China's Trillion Dollar Plan To Dominate Global Trade

There’s a new highway in Pakistan. And a new rail terminal in Kazakhstan. A sea port in Sri Lanka recently opened. As well as this bridge in rural Laos.

What’s interesting is that they’re all part of one country’s project that spans 3 continents and touches over 60% of the world’s population. If you connect the dots, it’s not hard to see which country that is. This is China's Belt and Road Initiative -- the most ambitious infrastructure project in modern history that's designed to reroute global trade. It's how China plans to become the world’s next superpower.

It’s 2013 and Chinese president, Xi Jinping is giving a speech in Kazakhstan where he mentions the Ancient Silk Road: A network of trade routes that spread goods, ideas, and culture across Europe, the Middle East, and China as far back as 200 BC. He then says: "we should take an innovative approach and jointly build an economic belt along the Silk Road." 

A month later, Xi is in Indonesia: "The two sides should work together to build a maritime silk road for the 21st century." These two phrases were the first mentions of Xi’s legacy project, the multi-trillion dollar Belt and Road Initiative, or BRI.

They’re also the two components of the plan. There’s an overland Economic Belt of 6 corridors that serves as new routes to get goods in and out of China. Like this railroad connecting China to London. And these gas pipelines from the Caspian sea to China And a high-speed train network in South East Asia. Then there’s the maritime silk road -- a chain of seaports stretching from the South China Sea to Africa that also directs trade to and from China. 

The BRI also includes oil refineries, industrial parks, power plants, mines, and fiber-optic networks - all designed to make it easier for the world to trade with China.

So far, over 60 countries have reportedly signed agreements for these projects. And the list is growing, because China promotes it as a win-win for everyone.

Take, for example, the BRI’s flagship project: Pakistan. Like many countries in Central and South Asia, Pakistan has a stagnant economy, and a corruption problem. It wasn’t a popular place for foreign investment, that is until China came along. 

In 2001, China offered to build a brand new port in the small fishing town of Gwadar. By 2018, the port as well as highway and railway networks became a $62 billion dollar Corridor within the BRI. It’s where the Economic Belt meets the Maritime Silk Road. And it seemed to benefit both countries. Pakistan saw its highest GDP growth in 8 years and forged a tight relationship with a major world power.

China, on the other hand, secured a new alternative route for goods, especially, oil and gas from the Middle East.

Through projects like these, it also found a way to boost its economy. Chinese construction companies that had fewer opportunities within their own country saw a huge boost from BRI contracts — 7 out of the 10 biggest construction firms in the world are now Chinese.

What tips the balance in China’s favor even more is a requirement that it be involved in building these projects. In Pakistan for example, Chinese workers have directly built projects, like this highway here, and a Chinese firm has worked with locals on a railway here in Serbia.

China’s involvement is one of its very few demands and that’s set these deals apart so far. See, typically, to get investment from the West, countries have to meet strict ethical standards. But China’s offered billions of dollars — mostly in loans — with far fewer conditions. 

So, it’s no surprise the BRI has been a big hit with the less-democratic countries in the region. China has signed agreements with Authoritarian governments Military regimes. And some of the most corrupt countries in the world. It’s even affiliated with, Afghanistan, Ukraine, Yemen, and Iraq; all currently splintered by conflict.

Because of China's willingness to loan money to unreliable countries, many experts have called the BRI a risky plan. Eventually, these countries will have to pay China back -- but corruption and conflict make that payback unlikely. A recent report found that many countries indebted to China are vulnerable, including 8 that are at high risk of being unable to pay.

So why does China keep lending? Because there’s more to the BRI than just economics: In Sri Lanka, China loaned about 1.5 billion dollars for a new deep-water port. It was a key stop on the Maritime Silk Road. But by 2017 it was clear Sri Lanka couldn’t pay back the loan, so instead, they gave China control of the port as part of a 99-year lease. China also controls the strategic port in Pakistan - where it has a 40-year lease, It’s pushing for a similar agreement in Myanmar, and it just opened an actual Chinese naval base in Djibouti.

These are all signs of what’s called the String of Pearls theory. It predicts that China is trying to establish a string of naval bases in the Indian Ocean that will allow it to station ships and guard shipping routes that move through the region. So while China’s not getting its money back, its still achieving some very important strategic goals.

China’s growing influence challenges the status of the US, which has been the world’s lone super-power for the last several decades. Isolation is trending in the US meaning it’s investing less and therefore losing influence around the world.

The BRI is China's way of leveraging power to become a global leader. By building relationships and taking control of global trade, China is well on its way.

Source: Vox

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