ANALYSIS CHINA

"ONE BELT, ONE ROAD":

CHINA'S GREAT LEAP OUTWARD

Introduction

ABOUT by François Godement The Chinese have long been obsessed with strategic culture, power balances and geopolitical shifts. Academic institutions, China has created an action plan for its Silk Road concept think tanks, journals and web-based debates in the form of the “One Belt, One Road” (OBOR) initiative. are growing in number and quality and give It is grandiose, potentially involving an area that covers China’s foreign policy breadth and depth. 55 percent of world GNP, 70 percent of global population, China Analysis, which is published in both and 75 percent of known energy reserves. China’s financial French and English, introduces European commitments to the project seem huge: some multilateral audiences to these debates inside China’s and bilateral pledges may overlap, but it is still likely we are expert and think-tank world and helps the looking at up to $300 billion in infrastructure financing from European policy community understand how China in the coming years1 – not counting the leveraging China’s leadership thinks about domestic and foreign policy issues. While freedom effect on private investors and lenders, and the impact of of expression and information remain peer competition. Japan, for example, has just announced restricted in China’s media, these published a $110 billion infrastructure fund for Asia, and the Asian sources and debates provide an important Development Bank is hurriedly revising its disbursement way of understanding emerging trends rules to increase its lending capacity. This does not even within China. include the grand bargain being discussed with Russia on Each issue of China Analysis focuses on a overland transport, energy, and cyber-connectivity. specific theme and draws mainly on Chinese mainland sources. However, it also monitors However, concrete details are scarce, especially at the content in Chinese-language publications bilateral level, where potential partners seem to supply more from Hong Kong and Taiwan, which occasionally include news and analysis that information than can be found in published Chinese sources. is not published in the mainland and reflects Implementation may span a very long time period – as much the diversity of Chinese thinking. as 35 years, according to some of our sources, reaching

The French version of China Analysis can be accessed online at www.centreasia.eu. 1 Note that this figure does not include the $890 billion of public investment recently announced by China Development Bank, one of China's policy banks. See: He Yini, " China to invest $900b in Belt and Road Initiative", China Daily, 28 May 2015. Available at: http://usa.chinadaily.com.cn/business/2015-05/28/con-

June 2015 tent_20845687.htm. 2 June 2015 CHINA ANALYSIS Asians, and our sources offer reassurance that China is China that reassurance offer sources our and Asians, Jinping talked first of a “community of destiny” among ofdestiny” a“community of first talked Jinping For thetimebeing,however,nopartnercanignoreChina’s The answers are as yet unclear. The answersareasyetunclear. There isadebateaboutwhetheritwisetopoursuchhuge now – actors Chinese potential among competition The theincrease further expectations great world’s The Xi offensive; diplomatic and geopolitical a also is This Is this a viable strategy, considering the obvious integration considering the Is thisaviablestrategy, Investment Bank(AIIB).Intensedebateisbeingcarried Republic of China in 2049. Republic ofChinain2049. financing. How it will manage to leverage China’s capital toleverage manage it will How financing. amounts into low-return projects and high-risk countries. Will amounts intolow-returnprojectsandhigh-riskcountries.Will and ontheexportofitshugeinfrastructure-building or will itdrag action trumpeconomicinterdependence, decade. past the of policy development western abroad the all expectationsoftheChina-foundedAsianInfrastructure audience forwhattheChinesesometimesdescribeas Much of China’s logic on the project is based on geopolitics geopolitics on based is project the on logic China’s of Much China alsorisks overreachingitself,andthereismuch continental overture represents a return to the late 1950s, late the to return a represents overture continental beyondthe success there ismuchdiscussionof example, completion intimeforthe100thanniversaryofPeople’s capacities. But even within China, these sectors are leading capacities. ButevenwithinChina, thesesectorsareleading down China’soverallcompetitiveness? out abouttheSilkRoadsincountriesthathavereasonto on public financing and state-owned enterprises? Can China China Can enterprises? state-owned and financing public on economy? Cangeopolitical global China inthe of coastal rather than to revise it. But money also talks, andastrategy also money it. But revise rather thanto returning to some caveats: this is a concept based on giving, on based concept a is caveats: this some to returning widely outside China, especially along the continental routes. widely outsideChina, especiallyalongthecontinentalroutes. with coast the from away growth rebalanced Mao when worry aboutsomeoftheirimplications. which ledtoChina’srapidgrowthoverthreedecades.For massive investments inland. The project also extends also project inland. The massive investments westward the Emphasising decades. of recent main trends also in China’spast.Itcould of events lines much alongthe throwweight and its track record in throwweight building massive this turnouttobearepeatofoldmistakes,withoverreliance oflosingmoneyorstirring upopposition. possibility the model 1979 the after opening”, “second country’s the infrastructure investmentplan thatiscontingentonmarket a €315billion up is alsosetting itself infrastructure. Europe up toChina’smaritimecoast–could including everybody faces China leadership. of terms in and finances of terms in seeking to “supplement” the existing international order existing the “supplement” to seeking happen that the aggregated projects shift some of China’s of some shift projects aggregated the that happen provoke a “blind development” ( provoke a “blinddevelopment” keep sources Our Chinese process. the about uncertainty power, inadditiontothetradepoweritalreadypossesses. leverage private firms and investment in its grandiose plans? differ conditions geopolitical and Geographical loss-makers. financial China’s building is aid and loans on based largely mengmu fazhan ) very a EuropeanminoritystakeintheAIIB. question – and perhaps a more important issue than that of than that a moreimportantissue – andperhaps question interesting another is growth European drive for export Development and Reform Commission, and the Ministry of

