The Belt and Road Initiative and China’s Grand Diplomacy

Zheng Yongnian & Zhang Chi

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The Belt and Road Initiative and China’s Grand Diplomacy

Zheng Yongnian & Zhang Chi

Zheng Yongnian is Professor and Director of the East Asian Institute, National University of Singapore.

Zhang Chi is Assistant Professor and Lieutenant Colonel at Institute for Strategic Studies, National Defence University of China. This article was translated from the Chinese-language Contemporary World, Issue 2, 2016.

With the official implementation of the Belt and Road Initiative, China has developed its grand diplomacy featuring “two pillars”(new type of major-country relationship and the Belt and Road Initiative) and “one circle” (peripheral diplomacy). The Belt and Road Initiative demonstrates the spirit of the age, characterized by peace, mutual respect, openness and inclusiveness. Its international strategic significance is reflected in the following three aspects: breaking through the security dilemma among nations, assuming the responsibilities of a major country, and forming China’s soft power in the international community.

China’s Grand Diplomacy Featuring “Two Pillars and One Circle”

China’s grand diplomacy features “two pillars and one circle.” The “two pillars” include a new type of major-country relationship with countries such as the United States, Russia and India, and the Belt and Road Initiative which mainly deals with developing countries; the “one circle” refers to peripheral diplomacy that is mainly related to China’s Asian neighbors. The three aspects connect with and reinforce each other.

A New Type of Major-Country Relationship

The new type of major-country relationship is China’s foreign policyinitiative for developing relations with big countries. The Belt and Road Initiative and the new type of major-country relationship rely on each other. The Belt and Road Initiative can be smoothly implemented only when a new type of major-country relationship is established. The implementation of the Belt and Road Initiative can offer a strategic “home front” for the new type of major-country relationship.

Although the idea of a new type of major-country relationship was raised for China-US relations, it can also be applied to China’s relations with Russia, India, and major countries in Europe and other regions, most of which are also countries along the Belt and Road. From a geopolitical point of view, it is these countries that are able to pose vital external threats and challenges to the development of China and the Belt and Road Initiative. Only when China properly handles the relationships with these countries can it ensure that the Belt and Road Initiative is well implemented. As China deals with these countries, it should not only solve the economic and trade issues, but also, more importantly, the issues about war and peace. Peace is the prerequisite for China’s sustainable development. For China, to build a new type of major-country relationship with the United States, Russia, India and major European countries is necessary for it to maintain sustainable domestic development and keep international peace.

In terms of China-US relations, with the rise of China and the relative decline of the US’s global dominance, the competition between China and the United States has intensified. Although both sides hope that the competition will lead to a win-win situation, rather than becoming a zerosum game, from the perspective of international politics, competition among major countries can easily be affected by irrational factors, and the results may not necessarily become what those countries expect, and even lead to the opposite. According to Western theories and experiences of international relations, rising powers often challenge established ones, and the latter often fears and takes precautions against the former, this is known as the Thucydides trap, which has resulted in wave after wave of wars and conflicts.

As early as in 2013, China put forward the initiative of a new type ofmajor-country relationship with the United States, which was aimed at avoiding the Thucydides trap. In 2015, during his visit to the United States, Chinese President Xi Jinping declared that establishing a new type of majorcountry relationship with the United States, which features non-conflict, non-confrontation, mutual respect and win-win cooperation, is a priority of China’s foreign policy. US President Barack Obama also expressed that both the US and China were capable of properly managing disagreements and avoiding falling into the Thucydides trap. It demonstrates more or less that, based on historical experiences and proceeding from their own national conditions and global trends, the two countries are striving for a new type of major-country relationship, which is the way to avoid falling into the Thucydides trap.

With regard to China-Russia relations, the Belt and Road connect with Western Europe through the wide area of Central Asia and Eastern Europe, which is the core of Russia’s geopolitical interests. Therefore, while cooperating with Central Asian countries, China must put emphasis on its cooperation with Russia. One effective international mechanism, the Shanghai Cooperation Organization (SCO), already exists in this regard. The SCO is aimed at addressing the common problems faced by the countries concerned, such as terrorism, rather than targeting at any third party. It can offer some assistance to the Belt and Road Initiative. At present, Russia supports the synergy between the Eurasian Economic Union and the Belt and Road Initiative, which will help expand cooperation between China and Central Asian countries.

