The Chinese ambassador to the United States, Cui Tiankai, is right in suggesting that America should join China’s Belt and Road Initiative (BRI). While mistakes were made and some of its funds were misused by participating countries for one reason or another, the BRI is generally a sound development vehicle that allows both sides to promote trade and investment.
China gains new markets for its products and destinations for its investments. According to official government statistics, two-way trade between China and participating countries reached nearly US$6.5 trillion since its inception in 2013. The number accounts for over a quarter of the Asian giant’s total trade with the world.
Chinese government data also showed total accumulated investment exceeded US$80 billion from 2013 and 2018, most of which was spent on infrastructure projects. The total figure could reach US$1.3 trillion over the next decade, according to US investment bank Morgan Stanley.
The investment has played a crucial role in helping the recipient nations’ economic development because roads are important in transporting goods to and from markets. For example, Philip Mainga, Kenya Railways Corporation’s acting managing director, attested that it was China’s significant infrastructure investment that transformed the country’s economy and improved people’s livelihood.
Against this backdrop, the US should join the BRI instead of criticizing it because China has the capital to enhance economic growth and the expertise needed to repair and upgrade America’s crumbling infrastructure. US President Donald Trump himself estimated that upgrading infrastructure would require US$1.5 trillion over 10 or more years.
According to the CIA, government debt is expected to exceed 130% of GDP in 2o19. In addition, the economy is slowing down in part due to trade wars. To that end, the US government would struggle to find the funds to fix its roads, railways, airports and other infrastructures.
BRI serves US interests
The BRI is not perfect and China is not a charity, but the initiative has proven to be a “win-win” for the Asian giant and participating countries. This narrative could also apply to the China-US trade and investment relationship.
Indeed, joining the BRI might turn Trump’s campaign slogan “Make America Great Again” into a reality. As indicated earlier, Chinese investment and expertise could help the US repair and upgrade its infrastructure efficiently, saving money and time and therefore improving transportation efficiency.
Infrastructure and other construction projects have massive multiplier effects for downstream and upstream industries. For example, repairing a bridge requires steel, which in turn increases demand for commodities such as iron ore. The additional employment created in these sectors would boost the retail trade and hospitality industries.
Joining the BRI would increase opportunities for US construction, engineering and consulting firms to bid on projects overseas
Joining the BRI would increase opportunities for US construction, engineering and consulting firms to bid on projects overseas. The World Bank estimated that in order for developing countries to meet the infrastructure-related Sustainable Development Goals by 2030, they need to spend 4.5% of GDP. That is, US firms would be able to bid on BRI projects in participating countries, such as power generation plants, sanitation facilities, schools and a host of other related infrastructures.
US exports would likely increase as a result of joining the BRI. China’s increasingly large market of 1.4 billion people coupled with a billion more in participating countries would provide American businesses with lucrative opportunities, as billions of people would buy huge quantities of foodstuffs and consumer goods.
Joining the BRI could give the US a “peace dividend,” particularly when it is integrated into the Russian-led Eurasian Economic Union (EEU). If the world’s three most powerful countries are cooperating with each other, the global geopolitical and security environments should be more stable, freeing up some of the US’s huge defense budget for economic and social programs.
Taking the argument to its logical conclusion, there is really no valid economic or geopolitical reason why the US should not join the BRI. This begs the question: Why did it not join? Might the BRI be considered a national security threat like China’s telecommunications equipment, or perhaps joining it could be interpreted as caving in to Chinese dominance?
‘China threat’ rhetoric
The “China threat” rhetoric is always there, but it takes on a new meaning under the Trump administration. The US president blasted China for “eating America’s lunch” in his 2016 campaign, accusing it of “unfair” trade practices, so he launched a trade war and stepped up “freedom of navigation operations” in the South China Sea and the Taiwan Strait. In addition, his senior officials travel the world to denounce China as a “threat” to the post-war world order. The US Congress jumped on the anti-China bandwagon, passing legislation that intentionally pokes China in the eye.
The latest is a visa restriction on Chinese scholars, experts and students, fearing that they could be spies for the Chinese government or stealing US technology. Whether the charges are true depends on whom one talks to, but so far the US accusers have not been able to provide any substantiated evidence to support the claims. Indeed, much of the “stolen” information that US officials accused the Chinese of stealing can be found on Google.
There is zero chance that a US president, particularly Trump, will join the BRI. Indeed, Trump refused to send a representative to the second BRI Forum, as he did when the first was held. Trump and his senior officials think joining the BRI would give China greater access to “sensitive” information and technology.
Perhaps the biggest driver of the anti-China rhetoric is the country’s successful economic development and governance platforms. “Socialism with Chinese Characteristics” policies are undoubtedly responsible for China becoming the world’s second-largest economy in nominal exchange rate measurements within 40 years. The accumulated wealth has improved people’s living standards, gained economic and geopolitical influence and allowed the country to walk an independent path.
The US interprets China’s independent foreign policies as a threat to increase its dominance, culminating in Trump mounting a trade war against the Asian giant. But a trade war is not about current account deficits for reasons cited in past articles, but an attempt to stifle China’s economic, technological and military rise. The theory gains currency because the US demands that China give up its “socialist market economy” platform of subsidizing state-owned enterprises or state involvement in the economy, claiming it disadvantages US firms and violating the World Trade Organization’s rules.
Having China as an equal is unthinkable to the US political and business establishments because that could erode American global influence and its national interest. China’s BRI has drawn more and more members into its orbit. But importantly, the yuan could challenge the greenback, providing nations an alternative payments system, thereby diluting the importance of the US dollar.
The greenback’s world reserve currency status is the “power” behind US hegemony, allowing it to build a formidable military, and it sanctions any nation that does not toe the line. Being accepted as a medium of exchange for the settlement of debts gives the US an “unlimited” supply of money.
It might be the fear that joining the BRI could end US financial hegemony, thereby reducing America’s ability to sanction nations that refuse to bow to Washington.
However, short of an all-out nuclear war that even US hawks would not have the stomach for, it is too late to contain China. It is simply too big to defeat without suffering unthinkable losses of American lives and properties.
Taking the argument to its logical conclusion, joining the BRI could turn Trump’s slogan of “Make America Great Again” into a reality. Containing China with “fake news” and a pinch of paranoia, on the other hand, has squandered many economic opportunities and is, in fact, isolating America. Amid US pressure not to join the BRI, more and more nations, including staunch allies, are participating in it.