1. China’s “second opening”: Grand ambitions Commerce. This plan sets out a vision in which Chinese-led but a long road ahead infrastructure construction, reduced tariffs, and simplified customs administration would allow trade to flow seamlessly David Cohen between China and Europe by both rail and cargo ship.7 The action plan takes in every conceivable goal, from improving Sources: distributed supply chains to developing trade in services to Chu Yin, “Realisation of ‘One Belt, One Road’ Strategy increasing food security for the countries that participate in Requires More Careful Consideration”, Aisixiang, 1 the project. In short, it is a statement of ambitions, which January 2015.2 likely encompasses the priorities and pet projects of many dozens of bureaucratic actors. And Beijing has put its money Huang Yiping, “Don’t Let ‘One Belt, One Road’ Fall into where its mouth is. It has committed a total of about $100 the Trap of Japan’s Overseas Investments”, Zhongguo billion to a trio of new infrastructure funds: $40 billion to Gaige Wang, 10 February 2015.3 the Central Asia-focused Silk Road Fund, $50 billion to a Jia Qingguo, “One Belt, One Road: Urgent Clarifications new Asian Infrastructure Investment Bank (AIIB), and $10 and Discussions of a Few Major Questions”, Renmin billion to the BRICS-led New Development Bank.8 Luntan, 19 March 2015.4 Wang Yanchun, “Silk Road Innovation”, Caijing, 23 The authors selected here describe the OBOR as a key March 2014.5 element of a "new round of opening to the world" (新一 Zheng Xie, “‘One Belt, One Road’ is not ‘China’s Marshall 轮对外开放, xin yi lun duiwai kaifang), a phrase used Plan’”, Huanqiu Wang, 17 November 2014.6 by Xi Jinping to describe his economic strategy.9 Its goal, Jia Qingguo writes, should be to promote China’s economic upgrading and rebalancing through such Chinese President Xi Jinping’s recent tour of Kazakhstan, opening. However, the idea is still at the planning stage. Russia, and Belarus gave him an opportunity to talk up It will take years to come to fruition and will face many his “Silk Road Economic Belt” (SREB) initiative. Xi signed serious challenges along the way. At this stage, even major trade deals in Almaty, Moscow, and Minsk, including an elements of the plan appear to be up for debate, and the agreement to coordinate the SREB initiative with Russia’s authors covered here appear to have taken advantage of Eurasian Union project. this situation to push their own policy priorities under the banner of a new strategic slogan. The SREB is aimed at facilitating land-based trade across the Eurasian landmass, and the concept has dominated The authors agree that China should not expect to replace China’s relations with Central Asia ever since Xi proposed the established international trading system. A Global it in September 2013. Its sister project, the “21st Century Times editorial published under the pseudonym of Zheng Maritime Silk Road”, is oriented towards the Association Xie focuses on rebutting the claims of Western outlets, of Southeast Asian Nations (ASEAN). Together, these two which have described the programme as “China’s Marshall projects are now usually talked about as part of China’s Plan”. Huang Yiping and Chu Yin discuss the limits of global economic strategy known as the “One Belt, One Road” China’s capabilities, warning that the project could be initiative (一带一路, yidai yilu, hereafter OBOR). The derailed by ham-fisted great power diplomacy, inattention initiatives are elements of a regional economic strategy that to political risk, or excessive central planning. Despite also includes the planned China-Pakistan and Bangladesh- the considerable economic upside for all participants, China-India-Myanmar Economic Corridors. Huang writes, “One Belt, One Road is a good international economic strategy, but for now it is certainly not an easy 一带一路 是一个好的国际经济策略，但是在目前的 On 28 March, an “action plan” was jointly released by three one.” (“ ” 情况下要想取得成功却不容易 agencies: the Ministry of Foreign Affairs, the National , “yidaiyilu” shi yige haode guoji jingji celüe, danshi zai muqian de qingkuang xia yao 2 Chu Yin is an associate professor of international relations at xiang qude chenggong quebu rongyi). Tsinghua University, Beijing. 7 For the English version of the Action plan, see: “Vision and 3 Huang Yiping is a professor of economics at Peking University's Actions on Jointly Building Silk Road Economic Belt and 21st National School of Development and at Australia National Uni- Century Maritime Silk Road”, National Development and Reform versity’s Crawford School of Economics and Government. He was Commission, 28 March 2015, available at: http://en.ndrc.gov.cn/ Chief Asia Economist at Citigroup from 2000 to 2009, and held a newsrelease/201503/t20150330_669367.html. similar position at Barclay's. 8 For more information on the AIIB, see Agatha Kratz’s article in 4 Jia Qingguo is a member of the Standing Committee of the this issue. CPPCC and dean of the University of international relations at Beijing University. 9 Xi Jinping notably used the phrase during a Politburo study session. See: Xi Jinping, "Accelerating the implementation of 5 Wang Yanchun is a journalist for Caijing. a free-trade zone strategy, accelerating the construction of a 6 This article is attributed to “Zheng Xie, an observer of interna- new economic model based on openness", Xinhua, 6 Decembre tional affairs”. Zheng Xie (郑协), the name of a Song dynasty poet, 2014. Available at: http://news.xinhuanet.com/politics/2014- appears to be a pseudonym. 12/06/c_1113546075.htm. 3 4 June 2015 CHINA ANALYSIS ’eosm hnig (“ thinking” “’zero-sum thinking” ( “wishful A recent report from Renmin University, described by the A recentreportfromRenmin University, described Xinhua News Agency as the first think tank report on the on report tank think first the as Agency News Xinhua 10 LiJinlei,“Report:SilkRoadEconomic BeltMayBeDivided 对国际经济秩序做出补充 Jia Qingguo writes that, Jia Qingguo writes guo XinwenWang 75 percent of known energy reserves. China is to launch five The Renmin University report cautions that because of The RenminUniversityreportcautionsthatbecauseof United States President Barack President Obama’s States demandthatChina United daguo shitu dui guoji jingji zhixu zuochu buchong zhixu jingji guoji dui shitu daguo Better planningneeded Huang Yiping says the OBOR represents a sea changein Huang YipingsaystheOBORrepresents Republic of China. Likewise, a Ministry of Commerce official Road projects will be fully realised in about 35 years, in 2049, Deng Xiaoping’s advice to “hide your capabilities and bide and capabilities your “hide to advice Xiaoping’s Deng Planners about thegoals should alsocometoan agreement 新 shi dejiedu and DengXiaoping. limits ofcurrentplanning. and the your time”( implementation year, with planningnext of strategic years China as “a new great power is trying to supplement the is tryingtosupplement China as“anewgreatpower to end an put has rise China’s profile. international China’s given todevelopingcountriesininternationalinstitutions. project’s the as great era comparabletothose Silk to beginin2021. that the The reportestimates expected of the strategy: for now, he says, there are many different many are there says, he now, for strategy: the of Into ThreePhases;InitialCompletion Predictedin2049”, take on more responsibility for providinginternational take onmoreresponsibility to corresponded that diplomacy low-profile of period the a third of threshold the the 100th anniversary of thefoundationPeople’s international economicorder”( a clear need will it succeed, is to it if vision, but is astrategic ( 30 years” “new the of by Caijingtalksinterms interviewed should not succumbto should scepticism within China’s immediate neighbourhood as well scepticism withinChina’s immediateneighbourhoodaswell with role, inline active a more playing China is that says harsh terrain, political instability, and geopolitical threats. geopolitical instability, and harsh terrain,political public goods. Another reason is to redress the limited role limited the redress reason isto goods. Another public not onlyamongacademics, of thestrategy understandings plan. Solutions willhavetobefoundtheproblemsof may be,China potential and population, global of of worldGNP,70percent percent ambition project’s the of scale the both confirms projects, Silk Road projects will connect countries that represent 55 represent that countries connect Silk Roadprojectswill but alsowithingovernment. Zedong Mao by begun Supplement, notchallenge 30 年 , xin 30 nian ), the Silk Road projects have been met with been metwith projects have the SilkRoad ), 韬光养晦 , 28June2014. 一厢情愿 ), a reference that puts today’s Chinaon thatputs ), a reference , taoguangyanghui , 零和博弈 Zhongguo zuoweiyige xinxing , yixiangqingyuan One Roadis a goodin strategy, but for now it one" ternational economic is certainlynotaneasy Huang writes: "One Belt, 中国作为一个新兴大国试图 10 ” Thereportsaysthatthe 式的解读 . ). With theOBOR, , ). The OBOR “lingheboyi” “lingheboyi” ). Huang Zhong - - 一带一路上的国家并不是平等的 同于西方霸权表现出来的殖民主义与种族主义，但中国与 Jia says that regional powers, too, arewaryof China’srise. regional powers, Jia saysthat Japanese participationinChina’snewinstitutions. Trans-Pacific Partnership as moves in a zero-sum game. in azero-sum as moves Partnership Trans-Pacific The guojia bingbushi pingdengde gongtong kaifa However, HuangwarnsthatsomeChinesescholarswant Road appealing.Chusays: “Althoughwearearighteous target the many of Asia, while in Central Russia’s position But HuangpointsoutthatChinaisstillamiddle-income yu xifangbaquanbiaoxianchulai dezhiminzhuyi yu a US-Japanaxis. TheyviewboththeOBORandUS’s as resistancefromoutsidepowers.However, itnotesthatthe Chinese governmentshouldsticktothegoalofa“peaceful to aimed which Plan, Marshall the to contrast In China. Chu focusesonpoliticalrisk,cautioningChinanotto thatitischallenging China mustavoid theperception economic situationshowsthatexport-fuelledwealthdoes can happentocountriesthatthrowtheirweightaround continue. ThefateoftheSovietUniondemonstrateswhat country andhasnoguaranteethatrapidgrowthwill control WesternEuropeannationsandtocontainthe equals” ( country, freeofWesternimperialism, colonialism,and currently are project Road Silk Maritime the for countries countries asequalsandshouldevenwelcomeUS zhongminzhuyi, danZhongguo yu yidaiyilu shang de zhi bang, zaichuli guojiguanxi shang jiongranbutong other countries may not find the message of the Silk of message the find not may countries other of theTangDynastyisfondlyrememberedinChina, but not last forever. To avoid ending up in either situation, thesituation, either in up ending avoid To forever. last not region isalreadydividedbetweenaChina-Russiaaxisand racism, weandtheOBORcountriesareabsolutelynot rise” ( without a firm economic base, while Japan’s current Japan’s while base, economic firm a without with nopoliticalstringsattached. which has exposed projects to political risk both fromrisk to political exposed projects which has main regionalpowersrecognisethebenefits ofChina’splan. make themreluctanttocooperate.In order toovercome joint development” ( joint development” to pursueastrategicconfrontationwiththeUS, which, the rumoursoriginatewithUS, whichwantstodiscredit take smallercountriesforgranted. TheSinocentricworld to growing strength its use Chinashould scepticism, this in his opinion, would be foolhardy. He says that somesays He be foolhardy. would opinion, his in involved in territorial disputes with China, may which with involved interritorialdisputes scholars of international relations believe the Asia-Pacific the believe relations international of scholars suggestion ofcompetitionasslander, intimatingthat persuade its neighbours to “shelve disputes and pursue disputes its neighboursto“shelve persuade local oppositionpartiesand fromcompetingregional Soviet Union, China’sOBORisnotanallianceandcomes frequently failedtoconsider localandregionalpolitics, 和平崛起 Global Times 尽管我们是仁义之邦，在处理国际关系上迥然不 , ). heping jueqi , characteristically,rejectsany 搁置争议 ). ItshouldtreatotherAsian , , jinguan womenshi renyi ). Chineseplannershave 共同开发 , gezhi zhengyi, powers. Chu says recent events in Thailand and Myanmar when the west was a hinterland to the developing and show that political instability is a major risk. The electoral relatively open east. Now, He says, the most promising defeat of a Beijing-friendly government in Sri Lanka could opportunities are in the Arab countries, Central Asia, and also disrupt the construction of a key port there – since, in Russia. For the next 30 years, China’s development story contrast to the US during the Marshall Plan, China does will be focused on the west. not have the luxury of militarily occupying the countries in which it invests. On a regional level, India, the US, Russia, and Japan are all important players in OBOR countries and could use their power to block China’s plans.

Rebalancing at home

The OBOR is an international strategy, but its success, Jia writes, will be measured by its effects on China’s domestic economic rebalancing. China will send out its own capital, technology, and management experience, and will promote the development and prosperity of neighbouring countries. In so doing, the country will encourage its own economic transformation and make itself the centre of the regional economy. So as to ensure that investment is allocated efficiently and state assets are protected, private capital should take the lead in this strategy.

Huang stresses the danger of over-emphasising state planning and infrastructure construction, as do the experts interviewed by Wang Yanchun in Caijing. Huang writes that, should the Chinese government take on too much of the project, it would be at risk of repeating on an international scale the errors made in the development of China’s west. Despite massive infrastructure investment in the western regions of the country over the past 20 years, they have made little progress aside from the development driven by natural resource extraction. Huang says: “When the central government offers a free lunch to localities, they stop worrying about economic returns” (中央政府投资，对 地方来说相当于免费午餐，无论是投资决策还是项目实 施，经济回报都不是重点考虑的因素, zhongyang zhengfu touzi, dui difang laishuo xiangdang yu mianfei wucan, wulun shi touzi juece haishi xiangmu shishi, jingji huibao dou bushi zhongdian kaolu de yinsu). Huang says that the government should take a limited role in developing the OBOR infrastructure projects and should delegate most investment decisions to host countries and to the market.

An Jianglin, an expert from the Gansu Academic of Social Sciences interviewed by Wang Yanchun in Caijing, raises the issue of “blind investment” (盲目投资, mangmu touzi). An warns that many areas have roads, for example, but there are no cars on them. The government’s role is to coordinate policies, rules, and regulations to facilitate trade, not to prescribe the development of particular industries and regions. Unlike Deng’s era of reform and opening, this one will depend on local innovation, not on investments flowing from planning authorities in Beijing.

