Exporting the Chinese Dream to Al Khaleej

Home , 2017 in Saudi Arabia, Quest Arabiya

Exporting the Chinese Dream to Al Khaleej: An Examination of the Belt and Road Initiative and the Asian Infrastructure Investment Bank as China’s Emergent Hegemonic Project in the Gulf

A thesis submitted to The University of Manchester for the degree of Doctor of Philosophy in the Faculty of Humanities

2018

Muhammad Zulfikar Rakhmat School of Social Sciences, Faculty of Humanities

Table of Contents

Table of Contents 2 List of Figures 5 List of Appendix 5 List of Abbreviations 6 Abstract 9 Declaration 10 Copyright Statement 11 Acknowledgements 12 Technical Notes 14 The Author 14 Chapter One 16 Introduction 16 1.1 The Scope of the Thesis 16 1.2 What are the BRI and the AIIB? 18 1.3 Why the Gulf? 24 1.4 Aims and Objectives 27 1.5 Research Questions 28 1.6 Contributions 28 1.7 Methodology 29 1.8 Chapter Structure 34 Chapter Two 38 A Regional Historical Bloc: A Neo-Gramscian Perspective on the BRI and the AIIB in the Gulf 38 2.1 Introduction 38 2.2 Orthodox Approaches to the BRI and the AIIB 39 2.3 An Alternative Neo-Gramscian Perspective 49 2.4 A Regional Historical Bloc: A Neo-Gramscian Perspective on the BRI and the AIIB in the Gulf 60 2.5 Conclusion 68 Chapter Three 70 Historicising the Emergence of the BRI and the AIIB in the Gulf 70

3.1 Introduction 70 3.2 Globalisation and Its Impact on China 71 3.3 The Gulf’s Integration with Global Economy 77 3.4 When China and the Gulf Met 80 3.5 The Emergence of the BRI and the AIIB as an Emergent Hegemonic Project 89 3.6 Conclusion 96 Chapter Four 99 The Material Implementation of Chinese Emergent Hegemonic Project in the Gulf: From Energy to Finance 99 4.1 Introduction 99 4.2 The Emergence of the BRI and the AIIB in the Gulf 100 4.3 Securing Energy Resources 103 4.4 Directing Chinese Capital in Non-Energy Infrastructure Sector 109 4.5 Further Internationalising Chinese Finance 117 4.6 Conclusion 124 Chapter Five 127 The Ideological Struggle of the Chinese Emergent Hegemonic Project in the Gulf: Creating the Common Sense of the BRI and the AIIB 127 5.1 Introduction 127 5.2 The Ideational Component: Articulating a Common Sense of the Chinese Dream 128 5.3 The Structural Component: The Organic Intellectuals behind the Ideological Struggle 133 5.3.1 State Elites 134 5.3.2 Mainstream Media 137 5.3.3 Academics and Educational Institutions 140 5.3.4 Cultural Exchanges 147 5.4 Knowing Little about China: The Limits of the Ideological Struggle 150 5.5 Conclusion 155 Chapter Six 158 The Institutional Frameworks of the Chinese Emergent Hegemonic Project in the Gulf: Co-opting the Regional State-Society Complexes 158 6.1 Introduction 158 6.2 Co-opting in the Policy-Making Process 159

6.3 Co-opting through Material Incentives 164 6.3.1 Focusing on Giving Infrastructure Loans to Developing Countries 164 6.3.2 The Doctrine of Non-Conditionality 166 6.4 The Limits of the Institutional Elements of the BRI and the AIIB 169 6.5 Conclusion 173 Chapter Seven 177 Conclusion 177 7.1 Revisiting the Research Questions 177 7.2 The Wider Implications 186 7.3 Contributions and Further Research 188 Bibliography 192 Primary and Secondary Sources 192 Appendix A: List of Interviews 252

Word count: 78,889

List of Figures

Figure 1-1 Map of the Belt and Road Initiative

List of Appendix

Appendix 1 List of Interviews

List of Abbreviations

ABC Agricultural Bank of China ADB Asian Development Bank ADFD Abu Dhabi Fund for Development ADGM Abu Dhabi Global Market ADIA Abu Dhabi Investment Authority ADIB Abu Dhabi Islamic Bank ADNOC Abu Dhabi National Oil Company AIIB Asian Infrastructure Investment Bank AOA Articles of Agreement ASEAN Association of South East Asian Nations BOC Bank of China BRI Belt and Road Initiative CASCF China-Arab States Cooperation Forum CBRC China Banking Regulatory Commission CCB China Construction Bank CCCPC Central Committee of the Communist Party of China CCG Centre for China and Globalisation CCP Chinese Communist Party CCTV China Central Television CEPCC China Electric Power Construction Corporation CIC China Investment Corporation CNOOC China National Offshore Oil Corporation CNNC China National Nuclear Corporation CNPC China National Petroleum Corporation COPHC China Overseas Port Holding Company COSCO China Ocean Shipping Company CSC China Scholarship Council CSCEC China State Construction Engineering Corporation CSEI Cross-Strait Economic Integration CSIS Center for Strategic and International Studies DCCC Dubai Commodities Clearing Corporation DEWA Dubai Electricity and Water Authority DGCX Dubai Gold and Commodities Exchange DIFC Dubai International Financial Center EBRD European Bank for Reconstruction and Development FANR Federal Authority for Nuclear Regulation FDI Foreign Direct Investments

FMPRC Ministry of Foreign Affairs of the People’s Republic of China FTA Free Trade Agreements GATT General Agreements of Tariffs and Trade GCC Gulf Cooperation Council GDP Gross Domestic Product HKMA Hong Kong Monetary Authority ICBC Industrial and Commercial Bank of China IDB Islamic Development Bank IEA International Energy Agency IFSB Islamic Financial Services Board IISS Institute of International and Strategic Studies IMF International Monetary Fund IPE International Political Economy IPOs Initial Public Offerings IR International Relations JLL Jones Lang LaSalle JOCIC Jiangsu Provincial Overseas Corporation and Investment Company KCIC Kuwait-China Investment Company KIA Kuwait Investment Authority KSA Kingdom of Saudi Arabia LNG Liquid Natural Gas M&A Mergers and Acquisition MOFCOM Ministry of Commerce MOUs Memorandum of Understandings MTO Methanol-to-Olefins NBAD National Bank of Abu Dhabi (NBAD) NDRC National Development Reform Commission NOCs National Oil Companies Norinco China North Industries Group Corp NNSA National Nuclear Safety Administration NSF National Security Fund OBOR One Belt, One Road ODI Outward Direct Investments OFDI Outward Foreign Direct Investments OIC Organisation of Islamic Countries PBoC People’s Bank of China PFM Prospective Founding Member PKU Peking University PLAN People’s Liberation Army Navy QCB Qatar Central Bank

QFII Qualified Foreign Institutional Investor QIIB Qatar International Islamic Bank QNB Qatar National Bank QU Qatar University RFQI RMB Qualified Foreign Institutional Investor RMB Renminbi SABIC Sinopec and Saudi Basic Industries Corporation SACEUR NATO Supreme Allied Commander Europe SAFE State Administration of Foreign Exchange SASAC State-Owned Assets Supervision and Administration Commission of the State Council SDR Special Drawing Rights SEZs Special Economic Zones SEZAD Special Economic Zone Authority at Duqm SHU Shanghai University Sinopec China Petroleum and Chemical Corporation SLOC Sea Lanes of Communication SMEs State Medium Enterprises SOEs State-Owned Enterprises SQU Sultan Qaboos University SWF Sovereign Wealth Fund TII Translation and Interpreting Institute TNCs Trans National Companies UAE United Arab Emirates UN United Nations US United States WFOE Wholly Foreign Owned Enterprise WTO World Trade Organisation YASREF Yanbu Aramco Sinopec Refining Company

Abstract The University of Manchester, Doctor of Philosophy Muhammad Zulfikar Rakhmat (30 September 2018)

This thesis is a neo-Gramscian examination of the Belt and Road Initiative (BRI) and the Asian Infrastructure Investment Bank (AIIB) in the Gulf. Specifically, it investigates why China is implementing the BRI and the AIIB in the region, and why the Gulf state- society complexes are supporting and participating in the initiative. The thesis starts by identifying the existing theoretical approaches employed to analyse the initiative and argues that they primarily suffer from limitations in answering the research questions of this thesis, as they are unable to historicise the initiative, to investigate the influence of domestic dynamics that formed part of the project, to identify the roles of non-state actors, and to account the consensus-building efforts carried out to gain the consent of those who are impacted. This thesis turns to neo-Gramscian perspectives, specifically the concepts of hegemonic project and historical structures, which can resolve the limitations of orthodox literature. The concept of a regional historical bloc is then built as an analytical framework to answer the thesis’ research question. By deploying this concept, the thesis is able to examine not only the historical and domestic contexts and the social forces behind the initiative, but also to analyse the consensus-building efforts deployed to attain the consent of the Gulf state-society complexes for the realisation of the BRI and the AIIB. This thesis’ contributions are three. First, it will contribute to BRI/AIIB literature through deploying neo-Gramscian perspectives and by focusing on a region that has been relatively under-researched. It will also contribute to the debates within Middle East and Gulf studies on the power transition in the region by putting forward a new perspective on whether the transition is moving to China. Finally, it will contribute to academic and policy-making discussions regarding China’s domestic and international behaviour by shedding light on its ideological and institutional aspects.

There are three main findings of the thesis. First, the implementation of the BRI and the AIIB in the Gulf springs from four main historical trajectories: China’s transition to capitalism, resulting from globalisation; the Gulf countries’ integration in to the global economy; China’s interaction with the Gulf states since the end of 1970s; and various economic problems presently faced by China. Secondly, the implementation of the BRI and the AIIB in the Gulf consists of an alliance of various social forces which have been galvanised by Xi Jinping around the idea of the Chinese Dream rather than being the ‘state-only’ projects orthodox examinations have found them to be. Third, instead of being an automatic process, the implementation of the BRI and the AIIB in the Gulf involves consensus-building strategies to attain the consent of the regional state-society complexes. Notwithstanding several limitations, these strategies have been carried out by organic intellectuals who work to universalise the interests behind the initiative and through certain institutional arrangements embedded in it and designed to co-opt the Gulf state-society complexes into the framework of the BRI and the AIIB. The data used in this research are derived from literature analysis and interviews carried out with academics and other relevant stakeholders.

Keywords: China, OBOR, BRI, AIIB, One Belt One Road, Belt and Road Initiative, Asian Infrastructure Investment Bank, Xi Jinping, Gulf, GCC, Middle East, Arab, Neo- Gramscian, Gramsci.

Declaration

No portion of the work referred to in the thesis has been submitted in support of an application for another degree or qualification of this or any other university or other institute of learning.

I. The author of this thesis (including any appendices and/or schedules to this thesis) owns certain copyright or related rights in it (the “Copyright”) and s/he has given The University of Manchester certain rights to use such Copyright, including for administrative purposes.

II. Copies of this thesis, either in full or in extracts and whether in hard or electronic copy, may be made only in accordance with the Copyright, Designs and Patents Act 1988 (as amended) and regulations issued under it or, where appropriate, with licensing agreements which the University has from time to time. This page must form part of any such copies made.

III. The ownership of certain Copyright, patents, designs, trademarks and other intellectual property (the “Intellectual Property”) and any reproductions of copyright works in the thesis, for example graphs and tables (“Reproductions”), which may be described in this thesis, may not be owned by the author and may be owned by third parties. Such Intellectual Property and Reproductions cannot and must not be made available for use without the prior written permission of the owner(s) of the relevant Intellectual Property and/or Reproductions.

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Acknowledgements

Most importantly, I would like to express my deepest gratitude to Allah the Almighty without whom nothing would be possible. I also would like to send peace and blessings upon the Prophet Muhammad.

Second, when it comes to debts, how much I owe my father and mother cannot be overstated. Their never-ending support and prayers are the backbone of this thesis. Also, huge thanks to my sister and brother whom I love very much, Talitha Chairina Rahmah and Bahariviansyah Aimar Rakhmat, for their continued support. Without them, besides my extended family, I would not have reached this point.

My supervisor, Dr. Elena Barabantseva, has been pivotal. She set me on this course following after supervising me for my MA dissertation. Since then, her guidance and feedback have been invaluable to this thesis. Dr. Stuart Shields, my second supervisor, also deserves special mention. As someone who started this PhD with little knowledge of Gramsci, it would have been impossible for me to complete this project without him.

A Ph.D life always has bright and dark days. To myself, the brightest day was when someone by the name of Dikanaya Tarahita came to fill my life in the early, hectic days. Since then, she has become a light in the darkness, a smile when sadness comes, a relief when confusion sprouts. Je vous remercie beaucoup for being my companion in the last two years, and I hope that you will continue to be so forever. I also thank you for your assistance during the initial process of research and the later process of writing and proofreading.

I would further to thank all the interviewees, especially Mohammed Al Sudairi, for their time and support in assisting with my research. Without their openness, this project could not have been carried out. My sincere thanks are also dedicated to Ahmad Rizky Mardhatillah Umar, who never gets tired of explaining Gramsci to me.

This thesis is rooted in my long-held research interests on China-Middle East affairs which started at the Department of International Affairs at Qatar University. I am very grateful to everyone I met during that time who introduced me to this scholarly interest at one of the most important times in Middle Eastern affairs and Chinese international politics. I am surely indebted to Dr. Jackie Armijo who first sparked my interests in China-Middle East relations and whose encouragement, advice, and guidance were crucial. I am grateful for the many exchanges with Dr. Steven Wright and Dr. Todd Thompson, whose letters of recommendation helped me to get into Manchester. I would also like to express some words of appreciation to Mohammed Shaheem, Nasr Samadee, Muhammad Shittu, and everyone majoring in International Affairs, for their

friendship and support during my life in Qatar, especially Mohammed Ismail Umlai, who helped me fill in my application form for an MA programme at Manchester. My deepest appreciation is also due to everyone in the Special Needs Sections, who provided me with tremendous support during my undergraduate studies.

Since arriving in Manchester in September 2014, I have incurred more debts to several individuals who played an important role in my journey towards a Ph.D. I would like to express my deepest thanks to Lokman Mana and Souleyman Mana who were my only companions during the first few months in Manchester. Their help and company will never fade from my memory. My sincere thanks also to Media Wahyudi Askar for his friendship and support during my time in the UK. I am also thankful to Dr. Gabriel Siles-Brugge for his advice in pursuing a Ph.D study, and Dr. Nick Turnbull for his recommendation letter.

There are also people who have gone above and beyond the normal expectations of collegiality, reciprocity, and friendship to whom I need to express my utmost gratitude. Muhammad Beni Saputra, who was not only a co-author in a number of journalistic articles, but also was a great travelling companion. My special thanks to Dr. Zaenal Muttaqin, Mbak Mira, Andrea, and Arsa who became my parents and my family during my time in the UK. I would also like to thank Dr. Munas Ramli, Uni Media, Dr. Ezri Hayat, Dr. Nanda Ayu, Uni Winda, Pak Sugeng, Mbak Hanni, Cak Awik, Mas Fauzi, Mas Dimas, Bang Joe, Dr. Anugrah Subandono, Diwangkara Bagus Nugraha, Hilton Tnunay, Cak Affan, and Mas Riza, whose support and assistance were important to my studies and my life in Manchester. My special appreciation also to Sekolabilitas team, Dikanaya, Mas Yoga, Mbak Irma, Sofi, Mbak Retno, Mbak Rahma, and all the staff for helping me to achieve my dreams for Indonesia.

My apologies for those who I could not mention. However, I know that I certainly could not have finished my thesis without the help of many people.

Muhammad Zulfikar Rakhmat Manchester, UK (2018)

Technical Notes

This thesis adopts Harvard citation style,1 whereby in-text citations for websites and news articles do not include page numbers, unlike the citations for books, journals, reports, and official documents that have page numbers. In some parts nonetheless, the format “Name (Year)” without page number is also used in footnotes, to refer to further references about particular subjects. The same format is also used for official documents that contain no page numbers such as the Vision and Action of the BRI. For references that have no specific author, the name of the institution or publication is used as the author’s name, such as NDRC (2015) or Xinhua (2015). For works written by the same author in the same year, numbers are used after the author’s name to differentiate between the works, such as Xinhua1 (2015) or AIIB2 (2016). Regarding interviews, the in-text citation format is “Name (Year)”; for example, Al-Sudairi (2016). Also, a concise summary of interviewees’ biographies is presented as a footnote with the first mention of their names. The biographies of the interviewees who preferred not to be identified are not shown. All interviews carried out are listed in Appendix A, those who prefer not to be identified being listed as “unnamed interviewee”.

The Author

Muhammad Zulfikar Rakhmat has an MA in International Politics from the University of Manchester (2015). His main research interest is Middle East politics, particularly the emergence of China and ASEAN countries in the region. Outside academia, he has deep interests in Indonesian politics and disability issue, where he writes regularly for journalist publications. Prior coming to the UK, Muhammad lived in Qatar, where he obtained a BA in International Affairs from Qatar University (2013).

The Supervisors (1) Dr. Elena Barabantseva, The University of Manchester (2) Dr. Stuart Shields, The University of Manchester

The Examiners (1) Dr. Dominic Kelly, The University of Warwick (external) (2) Dr. Shogo Suzuki, The University of Manchester (internal)

1 I obtained this citation style guideline from the “EU as an International Actors” class’ syllabus taught by Dr. Gabriel Siles-Brugge which I took during my MA at the University of Manchester (2014). I have since used the format for all essays, assignments, and dissertation during my M.A. studies, and now my Ph.D thesis. I would also like to thank Dr. Gabriel whom I consulted several times during the writing of this thesis.

I dedicate this thesis to anyone in Indonesia who remains neglected in the society because of the disabilities that they have.

“Prayers, persistence, and hard work always pay off no matter what limitations we have”.

Chapter One Introduction

1.1 The Scope of the Thesis

This doctoral research investigates the Belt and Road Initiative (BRI) and the Asian Infrastructure Investment Bank (AIIB) in the Gulf.2 In particular, it aims to answer the question of why China is implementing the initiative3 in the region and why the Gulf state-society complexes4 are supporting and participating in it. The BRI and the AIIB are Chinese state-led projects initiated by the General Secretary of China’s Communist Party, Xi Jinping, who ascended to power in 2012. Despite the concrete and external achievements from its economic transition since the late 1970s, China’s economy has been challenged by several difficulties: inter alia, declining economic growth, increasing energy demands, overaccumulation of manufacturing capital, a relatively high-level of regional disparity, and income inequality, which have ignited dissent and protests within Chinese populations.5 Xi believed that the best solution to these issues was to further open up the economy. He subsequently introduced the BRI and the AIIB as the main strategy to achieve his objective. The initiative are intended to: improve transportation infrastructure, lessen trade barriers, deepen financial cooperation, and promote cultural ties and political stability through concentrating on infrastructure investments between China and Central Asia, South Asia, the Middle East, Africa, and Europe.

Since its launch in September 2013, the initiative has been concretely and massively implemented around the world. Despite the Gulf being a hotbed of instability and the world’s most noxious conflicts, it has become one of the regions that have witnessed the active implementation of the BRI and the AIIB. After the initiative was launched in the Gulf in 2014 through Xi’s famous speech titled “Promoting Silk Road Spirit and Deepening China-Arab Cooperation”, an alliance of different social forces6 comprised of Chinese politicians, companies, media, academic institutions, and cultural entities

2Al Khaleej, the term I use in the title of the thesis, is a widely used Arabic term for the Gulf region. I discuss more about the region and why I focus on the BRI and AIIB in this specific region in Section 1.3. 3 This thesis investigates the implementation of the BRI in the Gulf. However, as shown throughout the chapters its implementation cannot be separated from the AIIB. Therefore, this thesis considers the BRI and the AIIB as one initiative, and refers to it as the implementation of the BRI and the AIIB. I discuss this in Section 2. 4 The concept of civil-society complex is discussed in Chapter 2, Section 3. 5 These challenges are discussed in Chapter 3, Section 5. 6 The concept of social forces is discussed in Chapter 2, Section 3.

have been devoting their resources and efforts to implement “the largest programme of economic diplomacy since the U.S.-initiated Marshall Plan” (Shen, 2016) in a region regarded as “natural and cooperative partners of the BRI” (Liu and Wang, 2017). Yet not only has the Gulf been insufficiently analysed in the existing literature on the BRI, the few existing studies have been unable to answer vital questions surrounding the implementation of the initiative itself. In particular, the question of why the BRI and AIIB initiative is being advanced in the Gulf and receiving support and participation from the Gulf state-society complexes.

By turning to critical scholarships in International Relations and International Political Economy (IR/IPE), in particular neo-Gramscian perspectives,7 the thesis attempts to answer these questions through investigating the historical and domestic contexts that resulted in the implementation of the initiative in the Gulf and by investigating the consent-building strategies used by the Chinese state-society complex in the regional countries. From the time Xi Jinping introduced the BRI and the AIIB, realist, liberal, and constructivist perspectives have tried to provide competing views of the initiative. Even though these studies have furnished us with many useful insights, they suffer from some problematic features, mainly ahistoricism, state-centrism, and determinism. As discussed further in Chapter 2, Section 2, these limits have made them inadequate to explain crucial aspects surrounding the BRI and the AIIB in the Gulf, specifically their historical context, the specific actors involved, the impact of domestic dynamics, and the consent-building efforts that have helped attract Gulf state-society complexes to support and partake in the initiative. Theorising the BRI and the AIIB as an emergent hegemonic project and investigating it via the reformulated neo-Gramscian concept of historical structures,8 named as a regional historical bloc, enables us to answer the main research questions of the thesis. This in turn resolves the limitations of the orthodox literature and allows for a more nuanced study of the initiative by accounting for the

7 Neo-Gramscianism is not one coherent approach. Its concepts and how they are deployed in this thesis are explained in Chapter 2. However, two points are of note. One, I use neo-Gramscian as a label for the distinct approach in IR/IPE, which was built in response to, or based on, Robert Cox’s works (Cox, 1983; 1986). The label was selected as many of its core concepts are influenced by Antonio Gramsci’s works (Gramsci, 1971). Although I make direct reference to Gramsci at some points in this thesis, it is not my aim to discuss the way neo-Gramscians have interpreted Gramsci (see Germain and Kenny, 1997). I suggest that neo-Gramscian is an approach in its own right and it is, therefore, neo-Gramscian, not Gramscian concepts, which are deployed in this thesis. See Gill (1993) for a collection of essays by neo-Gramscians. Second, while there are clearly similarities in the manner scholars have tried to build upon Gramsci’s concept, the notion of a coherent neo-Gramscian ‘school’ should be avoided. Some have proposed an ‘Italian’ school as an effort to solve this problem (See Burnham, 1991: 191-212; Smith, 1996: 191-212). However, the proposal of a particular school of thought over-emphasises the importance of an authoritative reading of Gramsci. What has taken place is the simplification of the internal contradictions that have supplanted the neo-Gramscian research agenda into another form of tradition in place of the original critical intents (See Ives and Short, 2013: 624). One way to resolve this issue is to acknowledge the variation in these approaches and discuss neo-Gramscian perspectives. 8 The original framework of historical structures developed by Cox (1986: 218) is presented in Chapter 2, Section 3 and the reformulated version for this thesis, a regional historical bloc, is developed in Chapter 2, Section 4.

historical and domestic contexts behind the initiative in the Gulf, the roles of state and non-state actors involved, and the consent-building efforts behind its implementation.

The main contributions of the thesis are threefold. First, going beyond the ahistorical narratives of the BRI and the AIIB, the thesis proposes that the implementation of the initiative in the Gulf have to be investigated against the background of four historical phases: China’s transition to state capitalism and its subsequent re-integration with the global economy which resulted from the process of globalisation; the Gulf’s integration with the global economy; China’s interaction with the Gulf states since the 1970s; and various economic problems presently faced by China. Two, different from orthodox perspectives of the BRI and the AIIB as a state-only project, this thesis proposes that the implementation of the initiative in the Gulf is a function of an alliance of numerous social forces comprised of state elites, state and private enterprises, banks, academics and educational institutions, the mass media, and cultural entities, who emerged from the economic reform and have been galvanised by Xi Jinping around the idea of the Chinese Dream. Third, instead of being deterministically realised, as typically assumed by orthodox analyses, the implementation of the BRI and the AIIB in the Gulf involves consensus-building efforts to gain the consent of the regional state-society complexes. Although their influence is still limited, these processes have taken place through the activities of ‘organic intellectuals’9 who work to universalise the objectives of the BRI and the AIIB into a common vision, and through certain institutional arrangements entrenched in the initiative and designed to co-opt the Gulf state-society complexes into the agenda of the BRI and the AIIB.

In order to further set the scene for this thesis, the introductory chapter now proceeds to briefly explain what the BRI and the AIIB actually entail, and the relevance of the Gulf in the analysis of the initiative, before outlining the primary research questions, contributions, methodology, and the structure of the thesis.

1.2 What are the BRI and the AIIB?

As the concentration of this doctoral research is the BRI and the AIIB, it is important to outline from the start what the initiative is and what it entails, although the precise details will be elaborated upon as the thesis moves forward. The BRI was introduced by Xi Jinping in 2013 at the time when China, despite its momentous economic growth, encountered various economic challenges. Xi believed that the way to sustain economic

9 The concept is elaborated in Chapter 2, Sections 4 and 5.

growth and to resolve different economic challenges was to further integrate China with the global economy, also known as ‘opening-up’. Xi thus introduced the BRI to:

“enable China to further expand and deepen its opening-up, and to strengthen its mutually beneficial cooperation with countries in Asia, Europe, and Africa and the rest of the world” (NDRC, 2015).

While Gramsci argues that the leading class:

“creates alongside himself the industrial technician, the specialist in political economy, the organisers of a new culture, of a new legal system, etc” (Gramsci, 1971: 16).

To implement the BRI and the AIIB Xi chose the National Development and Reform Commission (NDRC), alongside the Ministries of Foreign Affairs and Commerce, as the ‘technicians’ of the BRI (Gramsci, 1971: 16). They are responsible for designing the technical plan for its implementation, for supervising the daily management, and for coordinating with other relevant ministries and entities (Rolland, 2018: 4). Alongside these three, Xi has also established a central small leading group on “advancing the development of the belt and road”, comprising five members of Politburo, to ensure that the highest level of the CCP continues to have the power to coordinate all aspects of the initiative (ibid.).

In general, by invoking the historical imagery of the old ancient Silk Road, the BRI envisions the construction of a set of infrastructural links that run from China to other parts of Asia, Europe, the Middle East, and Africa. It has two complementary portions: the “Silk Road Economic Belt”, which is a land-based trade connection between China and Europe, and the “21st Maritime Silk Road”, which is a maritime link between China and Southeast Asia, the Indian Ocean, the Red Sea, and the Mediterranean to Europe (Fallon, 2015: 141). No comprehensive single blueprint exists for the BRI routes, which has resulted in numerous impressions and interpretations of the routes. The only map available is the one issued by the government-owned news agency, Xinhua, which is also incomplete as it does not show the routes branching to South Asia.

Figure 1.1 Map of the Belt and Road Initiative

More details of the BRI only emerged when the NDRC published a document entitled Vision and Action on Jointly Building Silk Road Economic Belt and 21st Century Maritime Silk Road10in 2015. Even though the document reads more like a general roadmap than a detailed and concrete plan, it is the only official guide available to give the world some sense of the BRI. Despite featuring no map, it states that the BRI’s routes constitute 65 countries, and most of them are emerging economies and developing countries (Pop, 2016: 7). It further specifies the six corridors that would be the focus of the BRI, including the: China-Mongolia-Russia-Corridor, China-Indochina Peninsula Corridor, new Eurasian Land Bridge, China-Pakistan Economic Corridor, China-Central Asia- West Asia Corridor, and Bangladesh-China-India-Myanmar Corridor (NDRC, 2015). Also contained in Vision and Action are the pillars of the BRI: trade facilitation; financial integration; people-to-people exchange; policy coordination; connectivity improvement. In order to achieve these goals, the priority areas for the BRI include: removing trade and investment barriers, establishing economic cooperation through joint investment projects; cooperation in conventional and renewable energy fields (ibid.).

In its implementation, however, the BRI goes beyond the CCP’s economic interests to:

“advocate peace and cooperation, openness and inclusiveness, mutual learning and mutual benefit. It […] works to build a community of shared interests,

10 The document is referred to in this thesis as “Vision and Action”.

destiny and responsibility, featuring mutual political trust, economic integration, and cultural inclusiveness” (NDRC, 2015).

These objectives are intended to synthesise a long-term framework for political and economic interests behind the BRI (Gill, 1992: 45). Thus, as fully explained in Chapter 2, Section 3, the BRI can be referred to as an emergent hegemonic project11 whereby:

“[although] stem[ming] from the economic sphere, [they] transcend […] into political and social spheres, incorporating broader issues that harmonise the interests of the leading forces and subordinate classes” (Morton, 2007: 153).12

While starting to draw up the actions necessary to implement the BRI, Xi announced the establishment of the AIIB (Renard, 2015). Its objective is to finance the realisation of the BRI (Kin, 2015: 11), alongside the US$40 billion Silk Road Fund which was set up in 2015 and backed by the China Investment Corporation (CIC), Export-Import Bank, China Development Bank, and the State Administration of Foreign Exchange (SAFE). Although some propose that the AIIB has no link to the BRI (Zhu, 2015; Shepard, 2017), I argue that both can be considered as ‘one’ project under the same umbrella, particularly with regards to how the BRI is realised in the Gulf. As showed in the empirical chapters of this thesis (Chapters 4, 5, and 6), both the BRI and the AIIB complement one another in their implementation in the Gulf. In this respect, the thesis regards the BRI and the AIIB as ‘one’ emergent hegemonic project.13 My argument also parallels some official and scholarly iterations which link the two together.14Callaghan and Hubbard (2016: 119), for example, argue that:

“China’s motivation behind the AIIB proposal is best explained in the context of its ‘Silk Road economic belt’ and ‘21st century maritime Silk Road’ […]. In his capacity as chair of China’s leading economic policy group, Xi Jinping has explicitly instructed policymakers that the ‘primary task’ of the AIIB is to provide capital for these initiatives” (ibid.).15

Others also argue that the Bank is the main funding source for the BRI (Tiezzi, 2014; Wilson, 2017: 1-12). As explained in Chapter 6, however, the role of the AIIB in the implementation of the BRI in the Gulf goes beyond providing capital, but it also serves

11 The thesis considers the BRI and the AIIB as an emergent hegemonic project because, as I showcase in Chapters 5 and 6, it is still not in place, as the formation of a common sense for its implementation is still in its infancy. I also explain this in Chapter 2, Section 3. 12 Square brackets are used in the thesis to indicate changes made by the author to direct quotes. 13 The concept of hegemonic project is elaborated in Chapter 2, Section 4. 14 See also Gabusi (2017: 31-39) for an analysis on the linkage between the BRI and the AIIB. 15 See Xinhua19 (2015).

as a platform to carry out a co-optation strategy, or a strategy to attain consensus for the pursuance of a hegemonic project (Kakizaki, 2010: 234, cited in Yaman, 2012: 71).

