How a Great Power Falls Apart
Decline Is Invisible From the Inside
China’s sweeping Belt and Road Initiative, which involves reviving the ancient Silk Road linking Asia to Europe, has become the most visible symbol of China’s rising ambitions. Ever since the administration of U.S. President Donald Trump pulled the plug on the Trans-Pacific Partnership (TPP) earlier this year, abandoning its chance to set the rules of international commerce, China has seized the opportunity to prove it can assume the mantle of global economic leadership.
In his opening remarks at the first Belt and Road Forum last week, Chinese President Xi Jinping called upon the attendees to “build an open platform of cooperation and uphold and grow an open world economy,” echoing the speech he gave at Davos in January, just days after Trump withdrew the United States from the TPP. Over the course of the two-day meeting in Beijing, 29 heads of state, 1,200 delegates from over 100 governments, and global leaders such as UN Secretary-General António Guterres and World Bank President Jim Yong Kim discussed what Xi called the “project of the century.” The Trump administration also sent a delegation to the forum, led by Matthew Pottinger, the National Security Council’s senior director for Asian affairs.
Belt and Road is an enormous endeavor. China is expected to pour $1 trillion in largely public financing into a variety of projects spanning 65 countries. Once complete, the “belt” will include a massive network of highways and railways linking China to Central Asia, Europe, and the Middle East. The “road” will consist of a series of maritime routes between Southeast Asia and Europe. Sixty-eight nations and international organizations have already signed cooperation agreements with China. And 18 countries, including the United Kingdom, have agreed on principles for financing Belt and Road projects.
The initiative has high-level support in Beijing. Championed by Xi, it is reportedly being coordinated by a task force chaired by one of the seven members of China’s Politburo Standing Committee—the top decision-making body in China. As part of a public relations offensive meant to promote the initiative, state-backed think tanks have hosted dozens of conferences around the world on Belt and Road and on promoting opportunities for cooperation, sometimes in coordination with leading U.S.-based think tanks. Such conferences have succeeded in generating buzz and garnering legitimacy for Belt and Road among policy circles.
Under the administration of former U.S. President Barack Obama, the United States’ response to Belt and Road was generally to offer cool acknowledgment. The Trump administration must take a different approach if it wants to sustain U.S. leadership in Asia and repair the damage it did to U.S. credibility by withdrawing from the TPP. To do so, Washington must push back against China’s attempt to create its spheres of influence, trade, and investment across Africa, Asia, and Europe. But it must also carve out areas for cooperation with Beijing, since there are opportunities for Belt and Road to serve U.S. interests.
CONTAIN AND COOPERATE
To push back on Belt and Road, Washington must ramp up trade, investment, and infrastructure building across Asia. Doing so will enable the United States to create jobs at home by increasing exports to a region that is home to five of the United States’ top ten trade partners. This would also provide the needed foundation for deeper diplomatic and security ties. When it comes to trade, the region is not waiting around for Washington; in fact, the 11 other TPP members met in Hanoi over the weekend to discuss how to move forward without the United States. As Singapore Prime Minister Lee Hsien Loong has noted, “Failing to get the TPP done will hurt the credibility and standing of the U.S. not just in Asia, but worldwide.” One way or another, the Trump administration must find its way back into the TPP. This may start with a series of bilateral agreements beginning with Japan, but ultimately, bilateral agreements cannot unleash the network effects and geopolitical dividends of a major multilateral agreement that places the United States at its core.