In the same article, He Zhengrong, director of the Ningxia Department of Commerce, describes the Silk Road as a geographic reversal of the era of Reform and Opening, 5 6 June 2015 CHINA ANALYSIS “jiaoxiangyue” 是中方一家的“独奏曲”，而是各国共同参与的 17 SuHaoisprofessorattheDepartment ofDiplomacyChina 16 ZhengYongnianisheadofthe EastAsiaResearchInstituteof 15 WangYiweiisprofessorofinternationalrelationsatRenmin 14 LiMingjieisajournalistatthestate-runmagazine 13 WangJisiisprofessoranddeanoftheSchoolInternational 12 ZhangYesuiisChina’sexecutivevice-ministerofforeign 11 Fulltextavailableat: 2009) andtotheUnitedStates(2009-2012). United States, causing tensions togrowand increasing States, causingtensions United University, directoroftheInstituteInternationalAffairsand ence on8March,whenhestatedthattheOBORwas“notChina's Power transition theory and the “Thucydides trap” say “Thucydides and the Power transitiontheory Road projects. The term“symphony”( Foreign AffairsUniversity. zhongfang yijiade“duzouqu”,ershigeguogongtongcanyu affairs. HeisaformerambassadortotheUnitedNations(2008- solo, butasymphonyperformedbyallrelevantcountries”( wjb_602314/wjbz_602318/zyjhs/t1243647.shtml their neighboursandfromdominantpowers,likethe from opposition likeChina,elicit that risingpowers, published aboutayearbeforetheofficialpresentationofSilk Studies atPekingUniversity.Hisarticle,publishedin2012,was the UniversityofNottingham. the NationalUniversityofSingapore andalifelongprofessorat the ResearchCenteronEuropean Union. the musicalmetaphorusedbyWangYiduringhispressconfer the firsttoadvocateimplementationofSilkRoads–itwas

“Foreign Minister Wang Yi answers journalists’ question journalists’ answers Yi Wang Minister “Foreign Antoine Bondaz Xinhua Wang 17 October2012. Wang Yiwei, “How to deal with geopolitical risks during geopolitical with to deal Wang Yiwei,“How China's West’, the towards “‘Marching Jisi, Wang 2. RebalancingChina’sgeopolitics Oriental MorningPost Editorial, “The ‘One Belt, One Road’ initiative is different i igi “o t pa te Oe et Oe Road’ One Belt, ‘One the play to “How Mingjie Li Shangbao –ShenzhenEconomicDaily geopolitical tool”, Speech at China Development Forum, at ChinaDevelopment Speech tool”, geopolitical geopolitical strategy of rebalancing”, strategy geopolitical on China's diplomacy, foreign policy and foreign and foreign policy diplomacy, on China's relations”, MinistryofForeignAffairs,8March2015. Zheng Yongnian, “The ‘One Belt, One Road’ strategy One ‘One Belt, Yongnian, “The Zheng a ‘One Belt,OneRoad’initiativeisnot “The Zhang Yesui, the concept of a new type of greatpowers”, of anewtype the concept Road”, One Belt One the of implementation the symphony well”, helps the worldeconomyrebalance”, helps Su Hao, “One Belt, One Road – Global foundation of foundation Global Road – One Belt, Hao, “One Su from the Marshall Plan”, Sources: , 29April2015. , 21March2015. ). 13 Liaowang –Outlook

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. “tool ofgeopolitics”( rise” ( “peaceful “traditional geopoliticalconfrontation”( 予 18 GrahamAllison,“Thucydides's traphasbeensprunginthePa qifu Foreign Minister Wang Yi said that the OBOR was not a not was OBOR the that said Yi Wang Minister Foreign This official position has since been repeated in the Chinese Chinese the in repeated been since has position official This 抗 n i ana ades o h pes n ac, China’s March, in press the to address annual his In gongju Road” initiative( cific”, xinxing daguo xinxing and reassurance. The OBOR, as presented in Chinese media, in Chinese and reassurance.TheOBOR, as presented US the to a response OBOR as never present here authors Chinaasanon-threateningandnon- aim topresent are concerned about China’s rise because, historically, a because, China’s rise about are concerned vice foreignminister, ZhangYesui, echoedthismessage China today is “a giver, not a taker” ( taker” a giver, not “a is China today complement” ( country ororganisation”( countries initsneighbourhoodtodevelop. ( “bully” to tends powerful more grows that country commitment. does notthreaten”( creating anewprecedentofpeacefulrise.Chinarefuses of reassuranceattheChinaDevelopmentForumlater China isa“newtypeofrisingpower” to try and itsneighbours toreassure is stance official bu zhendui renheguojiahuo tedingzuzhi real intentions, hesaidtheprojectshouldnotbeviewed rebalancing strategy in the Asia-Pacific region; instead, they The past. in the others dissimilar to power, revisionist rising through an“out-datedColdWar mentality”.China’s than tenyearsagobyZhengBijian. war. of likelihood the ht hn’ OO i “o drce aant n specific any against directed “not is OBOR China’s that the implementation of the OBOR is the evidence of this the implementationofOBORisevidencethis in March. He presented China as a satisfied power, fully power, satisfied a as China presented He March. in international andregionalinstitutions. integrated intotheinternationalsystem.Zhangsaid its neighbours. Instead, China is committed to peace, and its neighbours. Instead, Chinaiscommittedtopeace, and intends tobreakthepatternofrisegreatpowers, is presentedasacountrythathaslearntfromhistoryand seems like a concrete implementation of the concept of the concept of the implementation like aconcrete seems non-confrontation of in China’sstrategy it asatool of speak html#axzz3cZGPCmig present China as a “new type of rising power” ( of risingpower” China asa“newtype present press. Inaneditorialpublishedin Su Hao has a similar analysis. Su says that regional powers regional that says Hao hasasimilaranalysis. Su Su for hegemony”( ft.com/intl/cms/s/0/5d695b5a-ead3-11e1-984b-00144feab49a. , , bu shi suoqu, ershijiyu shi suoqu, bu chuantong diyuanzhengzhi duikang ) others. However, the world has entered a new period: a new world hasentered ) others.However,the Financial Times ). InanodtoWesterncritics’fearsaboutChina’s 和平崛起 ). So, discussions about the “One Belt, One “One the about ). So,discussions 有益补充 争霸 一带一路 , 21August2012,availableat: . 不欺诈 , 18 地缘政治的工具 zhengba China is well aware of this trap. Its trap. this of aware well China is , heping jueqi , , , youyi buchong ), and it aims to help poorer help ), anditaimsto 不针对任何国家或特定的组织 yidai yilu 不威胁 ), and “does not cheat and ), and“doesnotcheat Huanqiu Shibao , ), an idea coined more coined ), anidea , bu qizha, buweixie diyuanzhengzhi de , hereafter OBOR) , hereafter ), does not “strive ), doesnot“strive 不是索取，而是给 ) butisa“useful 传统地缘政治对 ) toexisting http://www. 新型大国 , China , China 欺负 ) - , , , The US and OBOR implementing the OBOR. He also strongly criticises Japan for standing at the vanguard (排头兵, paitoubing) of US Indirectly criticising the US as a traditional power, Chinese strategy. However, he stresses that China’s initiative is an officials and academics repeatedly stress than the OBOR is inclusive model of cooperation that is open to all – it is not like the Marshall Plan. Wang Yi states that comparing aimed at building a “community of interests and security” ( the OBOR to the Marshall Plan is like comparing “apples 利益+安全共同体, liyi+anquan gongtongti) between China and oranges”. The OBOR is based on “open cooperation” ( and its neighbours, including both the US and Japan. 开放合作, kaifang hezuo) – which implicitly means that the Marshall Plan was not. The Huanqiu Shibao editorial “Rebalancing” the world economy agrees. The Marshall Plan placed harsh political conditions on the countries it covered and excluded pro-Soviet During his luncheon address at the China Development European countries, which led to the division of Europe. Forum, Foreign Minister Wang Yi said that “economic The OBOR initiative, on the other hand, is presented as an imbalances” (发展不平衡, fazhan bupingheng) are the unconditional plan to assist in the development of China’s root causes of conflict and that China should provide more neighbours, regardless of “public goods” (公共产品, gonggong chanpin) to mitigate their current relationship them. This argument, playing on the terms “imbalances” with China. The editorial In general, Chinese scholars seem very and “rebalancing”, could be interpreted as an indirect says that no country is criticism of the US. being “forced” (被迫, careful not to directly beipo) to join China’s criticise the US in dis- cussing the OBOR. In general, Chinese scholars seem very careful not to initiative, even though directly criticise the US in discussing the OBOR. Zheng China’s neighbours will Yongnian, based in Singapore, is one of the more outspoken most probably join because of the attractiveness of the commentators. He says that Western economies, and initiative. As the engine of global development, China is mainly the US, were responsible for the global economic aiming to share the benefits of its economic growth. and political imbalances that led to the global financial crisis. China should work to “rebalance” (再平衡, zai Academics such as Wang Yiwei criticise the US’s regional pingheng) these imbalances through the OBOR. He argues “strategic encirclement” (战略围堵, zhanlüe weidu) of China, that the Western model of neoliberalism is in crisis and that but all the writers insist that the OBOR initiative does not Western countries want China to rescue them. However, target the US, nor should it be seen as a response to the saving the West would be China’s “biggest strategic mistake” US rebalancing strategy in the Asia-Pacific. As early as (最大的战略失误, zuida de zhanlüe shiwu), as would be October 2012, Beijing University professor Wang Jisi was focusing only on Western economies in its international the first Chinese scholar to speak of the need for China strategy. China’s priority should be to cooperate with to revitalise three Silk Roads, to Southeast Asia, to South developing countries. Zheng says that China should use Asia, and to Central Asia. He argued that even though the this “rare historical opportunity” (千载难逢的历史机遇, US was “pivoting to the East” (东移, Dongyi), and Russia, qianzainanfeng de lishi jiyu) and take on its responsibilities India, and the European Union were “hoping for the East” ( as the largest developing country so as to push for a partial 东望, Dongwang), China should not limit its strategic vision reform of global governance and international cooperation. to the Asia-Pacific and should instead “march towards the This reform would not be aimed at weakening the US, but West” (西进, Xijin). At the time, he made two points. First, simply at empowering developing countries. there is almost no risk of US-China military competition in the west, because the two countries have a common interest Su Hao also argues that the OBOR is not a response to US in stability in the region, including in Afghanistan and pressure, but unlike Zheng, he thinks the project should Pakistan, and because there is huge potential for bilateral be used as a tool in the rapprochement between Asian cooperation. Secondly, he refused to consider his concept as and European economies. The OBOR could serve as a a response to the US rebalancing strategy, but rather saw it strategic bridge between two complementary economies, as a way to “geopolitically ‘rebalance’ [China’s] thinking” (地 which should not have to rely on the US for their economic 缘战略“再平衡”思考, diyuan zhanlüe “zai pingheng” sikao). growth. Europe, he says, has taken the first step by “turning East” (欧洲转身向东, Ouzhou zhuanshen xiangdong), In a roundtable organised by Liaowang, Li Ziguo, deputy focusing more and more on Asia for economic reasons, and director of the “One Belt, One Road” research centre, also “disengaging” (抽离, chouli) from the US-Europe alliance. says that the OBOR is not a response to America's rebalancing Even the United Kingdom, the US’s closest ally, has joined in Asia-Pacific or to Russia’s Eurasian Union (EEU), but the Asian Infrastructure Investment Bank (AIIB) and is simply a new model of economic cooperation.19 Wang Yiwei starting to distance itself from Washington. In response, is very critical of the US for trying to prevent China from China is promoting the OBOR to overcome the obstacle of distance and to connect Europe and Asia. 19 The “One Belt, One Road” research centre is affiliated to the Ministry of Foreign Affairs’ China Institute of International Stud- ies (CIIS). 7 8 June 2015 CHINA ANALYSIS 义 Wang’s suggestedcarefulandmeasuredmessagingseems