As for China-India relations, the Belt and Road covers Southeast Asia and reaches the Indian Ocean and Africa, so it also concerns the geopolitical interests of India. In recent years, India has been playing an important role in the Middle East and Africa, and paid close attention to China’s rapid rise and “going global.” There are still territorial disputes between China and India, but if they are properly handled, the two countries can address divergence over their geopolitical interests and carry out cooperation. After all, China and India have been neighbors for thousands of years withoutmajor conflicts. The territorial disputes are issues left over by Western imperialism. If China can take India’s geopolitical interests into account when implementing the Belt and Road Initiative, there will be huge room for cooperation between China and India..

Moreover, the Belt and Road Initiative is mainly for developing countries. Although it extends to some developed countries in Europe, most of the over 60 countries along the Silk Road Economic Belt and the 21st Century Maritime Silk Road are small and medium-sized developing countries. Past experience shows the new type of major-country relationship would not be enough on its own for China to stand firmly on the global political stage. However, by vigorously developing relations with developing countries through the Belt and Road Initiative, it can consolidate the “home front” of its global strategy. With the “home front” consolidated China will have the power and basis to build new type of major-country relationships.

The Belt and Road Initiative

The Belt and Road Initiative can be viewed as China’s foreign policy toward developing countries. It covers multiple areas including trade, finance, infrastructure and culture. The factors for economic development of China and countries along the routes are highly complementary. Huge productivity can be released if they can be effectively combined. Most of the countries along the Belt and Road are blessed with rich natural and human resources, but they are generally lacking in capital, talents and technology, as well as facing such bottlenecks as inadequate infrastructure, small market size, and poor governance. The following three major advantages China has can help these countries overcome the bottlenecks and stimulate economic development.

The first is infrastructure advantage. Having the required experience and technology, China is undertaking infrastructure projects such as reservoirs, power plants, ultra high volatage (UHV) grid, deep water ports, airports, industrial parks, traditional railways, high-speed railways, highways and telecommunications networks simultaneously in many countries.China also has the ability to help an entire region (such as Southeast Asia) build transnational infrastructure networks, overcome the obstacle of small domestic market size, and develop intraregional division of labor so as to form transnational industrial clusters.

The second is intellectual advantage. During its process of reform and opening-up, China has cultivated a large number of talents in the areas of economic development, public governance and urban planning, and independently explored unique economic development experience that effectively combines the advantages of market and government. China can share these experiences with countries along the Belt and Road, provide managerial expertise and technical support, and assist in talent training.

China must give strategic priority to its neighboring areas if it is going to shape a favorable international order for itself.

The third is financial advantage. China boasts huge foreign exchange reserves and a rich amount of domestic savings, and has established an independent global payment system. As China has signed currency swap agreements with many countries, the renminbi has become more and more popular as a trade settlement currency. As the renminbi is going to be officially included in the International Monetary Fund’s special drawing rights basket with a share of 10.92 percent, it will accelerate the process of it becoming a freely convertible currency, and become the world’s thirdlargest currency following the US dollar (41.73 percent) and the euro (30.93 percent). Therefore, China has the ability to provide developing countries with low-cost financing and credit.

Peripheral Diplomacy

The peripheral diplomacy is the core and frontier of China’s grand diplomacy, which is determined by the special geopolitical environment of the country. The starting point for the Belt and Road is therefore China’s neighboring areas.

Among all major countries in the world, the geopolitical environment of China is very special. China has over 10 neighbors, both land and maritime, and they include strong powers such as Russia, Japan and India. The United States in contrast, has two neighbors, Canada and Mexico. The strength of these two countries cannot be compared with that of the United States, and both of them rely on the United States for their own development. China’s diplomacy has to be both practical and flexible and suit its own geopolitical environment.

Most of the hot-spot issues in the field of international security are in China’s neighborhood, and many of them are directly related to China, including the nuclear issue of the Democratic People’s Republic of Korea, the Taiwan question, sovereignty disputes over the East and South China Seas, the China-India border issue, and Afghanistan. In recent years, while old problems and disputes still exist and have even intensified, new ones are emerging. Any of them may translate into major crises at any time.

China’s periphery is the basis of Chinese world order. China must give strategic priority to its neighboring areas if it is going to shape a favorable international order for itself. The crises China has to face in the future are more likely to stem directly from the small and medium–sized countries that surround it. If major crises take place in the surrounding area or in the relations between China and its neighbors, they will have a direct and serious impact on Chinese world order, and may shake the foundations of China’s rise.

Almost all the surrounding countries are along the Belt and Road. In the past few years, the Chinese government has put forward the ideas and goals for neighboring diplomacy, namely an “amity, sincerity, mutual benefit and inclusiveness” and an “amicable, secure and prosperous neighborhood”. The Belt and Road Initiative is the best approach to achieve these goals.

