility (CSR), private security corporations and big data analysis provide a wide range of capabilities that can benefit the overall BRI’s security.
Risks Challenges
Economic returns and control of risks are generally two aspects of outbound investment activities. The security environment is evolving globally and more attention is given for other than military threats. They are a major concern related to internal and external security of any country as such risks are evolving across national borders.
Since China launched the Going Out investment policy, its FDI has spread all over the world. In terms of infrastructure and energy investments , the Chinese outbound economic footprint largely concentrates on the developing countries such as the African ones. As a latecomer, China usually invests in countries with religious tensions and militant groups where Western companies are absent. Therefore, insurgents, rebels and militants are already targeting the massive Chinese infrastructure investments altogether with the influx of Chinese personnel. The concept of ‘One Belt, One Road’ is vulnerable for attacks along the land and sea. Therefore, non-traditional security threats are posed to curb the progress of regional economies and social development (Arduino 2015).
Many countries along the BRI are facing security threats from extremism and terrorism , such as the self-proclaimed Islamic State. China has remained very cautious of getting involved in the complexities of politics and conflict of other countries. But as Chinese citizens and properties are threatened, the Chinese leadership realizes the necessity of increasing its capability of protecting overseas investments and personnel. The Xinjiang Uyghur Autonomous Region as the link of Central Asia and the mainland of China is a place vulnerable to Islamic extremists and disruptive forces. Moreover, the China-Pakistan Economic Corridor (CPEC ) presents extreme risks as the political environment in Pakistan has proven unstable and terrorist attacks are the norm.
In addition to political risks, some of the projects Chinese companies have been undertaking are exposed to dangers that are based on unsustainable debt or lax social and environmental standards. Such projects are vulnerable to the economic situation and public perceptions. Indeed, a number of BRI projects have already experienced social protest, such as the suspension of the Sri Lankan port of Hambantota.
The BRI has to deal with risks challenges where a shared understanding on security, and the role of China in security is needed. The question is to what extent the outside world will feel comfortable with China’s participation in protecting its overseas investments . After all, China’s role in security challenges is largely dependent on how other countries view China’s intention and the purposes of the BRI.
Corporate Social Responsibilities Challenges
China’s efforts in cultivating close economic ties with developing countries , particularly its neighbouring countries, have been a key element in its regional strategy. The Chinese government has launched strong supporting policies in encouraging Chinese companies to make overseas investments , from ‘Going Out’ to ‘BRI’. China has wielded its economic clout via a sovereign wealth fund, state-owned investment banks and huge amounts of foreign reserves to seek investments in energy, technology, finance and infrastructure in both developed and developing economies.
However, China’s growing presence in the international investment markets has resulted in mixed responses. On the one hand, Chinese investment brings benefits to the host country as a new source of investment while capitals from traditional developed countries dry up. On the other hand, Chinese overseas business activities faced a number of governance problems that resulted in resistance in host countries: claims of neo-colonial motives in the developing world; irresponsible operations in the investment destination; defiance against labour rights and so on. China’s perceived poor records in the environment and corporate governance have triggered further concerns. The appeal of China’s state-led business model to the developing countries is believed in the West to undermine international attempts to promote governance and transparency. At the same time, other countries may find the ‘Capitalism with Chinese characteristics’ a viable model after the 2008 financial meltdown.
China’s economic statecraft is also inconsistent. Despite its declaration of becoming a responsible global player, it continues to collaborate with ‘pariah’ states in pursuit of its own economic interests. Such contradictory ...