20 WangJun,“HowcantheAIIB succeed?”, Reading theChinesepresswouldhaveusthinkthat com/2015-04-03/100797344.html Caixin Weekly BR oe f rsdn X Jnigs e iiitvs is initiatives, aimed onlyateconomicrebalancingandbuilding key Jinping’s Xi President of one OBOR, opposition frompotentialpartnercountriesabroad. rare, andechoesanarticleontheAIIBbyWang Jun, in no grandergeopoliticalobjective.Thislow-keytoneis which headvisesChinatousetheutmostcarefulness to beatworkinthearticlessurveyedhere. in communicatingabouttheAIIBandSilkRoad seems that Chinesecommentatorshavetakenthehint–seems projects, toavoidbothChinese“populism”( friendly relationshipswithChina’sneighbourhood, with , mincuizhuyi , 6April2015,availableat: ) at home and misunderstanding andmisunderstanding and home at ) . http://weekly.caixin. Caixin Zhoukan- 民粹主 20 It It “Vision and actions on jointly building the Silk Road Economic Belt “Vision andactionsonjointlybuildingtheSilkRoad EconomicBelt “Silk Road”umbrella.WithintheSilkRoadProjects, Arctic SilkRoadandaKoreanRoad. 27 In the Action plan for the One Belt, One Road, the financial 27 IntheActionplanforOneBelt,Road, thefinancial 26 Inthisarticle,theterm“SilkRoadprojects”comprisesall 25 XuGaoischiefeconomistatGuangdaSecuritiesandhasalso 24 Foundedin1993,AnboundisaChineseconsultingfirmand 23 JiaQingguoisamemberoftheStandingCommittee 22 ZhengYongnianisheadoftheEastAsiaResearchInstitute 21 WangYanchunisajournalistfor described asaneconomicrouteandnetworkfordevel crisis andsloweconomicrecoveryarecitedasthemainback concept isillustratedbythefactthat,whileAnbound’sChenGong opment and prosperity. For the Action plan text in Chinese, see: opment andprosperity. FortheActionplantextinChinese, see: other projectshavealsobeenenvisionedordiscussedunderthe Beijing University. Development and Reform Commission, Ministry of Foreign Affairs, Development andReformCommission, MinistryofForeign Affairs, and rebalancingobjectives. China’s Silk Road projects are often talked about intermsof are oftentalked China’s SilkRoadprojects conceived ofasaneconomicgrandstrategy,designed ( and Ministry of Commerce of the People's Republic of China, with and MinistryofCommercethePeople's RepublicofChina, with and the21stCenturyMaritimeSilk Road”,issuedbytheNational ground determinants for the project. Besides, the project is mainly ground determinantsfortheproject. Besides,theprojectismainly seems tobethemostimportantandbestpublicisedone–itisat served asaneconomistfortheIMFandWorldBank. west, onegoingsouth.Otherarticlesanddiscussionsoverrecent wider SilkRoadtheme.Thisextensivenatureofthe news.xinhuanet.com/world/2015-03/28/c_1114793986.htm months havealludedtomoreprojects,includingforexamplean their geopolitical meaning. their geopolitical to meet several growth-enhancing, trade facilitation, trade growth-enhancing, several meet to Chinese projectsandinitiativeslaunchedoranticipatedunderthe CPPCC anddeanoftheUniversityinternationalrelationsat focuses hisanalysisonthe State Councilauthorisation, 28March2015, availableat: that therearethreeroadsinthemaking:onegoingeast, the coreofofficialActionplanreleasedon28March.However, think-tank withlinkstotheStateCouncil(www.anbound.com). the UniversityofNottingham. the NationalUniversityofSingaporeandalifelongprofessorat 一带 Agatha Kratz Anbound, “‘One Belt, One Road’ is facing increasing Road’ isfacing Anbound, “‘OneBelt,One 3. One Belt, One Road:What’sinitforChina’s 3. OneBelt, Xu Gao, “Looking at the ‘One Belt, One Road’ strategy Road’ One Belt, ‘One the at “Looking Gao, Xu Wang Yanchun, “Reconstructing China’strade”, Wang Yanchun,“Reconstructing Times (Chineseversion) Jia Qingguo, “A number of issues that the OBOR urgently thatthe Jia Qingguo, “Anumberofissues January 2015. 2 February2015. economic players? challenges”, needs toclarifyandprove”, discussion”, not remain only atheoretical Zheng Yongnian, “How to make sure the Silk Roaddoes Zheng Yongnian,“Howtomakesurethe from areturnoninvestmentpointofview”, Sources: , 一路 ) initiative,alsoreferredtoas“OneBelt,OneRoad”, Caijing Wang(Opinion) 22

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recognise that the Silk Road plans could benefit China’s says that the Ruyi Group’s story illustrates the challenges economy. However, they believe that the project comes facing China, and the need to go abroad in order to offset with financial risks, and they fear that old mistakes might the country’s fast-fading trade competitiveness in the be reproduced in its implementation, with undifferentiated context of highly internationally fragmented value chains. strategies being applied to very different regions and situations in China’s periphery. The Silk Road project and China’s “new opening”

