At the end of 2012, a new General Secretary of the Chinese Communist Party, later President of the Republic, Xi Jinping, came into office in Beijing — marking a turning point in China’s economic strategy from reforms initiated in the late 1970s and early 1980s by Deng Xiaoping, 30 years ago. Their doctrine was one of “hiding brightness, nourishing obscurity”; or in other words, one that allowed China to “[keep] a low profile while developing power”. The new leader’s strategy seems to represent a break from three decades of reform.
One of the most striking illustrations of this new policy is the launch of the “One Belt, One Road” initiative, combining two orientations – the “Silk Road Economic Belt,” initiated in Kazakhstan on September 7, 2013 by President Xi during a State visit, and “21st Century Maritime Silk Road,” launched in Indonesia on October 3, 2013, also by President Xi.
The formal objective of what has become the central element of Chinese diplomacy is to achieve a more egalitarian, inclusive and prosperous global economy, but through the adoption of an alternative method to the development and integration models run by the United States and their European allies since 1945. From an economic standpoint, this new model, which is still in its gestation period, rests on an advanced form of State capitalism. From a political standpoint, it represents an autocracy considered benevolent in regard to the well-being of the people. It is based on a solidly anchored belief shared by the majority of past and present leaders that economic development is the key to stability and social peace. And the foundation of this economic development relies on infrastructure.
By initiating projects such as “One Belt, One Road,” China’s ruling party – faced with historic declines in economic growth that significantly threaten social stability and political legitimacy at home – looks to facilitate its integration in the Eurasian continent and as far as Africa. Connecting China to its near and distant markets would create a sense of a “common destiny” at the Asian regional level. Furthermore, it would ensure the country’s security through accelerated economic development in Western China, which is subject to increasing turmoil; this, in turn would establish an economic interdependence within China’s periphery, insuring its pacification. The target market is immense, covering around 60 developing or industrialized countries, over four billion inhabitants and an aggregate economy of twenty-one trillion dollars.
Behind the official scene, China’s strategy also appears to be an attempt at finding a solution to the State-Owned Enterprise (SOE) crisis following domestic overproduction and intensifying competition across international markets, particularly the infrastructure sector. These SOEs are undergoing reforms aimed at eliminating redundancies and competition amongst themselves, which harms performance in international markets. They should therefore be able to benefit from the billions of dollars flowing to this project through the new Asian Infrastructure Investment Bank (AIIB), which gathered 57 signatory States — with the noticeable absence of the United States – and the various Chinese financial instruments (development aid, loans at concessionary interest rates or commercial loans from Eximbank, CDB, etc.).
Naturally, an initiative as ambitious as “One Belt, One Road” presents numerous challenges for China, first and foremost the idea that economic development of a region almost inevitably leads to political and social stability. Moreover, the second postulate of the strategy is that leaders of the participating States in this initiative, in Central Asia as well as in the Middle East or in Africa, are genuinely preoccupied with the well-being of their people, not only with protecting their own status and power. Even though China has been able, throughout the entire reform process and despite a high level of corruption, to ensure a continuous redistribution of the created wealth, few other countries have been able to do so – most regimes surviving by means of a total confiscation of national wealth. Another major obstacle against the implementation of this strategy is the emergence and continuing-expansion of Islamist terrorism whose main targets notably include China. As a result, the infrastructure built thanks to this project will also have to be secured in Central Asia as well as in the Middle East.
The current financial capacities of China, while significantly diminished over the past few months, remain an opportunity to be seized not only by developing countries but also by industrialized countries, as illustrated by the immediate accession of certain European countries to the AIIB, notably Germany, the United Kingdom and France. Although this project is considered utopian by numerous observers, its success in the long term would radically transform the international order and would considerably weaken the United States’ role and status. (Washington’s decision to not only refrain from participating in this project but also to try, in vain, to dissuade allies from joining the effort has revealed the United States’ newfound loneliness at the international level as opposed to China’s growing influence.)
The clear failure of international financial institutions in their endeavor to resolve the problem of underdevelopment on the one hand, and of the American method for resolving conflicts by force on the other, leads us to hope not only for the success in the economic dimension of such a strategy, but for a progressive evolution of the model toward a greater liberty of peoples.
Dr. Lionel Vairon is the CEO of both CEC Consulting – Luxembourg and Elysha Business Consulting (Tunisia), working on development strategies of companies and governmental institutions of various countries. He has also been, recently, Special Advisor for the President of the Republic of Niger for two years. Dr. Vairon is well versed on China-related current events, including politics, security, corruption, human rights, media and more.