In 2014, a year following its inauguration, a Memorandum of Understanding (MoU) on the founding of the AIIB was signed by 21 countries. Within only 18 months, fifty- seven countries had become founding members of the Bank, the majority of which were Asian countries and a number of Western countries. The two notable absentees were the U.S. and Japan. The AIIB’s Articles of Agreement (AoA) were then signed by those states between June and December 2015 and went into force on 25 December 2015. A former China’s finance minister, Jin Liqun, was chosen as the Bank’s president. On 16 January 2016, the AIIB commenced its operation. It is widely regarded as the first multilateral development bank16 dedicated to infrastructures, and the first global- level institution established by China (Renard, 2015: 1-7). It is also widely considered to be a mechanism for China to have a voice in the global economy and to internationalise the Renminbi (Kartz, 2015: 14-16). Overall, the BRI is expected to be completed in 2049 – the 100th anniversary of the People’s Republic of China (Wang, 2015: 95).

Since the BRI and the AIIB were launched, Xi Jinping has been promoting his notion of the Chinese Dream, which he first uttered on his inauguration day on 15 November 2012 (Sorensen, 2015: 55). Aiming to legitimise his hegemonic project, the Chinese Dream is presented by Xi as the vision for China’s development over the coming years, and the main message is national ‘rejuvenation’. He defines the notion as a “national rejuvenation [which takes the form of] improvement of people’s livelihoods, prosperity, [and the] construction of a better society” (Chin, 2017: 36). Over the years, the message has been widely promoted by state elites, academic intellectuals, and the media around China.17 These ideological endeavors are intended to promote the BRI and the AIIB to the public as well as to establish “not only a unison of economic and political aims, but also intellectual and moral unity” (Gramsci, 1971: 181), or in Xi’s own words, to allure the people to “work assiduously to fulfill the dreams and contribute to the revitalisation of the nation” (Bangkok Post, 2016).18

Such campaigns have not only resulted in increasing support for the initiative, but have also led to the emergence of a coalition of diverse social forces who are unified around the common objective of achieving the Chinese Dream and have become the agents in the implementation of the BRI and the AIIB. These include government elites, state and private firms, banks, and other financial institutions, who since the initiative was inaugurated, have spanned numerous countries, signing agreements and taking part in

16 The institutional structures of the AIIB are discussed in Chapter 6. 17 See Rolland (2018: 5) for examples. 18 See, for example, Sidaway and Woon (2017: 591-603) for an analysis of narratives used by the CCP to gain moral and intellectual legitimacy for the BRI and the AIIB.

different projects to realise the objectives of the BRI and the AIIB. Despite no detailed project list having yet been made public,19 the implementation of the initiative has been concentrated on the construction of notable amounts of hard infrastructures such as: railways, truck roads and highways, air and sea ports, utility stations and power grids, oil and gas pipes, and telecommunication networks (Blanchard and Flint, 2017: 227). Other projects are: the buildings of industrial parks, Special Economic Zones (SEZs), manufacturing plants, exhibition halls, trade fairs and other facilities (ibid.).

The BRI and the AIIB, furthermore, go beyond hard infrastructures, whereby soft- infrastructures are also the major focus, such as the signing of Free Trade Agreements (FTAs), the negotiation of aid deals and the finalisation of investments agreements aimed to create the right environment for the infrastructure agreements and projects. This is as well as the liberalisation of market for foreign investments and the signing of agreements that enable cargo, passenger flights, and the establishments of financial institutions (ibid.). Drawing on the concept of a regional historical bloc, these aspects of the initiative are referred to in this thesis as the “material implementation” of the BRI and the AIIB, as I explain theoretically in Chapter 2, Section 4, and deploy in the context of the Gulf in Chapter 4. While these material elements have been the focus of the existing analyses, what is neglected is that the implementation of the BRI and the AIIB also involves an ideological struggle and institutional frameworks to attain the social support of those who are impacted.

Such a struggle has been carried out through the activities of individuals and institutions who can be described from neo-Gramscian perspectives as “organic intellectuals” or “the organisers of a new culture”, which comprise of state elites, academics, educational institutions, the media, and cultural entities. Their functions are not only to propagate the BRI and the AIIB to the masses, but also to translate the objectives of the initiative into a universal vision, or typically in “promoting the China Dream as consistent with the dream of everyone” (Callahan1, 2016: 226). The ideological struggle by organic intellectuals has been supported by certain institutional arrangements embedded in the initiative. They have facilitated the carrying out of what neo-Gramscian perspectives define as a strategy of co-optation: a strategy to attain the consent of lesser forces for the interests of the leading forces (Kakizaki, 2010: 234, cited in Yaman, 2012: 71). The two aspects of the implementation above are considered in this thesis as “ideological

19 As Hurley et al. (2018: 8) write, the Party-state does not report the BRI projects in a systematic and transparent manner. Beyond topline investment numbers that have been announced by Chinese officials, alongside the occasional projection on intended country-level investment under the initiative, BRI project information is not centrally reported. China and its commercial banks will sometimes make public announcements about project investments. However, this is not done consistently, and specific financing agreements are rarely published. It is also uncommon for the recipient countries to fully disclose project information. Given this reality, this thesis identifies BRI and the AIIB projects in the Gulf through media reports. See Section 7 for further explanation.

struggle” and “institutional frameworks”, as explained fully in Chapter 2, Section 4 and discussed in the case of the Gulf in Chapters 5 and 6.

It is through the activities of the social forces who are involved in both the “material implementation” and the “ideological struggle” of the BRI and the AIIB, alongside its institutional frameworks, that the latter is being realised around the world. During the Belt and Road Forum in May 2017, the CCP published a “list of deliverables” which showcase over 270 “concrete results” that had been achieved in each area of the BRI (Xinhua1, 2017). Other state sources have also indicated that 50 state enterprises have invested in almost 1,700 projects in countries along and outside the routes (Wu, 2017). Several projects are underway; others have been announced, with MoUs concluded and promises of investments made, but they have not yet materialised. Some have also been started by other countries, funded either partially or totally by the CCP, or have been announced by Xi but funded partially by non-Chinese institutions (Rolland, 2018: 6). Of the various countries and regions that have witnessed the active implementation of the BRI and the AIIB, the Gulf is one that deserves further scrutiny. The next section explains why.

1.3 Why the Gulf?

The focus of this thesis is the implementation of the BRI and the AIIB in Arab Gulf states that today comprise the six GCC countries – Saudi Arabia, Qatar, Kuwait, Oman, Bahrain, and the United Arab Emirates (UAE). Their common features, such as their political and welfare systems, cultures, growing economies, and energy reserves and revenues led to their collectively forming the Gulf Cooperation Council (GCC) in 1981 (Rizvi, 1982: 29-38). When establishing the GCC, the member countries believed that economic and security challenges within an unstable regional environment produced a need to coordinate their policies and collectively mobilise their capabilities. The GCC’s arrangement was viewed as a practical answer not only to the challenges of regional security, but also to foreign policy and to economic development. Trade barriers have since been abolished through the implementation of structural changes, including free movement of products, services, and labours. Other reforms include the harmonisation of the bank sector and permission for all GCC nationals to possess real estate in all of the member states. Although the BRI routes do not pass precisely through the Gulf, the region represents a particularly important focus for the study of the BRI and the AIIB for three main reasons.

First, for many years, the Gulf has occupied an important position in global politics. With its abundant energy resources20 and competitive position in the global market, owing to its production capacity, lower productive costs, competitive prices, as well as strategic location21, the Gulf has become not only the engine of regional development, but also a crucial location for the expansion of world hegemons. From 1820 to 1971, the region experienced Pax Britannica,22 which can be described through Cox’s words, whereby it:

“was founded on its sea power, which remained free from challenge by a continental state as a result of Britain’s ability to play the role of balancer in a relatively fluid balance of power […]. The norms of liberal economics (free trade, the gold standard, free movement of capital and persons) gained widespread acceptance with the spread of British prestige, providing a universalistic ideology which represented these norms as the basis of a harmony of interests” (Cox, 1981: 140).

When British power declined during the last quarter of the 19th Century, the Gulf also began to experience the emergence of the U.S.’s power, which, also in Cox’s (1981: 102-7) description, constituted not only the economic and military expansion of the U.S., but also the universalisation of neo-liberal economic ideas supported by the preponderance of international institutions which underpinned the dominance. As Markakis (2015: 5), who conducted a neo-Gramscian analysis23 on the U.S. hegemony in the Middle East, argues, the Gulf is a part of the world that has seen not only the transnationalisation of U.S. production and finance, but also efforts:

“to encourage political reform and the spread of its ideology, so as to ensure a more sound, enduring form of stability over the long term” (ibid.).

In recent years, moreover, with the rapid progression of China, the Gulf is also one of the regions where debates have gradually been taking place questioning the emergence of a Pax Sinica, which implies a period of Asian dominance with China as the leader. In

20 The Gulf accounts for about 48% of the world’s total oil reserves, with a production life of another 78 years at low cost; LNG reserves account for approximately 40% of the world’s total, with a production life of another 264 years, while the world’s production life is only 67 years (Yang, 2014: 103-110). Not only does the Gulf holds more oil than anywhere else in the world, its oil is also the cheapest to extract and is of very high quality. In addition, the importance of the Gulf does not only stem from its large underground reserves. 21 The economic size of the Gulf accounts for approximately 50% of the Arab states’ total, with its foreign trade accounting for about 60% and foreign investment about 70% (Xie, 2013). The Gulf also owns sizable amounts of petro-dollars: its sovereign wealth fund has reached $2.3 trillion, comprising about 36 percent of the world’s total (MOFCOM, 2014). 22 See Onley (2009) for an analysis of Pax Britannica in the Gulf. 23 Although there are none on the Gulf, there are few neo-Gramscian examinations on Pax Americana in the Middle East, see, for example, Mueller (2010: 93-114), Markakis (2015), and Batayneh (2016).

light of China’s quest for new markets and energy supplies to maintain its growing economy, China’s role in the Gulf24 has expanded noticeably. In 2013, for example, it became the Gulf’s largest trading partner, whereby its trade with the Gulf makes up about 70% of its trade in the whole Arab world, indicating that its economic stake in the region is focused predominantly on the Gulf (Niblock, 2016). The consulting firm McKinsey &Company has also estimated that by 2020, the total trade between China and the Middle East will rise to approximately $500 billion, with China-GCC trade consisting for much of that run-up (Kamrava, 2011: 213).

In an interview for this thesis, Giorgio Cafiero,25 the CEO of Gulf State Analytics, emphasised the vital role of the Gulf in China’s foreign policy by asserting that China’s increasing involvement in the political dynamics of the wider Middle East is primarily caused by its high economic stake in the Gulf. Furthermore, as will be elaborated in Chapter 3, Section 4, China’s internationalisation26 in the Gulf region, just as with Pax Britannica and Pax Americana, has also been escorted by certain struggles at the ideational level and the establishment of a set of institutional frameworks aimed at “bringing about not only a unison of economic and political aims, but also intellectual and moral unity on a […] ‘universal’ plane” (Gramsci, 1971: 181-2). This gradual transformation of the regional order from Pax Americana to Pax Sinica forms an exciting setting within which to place a substantive analysis of the implementation of the BRI and the AIIB in the Gulf.

Another crucial rationale is that since the BRI and the AIIB were announced in 2013, the Gulf has become one of the key places in the world to witness the active realisation of the initiative. As laid out in Chapters 4, 5, and 6, an alliance of diverse social forces behind the project has been devoting time and resources to realise the initiative in the region (Niblock, 2016; Olimat, 2016; Cafiero and Wagner, 2017). From the time Xi launched the project, the Gulf region has witnessed the most rapid entrance of Chinese firms and banks, accompanied by the activities of what Gramsci (1971: 9-10) calls ‘organic intellectuals’ who wage an ideological struggle27 to not only propagate the BRI

24 See Olimat (2016) for a detailed analysis of China’s footholds in the Gulf. 25 Giorgio Cafiero is CEO of Gulf State Analytics, a Washington DC-based geopolitical risk consulting firm which assesses risks and opportunities among GCC countries. 26 I use “internationalisation” in the context of China because, as Robinson (2008: 127) proposes, China’s activities in the international economy have been primarily “state-led”. As Cox (1996: 302) further argues, internationalisation can be defined as the transformation of the state “into an agency for adjusting national economic practices and policies to the perceived exigencies of the global economy. The state becomes a transmission belt from the global to the national economy, where heretofore it had acted as the bulwark defending economic welfare from external disturbances”. Also see Cox (1981) and Robinson (2005) for discussions on this. 27 One important feature of the neo-Gramscian perspectives is that it enables me to examine the political project that takes place alongside the implementation of the BRI and the AIIB in the Gulf. See Chapter 2, Section 3 for more explanations how the neo-Gramscianism provides a powerful tool to analyse the two initiatives and see Chapter 2, Section 4, for theoretical conceptions of the ideological struggle.

and the AIIB, but also to universalise the interests behind the two initiatives with the broader interests of the Gulf’s state-society complexes.28This is also assisted by certain institutional frameworks aimed at attracting the regional state-society complexes into the initiative’s framework.29In the midst of these dynamics, only limited investigations within the studies on the BRI and the AIIB have captured the implementation of the initiative in the region, even though many examinations have emerged which look at the importance and the realisation of the initiative in some parts of the world.30 This, however, should not be equated with a complete absence, as there have been attempts to study the BRI and the AIIB in the Gulf.31Nevertheless, for the most part, these studies are merely journalistic or blog pieces, and therefore unable to offer in-depth and theoretically grounded analyses.

Based on these circumstances, this thesis not only contributes to the existing literature on the BRI and the AIIB by concentrating on a region that has not been sufficiently examined, but also to the growing investigations into the implementation of the BRI and the AIIB in the Gulf, by deploying a neo-Gramscian perspective in the analysis.

1.4 Aims and Objectives

In summation, the main aim of this thesis is to analyse why China is advancing the BRI and the AIIB in the Gulf and to investigate the consent-building strategies behind the implementation of the BRI and the AIIB in the Gulf. In order to facilitate the identified aim, the following objectives are developed:

1. to historicise32 the implementation of the BRI and the AIIB in the Gulf,

28 This is the focus of Chapter 5. 29 This is the focus of Chapter 6. 30 See, for example, Yilmaz and Liu (2016) for the U.S.; Cameron (2015) and Kowalski (2017) for Europe; Suzuki (2015) for Japan; Fallon (2015), Postich (2015) and Sternberg et al. (2017) for Central Asia; Hali et al. (2015) for South Asia; Arase (2015), Pitakdumrongkit (2016), Rana (2016), and Bruno (2017) for South East Asia; Yun (2015) and Pautasso (2016) for Africa. 31 Ehteshami and Horesh (2017), for example, have analysed the importance and the implementation of the BRI and the AIIB in the wider Middle East. Although the Gulf was mentioned, it was not their focus. The same goes with Lehr (2017) and Lin (2017). Meanwhile, Ma and Hou (2015) have focused on Organisation of Islamic Countries (OIC), but the Gulf was only slightly discussed. Others have studied the BRI and the AIIB in the Gulf including Karasik (2016), Niblock (2016), Wang (2016), Payne (2016), Fulton (2017), and Cafiero and Wagner (2017). However, aside from the fact that for the most part these studies are only journalistic pieces, they mainly focus on the importance of the Gulf for the BRI and the AIIB, without paying attention to their realisation. While Olimat (2016)’s book has tried to highlight some of the projects implemented under the BRI and the AIIB in the Gulf, he did not go into detail and primarily focused on the material aspect, with no specific regard for the ideological struggle. In addition, the book was published in 2016 and thus requires updating. 32 As Cello (2017: 237) writes, “to historicise” can be defined as looking at social phenomena as different at different points of time in history, “the logical corollary of which is […] [to] approach the past without

2. to identify the social forces involved in the initiative and their interests, 3. to investigate, grounded on the framework of a regional historical bloc, the material implementation, the ideological struggle, and the institutional frameworks of the BRI and the AIIB in the Gulf.

1.5 Research Questions

The thesis’ main research question is:

Why is China implementing the BRI and the AIIB in the Gulf, and why are the Gulf state-society complexes supporting and participating in the initiative?

To answer the above question, the following sub-questions are developed:

1. How can neo-Gramscian perspectives advance the analysis of the realisation of the BRI and the AIIB in the Gulf? (Chapter 2) 2. What is the historical context to the implementation of the BRI and the AIIB in the Gulf? (Chapter 3) 3. What constitutes the material implementation of the BRI and the AIIB in the Gulf and which social forces are involved in the process? (Chapter 4) 4. How do ideological struggles attract the Gulf state-society complexes into supporting and participating in the BRI and the AIIB’s implementation, and which social forces are involved? (Chapter 5) 5. How do the institutional arrangements embedded in the BRI and the AIIB help to attract the Gulf state-society complexes into supporting and participating in the hegemonic project? (Chapter 6)

1.6 Contributions

In answering the above questions, this thesis makes a number of contributions to the scholarship (these contributions will be re-visited in Chapter 7, Section 4):

assuming continuity with the present. It is, as Cello further argues, an attempt to reverse the way history is commonly carried out in IR: instead of bringing the past into the present, we must agree to be brought to the past. This means, in essence doing away with appeals to principles that lend necessity or unity to history. Also see Morton (2007: 29-38) for explanations on historicising.

- Contributing to the existing literature on the BRI and the AIIB by, on the one hand, deploying a neo-Gramscian perspective which provides a more nuanced understanding of the initiative by taking into account the historical context, the specific state and non-state actors involved, the influence of domestic contexts, and consensus-building efforts carried out to attain the consent of those who are impacted.33 On the other hand, it also contributes to the BRI and the AIIB literature through examining its implementation in the Gulf region, a part of the world that is crucial to the initiative but is still under-researched in the existing literature.34 - Contributing to the growing analyses on China-Gulf relations within the fields of IR, Middle East/Gulf studies, and Chinese studies through concentrating on the implementation of China’s most recent and crucial initiative in the region. - Contributing to the burgeoning debates in the field of Middle East/Gulf studies on the power-shifting phenomena in the region; the decline of the U.S. and the emergence of alternative powers such as the BRICS and ASEAN by triggering a further perspective whether this transition is moving to China. - Adding knowledge to the debates within academic and policy-making circles on China’s behaviours in the world, which primarily concentrate on the material or economic components of the behaviours, with little attention to the ideological component. The thesis brings insights to both academics and policy-makers on the importance of paying attention to consent-building strategies, including the role of ideas, and to institutional frameworks for apprehending China’s conduct domestically or internationally.

1.7 Methodology

Here I continue to lay a path for the thesis by outlining the methodology employed to answer the main research questions. The primary objective of this thesis is a thorough examination of the BRI and the AIIB in the Gulf and the simultaneous open-ended enquiry into broader theoretical issues. This links various disciplinary areas, integrating the empirical, analytical and theoretical. Various data sources were engaged throughout the research, which I outline in the second part of this section. What underpins my response to these disciplines is the deployment of a critical IPE and the metatheoretical framework of a neo-Gramscian perspective. This gives a way for the amalgamation of disparate and contradictory elements of the BRI and the AIIB in the Gulf into a more complex and nuanced picture. It is, nevertheless, crucial to note that there are various understandings of what theory is. The definition of theory deployed for one’s research greatly influences the way the investigation is carried out. At one level, theory is seen as

33 This is elaborated in Chapter 2, Section 3. 34 This is elaborated in Section 3.

a general framework of references for investigation (Pass, 2018: 595-618). It generally consists of concepts which guide the investigation.

Neo-Gramscian perspectives repudiate the common positivist view of theory which considers a theory as a set of generalisations capable of offering systemic explanation of some area of knowledge or body of observations, or which may be used to predict events, or which prescribes conduct (Engelhardt and Moore, 2017: 275). To utilise this concept of theory means that the examination includes the testing of some hypotheses, intending to arrive at general findings related not only to case studies but transferrable to other situations. Such an understanding of theory and scientific enquiry is rejected in this thesis since it prevents sophisticated analyses of the BRI and the AIIB in the Gulf for three reasons (this will be explained further in Chapter 2):

1. It sees the social world as containing an inherent truth that could be discovered through finding and examining the regularities (Neufeld, 1995: 33). As a result, it perceives reality as ahistorical and sees politics as a natural process. Deploying this perspective would disable us from taking into account the historical context that explains the implementation of the BRI and the AIIB in the Gulf. 2. It separates objects and subjects, which therefore postulates the existence of a “real world” – the object – which is separate from the theoretical constructions of social scientists – the subject (ibid.). There is thus a lack of conceptualisation of actors and view politics not as creative spaces of human beings. Actors in the process are seen to have pre-determined interests. This kind of theory does not allow us to analyse the specific actors involved in the BRI and the AIIB in the Gulf and how their interests have come about. 3. It places an emphasis on the “value-free nature of scientific knowledge” with the underlying assumption of the division of facts and value (ibid: 35-38). As a result, through assuming an objective reality, it separates beliefs and ideologies, seen as value-laden, from objective facts, and hence disregards the normative basis of social reality and is unable to take into consideration the independent role of ideas. This would render us incapable of analysing ideological struggles in a nuanced way, especially the roles of ideas in the implementation of the BRI and the AIIB in the Gulf.

Neo-Gramscian perspectives are rather deployed here to guide the analysis. As a critical theory grounded on Marx’s abstraction methodology, it “does not envisage any general or universally valid laws which can be explained by the development of appropriate general applicable theories” (Cox, 1986: 243). It is a method of using certain theoretical conceptions in an empirical analysis (van Apeldoorn and Hager, 2010: 209-238). It revolves around the movement from abstract to concrete.

In this thesis, the various neo-Gramscian concepts relevant to the thesis: hegemony, hegemonic project, historical structures, social forces, ideas, common sense, organic intellectuals and institutions, are discussed in Chapter 2, Section 2.2. Thereafter, these

concepts need to be operationalised. The way in which empirical facts can be gathered and linked to the concepts has to be iterated. Only then are the concepts able to provide the linkages between empirical material and theoretical analysis. The concepts highlighted in Chapter 2, Section 2.2 are then operationalised through the framework of a regional historical bloc that is built in Chapter 2, Section 2.3, before I commence the empirical investigation in Chapter 3 onwards. The theory is therefore responsible for the examination of the results. In this process, the findings are not only assessed, but concepts of the theory themselves are revised and improved in response to the results. It is vital to note that abstraction does not imply universality. Its objective is rather to explain a specific phenomenon. In this regard, a neo-Gramscian perspective is deployed in this thesis to specifically investigate the BRI and the AIIB in the Gulf. The thesis does not aim to develop a theoretical framework for the investigation of the initiative in general, but only the particular case of the Gulf. This study is not intended to lead to general findings transferable to other cases.

Neo-Gramscian perspectives are grounded on an anti-foundational ontology in the form of historical materialism based on the works of Karl Marx (Marx, 185735; 185936). This has three main distinctive features: a view that reality is a historical phenomenon; a specific emphasis on the dialectic links between objects and subjects; an attention to the dialecticism and ideas. As discussed in Chapter 2, Section 3, through deploying a neo- Gramscian perspective, the focal points of the thesis are:

1. the study of the historical context that enables the implementation of the BRI and the AIIB in the Gulf; 2. the identification of the various agents involved; 3. the analysis of the political project and the ideational aspects of the initiative.

In order to achieve these three components, this thesis relies on several data sources, as outlined below.

Data Sources

This thesis primarily relies on published and unpublished primary and secondary works in Chinese, Arabic, and English.37Major documents include the Vision and Action of the BRI and the Articles of Agreements of the AIIB, and official documents of BRI and AIIB projects. These are complemented by speeches made by Chinese officials, which have been obtained through Internet searches. These official documents and statements not only offer information about the interests and objectives of the BRI and the AIIB, but also the institutional features of the initiative and the Chinese Dream as the main

35 The work has been translated to English by several authors. For this thesis, I used Sitton (2010). 36 I read the English translation of this work here: http://www.marxists.org/archive/marx/works/1857/ grundrisse/. 37 While for resources in Arabic I translated them myself, I rely on a translator for resources in Chinese.

legitimating idea of the project. They also enable us to examine how Chinese elites are interpreting and elaborating upon narratives about the BRI and the AIIB, and how they portray such narratives to Gulf audiences in particular. Meanwhile, secondary sources constitute peer-reviewed and non-peer-reviewed secondary sources. Concerning the former, I rely on scholarly materials, in the form of books, journals, book chapters, and policy briefs. They provide crucial insights into the historical trajectories of the BRI and the AIIB in the Gulf and their realisation in practice, both materially and ideologically, and particularly into the social forces involved.

This academic literature is substantiated with non-peer-reviewed resources, primarily comprising of journalistic articles from well-known publications. The contemporary character of the BRI and the AIIB signifies that many of the developments and events have only recently taken place; as such, journalism from and about the BRI and the AIIB is a crucial source of information for this thesis. It offers the latest information on how the BRI and the AIIB are being implemented practically, and the social forces involved. Moreover, these journalistic materials are also important since the CCP does not report BRI and the AIIB loans in a systematic or transparent manner. Beyond top line investment numbers that have been announced by the Party, and the occasional projection on intended projects under the initiative, the BRI and the AIIB projects are not centrally reported. At the same time, while Chinese policy and commercial banks sometimes do make public announcements on project investments this is not done in a consistent manner, and specific financing is seldom published. It is also uncommon for the debtor countries to fully and completely disclose loan information.

Given these circumstances, I identify BRI and the AIIB projects in the Gulf primarily through media publications alongside scholarly publications, replicating the methods of other projects that have tried to identify Chinese overseas lending (Hurley et al., 2018: 9). I identify publicly reported Chinese activities from the first inauguration of the BRI on September 7, 2013 to July 2018. Moreover, media publications are also main sources for official statements by Chinese and the Gulf elites, and other social forces in the implementation of the initiative. For realibility, nevertheless, I do not always take the information in these journalistic sources for granted. Besides only gaining information from well-respected publications, I cross-checked the information obtained, either by asking experts during my interviews or comparing them with other sources. Finally, I also use statistical documents from numerous institutions to gain data to support the thesis’ analysis.

These documentary resources are further complemented by expert interviews that were carried out during field research in Hong Kong, Singapore, and a number of the Gulf countries between October 2016 and April 2017. It is, nevertheless, important to

emphasise that these interviews are not the main source for the construction of a broad empirical foundation. Instead, the interviews provide additional sources of insightful knowledge that could not be obtained from the documentary resources alone. Given the difficulty of obtaining direct access to social forces involved, most of the interviews were conducted as expert interviews, which is a type of guideline-based interview.38 The interviewees were chose based on:

1. their involvement in the BRI and the AIIB, especially the implementation of the initiative in the Gulf, which means that these individuals can be considered as social forces; 2. their access to the social forces who could not be directly interviewed; 3. their knowledge on the subjects relevant to this thesis.39

Their short biographies are provided in a footnote in the first mention of their names, except for those who refused to be identified. The interviewees were contacted by e- mail prior to fieldwork.

Semi-structured interviews (Flick, 2009: 4) wereused, whereby a guide was prepared and followed during the interviews, while allowing the participants to raise new issues. There are two ways of recording the information: digital recording and note-taking. In instances where meeting in person was not possible, interviews were conducted via Skype, Facebook Messenger, and e-mail. Ethical approval was obtained from the Ethics Committee before the fieldwork. Participants’ consent was attained by offering as much information concerning the thesis and the author as was necessary. The participants were also informed that interviews would be recorded and their names would be cited. For interviewees who preferred anonymity, their names are not used in the presentation of empirical material.

In addition to providing additional information about the initiative, the interviews were particularly useful in identifying the social forces involved and their strategies, as well as the limitations of the initiative. The interviews also enhance the data sources of the thesis by revealing the unobservable developments, or experiences not revealed in the literature. They also enable me to clarify a number of points from the literature that are unclear or that require further explanations, and to cross-check some information obtained from the mass media. The reliability of data is always a problem in interviews (Roberts, 1978: 295); the interviewees tend to present their personal, subjective view of certain matters. To resolve this issue, the data obtained from each interview was cross-

38 The guideline-based interviews also include: 1) focused interviews; 2) semi-standardised interviews; 3) problem-centered interviews; 4) expert interviews; 5) ethnographic interviews; as well as 6) biographical interviews (Flick, 2009: 4). 39 The list of interviews is provided in Appendix 1.

checked through drawing on the accounts of other interviewees. Further verification was obtained by comparing the material to the literature, which also generated empirical insights and frequently contained interviews as well. On the whole, this indicates at least a certain degree of reliability.

1.8 Chapter Structure

This chapter concludes through outlining the structure of the thesis. In its undertaking to answer the above research questions, it consists of seven chapters, as follows. It is crucial to note that each chapter (except Chapters 1 and 7) has numbered introduction and concluding sections, and therefore the main section starts in the second section.

