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New silk road

by Hans Dembowski


Chinese construction companies are active on many continents: road project in Ethiopia.

Chinese construction companies are active on many continents: road project in Ethiopia.

China’s decades of spectacular growth are coming to an end. The bursting of the stock-market bubble, which sent shockwaves through international financial markets, is merely one indicator. As China's government is struggling with the econmic downturn, it is unlikely to give up upon its international infrastructure ambitions.

There is more evidence of economic problems. China’s exports have been slowing, and so have its imports. Moreover, China’s more populous regions now have so many roads, railway lines, airports and harbours that investing in additional transport infrastructure makes little sense. Accordingly, construction companies lack assignments. 

When aspiring super powers face domestic problems, they tend to develop foreign ambitions. Indeed, China is becoming more assertive in two ways. It is investing in its military, and it has grand plans for building international infrastructure. The international community should discourage the former trend and welcome the latter. 

Yes, it serves Beijing’s foreign trade interests to build new roads, railways, container terminals and airports abroad. However, the economies of the countries concerned will benefit too. Accordingly, China’s Communist regime has a reason to expect its rhetoric of a “new silk road” or a “maritime silk road” to be appreciated.  

Not everyone is happy however. The Indian government, for example, is uncomfortable with grand schemes to improve transportation options in Pakistan, linking China’s western border to the Arabian Sea. It does not like China’s plans to expand harbour infrastructure in all of India’s neighbouring countries either. India feels that this region is its own “backyard”, and its military worries about hostile armed forces using the new transport infrastructure. After all, China is an ally of India’s arch enemy Pakistan.

The Russian government similarly eyes China’s attempts to build closer links to central Asian nations with suspicion. Former Soviet Republics, in Moscow’s understanding, belong to its own sphere of influence. And because the US administration is worried about China’s growing global clout too, it objected to allies joining the Asian Infrastructure Investment Bank.

Nonetheless, Germany, Britain, France and others signed up to the new multilateral financial institution that will be based in Beijing. From a developmental perspective, their decision was correct. Infrastructure is essential for development, and it makes sense to join forces to build it. Moreover, cooperating with Beijing’s authoritarian regime will help to tie it into a multilateral order.

That said, China’s partners must be on the watch. They must not accept sabre-rattling in the South-China Sea or elsewhere, and they should limit the access of China’s military to all new-built facilities. Moreover, they must pay attention to quality. Chinese companies have a long track record of building infrastructure in other countries and continents. Some results are excellent, but in other cases, the new infrastructure was shoddy and became damaged fast. Whoever deals with Chinese infrastructure providers should therefore thoroughly assess past experience and ensure that future projects result in lasting infrastructure. A guiding principle could simply be to insist that China keeps its word. 

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