China in Europe

OBOR is more likely to succeed outside of Eurasia

At first glance, China’s yi dai yi lu (One Belt One Road or OBOR) initiative to enhance partnerships and connectivity between China and Eurasia, announced by Chinese President Xi Jinping in 2013 with much fanfare, appears to be a 21st century reboot of Jiangs Zemin’s 1999 Go West policy. The latter aimed to stabilize China’s western provinces through domestic investment and regional integration with Asian neighbors. Some Western observers downplay the significance of OBOR as “new wine in old wineskins.” Even Russian President Vladimir Putin seems to have been convinced that OBOR is essentially an infrastructure development plan which does not fundamentally compete with his own Eurasian political and economic agenda.

There is no doubt that “yi dai yi lu” has become the catchphrase of the day, as Chinese provinces and cities rush to capitalize on the initiative, much like they did with Deng Xiaoping’s special economic zone plan in the 1980s and early 1990s. At that time, Chinese localities rushed to open zones to attract central government investment in support of their own regional integration initiatives. Similarly, today OBOR is the umbrella for a wide range of disparate economic cooperation schemes that promise to connect China to its traditional Silk Route partners by land and by sea as well as to those far outside Eurasia, including regions such as the Arctic, Australia, and Africa.

Chinese infrastructure spending promises to match the rhetoric, as China’s trade with the more than 70 OBOR participants exceeded $1 trillion in 2015, or one quarter of China’s total foreign trade. China’s companies have invested almost $15 billion in OBOR-related projects so far, and Chinese government funds—the $40 billion Silk Road Fund, dedicated to OBOR initiatives, the Asian Infrastructure Investment Bank (AIIB) and the China Development Bank—are expected to make major contributions.

If only the situation on the ground would cooperate. The tenfold increase in infrastructure spending in China’s western provinces since the 1999 Go West plan was initiated has done little to improve political stability. Indeed, many Western analysts argue, to the contrary, that development has exacerbated ethnic tensions in Xinjiang and Tibet and done little to address economic disparities between China’s inland and coastal provinces.

Similarly, the much heralded China-Pakistan Economic Corridor (CPEC), a key OBOR component involving $46 billion in investment over the next 15 years in an array of projects, including constructing a deep-water port in Gwadar, building highways, and expanding energy infrastructure, faces many political, economic, and security challenges. Threats from the Taliban, an insurgency in Balochistan, inadequate water and electricity supplies all complicate China’s plans. The stakes are high; however, as the failure of China’s aim for stability through regional integration will further inflame tensions in the tinderbox that is Xinjiang.

Some Chinese scholars argue that OBOR is more of a strategy and that the political connections that will result from negotiations will have important value, even if the projects involved may take a long time to implement. Others note that improving connectivity in Eurasia faces so many obstacles, that China may do better to view the region as the entry point to southern Europe, not as a destination in and of itself.

Indeed, what is new about OBOR is its potential to upgrade substantially China’s economic presence in southern and eastern Europe. . The original Silk Route was not a single road but multiple trading corridors between Asia and Europe, involving maritime trade as well as land-based exchanges. Similarly, China’s Eurasian land bridges are being built not as ends in themselves, but to connect with new port infrastructure.

Chinese investment in the Greek port of Piraeus is an important indicator of China’s broader view of OBOR’s potential impact. The Chinese state-owned shipping company, COSCO, has been operating the port since 2009 but on July 4, 2016 the company succeeded in finalizing a deal to acquire a 67 percent stake in the port for $410 million. Zou Xiaoli, China’s Ambassador to Greece, likened the port deal to a “dragon’s head,” meaning it would have a transformative impact on China’s regional goals to create a new hub for Chinese exports to Europe and a new outpost for China in the Mediterranean. And Piraeus is just one of many Mediterranean ports Chinese companies are targeting for investment.

Increased Chinese investment in southern Europe, already weakened by economic crisis and beleaguered by unprecedented numbers of migrants, comes at a critical point for the European Union due to Brexit. Some analysts see the potential for China to further test European Union unity through the Chinese 16+1 initiative to engage central, east European, and Baltic countries, including five non-EU members. Although China’s new interest in European infrastructure may enhance cooperation with the EU, the focus of Chinese attention on weaker, peripheral areas within the EU or on its peripheries may create new strains within the organization and between the EU and the United States.

Another new feature of China’s regional integration plans for Europe is that it paves the way for a more global Chinese naval posture. In Europe, OBOR-related investments do not face the same kinds of security challenges China confronts in South Asia, but the unexpected need to repatriate 36,000 Chinese working in Libya in 2011 has led China to increase its military presence in the region. This has involved leasing port facilities in Djibouti on the Indian Ocean, another locus for the maritime Silk Road, as well as two sets of Sino-Russian military exercises in the Mediterranean.

What is new about OBOR is that it is more likely to succeed outside of Eurasia, leading to new opportunities but also unexpected challenges for Europe and the United States.

Dr. Elizabeth Wishnick is a Professor of Political Science at Montclair State University and the author of the forthcoming book, China’s Risk: Oil, Water, Food and Regional Security.

This essay is a part of our Big Questions series.