- Chapter 2 (A Regional Historical Bloc: A Neo-Gramscian Perspective on the BRI and the AIIB in the Gulf) introduces the main theoretical framework that guides and underpins the thesis. The framework is based on neo-Gramscian perspectives. It attempts to answer the first sub-research question: how can neo-Gramscian perspectives advance the analysis of the realisation of the BRI and the AIIB in the Gulf? The chapter is in three sections. Section 2.2. scrutinises the orthodox approaches employed to examine the BRI and the AIIB. It suggests that those approaches, which can be categorised into three guiding principles – realist, neo- liberal, and constructivist – are unable to offer a tool to fully answer the research question of the thesis and to provide a coherent investigation of the initiative, because of their ahistoric, state-centric, and deterministic characteristics. On this ground, Section 2.3 introduces neo-Gramscian perspectives as an alternative framework that can address the limitations of orthodox theories by discussing its basic premises and two of its foremost concepts that are relevant to this thesis, namely: hegemonic projects and historical structures. The perspectives present a powerful device to answer the thesis’ research question, which would offer a more nuanced analysis of the BRI and the AIIB in the Gulf, as they take into account the historical context behind the inititiative in the Gulf, the impacts of domestic circumstances, the roles of state and non-state actors involved, and the consensus-building strategies, including the roles of ideas, that accompany the realisation of the initiative. Section 2.4 then develops the concept of a regional historical bloc as the main analytical framework of the thesis. This is achieved by establishing theoretical linkages between the concepts introduced in Section 2.3 with the foci of the empirical portions of the thesis and the incorporation of other relevant neo-Gramscian concepts.

- Chapter 3 (Historicising the Emergence of the BRI and the AIIB in the Gulf) attempts to answer the question of why China is implementing the BRI and the AIIB in the Gulf by answering the third sub-research question of the thesis: What is the historical context of the BRI and the AIIB in the Gulf? Through answering the question, it also intends to set the context of the subsequent chapters. It argues that the implementation of the initiative in the Gulf must be analysed against four major historical stages. The first stage, which is explained in Section 3.2, is the impact of globalisation on China, which led to the latter’s transition to state capitalism and re-integration with the global economy. The second stage, which is the main focus of Section 3.3, is the Gulf states’ integration with the global economy. While the Gulf countries have been connected to the outside world for many years, it was the process of globalisation that guided the contemporary integration of the Gulf countries with the global economy. Thereafter, Section 3.4 focuses on the third stage, which is the interaction between China and the Gulf countries. Even though the interaction between the two can be traced back many centuries, the relationship was limited and primarily influenced by political interests. It was not until China’s economic transition and opening-up that the interaction began to shift and to revolve around the flows of capital and labour. Having introduced the first three historical stages to enable understanding of the BRI and the AIIB in the Gulf, Section 3.5 concentrates on the emergence of the BRI and the AIIB as an emergent hegemonic project. It is advanced that the increasing appearance of various issues in the Chinese economy have driven Xi Jinping, who became the Party-state’s General Secretary in 2012, to initiate the BRI and the AIIB as a key strategy to protect the economy.

- Chapter 4 (The Material Implementation of the Chinese Emergent Hegemonic Project) aims to further answer the question of why China is advancing the BRI and the AIIB in the Gulf by investigating the material implementation of the initiative in the region. In doing so, it also aims to offer the grounds to answer the question of why the Gulf state-society complexes are supporting and participating in the BRI and the AIIB. The chapter does so by analysing the domestic and regional roots of the material interests behind the initiative and through scrutinising the activities of the social forces involved. It argues that there are three fundamental elements of the material implementation of the BRI and the AIIB in the Gulf. These are: the securing of energy resources, which has been done through the roles of state elites and state and private energy firms; the growing infiltration of Chinese capital in the Gulf’s non-energy infrastructure sectors, with state and private firms as the social forces; the increased internationalisation of Chinese finance through the activities of Chinese banks and other financial institutions in the region, either in expanding their presence, issuing bonds, regionalising the

Chinese currency, or increasing involvement in Islamic finance. To explain these components, the chapter proceeds with four sections. It begins with Section 4.2 which explains the emergence of the BRI and the AIIB in the Gulf. Section 4.3 focuses on the first component of the material implementation of the emergent hegemonic project in the Gulf, which is the securing of energy resources, and Section 4.4 analyses the second component, which is the rising infiltration of the Chinese capital in the regional non-energy infrastructure sectors. The final section analyses the third component, which is the increased internationalisation of Chinese finance, not only by examining the activities of Chinese banks and financial institutions, but also the role of the AIIB itself.

- Chapter 5 (The Ideological Struggle of Chinese Emergent Hegemonic Project) answers the question of why the Gulf state-society complexes are supporting and taking part in the BRI and the AIIB by analysing the ideological struggle waged alongside the material implementation of the BRI and the AIIB in the Gulf. Different from orthodox approaches which consider the initiative as restricted to the material sphere, it proposes that the implementation of the BRI and the AIIB, especially in the Gulf, goes beyond the material sphere to involve an ideological struggle to form a common sense that the objectives of the hegemonic project are considered as “natural” by the Gulf’s society. It is argued that this struggle can be divided into two components. The first, which is analysed in Section 5.2, is ideational, which mainly concerns how the objectives of the BRI and the AIIB are rearticulated to find their appeal among the societies of the Gulf. I suggest that an “equalisation” strategy has been used, whereby: 1) the Chinese Dream, as the legitimating idea of the initiative, is promoted in line with that of the “Gulf Dream”; 2) the objectives of the BRI and the AIIB are promoted as conforming to the development plans of the Gulf countries; 3) the initiative is endorsed as benefiting not only China, but also the regional countries; 4) China’s stances on regional issues are made in parallel with that of the Gulf countries. The second component, which is elaborated upon in Section 3.5, is structural, which refers to the particular social forces engaged in the ideological struggle. These forces, who from a neo-Gramscian perspective can be regarded ‘organic intellectuals’, consist of four main groups: the CCP elites; academics and educational institutions; the media; culture entities. Section 5.4 ends the chapter by assessing the limits of the ideological struggle of the BRI and the AIIB in the Gulf, in creating a common sense around the initiative’s objectives. It is advanced that even though, to some extent, the ideological struggle has led the Gulf state-society complexes support and participate in the initiative, they continue to have reservations. These include the lack of clear plan for the initiative and the limited coherence and clarity of what the Chinese Dream is, as the legitimating idea of the initiative attempts to

represent. They also include the negative views of China among the Gulf states and the ideological struggle to propagate the initiative and establish a common sense around its objectives.

- Chapter 6 (The Institutional Frameworks of Chinese Emergent Hegemonic Project) further answers the question of why the BRI and the AIIB are gaining support and participation of the Gulf state-society complexes through investigating the institutional arrangements embedded in the initiative which also facilitate their implementation in the Gulf. I propose to consider these arrangements as part of co-optation strategy intended to attain the consent of subordinate masses for the interests of the ruling class (Kakizaki, 2010: 234 cited in Yaman, 2012: 71). The first of the institutional arrangements, which is dealt with in Section 6.2, is the incorporation of the Gulf states into the policy-making process of the initiative, which is enabled through the provision of large voting shares to the regional states and the appointment of the Gulf states into the bank’s Board of Directors. The second institutional component, which is explained in Section 6.3, is the provision of material incentives to the Gulf, facilitated by the main focus of the initiative in giving infrastructure loans to developing nations and by upholding the principle of non-conditionality in the operating procedures of the BRI and the AIIB. Then, Section 6.4 focuses on the effectiveness of these institutional elements in serving the implementation of the BRI and the AIIB in the Gulf. The primary argument is that although certain institutional arrangements of the initiative have played a significant role in consensus-building strategies behind its realisation in the Gulf, there are several obstacles that hinder its effectiveness. These include: the fact that not all the Gulf states have joined the bank, which resulted in the co-optation strategy not being implemented evenly across the region; the membership of Western countries which made China unable to fully adhere to its own norms; and the fact that giving loans is expensive and requires China to depend on other institutions.

- Chapter 7 (Conclusion) recaptures the findings of each chapter and provides an overview of the arguments put forward by revisiting the research questions of the thesis. It has three major sections. Section 7.1 revisits the research questions that have been answered throughout the thesis. Section 7.2 analyses the wider implications of the findings. Finally, Section 7.4 elaborates the contributions of the thesis and offers suggestions for further research.

This chapter has detailed the overview of the thesis’ topic and set the thesis’ agenda. The thesis now develops an analytical framework to answer its research questions.

Chapter Two A Regional Historical Bloc: A Neo-Gramscian Perspective on the BRI and the AIIB in the Gulf

2.1 Introduction

The previous chapter explained the thesis overview. This chapter develops the thesis’ analytical framework. Since the initiative was launched, realist, liberal, and constructivist approaches have provided competing views on the BRI and the AIIB. While they have presented us with important insights, as highlighted in Section 2.2, they suffer from problematic features including ahistoricism, state-centrism, and determinism, and are thus unable to offer a nuanced analysis on the initiative. These make them inadequate to deploy in an analysis of the BRI and the AIIB in the Gulf, as the implementation of the initiative in the region requires investigation against certain historical phases,40 is a function of diverse social forces, and involves not only material implementation, but also consensus-building strategies to attain the consent of those impacted. This thesis therefore turns to neo-Gramscian perspectives as an alternative theoretical framework which could solve the deficiencies of orthodox approaches and better investigate the implementation of the BRI and the AIIB in the Gulf. It employs the neo-Gramscian concepts of hegemonic projects and historical structures to develop the framework of a regional historical bloc as the theory of the thesis. Theorising the BRI and the AIIB in the Gulf as an emergent hegemonic project, and examining it through the notion of historical structures, provides an avenue to better understand the initiative.

This chapter has three sections. Section 2.2 engages with the existing literature, and the orthodox approaches deployed to examine the BRI and the AIIB are critically assessed. Section 2.3 introduces neo-Gramscian perspectives as an alternative framework that could solve the limitations of the orthodox approaches. In Section 2.4, the conception of a regional historical bloc as the theoretical framework of the thesis is developed by linking several neo-Gramscian concepts with the foci of the thesis’ empirical chapters.

40 This is elaborated in Chapter 3.

2.2 Orthodox Approaches to the BRI and the AIIB

This section critically analyses the established approaches to the BRI and the AIIB. Since the initiative was launched, both Chinese and global observers have attempted to provide explanations concerning the BRI and the AIIB, both in general and in the Gulf specifically. The attempts have been made from three competing perspectives: realist, neo-liberal, and constructivist. Although they have enriched our understanding of the initiative, they have several limitations which restrict them from giving nuanced analyses, as outlined below.41 This section serves as a precursor to the development of an analytical framework in later sections.

The Realist Perspective: Dominating the World

The most common analysis follows a realist geopolitical trend to see the BRI and the AIIB, as a “Trojan horse” designed to extend China’s influence (Campbell, 2016), or a strategy to counter Western-led order (Shambaugh, 2016: 162-63). Despite the CCP’s rejection that the initiative is a “tool of geopolitics” (Wang, 2015), realists perceive the initiative as China’s “grand strategy for Eurasia” (Fallon, 2015: 141) or as China’s own Marshall Plan, expanding its influence through supporting development (Kennedy and Parker, 2015).42 The underlying approach of this narrative is Waltz’s (1979: 93) anarchic view of global politics, consisting of states motivated by material and security interests. The majority of the authors hold “China-threat” beliefs, seeing China as a revisionist power challenging the existing hegemony and reconstituting the regional and world order.43 Gulf-focused studies in this narrative conceive the BRI and the AIIB as China’s strategy to expand its influence in the region (Luft, 2016). A renowned Sino-Gulf affairs analyst, Dorsey (2016: 9), for example, considers the initiative as marking a revolution in China’s foreign policy in the Gulf, where it now intends to strengthen its influence in the region through investments and loans.

While the majority of analyses understand the BRI and the AIIB as ‘one’ initiative, they have also been examined separately. Stiglitz (2015), for example, considers the AIIB as

41 These categorisations may be subjective sand are only used to show their limitations in order to present the analytical framework for this thesis. These categories should be considered analytical rather than rigid and discrete division. 42 Foreign Minister Wang Yi repudiates such comparisons by stating that “it is a product of inclusive cooperation, not tool of geopolitics, and must not be viewed with the outdated Cold War mentality” (Xinhua19, 2015). Shen and Chan (2018: 1-11) has also carried out a comparative analysis on the BRI and the Marshall Plan. 43 See Tucker (2014) for an analysis on the China Threat.

a ‘challenger’ to the established financial system.44 Huotari and Heep (2015: 153) also suggest that the AIIB is a manifestation of how China is utilising its leverage to become a new driving force of international arrangements that insinuate its power in the areas of global finance, money, and trade by providing liquidity, aids and loans, establishing new currency,45 and organising a ‘voice’ for developing countries who have been mainly neglected in the existing institutions.46 Within the realist account, the BRI and the AIIB is also seen as China’s security strategy. Yale (2015) suggests that the BRI is implicitly intended to facilitate a greater People’s Liberation Army Navy (PLAN) presence in the Indian Ocean to secure China’s maritime links. Particularly in the Gulf, Liu (2017: 142) for example, sees the BRI’s investments in developing the Gwadar Port in Pakistan as a strategy to protect energy and trade lanes between China and the Gulf from piracy.

The realists, furthermore, consider the BRI and the AIIB as commercial and capitalist endeavours with the aim exclusively being to invest in projects that benefit China. The proposition that the initiative produces “win-win” outcomes is denied; instead it is said that the objective is to position China as “the centre of regional economy” and to serve China’s material gains (Cohen, 2015: 5). On the one hand, the BRI and the AIIB-linked projects are intended to resolve China’s overcapacity (Zhang, 2017).47 On the other hand, the outcome of the projects is intended to be the facilitation of the flow of capital, labour, and investment crucial to China’s economic development and the growth of its western regions (Esteban and Otero-Iglesias, 2015: 1-10). 48 Henelito Sevilla, in his study on the BRI in the Middle East, argues that the initiative:

“[is] a necessary measure to meet future Chinese demands for energy and open markets for its surplus product” (Sevilla, 2017: 83).

While the BRI and the AIIB may fit the realist narrative, this approach is insufficient for three reasons. First, it is ahistoric, whereby it considers the initiative as a clean and uncompromising break with the past. Due to its emphasis on structure, which regards the world as static and rational, they disregard the historical origins of the BRI and the AIIB. They cannot thus historically explain why the initiative has been launched by Xi at this specific time and the interests behind the initiative that they presume exist. As Chapter 3 exemplifies, to answer the question of why is China implementing the BRI

44 A multitude of scholars hold this perception. See, for example, Wihtol (2015), Renard (2015), Etzioni (2016), Chow (2016), Luft (2016), Mishra (2016), Aberg (2016), Callaghan and Hubbard (2016), and Wan (2016). 45 See, for instance, Kartz (2015), Ryan (2015), Sekine (2015), Lee and Kim (2016), Lim et al. (2016), Wu (2016), and Chin (2016). 46 See also Reisen (2015), Chin (2016), Peng and Tok (2016), Wang (2016), and Wan (2016). 47 See, for example, Suzuki (2015), Callaghan and Hubbard (2016), and Johnston (2016) for analyses on the BRIAIIB and the issue of overaccumulation. 48 See also Zhang, (2015), Dollar (2015), and Bhoothalingam (2016).

and the AIIB in the Gulf, the initiative need to be understood against the background of globalisation which led to the opening up of Chinese and Gulf states to the global economy and the ensuing interaction between China and the Gulf states. The realists, nonetheless, ignore this phenomenon, because of its ahistoric trait, and only provide predetermined assumptions on the objectives of the initiative. That approach suffers from a state-centrism which regards states as basic units of analysis. Consequently, the initiatives are mainly viewed as inter-state activity, where China is regarded as the only actor in the initiative, without considering the roles of the non-state actors involved.

Although Wu (2015: 8) and Olimat (2016), for instance, listed some examples of the BRI and the AIIB’s projects in the Gulf, they do not inform us of the specific agents behind those projects.49 As the thesis’ empirical chapters demonstrate, rather than being a “state-only” activity, the realisation of the BRI and the AIIB in the Gulf involves both state and non-state social forces. This view runs parallel with, among others, Blanchard and Flint (2017: 224) who suggest that the initiatives involve various subnational actors. This state-centrism has also resulted in another problem: black-boxing of states, which then ignores the BRI and the AIIB from its domestic context. The problem is that, as Sevilla argues:

“Understanding China from an external perspective […] only gives us a partial [view]. […] It is necessary to comprehend the interplay of domestic and international variables that formed part of China’s recent geo-economic initiative” (Sevilla, 2017: 83).

As further explained in Chapters 3 and 4, the BRI and the AIIB in the Gulf is actively impacted by local dynamics within China. Therefore, the domestic/global theoretical differentiation obscures rather than clarifies. Third, the realists emphasise determinism. The implementation of the BRI and the AIIB is portrayed as though China can do anything and the world will respond positively. It is regarded as a struggle-less process that effectively reinforces the introduction of a new system to the established order and unproblematically achieves China’s interests. The question of why the BRI and the AIIB is accepted by other countries is not answered. It appears rather too idealistic, in a world of intense conflict, to believe that an enormous strategy such as the BRI and the AIIB can be implemented without any political efforts to convince those impacted. Most of the studies above nonetheless, imply that is the case.

49 Some works on the BRI have also begun to analyse the roles of specific actors beyond the state in the BRI. See, for example, Arduino and Xue (2018) and Liu (2018: 1-30).

The Neo-Liberal Perspective: Cooperating with the World

The second narrative moves beyond a realist viewpoint and rejects the contention that suspects the BRI and the AIIB of being China’s “revisionist” strategy. This literature is influenced by the liberal institutionalist and complex interdependence theories which propose that state cooperation is possible because of the presence of international institutions (Keohane, 1984: 50-83) and because states acknowledge that they need one another. They agree with the realist assumption that states are rationally motivated by their interests, but they are not expected to clash, as countries cooperate either through institutions or among themselves to settle their differences. This narrative, influenced by the Vision and Action document which prioritises “connections” and “connectivities”, sees the BRI and the AIIB as aiming not to overthrow the existing global powers or structure (Bondaz, 2015; Zimmermann, 2015), but as an attempt to increase relations with countries around the world. Yang Shu, Director of the Institute for Central Asian Studies at Lanzhou University, proposes that the BRI is by no means China’s efforts to counter-balance U.S. efforts in “rebalancing towards the Asia Pacific” (Shu, 2013, cited in Zou, 2018: 8). Rather, it is a mechanism for “South-South Cooperation”.

The initiative is considered less as an effort for seeking hegemony than as a means to revisit the Third World spirit developed in Maoist China. Wang (2015), a professor at Peking University who once suggested for China’s necessity to rebalance geopolitically, proposes that the BRI and the AIIB is not the mechanism to help them do so. This understanding is also prevalent in analysis of the BRI and the AIIB in the Gulf. Payne (2016), for example, argues that:

“[The BRI] is not a strategic vision for Eurasia that features a military and security footprint, at least not as it is initially conceived” (Payne, 2016).

One year later, Fulton (2017) also proposed that the “BRI is focused on developing connectivity through inclusive cooperation, rather than a strategy that is directed against another state or group of states”. He also emphasised that the implementation of the initiative in the Gulf revolves “around the core of economic interdependence” (ibid.). The AIIB-focused examinations in this narrative conceive that the Bank is merely a complement to the current system and operates within the existing frameworks and practices (Hines, 2016: 1-28). While the realists consider the AIIB as aiming to overrule the current system and advance the Sino-centric agenda, liberals such as Bestani (2015) suggest that the AIIB represents China’s “intent… [to be] part of a member of the current economic order rather than challenging the status quo”.

Furthermore, the perspective also rejects the realist assumption that the BRI and the AIIB only benefits China (Kaczmarski and Jakobowski, 2015: 1-8). Through examining projects in the initiative, it argues that the initiative establishes facilities and economic corridors which facilitate mutually a beneficial flow of trade and investments between China and its partners. In the Gulf, Hatab writes that the BRI and the AIIB:

“strengthen China’s importance as an economic partner for the Arab world and deepen economic integration, boost cross-border trade and financial flows in part through major Chinese investments in building up infrastructure” (Hatab, 2015: 3).

This proposition is also shared by other Sino-Gulf observers such as Diaa (2015), who considers the BRI as aiming to strengthen China-Gulf trade, which will benefit both, and Qian Xuming, a research fellow at Shanghai International Studies University, who argues that the BRI advances mutually beneficial China-Gulf cooperation (Qian, 2017, cited in Al-Tamimi, 2017).

While the liberal perspective has provided an alternative view on the BRI and the AIIB, it still suffers from several deficiencies. First, grounded in the rational choice theory, conceiving the initiative as an ahistorical phenomenon and the interests behind it are presumed. No exploration is made of how Chinese interests in the initiative serve to establish cooperation with other institutions or other countries. The interests outlined are only presumptions. Second, the initiative is still viewed as “state-only”, where China is the only subject of the analysis and the impacts of domestic dynamics are not taken into account. Khan (2018), for example, proposes that over 4200 Chinese firms have set up base in the UAE as part of the BRI. Nonetheless, he ignores their roles in the initiative and the interests they represent. Thirdly, the implementation of the initiative is still seen as a natural process. Olimat (2016: 26), for example, outlines that the Gulf countries have responded positively to the BRI and the AIIB. However, no attention is paid to the struggle to attract these countries to support the initiative.

The Liberal Institutionalist and Constructivist Perspectives: Focusing on Ideas

The third existing approach used to understand the BRI and the AIIB is concerned with the ideational aspect of the initiative. This can be divided into two paradigms. The first is apparently influenced by the liberal institutionalist perspective which holds that ideas “have a causal weight in explanation of human action” (Goldstein and Keohane, 1993: 420). These studies show how certain ideas influence the initiation of the BRI and the AIIB. For example, Zheng (2015, cited in Callahan2, 2016: 237) argues that the BRI is rooted in China’s civilisational ideas to raise China’s status as a global actor that can

guide the values of the post-U.S. ‘zeitgeist’ (shidai jingshen). Other analyses are influenced by Goldstein and Keohane’s (1993: 420) further conceptualisation that ideas gain causal relevance if they are embedded in institutions. They understand the BRI and the AIIB not only as an institution seeking cooperation, but as a means of exporting particular Chinese ideas (Wang, 2015: 2; Swaine, 2015). Wang (2015: 2), for instance, argues that the BRI is a mechanism to spread China’s model of globalisation.50

In the meantime, others, such as Sorensen (2015: 63) adopts Jacobsen’s (1995: 298-300) understanding that ideas attain causal relevance when they are employed by actors who deploy them as “weapons” to legitimise their policies. Mayer (2018: 24), for instance, states that in recent decades, the CCP has tried to establish legitimacy for its interests through drawing heavily on China’s traditional culture and values on the one hand and referring to Chinese history on the other. In the context of the BRI and the AIIB, she proposes, the CCP initiated the notion of a “community of common destiny” to incite a strong resurgence of nostalgia within the countries along the routes, which would contribute to lending legitimacy to the implementation of the initiative (ibid.). Similarly, Sorensen (2015: 63) proposes the notion of revitalising the Chinese nation wrapped in the widely promoted “Chinese Dream” as a manipulating tool for China’s present-day policies and initiatives, including the BRI and the AIIB.

The liberal institutionalist approach to the BRI and the AIIB thus generally focuses on the causal relevance of ideas. As suggested by Goldstein and Keohane (1993:7), this relevance can be established through three different means: as a main influencer for the initiation and the implementation of the BRI and the AIIB; as the main idea embedded and carried by the initiative; and as ideas used as “weapons” to create legitimacy for the initiative. This approach is based on a positivist understanding of social science, which involves a separation of subject and object and the search for clear cause-effect links. While the liberal institutionalist premise is that ideas can be deployed by certain actors as manipulating tools is relevant in an analysis of the BRI and the AIIB in the Gulf, as I explain in Section 2.5, the approach in itself is not fully convincing in explaining the Chinese initiative. First, these studies are adopting a perspective which treats ideas as causes and as possible additional explanatory variables. There is therefore no space for viewing ideas as partly constituting the wider social reality. They are only perceived as commodities, as objects which influence other objects. This:

“reinforces the notion that ideas are distinct from interests and that their role, in practice is limited to manipulation and it obscures the constitutive functions of ideas” (Laffey and Weldes, 1997: 207).

50 See Freeman (2015), Miao (2015), Weaver (2015), Kaczmarski (2015), Billington (2015), Larson (2015), and Peng and Tok (2016) for similar arguments.

Such a circumstance prevents the approach from finding the link between ideas and material interests behind the BRI and the AIIB and from investigating the structural quality of ideas in the form of “intersubjective meanings” (Yee, 1996: 102). Secondly, the approach does not consider the origins of ideas it explains: whose ideas are driving the BRI and the AIIB? Thirdly, the liberal institutionalist approach also does not tell us why those specific ideas, and not others, attain causal power. Zheng (2015, cited in Callahan2, 2016: 237), for example, does not elucidate why it is Chinese ideas about civilisation that have influenced the initiation of the BRI. Meanwhile, Wang (2015: 34) does not explain why it is China’s globalisation model, not others, which is being spread by the initiative.

The second paradigm focusing on the ideational elements of the BRI and the AIIB is influenced by constructivism. Although constructivism is not one unified theory and rather can be considered as a school of thought, its main assumption is that ideas are “intersubjective meanings” and “the product of collective self-interpretations and self- definitions of human communities” (Neufeld, 1995: 77). Together, the “intersubjective meanings” establish a “web of meaning”, which is a part of social totality – the structure within which people function –and to which they adapt, in a similar fashion to how they adapt to material conditions.

“The practices in which human beings are engaged cannot be understood in isolation from the web of meaning, which is in a fundamental sense constitutive of those practices, even as it is embedded in and instantiated through those same practices” (Neufeld, 1995: 77).

Wendt (1994: 349), a famous proponent of constructivism, criticises realist and liberal pers pectives that states’ interests and identities are a given, which makes the analysis of “identities and interests, the reproduction and/or transformation of which, is a crucial determinant of structural change”, impossible. Hence, the structure within which action takes place, not only constitutes material conditions but is also an intersubjectively constituted structure of identities and interests in the system (Wendt, 1992: 401). To understand the transformation of identities, interests, and structures, ideas need to be viewed as part of the structure and as intersubjective meanings.

Callahan (2016: 226)’s contribution to this strand of literature has been especially vocal. He begins his article by critiquing the existing constructivist studies on Chinese foreign policy which state that the latter is influenced by its distinct historical and civilisational identities (ibid.). In his view, this literature not only suffers from historical inaccuracy, but the focus on China’s primitive ideas means it disregards the identity dynamics of China’s 20th century experiences of war, revolution, and socialism (ibid.). He, instead,

suggests that rather than situating present-day Chinese foreign policy in the context of thousands of years of civilisation, it is important to look at the linkage between recent Chinese foreign policy concepts and initiatives and the contemporary ideational debates within the CCP. By examining patterns of signification and repetition in the official statements of Chinese political figures in recent years, Callahan (2016: 226) argues that the initiation of the BRI and the AIIB, which he considers a mechanism designed to establish a Sino-centric world, is rooted in the recently widespread idea of “peripheral diplomacy” which suggests that China should be at the centre of the world and other countries at the margins.51 Meanwhile however, Wang (2015: 103) proposes that it is China’s view of itself as a humiliated nation needing to rejuvenate, as iterated through Xi’s concept of the “China Dream”, that acts as the structure that shapes the ideational direction of current Chinese foreign policy preferences and initiatives, including the BRI and the AIIB.

This constructivist literature, however, does not only concentrate on how shared ideas and identities influence the initiation of the BRI and the AIIB. Instead, following some constructivists such as Flockhart (2012: 16), they demonstrate that actors whose actions cannot be isolated from certain intersubjective meanings may themselves change the intersubjective meanings of a structure. This is what is termed in constructivism as the process of ‘structuration’, a cycle where structure shapes the behaviour of actors who then shape the behaviour of the structure (Giddens, 1984). Callahan1 (2016: 36) uses this understanding when he argues that the BRI has been initiated to rebuild a China- led world order with new governance intersubjective meanings, which include not only regularly repeated principles such as mutual respect, mutual trust, reciprocity, equality, and win-win, but also the traditional ideas of a hierarchical regional structure with parallels in the historical ‘tributary system’. Similarly, Zhou and Esteban (2018: 11) argue that the linkage between China and the countries along the BRI routes helps to promote China-led intersubjective ideas and norms to build Chinese soft and normative power and hence enhance the legitimacy of its growing influence in the world. Mayer (2018: 23) provides an example, exploring how today China’s new “geo-visions” have begun to alter the social construction of space across Eurasia, whereby various maps of the BRI exclude the U.S., replacing the transatlantic and transpacific focus with a solid Eurasian picture.

These constructivist analyses, however, remain unable to provide convincing analyses of the ideational components of the BRI and the AIIB. Most of these studies employ a constructivist view of material structure that is already separated and thus they do not comprehend the material context behind the ideational components of the initiative.

51 For example, Foreign Minister Yang Jiechi said to ASEAN leaders in 2010 that “China is a big country and other countries are small countries, and that’s just a fact” (Mitchell, 2016).

This is grounded in the constructivist distinction of the ‘logic of anarchy’ and the ‘logic of capital’ in its analysis of the state-system and its potential transformation into a world state (Wendt, 2003: 494), which divorces the relation of capitalist development from state formation processes whilst also then collapsing analysis into a single logic in which the power of the dynamics of anarchy prevails (Bieler and Morton, 2008: 103). As such, it does not offer any appreciation of the internal link between the geopolitical conditions of the state-system and capital accumulation. This means constructivism maintains “the view that material conditions are in fact independent of ideas” (Palan, 2000: 590). Disregard of the material context leave constructivist-based investigations of the BRI and the AIIB unable to answer the question of why it has been those ideas, not others, that have become the intersubjective ideas that are influencing the initiative’s realisation.

Secondly, the neglect of the material context also made constructivists, who differ from the liberal institutionalists in their understanding of ideas, ignore the role of ideas as a manipulating tool (Bieler and Morton, 2008: 103). Even though Zhou and Esteban (2018: 11) agree that promotion of Chinese-led intersubjective meaning via the BRI and the AIIB is intended to enhance the legitimacy of its increasing role in the world, most of the constructivist literature tends to disregard the fact that efforts to establish new intersubjective meanings through the initiative are also a part of efforts to legitimise material interests behind the initiative. As I showcase in Chapters 3 and 5, the idea of the Chinese Dream, and other worldviews, have been used to turn the interests behind the BRI and the AIIB into intersubjective meanings in an effort to gain the support of Chinese people and the Gulf countries for the initiation and implementation of the initiative. Adopting constructivism, however, would disregard this aspect.