The United States must also aggressively promote U.S. investment in Asia. As the largest cumulative source of foreign direct investment in the region comprising the Association of Southeast Asian Nations, the United States is already offering both quantity and quality when it comes to creating jobs, transferring cutting-edge technology, and strengthening the skills of local workers. This effort needs to be amplified by dramatically scaling up initiatives such as the private sector innovation road show series, which the U.S. State Department organized last year. Through the road show series, senior State Department economic officials led delegations of top U.S. firms across ten major cities in Asia to discuss with foreign officials the regulatory changes needed to facilitate innovation and investment. The series also provided an opportunity to build business partnerships and was widely and positively covered in local media, yielding concrete deals, such as the unlocking of a stalled contract for a major U.S. firm. This firm will now serve as the project lead for the building of a new city in India. Beyond road shows, the Trump administration must step up its advocacy on behalf of U.S. firms that are bidding on foreign government contracts and that are facing regulatory challenges abroad. This effort must begin by prioritizing advocacy in Asia, and it must extend beyond the business affairs advocacy divisions at the U.S. Departments of Commerce and State to include top officials across the government.
As part of its efforts to promote investment, the administration must increase its support for U.S. firms competing in infrastructure and connectivity. One way to do so in a resource-constrained environment is to make common cause with allies that are wary of China’s infrastructure initiatives. Japan is one such ally. Spurred on by China’s establishment of its $100 billion Asian Infrastructure Investment Bank (AIIB), Japanese Prime Minister Shinzo Abe announced his $110 billion Partnership for Quality Infrastructure initiative in 2015 to meet infrastructure needs in Asia. The partnership was expanded last year to $200 billion and to cover developing countries around the world. With a close eye on Belt and Road, Japanese officials have repeatedly solicited U.S. engagement in partnering on key infrastructure projects in Asia. Such collaboration could further strengthen ties with an ally that shares U.S. concerns about China’s strategic intent while opening up opportunities for U.S. firms.
At the same time, the Trump administration should remain open to working with China on Belt and Road projects on a case-by-case basis. According to the Asian Development Bank, Asia needs $26 trillion in investment by 2030 to resolve its infrastructure shortages. No one country can meet that need on its own. China has an important role to play in global development, and although the United States may be less positioned to do so should Trump’s proposed cuts to development funding come into force, Belt and Road will create commercial opportunities for U.S. firms that are keen to partner with Chinese firms. Some Belt and Road initiatives may even align with key U.S. security interests. China’s planned $46 billion investment in Pakistan, for example, known as the China-Pakistan Economic Corridor (CPEC), could help tackle the crippling power shortages that have long short-circuited Pakistan’s economy and lead to the growth and stability that the United States has long sought to establish there. Some U.S. firms are already a part of the equation. General Electric, for example, is supplying a major Chinese-backed power project in Pakistan, but the United States should encourage more firms to follow suit.
PLAYING THE GAME
Moving forward, U.S. and Chinese officials should include Belt and Road, as well as global infrastructure development, as a formal topic of discussion in future bilateral talks. During the Obama administration, Chinese officials were reluctant to discuss Belt and Road in formal dialogues, possibly because they were still grappling internally with its dimensions or were not empowered to do so. The Trump administration should encourage open discussion of Belt and Road projects so that the two countries can find common areas for cooperation. Given the number of financing and procurement opportunities that Belt and Road will present, Trump should ask China to have its policy banks allow U.S. firms to bid on projects and participate in Belt and Road. One area where the United States should offer its immediate support is to U.S. firms bidding on projects financed by the AIIB, which is considered China’s version of the World Bank, given statements by the AIIB’s president indicating that U.S. firms are welcome to do so even though the United States is not a member. Throughout these partnerships, however, Washington must heed concerns regarding Belt and Road and raise them candidly with Beijing. There is an ongoing debate in Pakistan, for example, over whether CPEC is creating unsustainable levels of debt. Other developing countries have expressed concerns regarding the low quality of Chinese construction. Even as it recognizes Belt and Road’s contributions to global infrastructure development, Washington must press China to adhere to international safeguards and standards.
There is no doubt that China is now deftly leveraging its resources to build multilateral institutions and initiatives with significant global support. The Trump administration cannot sit on its hands. It must, of course, approach Belt and Road carefully but also engage with it and start putting its own pieces on the global economic board—or risk relegating the United States to the sidelines.