T2B18: Xiden 5

Belt and Road

Newslet

If we want to survive this century, we have to think outside two boxes:

  1. The box of agrarian civilization

  2. The box of industrial civilization

What’s left? The various indigenous communities - only around 5% of the human population but living within and managing 80+% of the world’s biodiversity. This article reports some interesting ideas about how Native American communities are reframing the climate crisis from their cultural and philosophical perspective.

Belt and Road Infographic

US <—> China is going to define the geopolitical landscape for the foreseeable future. Biden has sent the signal that he’s bringing his A-Team to this match, with Kerry acting as the transition from the concerns of the past (trade) to the concerns of the future (climate).

The Kerry appointment also leaves some uncertainty in my mind: is the US going to take a cooperative stance with respect to climate (what one would want and expect) or an antagonistic stance, making it more a National Security issue than a global cooperation one.

I hope that’s productive uncertainty, making me end the Xiden exploration with Kerry and Climate, which also also mark the transition to Cliden.

What is the BRI?

The first of two updates on the BRI from the Chinese perspective.

The BRI (Belt and Road Initiative) - earlier known as OBOR (One Belt One Road) is a huge initiative, one that’s constantly compared with the post-WWII Marshall plan. This backgrounder from the Council on Foreign Relations will give you a taste of the BRI’s scope and ambition.

The obvious question: what’s in it for China? What problems does it solve for them?

I don’t have an answer, but I have a hypothesis, and in this essay, I want to build up to that hypothesis. The first clue lies in the most common criticism of the BRI:

skeptics worry that China is laying a debt trap for borrowing governments

Let me flesh that worry out:

  • China lends you money

  • You can’t pay the loan back either because the project didn’t produce enough surplus to do so or your system is too corrupt to make good use of that loan

  • China demands more of your resources and there’s a vicious cycle

China didn’t pioneer this form of debt based control - the World Bank and the IMF were the innovators with the ADB acting as a surrogate in Asia. All three are firmly in the American sphere of influence and China might well feel shut out from inserting its interests into those institutions. So one reason for BRI is to have a Chinese controlled debt instrument. That also serves another purpose - increasing the Renmimbi’s international profile. If the debts can be paid in Renmimbi and eventually served in Renmimbi, the Chinese currency becomes an alternative to the dollar.

More than debt

However, BRI doesn’t stop with loans. The loans fund infrastructure projects that are typically fulfilled by Chinese companies, employing Chinese labor. China has enormous amounts of excess industrial capacity that’s no longer needed and (perhaps) also a huge labor surplus of people trained for industrial skills that China doesn’t need. Finding an export market for these industries and people helps prevent a bust at home and unrest among populations that were trained with an expectation of employment.

Why are these industries and people not needed?

Because China wants to ascend the value chain, it wants to focus on knowledge driven industries where much of the value is captured (think Apple), where the US still rules and where strategic competition will be sharpest in the coming decades. It also wants to green its own energy infrastructure while extracting as much profit out of its investments in coal and other fossil fuels. Why not export the previous generation of products?

The Middle Kingdom

However, the way this export market is being designed that gives us a hint about my core hypothesis:

The BRI projects focus on the Eurasian landmass - it’s a land centric view of hegemony.

The two great imperial powers of the last three hundred years, Britain and the US, are both seafaring powers, to which we can add air power into the US bucket. China can’t challenge US dominance in those sectors. However, it sees itself as the heart of the Eurasian landmass, which has been the dominant continent for the entire history of human civilization and as the Middle Kingdom, China wants to reorganize the Eurasian landmass in its image:

  • with the periphery providing energy, markets and access to ports and

  • the center, i.e., China, making and sharing the most important goods and principles

China is turning weakness - lack of military dominance, feeling shut out of international institutions that exert economic control- into strength. The name reflects that jujitsu move. Who in Europe or India or the US cares about the Silk Road or has any romantic associations with the name?

It’s a name designed for an internal audience, not an external one

Concluding Hypothesis

Xi launched BRI (in its OBOR avatar) immediately after he came to power. It’s central to his projection of China’s return to prominence and his role in that return.

BRI is

  1. a revival of China’s self image as the Middle Kingdom, the center of Eurasia if not the world and

  2. of Xi as the son of the people who makes that revival happen.

This is only a hunch for now but a hunch on which I am willing to bet some time and mental energy. Even if I am totally mistaken, BRI remains a good lens to look at Xiden (see the infographic earlier in the essay).

This being a long holiday weekend in my part of the world, I might go light for the next three days but then I will start with how the BRI is represented in official Chinese documents.