In addition, for a long time to come, most of the geopolitical pressures China faces still come from the United States. But there are no direct geopolitical disputes between the two countries, and the two economies are highly interdependent. Frictions and conflicts between the two countries aremore likely to be those between China and those allies of the United States that are China’s neighbors. This means that building a new type of majorcountry relationship is inextricably linked with peripheral diplomacy, and both must make progress.

The Global Significance of the Belt and Road Initiative

For China, the international significance of the Belt and Road Initiative has three main aspects: First, it will help break through the security dilemma between China and the countries involved; second, it will help achieve a winwin situation for China and other developing countries, and enable China to better assume its responsibilities as a major country; third, it will help promote China’s soft power in the world.

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Breaking through the Security Dilemma

By developing and strengthening relations between China and other developing countries, the Belt and Road Initiative will help break through the security dilemma among countries, and provide a new driving force for deepening regional economic cooperation.

First, the Belt and Road Initiative is the inevitable strategic choice as China has to deal with the strategic pressure from the United States. In recent years, with the deepening of the US’s Asia-Pacific rebalancing strategy, the diplomatic space for China in Asia has been squeezed. But China has neither the strategy nor the intention to challenge the United States. Whether from its cultural inclinations or actual ability, China does not want a “real conflict” with the United States. Meanwhile, the United States’ rebalancing to the Asia-Pacific has forced it to mobilize its strategic resources to East Asia, which will inevitably lead to a relative decline of its strategic capability in other regions. The United States’ influence has greatly diminished in areas such as the Middle East, Africa, and Central Asia. As the influence of the United States declines in these regions, China will inevitably move toward them. The Belt and Road Initiative is such a strategic choice.While economic and trade are its main purpose, it more or less reflects China’s foreign policy considerations to look westward in the face of the US’s strategic squeezing.

Second, the Belt and Road Initiative can create conditions for the breakthrough in the security dilemma between China and Japan. In recent years, China-Japan relations have stalled due to sovereignty disputes over the East China Sea, the Diaoyu Islands in particular, and the geopolitical and strategic competition between the two countries has intensified. The implementation of the Belt and Road Initiative can extend China-Japan competition to many developing countries along the routes, so as to make China-Japan competition in East Asia less intensified. In developing countries, China is more advantageous. In fact, the competitive advantage of a country abroad is the extension of its internal strengths. At present, the advantages of Japan’s domestic economic development have been largely exhausted, so it is difficult for it to act as the “l(fā)eading goose” of economic development in the international community, as it used to be. For a long time to come, the advantages of China’s domestic economic development determine that China has the ability to play such a leading role in developing countries.

Third, the Belt and Road Initiative can generate more common interests so as to ease the tensions in the South China Sea. Objectively speaking, with or without the Belt and Road Initiative, the sovereignty disputes in the South China Sea exist. But with the Belt and Road, the cake can be made larger, and there will be more common interests and the necessity for cooperation among countries in the region, which will help ease the tensions.

Fourth, the initiative will help solve security dilemma between China and the West in terms of trade and investment. Currently, with the weak economic recovery of Western countries, the extremely loose monetary policies of the US Federal Reserve and the European Central Bank alone cannot solve the long-standing structural problems such as unemployment, loss of industry, and ethnic conflicts. Meanwhile, Western countries often refuse Chinese capital and products with the excuse it “threatens nationalsecurity”. It is difficult to fundamentally change this situation. Therefore, while making continued efforts to deal with the West, China should give play to its advantages in developing countries, and seek new room for trade and investment. In other words, China must “walk with two legs”economically, with one leg in the Western countries, and the other in the developing ones. The Belt and Road Initiative will help China increase its trade with and investment in developing countries, so as to reduce its economic and trade frictions and other possible problems with Western countries.

Assuming Responsibilities as a Major Country

For one thing, the Belt and Road Initiative will help China achieve sustainable development. At present, China’s economic structure needs to be adjusted. In this regard, while it is important to deepen domestic reform, China can also give full play to the role of external economic factors. This can promote domestic reform and ease the pressures from reform at the same time. Historically, when Western developed countries grew into economic powers (from low-income to high-income economies), all of them made use of external economic factors. Their economic development was often accompanied by policies concerning colonialism and imperialism. China certainly cannot follow the old path of Western countries. Rather, it must find a path featuring mutual respect, common development, and win-win cooperation with other developing countries. The Belt and Road Initiative is one such path.