Thirdly, another issue of constructivist analyses is that there is limited conceptualisation of actors in them. It is not clear who or which specific agents work to establish the intersubjective meanings that influence the initiation of the BRI and the AIIB or work to form intersubjective meanings through the initiative. These studies suffer from the prevalent problem of constructivism which is, despite its emphasis on agency, falling back on state-centrism whereby “China” is the main/sole subject in the study (Wendt, 1999: 39). This lack of conceptualisation of actors makes constructivism unable to fully explain how certain ideas or worldviews have become embodied in the BRI and the AIIB and the relevant constitutional structure of the countries along the routes. This is despite the fact that growing number of observers such as Mayer (2018: 24) have begun to acknowledge the roles of certain agents such as scientific cooperation by academics and the media in their analysis of the ideational component of the BRI and the AIIB.

The issues above showcase that liberal institutionalist and constructivist approaches are unable to provide a convincing theoretical framework to examine the implementation of the BRI and the AIIB in the Gulf. This is because, as theoretically discussed in Section 2.5 and empirically demonstrated in Chapters 3 and 5, a theoretical framework is required that can combine premises of liberal institutionalism and constructivism and that can resolve limits of those approaches in examining the roles of certain ideas as manipulating tools of the BRI and the AIIB. This intends to universalise the interests behind the initiative into the “intersubjective” interests of Gulf society, and the material context of those ideas and the agents involved in the process. As explained in Section 2.3, neo-Gramscian perspectives fulfil these requirements.

To summarise this section, while the existing literature certainly enriches our knowledge of the BRI and the AIIB, orthodox studies remain unable to give a nuanced analysis. First, these approaches consider the implementation of the BRI and the AIIB as an ahistorical process. They ignore the historical precedents that drove the implementation of the initiative, and the interests behind it are seen pre-determined. This is problematic because it disables us to fully answer why China is implementing the BRI and the AIIB in the Gulf. As shown in Chapter 3, the BRI and the AIIB in the Gulf must be analysed against the background of the globalisation process during 1970s, which, led to the integration of China and the Gulf states, among others, to the global economy and the subsequent increased interaction between them. Neglecting these historical trajectories offers an insufficient analysis of the factors behind the BRI and the AIIB in the Gulf. Second, these studies are state-centric, thus they do not consider the roles of specific actors beyond the state and overlook the domestic and international context of the initiative. This is problematic for two reasons. First, as demonstrated in Chapters 4 and 5, the BRI and the AIIB in the Gulf is a function of both state and non-state agents. Second, as Sevilla (2017: 83) argues and as shown in Chapters 3 and 4, it is important to “comprehend the interplay of domestic and international variables that formed part of China’s geo-economic initiative”.

Thirdly, the orthodox approaches emphasise determinism, whereby the BRI and the AIIB is considered as a struggle-free process. What is suggested is that the initiative is being implemented automatically without any efforts to convince those impacted. Han and Chen (2018: 2), for instance, indicate that Oman has “positively responded” to the BRI and the AIIB. However, due to their deterministic basis, they do not explain what made these countries attracted to the initiative. This is limiting in answering why are the Gulf countries supporting and participating in the BRI and the AIIB. Chapters 5 and 6 of the thesis show that the BRI and the AIIB have not fallen suddenly from the sky to the Gulf. Rather, it has been the outcome of consensus-building efforts between social forces. Moreover, although the ideational elements of the initiative have gradually been

examined, they still have limitations, especially being unable to examine in an integrative manner the context of the ideas associated with the BRI and the AIIB and their roles as a manipulating tool in the implementation of the initiative.

To resolve these deficiencies, I turn to a critical theory derived from neo-Gramscian perspectives, which offers an alternative viewpoint to orthodox approaches, as I discuss below.

2.3 An Alternative Neo-Gramscian Perspective

Having considered the theoretical prerequisites necessary for a sufficient analysis of the BRI and the AIIB in the previous section, I now develop a more nuanced theoretical framework to examine the implementation of the initiative in the Gulf. To do so, I turn to neo-Gramscian perspectives, in particular their concepts of hegemonic projects and historical structures, which provide useful traction to resolve the deficiencies of the orthodox approaches. This section outlines the primary premises of neo-Gramscianism to explore their relevance for this thesis. It proceeds as follows. First the ontological basis of the perspectives is explained, followed by a discussion of hegemonic projects and historical structures as the primary concepts that will guide the thesis, before elaborating on how theorising the initiative from neo-Gramscian perspectives resolve the shortcomings of the established approaches. This section serves as a preliminary introduction for the next section, where the notion of a regional historical bloc as the thesis’ analytical framework is developed.

The Archaeology of neo-Gramscian Perspectives52

Neo-Gramscianism originated in two seminal works by Robert Cox (Cox, 1981; Cox, 1983). The pre-eminence of the perspectives in analysing the BRI and the AIIB in the Gulf, over the orthodox approaches, lies in its ontological nature, which eschews the positivist basis of the orthodox IR theories, and instead identifies itself with an anti- foundational ontology in the form of historicism based on Karl Marx’s work. This has three primary elements: a materialist understanding of history based on Marx’s (1859) ontological supremacy of production, where the interaction between the means of production and the relations of production comprise the basis of society; the refusal of positivist subject and objective differentiation, instead emphasising dialecticism which conceives a social reality as a dynamic totality; and the vindication of Marx’s (1857) well known abstraction method.

52 Overbeek (2000: 168-83) uses this phrase.

This ontological stance presents an alternative view of social reality from orthodox approaches, by looking at it not as ahistorical or given, but as a process that is always changing. It rejects the division between politics and economics and the naturalisation of a civil society of abstract individuals. It instead repolitises as well as communises the economy and civil society, rejecting objectification and naturalisation of capitalism’s conditions. It considers both economics and civil society as terrains of struggle, which is transformable in a wider political process of social self-determination (Rupert, 1995: 2). Although broadly accepting Marx’s conceptions (Gramsci, 1971: 201-2), Gramsci discards a mechanical, positivistic and materialistic reading of Marx and proposes that economic developments are not necessarily trailed by social change. Rather, the social dynamics that emerge are the consequences of particular agents within a society whose thoughts and actions are influenced by their social consciousness. The primary element of the political struggle is to create a common consciousness. Theorising the politics of ideological struggle provides an alternative view of capitalist social relations, including state-focused premises, and creates a new social order out of historical conditions (ibid: 229).

In this way, and as I elaborated throughout the chapter, neo-Gramscian perspectives spur an alternative to orthodox theorisations of the BRI and the AIIB highlighted in Section 2.2. Firstly, it moves away from the essentialism and reductionism prevalent in orthodox approaches. Instead, it places a particular emphasis on historically grounded interpretation of the dialectic totality of structure and agency. This allows us to situate the implementation of the BRI and the AIIB within a particular historical period and to move beyond statism of the orthodoxes where the ontological primacy of the state and the roles of non-state actors remain problematic. Finally, by rejecting the positivist nomothetic tendencies of Marx and by bringing in civil society as an additional element into IR, it enables us to take account for the consensus-building strategies behind the implementation of the BRI and the AIIB.

The perspectives have been deployed in many analyses of China in contemporary times. For examples, Todd (1974), Dirlik (1983), and Liu (1997) drew parallels between Gramsci and Mao’s revolutionary strategies, while Zheng (2009) deployed Gramsci to cast the Party-state as “organisational emperor”. Meanwhile, Su (2011) deployed it to analyse the usage of ideologies and narratives of revolution and reform to attain and maintain hegemony in present-day China, and Mayer-Clement (2015) used Gramsci to analyse the impact of the marketisation and the commercialisation of the entertainment industries upon the CCP’s stability. Li (2015) deployed Gramsci’s ideas of hegemony, counter-hegemony and passive revolution to discuss the Chinese Dream, while Huang (2015) studied the reception of Gramsci’s hegemony in China itself. The perspectives have also been deployed to examine present-day China in international politics. Yilmaz

(2014), for instance, wrote the relevance of Gramsci’s historical bloc in understanding China’s rise in the post-cold war order. Neo-Gramscianism has also been used to study China-U.S. relations during the 1990s (Roden, 2003), to study Cross-Strait Economic Integration (CSEI) (Green, 2016), and to examine the present-day Chinese state (Hui, 2018: 43-68). Together with these studies, this thesis proposes that neo-Gramscian perspectives also provide a useful tool to investigate one aspect of present-day China: the implementation of the BRI and the AIIB in the Gulf.

Cox’s works emerged through his deployment of Antonio Gramsci’s conceptions and thought processes to understand how power was exercised in the world order (Cox, 1981: 133). Investigating the unification of Italy in 1870 and the rise of fascism there, Gramsci (1971: 120) created a culturally and institutionally sensitive form of Marxism that explained how power was exercised in a social formation. In circumstances where a leading class ruled a society by coercion, as the roots of social power did not permeate deeply into all levels of social life, ‘a war of movement’ (direct confrontation) leading to the dethroning of brutal forces would possibly take place. However, when a leading class secured its legitimacy through state and civil society institutions, trying to attain support of the existing social order, a hegemony was formed. As the social power of the ruling class was robustly built, a war of movement was not possible. This process constituted a ‘war of position’: a political struggle to challenge the prevailing order and to establish alternatives. Different from the ‘war of movement’, the war of position was a strategy in the creation of consent to rule and was to be pursued not directly against the state, but in and through civil society (Kelly, 2017: 186).

This understanding, alongside several of Gramsci’s concepts, including hegemony, war of movement, war of position, and historic bloc, are deployed by Cox to account for a world order. He suggests that globally hegemonic groups are initially formed as social forces and dominant classes within powerful states, and expand outward (Cox, 1981: 153). Cox’s understanding,53 followed by the later proponents of neo-Gramscianism (Rupert, 1995; Augelli and Murphy, 1988; Morton, 2007; Bieler and Morton, 2014: 17), provides an innovation in the understandings of power and hegemony in IR and IPE by defining it as:

“An expression of primarily based consent, manifested in the acceptance of ideas and supported by material resources and institutions, which is initially established by social forces occupying a leading role within a state, but is then projected outward on a world scale” (Bieler and Morton, 2004: 87).

53 There is an ongoing debate on the deployment of Gramsci’s ideas in the international context, see Germain and Kenny (1998: 3-21). See Augelli and Murphy (1988: 5), Cox (1999: 5), and Morton (1999: 9) for responses and justifications.

The breakthrough is based in the weight on ideological, social, and cultural aspects of power. Unlike orthodox conceptualisations of hegemony which place an emphasis on the material capacities of power, a neo-Gramscian understanding puts an emphasis on the consensual character of political rule, or what Gramsci describes as the “moral and intellectual leadership” of the leading class or class fraction within society (Hui, 2018: 62).

This conception is based on Gramsci’s notion of the historic bloc coined to “indicate the way in which a hegemonic class combines the leadership of a bloc of social forces in civil society with its leadership in the sphere of production” (Shields, 2016: 170). The historic bloc constitutes a coalition of classes, or fractions of capital that try to form a specific type of social order “[comprising] political, cultural, and economic aspects of a particular social formation, uniting these in historically specific ways to form a complex, politically contestable and dynamic ensemble of social relations” (Rupert, 1995: 29-30). The rule of the dominant class relies on two equally vital aspects; economic domination and intellectual and moral leaderships. Leading social forces maintain their position by securing the ‘spontaneous consent’ of subordinates through the negotiated formulation of a political and ideological consensus that incorporates both the dominant and lesser forces. This assumes consent given by the majority of a population to a certain course given by those in power.

Although the concept does not negate the coercive aspect of power through claiming that hegemony includes “a combination of consent and coercion” (Boothman, 2011: 73), its praxis is based more on the former than the latter (ibid.). As Cox (1983: 127) says, hegemony succeeds when the “consensual aspect of power is in the forefront”. Hegemony is the state in which power recedes “into the background of consciousness” and inter-state relations are managed via consent-inducing efforts although coercive forces still underlie the entire structure. In Cox’s work, the notions of historic bloc and hegemony are very close together and, although it is not clearly written, appear identical (Bieler, 1998: 70). This implies that the formation of a historic bloc means that the bloc achieves hegemony. Gill, however, differentiates the two concepts through arguing that a historical bloc “may at times have the potential to become hegemonic” (1993: 30), but also it may not. Gill’s argument, which this thesis adopts, offers the analytical advantage of identifying a combination of the material and ideological forces necessary to form a historical bloc, without necessarily leading to the conclusion that this is combined with hegemonic rule.

For this thesis, hence, the neo-Gramscian understanding of hegemony and the concept of historic bloc provides a powerful analytical tool to explain why the BRI and the AIIB have received support and participation from the Gulf state-society complexes. It

will be shown in Chapters 4, 5, and 6, that the initiative in the Gulf is not a struggle-free phenomenon. Instead, certain ideological struggles and institutional frameworks need to be pursued and arranged in an effort to organise an alliance, or historic bloc, with regional society, to attain legitimacy for the initiative. Neo-Gramscianism gives a crucial orientation away from orthodox approaches and a tool to answer the thesis’ research question by unravelling the consent-building endeavours waged alongside the material implementation of the BRI and the AIIB in the Gulf. In order to operationalise the perspectives in this thesis, I deploy two of its concepts, namely: hegemonic project and historical structures.

The BRI and the AIIB as an Emergent Hegemonic Project

There are two neo-Gramscian notions that are relevant to answering this thesis’ main research question; hegemonic project and historical structures. Although the former has been primarily left undefined within neo-Gramscianism, Jessop (1990: 198) has tried to define hegemonic projects by discussing them with a related concept: “accumulation strategy”. He argues that:

“While an accumulation strategy is directly concerned with economic expansion on a national and international scale, hegemonic projects [concerns] with various non-economic objectives (even if economically conditioned and economically relevant) […] [W]hile an accumulation strategy is oriented primarily to the relations of production and the balance of social forces, hegemonic projects are typically oriented to broader issues not only in economic relations but also in the field of civil society and the state” (ibid.).

The success of an accumulation strategy relies upon the complex relations among the different fractions of capital and the balance of forces between leading and subordinate classes; thus, the significance of a hegemonic project. This constitutes the galvanisation of support behind a concrete programme that claims to represent the general interests of a society while explicitly or implicitly advancing the long-term interests of the leading class. The two should not be viewed as two distinct realms, but instead as two elements of political actions grounded on the same social relations of production (Morton, 2007: 153). As Jessop (1990: 201) proposes, “the crucial factor in the success of accumulation strategies remains the integration of the circuit of capital and hence the consolidation of support within the dominant fractions and classes”. My argument is that the BRI and the AIIB in the Gulf can be understood within this conception of hegemonic projects because even though the initiative “stem[s] from the economic sphere, [they] transcend this into political and social spheres, incorporating broader issues that harmonise the interests of the leading forces and subordinate classes” (Morton, 2007: 153). As will be

discussed in the empirical portions of the thesis, the implementation of the BRI and the AIIB in the Gulf are rooted in economic interests; however, their implementation involves the universalisation of their objectives with the interests of regional society, in order to attract the support and participation of the Gulf countries. However, as I show in Chapters 5 and 6, the hegemonic project is not yet properly in place as the efforts to galvanise support for its objectives are still in their infancy. On this ground, the thesis considers the initiative as an emergent hegemonic project.

Unpacking the Historical Structures of the Emergent Hegemonic Project

To further investigate the BRI and the AIIB as an emergent hegemonic project, I turn to Cox’s (1986: 245) concept of “historical structure”, which, as I discuss below, allows us to unpack the material, ideational, and institutional components of the initiative. In this section, I first present Cox’s concept of historical structures before developing my iterative version for this thesis in the next section. The concept of historical structures is adopted by Cox from Gramsci’s concept of the historical bloc, which is employed to examine the interplay between the material and ideational forces of a hegemonic order in capitalist or industrial societies. Cox adopts this to study world order, whereby he proposes that three elements structure it:

1. Material capabilities, which are natural resources and technological aptitudes that could be deployed for either productive or destructive purposes. This definition does not specify the location of material capabilities and there is not a presumption that they lie within the states’ borders, to be utilised by elites when they are needed. 2. Ideas, which are of two kinds. “One kind consists of intersubjective meanings which tend to perpetuate habits and expectations of behavior; […] the other kind of ideas relevant to a historical structure are collective images of social order held by different groups of people” (Pass, 2018: 598). Both have different purposes. While intersubjective meanings tend to cut across social divisions and lay the ground for social discourse through a historical structure, there may be different collective images simultaneously, a clash of which can resulted in alternative developments. 3. Institutions, which serve as a means of stabilising and perpetuating an order by promoting ideas which are consistent with this order. Having established a life of their own, they may even become a battleground of conflicting collective images (ibid: 613).

With these structures, a hegemony is described from a neo-Gramscian perspective as a power structure maintained by a consensus between opposing social forces (Payne,

1998: 253). This consensus is, on the one hand, manifested in an acceptance of certain dominant ideas, and on the other hand, supported by material resources and a set of institutions. Analysis of world order must take into account these three components, the combination of which forms a hegemonic world order and can be discerned from a non-hegemonic world order when the power relations on which it rests recede into the background. Cox (1981: 136-7) also reminds us that a fixed determinism needs not to be assumed among these three structures, as the relationships can be reciprocal. The direction in which the lines run is always a question to be answered by an empirical study of a particular case.

Cox’s historical structures are considered an innovative and useful tool to the study of IR (Sinclair, 2016: 501-519). They enable the unpacking of a structure, so that the elemental features that make up any specific configuration can be analytically taken into account. While historical structures have been developed by Cox to study hegemonic world order, they can also be deployed to examine other aspects of the world order. This is made possible by Cox’s contention that historical structures must be seen as the limited nature of each structure. These “limited totalities”, as Cox defines them, do not include everything, but are instead of “a particular sphere in the historically located totality” (Cox, 1981: 37). For Cox, rather than invoking ceteris paribus like the orthodox theories, this can be avoided by “juxtaposing and connecting” historical structures in associated spheres (Cox and Sinclair, 1996: 11). He presents diachronic understanding through deriving structures from historical situations rather than by using an abstract model of world order, and by anticipating the formation of rival or counter-hegemonic structures (ibid.).

Yilmaz (2014: 191-222), for instance, has deployed the concept of historical structures to unpack the economic, ideological, and institutional components of China’s rise in the post-cold war era. In this thesis, the limited totality on which I focus is the BRI and the AIIB in the Gulf. This constitutes the unravelling of historical structures that make up the emergent hegemonic project by investigating the dialectical interplay between its material, ideational and institutional structures. I will make explicit the theoretical link between the concept of historical structures and the foci of empirical chapters of this thesis in Section 2.4. Theorising the implementation of the BRI and the AIIB in the Gulf as an emergent hegemonic project and unpacking it via the concept of historical structures will provide a means to remedy the limitations of the orthodox approaches and to better explain the initiative in the Gulf for three reasons I outline below.

How This Can Resolve the Problems of the Orthodox Approaches

Firstly, neo-Gramscianism which calls the social world into question “by concerning itself with their origins and how and whether they might be in the process of changing” (Cox, 1986: 208) resolves the ahistoricist basis of the orthodox approaches. As a theory of history which concerns itself with understanding the process of change affecting the very structures, neo-Gramscianism sees human nature and other structures that define social and political reality “[…] as being themselves products of history and subject to change” (Cox, 1989: 38). This enables us to perceive the BRI and the AIIB in the Gulf historically rather than taking them for granted as the orthodox studies do. As showed in Chapter 3, to better understand the implementation of the initiative in the Gulf, in particular to answer the question of why is China implementing it in the region, the BRI and the AIIB need to be analysed against the background of four main historical phases: globalisation process and China’s subsequent turn to capitalism; the Gulf states’ integration with the global economy; interaction between China and the Gulf states since 1979; and the various economic problems presently faced by China. Orthodox literature disregards these historical trajectories, because it takes structures for granted. Neo-Gramscianism, with its focus on changing social and power relations, is capable to take these into account.

Second, neo-Gramscianism, through focusing on the structure-agency dialectical link, resolves the state-centrism of orthodox approaches through considering social forces, endangered by the production, as the main actors of historical structures (Lacher and Germann, 2012: 99-124). The concept of class is important in defining social forces. This thesis defines classes as social forces whose cohesion derives from their roles in the production (Holman and van der Pijl, 1996: 55; Bieler, 2002: 579). Class is therefore defined as a relation and the fractions of capital and labour can be identified by their position in the production system. I identify the social forces in the BRI and the AIIB in Chapters 3, 4, 5. This focus on social forces remedies the state-centrism in orthodox studies, which regard the state as the only actor in the initiative, without analysing the non-state actors involved. Hameiri and Jones (2018: 589) have demonstrated how the implementation of the BRI and the AIIB involves various actors beyond state entities. As also shown in Chapters 4 and 5, considering the BRI and the AIIB in the Gulf as a ‘state-only’ initiative is redundant. Although the state has a significant role, fragmented and decentralised state actors, quasi-market actors, and others are also playing their parts in the BRI and the AIIB in the Gulf. Something broadly considered as a ‘grand strategy’, in reality involves multilevel, inter-agency struggles and local imperatives.

Neo-Gramscian perspectives enable us to investigate the class struggle that takes place in the implementation of the BRI and the AIIB in the Gulf. It enables us to move

beyond the understanding of China as a monolithic state pursuing a grand strategy. As shown in Chapters 3, 4, and 5, rather than being a state-only initiative, the BRI and the AIIB in the Gulf is a function of a coalition of diverse social forces who are unified by the interest of achieving the Chinese Dream. While Gramsci (1971: 16-7) proposes that “the capitalist entrepreneur creates alongside himself the industrial technician, the specialist in political economy, the organisers of a new culture, of a new legal system, etc.”, in the context of BRI and AIIB in the Gulf there are social forces who are involved in material implementation and those who wage the ideological struggle. The former, constitutes elites, companies, banks, and other financial institutions, working in the productive field. Meanwhile, the latter, consisting of elites, the media, academic intellectuals, and cultural entities “penetrate not just the state, but also civil society” to formulate consent for the initiative (Robinson, 1996: 643).

The neo-Gramscianist focus on social forces widens the ahistorical and unitary notion of state made by state-centric approaches. In Cox’s view, the basic unit of world order is the relations between state and society, termed as “state-society complexes” (Kelly, 2002: 13). Instead of there being a singular state form around which all of international relations take place, what exists is a “plurality of forms of state, expressing different configurations of state/society complexes” (ibid.). Reformulating Gramsci’s concept of “integral state”, neo-Gramscian perspectives perceive states as constituting of “political society + civil society” (Pass, 2018: 607). While political society are coercive apparatus such as the judiciary, paramilitary, and ministry, civil society includes institutions such as the media, churches, and schools. While capturing the former leads to domination, it is only by infiltrating the latter that consensus negotiation, leading to hegemony, takes place. This concept of a state/society complex is important for this thesis for two reasons.

First, it accounts not only for the roles of state institutions in the implementation of the BRI and the AIIB, but also of intellectuals, media, and other civil society institutions as credible actors. Considering the nature of the Chinese state, it would be meaningless to disregard the state as the key actor in the initiative. Focusing on social forces does not negate the roles of state actors. Nonetheless, it also investigates non-state actors such as private firms, intellectuals, media, and cultural entities, who have been ignored in orthodox studies. Second, it solves the artificial division of domestic and international spheres by established literature which conceive the implementation of the BRI and the AIIB as a disconnected event from the socio-economic forces at work within China and view the social forces involved as unconnected agents, not as transnational actors transgressing the separation line between global and national politics. This division does not allow us to fully investigate how interests behind the BRI and the AIIB emerged

and how the involvement of social forces came about. As Sevilla (2017: 83) notes, the BRI and the AIIB in the Gulf cannot be separated from its domestic context.

The state/civil society complex enables us to depart from the established literature, which concentrate upon the geo-economic and geo-political impacts of the BRI and the AIIB. It allows for an ‘inside-out’ approach by investigating the domestic dynamics which shape the policy agenda of the initiative. As demonstrated in Section 2.2, most existing studies stress the geo-economic and geo-political significances of the initiative with no attention to how domestic politics dictate how the BRI and the AIIB are being realised. Meanwhile, as Yu (2018: 1-14) suggests, and as shown in Chapters 3 and 4, the implementation of the BRI and the AIIB, including in the Gulf, cannot be separated from domestic interests, such as how to overcome China’s overcapacity, how to secure its long-term energy needs, and how to develop the country’s underdeveloped regions, wħich in turn would help the CCP maintain its power. Overall, the state/civil society complex enables us to move beyond the established literature by examining the various agents involved in the initiative and to answer in a more nuanced way the question of why China is implementing the BRI and the AIIB in the Gulf. This can be done by analysing the domestic dynamics that actively impact the realisation of the initiative in the region.

Thirdly, the historical structures described as a “historical congruence between material forces, institutions, and ideologies” (Gray, 2018: 241) fix the deterministic character of orthodox theories by widening politics beyond the immediate struggle for control of the means of coercion, to include consent-building activities within the state, economy, and civil society. This is based on Gramsci’s repudiation of the positivist nomothetic tendencies to propose a line of causality, from economics to politics or from base to superstructures. Rather, Gramsci saw historical materialism as the philosophy of praxis, which rejects structural determinism and views the social world as constituted by the human practice. In his view, the economy is relegated from determinants of politics to a field of practice that enables the exercise of hegemonic rule, while simultaneously constraining it within the historically particular parameters that are associated with the material necessity. Such a view broadens the scope of practice beyond the ‘economic’ realm to the activities of articulating interests and social struggle.

This enables us to answer the question of why the Gulf state-society complexes are supporting and participating in the BRI and the AIIB by moving beyond concentrating on the material implementation of the BRI and the AIIB examined by the orthodox analyses to the ideological struggles aimed at gaining the consent of the Gulf countries that take place alongside the former. As showcased in Chapters 5 and 6, different from the orthodox perceptions, the implementation of the initiative, particularly in the Gulf,

is not an offhand process. Instead, it necessitates a constant stream of ideological and material forces which synthesises a long-term framework for political and economic objectives (Gill, 1992: 45). It is not limited to just economic activities, but also involves struggle at the ideational level. Certain ideological and institutional processes are followed to increase the Gulf state-society complexes’ awareness and support for the initiative. While the ‘material capabilities’ strand of historical structures enables us to ‘speak the same language’ as those orthodox approaches, by still examining the material realisation of the BRI and the AIIB in the Gulf, the ‘ideas’ and ‘institutions’ strands allow us to correct the orthodox analyses by analysing the ideological and institutional processes that accompany material realisation.

This component is enhanced by the neo-Gramscian understanding of ideas,54 which is more nuanced than liberal institutionalist and constructivist approaches. Even though, as demonstrated in Section 2.1, the latter two approaches have been deployed to study the ideational elements of the BRI and the AIIB, they remain inadequate. As a critical theory, neo-Gramscian perspectives, as Bieler (2006: 124) proposes, integrate several premises of both liberal institutionalist and constructivist conceptions of ideas. Its view of ideas agrees with constructivism, which considers ideas as part of the structure in the form of “intersubjective meanings”. It is in this way that we have to comprehend the notion that ideas establish wider frameworks of thought “which condition the way individuals and groups are able to understand their social situation, and the possibilities of social change” (Bieler and Morton, 2018: 72).

At the same time, nonetheless, even though it breaks with a liberal explanation of causal relations, neo-Gramscian perspectives do not entirely ignore liberal institutionalist understanding of ideas. In particular, they agree that ideas can be used as a legitimating tool of certain actions and interests. This insight into the role of ideas is incorporated within constructivist understanding, provided there is no attempt to detect causal links between ideas and policy in general but to identify such legitimation strategies in certain instances. By this, it makes clear that these strategies tend to be successful in instances where the legitimating ideas parallel to the intersubjective meanings of the structure, as they would appear logical. In contrast, it might be difficult to pursue actions legitimised with ideas which contradict intersubjective meanings. However, the linkage is not one- sided. Actors themselves, who deploy ideas to legitimise their interests or actions, could change the intersubjective meanings of social practices. They are instantiated by them and human consciousness, thus embodying a transformative nature (Bieler, 2006: 124).

54 In this thesis, “idea” is regarded synonymously with “belief” and “ideology”, as all three terms convey a non-material nature (Woods, 1995: 162).

To sum up, the neo-Gramscian conception of ideas has two aspects. First, ideas are regarded as part of the overall structure by the power of intersubjective meanings. They form a broader context of ideas that “condition the way individuals and groups are able to understand their social situation and the possibilities of social change” (Bieler and Morton, 2018: 72). Second, ideas can be used by actors as part of the process by which particular policies and interests are legitimised. They are an important component of a hegemonic project. The latter is successful when its legitimising ideas can be accepted as universal or recognised from neo-Gramscian perspectives as a “common sense” (Crehan, 2016: 81) that would underwrite the intellectual and moral legitimacy of a hegemonic project. This understanding, complemented by neo-Gramscian attention to the carriers of ideas, with its concept of “organic intellectuals”,55 allows analysis of the Chinese Dream and other worldviews, instigated as the legitimating ideas of the BRI and the AIIB in the ideological struggle behind the implementation of the initiative in the Gulf. I explain further the relevance of this understanding of ideas for this thesis in the next section.

The preceding arguments bring us to the point where I can construct a neo-Gramscian analytical framework grounded on the conceptions of hegemonic projects and historical structures to understand the implementation of the BRI and the AIIB in the Gulf.

2.4 A Regional Historical Bloc: A Neo-Gramscian Perspective on the BRI and the AIIB in the Gulf

The last section discussed how theorising the implementation of the BRI and the AIIB in the Gulf 56 as an emergent hegemonic project, and investigating it through neo- Gramscian concept of historical structures, provides a powerful traction to reify the limitations of the orthodox approaches identified in Section 2.2. This section develops the framework of a regional historical bloc, which explains how neo-Gramscianism guides this thesis. This is done by establishing the linkages between the three forces of historical structures and the foci of this thesis’ empirical chapters and by integrating other relevant neo-Gramscian concepts.

55 The notion of “organic intellectuals” is discussed in Section 2.5. 56 The rationale behind choosing the Gulf as the focus of this thesis is elaborated upon in Chapter 1, Section 3.

The Material Implementation

In using the concept of historical structures, Cox (1996: 98) proposes that the question of which way the lines of force run is always a historical question to be answered by a study of the particular case. In this thesis, the starting point of a regional historical bloc is the material aspect. This is because the BRI and the AIIB in the Gulf:

“stem from the economic sphere, but it also transcends […] into political and social spheres incorporating broader issues that harmonies the interests of the leading and subordinate classes” (Morton, 2007: 153).

