In an important article for Project Syndicate, Brahma Chellaney says that if there’s one thing China excels at, it’s the use of economic tools to advance perceived geostrategic interests. On a petty level that means dredging sand up into little island berms in the South China Sea and parking machine guns on them. In the grander scheme of things it is what has become known colloquially as ‘The New Silk Road’, or to give the project its proper title and acronym, the One Belt One Road initiative (OBOR). It’s a trillion dollar boondoggle that has as its superficial aim the re-establishment, in the interests of commonwealth and trade, of the ancient merchant route that connected East to West, along which the Romans travelled all the way to India and China two thousand years ago (the Chinese name for the Romans, by the way, is ‘lei jun’ – legion).
The original Silk Road traversed the Taklamakan desert (that charming name actually means ‘you go in but you don’t come out’), crossed Eurasia and the Near East and terminated in poor ISIS-benighted Palmyra, where the looms were set up that spun the silk unloaded from the camels. From the Levantine littoral the Genoans, Venetians and Belgians and Dutch hauled the precious eastern goods westwards to chilly old Europe, which was busily mining silver in the mountains around Austria to try to make up the crippling balance-of-trade deficit the Frankish and Anglo-Saxon world suffered with regard to the Orient throughout the middle ages and until the end of the Renaissance (see Peter Spufford’s fabulous book, Power and Profit, The Merchant in Medieval Europe).
China’s ruling communists believe that in changing from the factory of the world to the world’s foremost manufacturer of quality high tech goods, sometime in the future, a modern distribution network such as OBOR will serve China well. (The ‘belt’ is the land route and – somewhat confusingly – the ‘road’ is the maritime seaways that reflect it southernwards, as can be seen from this Chinese map:)
Last year, when rumours of Chinese economic slowdown and disastrous levels of indebtedness were at last leaking out, commentators started to have doubts about the likelihood of OBOR being completed or of certain elements of it finding the necessary funds to even break ground. And then the renmimbi started to slide … One prescient piece that caught my eye back in 2015, by Moritz Rudolf of the the Mercator Institute for China Studies, argued that Xi Jinping’s signature project was in danger of failing altogether.
In May 2014 China and Russia had signed an agreement to build an oil pipeline, nicknamed ‘Power of Siberia’, but no sooner had construction commenced than it ceased. The same thing happened to the newly begun Altai gas pipeline which was to connect China with western Siberia. Rudolf was vastly sceptical about the entire OBOR project, arguing that China was following the wrong course:
‘At a more basic level, the OBOR represents an economic step backwards: instead of placing more emphasis on domestic demand, Beijing is speculating on new export markets in unstable regions such as Pakistan. The overcapacity of Chinese state-owned enterprises are not addressed but simply exported abroad. In this way the leadership is hampering its own ability to overcome the structural crisis of the Chinese growth model.’
This chimes with the economist Michael Pettis’s view that China needs desperately to divert more of its GDP away from savings (government and institutional investing) and towards the poor Chinese consumer, who isn’t spending much because she isn’t getting much of the pie compared to China’s other economic sectors. Rudolf treats his readers to some wan pen portraits of lonely Chinese PX stores on the borders of poor and desolate neighboring territories: nothing but some furs for sale here; there a line of decorative plastic camels outside a lonely yurt and some German sweets and Russian booze on a shelf within. No customers to be seen on the wide, far horizon – that sort of thing.
And it is true that China seems to be planning to spend a lot of money transporting its exports to places where there are few people, and mostly poor people. As we now know from our post-crash experience in the West, a few more finance and tech billionaires can’t support aggregate demand. As for other, richer countries, they’ve just about had enough of China exporting deflation by dumping uneconomic, subsidised goods on foreign markets. Cheap rebar, anybody? Perhaps not now that Trump is president.
But what if that version of the function of OBOR is just a feint? The Chinese may be many things but they are not stupid. What if the secret, real purpose of the initiative is imperial, and that the words about trade and commonwealth and networking are so much flannel? What if China is actually planning an invasion by default of those countries which have been foolish enough to invite OBOR projects within their borders?
This is the burden of Chellaney’s article, and he bluntly asserts that China is making huge loans to certain poor but strategically important countries if they agree to build the OBOR infrastructure. These loans should provide much-needed jobs and growth, except that when the vastly expensive projects are completed – often with imported Chinese labour (including convict labour, which China strongly denies although it has form in that area) – they are as per Rudolf’s descriptions above, deserted and expensive white elephants. Chellaney singles out Sri Lanka’s Mattala Rajapaksa International Airport, which opened in 2013 and has been awarded the title of the world’s emptiest lufthaven. Chellaney notes that
‘Likewise, Hambantota’s Magampura Mahinda Rajapaksa Port remains largely idle, as does the multibillion-dollar Gwadar port in Pakistan. For China, however, these projects are operating exactly as needed.’
What he means by that is the countries are now deep in debt to their Chinese bankers and forced to make – let us say – certain concessions that affect their sovereignty, such as allowing Chinese submarines (Sri Lanka) or Chinese warships (Pakistan) to begin to use the facilities as if they were their own – which they basically are – in return for a little financial easement on the interest payments. Chellaney says that the Chinese even have a vested interest in these projects not working, as that means they have even more power over the debtors, and more ease of movement for whatever military and colonial designs the Chicom leadership has in mind:
‘Already, China has used its clout to push Cambodia, Laos, Myanmar, and Thailand [OBOR debtors] to block a united ASEAN stand against China’s aggressive pursuit of its territorial claims in the South China Sea.’
Apparently not many western powers have figured this out yet, although I doubt India is oblivious to it. Ajit Doval, Modi’s NSA, knows very well what is happening in the jungles of Myanmar, and what China’s Pakistani proxies are up to in there; so I dare say he has also figured out the OBOR element of the plan. China’s neo-colonial bait-and-switch loan-sharking is already cutting a swathe through Asia’s commercial markets, forcing countries to award it major shares in companies to defray OBOR debts.
Ex Indian Foreign Secretary Shyam Saran is of course well informed on the matter (see his excellent essay for Indian Strategic Studies), and once again he raises the issue of the need urgently to develop the Andaman Islands, still sadly neglected by Delhi, as a major strategic bulwark/choke-point against China’s nefarious plans.
He is right.