China needs to restructure its trade Zheng Yongnian also says that China’s era of high growth is gone. However, the Silk Road projects could provide China Caijing’s reporter, Wang Yanchun, uses recent trade figures with a new opportunity for development. Zheng goes through to explain the pressing need for China to “reconstruct its the usual discussion of mutually beneficial cooperation trade” (重构中国贸易, chonggou Zhongguo maoyi). He with neighbouring countries and of sharing China’s reform says that all the economies in Asia have entered a new and opening experience to help partner countries promote development stage. The reorganisation of Asia’s trade, due to economic development and address economic challenges. new trade agreements among other factors, is transforming But beyond all that, Zheng value and trade chains. This has led to a rapid reorganisation Jia Qingguo says the sees the projects as a of economic structures and flows across Asia, which means objective of the Silk way to leverage China’s that China must alter its traditional trade patterns. Road projects should advantages in finance, be China's economic markets, technology, and To be sure, China’s trade is still growing, but growth must upgrading, rebalancing production capacity in be viewed in the context of the “new normal” (新常态, xin and further opening. less developed markets. changtai). Growth in overall trade reached 3.4 percent in The Silk Road plans, he 2014, with exports growing by a mere 6.1 percent. Wang says, could help Chinese says that, for the third year in a row, China’s trade objectives companies improve their “capacity for transnational were not achieved in 2014. This weak performance was due operations” (跨国营运能力, kuaguo yingyun nengli), as to a number of reasons, including the fact that international well as to establish “foreign trade strongholds” (海外经贸据 demand is still depressed after the 2008 crisis, but a 点, haiwai jingmao judian) and “production bases” (生产基 more important reason is the increased (labour-based) 地, shengchan jidi). The plans could also help China to deal competitiveness of China’s South and Southeast Asian with its severe problem of surplus production capacity, and neighbours. This has meant that investment in China’s could revive industries that are less efficient in the domestic manufacturing sector has dropped and its share of the market. Finally, the plans should promote an orderly “going world’s low-quality manufacturing production has fallen.28 out” for Chinese firms, which Zheng calls a “pivot abroad” (对 One seemingly positive consequence is that China’s non- 外移转, duiwai yizhuan). processing trade is now higher than its processing trade, which demonstrates China’s evolution towards a domestic- Jia Qingguo says the objective of the Silk Road projects driven, higher-quality-focused economic model.29 However, should be China’s economic upgrading, rebalancing, and as Ministry of Commerce spokesman Sun Jiwen puts further opening. Jia calls it a “new wave of opening” (新 it: “The 30-year era of continuous high growth in trade is 一轮对外开放, xinyilun duiwai kaifang) – unlike in the gone forever” (外贸持续30多年的高速增长时代一去不复返 past, when China opened itself up to participation from 了, waimao chixu 30 duo nian de gaosu zengzhang shidai outside, attracting foreign investments, technologies, and yiqubufufan le). management skills, China should now reverse its role by itself opening outwards. Because of these changes, China needs to cultivate opportunities outside its borders. As an example, Wang The need for differentiation cites the Ruyi Group (Shandong), which has established weaving and spinning plants in Pakistan to benefit from Jia recognises the economic rationale for the Silk Road, low labour costs, but has also acquired stakes in Australian but he is critical of the plan’s formulation. He says the and Japan textile manufacturers with the aim of setting up routes’ three directions (east, west, and south) should be a truly international value and marketing chain. Today, the much more clearly differentiated. China’s opening to the group is involved in Japan, Australia, New Zealand, India, east should be based on promoting economic upgrading and even the United Kingdom, Germany, and Italy. Wang by taking advantage of East Asia’s advanced science and technology economy. To the west and south, China’s 28 In 2014, FDI to China declined by 40 percent from the US, 22 main objective should be to promote an economic boom percent from Japan, 10 percent from the European Union, and 24 in neighbouring countries, which would in turn further percent from ASEAN, compared to 2013. And while in 2000, 40 China’s own economic transformation and growth as well percent of Nike’s shoes were made in China, and 13 percent in Vietnam, in 2013, only 30 percent were made in China, compared as benefit Chinese companies and goods. to 42 percent in Vietnam. 29 Non-processing trade represented 54 percent of China’s total trade in 2014, compared to 43 percent in 2005. 9 10 June 2015 CHINA ANALYSIS 也要发展 中国生产的东西，东盟也生产；中国想发展的东西，东盟 Anbound’s commentary also calls for differentiation. It differentiation. for calls also commentary Anbound’s u a sae Abuds ocrs ht hn is China that concerns Anbound’s shares Gao Xu less China’s of development the promote and Xinjiang 30 AccordingtoChen,“allofthe items[ofOneBelt,Road] This has created the potential for a debt crisis in thein crisis debt a for the potential created has This Investing in these countries might risk increasingChina’s might countries Investing inthese Demanding returns He explains that the projects aim to buildinfrastructureand thattheprojects He explains to engage Road ismuchweaker, but Chinahasdecided He undertakesathree-prongedanalysisoftheprojectto Sichouzhi Lu ye yao fazhan shengchan; Zhongguo xiang fazhan de dongxi, Dongmeng area – Western China and Central Asia–tostabiliseand area –WesternChina and incountrieswherereturns areevenlessstableand and returnsoninfrastructureinvestmentsarecurrently already representsaquarterofChina’stotalinvestment, account indiscussionsontheproject. jiben shangdoushihuajiandexiangmu very low in China, often not even covering financial outlay. hn’ cmeiie datg aog h Mrtm Silk Maritime the along advantage competitive China’s Gong, Anbound’schiefresearcher. Chensaysthatthis country. Evenso,intheSilkRoadprojects,Chinaplans perspective,micro a From ROI. potential its determine returns. Theauthor sake oflimited burden forthe debt involved isuncertainatbest. countries environment inthe difficulties along the Maritime Silk Road than it would have much greater face more intensively, andChinawill compete eastern coastalprovincesactively lobbiedtobepartofthe developed westernneighbours. However, China’ssouth- to resources (limited) China’s cause will diversification explains that“OneBelt, OneRoad”wasextendedfrom are basicallyaboutspendingmoney” ( on investment, especially since the political and economic political the since on investment,especially regrets that thisconsiderationisveryrarelytakeninto regrets route. Thisexpansionisamistake,accordingtoChen way wouldhave beentoconcentrateresourcesonone misallocating its limited resources. Xu looks at the Silk Road thinks about developing, ASEAN also wants to develop” ( develop” to wants ASEAN also developing, thinks about the original“NewSilkRoad”project( to continueinvestingininfrastructure, bothinChina Infrastructure investmentidea. bad a seem projects the countries. Butacentralquestion in developing technology is whether the projects can bring China sufficient return sufficient China bring can projects the whether is if ithadfocusedonlyonthewesternroute. is tobelaunchedconcomitantly. initiative, leadingtothedraftingofasecondroute,which significant resources there. Chen Gong says: “What China “What says: Gong Chen there. resources significant projects from the perspective of returnon investment (ROI). perspective projects from the produces, ASEANcountriesalsoproduce,andwhatChina e atfly ipre oe to ag a field. a large too over dispersed wastefully be , Zhongguoshengchan dedongxi,Dongmengye ), whichonlyconcentratedonthewestern ). Therefore, the two regions are bound to bound are regions two ). Therefore,the 基本上都是花钱的项目 ). 新丝绸之路 30 Abetter , , xin “drainage” ( Without the investments being made in the projects, the projects, in the made being investments the Without 31 Noteherethat,whiletheSilk Roadprojectsareoutward-

Finally, because the main actors in the projects are projects in the main actors the Finally, because could projects infrastructure From amacroperspective, This centralityofSOEs,however,runs counter toJian Therefore, theoverallROIofprojectisnotprohibitively as the economy. And it offers a new investment opportunity opportunity investment new a offers it And economy. the as available tothem. and goodstransport. and debate. One final comment made by Chen Gong is Gong byChen made comment final One debate. and discussion to open is efficiency economic its but accepted, Overall, theeconomicrelevanceofSilkRoadiscommonly the toavoid and efficiency, investment to sensitivity and the make privateenterprises recommendation to Qingguo’s Chinese state-owned enterprises (SOEs), Xu says that the that says Xu (SOEs), enterprises state-owned Chinese goes againstthegovernment’sdesiretoputthesestimulus- certain. opportunity cost should actually be negative for China. negative be actually should cost opportunity of Chinaismoreacceptableandlesscontentious. over thelasttenyears: basedonpublicactorsand reproduction of China’s unbalanced model of development reproduction ofChina’sunbalancedmodeldevelopment thus easing the pressure on natural and energy resources energy natural and on pressure the easing thus that, in the end, the Silk Road projects are a large-scale large-scale a are projects Road Silk the end, the in that, in the public sector and help to stabilise employment as well in thepublicsectorandhelptostabiliseemploymentaswell is bySOEs), furtherinvestment shouldactuallyreducewaste infrastructure the but into Chinaitself, go would investment infrastructure spending, and excessively supply-based. This infrastructure spending,andexcessivelysupply-based. This significant micro-hazardforChina. have an indirect benefit for China. Only part ofthe part Only China. for benefit indirect an have low. Because of China’s economic structure (dominated as it low. BecauseofChina’seconomicstructure(dominatedasit looking projectswithalargepart oftheirinvestmentdoneabroad, SOEs would in fact not make use of the excess funds excess the of use make not in fact would SOEs far been heavily invested in low return US bonds. far beenheavilyinvestedinlowreturnUSbonds. for China’shugeforeignexchangereserves, whichhaveso built would help link China to its neighbouring countries, neighbouring its linkChinato help would built based growth levers aside – but perhaps using them outside based growthlevers aside–butperhapsusingthemoutside backbone of the project – to leverage their energy, flexibility, they doincludetheupgradingof communication andeconomic infrastructures withinChina. 31 Therefore, developingtheSilkRoadscarries 流失 , liushi ) effectofSOEs. to go global? Are the countries along the routes ready to 4. The geopolitical roadblocks embrace the initiative? How much does China know about the countries involved and about how they will be changed Raffaello Pantucci and Qingzhen Chen by Chinese investment? And is China properly prepared to implement this strategy? Sources: Zhang Yunling, “Analysis says One Belt One Road Faces Internal challenges Five Challenges,” Xiaotang Caizhi, 23 March 2015.32 Zhang Yunling outlines several internal and external Tang Yiru, “Where does the money come from for constraints to the OBOR project. One problem is that the One Belt One Road? Geopolitical risks cannot be results are expected quickly; President Xi Jinping has said ignored,” Guoji Jinrong Bao, 9 February 2015.33 that he wants to see the strategy having an impact this year. Hu Zhiyong, “How to understand the political risks of However, the foundation of the OBOR project is large-scale ‘One Belt One Road’”, Aisixiang, 2 March 2015.34 infrastructure investment, which cannot yield quick and Jia Qingguo, “A number of issues that the OBOR urgently visible returns. Zhang suggests that expectations should needs to clarify and prove,” Aisixiang, 24 March 2015.35 be lowered and that the plans should be given a ten-year Ge Jianxiong, “The History of One Belt One Road is timeframe for success. China also needs to be open about misunderstood,” Financial Times (Chinese version), 10 how the strategy is being developed and about who can be March 2015.36 involved. Although the OBOR is a Chinese initiative, China Pang Zhongying, “One of the resistances to the One Belt must make sure it remains open to everyone along the One Road is from India,” Aisixiang, 4 March 2015.37 routes, including to existing international institutions.

