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Since its announcement in 2013, The People’s Republic of China’s “One Belt One Road” (OBOR) program has posed many questions for other globally. It is an extensive investment plan which promotes infrastructure growth in many states, including developing ones, in an effort to promote international trade through China across the sea and land into Africa, Europe, and other parts of Asia. The aggregate size of the program is estimated at around $1.4 trillion (USD) as reported by The Atlantic. Due to the intricacies of the plan and the geopolitical context, many questions of whether China has a more nefarious objective for employing the program, and how other actors should respond to the policy have been posed. This plan is a centrepiece in the political game which is sitting on a knife’s edge. Other aspects of China’s relations with the rest of the world include disputes over territory in the South China Sea, its attitudes and actions in regards to climate change, and (more so the focus of this piece) how smaller nations are impacted by the Chinese shift to a more outward in terms of foreign policy.
Historical context is required to fully understand China’s motives behind this policy. For many centuries China was the economic hub of the eastern hemisphere. Exemplary of this is the famed ‘Silk Road’, a network of trade routes which allowed the free import and export of various goods across the continent. Chinese prestige waned during the period known as the “century of shame” which began with their defeat to the British in the Opium Wars in the mid-19th century, beginning an extended period of subjugation culminating in the brutal invasion from the Japanese Empire in the lead up to the Second World War. Subsequent to this was the continuation of the civil conflict within China which saw the Communist Party (CCP) gaining the legitimacy to rule in 1949. Under the leadership of the CCP, China developed nuclear weapons; gained a seat as a permanent member of the UN Security Council with veto powers; and played a major role in the conflict between the Soviet Union and the United States throughout the 20th Century. China had regained its seat at the pinnacle of geopolitics, an equal member of the international community and not subjugated by those more powerful.
Along with this sense of restoring its dignity after an extensive period of shame, China has undergone a shift in foreign policy in recent decades as those in charge of the CCP have changed. Under the leadership of Deng Xiaoping, the Chinese economy opened up to western trade, leading to a rapid increase in economic growth within the nation. This involved much market liberalisation, a diversion from the policies of previous ruler Mao Tse-tung, and from the influence of Soviet leaders. Bennis So Wai Yip explains that this was a response to the wave of right-wing economic reforms of the late 1970s and 1980s personified by political figures such as Margaret Thatcher and Ronald Reagan. During this time, China opted for the foreign policy of concealing their power and refraining from projecting their influence on the world. This stance has not held into modern times. As China’s power has grown into the 21st century it has begun to openly project its influence, especially under current Secretary General, Xi Jinping. This has involved both expanding its own territorial claims within the South China Sea and establishing military bases outside of these claims, the first being in Djibouti.
Whilst the expansion of its military interests is an important aspect of China’s foreign policy, more topical in the current discourse is the OBOR program and its impact on various actors. The key question as this coincides with a United States vacation from the region, as shown by its withdrawal from the Trans-Pacific Partnership (TPP), is whether the OBOR program signifies the arrival of Chinese primacy in the region. Joshua Meltzer writing for the Brookings Institute that the pragmatic motivation is by developing infrastructure and investment within many states, it increases the “economic reliance on China”.
The advent of this has caused some concern about China’s sway over those in the region, particularly in Australia which has close political ties to the United States. Whilst some Australian firms see this as a great economic opportunity that they should partake in their government is somewhat more skeptical. This was shown in July by Australian Foreign Minister, Julie Bishop, announcing their own investment infrastructure program for South Pacific Nations in an attempt to counter Chinese influence. An Australian Parliament online publication outlines some of the criticisms that have been raised over the program. This includes a focus on the accusation of China intentionally designing the loans to exploit their economic leverage over smaller nations in an attempt to “dominate” them.
Nathan Hayes writing for the London School of Economics stated that many of the smaller countries receiving the loans do not have efficient enough economies to pay back the loans from China. This comes about from underdeveloped private and public sectors which leaves much of the infrastructure construction to Chinese firms. He follows this up by saying that while this risk exists if the investments do not lead to a high amount of trade, which in this case would bring about mutual benefit between China and the loan recipient. On the contrary to this result, if these states default on a loan it gives the Chinese government cause for taking over ownership of key infrastructure facilities in foreign sovereign states. While most of the discourse and contention surrounding the OBOR plan will focus on the strategic and geopolitical implications of the policy, it is also important to ensure that the states receiving the loans are doing so under good faith from China. In addition to this, powers who are competing with China for sway in the region must ensure that all parties best interests are represented at the negotiating table.