While the initiative in the Gulf revolves around material interests and activities, it also involves an ideological struggle being waged to attain the regional countries’ consent. The conception of historical structures, which is designed “to indicate the way in which a hegemonic class combines the leadership of a bloc of social forces in civil society with its leadership in the production” (Simon, 1982: 86), allows us to remain able to examine the material aspects of the BRI and the AIIB in the Gulf.

This strand of the framework of a regional historical bloc, which is expanded upon in Chapter 4, is established to scrutinise the material implementation of the BRI and the AIIB in the Gulf. In particular, it is used to analyse the ‘economic’ or ‘material’ interests and activities which underpin the initiative in the Gulf. While such analysis may have been the focus of the orthodox approaches, neo-Gramscianism, with its emphasis on social forces, history, and domestic/global linkages, allows us to regard the ‘material’ implementation of the BRI and the AIIB not as state-focused, and disconnected from domestic circumstances. Rather, it provides us with a powerful tool to understand how those material interests have come about and the roles of state and non-state social forces in the process. This not only enables us to provide a more nuanced answer the question of why China is advancing the BRI and the AIIB in the Gulf, but also to depart from the orthodox understanding of the initiative as ‘state-only’. It can be used to show that the initiative in the Gulf is a function of an alliance of diverse social forces composed of state elites and companies, private enterprises, banks, and other financial institutions. What is, moreover, equally important is that the framework of historical structures allows us to move beyond analysis of the material implementation of the BRI and the AIIB in the Gulf to investigate the widely neglected, yet crucial, political- ideological struggle behind their realisation, as I discuss in the next sub-section.

The Ideological Struggle

As explained in Section 2.3, although hegemonic projects may be rooted in material interests, their most crucial aspect lie in their ability to “resolve the abstract problem of conflicts between particular interests and the general interests” (Jessop, 1983: 100). This involves the mobilisation of support to establish the active consent of those who are impacted by the hegemonic project but who are not directly benefited by the project (Kelly, 2015: 51). This conception, and the focus of the historical structures on the formation of consent, offers traction to answer the question of why are the Gulf state- society complexes supporting and participating in the BRI and the AIIB by showing how the realisation of the BRI and the AIIB in the Gulf is not only restricted to the economic sphere, but is also waged at the ideational level to attain the consent of Gulf society. Developing from the ‘ideas’ strand of the historical structures, the ‘ideological struggle’ strand of the regional historical bloc is built to analyse the ideological struggle behind the BRI and the AIIB in the Gulf. This strand is divided into two components: ideational, which focuses on how the objectives of the BRI and the AIIB is translated into a universal interest by the Gulf’s state-society complexes; and structural, which scrutinises the specific social forces involved in the ideological struggle.

a. The Ideational Component: Ideas and Common Sense

As discussed in the previous section, neo-Gramscian perspectives stress the vitality of ideas. They form the broader contexts of thought that “condition the way individuals and groups are able to understand their social situation, and the possibilities of social change” (Bieler and Morton, 2018: 72). Ideas are of two types in neo-Gramscian sense: those historically conditioned by intersubjective meanings, and those which are shared understandings of the nature of social relations that perpetuate habits and expectations of behaviour; and the collective images of social order which constitute differing views concerning both the nature and legitimacy of prevailing power relations. Groups with different collective images differ over the legitimacy of the existing power relations, and what constitutes the social good (Cox, 1986: 218). The possible formation of a material and ideational basis for the emergence of a structure are unlikely when there is a clash of rival collective images.

Ideas are therefore a tool to legitimise certain interests and policies. They serve as an enabling discourse to organise moral and intellectual legitimacy. In this respect, ideas are important element of a hegemonic project. The latter is likely to succeed when the legitimating ideas coincide with the intersubjective meanings of the popular masses. This emphasis on ideas as an enabling discourse to establish a moral and intellectual legitimacy is important when examining China’s policy goals. It has been a tradition that

in pursuing certain goals and policies, each Chinese leader relies on certain ideas such as the “Three Represents” of Jiang Zemin or “Socialism with Chinese Characteristics” by Deng Xiaoping. Consistent with neo-Gramscian perspectives, these ideas act as maxims which articulate certain goals and policies that the Party-state deploys to appeal among the population. This understanding is also suitable for this thesis as it enables an investigation of how particular worldviews are constructed as legitimating tools for the implementation of the BRI and the AIIB in the Gulf, as shown in Chapter 5, Section 2.

To substantiate the investigation of the roles of ideas in the hegemonic project, it is useful to revisit the Gramscian concept of a ‘common sense’, which provides a useful lexicon to answer this thesis’ research question. Gramsci defines the concept through distinguishing between ‘good sense,’ which is described as a coherent philosophy, and a ‘common sense’, which, as Rupert (1995: 30) proposes, “enters the consciousness of the wider masses as part of their cofounded and fragmentary worldview”. Whereas the latter is devised and diffused by those in power, “its historical effectiveness” lies not in the full and unconditional brainwashing of those lesser powers, but in the fact that such strategies “leave behind a sedimentation of ‘common sense’” (Kilminster, 2014: 168). In other words, just as for that which Cox calls intersubjective meaning, common sense can be viewed as a canon of knowledge that frames the understanding of the world, is shared intersubjectively across the general population, and exists at such a depth that criticism and questioning do not take place. This offers the foundation for the success of a hegemonic project because, as Bocock (1986: 45) says, through it the ruling forces can secure their interests and control subaltern views.

The neo-Gramscian concepts of ideas and common sense are deployed in Chapter 5 to understand the ideological struggles that occur behind the realisation of the BRI and the AIIB in the Gulf. Specifically, this means how the interests behind the initiative are universalised with the general interests of the regional society, including investigating how the Chinese Dream, as the legitimating idea of the initiative, is transformed into a universally accepted common sense. However, deploying the conceptions of ideas and common sense will not be enough, as, from neo-Gramscian perspectives, ideas need to be spread and understood to be turned into a common sense. The formation of a common sense occurs through the functioning of organic intellectuals in the sphere of civil society, as described below.

b. The Structural Component: Organic Intellectuals

The second component of the ideological struggle strand of the regional historical bloc is structural. Neo-Gramscian perspectives do not only concern specific ideas used to intervene and shape a common sense to serve the interests of the hegemonic project.

Instead, it also focuses on specific carriers of those ideas. This structural component is built to identify the social forces involved in the ideological struggle of the BRI and the AIIB in the Gulf. As mentioned in Section 2.3, there are two types of social forces involved in the realisation of the initiative in the Gulf: those who are involved in its material implementation and those engaged in the ideological struggle. This aspect concerns the second type of social forces. In this respect, I turn to the conception of organic intellectuals.57 Gramsci argues that:

“Every social group, coming into existence on the original terrain of an essential function in the world of economic production, creates together with itself, organically, one or more strata of intellectuals which give it homogeneity and an awareness of its own function not only in the economic but also in the social and political fields” (Gramsci, 1971: 5).

Unlike traditional intellectuals who regard themselves as autonomous and independent from the dominant social group (Ciocchini and Khoury 2018: 75-90), these intellectuals are defined as “organic” because they:

“grow organically with the dominant class (they are its educators, its judiciary, etc.) and are instrumental in the production and maintenance of its hegemony” (Doyle, 2015: 403-22).

Consequently, their worldviews and interests are representative of the worldview and interests of the system and the classes the system serves. They work as the “permanent persuaders”, whose primary social task is to socialise and to translate “the interests of the leading class into harmony with those of subordinate classes and incorporates these other interests into an ideology expressed in universal terms” (Cox, 1983: 168).

The concept of organic intellectuals is relevant in the examination of the BRI and the AIIB in the Gulf, mainly to identify the social forces involved in the ideological struggle to universalise the objectives of the initiative to serve the interests of all. For this thesis, I define “organic intellectuals” more broadly. Stuart Shields, in his article about the roles of the European Bank for Reconstruction and Development (EBRD), legitimises neo-liberal reforms in the post-communist transition, arguing that “organic intellectuals need not just be individuals, but also organic collective intellectuals” (Shields, 2016: 48). Others agree that organic intellectuals frequently appear grouped together, as collective organic intellectuals in the forms of think-tanks, expert panels, and institutionalised mechanisms (Storey, 2003: 50; Holman and van der Pijl, 2003: 72). This concept of

57 Cox hardly uses the notion of organic intellectuals in his seminal works. For an inclusion into the neo- Gramscian perspective, see Gill (1990: 51-54).

collective organic intellectuals is useful for the analysis of the ideological struggle of the BRI and the AIIB in the Gulf, as those who are involved in the struggle are not only specific individuals such as Party elite and academics, but also institutions such as the mass media, academic institutions, and cultural exchange activities. These institutions serve as organic-collective intellectuals to formulate common interests and assert them externally (Macartney, 2011: 74).

These two elements of the ideological struggle within the regional historical bloc will be deployed in Chapter 5 to investigate the ideological struggle that takes place alongside the material implementation of the BRI and the AIIB in the Gulf. Besides this struggle, moreover, the BRI and the AIIB in the Gulf are also supported by certain institutional arrangements embedded in the initiative. The next sub-section develops an analytical framework to examine such arrangements.

The Institutional Frameworks

Drawing on Cox’s notion of historical structures, which identifies institutions as its third component, I develop the third strand of the regional historical bloc to scrutinise the institutional compositions of the BRI and the AIIB, which also play a crucial role in the realisation of the initiative in the Gulf. In defining institutions, Cox notes that:

“Institutionalisation is a means of stabilising and perpetuating a particular order. Institutions reflect the power relations prevailing at the point of origin and tend, at least initially, to encourage collective images consistent with the power relations. Eventually, institutions take their own life; they can become a battleground of opposing tendencies, or rival institutions may reflect different tendencies. Institutions are particular amalgams of ideas and material power which in turn influence the development of ideas and material capabilities” (Cox, 1987: 259).

This understanding is grounded in analysis of the roles of U.S.-led institutions in the construction and maintenance of Pax Americana (Cox, 1983: 172). The argument is that these institutions, for instance, the UN and the IMF, legitimised Pax Americana, consolidating U.S. hegemony by minimising any necessity for the use of force. They assisted the establishment of U.S. hegemony in a similar manner to that which national institutions used to form the bourgeois hegemony. Institutions, national or global, help facilitate the hegemonic project because they mediate and legitimise the existing power relations. Through compromise, negotiation, and concession, interests of the leading forces are translated into universal interests.

I use the neo-Gramscian understanding of the roles of institution in the establishment and maintenance of a world order to examine the institutional structures of the BRI and the AIIB and their roles in the implementation of the initiative in the Gulf. To appropriate this understanding of institutions for this thesis, it is useful to revisit Cox’s (1983: 62) typology of international institutions in the world order:

“Among the features of international organisations […] are the following: 1) They embody the rules which facilitate the expansion of hegemonic orders; 2) They are themselves the product of the hegemonic world order; 3) They ideologically legitimate the norms of the world order; 4) They co-opt elites from peripheral stages; and 5) They absorb counter-hegemonic ideas” (Cox, 1983: 172).

While Cox formulates this typology to investigate the roles of international institutions in the production and reproduction of the world hegemony, it is also relevant to study the institutional structures of the BRI and the AIIB and their roles in their realisation in the Gulf. The last two characteristics of Cox’s typology are particularly relevant to this thesis. Institutions co-opt peripheral elites and absorb potential counter-hegemonic ideas to create or to ensure the dominance of hegemonic ideology.

First, institutions involve marginal elites to form an appearance of broad representation and to legitimise the policies they pursue. In the case of the BRI and the AIIB in the Gulf, including the regional countries in the policymaking process by giving them large voting shares and appointing Gulf states to the Board of Directors of the AIIB could be seen as an attempt to co-opt the regional elites and civil society into the framework of the initiative, and to attain the legitimacy for the initiative in the region. Secondly, institutions absorb counter-hegemonic ideas and concerns to make it appear as though the concerns of critics are being heard and taken seriously. In this process, however, the meaning of these ideas and concerns is usually transformed to fit the leading forces’ interests. For China in the Gulf, providing large voting shares to the Gulf countries and appointing them to the Board of Directors of the AIIB could be seen as an attempt to appear as though the Gulf states are being incorporated into the policy-making process while China in reality owns the veto power over all decisions. In this case, participation in the policy-making process could be seen as a micropolitical technology of inclusion and control.

To better comprehend the roles of the institutional structures of the BRI and the AIIB in their implementation in the Gulf, another element needs to be added to Cox’s list: the provision of material incentives to subaltern social forces in order to co-opt them into a hegemonic worldview. This element is often overlooked, despite the fact that it

seems to be the most important one in the struggle to establish a consensus among the subaltern forces. This amendment is relevant in understanding the BRI and the AIIB in the Gulf. The core operational focus of the BRI and the AIIB has been to provide infrastructure loans to the developing countries which, the CCP says, could contribute to their growth. This could be regarded as a strategy to offer “sacrifices of an economic corporate kind” (Gramsci, 1971: 161) or as “material concessions to subaltern classes” (Gill, 1995: 399) in order to saturate “both productive and ideological relations across the social formation” (Mann, 2009: 340). This strand is deployed in Chapter 6.

The three structures above are what constitute the regional historical bloc, which is the analytical framework of the thesis. With all theoretical concepts now identified, it is vital to outline how and where they are deployed in the thesis. I use the notion of social forces throughout the empirical portions of the thesis to identify the specific agents in the historical trajectories behind the realisation of the BRI and the AIIB in the Gulf (Chapter 3) and their subsequent implementation (Chapters 4, 5, and 6). In Chapter 3, Section 4, I depend on the concept of regional historical bloc to explain one of the historical trajectories behind the BRI and the AIIB in the Gulf region, which is China’s integration with the Gulf countries. It allows me to demonstrate the material process of internationalisation, along with the ideological struggle and the institutional frameworks that escort the process. This means that the concepts of civil society, ideas, common sense, and organic intellectuals, are also deployed in narrating the analysis.

In Chapter 4, the “material implementation” cog of the regional historical bloc is used to investigate the material or economic activities of the BRI and the AIIB in the Gulf. The adoption of the framework means that I also rely on the notion of social forces to identify the specific agents involved in the material implementation. Thereafter, the “ideological struggle” element of the regional historical bloc is deployed in Chapter 5 to examine one part of the consensus-building efforts of the BRI and the AIIB in the Gulf. First, in Section 2, I deploy the concepts of ideas and common sense to study the ideational aspect of the struggle, which refers to how the initiative’s objectives are articulated to the Gulf’s society. Secondly, in Section 3, I rely on the notion of organic intellectuals. By deploying this concept, it is possible to identify agents involved in the ideological struggle. Finally, the neo-Gramscian understanding of institutions and the concept of co-optation are deployed in Chapter 6 to investigate another part of the consensus-building efforts of the BRI and the AIIB in the Gulf. To be specific, they are used to examine the roles of the institutional arrangements of the initiative in securing the consent of the regional society. As such, the deployment of these concepts enables us to remedy the limitations of the orthodox approaches by considering the history behind the implementation of the initiative in the region, the roles of state and non-

state agents, and the consensus-building efforts that take place alongside their material implementation.

2.5 Conclusion

This chapter presented an analytical framework to answer the research question of why the BRI and the AIIB is being implemented in the Gulf and why the initiative is gaining the support and participation of the Gulf state-society complexes. This chapter aimed to answer the second subsidiary research question, which is how neo-Gramscian perspectives advance the analysis of the realisation of the BRI and the AIIB in the Gulf. To that aim, I began by critically assessing the orthodox approaches to the BRI and the AIIB. Although the established literature certainly enriches our understanding regarding the initiative, it remains unable to provide sufficient examinations for three reasons. In addition to disregarding the history and therefore conceiving the BRI and the AIIB as an ahistorical phenomenon, it also suffers from state-centrism and determinism and therefore ignores the roles of non-state social forces and domestic variables, and it disregards the ideological struggle that occurs alongside the material implementation of the initiative. I then progressed to introduce neo-Gramscian perspectives as an alternative analytical framework that can overcome the deficiencies of the established theorisations. I argued that theorising the BRI and the AIIB as an emergent hegemonic project, and analysing it through the neo-Gramscian concept of historical structures, offers powerful traction to examine the implementation of the initiative in the Gulf. This is for three reasons overall.

First, as a critical theory which emphasises history, neo-Gramscian perspectives give us a powerful tool to place the implementation of the BRI and the AIIB in the Gulf within a specific historic moment. Second, by focusing on the dialectical connections between structure and agency, the perspectives allow us to resolve the state-centrism inherent in the established literatures on the BRI and the AIIB by accounting for the roles of non- state social forces involved and the domestic variables that influence the realisation of the initiative in the Gulf. These two reasons would allow us to nuancedly answer the question of why is China implementing the BRI and the AIIB in the Gulf. Third, based on Gramsci’s refusal of the deterministic reading of Marx, the perspectives widen the meaning of politics beyond the immediate struggle for control of the means of production to include activities that form consent within the economy, state, and civil society. For this thesis, that enables us to correct the issue of determinism at the heart of the orthodox approaches, and to answer the question of why are the countries of the Gulf supporting and participating in the BRI and the AIIB by moving beyond the core

focus on the ‘material’ element of the initiative to draw attention to consensus-building processes that occur behind the implementation of the BRI and the AIIB in the Gulf.

To explain how neo-Gramscian perspectives will guide the rest of the thesis, I built the concept of a regional historical framework by establishing the theoretical linkages between the three strands of the historical structures proposed by Cox and the focus of the empirical chapters of this study. The notion comprises three main components. First, the material implementation, which will be deployed in Chapter 4 to investigate material interests behind the BRI and the AIIB in the Gulf, the social forces involved, and their activities. The second component is the ideological struggle, which will be used in Chapter 5 to investigate the ideological struggle that takes place behind the material implementation of the initiative aimed at attaining the consent of the regional society. Here, I also utilise the neo-Gramscian understanding of ideas and common sense to examine the role of certain narratives as the legitimating idea of the initiative, and the concept of “organic intellectuals” to identify the specific social forces involved in the ideological struggle. The third component is the institutional frameworks, which will be used in Chapter 6 to analyse certain institutional arrangements within the BRI and the AIIB that also have an important role in the consensus-building efforts behind their implementation.

It must be noted, nonetheless, that taking up the triadic configurations of the regional historical bloc in separately does not imply an ontological divisibility or ‘sovereignty’ of these sets of structures and does not dismiss the dialectic nature of the triad. This is carried out only to categorise the individual forces and to enable their deconstruction. This final section brings us to the point where it is possible to deploy a neo-Gramscian perspectives to the investigation of the implementation of the BRI and the AIIB in the Gulf, which resolves the deficiencies of the established literature. Before deploying the framework of a regional historical bloc in Chapters 4, 5, and 6, the next chapter will first provide the context against which the BRI and the AIIB in the Gulf must be investigated. It is through deploying neo-Gramscian perspectives, which is capable of explaining structural change, that this historical background can be analysed.

Chapter Three Historicising the Emergence of the BRI and the AIIB in the Gulf

3.1 Introduction

The preceding chapter presented the theoretical framework that guides this thesis. To be precise, I developed the concept of a ‘regional historical bloc’ as a primary analytical framework to examine the BRI and the AIIB in the Gulf. This chapter, in parallel with neo-Gramscian emphasis on history, aims to place the implementation of the BRI and the AIIB in the Gulf within a historical context. It intends to answer the third sub- research question: what is the historical context to the implementation of the BRI and the AIIB in the Gulf? Answering this question would help answer the question of why the initiative is being implemented in the Gulf in particular.

I advance that the BRI and the AIIB in the Gulf require analysis against four historical trajectories. The first trajectory is China’s reform from a socialist mode of production to state capitalist one, which resulted from the process of globalisation and led to its re- integration into the world economy. The second trajectory is the Gulf’s integration with the global economy. Meanwhile, the third trajectory is the interaction between China and the Gulf countries, which although in the beginning was limited and mainly driven by political motivations, in the recent period has transformed to revolve around the transnationalisation of each other’s capital. Lastly, the fourth trajectory is the different economic problems presently faced by China and which led the CCP to introduce the BRI and the AIIB as the main strategy to resolve them. It is through taking these four historical trajectories into consideration that the implementation of the BRI and the AIIB in the Gulf can be fully understood.

To elaborate upon these stages, this chapter has four further sections. Section 3.2 deals with China’s transition from state socialism to a state-ruled market economy model of development. Section 3.3 then analyses the Gulf’s integration with the global economy. Section 3.4 offers a historical overview of China’s interaction with the Gulf countries. Section 3.5 finally investigates the emergence of the BRI and the AIIB as a Chinese emergent hegemonic project. This chapter is based on primary and secondary literature, which was supplemented by interviews.

3.2 Globalisation and Its Impact on China

This section offers a brief overview58 of the first historical trajectory against which the BRI and the AIIB in the Gulf must be analysed: globalisation and its impact on China. This section helps to understand how the modern China began to interact with the outside world, which is important in order to make sense of the interaction between China and the Gulf countries and the subsequent implementation of the BRI and the AIIB in the Gulf. Since the early 1970s, the world has been experiencing the process of globalisation which, from a political economy perspective, is manifested in two major interlinked processes: the transnationalisation of production and finance at the material level and a transition from Keynesianism to neo-liberalism at the ideological level (Cox, 1992: 30).59 This, writes Cox (1987: 7), has led to the rise of a capitalist world hegemony which has turned states inside-out – known as ‘the internationalising of states’ – to service the needs of transnational capitals. As a result, states in many parts of the world have been restructuring their domestic policies and institutions to serve the external exigencies of transnationalised production under global capitalism (ibid.).

With this process comes the establishment of a transnational historic bloc. Constituted of elites, bureaucracies, managers, and technicians from various parts of the world, this historic bloc cuts across political coalitions, national bureaucracies, and domestic social institutions to interlock states with transnationalised capital interests. This transnational historical bloc achieves “[…] common criteria of interpretation […] and common goal anchored in the idea of ‘an open world economy’ [over a sort of] ideological osmosis” (Cox, 1987: 2454). In this manner, a world-hegemony arises and:

“the historic blocs underpinning particular states become connected through the mutual interests and ideological perspectives of social classes in different countries, and global classes begin to form” (ibid: 7).

Various forms of state (e.g. fascist, corporatist) emerged, but they rose responding to the interests of the capitalist world-hegemony. Such developments were also taking root in China. While previously, under Mao Zedong’s ruling (1949-1976), China was a totalitarian state where its accumulation and social formation processes were confined within its borders and its foreign relations were mainly influenced by political motives,60 such practices transformed in the longue durée of the capitalist expansion. Different from

58 Due to the limited space, I do not intend to provide a comprehensive account of the economic reform in China. Rather, I only narrate some points which are relevant to the thesis. 59 See Gill and Law (1988: 16), Cox (1992: 30; 1993: 259-260), Helleiner (1994; 1996), and Strange (1994: 106) for more examinations of the transnationalisation of production and finance. 60 See, for example, Kang (2010) for an analysis of China’s pre-modern international relations.

many parts of the world however, capitalism was taking root in China in a manner which was elite-engineered.61

After Mao’s demise in 1970s, a group known as the ‘Reformers’, led by Deng Xiaoping, ascended to power after arresting the ‘Gang of Four’ Maoist leaders (Baum, 1996: 40). Witnessing globalisation rolled out, these social forces, despite having no clear-cut plan and being polarised among themselves,62 were driven by the prominence of capitalist ideas. They advocated internal adaptation to facilitate the interests of transnational capital. A series of steps were then initiated which mainly revolved around an ostensible reduction in the state’s role in the economy by privatising state industries in urban and rural areas. The steps also included the implementation of the “Four Modernisations” policy introduced in the 11th Party Congress in 1977, aimed to develop China’s defense, industrial, agriculture, and scientific and technological fields (Li and Shaw, 2013: 93). As elsewhere, nonetheless, the so-called neo-liberalisation process in China did not only constitute the creation of a new economic framework. Rather, it also involved strategies to “generate consensus guidelines, underpinned by an ideology of globalisation” (Cox, 1996: 304).

Accompanying these reforms therefore, was an effort to shift the dominant discourse from Marxian economic strategies to the fount of Western liberal capitalism. Deng was assisted by several institutions surrounding the CCP, including Beijing University, the Institute of Structural Reform (State Council), together with the Institute of Industrial Economics (Ling, 1996: 10), who served as organic intellectuals of the reform. They proliferated capitalist ideas through propagating the socialist ills of central planning and class struggle, as well as revolutionary ideology, and socialising neo-classical economic virtues, such as individual self-interests, market forces, and technical skills (ibid.). At the Twelfth CCP’s Central Committee in 1985, despite some objections,63 a fundamental justification for central planning – class struggle – was obliterated, and three years later the previous Party-state’s slogan, which positioned central planning at the economy’s core and commodity production as its supplement, was displaced with a new focus on productivity, efficiency and objectivity (ibid.).

Deng, nonetheless, believed that a full abandonment of socialism as a political ideology would challenge their political and economic power. Meanwhile, they were unwilling to sustain the old system, as benefits brought by transition were appealing. The only way to maintain both their political power and economic interests was through reconciling two apparently contradictory strains: internal political control and external economic

61 See Chan and Hui (2017: 66-92) for more analysis on this. 62 See Solinger (1982: 1238-1275) who writes during an early stage of the reform process. 63 See Dickson (2003).

integration. What took place was therefore a “reform without losers” (Naughton, 2007: 91), where market economy development was facilitated, while remaining embedded in a state-planning system. As Wu writes, the reform in China:

“maintained a dual-track of sustaining core values of a socialist principle while selectively embracing liberal ideas in the context of continued state authority” (Wu, 2010: 64).

Although the transition led to the withdrawal of the Party-state from certain segments of the economy, it did not fully eliminate the CCP’s monopoly over the economy (Li and Shaw, 2013: 97). Various mechanisms64 were initiated to ensure that the Party-state retained its influence. On the one hand, it is allowed to maintain direct ownership of assets in some strategic industries (e.g. energy, defence, infrastructure and finance); and to be involved in industrial policies to promote priority sectors (e.g. automobiles, high- end manufacturing, and bio-technology). As Zhao states, the CCP:

“still keeps ultimate control over strategic sectors of the economy and a large range of core industries [such as] utilities, transportation, telecommunications, finance, and the media” (Zhao, 2010: 422).

Consequently, SOEs remain major players in the economy, where the Party-state’s role in those companies was consolidated through the State-Owned Assets Supervision and Administration of the State Council (SASAC) and the NDRC (Lardy, 2014). As an article by the Wall Street Journal describes:

“The Chinese system is based on ‘vertically integrated groups’ of large state- owned companies. Each group has a ‘central holding company’, the [SASAC] which is the majority shareholder in a ‘core company.’ That company, in turn, owns a majority of shares in the state-owned companies that comprise the group […]. Altogether, these vertically integrated groups control some 120 SOEs, all subject to government control via SASAC” (Lubman, 2012).

Moreover, the Party-state also retains nomenklatura control over appointments for top leadership and managerial positions in SOEs, whereby many of them also hold certain positions in the Party (Li and Shaw, 2013: 97). Even if many state firms have been privatised, they were mainly transferred into the hands of individuals linked to the CCP, such as the Red Capitalists,65 previous state-firm managers, Party officials’ relatives, and

64 See Breslin (2007: 75-79) for an analysis of state-economy relations in China after the reform. 65 The new capitalists who stemmed from the Party or had close personal and political ties to the Party.

those who left political office to participate in business (ibid.).66 Minqi Li, for example, quotes a report asserting that about:

“two million high and middle-ranking, current and retired Chinese government officials and their relatives own about 70 percent of the total private wealth (savings, stocks, bonds, houses, and foreign exchanges) in China” (Li, 2008: 106).

China’s transition to capitalism was a gradual move until the Tiananmen Square protest took place in 1989, which urged, among other things, further economic liberalisation (Zhao, 2001: 49). This included: the privatisation of more state businesses, whereby by 1998 80% of firms in China were privatised; further injection of market incentives into production and the labour market; and the lessening of socialist welfare guarantees (Rucki, 2011: 347). A number of policies67 were also introduced to advance China’s internationalisation, including: the easing of import licensing and the quota system; the opening-up of new industrial sectors and special economic zones for foreign capital; making the Renminbi, to some extent, convertible; later becoming a member of the World Trade Organisation (WTO)68 (ibid.). These changes have attracted noticeable amounts of foreign capital into China and drove the internationalisation of Chinese capital (Hong, 2008:136-147), even though internationalisation only became a priority in the mid to late 1990s, especially after Deng’s trip to southern parts of China to gather support for his reform and opening-up of the country.

The journey boosted internationally-oriented politicians in the CCP and bureaucrats in the state’s agencies (Voss et al., 2009: 149), and was continued by intellectuals, primarily educated abroad, who returned and helped to set up the outwardly-oriented intellectual agenda. The importance of further integrating with the outside world was a means not only to access larger market shares, but also to find domestically-limited and unavailable resources and to make businesses more effective and efficient. As a consequence of this newly gained liberalisation momentum, OFDI became an important part of the national development plan and was sanctioned by the then chairman of CCP and later Deng’s successor, Jiang Zemin (ibid.). This became even more important after China became a member of the WTO in 2001, as Beijing was pressured to further integrate with global economy (Chen and Shih, 2008: 22). In response, the CCP introduced the “Going-out”

66 These capitalists were also later allowed to join the CCP during Jiang Zemin’s era. See Breslin (2007: 71) for more analyses. 67 There were various policies to facilitate integration with the global economy in the early period of China’s reform. See Breslin (2007: 83-86). 68 See Breslin (2003: 213-229) for a critical IPE account of China’s entry into the WTO.

policy69 in its tenth Five Year Plan which was intended to attract more foreign capital into China and to enforce China’s integration with the outside world.

Shi Guangsheng, the then Minister of Foreign Trade and Economic Cooperation, said about the importance of the Going-out policy:

“By “Going Global”, the enterprises can invest and set up factories overseas, better utilise the domestic and foreign markets and resources, further expand the export of equipment, materials and resources, and labour service, and create new export growth points. Thus, we can enhance the level of China’s opening to the outside world” (Schuller and Turner, 2005: 3-14).