According to Guoji Jinrong Bao, Chinese authorities have tried to stress the openness of the OBOR strategy, Chinese authorities – and authors selected here – describe particularly to private capital. Private funding has already China’s “One Belt, One Road” (一带一路, yidai yilu, started to materialise: for example, the “Maritime Silk hereafter OBOR) strategy as one of the most important Road Investment Fund Management Centre”, a private foreign policy initiatives in the twenty-first century, capital company, is planning to set up a “Maritime Silk and Chinese authors agree. Across the country (and, Road Bank” with $100 billion in assets to invest in projects increasingly, across the world), Chinese universities and in countries, regions, and cities along the routes. Chinese research institutions are conducting projects to explore authorities are pleased about the development, although how the vision might be implemented. Meanwhile, China’s it must be admitted that there is a degree of risk attached leadership is offering economic incentives to help make to this new bank. Because of its size, the new institution the vision a reality, either through bilateral connections or could require public support if it should find itself in through the new constellation of multilateral international financial distress. financial institutions that China is developing.38 However, Chinese comments also reflect that the strategy will have The OBOR has also attracted great interest within China to overcome many challenges. Is Chinese business ready from local and provincial governments. More than 22 provinces in China have said in their government working 32 Zhang Yunling is professor of International Economics at the reports that they want to take part in the initiative. However, Institute for Asia Pacific Studies at CASS and a CPPCC member. Guoji Jinrong Bao points out that the rush to implement 33 Tang Yiru is a journalist at Guoji Jinrong Bao. the OBOR could lead to duplication and wastage. For 34 Hu Zhiyong is a research fellow at the Institute for Interna- example, many international railway projects have sprung tional Relations at the Shanghai Academy of Social Sciences. up to go along with the initiative. But these routes tend 35 Jia Qingguo is a member of the Standing Committee of the CPPCC and dean of the University of international relations at to be expensive and are often underused. In the rush to Beijing University. support the OBOR, a number of provinces have poured 36 Ge Jianxiong is professor of History and Historical Geography subsidies into projects that are not necessarily economically at Fudan University and a CPPCC member. viable. And many local officials have developed plans for 37 Pang Zhongying is professor of International Relations at the cooperation with Central Asian countries that are focused School of International Studies, Renmin University of China in on their own narrow regional interests rather than on Beijing. achieving the larger national strategy. It seems that 38 The most publicised recent bilateral commitment was the $46 China’s provinces and regions are getting caught up in the billion of investments pledged by Xi Jinping’s during his two-day visit to Pakistan in April, which was followed soon after in early excitement around the OBOR, and the rush to join in could May by a visit to Kazakhstan, Russia, and Belarus in which a have damaging repercussions. further $15.7 billion in deals were signed in Belarus alone. New in- ternational financial institutions include the Asian Infrastructure Investment Bank (AIIB), the BRICS’ New Development Bank, the Silk Road Fund, a CIC-backed fund (announced recently, during Li Keqiang’s visit to Brazil), and even, possibly, a SCO Develop- ment Bank. 11 12 June 2015 CHINA ANALYSIS Another challenge, Zhang says, is China’s existing disputes Zhangsays,isChina’sexisting Another challenge, Association ofSoutheastAsianNations(ASEAN)are Among potentialpartnercountries, membersofthe Jia Qingguo says that along the routes to China’s west, to routes the along that says Jia Qingguo United StatesandNATOwithdraw fromAfghanistan, External challenges Hu Zhiyong saysthatthethreatofterrorismrepresents Pakistan to the Middle East, distances to market are long and avoid escalation, and avoid escalation, Sea,an China the South be of manyterritorialissues.Zhangis site area thatisthe will stop first the reality, a another politicalriskalong theOBORroute. Asthe ay Chinese Many iw hn’ am ad taei proe. ay fear Many purposes. strategic and aims China’s view geographical terrain geographical is poor, with many areas onlysparsely efficiency. Operating costs are often high and customs high markets islikely clearance isslow. Theimmaturityofthese areoften costs Operating efficiency. constrain size market limited and development economic dangerous unintendedconsequences. authorities. current against statements make to efforts concerned aboutpolitical commentators arealso create anewregional situation, can controlthe countries arereluctanttocooperateintheinitiative. opportunities for profit. Many of the countries along the the countries of Many profit. for opportunities route have underdeveloped market economies that are that market economies have underdeveloped route of dynamics political internal the influence necessarily risk. Zhang pointsout region in the China anditsneighbours not convincedthat with its neighbours. If the Maritime Silk Road is to become mostThe three externalchallenges. also describes Zhang whether via Central Asia and Russia to Europe or via via CentralAsiaandRussiatoEurope whether which theyareoperating.Inthisway,Chinacouldavoid Zhang saysthatChinaneedstodomoreresearchinto to have a negative impact on the Chinese firms trying to trying firms Chinese the on impact negative a have to the groundinthesecountries, whichdonotnecessarily these countries.OppositionpartieswilluseChinaintheir the impactthatthisgrowthhasonitsneighbours, will stillare OBOR the in involved countries the of most that trading order. dominateto China by attempt veiled a is OBOR the that it isbecomingincreasingly possiblethatthecurrent implement theOBORthroughtheseterritories. it couldhelpthelargeChinesecompaniesinvestingon its neighbours’domesticpoliticalsituations.Bydoingso, in transition. China’seconomicgrowth, togetherwith its neighbouringregions.Thesedoubtsmeanthatmany serious oneisthesuspicionwithwhichothercountries populated. Even in countries with sizeable populations, low understand thepoliticalnuancesofenvironmentsin probably themostconcerned. beset by problems of corruption and of low administrative low of and corruption of problems by beset The mostserious view China'saimsand which other countries strategic purposes. challenge forChina is thesuspicionwith 40 WangYiweiisprofessorofinternational relationsatRenmin Asia, increasinginstabilityalongtheSilkRoadroutesinto Another challengeforChinaandtheinitiativeis 39 The“threeevilforces”areaChineseanalyticalconception Jianxiong says that China rightly does not wanttointerfere does Jianxiong says thatChinarightly For example, China’s water pipe construction project For example,China’s water pipe Further, the EEU might not be willing or even able to or evenable mightnotbe willing EEU Further, the Unsurprisingly, as in most discussions on Chinese foreign on Chinese discussions in most as Unsurprisingly, Kyrgyzstan because of disturbances by angry locals. What locals. angry by disturbances of because Kyrgyzstan Big countries:theUS,Russia,andIndia University, directoroftheInstitute ofInternationalAffairsand Russian-led Eurasian Union (EEU) will divide the relevant the divide will Eurasian Union(EEU) Russian-led extensively ontheOBORproject. TheEEUwasformallylaunched of theResearchCenteronEuropean Union.Hehaspublished are very different: one is a trade and economic corridor and economic atrade is one different: very are in Quoted Chinese companies and their interests, while not interfering while and theirinterests, companies Chinese Chinese commentators also expect resistance from Russia. resistance also expect commentators Chinese government will collapse and the Taliban will return. If thisIf return. will and theTaliban collapse government will can or should China do when countries become politically become countries China dowhen can orshould container truckshadtobeabandonedontheroadsin effort toaddresstheseproblems. could bethemostdestabilisingforceforinitiative–but controlled byMoscow. initiatives two the OBOR. with Hesaysthatthe cooperate China. with Russiaor stronger ties to pursue choosing torn between route, leavingthem along the countries needs tofindawayaddressthiscomplicateddilemma. region. Thiswillhave consequencesforthesmooth was burnt down in Libya in 2003, and in 2014, over 200 over 2014, in and 2003, in Libya in down burnt was issues, butthatthereality with othercountries’domestic with otherpowers.HuZhiyong believesthattheUSwill religious extremism”andaretakentomeanthedriversof most frequentlycitedwithinthecontextofShanghaiCoopera the achievementsofOBOR, through given thatitpasses the countriesalongroutesarenotmakingacoherent the region. The“threeevilforces”( in other countries’ domestic politics. Chinese foreign policy politics. Chinese in othercountries’domestic abroad. business Chinese with are interfering is thatothers initiated by Beijing, while the other is a new economic zone implementation ofthestrategy. the in influence China’s to and Asia Central to pays it such unstable countries, and at the same time protect time same and atthe countries, unstable such happens, it will have a knock-on effect in South and Central have animpactontheOBOR. AsChinaadvancesthe people, or money? Ge asks how China can expect to protect or money?GeaskshowChinacanexpect people, materiel, China tolose or breakcontracts,causing unstable policy. Ge policy, theauthorsbringupnon-interference project, the US will be forced to increase the attentionthe increase to forced be will US the project, to emerge tensions geopolitical or conflicts for potential terrorist groupsthatmostconcern Chinesepolicymakers. tion Organization(SCO).Theyare“terrorism,separatism,and in January2015. Guoji Jinrong Bao Guoji , Wang Yiwei expects that the expects , WangYiwei 39

三股势力 , sangu shili 40 - )

Hu Zhiyong agrees: the unbalanced trade relations between the Silk Road developed organically to meet foreign demand China and Russia, he thinks, will engender resentment for Chinese silk. Now, the situation is different. This time, between the two powers, as well as in the regional countries the motivation for building the OBOR comes from China stuck between the two. Russia will be concerned about the itself – it has neither the cooperation of nor the demand fact that the OBOR initiative covers areas within Russia’s from other countries. Ge thinks it is impossible – or at least traditional sphere of interest. He adds that Russia has an dangerous – to build such a huge project with a supply- ambiguous attitude to China's territorial disputes with based approach, or without a clearer sense of demand from other countries. Moreover, its own historical, territorial, partner countries. More research needs to be done on the military, and ideological disputes with China will create needs of partner countries. barriers to the OBOR. China’s academic community believes that the OBOR India may also challenge China’s OBOR. The article in Guoji faces numerous challenges. Internally, there is too great Jinrong Bao says that India remains cautious on the project a focus on quick results, which could lead to wastage. and still has not expressed its full support. Pang Zhongying Externally, the OBOR faces political risks, the “three evil contends that India will be a challenge to China’s OBOR. forces”, and challenges from big states which are either India sees the initiative not as an opportunity, but as a concerned about the project or have interests that conflict threat or a form of competition. Modi’s administration has with it. Smaller powers are equally concerned, although even come up with a counter proposal to the Maritime Silk they express this disquiet differently. Chinese scholars Road: the so-called Project Mausam.41 India’s position at clearly reflect the Chinese authorities’ view that the OBOR the moment is to indulge China’s OBOR – in other words, is a highly significant foreign policy idea that has moved to let it proceed while trying to gain a better understanding beyond rhetoric. However, they find that its articulation of it. But China has undertaken little research into the is still unclear and that in its current conception, it faces Mausam initiative, and right now seems reluctant to engage numerous problems. Developing greater clarity will clearly with it at all. be a driver of academic thinking for the near-term future.

