China’s Belt and Road Initiative: an opportunity or threat to the UK? - Ben Zhang

China’s One Belt and One Road (OBOR) or Belt and Road(BRI) Initiative is a development strategy which interlinks trade opportunities and infrastructure projects in Eurasia (combined continental landmass of Europe and Asia) and the Pacific.

The BRI, often described as the 21st century silk road, was proposed by Chinese President Xi in 2013. Since, the project has attracted 65 countries to participate in, covering 60% of the world’s population. A projection investment of $1 trillion (mainly in infrastructure and transport links) has the potential to accelerate industrialisation and to drive economic growth through trade, especially in emerging countries.

According to President Xi’s vision of the BRI: promoting investing and trade opportunities, growing interaction would increase connectivity in Asia, Europe and Africa. Along the side with the BRI, China will increase further its “sphere of influence” by creating a global platform for economic and political cooperation.

Historically, the UK relied on trading within its large overseas empire. China and Britain have built their trading partnerships ever since the first opium war in 1839. After exiting the European Union Trade Bloc, Britain is looking for free trade agreements. British Prime minister Boris Johnson has expressed his interest in this initiative. The UK could use the BRI as a trade opportunity to explore benefits of the massive Chinese market. In order to assess the effects of the BRI on the UK, it is important to recognise some of the Chinese objectives. This can lead us to predict how outcomes of this project will affect Britain economically and politically on a long and short run.

The BRI is the largest foreign policy imposed since the US-led Marshall Plan, which was introduced post-World War II to revive the war-thrashed economy in Europe. At this moment, the world remains uncertain whether China intends true altruism or just purely driven by an imperial incentive. Understanding China’s objectives would help us to foresee the effects and evaluate its influence on the UK.

On a global scale, the Chinese promises mutual benefits the countries involved, however, China hasn’t purely invested in the BRI in search of economic gains. Some “hidden” strategic objectives behind the initiative aims at consolidating China’s regional leadership in Asia whilst also increasing its political status on a global scale.

Yet the Chinese government will not reveal its strategic plans directly to the public. In many ways similar to the Marshall plan, both contain “hidden” strategic aims.

How will the BRI increase China’s economic sphere of influence?

First of all, president Xi intends to use the BRI as a strategy to boost China’s domestic and Industrial exports. By the end of the WWII, the U.S. had a high industrial capacity, however, overcapacity caused the stagnation of U.S. economic growth. The U.S. looked for oversea markets for exportation of American goods to tackle this problem. In recent years, Chinese GDP growth has slowed down; causing widespread overcapacity in the

heavy industries such as steel. By investing in the OBOR initiative, 150 million tonnes of excess steel capacity can be invested into pipelines, railways and other transport methods. The establishment of financial institutions such as the Asian Infrastructure Investment Bank(AIIB) also helps to solve this.

Secondly, the BRI helps China to internationalise its currency (RMB), likewise the Marshall Plan allowed the U.S. to export its currency, China hold ambitions to create the world’s largest trading platform. This would allow China to increase its cross-border payments made by RMB and thus increase its global influence in economy. In short, China will increase its economic sphere of influence by leveraging their capital to get involved in helping other countries to get wealthier, so they can become customers of the Chinese products.

How will the BRI increase China’s geostrategic/political sphere of influence?

China is eager to establish the global status of a superpower and the BRI could be seen as a “political” strategy.

The economic instability in Western Europe after WWII encouraged the growth of Communism around the world. The Marshall plan was also an ideological campaign between Capitalism and Communism. Although the battle over ideology is not the case for the BRI as ideological factors are not viewed as important today. However, the initiative focuses on increasing connectivity including interlinking pipelines, harbours, railways. This consolidates China’s trading relationships within Central Asia, Southeast Asia and Africa. China’s BRI also targets to intensify relations with Western Allies such as the UK through economic and political integration.

China seeks to increase its diplomatic support by pulling countries close together with infrastructure investment and trade deals. Acknowledging Chinese strategic aims behind this massive investment project, we could then associate potential risks; these risks affect countries differently according to their levels of development and political stability.

Today, China is transiting to a service sector-oriented economy, one of Britain’s great strengths. UK’s position on Brexit gives the government the opportunity to trade freely with the rest of the world. London is one of the world’s largest financial and serve centre and its strategic location at the end of the “Silk Road Economic Belt” provides the BRI a vital link between Asia and Europe. Former Chancellor of the Exchequer, Philip Hammond said in the Belt and Road summit in Beijing “As China drives forward the Belt and Road initiative from the East we in Britain are a natural partner in the West”. The BRI is an economic opportunity to the UK because of its scale and associated financial opportunities for businesses in the UK.

“Our offer is to bring together the best of Chinese manufacturing, engineering and construction, with the best of British project design and legal, technical and financial services expertise, as we promise the golden era of U.K.-China relations to deliver world class sustainable infrastructure for the 21st century,”- Philip Hammond in 2019

In contrast, Jörg Wuttke of the EU Chamber of Commerce in China has spoken, “(the BRI initiative) has been hijacked by Chinese companies, which have used it as an excuse to evade capital controls, smuggling money out of the country by disguising it as interna

tional investments and partnerships.” Given the massive scale of the BRI, if the Chinese government fails, the whole series of projects would collapse and will affect a chain of countries.

The BRI provides more opportunities than the risks to the UK both politically and economically. The first freight train which arrived in London from China was named after a saying by former Chinese Communist leader Mao Zedong, “the East Wind shall prevail over the West”. As long as the East Wind is well regulated, the BRI project will provide better good to our country.

Figure 1: Map of the BRI