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http://www.worldpoliticsreview.com/articles/14618/china-s-marshall-plan-all-silk-roads-lead-to-beijing

China’s Marshall Plan: All Silk Roads Lead to Beijing?

By Michele Penna, Dec. 9, 2014, 

Chinese President Xi Jinping addresses the Australia China state and provincial leaders forum
 in Sydney, Australia, Nov. 19, 2014.

For centuries, the trade routes of the Silk Road have evoked spices, empires and deserts. However, if a new strategy planned by the Chinese government proves successful, it may well come to be associated with China’s ascent in world politics.

On Nov. 8, during the annual meeting of the Asia-Pacific Economic Cooperation (APEC) forum in Beijing, Chinese President Xi Jinping pledged $40 billion for the creation of a Silk Road Investment Fund to “break the connectivity bottleneck” in Asia. Only five days after the APEC announcement, the China Securities Journal reported that “relevant departments” are trying to establish a private Maritime Silk Road Bank with an initial paid-in capital of 5 billion yuan, or roughly $810 million. The bank will be largely funded by an organization called Maritime Silk Road Investment Fund—not to be confused with the one announced by Xi—and a number of unspecified members of the Association of Southeast Asian Nations (ASEAN).

There is little information about these two institutions, but according to the China Securities Journal, the private bank will join the investment fund unveiled during the APEC meeting in financing two initiatives aimed at forging closer links between China and the rest of the world. The first is a land route named the Silk Road Economic Belt, a system of railways, highways and pipelines stretching across Central Asia, the Middle East and Europe. The second is the so-called 21st-Century Maritime Silk Road initiative, a network of sea routes connecting Chinese ports to the Indian Ocean, the east coast of Africa and the Mediterranean Sea.

These projects will likely also benefit from the new Asian Infrastructure Investment Bank (AIIB), announced in October by China, together with other developing countries, which many see as a competitor of the World Bank and the Asian Development Bank.

China is serious about these grand objectives, as evidenced by how much money the government is willing to spend on them. In Sri Lanka, for instance, the state-owned China Communications Construction Co. is financing a $1.4 billion port project. In October, Chinese Premier Li Keqiang pledged $327 million for reconstruction in Afghanistan, where, China Daily reports, Beijing has invested in more than 30 projects. According to HSBC, the total investment in the Silk Road Economic Belt alone could go beyond $100 billion.

Propping up its slowing economy by tapping into new markets is one of Beijing’s goals in investing abroad. “Before Xi Jinping became president, China’s economic strategy was mainly designed to attract external resources and especially foreign direct investments,” says Yang Xiyu, a senior fellow at the China Institute of International Studies. “For three decades China has enjoyed great trade growth, but now we have reached a limit.” Both Silk Road initiatives, adds Yang, signal a historical change in China’s policies that can be compared, in terms of significance, to the open-door policy implemented by former leader Deng Xiaoping in the 1980s.

Another goal for China is reducing its reliance on importing energy resources through maritime chokepoints. In 2012, about 84 percent of China’s oil imports passed through the Strait of Malacca, a narrow channel between Indonesia and Malaysia that Beijing thinks would be dangerously easy to block in case of conflict.

Furthermore, Chinese authorities hope that the land route will help rebalance the country’s uneven economic landscape. In the past three decades, China’s tumultuous development has mostly benefited its coastal areas, leaving western provinces behind. By shifting the focus to land transportation, inland provinces—first and foremost restive Xinjiang, where Uighur separatism and terrorism are causing headaches for policymakers in Beijing—could gain better access to international markets.

But looking at the new Silk Road simply in economic terms would be a mistake: There is much more to it. “To be blunt, this is a geopolitical reorientation,” says Hosuk Lee-Makiyama, the director of the European Centre for International Political Economy (ECIPE) and a former senior adviser to the European Union Presidency of Sweden. “The political narrative is primarily geostrategic.”

Some see the project as a Marshall Plan with Chinese characteristics, as financing infrastructure in neighboring countries would provide Beijing with the influence it needs to consolidate its role as Asia’s foremost power. According to Chris Ogden, a lecturer in international relations at the University of St. Andrews, economic cooperation has often been Beijing’s first step in building relations. “The Chinese government wants China to be a great power, and having a positive perception in the world is very important,” he says.

From this perspective, relying on a multilateral approach could prove a smart choice. “These institutions would make Chinese capital exports less politically sensitive,” Huang Jing, director of the Centre on Asia and Globalization at Singapore’s Lee Kuan Yew School of Public Policy, explains. “When China chooses to finance an expensive project in a certain country, that decision is immediately perceived as political. But if the project is funded by the Silk Road Fund, which has many countries as signatories, then there is no problem.”

It comes as little surprise that other powers are wary of China’s undertakings, since many of them have long-standing interests in the region. Indeed, the South China Sea and other waterways surrounding the People’s Republic have been patrolled by the United States for decades and are the object of bitter territorial disputes. Russia regards Central Asia as belonging to its traditional sphere of influence. Indian authorities, too, are nervous about China’s rise, particularly in the Indian Ocean region. “I don’t think major powers will react very positively,” contends Huang. “To an extent, China’s gain is their loss.”

China will also face an array of local issues, ranging from anti-Chinese feelings in Vietnam, where a vicious attack against Chinese companies took place earlier this year, to political instability in Thailand and the insurgency in Afghanistan.

Given these issues and the wariness of major powers, it remains uncertain whether Beijing will be able to create a new Asian order. Much will depend on Chinese policymakers themselves, as they will be tasked with a hard job: trying to convince others that the New Silk Road is not just in Beijing’s geopolitical interest, but in theirs, too.

Michele Penna is a freelance journalist covering Asian affairs. He holds a master’s degree in International Relations from Peking University in Beijing and has worked for various English and Italian media outlets. In 2013, he reported from Tacloban, the city destroyed by Typhoon Haiyan, and in 2014 he spent time writing about the Occupy Movement in Hong Kong. He can be reached at michelepenna.asia@gmail.com.