Conceptualisation and insufficient research

Jia Qingguo says China urgently needs to come to an understanding of the true meaning of the OBOR. There are many different interpretations of the project. Some see it as an opening up through China’s western or southern regions. Others see it as an attempt to reach out to developing countries. And some see the project not so much as a new mechanism, but as a new strategic ideological concept and initiative aimed at launching a new development era. Commentators and stakeholders also disagree on what the OBOR should try to achieve. Some say it is mainly a form of economic cooperation, while others think it should go beyond that and aim to increase cultural exchange. Jia argues that this lack of understanding is a real problem for the development of the initiative. He calls for further research to ensure that the OBOR will generate tangible benefits for China and its partner countries along the routes.

Ge Jianxiong says that most people do not know the proper history of the Silk Road, and moreover, just because the Silk Road worked in the past, that does not mean that it would necessarily work today. He thinks that there is a misconception that China built the Silk Road. But in fact,

41 “Project Mausam” is an initiative announced by Indian President Modi to increase India’s links with countries impacted by the Maritime Silk Road. Characterised in the Indian press as a “transnational initiative meant to revive [India’s] ancient maritime routes and cultural linkages with countries in the region”, the project is seen as a direct response to China’s OBOR. See Sachin Parashar, “Narendra Modi’s ‘Mausam’ manoeuvre to check China’s maritime might”, The Times of India, 16 September 2014, available at: http://timesofindia.indiatimes.com/india/Narendra- Modis-Mausam-manoeuvre-to-check-Chinas-maritime-might/ articleshow/42562085.cms. 13 14 June 2015 CHINA ANALYSIS 47 Including37countriesfromAsia, 20fromoutsideofAsia, 46 WangJunisleadfinancialsector specialist,EastAsiaand 45 MengXiaokeisajournalistfor 44 ShuiShangnanisaguestprofessoratSouthernChinaAgricul 43 SheJianguangisCEOandchiefeconomistatMizuhoSecuri 42 CaiTingyi,WangYanchun,andJinYanarealljournalistsfor

Asia – which even China did not expect – has made it a – hasmade not expect even Chinadid Asia –which Road Silk China’s to support financial provide to and Asia Yan, say that the early success of the project was helped project of the early success Yan, say thatthe Caijing Investment Bank (AIIB) was first raised. Eighteen months Eighteen raised. first was (AIIB) Bank Investment tour Keqiang’s Li and Jinping Xi during 2013, October In Caijing Pacific Region,attheWorldBank. Paris. be well $100 of billionmight objective capital legal and the The reasonsforChina’ssuccess the did Cai Tingyi,WangYanchun,andJinYansay.How diplomatic victory” ( diplomatic ( excitement” and fouroftheG7countries.For a listof“prospectivefounding of South East Asia, the idea of anAsianInfrastructure idea Asia, the East of South represent forChina?Andwhatchallengeslieahead? The mainaimof more quicklythanexpected. much reached responsible formanyUnitedNationseconomicdevelopment members”, seetheAIIBwebsite’s “Members”section,availableat: ment, andmarketpoliciesforUNDPhasparticipatedorbeen truly international project. Many even see it as a clear “first in infrastructure of construction the promote bankto is the bank. the http://aiibank.org/members.html project gather such support? How much of a victory does it project gathersuchsupport?Howmuchofavictorydoes projects. Buttheinterestshownbycountriesfromoutside later, 57 countries have expressed interest in joining interest have expressed countries later, 57 projects inAfrica,Asia,LatinAmerica,andChina. by the professionalism, openness,andhighstandards by the ture University.Hehasbeendoingresearchontrade,develop ties Asia. – ChinaYouthDaily Agatha Kratz Wang Jun, “How can the AIIB still succeed?”, AIIBstill can the Wang Jun,“How 5. China’sAIIB:Atriumphinpublicdiplomacy Zhoukan –CaixinWeekly eg ioe “h hv Erpa pwr embraced powers European have “Why Xiaoke, Meng Cai Tingyi, for Wang Yanchun,andJin Yan, “Outlook the AIIB one after another?”, after AIIB one the the AIIB”, paradigm”, Shui Shangnan, “IftheAIIB on mutual only focuses She Jianguang, “Trying out a new international financing benefit, it won’t succeed”, Sources: . ’s journalists,CaiTingyi, Wang Yanchun,andJin 47 She Jianguang says there is “extraordinary SheJianguangsaysthere Caijing Caijing 热闹非凡 , 7April2015. 外交初捷 , 7April2015. , 25March2015. , renao feifan Gongshi Wang , 6April2015. , . waijiao chu jie waijiao China YouthDaily Zhongguo Qingnian Bao Zhongguo Qingnian 42 43

) aroundtheproject, 45

46 , 13 April 2015. , 13April

) forChina, as , basedin Caixin - 44 -

- 49 NumberspresentedbyZhuMinin:YangLaninterviewsLin 48 ThisexpressionisactuallyfromCaiTingyi,WangYanchun, Asia needs $8.2 trillion in infrastructure financing from financing infrastructure in trillion $8.2 needs Asia April 2015. April 2015. 慢 2010 to2020. TheWorldBank(WB)andtheADBcannot Yifu andZhuMin,“TheAIIB’smanyvictories”, ( 51 SheJianguangexplainsthatthe Republican-ledUSCongress, 50 IMFfigurefor2015,basedon USgrossdomesticproduct To remedy this distortion, the reform of IMF voting rights voting IMF of reform the distortion, this remedy To opposed toreform,hasbeendelaying theprocess. are obsolete. The Bretton Woodsinstitutions,forexample, The are obsolete. and foreignexchangereserves intolong-termstrategic an AsianDevelopmentBank(ADB)reportsayingthat and unsuited to the current global situation. Theemerging current global to the and unsuited since countries developed the of weakening relative and the of 70 percent GDP andheld ofglobal almost 50percent eg ioe as ht xsig eeomn institutions development existing that says Xiaoke Meng a fill to created was AIIB the say, they importantly, More veto power, even though it represents “only” 17 percent 17 “only” represents it though even power, veto countries wouldwanttocontribute.Led byChina, the process The phases. initiative’s preparatory in the deployed onre – is aog hm hn – have“speaking – China them among first – countries and JinYan’sarticle,butsumsupquiteclearlySheJianguang tan Lu–YangLan’sinterviewrecords real need in terms of infrastructure financing. They cite They financing. infrastructure of terms in need real restructure the current international financial order. Thus, order. financial international current the restructure reform. not reflect their economic weight, and the US still possesses ( rights” has balance global the However, dominance. US reflected were set up 70 years ago, when the United States produced States United the 70 yearsago,when up set were consultations was transparentandseveralhigh-level was launchedin2010, but theprocessremains extremely multilateral organisationexperts. to help fill the gap. This makes it only natural that many that natural only it makes This gap. the fill help to banks and involving development took place existing the 2008 crisis. Traditional institutions are now outdated now are institutions Traditional crisis. 2008 the the world’sgoldreserves. institution: “a multilateral development bank for anewage” development institution: “amultilateral is “careless” ( “careless” is success was also a product of the very nature of the of very nature the of a product also was success supply thismuch,sotheAIIBrepresentsausefulplatform slow, mainly due to US reluctance to carry through slow, mainlyduetoUSreluctance pan-Asian investments. project willaimtoachieve whatAsiancountrieshaveso percent ofworldGDP. 16 and Fund Monetary International the in participation She Jianguang and Shui Shangnan say that the bank’s the that Shangnan say Shui and Jianguang She far been unable to do: to channel Asia’s impressivesavingschannel do: to unable to far been Shui Shangnan’sviewsontheissue. based onpurchasing-power-parity (PPP),IMFWEODatabase by creatingtheAIIB, on theWest pressure China isputting markets emerging of rise the by altered dramatically been 新时代多边开发银行 , aoman 51 话语权 The ), and that the US is dismissive of the need to need US isdismissiveofthe ), andthatthe 漫不经心 Caijing , huayuquan , journalists say that the US’s attitude the journalistssaythat 50 xin shidaiduobiankaifa yinhang ,

manbujingxin 49 So, of course these institutions So, of coursethese ) in these institutions that do that institutions ) inthese , transcribedin ) and“arrogant”( Yang LanFang Caijing , 7 ). - 傲 48

to further the reform of the existing institutions as well as The Caijing journalists say that this “European diplomatic offering developing countries an alternative: a multilateral turnaround” (欧洲外交逆转, Ouzhou waijiao nizhuan) cooperative banking organisation led by emerging powers. represents an “undeniable and severe defeat” (不能不算是 This is one of the main reasons that international public 严重挫败, bunengbu xuanshi yanzhong cuobai) for the US, opinion was strongly in favour of China’s initiative. Besides, which had put pressure on its allies not to join the bank. the journalists add, the AIIB’s success even among US allies However, although the UK’s move surprised some, it came shows the growing “antipathy” (反感, fangan) towards US as no surprise to China. Indeed, the journalists say, the UK hegemony, along with the “enthusiastic expectations” ( and China had been in touch regarding the bank since the 热烈期待, relie qidai) for the internationalisation of the summer of 2014, following discussions with Li Keqiang renminbi.52 She Jianguang notes that, in the past, most calls during his visit to the UK in June. So, China had in fact for renminbi internationalisation came from inside China. always been optimistic that the UK would join. Germany But now, international support for internationalisation is had also pushed for a growing, as more and more countries become tired of the common understanding 美元的困境 The bank's success “dollar predicament” ( , meiyuan de kunjing). was also a product on the AIIB during G7 of the very nature meetings, but the US Shui Shangnan says that the AIIB is the subject of global of the institution: "a and Japan had rejected interest because it represents a new type of institution multilateral develop- its calls. Therefore, whose objective is not, unlike that of the WB, to promote Germany, France, and 53 ment bank for a new liberal Western values. As an institution led by emerging age". Italy decided to join on countries, the AIIB aims to respond directly to their their own. According to needs – which means, among other things, lower or looser Caijing, in this instance conditions for financial support. as in that of off-shore renminbi agreements, European countries “fought to be the first and feared to be the last” ( The EU “turncoats” 争先恐后, zhengxiankonghou).