The policy constitutes measures that had not been available previously, such as financial supports and information dissemination on overseas investments. Numerous state- sponsored platforms were also initiated for Chinese FDIs, including general and special tax incentives, credits and loans, and a favourable import and export regime (Gu et al., 2016: 24). Moreover, the Party also now offers diplomatic backing for Chinese FDIs to access certain countries (ibid.).70 The policy has not only made China a major recipient of FDIs, but its own FDI level also increased jaggedly by 168% from US$0.5 billion in 2000 to approximately US$13.6 billion in 2007 (Pradhan, 2011: 125). The Ministry of Commerce also reported that in 2005, there were 6,230 Chinese companies operating overseas (ibid.). These figures are not just the outcomes of increased FDIs, but also increasing cross-national mergers and acquisitions (M&As), interpenetration of capital, interlock directorates, the establishments of strategic alliances, and the expansions of subcontracting and outsourcing abroad (Hong and Sun, 2006: 611-634).

With the instigation of the Going-out policy, Chinese finance began to internationalise as well. During the reform, the CCP initiated several changes in the financial system. While the system was an all-inclusive mono-bank system with the People’s Bank of China (PBoC) functioning as both a central and commercial bank which controlled the majority of the financial assets, the PBoC’s tasks were mandated to the newly formed four state banks, known as the “Big Four”: Bank of China (BoC), the Industrial and Commercial Bank of China (ICBC), China Construction Bank (CCB), and Agricultural Bank of China (ABC).71In addition to replacing state loans with profit-oriented loans, initiating securities markets, establishing new non-state commercial banks and other

69 See Buckley et al. (2008: 715-748) for a historical analysis of the Going-out policy. 70 For examples, see Gu et al. (2016: 24-34). 71 See, for example, Garcia-Herrero et al. (2006: 304-363), Breslin (2007: 57-60), Goodhart and Zeng (2007: 185-198), Podpiera (2006: 1-23), and Fu and Heffernan (2009: 39-52) for examinations of banking reform in China.

financial institutions at central, provincial, and municipal levels,72 other measures were the division of policy lending from state-owned banks, enforcing laws and regulations, and creating financial markets.73 The financial industry was also liberalised through the flexibilisation of quantity and price controls, the opening-up to foreign competition, the increased autonomy of the central and state banks, and the cautious stride towards capital liberalisation (Hess, 2014: 29). As in other sectors, however, this did not detach the CCP from its role of owning and directing many of the banks, dominating the bond markets, designating interest rates and the quarterly loans quota for banks, and being “window guidance” (which amounts should be given to which sectors) (ibid.). Not less crucial, the Party also sustained its authority over organising the structure of the banks, such as appointing branch managers (ibid.).

The internationalisation of Chinese finance is primarily captured by the “going-out” of its financial institutions, especially the “big four banks”. Besides actively selling shares to foreign investors, the banks have also taken over the central bank’s foreign currency portfolio, investing in M&A deals, and establishing branches and subsidiaries overseas (Pistor, 2013: 51). However, this is not a one-way process. While the banking reforms still ongoing, it has improved Chinese bank’s financial health, which has attracted many foreign investors to channel their investments into the country. Apart from successful overseas Initial Public Offerings (IPOs), these banks have witnessed their fortunes rise (Allen et al., 2006: 7). In 2009, the ‘big four’ ranked among the world’s top 15 in profit and by 2013 occupied the first four places in profit-ranking. China’s FDI level increased by 1000% from $2 billion in the year 2000 to nearly US$20 billion in 2007, comprising one-third of global banking profits (The Banker, 2013). In the Asia-Pacific region, these banks are among the ten largest banks measured by tier-1 capital, whereby they have been the only ones that have moved upwards in the top-ten rankings, replacing well- known Western banks such as Bank of America and JP Morgan Chase.

Equally important, the internationalisation of Chinese finance also involves the creation and the expansion of its SWFs, such as the China Investment Corporation (CIC), that was established in 2007 to invest in foreign exchange reserves (Sekine, 2009: 7). Since its launch, the CIC has made a series of high-profile investments, including in the U.S. private equity companies, Blackstone, Morgan Stanley, and more recently in the energy sectors.74 Besides the CIC, the State Administration for Foreign Exchange (SAFE) and National Security Fund (NSF) are other Chinese SWFs that have engaged in foreign investments, even though unlike the CIC which has substantial minority stakes, it has

72 Examples are 745 trust and investment companies, and several thousand credit cooperatives. 73 See, for example, Allen et al. (2006: 1-60), Breslin (2007: 57-60), Huang et al. (2013: 1-88), and Hess (2014) for more examinations of the impact of economic reforms on China’s financial industry. 74 See CIC’s website (http://www.swfinstitute.org/fund/cic.php) for details on its recent investments.

smaller stakes (Pistor, 2013: 51-52).75 Further measures were concerned with Chinese currency and foreign exchange earnings, which mainly took place in two phases. The first (1979-1993) focused on bringing realism to foreign exchange policy via improving incentives and through adopting a dual foreign exchange rate system. The second (since 1994) has been oriented towards unifying the foreign exchange market and making the current account convertible.76

Overall, capitalist hegemony took root in China in a unique way, whereby it was state engineered. With the facilitation of the CCP, the transnationally-oriented capitalist class emerged and, colliding with the state, it developed the capacity to initiate an economic system that served the interests of the transnational capitalist class. Such made China, in van der Pijl’s (2012: 509) definition, “a contender state-society complex”,77 where state class “controls not just the different apparatuses of the state as such, but also through state ownership, substantial sectors of the economy”. Regardless of the complexities, China’s transition to capitalism has not only stimulated its integration with the global economy but it has also spurred the development of the Chinese economy in all fields with its GDP growing by 9% annually (Mo, 2011: 103-5). Not only has China passed Germany and Japan to be the world’s second largest economy, it also now accounts for 20% of the world’s GDP in terms of purchasing power parity (Webber, 2010: 583-599).

3.3 The Gulf’s Integration with Global Economy

While the last section historicised China’s present-day integration with transnational capital by examining the impact of globalisation on the country, this section historicises another important trajectory in order to understand the BRI and the AIIB in the Gulf, which is the Gulf states’ interaction with the outside world.78 Geography and natural resources have assured the Gulf countries’ connection with the outside world for many years. World powers have long identified the region as a vital geostrategic arena. They have sought to carve out new markets for themselves and to control trade and military routes throughout the Gulf. From the early 16th century, for around two centuries, the

75 See Stitsart (2015)’s thesis for an in-depth examination of Chinese SWFs. 76 See Zhang (1999: 143-162) for the analysis of historical developments of the currency and exchange reform. 77 van der Pijl (2007: 627) coins the concept of contender state to explain a state-society configuration in which the state functions as “the directive centre, the initiator of social development”. It usually emerges when “a single state class holds power, deriving its effective command over society from its control of the state apparatus and centralised resources”. 78 It is crucial to note that there are notable differences in the way the Gulf countries began to interact with the outside world and the way globalisation has impacted these countries. However, due to the word count limits, this section only provides a general overview of the process sufficient to contextualise the BRI and the AIIB in the Gulf. See, for example, Peterson (2016) for a more detailed analysis.

Gulf was part of “Portugal’s Asian Empire” (Potter, 2009: 208). The geostrategic appeal of the Gulf and economic interests in finding new markets attracted the Dutch and Ottomans as well. With the emergence of Pax Britannica in 1815, the region was also one of the major arenas for British expansion, whereby later the British oil companies, alongside oil firms from France and the U.S., played a major role in the discovery of oil in the region in the 1930s (Onley, 2009: 1-44).

The more contemporary integration of the Gulf countries into the global economy has been shaped by the globalisation process of transnational capital, particularly following Britain’s role in the region diminished and the U.S. filled the vacuum (Mirtaheri, 2016: 6). The Gulf states, which gained independence during the 1960s-1980s and established the GCC as a regional organisation in 1981, were pressured to integrate within a global transnational class in exchange for Western military protection in the face of different regional security issues (Stokes and Raphael, 2010: 91). As a consequence, despite the negative views on globalisation among certain segments of society,79 the Gulf elites, with the help of Western institutions such as the IMF, executed a number of structural reforms to not only advance their integration with the institutionalised structure of transnational production, but also to minimise the state’s involvement in the economy and to refine the efficiency of their financial sector.80

It is however, of note that as in China, although the transition to capitalism has led to the loosening of the strong and heavy-handed authoritarianism by ruling families, it did not fully detach the state’s control over the economy. This is due to the tribal history of the Gulf countries, which was key to their modern state formation, where “dynasties presently ruling there are all of tribal origin” (Potter, 2009: 2). These tribes were based on family and blood ties. The resulting political structure is rooted in the crucial role of merchants as important actors in ruling families. Consequently, royal families, or the state, have become the social forces of transnationalisation, and take an active part in the policy-making of the countries’ economic affairs. Members of this transnational elite class81 have become crucial players in the global structure of capital accumulation. They are directly connected to transnational economic activities, and play an important role in facilitating the global accumulation of profits. As in China, the Gulf’s embrace of capitalism was facilitated by the state.

These elites co-opt their population through ideological efforts and material incentives in an attempt to legitimise the juxtaposition of a traditional ruling system with forces of modernisation. This is especially important with the rise of two new classes within the

79 See Ulrichen (2017: 85). 80 See Hanieh (2011) for more details on the Gulf countries’ embrace of capitalism. 81 See Mirtaheri (2016: 1-2).

Gulf region: those who wish to maintain religious conservatism and those who demand further liberalisation, including political liberalisation (Mirtaheri, 2016: 5). On the one hand, as Mirtaheri (2016: 4) argues, the Gulf elites use religion as a legitimating tool for their capitalist rule. They denounce nationalism and socialism, along with secularism, as threats to Islam and, consequently, religion emerged as a vital tool at the disposal of the state to suppress anti-capitalist forces. Accordingly, Egypt’s Gamal Nasser’s nationalism gave way to various forms of pan-Islamism (Prashad and Zinn, 2008: 260). Hence, only those conceptions of nationalism with strong religious elements that could bring some degree of legitimacy to the GCC capitalist classes’s attempts to justify their rule over traditional societies. Conversely, with its high oil revenues, the Gulf elites have also co- opted their people by pursuing a redistributive model of development (Hvidt, 2007: 562). It is through these two mechanisms that the Gulf transnational elite class form a moral and intellectual legitimacy for embracing the capitalist principles necessary for global capital accumulation.

The Gulf has mainly been integrated with the global economy through trade and FDIs. On the one hand, trade is manifested in the Gulf states’ export of its plentiful energy resources and imports of capital, consumer, and other goods (Legrenzi, 2015: 5). While private firms have increasingly played a crucial role, the social forces in this process have mainly been the transnational elite class and SOEs. They work to finalise either state-to-state or company-to-company trade agreements. Today, a number of free trade agreements have been signed with the Gulf’s trading partners, while some are currently in negotiation (Ennis, 2016: 142). By 2005, each GCC state was also a WTO member, which meant that trade reforms have been implemented to varying degrees.82 However, the Gulf state and private companies have been involved in various investments in different countries, mostly focusing on “areas of competitive strength” such as energy, tourism, and telecommunications (Ennis, 2016: 147). The Gulf region’s links to the global political economy has also been influenced by its need for foreign workers. Due to their small population sizes, the regional states have depended heavily on foreign workers for development. Legrenzi (2015: 61), for example, reported that expatriates contributed to 35% of the population and 65% of the workforce in the GCC countries. These dependencies have also made the regional countries’ most crucial partners those who export labour (Ennis, 2016: 148).

The GCC transnational elites, furthermore, have also become involved in the global financial industry. They have invested their petro-dollars around the world through their SWFs (Mirtaheri, 2016: 9). Ennis (2016: 137), for example, reported that the Gulf states sit alongside Norway and China as being among the largest SWF-holders. The

82 This information is gained from WTO’s website: http://www.wto.org/english/thewto_e/whatis_e/tif _e/org6_e.htm.

Gulf governments have also worked to develop themselves into some of the world’s important financial hubs through the establishments of free trade zones and regulatory reforms. Exemptions from corporate taxes and low start-up fees have further spurred the attractiveness of these countries in this capacity. While Bahrain has been the Gulf’s prominent financial hub since the 1980s, Dubai followed the way after a change to the federal UAE constitution in 2004, which allowed individual emirates to launch FTZs (ibid.). Dubai International Financial Center (DIFC), which today is the Gulf’s largest financial hub, was subsequently established with its own stock market, Dubai Gold and Commodities Exchange (DGCX). It is also reported that the Gulf is home to some of the world’s largest SWFs, with it being estimated to possess assets in the range of $1-1.5 trillion under sovereign management (ibid.).

With the exponential rise of Asian economies in recent years, especially those of China and India, the Gulf economies have progressed furthered into Asia and made various efforts to open themselves up to Asia. Demonstrative of this, the GCC capital outflows to Asia since 2000 have expanded by 100%, while only increasing by 50% to the U.S. (Legrenzi and Momani, 2011: 169). Meanwhile, according to one report, 43% of capital flows into the UAE came from emerging Asian markets and only 13% from developed states (Ennis, 2016: 135). The WTO has also outlined an evolution in the Gulf’s trade, where there is a shift to the East and growing relations between the region and Asian economies (WTO, 2013, cited in Ennis, 2016: 135). This shift is not the only factor in the opportunities brought by the rise of Asia. The Gulf countries are also required to reconcile with the declining centricity of the U.S. and Western world as the stewards of the world order alongside the more politically difficult investment environment since 9/11. The upcoming section specifically examines one of the exemplifications of this transition, which is China-Gulf relationship. It is also another historical trajectory that needs to be taken into consideration in order to understand the implementation of the BRI and the AIIB in the Gulf.

3.4 When China and the Gulf Met

Having begun to historicise how China and the Gulf countries have become integrated with the global economy in the last two sections, this chapter now turns to specifically historicising the interaction between China and the Gulf countries, which is another important historical antecedent through which the implementation of the BRI and the AIIB in the Gulf can be fully understood. Historically, China-Gulf relationship goes back fifteen centuries to the time of Silk Road’s trade and cultural relations.83 The ties,

83 See Olimat (2012) for more details.

nonetheless, became stagnant when the CCP adopted closed-mindedness in its foreign policy. The dimming of the relationship between China and the Gulf states ended when China and other Asian and African states, including the Gulf governments, participated in Bandung Conference in 1955, aiming to end all forms of colonialism and to establish an inclusive global order (Hongoh, 2016: 374). This shared political motive marked the birth of modern relations between China and the Gulf The scope of the interactions was however, primarily influenced by political considerations,84 and by the arms trade85 which assisted the liberation movements in the region.86 The ties were only transformed and strengthened following China’s embrace of capitalism, whereby the two sides began to witness the increasing internationalisation of each other’s capital and labour. It was the strengthening of this relationship that became starting point for the implementation of the BRI and the AIIB in the Gulf.

Post-globalisation China-Gulf relations were primarily influenced by China’s growing energy demands and the Gulf’s massive energy resources. While for many years energy was not a main concern in Chinese foreign policy, the economic transition expanded its energy needs, as industrialisation and urbanisation occurred at unprecedented rates. The discovery of Daqing’s oilfield in 1959 and the starting of production in 1969 at first made China confident of its oil self-sufficiency (Niblock et al., 2016: 208). However, the rapid economic growth resulting from reform required China to be dependent on outside imports and its deficit grew continuously (ibid.). China was estimated to have less than a three-day stock of its domestic oil and petrochemical industry (Rethinaraj, 2003: 377-388). This was mainly designed as a commercial reserve for its firms, leaving China without strategic reserves for exclusive use in critical periods (ibid.).

For this reason, the CCP had to look abroad. Of the potential alternative suppliers, the Gulf could not be overlooked. It was considered one of the “key sources of China’s crude oil imports” (Li, 1994, cited in Calabrese, 1998: 356) due to the region’s proven reserves, idle surplus capacity, and relatively low development and production costs (Calabrese, 1998: 356). Therefore, the Gulf has occupied an important place in China’s energy security policy (Leverett and Bader, 2005: 187). It is crucial to note that while previously China’s energy industry was controlled by two state agencies – The Ministry of Petroleum Industry and Ministry of Chemical Industry – which allocated resources in quantities and at prices specified by the State Planning Commission (Houser, 2008: 145), the reform made the CCP restructure the industry via decentralisation, minimising price control, and appreciating the local oil price in accordance to the international price (Kong, 2009: 11). The two ministries were thus converted into three NOCs – The

84 See Shichor (1979)’s book and Bin Huwaidin (2002)’s Ph.D thesis for a detailed account of China’s early engagements with the Gulf countries. 85 See Aarts and van Rijsingen (2007: 23-58) for details. 86 See Al Sabah (2017: 1-24) for a more in-depth analysis on China-Arab relations after Bandung.

CNOOC, the CNPC, and Sinopec – which have become the main social forces in China’s energy industry to this day (Houser, 2008: 145).87

Since the early reform periods, these NOCs had begun to internationalise in the Gulf, where they had been actively concluding import agreements, purchasing equity shares, participating in exploration and drilling, and building pipelines and refineries (Thorpe and Mitra, 2008: 109-24). The CCP also played a vital role in the process by offering various diplomatic and financial supports (ibid.).88These trends grew and expanded as China’s energy needs rose, and with the initiation of the “Going-out” policy. By 2013, as Downs (2013) reported, China became the Gulf’s main export destination, whereby of China’s total energy imports, the Gulf accounts for 60%, with Saudi Arabia serving as the largest oil supplier, providing 15% of the total imports, and Qatar as the largest exporter of LNG. Chinese NOCs have also engaged even more in oil exploration in GCC states, as well as in refining, marketing, and pipeline constructions.89 This energy interaction, however, is not a one-way process. Gulf corporations have directed their investments to the Chinese energy sector as well. For example, the Saudi SABIC helped Sinopec for the building of the Tianjin Petrochemical Complex, while Qatar Petroleum International (QPI), Qatar Petroleum’s subsidiary, was involved in the construction of a petrochemical complex in Hainan (Olimat, 2016: 24).90

As energy-related export-import and investments increase, China-Gulf interaction has gradually expanded to other sectors. Social forces involved in the process increasingly realise the opportunities available in other sectors. In an interview conducted during the fieldwork, a businessman from Yunnan who is now a shopkeeper in Doha said that:

“I came from Yunnan to Qatar in the early 1990s. I did not know anything about Qatar or the Gulf at the time. However, my friend who worked at Sinopec told me about Qatar as a nation with various business opportunities. One year later, I moved here”. (Unnamed interviewee in Qatar, 2017).

Even though from the 1980s to the 1990s, non-energy capital had begun to be traded between the Gulf and China, it was a slow and gradual phenomenon.91 It only increased noticeably following the formalising of the Going-out policy in 2001, when Chinese

87 CNOOC was established from the onshore assets of the Ministry of Petroleum Industry. Sinopec was created from downstream assets of Ministry of Petroleum Industry and Ministry of Chemical Industry. CNPC was originally formed as China National Oil and Natural Gas Corporation. See Houser (2008) for more explanations. 88 For example, China established relations with Kuwait and Oman in 1978, with the UAE in 1984, with Qatar in 1988, with Bahrain in 1989, and with Saudi Arabia in 1990. 89 See Olimat (2016: 34-5) for examples. 90 See Olimat (2016: 34-5) for examples. 91 See Olimat (2014).

state and private companies were urged to expand their operations overseas. While energy remains, the main capital being traded, the trade structure has slowly developed to include industrial and traditional finished products such as electronic products and clothing (Olimat, 2016: 36).

As trade increased, by 2016 China became the largest exporter to the GCC countries, outweighing the U.S., with exports growing to $60 billion annually between 1996 and 2016 (Karasik, 2016: 1-7). Niblock (2016) moreover, reported that rather than being concentrated in any one state, China’s trade is spread across all GCC countries. In this regard, it is different from U.S. trade with the region, around half of which is accounted for by Saudi Arabia alone (ibid.). Such growing trade has also been augmented by the establishment of Chinese retail shops, DragonMarts, in the Gulf’s major cities by some Chinese private firms (Olimat, 2016: 242-3). Dr. Jacqueline Armijo92, in an interview for this thesis, asserts that DragonMarts, especially the one in Dubai, are the largest trading hub outside mainland China, where various Chinese state and private firms sell ‘Made in China’ products from kid’s toys to machinery (Armijo, 2017).93 She further agrees that DragonMarts have become major platforms for the growing trade of non-energy capitals between China and the Gulf.

As such, investments between China and Gulf countries have expanded to non-energy sectors. On the one hand, Chinese non-energy FDIs in the Gulf have been focused primarily on infrastructure sectors. As the GCC states have been devoting petrodollars to infrastructures and therefore creating more lenient policies to attract FDI inflows in these sectors, Chinese firms, both state and private, have directed their infrastructure FDIs to the Gulf region. A U.S. think-tank, Heritage Foundation, reported that China’s infrastructure investments in the Gulf constitute 8% of China’s global total investments (Al-Tamimi, 2017). These projects are spread across sectors including fisheries, space technology, telecommunications, transportation, and automobiles (Wang, 2016: 184; Olimat, 2016: 162-190). As Zhang (2014) states, however, it is not easy to obtain official qualitative and quantitative reports on Gulf investment in China. Gulf state and private companies have invested billions of dollars in various sectors in different parts of China (Armijo and Kassem, 2012: 23-4; Zhang, 2014). These industries include textiles, aviation, hotel construction, e-commerce, and agriculture (Zhang, 2014).

92 Dr. Jacqueline Armijo is a scholar on China-Gulf relations. She taught for many years at Zayed University in the UAE and at Qatar University. She has published a number of important works on Islam in China and on China-Gulf relations. Dr. Armijo received her Ph.D in Chinese Studies from Harvard University. She is currently based in the U.S. 93 See Armijo’s (2014) piece on Dragon Mart in Dubai and Olimat (2016)’s book for more information on Dragon Marts in the Gulf.

China-Gulf relations have been also apparent in the financial sector. The Gulf has been one of the regions that have witnessed the active infiltration China’s finance. The “big four” have not only opened branches in the region, but they have also expanded their activities and services (Olimat, 2016: 85). Chinese SWFs have also made their way to the region, whereby in 2009, for example, the CIC concluded an agreement with the Kuwait Investment Authority (KIA) to establish the $350 Kuwait-China Investment Company (KCIC) (Davidson, 2012: 12). This, however, is not a one-way process: the Gulf’s SWF’s have made their way to China by becoming shareholders and investors in Chinese banks’ IPOs. Qatar Holdings, for example, has invested $2.8 billion in the IPO of ABC, which makes it the bank’s largest investor (Zhang, 2014). These investments rose further after the Chinese domestic bond and security market was opened up to foreign investors through the establishment of Qualified Foreign Institutional Investors (QFII) in early 2013, who direct two Gulf investment authorities, the Abu Dhabi Investment Authority (ADIA) and the KIA, to increase their investments (ibid.). The KIA, as an example, acquired a US$720 million stake in the ICBC (The New York Times, 2006), turning it into the largest subscriber in the world’s biggest IPO.

This financial interaction has also expanded to the Islamic finance sector. Following the 2008 Global Financial Crisis, there has been a renewed debate on the role of Islamic finance in helping to stabilise the global financial system, because of its strong ethical and religious principles. While the conventional banking sector was estimated by the IMF to lose around US$3 to US$4 trillion due to the financial crisis, no Islamic bank necessitated bailouts at the scale experienced by some of world’s banking industries in developed countries (MIFC, 2014: 4). Gradually understanding this phenomenon, the CCP94 introduced a series of Islamic funds to attract foreign investors. The Gulf entity was one of the fastest to respond, with Bahrain’s Shamil Bank establishing its US$100 million Shamil China Reality Mudarabah, the first-ever Islamic property endowment for investment in China’s real estate market (ICD, 2017: 49). After China joined the Islamic Financial Services Board, one of the world’s main standard-setting bodies for Islamic finance in 2009, a proposal was made to study the amendments necessary to the law to facilitate the development of Islamic finance in China (ibid.). While the CCP has only made limited follow-up efforts on amendments, Islamic banks from around the world have begun to invest in China.95 The Gulf entities were no exception. For example, in 2012, the Bahrain Economic Development Board signed an agreement with the China Council for the Promotion of International Trade which, among others, intended to develop Ningxia as an Islamic financial centre in China (ICD, 2017: 63).

94 See, for example, Lu (2014: 2227-2234) for the history and current conditions of Islamic finance in China. 95 For example, in 2012, the Malaysia-based Affin Holdings and Bank of East Asia proposed a plan to the China Banking Regulatory Commission (CBRC) to establish the first Islamic bank in China (ICD, 2017: 63).

China-Gulf interaction has also been shaped by the flow of migrant workers between the two regions. As the Gulf countries lack qualified domestic workers, and because customarily Chinese companies and banks prefer to bring in their own workforces for their operations overseas, there has been an increased flow of Chinese workers into the Gulf countries. Andersen and Yang (2014: 28) reported in 2014 that there were around 74,000 Chinese workers in the region. Of these, roughly 35,000 are in Saudi Arabia; 14,000 in the UAE; 6,000 in Qatar; and 5,000 in Kuwait (ibid.). Despite the scarcity of reliable data, Chinese workers are known to be present in Bahrain and Oman as well.96 The Party-state also plays a crucial role in the flow of this labour by signing regulating and protection agreements with the Gulf governments. In 2011, for instance, the CCP signed a MoU titled an “Agreement Regulating the Employment of Chinese Workers”, with Qatar responsible for regulating safety and protection for Chinese workers.97 Such agreements have also been signed with other GCC governments.98 It is crucial to note that Sino-Gulf interaction has been facilitated by transportation advances. While Gulf- based air-carriers have opened and increased their flights to and from China, the same also goes for Chinese carriers, which have launched daily flights to the Gulf’s major cities (Olimat, 2016: 145, 231).

Establishing Moral and Intellectual Legitimacy

The China-Gulf interaction, nevertheless, did not fall from the sky. It was instead accompanied by an ideological struggle and the initiation of institutional frameworks to establish “not only a unison of economic and political aims, but also intellectual and moral unity […] on a universal plane” (Gramsci, 1971: 181-2). Deploying the concept of a regional historical bloc developed in Chapter 2, the following two parts discuss the ideological struggle and institutional frameworks which have helped establish moral and intellectual legitimacy for China’s interaction with the Gulf states. While consolidating a capitalist hegemony, the propagation of neo-liberal ideas constitutes a crucial part of the effort in forming the moral and intellectual legitimacy behind its ascendancy (Cox, 1993: 266-7), China’s interaction with the Gulf countries was supported by distinctive struggle, although both parties had the same goal: universalising political and economic interests. This was necessitated as they acknowledged that there was a widespread lack of awareness and understanding of each other among both political and civil societies. At the same time, specifically on the part of China towards the Gulf, this was needed due to the inherited memory of the aggressive presence of Western hegemonies in the region, which have instilled suspicion among the societies about the arrival of a new regional player.

96 Confirmed through interviews with Al Sudairi (2016) and Simpfendorfer (2016). 97 See the document here: http://gulfmigration.eu/china-qatar-agreement-regulating-the-employment-of- chinese-workers-in-the-state-of-qatar/. 98 See Olimat (2016) for more examples.

Consequently, the ideological struggle behind China’s interaction with the Gulf states has not only revolved around increasing each other’s awareness about themselves, but also, around China presenting itself as an alternative to Western actors. In the first years of the interaction, these strategies involved propagating China’s anti-imperialist attitude, including opposing foreign intervention in the domestic affairs of the regional states, supporting liberalisation movements in the wider Middle East region, and encouraging peaceful methods of conflict resolution (Pan, 2010: 78-82). These strategies aimed to create an image which distinguishes China from Western players and have made China able to interact with the Gulf states. In the recent years, such strategies continue. They include invoking the Bandung Principles or propagating the idea that China’s political approaches are different from those of the West, such as their being ‘bottom-up’ as opposed to ‘top-down’, ‘radical’ as opposed to ‘incremental’ in terms of governance, and others.99 These strategies have made the Gulf countries’ political and civil societies appreciative of China. As Saudi Arabia’s Ambassador to the U.S., Prince Turki Al Faisal asserted in an interview with USA Today,

“China is not necessarily a better friend [than the U.S.], but a less complicated friend” (cited in Al Tamimi, 2014: 110).

This struggle to increase awareness concerning each other, and to present China as an alternative to the West, has not only been waged at the elite level, but also at the civil society level, which, in neo-Gramscian sense (Cox, 1996: 53), is the field of interest, articulation and social struggle for political mobilisation and coalition formation. This has been achieved by individuals and institutions which, in neo-Gramscian perspective, are seen as “organic intellectuals” who represent and articulate the ideas or interests of the leading class (Cox, 1999: 16). The emerging elite formation, organised informally (via elite institutions) and formally (via ‘official’ lobbies directed at the supranational and national regulatory institutions), and which is also becoming influential in the media, is a major social force in the struggle (Olimat, 2016: 98). This has been supplemented by China and Gulf-related courses that have been increasingly taught and promoted by intellectuals, both from China and the Gulf, at public universities and research centres in China and the Gulf. Public and academic seminars and conferences have also been organised.100

Efforts have also been made via the Confucius Institutes which have been established across the Gulf (Kirk, 2015). 101 These have been further supplemented by offering scholarships to young academics to study in each other’s countries. Olimat (2014: 144-

99 See Sun (2017: 363-366) for detailed comparisons of these concepts. 100 See Olimat (2016: 121-22) for further details. 101 I have also written a piece outlining the different Confucius Institutes that have been established in the Gulf. See Rakhmat (2015).

202) reported that since the mid-2000s, GCC students have been given scholarships to study in various Chinese universities, and many Chinese have been pursuing studies in the Gulf countries. Many of them have returned to their respective countries and have, directly or indirectly, become involved in the struggle to create moral and intellectual legitimacy by rising awareness on each other. Not less important are agreements signed between Chinese and Gulf academic and research institutes, leading to an increase in exchanges among teachers and students, academic events and collaborations, and the offering of courses on China or on the Middle East in Chinese and Gulf Universities.102 In addition, the efforts to establish an ideational basis of China-Gulf interactions have also been carried out through cultural endeavours. Cultural entities from China and the Gulf have been organising exchanges and agreements, which have resulted in various cultural activities such as painting exhibitions, Chinese New Year celebrations, book fairs, and other performances (Fahmy, 2015; Walker, 2015). Armijo (2017) stated in an interview that these cultural endeavours have become effective platforms for raising Chinese and Gulf civil societies’ awareness of each other.

