Études de l’Ifri CHINA’S BELT & ROAD AND THE WORLD: COMPETING FORMS OF GLOBALIZATION Alice EKMAN (ed), Françoise NICOLAS, Céline PAJON, John SEAMAN, Isabelle SAINT-MÉZARD, Sophie BOISSEAU DU ROCHER, Tatiana KASTOUÉVA-JEAN April 2019 Center for Asian Studies The Institut français des relations internationales (Ifri) is a research center and a forum for debate on major international political and economic issues. Headed by Thierry de Montbrial since its founding in 1979, Ifri is a non- governmental, non-profit organization. As an independent think tank, Ifri sets its own research agenda, publishing its findings regularly for a global audience. Taking an interdisciplinary approach, Ifri brings together political and economic decision-makers, researchers and internationally renowned experts to animate its debate and research activities. The opinions expressed in this text are the responsibility of the authors alone. “China’s Belt & Road and the World” research project, conducted by the Center for Asian Studies, Ifri, has benefited from the generous support of the Conseil supérieur de la formation et de la recherche stratégiques (CSFRS). This report has been translated and updated from a report published in French in October 2018 (“La France face aux nouvelles routes de la soie chinoises”). ISBN: 979-10-373-0028-7 © All rights reserved, Ifri, 2019 © Cover: Wikipedia Commons How to cite this publication : A. Ekman (ed.), “China’s Belt & Road and the World: Competing Forms of Globalization”, Études de l’Ifri, Ifri, April 2019. Ifri 27 rue de la Procession 75740 Paris Cedex 15 – FRANCE Tel.: +33 (0)1 40 61 60 00 – Fax : +33 (0)1 40 61 60 60 Email: [email protected] Website: Ifri.org Authors This report was planned and coordinated by Alice Ekman, Head of China Research at Ifri's Center for Asian Studies and a specialist in China’s foreign policy. Françoise Nicolas, Director of Ifri’s Center for Asian Studies and a specialist in economic integration in Asia, contributed to the entire report and in particular analyzed the financing of B&R. Françoise Nicolas also analyzed the positions of countries in Southeast Asia with Sophie Boisseau du Rocher, an Associate Research Fellow at Ifri’s Center for Asian Studies and a specialist in the region. John Seaman, a Research Fellow at Ifri’s Center for Asian Studies, contributed to the entire report and in particular analyzed China’s policy on standardization, as well as the position of the United States relative to B&R. Céline Pajon, a Research Fellow at Ifri’s Center for Asian Studies and Head of Japan Research, contributed to the entire report and in particular analyzed Japan’s positioning. Isabelle Saint-Mézard, an Associate Research Fellow at Ifri’s Center for Asian Studies and a specialist in South Asia, analyzed India’s positioning. Tatiana Kastouéva-Jean, Head of Ifri’s Russia-NIS Center, analyzed Russia’s positioning. The authors would particularly like to thank Angélique Tang-King- Yuk, Olympe Mattei d’Ornano and Flore Szekely for their participation and excellent work in supporting the research and preparation of several brainstorming sessions. We would also like to thank Daphné Bertin, Editorial Assistant at Ifri for her valuable layout work, Azra Isakovic, Ifri librarian, for her precious support throughout the research process, and David Quin for his professional proof reading work. All members of the team have contributed – through their expertise and knowledge of their field, as well as their valuable questions, concerns and counter-arguments – to maintaining continuous and stimulating brainstorming throughout the research project. Executive Summary B&R: a systemic project - B&R (China’s “Belt & Road Initiative”) is an unusual project in its methodology: it is constantly evolving. - Geographical and sectoral expansion of the project has been observed since its launch six years ago. - Geographical expansion: the Chinese project far exceeds the scope of Eurasia. It also encompasses Africa, Latin America, the South Pacific and the Arctic, among other areas. Today, all countries are potentially part of B&R. - Sectoral expansion: the Chinese project goes well beyond the infrastructure sector. It also encompasses the digital, space, culture, tourism, customs, police and legal sectors, among others. Today, all sectors are potentially part of B&R. - For China, B&R is a way to internationalize its national priorities. B&R increasingly appears as a vector for promoting the objectives referred to in the wide variety of Chinese planning documents. - In this context, B&R’s objectives are particularly ambitious and numerous, and it now appears more like a strategic plan than an “initiative”. - There has been an expansion in the non-material dimension of the Chinese project, particularly