The reasons of Asian and emerging countries for joining Meng says that the European countries’ decision to join the the AIIB are quite straightforward. However, Meng tries bank is not irrational. Europe has experienced economic to understand why European powers have embraced difficulties over the past few years, and it is looking to the AIIB – the countries that She Jianguang refers to benefit from Asia’s impressive growth. Besides, in spite of as “turncoats” (倒戈, daoge). The AIIB project had only its own depressed economic environment, European Union gathered 21 countries (including China) by the time member states have plenty of funds available for investment, the first “memorandum” was signed on 24 October and they are looking for more profitable opportunities than 2014.54 But the “unexpected” (出人意料, churenyiliao) those available in Europe. Finally, She Jianguang explains, declaration by Britain’s Chancellor George Osborne on France and Germany especially could easily lever their 12 March 2015 that the United Kingdom wished to join companies’ significant experience, impressive technologies, the bank as a founding member provoked an “avalanche- and operational knowledge in the context of infrastructure like wave of additions” (雪崩式的加入潮, xuebeng shi de building in Asia, and thus reap the benefits of the planned jiaru chao), including Germany, France, Italy, and later infrastructure projects. Therefore, She writes that investing on, Luxembourg, Denmark, and Switzerland.55 “In one in the AIIB is “profitable” (有利可图, youliketu) and “in night” (一夜之间, yiyezhijian), the Caijing journalists say, line with the countries’ national interests” (符合其国家利益, the AIIB project evolved from a mostly Asian initiative to fuhe qi guojia liyi). Meng also points out that, since China’s a full-on global, multilateral institution. influence in the world is growing fast, EU countries see the AIIB as an opportunity to deepen their relations with China.

Meng goes further, stating almost wishfully that EU 52 Caijing’s journalists cite EU countries’ “fight” (争夺, zheng- countries are also beginning to realise that a US-led duo) over offshore renminbi agreements as a proof of this trend. international order might no longer be in their favour. He 53 Shui Shangnan mentions the example of structural adjust- says that the EU started to lose confidence in the US during ment programmes, which were a condition imposed by the WB the 2008 crisis, when the US showed only limited support and IMF for financial support to economically distressed develop- ing countries. He also notes the example of Burma, which has only for the EU – it did not buy EU bonds, it downgraded EU been able to benefit from IMF and WB support since its demo- countries (via US rating agencies), and later on it made cratic transition. According to the author, this shows that the IMF intensive use of quantitative easing despite the fact that it and WB are mostly looking to impose their liberal Western values, hurt EU interests. Therefore, just like emerging countries, rather than to support development and prosperity. the EU might be growing more interested in building a 54 “Memorandum on setting up the AIIB”, 筹建亚投行的倡议, choujian yatouhang de changyi. space for itself outside US influence, and in looking to 55 An expression used in Wang Ling, Zhang Yuzhe, Wang Liwei, increase its “speaking rights” in the international order. Li Qing, Chen Lixiong (in Singapore), Zhang Yuanan (Washing- ton), “How can the AIIB succeed?”, Caixin Zhoukan – Caixin Weekly, 24 April 2015. 15 16 June 2015 CHINA ANALYSIS “way too optimistic” ( too optimistic” “way “inner” ( Wang says that the first difficulty will come from the fact that Caijing 57 Hereagain,foundingmembersmeetinginSingaporehavean 56 Inapublicaddresson25March,Vice-MinisterofFinance The CaijingjournalistssaythatChina’stothis response The AIIB has alongroadahead,andChina, as theleading Its ability to do so will prove extremely useful now that the that now useful extremely prove will so do to ability Its development bank”, countries wouldmostprobablyownbetween72to75percentof of votingrightsandnon-Asiancountries40percent.Formore Du Dawei, a former representative of China at the WB, China atthe of Dawei, aformerrepresentative Du China MorningPost One of the most contentious issues will be veto power.The be will issues most contentious One ofthe Many consider the AIIB’s first steps to have been a victory, a been have to steps first AIIB’s the consider Many oig s eesr fr motn dcsos a qualified a decisions, important for necessary is voting ground despitedifferences”( (between 10and15percent).For more information,see“Chinato to gainthe up team could same interests the with countries participants power, have veto China should if that explains will havetobereachedonanumberofissues, decisions common “find to have will China Therefore, expectations. country intheproject,willfacegreatestchallenges. article/1806870/china-take-30-cent-stake-aiib available at: other, in terms of development, values, faiths,andoverall other, intermsofdevelopment, Challenges aheadfortheAIIB scmp.com/news/china/policies-politics/article/1806870/china- similar tothatoftheADB,whereAsiancountrieshold60percent real negotiation phase has officially started. Wang says that whenever possible, especially for strategic decisions. When decisions. for strategic especially possible, whenever and Japanarenot US the However, because decline. will majority might be required. And if a vote should be required, be should a vote required. Andif be majority might interests. own its bank for the use China will that fear might participation of bank, China’s share join the more countries a regional along weight, on economic depend probably most nounced thatChinawouldprobablytakea25-30percentstakein the governance structure of the AIIB is still unclear, and still AIIB is the of governance structure the each from different very are members founding AIIB’s the split. and shares, votingrights,investment participation as such power ofvetotogether. participating, Chinamightretaindefactovetopower. proportional toparticipationinthebank. And asmoreand loan procedures,andsoon. frequent objection is that the bank will aim to use consensus bank aimtouse will is thatthe frequent objection founding membersinSingapore,itwasannouncedthatAsian from outsideofAsia)countries.Atarecentmeetingbetween Shi YaobinsaidthatAIIBmemberswouldbedividedbetween but Wang Jun thinks that to declare victory now would be victory nowwould Wang Junthinksthattodeclare but take-30-cent-stake-aiib take 'upto30percentstake'inAIIB developmentbank”, the Bank,withIndialikelybeing the second-largestshareholder the bank.Assuch,AIIBvotingrightstructurewouldbequite information, see:“Chinatotake'up30percentstake'inAIIB 56 The journalists say that veto rights should be Thejournalistssaythatvetorightsshould 域内 journalists note that participation in the bank will journalistsnotethatparticipationinthe , http://www.scmp.com/news/china/policies-politics/ yunei , i.e.Asian)and“outer”( , 22May2015,availableat: South ChinaMorningPost 未免过于乐观 . 求同存异 , weimian guoyu leguan weimian , 域外 qiutongcunyi . , 22May2015, http://www. , yuwai , i.e. South ). 57

). - 望 Wang concludes that these difficulties are much greater much are difficulties these that concludes Wang Wang Jun sees one final obstacle: “talent” ( 的（多边机构中）仍有否决权，是落后的

qiandaizi de daxiao qiandaizi (duobian jigou zhong) (duobian jigou rengyou foujuequan, shi luohou de Du notes that “still having a veto power mechanism ina having avetopower that “still Du notes a long way to go to prove that it can successfully lead a a longwaytogoprovethatitcansuccessfully aus kolde eprec, n eprie i hs built has it expertise; and experience, knowledge, values, China has benefited from the growing “disappointment” ( can speak fluent English and understand international understand and English fluent speak can capabilities. Similarly, China mustconcentrateskillswithin on “the size of the money bag” ( bag” money the of size “the on regulations, withasoundtrainingineconomics,highmoral multilateral organisation is quitebackwards”( multilateral financinginstitution. traditional institutions.WangJunagrees.Hesaysthat the AIIB. China will needtogatherapoolofmanagerswho and know-how concentrated with an institution WB is the the samemistakes. the recent wave of participants as a first victory, China has China victory, first a as participants of wave recent the many see if Even anticipated. originally had Chinese than its influence on these attributes. Its influence relies not just standing, leadership skills, and a global vision. skills, andaglobal Thismight standing, leadership of theWB says thatthesuccess comes fromitsgovernance, be quiteachallenge. , ), especially since China is trying to break free from since Chinaistryingtobreakfree ), especially shiwang ) withtheWB, avoid repeating and soitshould ), but on its people. In termsoftalent, on itspeople. ), but 並非錢袋子的大小 , 人才 zai dangjin de , rencai , bingfei 在当今 ). He 失

About the authors About Asia Centre

Antoine Bondaz is a PhD candidate in Political Sciences Asia Centre, founded in August 2005, conducts research and International Relations in Sciences Po Paris, his and organizes debate on international relations and research focus is China’s strategic thinking and security strategic issues, as well as on the political and economic issues in the Asia-Pacific region, he can be reached at transformations in the Asia-Pacific; promotes cooperation [email protected]. and second track dialogue with partners in Asia, Europe and the world; publishes timely information and analysis David Cohen is the former editor of the Jamestown from the region, executive briefs and reports from our Foundation's China Brief, currently studying at Stanford. He research team. can be reached at [email protected]. Asia Centre programmes cover the prevention of conflicts François Godement is an associate researcher at Asia and regional integration, the challenges of democracy and Centre, a senior policy fellow and head of the China & Asia governance, globalisation and national strategies, energy, programme at the European Council on Foreign Relations, proliferation and sustainable development. They also draw he can be reached at [email protected]. contributions and viewpoints from research associates and a network of research institutions. Agatha Kratz is the chief editor of China Analysis, and an Associate Policy Fellow at the European Council on Foreign www.centreasia.eu Relation’s Asia & China Programme. She can be reached at [email protected].

Raffaello Pantucci is Director of International Security Studies at the Royal United Services Institute (RUSI). His work on China focuses on China’s relations across its western borders and he is the editor of www.chinaincentralasia.com. He can be contacted at [email protected].

ECFR would like to thank Justine Doody for her help in preparing the text for publication.

This publication is edited in collaboration with Asia Centre.

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