Institutionalising the Interaction

China-Gulf interactions also did not take place without institutional supports. Various institutional frameworks have been involved in the establishment of the material and ideological basis of the interaction. The China-Arab States Cooperation Forum was established in 2004, which according to the “Declaration on CASCF” and the “Action Plan of CASCF” serves as a platform for negotiating the terms of China’s engagement with Arab states, including the Gulf (Neill, 2014: 210). It organises meetings, either in China or in one of the Arab countries, bi-annually. One of its main initiatives is the “1+2+3” cooperation pattern, which lays out the framework of Sino-Gulf interaction. Under the framework, energy constitutes the fundamental factor in the relationship; infrastructure, trade, and finance represent the second component (“2”); and the three refers to the new high-tech industries of nuclear technology, space, satellite, and new energy (“3”) (Olimat, 2016: 32).

Another crucial institution is the China-GCC Strategic Dialogue, which was founded in 2010 to “lock in” Sino-Gulf ties by upgrading the relationship to the level of ‘strategic.’ The “strategic partnership” is a diplomatic mechanism introduced by the CCP in the 1990s and is pursued by either individual, or groups of, countries (Murphy, 2013: 17). Such a partnership, however, does not necessarily refer to military alliances or quasi- military alliances. Instead, when specific relationships are labelled as ‘strategic’, they are expected to include all spheres of a relationship (as in political, economic, cultural, and military) and all the parties involved have to agree to pursue a long-term partnership

102 See Olimat (2016: 121-22; 144; 145; 173; 228) for further details. I also elaborate on this in Chapter 5.

(Medeiros, 2009: 82-9). The struggle towards “strategic partnerships” can be viewed as an attempt to “lock in” the political and economic commitments of the Gulf countries to China. To this date, the China-GCC Strategic Dialogue has established strategic partnerships with Qatar, Saudi Arabia, Bahrain, Oman and the UAE, and has engaged in negotiations with Kuwait (Murphy, 2013: 17).103

In addition to pursuing strategic partnerships, the China-GCC Strategic Dialogue has also organised rounds of negotiations on the finalisation of the China-GCC FTA (ibid: 19). The GCC is the second region, after the ASEAN, to have FTA negotiations with China (Ghafouri, 2009: 87). The negotiations started in July 2004, when China and the GCC concluded a Framework Agreement on Economic, Trade, Investment, and Technological Cooperation (Puig and Alice, 2017: 128). Several subsequent talks have since been held to finalise the signing of FTA, which is expected to strengthen China’s interaction with the Gulf states (ibid.). The FTA is expected to remove tariff barriers on capital moving between China and the GCC. Although to this date, the FTA has not been finalised and the CCP has called for its finalisation to be expedited (Xinhua2, 2017).104 A number of other institutions have also been established to support China- Gulf interactions, such as the China-GCC Cooperation Forum, China-GCC Trade and Economic Joint Committee, China-Arab States Economic and Trade Forum, and China-GCC Countries Forum on Economic Trade Cooperation (Olimat, 2016: 43). In each regional GCC country, further similar institutions have also been established such as Omani-Chinese Friendship Association, China-Qatar Business Council, and China- Kuwait Friendship Association (ibid.).105

Beside ‘locking in’ China-Gulf interaction, assisting companies and institutions, and organising mutual access for entities from China and the Gulf (ibid.), these institutions have served as an important platform for “defining the ideological basis of consensus, principles, and goals within which policies are framed, and the norms of ‘correct’ behavior” are established (Cox, 1987: 259). Various meetings, summits, and agreements organised by these institutions have been utilised to ease the struggle to raise awareness about each other and to universalise each other’s interests, thus establishing a common sense. Moreover, these institutions have also served as podiums to not only propagate Chinese political stance on regional issues, but also to socialise Chinese foreign policy ideas, and to present China as an alternative to Western powers. Therefore, besides institutionalising China-Gulf interactions, these institutions have served as platforms to create moral and intellectual legitimacy behind the interaction.

103 See Medeiros (2009) and Struver (2017: 1-33) for more studies on China’s strategic partnership. 104 See Puig and Alice (2017: 123-158) for an analysis on China-GCC FTA. 105 Other institutions include the Bahrain-China Joint Investment Forum, the Sino-Bahraini Committee for Economic, Trade, and Technological Cooperation, the Association of Chinese Companies in Saudi Arabia, and Saudi-Chinese Business Council (Olimat, 2016: 43).

This section has begun to historicise China’s contemporary interaction with the Gulf states. The tie between the two sides was limited until China’s economic reform and its subsequent opening-up. While previously the interaction was primarily influenced by political considerations, the post-reform interaction experienced a shift whereby it has growingly witnessed the flow of each other’s capital and labour. It has also been shown that the tie has been supported by ideological struggles and institutional frameworks intended to provide moral and intellectual legitimacy. This section ends the analysis of the three historical stages against which the implementation of the BRI and the AIIB must be judged. The next section will discuss the materialisation of the BRI and the AIIB as China’s emergent hegemonic project.

3.5 The Emergence of the BRI and the AIIB as an Emergent Hegemonic Project

The last three sections traced the three historical stages through which the realisation of the BRI and the AIIB in the Gulf can be understood. This section now discusses the emergence of the BRI and the AIIB as China’s emergent hegemonic project. This is crucial because to better understand the context and the reasons behind the realisation of the initiative in the Gulf, it is important to reflect on the emergence of the BRI and the AIIB. While the existing studies present the initiative as coming out of blue from Xi Jinping and mainly emphasise its geo-political and geo-economic significance, the BRI and the AIIB are originated from domestic circumstances within China. As Nordin and Weismann (2018: 240) note:

“The BRI is not detached from domestic politics. The BRI is a geo-economic plan, a continuation of the national development plan, and a new version of ‘opening up’”.

When Xi ascended as the CCP’s General Secretary in 2012, the country was struggling to manage a transition to a “new normal” of slower and more sustainable growth. In spite of the positive outcome from capitalist reform, the negative implications of the continuous rapid economic growth have become potentially threatening. During the first decades of the reform, China was experiencing rapid growth, benefitting from the expansion of its exports and FDIs. From 2012, nonetheless, it has witnessed a sustained decline and its development patterns have apparently reached a bottleneck. Between 1980 and 2015, its GDP grew by an average of 9.6% annually and its GDP per capita rose from US$200 to over US$8000 (Huang, 2016: 315). This growth, however, was accompanied by numerous downturns, especially in 1989-90 and 1998-99. In 2012,

GDP growth declined once more, to 7.7% from 9.3% a year earlier. This time, growth moderation was more persistent, remaining at 7.7% in 2013 and then declining further: 7.4% in 2014 and 6.9% in 2015 (ibid.). Observers even argued that this very low growth was underestimated.106

One particular issue that accompanies this decline is overcapacity. Despite its double- digit growth, China was not invulnerable to the 2008 financial crisis and it was heavily exposed when exports to its major markets in the U.S. and Europe plummeted, leading to the largest stimulus package in history, equivalent to 14% of GDP (Keidel, 2008). This step, nevertheless, only had a short-lived positive effect, and the CCP has since been searching for an alternative solution in preserving its economic growth (Zhang, 2017: 310-331). The 2008 mega-stimulus package’s figure of US$570 billion considerably understated the real figure as the Party-state encouraged banks to raise loans to firms and local governments (Hung, 2009: 22). This nevertheless reinforced the tendency towards overcapacity. Only 20% of the rescue package was aimed at social spending, with the majority being directed to fixed asset investment in sectors already plagued by overcapacity – such as steel and concrete (ibid.).

This was exacerbated by the competition among local governments encouraged by the CCP – known as “one country, 32 economies” (ibid.).107 In Japan, the same policy was implemented, whereby the government mobilised resources for strategic sectors. Jiang Zemin’s government initiated the policy, but competition among the local governments led to what Karl Marx identified as the anarchic character of accumulation, causing the uncoordinated creation of redundant production capacity (ibid.). Thus, even though the stimulus package allowed the economy to sustain its high growth rate and contributed to global economic recovery, it was gradually realised that much of the breakneck speed created by the stimulus was highly artificial. The stimulus spending was accompanied by large amount of foreign capital from overseas Chinese and core capitalist economies who were attracted by Chinese workers’ low remunerations and long-term expectations of Chinese market growth (Huang, 2003, cited in Hung, 2008: 159). This reinforced the accumulation of debt across many economic sectors and made China home to excess capacities which needed profitable and sound investment openings (Dollar, 2016: 2).

In addition to excess industrial capacities, China is also home to massive accumulated foreign exchange reserves. In the early period of internationalisation, the value of the Renminbi was kept artificially low to encourage exports. This nevertheless generated

106 According to a report compiled by wallstreetcn.com, Capital Economics, Citibank, Conference Board, and Lombard Street, respectively, estimated China’s first quarter GDP growth in 2015 at 4.9%, 4.0%, and 3.8%. See here: http://wallstreetcn.com/node/21837. 107 It should be noted that it is not only provincial governments that are economic actors. “Local” refers to multiple levels of government including cities, counties, townships and villages.

the accumulation of considerable foreign exchange reserves, which today amounts to $3 trillion (Liu and Dunford, 2016: 328). The previous CCP leaderships have initiated efforts to minimise these overaccumulations, but these reserves are primarily directed at low-return dollar denominated assets, U.S. Treasury Securities in particular.108 Industrial overcapacity and overaccumulated foreign reserves have also been accompanied by few other concerns, including increasing energy demands resulting from urbanisation and industrialisation, growing labour costs, and unemployment (Dollar, 2016: 2). No less important is the issue of regional inequality. Rapid economic growth has made several regions prosperous, while others have been ignored by the Party-state’s preferential development plan. The gap between coastal and middle or western regions, and among urban and rural areas has been greater than anticipated. A Chinese diplomat, Zhang Yesui, asserted that middle and western China constitute 80% of land and 60% of the population but collect only 14% of trade, 17% of FDI, 22% of ODI, and one-third of GDP (ibid.)109. As these problems reach their peak, they have become intertwined with instability, ethnic conflict, and the rise of various anti-hegemonic social forces (Li, 2015: 515).

Acknowledging that the transition to a market economy has not only engendered rapid economic growth, but also that the emergence of various economic problems and anti- hegemonic activities pose a danger to the CCP, Xi Jinping, as the leader of China’s one- party rule (Nathan, 2016: 181), has been under pressure to search for solutions. For him, the best method to eliminate the various challenges in the economy is by pursuing more reform and opening-up. This was reasserted in his speech at the Third Plenary Session of the 18th Central Committee of the CCP (Yagci, 2018: 73), where he declared that:

“To promote continuous and sound development of an economic society, there is no way but reform and opening-up” (Xi, 2013, cited in Tanaka, 2015: 6).

Several policies have subsequently been considered by Xi.110 However, the most crucial and comprehensive mechanism he can use to achieve his objective is the BRI and the AIIB, which is considered as “the signature foreign policy proposal of Xi” and “the economic pillar of Xi’s” effort (Zhang, 2016: 120-128). Vice Premier Zhang Gaoli, head of the Leading Group for the BRI, also pointed out that the BRI is a main strategy in China’s opening-up (Zou, 2018: 6). The NDRC further asserted that:

108 See Zheng and Yi (2007: 14-25) for a detailed analysis on China’s foreign exchange reserves. 109 See Keidel (2009: 538-561) and Crane et al. (2018: 98-107) for further examination ofregional disparity in China. 110 See, for example, Tanaka (2015: 1-44).

“the Belt and Road is […] the guiding principle in China’s opening up and foreign cooperation in the period to come” (ibid.).

The initiative indeed represents a manifestation of Xi’s intent to solve various economic issues in the country and pursue further integration with the global economy. Through concentrating on infrastructure investments abroad, the initiative is intended to present a profitable outlet for China’s industrial overcapacity (Ferdinand, 2016: 951). Although there are uncertainties as to whether the BRI countries are deep enough to absorb that overcapacity, the BRI and the AIIB would give opportunities for Chinese companies to invest in countries along the routes (Dollar, 2015: 163). Simultaneously, the initiative constitutes a “mercantile strategy”; besides being intended to utilise excess capacities productively, they are also meant to increase financial returns (Nicolas, 2017: 20-21). As explained previously, the previous CCP leadership have spurred exports together with accumulated systematic and substantial current account surpluses, which together with capital account surplus, fuelled foreign exchange reserves. This capital however, was not invested in high-yield assets (ibid.). The BRI and the AIIB aim to make the best of over-accumulated capital by finding higher long-term return investment opportunities to preserve and increase its value which has been directed at low-return U.S. Treasury Bills (ibid.).

Besides providing outlets for excess capacity and foreign exchange reserves, the focus on infrastructure projects is also intended to resolve other bottlenecks in the economy, namely securing the needed energy resources and increasing the productivity and the internationalisation of SOEs and private firms, which in turn would offer more jobs and enhance human capital. This would additionally help tackle demographic issues. The family planning policy has caused the share of youth in the country’s population to decline (Johnston, 2016: 123), leading to a ‘demographic dividend’ period: when a large portion of the population is of working age and there is rising output per capita of the population (ibid.). That labour portion is, however, currently declining, causing upward pressure on wages and downward pressure on productivity. In 2015, there were over 130,000 protests (almost 400 daily), expressing disappointment with living and salary standards (ibid.). The BRI and the AIIB is expected to create more output per labour than during the demographic dividend period, which would move the economy from low-cost labour and intensive production overseas to higher-value added services and industries.

No less crucial, the initiative is intended to upgrade trade linkages between provinces in western parts of China and nearby countries, which could bring advantages for those underdeveloped regions (Ferdinand, 2016: 951; Hong, 2017: 357) and address what the CCP calls the three evils (terrorism, extremism, and separatism) prevalent there (Han

and Paik, 2017: 31-42). At the same time, from Xi’s perspective, the BRI and the AIIB are expected to stir the process of a technological upgrade of the Chinese economy to realise the Party-state’s “Made in China 2025” plan. Three components are fuelling the rearrangement of the “Asian factory” making China the centre of the regional supply chain. China is becoming a high value-added economy. There is also ongoing relocation of low-cost manufacturing from China to Southeast Asia, and increasing purchasing power within its population (Mayer, 2018: 12). In addition, the initiative is intended to provide a means for Chinese telecommunication and Internet-based high-tech firms such as ZTE and Huawei to increase their market share in global online commerce by constructing IT infrastructure setting technological standards (ibid.).

The initiative, moreover, has long-term objectives. The results of the projects that the BRI and the AIIB pursue are expected to strengthen China’s internationalisation. It is clearly iterated in Vision and Action that the initiative intends, to reinforce financial integration and to expand trade and investments (NDRC, 2015). As stated in Section 3, economic reform and the subsequent initiation of the “Going-out” policy has led to the internationalisation of Chinese production and finance overseas. The projects under the BRI and the AIIB are intended to construct infrastructure and institutional platforms for China’s future internationalisation, whether in securing oil and gas resources or in ensuring a smooth and lower-cost flow of trade and investments, in new places (Liu and Dunford, 2016: 333-334). As Ben Simpfendorfer111 in an interview for this thesis said, the BRI and the AIIB can be viewed:

“[…] as the renewed “Going-out” policy to facilitate China’s internationalisation, but this time it includes infrastructure facilities too” (Simpfendorfer, 2016).

In other words, pursuing, for example, infrastructure projects in energy-producing states is not only intended to minimise excessive industrial capacity and attain financial returns, but also offer China access to energy resources in the future. Overall, the BRI and the AIIB have dual goal. While projects under the initiative are expected to quickly offset various problems in the Chinese economy, the outcomes of these projects are intended to facilitate the future internationalisation of Chinese production and finance.

Since the initiative publicly launched, Xi, with his Chinese Dream, has been having an ideological struggle to establish intellectual and moral legitimacy for his initiative. The

111 Ben Simpfendorfer is Founder and CEO of Silk Road Associates, a Hong Kong based consultancy firm. He has worked in Asia and the Middle East for the past 20 years. He advises a range of Fortune 500 MNCs on their commercial strategies in Asia. Ben is the author of The Rise of New East (Simpfendorfer, 2014) and The New Silk Road (Simpfendorfer, 2009), examining China’s commercial relations with the Middle East.

concept of the Chinese Dream, defined as the rejuvenation of Chinese nation, has been employed as the legitimating idea for the plan to reinforce development through greater marketisation and integration, with transnational capital from the BRI and the AIIB.112 As Xi said at the 19th National Congress of the CCP:

“the great rejuvenation of Chinese nation will become a reality in the course of reform and opening-up” (China Daily1, 2017).

Xi’s idea of the Chinese Dream originated from the Centre for China and Globalisation (CCG), whose members are returned scholars and experts from the U.S. and Europe. They standardised the name “BRI Initiative”, forbidding the use of “BRI Strategy”, to minimise suspicion and resistance (He, 2018: 12)113. These ideas, together with the BRI and the AIIB itself, have been promoted throughout the Party and the country through official speeches, workshops, conferences and seminars, both at bureaucracy 114 and society levels.

Xi has also been helped by a number of in-house think-tanks, such as the China Centre for Contemporary World Studies and the CCP’s International Liaison Department, which function as the main national secretariat for research on the BRI (Rolland, 2018: 5). By organising conferences, seminars, and exchanges, these institutions function as organic intellectuals who struggle not only to socialise the emergent hegemonic project within Chinese political and civil societies, but also to transform its objectives into a common sense. It was also intended to direct the collective will towards building a historical bloc with different social forces being told to “work assiduously to fulfil the dreams and contribute to revitalisation of the nation” (Bangkok Post, 2016). Similar to Gramsci, Xi sees the consent of the masses as an indispensable instrument in obtaining legitimacy for his initiative. He acknowledges the vitality of going beyond his narrow interests to exercise his leadership role within a broad coalition of historical blocs.

Such efforts have not only gained the people’s support for the BRI and the AIIB, but also resulted in a coalition among diverse social forces from both inside and outside the formal policy-making process, who are unified around a common objective to realise the BRI and the AIIB. These comprise state institutions, firms, financial entities,115 the mass media, intellectuals, and even (to a lesser extent) foreign corporate organisations (Yu, 2018: 1-14) who have become:

112 The use of political ideologies has been a tradition in China’s political dynamics. See, for example, Su (2011: 314) for a neo-Gramscian analysis of the topic. 113 It is notable that the CCG’s primary agenda is to promote closer integration with the West (He, 2018: 12). 114 For examples, see Rolland (2018: 5). 115 See Thomas and Chen (2018: 289-303) for an analysis of the roles of Chinese financial institutions in the BRI.

“[the] industrial technician, the specialist in political economy, the organisers of a new culture, of a new legal system, etc. [of the hegemonic project]” (Gramsci, 1971: 16).

In addition to the NDRC, Ministry of Commerce, and Ministry of Foreign Affairs as the appointed leading forces of the initiative, a ‘Small Leading Group’, consisting of senior policy makers, has been established at the State Council116 as the “technicians” responsible for the coordination of the initiative’s policies. Fifteen other ministries have also joined the policy-making process of the BRI and the AIIB.117At the same time, 31 provincial governments, from Hainan to Hei-longjiang have scrambled to list their preferred projects and industries in the initiative (Xinhua3, 2015). Other social forces incorporated into the historic bloc include transnationally-oriented state and private firms, banks and other financial institutions, who primarily emerged from the 1979 reform and have been active at the transnational level since.118 They are the main social forces with regard to how the BRI and the AIIB transpires on the ground. Since the initiative launched, they have spanned the globe, signing agreements and constructing projects under the BRI and the AIIB.

These have also been supported by the activities of what Gramsci refers to as “organic intellectuals”, who work to socialise and translate:

“the interests of the leading class into harmony with those of subordinate classes and incorporate these other interests into an ideology expressed in universal terms” (Cox, 1983: 168).

In the BRI and the AIIB, these constitute media, academic personnel and institutions, and cultural entities. They have spread in countries where the BRI and the AIIB are implemented, alongside the social forces involved in the material implementation of the initiative, to create ideological coherence and legitimacy for the project. This is achieved not only by socialising the BRI and the AIIB within the masses, but also by propagating the notion that “the BRI seeks a common prosperity for all mankind” (Gao, 2018: 327) or through “promoting the China Dream as is consistent with the dream of everyone” (Callahan1, 2016: 223). Thus, it can be said that although the state is the creator of the emergent hegemonic project, various social forces have been unified, via organisational

116 It is chaired by Zhang Gaoli, the CCP’s Standing Committee Member, with four deputy chairs who share responsibilities equally. See Yu (2018: 1-14) for details. 117 See Yu (2018: 1-14) for details. 118 See He (2018: 1-16) for in-depth analysis of how Xi Jinping attracted these social forces into his historical bloc.

unity and cohesiveness, to carry out the project’s implementation (Jessop, 1990: 261; 353).119

By May 2017, Xinhua1 (2007) reported that 270 “concrete results” had been achieved in each of the areas of the BRI. Other government sources also indicated that 50 SOEs have invested in nearly 1,700 projects in countries along and outside the routes in the last few years (Wu, 2017). New economic cooperation zones have been founded within 50 regions, and a free trade zone trial has been expanded from four to seven provinces (Lan, 2016). The initiative has also witnessed China become the world’s biggest goods exporter and a major capital exporter, where its ODI surpassed its FDI for the first time in 2015, and its ODI to countries along the BRI routes increased by 23.8% Year on Year in 2015 (ibid.). The Chongyang Institute for Financial Studies reported that from June 2013 to June 2016, China-BRI states trade stood at US$3.1 trillion, which accounts for 26% of China’s global trade (China Daily11, 2016). The Gulf has been one of the places which has been involved in the active implementation of the BRI and the AIIB. This is examined in the remaining chapters through the framework of a regional historical bloc explored in Chapter 2, Section 4. The framework allows the unpacking of the material, ideological, and institutional components of the initiative.

3.6 Conclusion

This chapter intended to answer the second sub-research question of the thesis: what is the historical context of the implementation of the BRI and the AIIB in the Gulf? The answer to this question will not only enable us to place the analysis in the subsequent chapters in a wider historical context, but also help us to answer the main research question: why the BRI and the AIIB is being implemented in the Gulf. I suggested that the implementation of the BRI and the AIIB in the Gulf have to be investigated against four historical trajectories. The first stage, discussed in Section 2, is China’s embrace of globalisation through re-orienting its economy from the socialist mode of production to the state capitalist one, marked by the reform initiated by Deng Xiaoping following Mao Zedong’s death. As the process of globalisation unfolded, Deng acknowledged the importance of integrating China’s economy with transnational capital. Consequently, an economic reform was implemented, by which a number of elements of capitalism were incorporated into the economy, while simultaneously sustaining the essential existing elements of the socialist system. Deng’s reform resulted not only in the installation of a distinct path towards a capitalist mode of production – one that has a prominent role

119 I identify the various social forces with regards to the implementation of the BRI and the AIIB in the Gulf in Chapters 4 and 5.

within the state – but also led to China’s re-integration into transnational circuits of capital.

The second historical trajectory, as explored in Section 3, is the Gulf’s integration into the global economy. Although geographical positions and resources have meant that the Gulf countries have been connected to the outside world for many years (whereby they have been important for the expansion of world powers from Portugal, Holland, Turkey, and Britain), the unfolding of the U.S.-led globalisation process has led to the regional countries being further integrated into the global economy. The process has not only made the Gulf states implement a number of efforts to incorporate capitalist principles into their economies, but has also led them to further their interactions with other countries. The first and second trajectories led to the third stage, which is China- Gulf interactions since late 1970s. The two sides’ integration with the global economy has made ties between China and the Gulf countries expand from limited ties mainly influenced by political considerations to the growing flow of each other’s capital and labour. It was also shown that the ties have been supported by ideological struggles and institutional frameworks intended to form moral and intellectual legitimacy.

The final section discussed the materialisation of the BRI and the AIIB as an emergent hegemonic project. Facing declining growth and various bottlenecks in the economy, including, among others, overcapacity and growing energy needs, Xi Jinping, who came to power in 2012, introduced the BRI and the AIIB as a strategy to maintain economic stability and to resolve China’s various economic problems. Through concentrating on infrastructure investments, the emergent hegemonic project has the double advantages of resolving the overcapacity and other problems in the economy, while simultaneously, in the long-term, furthering the internationalisation of China’s production and finance. The Gulf has been one region that has witnessed the active implementation of the BRI and the AIIB.

The rest of the thesis now turns to investigate how the initiative is being implemented in the Gulf. Specifically, it attempts to further answer the first part of the main research question – why is China implementing the BRI and the AIIB in the Gulf? – and the second part: why have the Gulf state-society complexes been so ready to support and participate in the implementation of the BRI and the AIIB? In contrast to orthodox approaches to the BRI and the AIIB, this thesis discovers that the implementation of the initiative goes beyond economic activities and, rather, involves struggle to translate the objectives of the project into a common sense (Morton2, 2003: 636). It is therefore possible to speak of a hegemonic project, even though emergent as it is not yet fully in shape, in a neo-Gramscian sense since it is rooted “not only in the economy, but the whole sphere of state-civil society relations” (ibid.). To examine this, I am deploying the

framework of a regional historical bloc built in Chapter 2, Section 4, which allows not only analysis of the material implementation of the BRI and the AIIB in the Gulf, but also of the ideological and institutional processes that accompany it. The next chapter will first investigate the material implementation of the initiative, before Chapters 5 and 6 study the ideological struggle and institutional frameworks of the initiative.

Chapter Four The Material Implementation of Chinese Emergent Hegemonic Project in the Gulf: From Energy to Finance

4.1 Introduction

The last chapter historicised the implementation of the BRI and the AIIB in the Gulf. The process of globalisation during the 1970s led to, among other things, the opening- up of China and the Gulf countries to the global economy and subsequent increased relations between them. Despite the internal and external achievements of the reform, China has been encountering an array of problems in its economy. Xi Jinping, who rose to power in 2012, introduced the BRI and the AIIB as his key strategy to resolve those problems. The Gulf, a strategic region that has had strong relations with China since globalisation has unfolded, has emerged as one of the key areas for the implementation of the strategy. Understanding these trajectories has helped to answer the question of why China is implementing its initiative in the Gulf.

Drawing on the concept of a regional historical bloc developed in Chapter 2, Section 4, this chapter continues answering the thesis’ research question by examining the material implementation of the initiative, which constitutes the basic contours of the emergent hegemonic project. It argues that understanding the basic contours of the initiative’s implementation in the Gulf will help us to answer further the question of why China is realising the BRI and the AIIB in the Gulf. In the later chapters, it will also give us the ability to answer why the Gulf state-society complexes are supporting and participating in the realisation of the initiative. As will be shown throughout the remainder of the thesis, China’s emergent hegemonic project springs from material interests and revolves around economic endeavours, although it involves ideological struggles and a need for institutional frameworks to “[bring] about a unison of different interests” (Morton, 2007: 153).

While such material implementation may have been covered by the orthodox analysis, neo-Gramscian perspectives move beyond examination of the material interests and activities which underpin the BRI and the AIIB in the Gulf as disconnected from the domestic situations within China and only involve state actors. Instead, it focuses on how those material interests originated and which particular actors are involved in the process. The chapter proposes that, having taken root in certain domestic and regional

contexts within China and the Gulf, the material realisation of the initiative in the latter focuses on three elements: the securing of energy resources, with state elites, state and private companies as the main social forces; the directing of Chinese capital into non- energy infrastructure projects, with state and private companies, and banks, as the social forces; and the increased internationalisation of Chinese finance, with banks and other financial institutions as the core agents.

To discuss these three components, the chapter is divided into four sections. In Section 4.2, the background of the BRI and the AIIB, as an emergent hegemonic project in the Gulf, is explained. In Section 4.3, the material implementation of the initiative in the Gulf is examined by concentrating on its first component, which is the securing of energy resources. Section 4.4 then focuses on the second component of the emergent hegemonic project, which is the increasing proliferation of Chinese capital in the Gulf’s non-energy infrastructure sectors. In Section 4.5, the main focus is the third element, namely the increased internationalisation of Chinese finance. This chapter is based on official documents, scholarly pieces, and journalistic articles, supplemented by fieldwork interviews.

4.2 The Emergence of the BRI and the AIIB in the Gulf

The Gulf is one of the main world regions in which the BRI and the AIIB is being actively implemented. The official launch of the initiative in the Gulf took place when Xi delivered a speech entitled: “Promoting Silk Road Spirit and Deepening China-Arab Cooperation” at the sixth Ministerial Conference of the China-Arab States Cooperation Forum in June 2014. Xi began his speech by stating that:

“Through the ancient Silk Road, the ancestors of the Chinese and Arab peoples took the lead in the friendly exchanges among nations in the ancient world. China and the Arab States enjoy mutual understanding and friendship because of the Silk Road, and are natural cooperative partners in jointly building the ‘One Belt, One Road’” (FMPRC, 2014).

In Xi’s view, the Gulf is well-positioned in the BRI’s strategic framework. The maritime route bypasses the region through the Red Sea before reaching the Mediterranean. As I explain further in this chapter, there are three specific strategic factors that drove Xi to implement the BRI and the AIIB in the Gulf.

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First, the Gulf is a region with large energy reserves. It needs capital, knowledge, and capabilities to exploit those resources. Investing in the regional energy sector is viewed not only as a means to direct China’s excess capacity, is anticipated to be a means of solving China’s energy insecurity. It will facilitate the flow of energy between China and the Gulf. Secondly, the Gulf, whose governments are presently devoting their petro- dollars to develop infrastructure, is seen as a lucrative location in which to use China’s overaccumulated capital. This plan however, also has long-term objectives. The results of these investments are intended to facilitate the future flow of trade and investments between China and the Gulf. This is shown by the types of projects in which the BRI and the AIIB are involved, as elaborated in Section 4.4. Thirdly, because of the Gulf’s position as one of the largest hubs in global finance, the BRI and the AIIB is expected to serve as a catalyst for the internationalisation of Chinese finance in the region.

Since Xi’s speech in 2014, the BRI and the AIIB have been actively implemented in the Gulf. Although Xi and other state elites are the initial social forces behind the initiative in the region, the implementation of the BRI and the AIIB in the Gulf actually involves an alliance of social forces. They are those whom Xi Jinping has successfully attracted to join his coalition through the idea of the Chinese Dream, and they can be divided into two groups: those who are involved in the material implementation of the BRI and the AIIB (including elites, state and private firms, banks, and financial institutions); and those who wage the ideological struggle behind the initiative (including state elites, the media, academics and educational institutions, and cultural entities). These social forces have been spreading out across the Gulf to implement the initiative. As Simpfendorfer (2016), for example, asserts in an interview for this thesis, Chinese firms, both private and SOEs, accompanied by banking and financial institutions, have entered the Gulf rapidly and in great numbers, to realise the BRI and the AIIB. I elaborate upon this in the rest of this chapter.

