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Economy

President Xi’s Silk Road Conundrum

Oct 24 , 2016

China has recently embarked on an ambitious plan: building a widespread infrastructural network that will connect Asia, Africa, and Europe. The “One Belt, One Road” (OBOR) plan consists of two pillars: the Silk Road Economic Belt and the 21st Century Maritime Silk Road (MSR). The plan, now officially known as the Belt and Road Initiative (BRI), is expected to lead to “win-win cooperation,” promising benefits for all those who participate. 

Regardless of the optimistic rhetoric, a closer look at the MSR suggests that materializing the ambitious initiative is facing several challenges. The maritime route stretches from China’s nearby waters all the way through the Indian Ocean, home to countries that have grievances with China’s recent behavior in the international area. Although not all of these countries are participants of the MSR, their location could allow them to seriously obstruct the implementation of the initiative. If China wants to materialize the initiative, it has to return to its so-called “Peaceful Rise.”
 
The stumbling blocks  
 
China’s recent behavior has generated grievances in some of the stakeholders of the Indo-Pacific, which creates an unfriendly environment for realizing the BRI. First of all, Tokyo has adopted changes in Japan’s national legislation, allowing it to militarily assist the U.S. or its various partners under certain conditions. The reform fits Japan’s “buck passing” strategy under which it usually defers the lion’s share of balancing to an ally (e.g., the U.S.), but accelerates security engagement in the incident of insufficient balancing by the partner. The reason behind Japan’s national security reform seems to be the threatening the security landscape of East Asia. Beijing has been constantly strengthening its navy and it is becoming more and more domineering in territorial disagreements, including the contentious issue of the Senkaku/Diaoyu islands located in the East China Sea.
 
Second, the Philippines is involved in the increasingly heated South China Sea disputes, where Beijing’s nine dash line competes with the claims of several other countries. China’s preferred way of handling the issue is keeping it between the concerned parties bilaterally. The Philippines, however, opted to take the issue to the Hague that practically ruled in favor of Manila. Meanwhile, Beijing has installed military facilities to the disputed islands of the South China Sea, a tendency that has worried Manila and Washington, despite the controversial statements made by the recently elected Philippine President Rodrigo Duterte. Both Washington and Manila concluded a defense accord, the Enhanced Defense Cooperation Agreement in January 2016. Additionally, Manila is going to be included in the prospective Maritime Security Initiative, a capacity building pact for countries around the South China Sea, despite of President Duterte’s conciliatory overtures toward Beijing.  
 
Third, Indonesia originally showed interest in combining its “maritime fulcrum” initiative with China’s BRI and steered clear from getting involved in the South China Sea disputes. However, recent incursions by Chinese fishing boats changed this situation. Some in Indonesia argue that China tactically uses fishing to assert territorial sovereignty around the Natuna Islands. As a response to China’s growing assertiveness, the Indonesian Prime Minister Joko Widodo visited the disputed area on the deck of a naval ship. It seems that China’s behavior is creating a gravity that draws the formerly cautious Indonesia in the disputes, further undermining the prospective implementation of the BRI.
 
Fourth, Vietnam is also a disputant in the South China Sea disputes. Washington has recently revoked its longstanding weapons embargo on Vietnam, and accentuated its support of Vietnam’s position on the disputes. Furthermore, India will install a “satellite tracking and imaging” hub in Vietnam that offers the ability to observe China and the South China Sea as part of New Delhi’s Look East policy.
 
Fifth, and somewhat ironically, one of the main stumbling blocks of the BRI is its very own “flagship project”: the $46 billion China-Pakistan Economic Corridor (CPEC). On the one hand, since the planned path of the project goes through Indo-Pakistani contested territories, it is one of the reasons why India, a crucially located country on the BRI, has severe grievances about the initiative as a whole. New Delhi has remained reluctant to commit itself to the MSR and launched its own regional initiatives: the Mausam Project, the Cotton Route, and the Spice Route. Observers reckon that these projects are India’s challenge to the MSR. Indian Prime Minister Narendra Modi repeatedly articulated his country’s commitment to safeguarding the freedom of navigation, echoing the U.S. policy. Also, New Delhi adopted a proactive naval posture, partly because of China’s growing clout in the Indian Ocean region. On the other hand, the planned route of the project stretches through a rough region: terrorists have already struck targets along the prospective path of the CPEC. These attacks only exacerbate the worries about potential cooperation between Uighur combatants, Turkmen rebels, and Pakistan’s Taliban. Given the great importance attached to the CPEC, the failure or success of the project will have significant implications for the region and unintended consequences on the BRI.
 
Return to “Peaceful Rise.”
 
Finally, one overarching repercussion of recent Chinese acts is that they have invited greater U.S. presence in the Indo-Pacific region. Washington has longstanding grievances about China’s recent acts related to the South and East China Sea disputes. As a champion of the “freedom of navigation”, the U.S. is getting deeply entangled in the disputes. In order to respond to China's behavior, Washington accelerated its engagement with the Philippines, Vietnam, and India in addition to solidifying its defense postures with Australia, Japan, Singapore, and South Korea, Taiwan, and Thailand.
 
China’s recent behavior also seems to undermine historical-cultural ties which have been evolving throughout the course of history. China-Sri Lanka relations, for instance, were characterized by prosperous trade and deep cultural links for hundreds of years. The bilateral relationship seemed to have reached its pinnacle during the autocratic presidency of Mahinda Rajapaksa, when China has engaged in several large scale infrastructure projects in the island nation. The democratic force of the Sri Lankan public, however, ousted Rajapaksa and the new government under the leadership of Maithripala Sirisena and Ranil Wickremesinghe have decided to keep a safe distance from Beijing.
 
Similarly, China-Myanmar cultural and economic ties have been intimate for centuries. Until more recently, China has been supporting the military junta of Myanmar for more than 20 years. With the country’s democratic transition starting from 2011, however, bilateral relations have faced difficulties. Apparently, China’s unconditional support for autocratic regimes generates negative political and public sentiments toward Beijing. Changing the course, however, Beijing has now begun to re-engage with the democratically-elected Aung San Suu Kyi, who is closely associated with the U.S.. Unfortunately for Beijing, its three enemies (separatism, extremism, and terrorism) could find inspiration in these developments. In order to avoid this, China has to return to its “Peaceful Rise” by initially resolving the issues of the “stumbling blocks” of the BRI. Mitigating the concerns related to the CPEC is of paramount importance, since the route of the project goes through China’s restive Xinjiang and Tibet provinces.
 
Therefore, we see that there are plenty of unexpected challenges to the BRI. The worrying part is that these challenges are created by China itself, given Beijing’s uncertainty of its economic growth, brewing domestic unrest, and growing nationalism. Also, China’s assertiveness invites grievances in possible BRI participants and inevitably draws increased U.S. military presence in the Indo-Pacific and the Central Asian regions. None of this is helping the implementation of President Xi’s hallmark initiative to address its domestic challenges, especially the production overcapacity and the creation of new markets.
 
In a way, economically-driven China is unconsciously sabotaging the implementing of its own initiative. In order to overcome these issues, China has to return to the “Peaceful Rise”. If China is going to adopt a way of emergence similar to that of the U.S., confrontation is likely to occur. The world needs a truly “new type of major power relations” put forward by Xi Jinping during the Sunnylands summit in 2013, reflecting the still thriving and living civilization in the world.
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