China has developed from a country with capital deficit into one with capital surplus, and it boasts a tremendous amount of capital accumulation(including national capital and private capital). Such a huge amount of capital is mostly saved in banks. It is not adding value, but faces the risk of devaluation. While it is undeniable that internally there is still a great deal of room for further investment, and China will continue to invest domestically, at the same time China’s capital will accelerate its pace of “going global”, with the scale of the country’s overseas investment becoming larger. As it implements the Belt and Road Initiative, China should translate its huge capital into investment in order to keep and increase its value. And what countries along the routes need to do is use China’s capital to accelerate their domestic construction and promote economic development.

In addition, China’s economic scale is extremely large, with strong production capacity in all major industrial sectors. The Belt and Road Initiative will not only help mature products made by Chinese enterprises enter vast overseas markets, but also help transfer surplus capacity in China abroad in an orderly manner. As they are translated into factors for the economic development of developing countries, they will promote the adjustment of China’s industrial structure while helping the economic development of these countries. In this process, the transnational operation capacity of Chinese enterprises can also be comprehensively increased.

For another thing, the Belt and Road Initiative can become a new driving force for the economic development of countries along the Belt and Road. As most of the counties are developing countries, their main task in the long run is development. By introducing external economic factors (capital and technology) into these countries and combining them with their internal factors (cheap labor and rich natural resources), the initiative will greatly stimulate their economic development, and upgrade China’s economic partnerships with Southeast Asia, South Asia, Central Asia, the Middle East, and Africa, and also promote regional economic development.

Despite their advanced economies, Western countries also face development bottlenecks. They lack momentum for their own development to a large extent, so it will be even more difficult for them to help developing countries. Even for those with the capacity to offer assistance, their foreignaid and investment often come attached with political and ideological conditions, which seriously restrict the development of developing countries. China is different. It is more pragmatic with its foreign investment and assistance, and they are offered with no strings attached. China has accumulated a lot of experience and lessons from its investment in the past. Therefore, China will pay more attention to the risks of foreign investment, but it will not attach preconditions like the West. What China should do is providing necessary financial and technical support to let countries along the Belt and Road develop together with China. Only when other developing countries are richer will China’s development be sustainable.

Building Up China’s Soft Power

The Belt and Road Initiative offers an opportunity and platform for China to increase its soft power in the world. It can help spread the valuable experience of China’s development to other developing countries, especially its experience of combining the power of market and government in its reform and opening-up. This will not only satisfy the needs of developing countries, but also enhance China’s soft power.

Nowadays, developing countries are still faced with huge pressure in promoting economic development. Before World War II, most of the developing countries were colonies of Western countries. Although colonial rule contributed to the development of the colonizers, the development of the colonized countries failed. After World War II, these colonies gained their independence, but they continued to rely on the West. This is because Western countries remain the most developed economies, and also because former colonizers continue to affect the development of the newly independent states through various ways. Obviously, this model has also failed. Since the 1980s, the West has started to promote the “Washington Consensus” among developing countries. But the “Washington Consensus”is mainly a summary of the Western development experience, which is not suitable for developing countries.

China’s development experience offers a different model option fromthe West for developing countries. More and more developing countries have shown great interest in China’s experience. This is decided by many factors. First, China’s achievements are remarkable. No matter how many big problems China has, many developing countries have enough reason to be deeply interested in China’s experience as it has transformed from an extremely poor country into the second-largest economy in the world within just over 30 years. Second, China has set an example for developing countries in many ways, such as reducing poverty through development, seeking development by integrating into the world, and addressing difficulties and problems through development. Third, compared with the experience of developed countries, China’s experience are more relevant to developing countries. In fact, the experience of China is not totally opposite to that of the West. In terms of market building and many other aspects, China has drawn a lot of experience from the West. But China has not mechanically copied the Western experiences; rather, it has constantly modified the experiences of other countries based on its own national conditions and realities, which is also needed by many developing countries. In the future, China can summarize its own experience while offering assistance based on the practical needs of countries along the Belt and Road.

Conclusion

After more than 30 years since the reform and opening-up was launched, China is becoming a world power. The geopolitical and international situation facing China today requires the country to “go global” and safeguard its national interests on the world stage, while shouldering its responsibilities as a major country. Whether “going global” or shouldering major-country responsibilities, China will meet huge challenges, which need to be tackled by grand diplomatic strategies. The Belt and Road Initiative is the first step of China’s all-round move toward the world; it is also, for reasons stated above, an important “test” China must pass as it rises.