in recent years. In addition to physical infrastructure (roads, railways, ports, airports, submarine cables and other infrastructure), China is promoting non-material cooperation via B&R (norms & standards, logistics, data, e- commerce, etc.). - By developing new infrastructure and standards, B&R is also a means to eventually limit China’s dependence on some foreign infrastructure and standards (primarily US) and enable China to better manage a wide variety of international flows (of goods, data, people, money, etc). China’s Belt & Road and the World A. Ekman (ed.) - China also sees its project as a platform for facilitating international interactions (multilateral as well as bilateral) and more generally as a tool for restructuring global governance. B&R would progressively shape a new global architecture and a new form of interaction between states. - China increasingly sees its project as a vector for promoting a new form of globalization. Looking to the future: competing forms of globalization - In this context, it is possible to anticipate the emergence of two rival poles, one led by the United States and the other by China, each one with their own infrastructure networks (road, air, maritime, space and communication – including submarine cables). - The prospective analysis developed in this report considers the distinct possibility for the emergence of two systems for managing transportation and exchanges. Two systems of standards and two systems of international and regional institutions would also coexist. - The emergence of two separate poles, which would coexist without integrating, is possible if the United States and China were less economically interdependent than they are today. It is possible in the new context of a potentially protracted trade war –anticipating that China will reduce its economic presence in the United States (scarred by the case of Huawei and others, symbols of its current vulnerability to US economic sanctions) and vice versa – that each country will seek to reduce its vulnerability to the other, to progressively undertake economic “decoupling”. - Hence, the polarization of international relations would create a new form of competition between infrastructure networks, standards, international institutions,… i.e. competition between two forms of globalization – one US-led, one China-led. - Other countries, if not able to develop their own offer, would have the choice of these two major competing offers, guided by their political preferences, geographical proximity and economic vulnerability to one or other of the two countries. 6 China’s Belt & Road and the World A. Ekman (ed.) - Each of the two poles would have its own network of “friendly countries”. With the continued tensions between the US and China, the two networks would become more identifiable than they are today: the United States and its allies on the one hand, China and its friends on the other. - Countries friendly to China, recognizable as formally declared “Belt & Road member” countries (after signing Memorandums of Understanding and other agreements), would have privileged access to infrastructure and services managed by China – from the BeiDou satellite to the 5G networks or submarine cables developed by Huawei, for instance. - Friends of China will also be more easily identified as they are more clearly aligned with Beijing’s position on various issues (on the South China Sea, Taiwan or Human Rights, for instance, or at the United Nations and other international organizations), more frequently participating in forums and summits organized by China and more frequently using official Chinese expressions (such as “Belt & Road Initiative”, “Community of Common Destiny”, “New Type of International Relations”, etc.) - Although this polarization is reminiscent of the Cold War, a direct confrontation between two distinct “blocks” is unlikely. Given China’s desire to develop a flexible network of friendly countries, which may include an increasing number of countries that are allies of the United States, the boundaries between the two poles are likely to be blurred and constantly evolving. - The United States and China would swing between tolerated coexistence in some areas and more direct confrontation in areas that either considers to be of strategic interest (Taiwan Strait, South China Sea, among others). - This scenario is more likely if B&R develops with some success in the coming years. - Although it is unlikely that the Chinese government would abandon the project, a slowdown is possible given the higher cost of investing in major infrastructure projects, the low return on investment, the failure of some projects for economic and/or security reasons, and the possible further slowing of Chinese economic growth.