What is, however, forgotten among mainstream analyses of the BRI and the AIIB is that instead of their being a struggle-less process, the implementation of the initiative has been made possible through specific concessions to regional society. This has taken place through the activities of academics, the media, elite classes, and cultural entities who can be understood in neo-Gramscian perspectives as “organic intellectuals” or “permanent persuaders” (Field, 2017: 73), to establish “national-popular” consensus, i.e. the formulation of the initiative as the collective will of Gulf society (Shilliam, 2004: 71). It involves the strategic capacity to universalise the interests behind the emergent hegemonic project as the general interests of all, or, as discussed in Chapter 2 Section 4, as “common sense” (Augelli and Murphy, 1988: 35-41). The strategy has manifested in promoting the idea that the initiative also benefits the Gulf countries. One such strategy

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was apparent, for example, in China’s Arab Policy, Xi Jinping’s recent blueprint for its strategy in the Middle East.120 The foreword states that:

“[…] [The] friendship between China and Arab states dates back to ancient times. Over thousand years ago, land and maritime ‘silk roads’ already linked the Chinese and the Arab nations. In the long stretches of history, peace, and cooperation, openness, and inclusiveness, learning from each other, mutual benefit and win-win results have always been the main theme of exchanges between China and Arab countries” (Xinhua18, 2016).

The term ‘Silk Road’ is cited twice in the foreword, both as a legacy and an opportunity, and is presented as the cornerstone on which to develop “pragmatic cooperation in the principles of mutual benefit and win-win results with Arab states” (Xinhua18, 2016). This strategy has also been complemented by China’s efforts to become more actively involved in regional affairs in the Middle East and to present itself as a suitable partner in nurturing peace in the region. It also promotes the idea that China’s positions on those issues are consistent with those of the Gulf states. All of these are intended to gain the social support of the regional state-society complexes for the implementation of the BRI and the AIIB in the region. Chapter 5 elaborates upon this.

The ideological struggle by organic intellectuals has been further supported by specific institutional arrangements embedded in the initiative. These arrangements have allowed the carrying out of what neo-Gramscian perspectives regard as a strategy of co-optation: attaining the consent of lesser forces for the interests of the leading forces (Kakizaki, 2010: 234, cited in Yaman, 2012: 71). There are two institutional configurations of the BRI and the AIIB that have offered a means to carry out co-optation within the Gulf countries. The first is the provision of large voting shares to Gulf states and bringing Saudi Arabia into the policy-making process of the initiative. This is intended not only to co-opt the regional countries and to absorb their potential contradictory interests (Cox 1993: 62), but also to establish an appearance of broad representation to make the initiative appealing. The second arrangement is the focus of the initiative on providing infrastructure loans to developing countries and the adoption of the non-conditionality principle in the working procedures of the initiative, which will allow the provision of material incentives to the Gulf countries. Even though the BRI and the AIIB’s focus on infrastructure finances has a lot to do with China’s accumulation strategy, the “no- strings” loans can also be viewed as “sacrifices of economic-corporate kinds” (Gramsci, 1971: 161) or as “material concessions” to gain consensus for the BRI and the AIIB in the region. Chapter 6 expands further on this.

120 See Xinhua18 (2016) for the full document.

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Drawing on the circumstances above, it is thus possible to speak in a neo-Gramscian sense of the realisation of an emergent hegemonic project, which is “grounded not only in the economy, but the whole sphere of state-civil society relations” (Morton2, 2003: 636). The realisation of the BRI and the AIIB in the Gulf is not restricted to the productive sphere, but also involves a struggle waged at the ideational level to generate “intellectual and moral” consent (Morton, 2007: 94). This chapter concentrates on the material implementation of the initiative as the basic contours of the BRI and the AIIB in the Gulf. Based on Xi’s three strategic considerations in implementing the initiative in the Gulf, the material implementation of the BRI and the AIIB in the Gulf has three aspects: the securing of energy resources, the directing of Chinese capital to non-energy infrastructure, and the increasing internationalisation of Chinese finance. Even though these elements have been analysed in orthodox analyses, neo-Gramscian perspectives allow us to analyse the domestic contexts of these material elements and to identify the specific social forces involved. The next section discusses the first component.

4.3 Securing Energy Resources

This section investigates one of the three components of the material implementation of the BRI and the AIIB in the Gulf: the securing of energy resources. Among the various bottlenecks in the Chinese economy, one of the most important is the recurrent issue of energy security. Al-Tamimi (2017) wrote that China’s oil consumption almost quadrupled in just twenty years from 2.9 mb/d in 1993 to 11.6 mb/d in 2016. Green and Stern (2015: 7) have predicted that 75% of China’s energy resources will depend on imports by 2030, as it is expected that the next 20 years will see 300 million peasants flowing to urban areas. To feed the growing middle class and to provide employment, it is necessary to secure stable energy resources. The need is made all the more acute by the estimation that China will have 120 million private cars by 2020, raising its energy needs to 14.2 mb/d by 2025 (Hurst, 2006: 3). It will also have 360 million passenger cars by 2035 (Preston, 2011, cited in Mustafic and Preljevic, 2017: 64). However, as Husna (2016) reports, due to 9.85% GDP annual growth, China cannot satisfy its need through domestic production and current imports. China is thus predicted to encounter energy shortages when sufficient supplies and new resources are not secured.

Thus, as Al-Tamimi (2017) writes, China’s energy-import reliance will grow from 64% in 2016 to 79% in 2035 – higher than the U.S. at its peak in 2015. This includes its need for LNG; in 2016 China exceeded South Korea as the second largest natural gas importing country (Liu and Wang, 2017). He (2014) estimates that by 2020, Chinese LNG consumption will reach 400 billion cubic metres. With its production volume reaching 200 billion cubic metres and imports increasing to 180 billion cubic metres, its

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foreign reliance would reach 45% (ibid.). In the midst of these circumstances, the Gulf has 48% of the world’s total oil reserves with a production life of another 78 years at low cost and 40% of the world’s LNG reserves with a production life of another 264 years, while global production life is only 67 years (Yang, 2014: 103-110). As mentioned in Chapter 3, Section 4.1, the region has been a major source of China’s energy supply and a major destination of Chinese NOCs, since China’s embrace of capitalism. In 2017 the Chinese General Administration of Customs reported that 380 million tons of oil entered China; of this, 115 million were from the Gulf (Liu and Wang, 2017). The Gulf, moreover, has been a major importer of China’s LNG, with Qatar and the UAE as its third and fourth largest supplier in 2016 (ibid.).

Due to these factors, energy features prominently in the implementation of the BRI and the AIIB in the Gulf. This was affirmed by Xi Jinping in his speech at the Arab League headquarter in 2016:

“I called for joint Chinese and Arab efforts to build the Belt and Road Initiative. I suggested that we take energy cooperation as one priority” (China Daily4, 2016).

The BRI and the AIIB – as Armijo (2017) proposes in an interview as part of this thesis – was introduced by Xi to provide a new stimulus for certain newly internationalised social forces – mainly state elites and NOCs – to seek out energy resources to resolve China’s ever-increasing demand, in the wake of the “Going-out” policy. The forces involved have been attracted by the prospect of achieving the intellectual and moral unity set out in the Chinese Dream. Lu Ruquan from CNPC also affirmed that the BRI constitutes “oil roads” through which energy resources will flow between the world’s major producers and China (Lu, 2016: 7). This energy objective is more clearly stated by Vision and Action, which says that the BRI is expected to:

“[…] increase cooperation121 in the exploration and development of coal, oil, gas, metal minerals and other conventional energy sources; advance cooperation in hydropower, nuclear power, wind power, solar power, and other clean, renewable energy sources; and promote cooperation in the processing and conversion of energy and resources at or near places where they are exploited, so as to create an integrated industrial chain of energy and resource cooperation. We should enhance cooperation in deep-processing technology, equipment, engineering services in the fields of energy and resources” (ibid.).

121 China’s use of the term ‘cooperation’ can also be seen as part of the consensus-building effort behind the implementation of the BRI and the AIIB in the Gulf. I will elaborate this in Chapter 5.

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The roles of state elites are ostensible in their negotiations with their Gulf counterparts to initiate joint efforts and to confirm agreements related to energy. As the main social forces of the emergent hegemonic project, they have served as pioneers who ensure that resistance from Gulf governments is minimised by universalising the objectives of the BRI and the AIIB with the interests of the Gulf’s peoples. While I will expand upon this ideological strategy in the next chapter, it is crucial to mention here that the elites’ activities have resulted in the signing of several energy-related deals between China and the Gulf countries. One important example was the signing of a strategic partnership with Qatar during the Emir of Qatar’s visit to China in the end of 2014, which was followed by a MoU between the NDRC and the Qatari government titled the “Qatar- China Joint Promotion of Related Cooperation on the One Belt, One Road” (Ahmed, 2016: 202). According to Article 2 of the MoU, both countries intend to “enhance substantial cooperation […] [in] energy” (ibid.). Another deal occurred in February 2018 when the Foreign Minister Wang Yi and Vice Chairman of the NDRC Ning Ji Zhe had a meeting with the UAE’s Minister of State Sultan Al Jaber and the CEO of Abu Dhabi National Oil Company (ADNOC) on expanding energy ties between China and the UAE (Gulf News1, 2018). In July 2018, Wang Yi also returned to the region to sign a MoU with the Bahraini government for the implementation of the BRI (Xinhua25, 2018).

In addition to signing agreements and engaging in state-to-state negotiations, the Party- state has also initiated a number of institutional and regulatory frameworks that have contributed to the implementation of the BRI and the AIIB in the Gulf. For example, it has finalised agreements with the UAE’s financial regulators intended to facilitate cross- regional activities and to expand regulatory partnerships to ease the activities of Chinese companies and financial institutions in the Gulf.122 Along with the Saudis, the CCP also initiated a high-level joint committee in 2016, with six sub-committees in charge of the BRI (Liu and Wang, 2017). Additionally, the CCP has been working to resume FTA negotiations with the GCC, which is expected to promote bilateral trade and facilitate investment. Although many of these regulatory frameworks have not yet been properly formulated, they are intended to lessen political risks and uncertainties that may be encountered in the implementation of the BRI and the AIIB.

Other social forces involved include Chinese NOCs. Mingqiao Zhao123 (2017), who conducted a survey on Chinese firms in the post-OBOR era, asserted in an interview

122 Another example is the Dubai International Financial Centre (DIFC) The leading financial hub for the region has pledged its commitment to the BRI and initiating a platform for Chinese businesses (WAM, 2015). 123 Mingqiao Zhao is Senior Business Development and Analyst at Arabia Monitor. She previously ran her own firm in China. Mingqiao holds an BA (Hons) in International Relations and Modern History from University of St. Andrews and an MSc from London School of Economics and Political Science.

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for this thesis that there is a growing number of Chinese companies entering the Gulf and “when asked whether they are in the Gulf because of the BRI, they say ‘yes’ – or ‘answering the call of the President”. One of these companies is CNOOC, which signed up to a term of crude oil supply with Aramco for the Huizhou refining projects in 2017. Under the agreement, Aramco would supply 22 to 26 million barrels of Arab Medium crude petroleum to CNOOC for one year, which commenced in the second half of 2017 (Zhou, 2017). Moreover, CNPC’s trading arms, China oil and Huajin Chemical have also engaged in talks with Aramco for oil supplies to their respective refineries (ibid.). With Chinaoil, the deals are intended to supply CNPC’s greenfield Yunnan refinery in western China with 13 million mt/year (260,000 bpd), and the crude is expected to be delivered through the BRI-developed Myanmar-China pipeline. With Huajin, Aramco is responsible for supplying Arab Heavy oil for the latter’s 120,000 barrels per-day refinery (ibid.).

Not long after this was concluded, Huajin signed another annual agreement in February 2017 to take a total of four million barrels of oil over the course of 2017 (ibid.). A year later in February 2018, the company also concluded an agreement with Aramco for 12 million barrels for the whole year, a significant increase from the 2017 agreement which was estimated to be 6 to 8 million barrels (Chen, 2018). In the same month, PetroChina and Sinopec also wrote to Aramco expressing their intention to purchase 5 percent of the firm directly as part of an effort to secure oil supplies for the country’s growing demands (El Gamal and Lawler, 2018). Nonetheless, no decision has yet been taken by Aramco. Another development took place in July 2018, whereby CNPC was awarded a US$1.6 billion deal by ADNOC to carry out offshore and onshore seismic surveys (Lo, 2018). Though limited compared to state firms, private companies have also become social forces of the emergent hegemonic project. In July 2018, for example, the Chinese Hengli Petrochemical Co. Ltd. signed an agreement with Aramco to supply it with approximately 20 million tons of crude oil for a year (Caixin, 2018). It was believed to be the first such agreement between Aramco and a private Chinese energy company (ibid.).

Besides signing agreements, another way energy companies play a role in the BRI and the AIIB in the Gulf is by creating an infrastructure that would facilitate the movement of energy resources between the Gulf and China. This is in accordance with Vision and Action. The BRI aims to enhance “the connectivity of energy infrastructure [and] work in concert to ensure the security of oil and gas pipelines and other transport routes” (NDRC, 2015). In Saudi Arabia, Sinopec cooperated with Aramco to launch the Yanbu Aramco Sinopec Refining Company (YASREF) refinery in mid-2016 (Zambelis, 2017). Tabled in 2012 with an initial investment of $10 billion, the project is the single largest investment by Chinese entities in Saudi Arabia (ibid.). Aramco possesses a 62% share

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while Sinopec has a 37% stake in a refinery that has the capacity to refine 400,000 bpd of Arabian heavy oil and produce over 13.5mn gallons/day of ultra-clean fuel and other high-value refined products (ibid.). The refinery, which is situated in Yanbu along the Red Sea in the province of al-Medina, has the capacity to deliver nearly 100,000 bpd of clean, high-octane gasoline through a gasoline complex with an advanced continuous catalytic reformer (ibid.). Zambelis (2017) reported that the refinery is the first overseas refinery built by Sinopec.

During the visit of King Salman to Beijing in early 2017, the China North Industries Group Corp (Norinco) also signed an agreement with Aramco on the construction of refining and chemical plants in northeast China (Chen, 2017). The plan, which includes a 300,000 bpd refinery and an ethylene complex with an annual capacity of one million tonnes, is to be developed at an estimated cost of $10.09 billion (ibid.). Sinopec and the Saudi Basic Industries Corporation (SABIC) have also signed a deal for the building of petrochemical projects in Saudi Arabia and China and expand the existing joint venture, the Sinopec-Sabic TianJin Petrochemical Company Limited, in China to ensure long- term cooperation (ibid.). In Oman, with the AIIB’s loans, a number of companies have also been involved in the construction of Duqm port and railway infrastructure in the country (AIIB1, 2016).124 The fund comprises $264 million for the building of Duqm port and $36 million for the building of the Gulf’s railway system (Xinhua4, 2016). According to Armijo (2017) in an interview for the thesis, the AIIB’s investment in the Duqm project is grounded in Xi’s strategic calculation to lay down an efficient and effective sea route for China’s trade and investments in the region.

The project’s official document, published by the AIIB, further outlines its importance (AIIB1, 2016: 4-8). On the one hand, the railway projects are intended to expedite the flow of energy from other Gulf producers and possibly the wider Middle East. On the other hand, the Duqm port, which is located strategically in the southeast of Oman with a coastline on the Indian ocean and Arabian Sea, is expected to be a vital maritime hub for regional energy transport, with its relative distance from Hormuz Strait marking it out as a secure transport corridor between the Gulf region and China (ibid.). While the construction of these projects is still ongoing, a consortium of six Chinese private companies, named as Oman Wanfang, has cooperated with the Special Economic Zone Authority at Duqm (SEZAD) to build the 1,172 hectare China-Oman Industrial Park (Han and Chen, 2018: 8-9). The initial deal was concluded in May 2016, which authorised these companies to develop and to operate the allocated area for 15 years (Fahy, 2016). The projects presently being built include a refinery capable of processing 235,000 bp/d and a petrochemical complex. Another important project is the US$2.3

124 The project’s document is accessible here: https://www.aiib.org/en/projects/approved2016/duqm- port-commercial-terminal.html.

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billion methanol-to-olefins (MTO) plant and a greenfield methanol complex (Zhang, 2017). The integrated natural gas-fed methanol and MTO complex is expected to have a capacity of 10 million tons/year, and would count among the largest petrochemical schemes in the region (ibid.)

Aside from constructing energy facilities in the Gulf, the role of these social forces in realising the energy component of the BRI and the AIIB includes constructing facilities outside the region that will help facilitate the flow of energy resources between China and the Gulf. CNPC, for instance, invested US$2.5 billion for the construction of the deep-water port and pipeline projects in Kyakphyui, Myanmar’s western coast, which was opened in early 2015 (Len, 2015: 7). Tim Niblock, an Emeritus Professor at the University of Exeter, whose works focus on China-Gulf relations, suggests that in the CNPC’s view, the construction of these projects allows energy resources from the Gulf to be transported via a 771 km pipeline from the Bay of Bengal into Yunnan Province in China, bypassing the often dangerous Malacca Strait (Niblock, 2016). At the same time, the state-owned China Overseas Port Holding Company (COPHC) has also concluded a 43-year long lease to develop and operate the port of Gwadar in Pakistan (Zhen, 2015). The agreement grants the COPHC authority to control all of the port’s affairs (ibid.). The project is intended to connect Kashgar in Xinjiang with Gwadar. As Armijo (2016) opines in an interview for this thesis, the port, even though located in Pakistan’s Balouchistan’s province, serves as the shortest route for energy transports from the Gulf to the western part of China.

Overall, the BRI and the AIIB has led to further internationalisation of China’s energy production in the Gulf. Through the activities of Chinese elites and energy companies as the main social forces that have been actively working towards the concluding of both state-to-state and company-to-company energy agreements, and via the building of energy-related facilities within and outside the region, the flow of energy resources between China and the Gulf have been expedited. By the end of 2015, 110 million tons of crude oil were shipped from the Gulf region, accounting for 75% of China’s imports from the Arab countries (Liu and Wang, 2017). Moreover, by 2017, Qatar became the largest LNG supplier to China, supplying around 35 percent of its LNG needs (ibid.). With the expected increase in energy deals and the completion of large-scale energy projects under the initiative, many of which are still under construction or yet to be built, the initiative is expected to solve China’s energy anxieties, which in turn will maintain the country’s economic growth.

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4.4 Directing Chinese Capital in Non-Energy Infrastructure Sector

Besides securing energy resources, another component of the BRI and the AIIB as China’s emergent hegemonic project in the Gulf is directing China’s overaccumulated industrial and manufacturing capital. This has been done through the roles of state and private Chinese companies and banks which can be defined from neo-Gramscian perspectives as the primary social forces who have participated in various non-energy infrastructure projects in the Gulf since the initiative was introduced. Whilst China experiences overcapacity in manufacturing and infrastructure industries, the Gulf states are currently devoting petro-dollars to develop theirs. To minimise the dependency on the energy industry, these countries are pursuing diversification, which has increased their need to create new infrastructures and this is expected to remain the case in the coming years (at a cost of around US$2 trillion) (Li and Wang, 2017). Li Wei of the State Council’s Development Research Centre affirmed that there is a convergence of interests between Xi’s strategy to minimise overcapacity and the GCC’s diversification efforts (Li, 2017). Aside from the need for infrastructure knowledge and labour, the Gulf countries also require materials, such as steel and cement which have accumulated in China. By taking part in infrastructure projects in the region, the implementation of the BRI and the AIIB in the Gulf are expected to resolve the issue of overcapacity in the economy.

This, however, also has a long-term objective. The outcomes of the projects under the initiative are expected to facilitate the future flow of non-energy trade and investments between China and the Gulf region. This objective is stated in the Vision and Action document, whereby “investment and trade cooperation is a major task in building the Belt and Road” (NDRC, 2015). In Xi’s view, even though China needs to pursue more balanced economic growth, in which national consumption plays a crucial role, such a process requires some time to be realised. Xi sees that the export of “Made in China” and FDIs overseas is still a short-term solution to stimulate Chinese economic growth, upgrade its industries, and protect employment (Liu and Dunford, 2016: 323-40). The Gulf has a crucial position in this respect, given its economic size, which accounts for about 50% of the Arab states overall, with their foreign trade volume accounting for 60% and FDI 70% (Xie, 2013). It is also vital to note that being a customs-free market with a population of 280 million, the region has considerable amounts of petro-dollars. Its SWFs’ total size has reached US$2.3 trillion, which accounts for around 36% of the world’s total (MOFCOM, 2014). Despite the turmoil taking place in its neighbouring states, the Gulf, continues to be a prosperous ‘special zone’, unlike other Arab states

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that have suffered downturn. The region is also considered to have a strategic location in regional and global trade (Liu and Wang, 2017).

While China’s internationalisation in the Gulf has intensified since its opening up, it remains relatively limited, whereby the proportion of energy partnership is noticeably high while the exports of its high value-added and technology-intensive products are small (ibid.). Even though, as expounded in Chapter 3 Section 4, in recent years the internationalisation process has expanded from traditional industries to automobiles, telecommunications, and retail, Xi wants to reinforce the process through the BRI and the AIIB (ibid.). In this context, the various projects under the initiative, besides being intended to direct overaccumulated resources, are also expected to reinforce China’s non-energy trade and investments in the region, which Xi considers as “good brothers, good friends, and good partners”, for economic and trade relations (FMPRC1, 2014). This is exemplified by the kind of projects that social forces under the initiative have focused on, which are primarily projects that will facilitate the movement of trade and investments between China and the Gulf. Such an objective was also reiterated by Xi in his speech at the Arab League in 2016, where he endorsed the initiative as the “new mechanism for trade and investment” between China and the region (China Daily4, 2016).

In order to establish a coalition that would support his ambitions, Xi and other elites have encouraged a number of social forces, particularly SOEs and private enterprises specialising in infrastructures, to take part in realising this objective in the Gulf. Chinese Premier Zhang Gaoli, for example, asserted that “China […] continues to encourage Chinese companies to do business in Kuwait” (Xinhua5, 2017). The media has also acted as organic intellectuals domestically, ensuring “intellectual and moral leadership” by propagating the premise that the Gulf has been a significant trading partner for China and that the region is a strategic place for investments (Lokhande, 2017; Li, 2017; Hollingsworth, 2017). China Daily, for example, published an opinion article by Li Wei, Director of the Development Research Centre of the State Council, in which he argued that:

“Located at a crossroads of the Atlantic, Indian and Pacific Ocean, the Gulf region is rich in oil and natural gas resources, and has convenient road and water networks […] both parties should combine bilateral financial cooperation with cooperation in infrastructure construction to tap industrial capacity” (Li, 2017).

This has also been assisted by intellectuals who promote public debates on the vitality of the Gulf in the implementation of the BRI and the AIIB. Liu Liu and Wang Zesheng

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of the China Institute of International Studies, for example, wrote an article outlining why investing in the Gulf would be advantageous for the Chinese economy (Liu and Wang, 2017).

Consequently, an increasing number of both state and private firms and banks have since made their way to the Gulf to implement the BRI and the AIIB. These are transnationally-oriented firms and banks that have been active globally or regionally in the Gulf since the economic reforms and opening-up. Although some of these firms participate in the emergent hegemonic project due to their own commercial goals, most of them have intensified their ‘going-out’ to the Gulf because of the BRI. Mingqiao (2017), who conducted a survey on Chinese companies in the Gulf, discovered that the majority of the companies identify the BRI as the moral and intellectual legitimacy that contributes to their present-day activities in the region. Although the activities of these social forces are apparent in various regional sectors, including infrastructure, IT and renewable energy, these firms are primarily involved in projects that will achieve the long-term objective of the BRI and the AIIB in the Gulf, which is to facilitate China’s internationalisation in the region in the future.

One of these projects is the building of retail shops and business hubs. For instance, Chinamex, a Chinese real estate developer specialising in the design and management of mall and mixed-use development, concluded a deal in 2013 with Diyar Al Muharraq, a complex of artificial lands in Bahrain, for the construction of a 120,000 square-metre wholesale and shopping entertainment complex, named Dragon City (Olimat, 2016: 2016: 85). It was opened in 2015 and named as the “Bahrain’s Chinatown” with retail shops featuring various Chinese industries and cultures (ibid.). While in the short-term the construction of this retail shop is intended to direct China’s excess capacities, in the long-term these retail shops are expected to facilitate the flow of Chinese capital in the region. Previously, in 2004, Chinamex also signed a joint venture with the government of Dubai’s Nakheel Development Corporation to build the Dragon Mart in Dubai, the largest foreign-based Chinese business complex outside mainland China.125

The mall, with nearly 4,000 vendors mainly from China, sells an array of items including furniture, daily goods, construction machinery, office supplies and traditional Chinese medicines (Armijo, 2014). When the BRI and the AIIB were launched, the company expanded the Dragon Mart from 150,000 square metres to 175,000 square metres (Dragon Mart 2), an expansion that cost $365 million (Olimat, 2016: 20). After seeing its success in the UAE, the Dragon Mart in Dubai partnered with a Qatari private firm, Barwa Real Estate to build a Dragon Mart in Qatar (Sambidge, 2011). Located at Barwa Commercial Avenue next to Qatar’s Industrial Area, the 21,000 square-metre complex

125 See Armijo (2014) for an examination of the Dragon Mart project in Dubai.

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houses about 280 shops and stalls.126 Since it was intended to operate in the same way as its counterpart in Dubai (ibid.), the mall hosts a variety of Chinese shops that sell various kinds of items from hard machinery to children’s toys. Although the shop was completed in 2012, it was only launched after the BRI was announced to the public in 2014.

Another company that takes part in the implementation of the BRI and the AIIB in the Gulf is the China State Construction Engineering Corporation (CSCEC). In September 2017, the company signed a MoU with the UAE-based Union Properties to build a $2.1 billion master plan in Dubai Motor City (Xinhua6, 2017). The CSCEC is given a responsibility for the constructions of 44 new high-and low-rise buildings, which are expected to comprise 11,500 apartments, 3,000 serviced apartments, 3,500 hotels, over 300,000 square metres of office space, 46,000 square metres of retail space, and more than 150 villas (Gulf Business, 2017). The project is planned to be completed in 2021. Although the CSCEC has been active in the Gulf since 2013, it was Xi’s initiation for the BRI and the AIIB that has propelled the company to take part in the project. As affirmed by Yu Tao, the President and CEO of the CSCEC Middle East in an interview with Xinhua, the company “feel[s] encouraged by the Belt and Road to expand and we started to join construction projects” in the Gulf (Xinhua6, 2017). To this date, CSCEC has also committed to other 16 projects in Dubai, mostly in the residential sector, but also in retail and hospitality (El Nady, 2018). The company is also involved in similar projects in other parts of the UAE. As an example, in January 2018, CSCEC signed an agreement with Ajman Holdings for the construction of a US$136 million shopping centre in Ajman, one of the UAE’s emirates (ibid.).

Aside from retail shops, the BRI and the AIIB in the Gulf are also involved in the building of business hubs. In 2017, the China Business Hub, the first ever dedicated business centre for Chinese SOEs and SMEs in the UAE, was launched in Dubai South (Trade Arabia1, 2017). The hub is intended to become home to Chinese businesses in the Gulf. Li Ling Bing, Chinese Consulate General in Dubai, said that the hub is intended “for the long-term continued economic cooperation between China and the UAE” (El Nady, 2018). The long-term objective of the construction of retail shops and business hubs for China has been more clearly reiterated by the former Chinese Ambassador in Qatar in his statement following the establishment of Dragon Mart in Doha:

“In Dubai, the facility was set up primarily to meet the needs of the country. Later, many of the Chinese products were exported to other GCC, Middle East,

126 During my fieldwork, I had the opportunity to visit the Dragon Mart in Qatar.

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and African countries. [China] […] could also make use of the new facility to expand its business with other countries” (Varghese, 2011).

This emphasises that Chinese companies’ involvement in these projects is intended not only to direct China’s excess industrial capacities, but also to provide facilities that will assist the internationalisation of Chinese capital in the Gulf.

In addition to business centres and retail shops, a number of companies have also been involved in the implementation of the BRI and the AIIB through building ports and other facilities, such as industrial parks, in the Gulf that are important for the market expansion objective of the BRI. This is in line with Vision and Action which states that the initiative aims to:

“forward port infrastructure construction [and] […] should explore a new mode of investment cooperation, working together to build all forms of industrial parks such as overseas economic and trade cooperation zones” (NDRC, 2015).

Jiangsu Provincial Overseas Cooperation and Investment Company Limited (JOCIC), for example, signed an agreement with Abu Dhabi Ports in August 2017 to construct a manufacturing operation in Khalifa Port’s free trade zone. According to the NDRC’s Director Ning Jizhe, it is one of the fastest growing ports in the world, a crucial hub in the region, and is known as the China-UAE Industrial Capacity Cooperation Industrial Park (Nanji, 2017). Through the deal, the JOCIC is given 23.7 m/sq feet of the available free trade zone space in Khalifa Port (ibid.). Fifteen companies have invested in the lease space, with $1 billion total investments (Hand, 2018). These firms include Hanergy Thin Film Power Group, Jiangsu Fantai Mining Development (Group) Co. Ltd, Xuzhou Zianghae Wood Co. Ltd, Jiangsu Jinzi Environmental Technology Co. Ltd, Guangzheng Group (Shepard, 2017), Nantong Suzhong Construction Co. Ltd, Jiangsu Dafeng Port Holding Group, and Lianyungang Anlun Oilfield Chemicals Co. Ltd (Hand, 2018). The Executive Vice Governor of Jiangsu, Huang Lixin, affirmed that the BRI is the moral and intellectual driver for these companies to participate in the project (John, 2017).

The Jiangsu agreement came in the wake of another deal which was signed at the end of 2016, between the government-owned China Ocean Shipping Company (COSCO) and Khalifa Port (COSCO, 2017). Under the agreement, the company is responsible for developing and operating a new container terminal at Khalifa Port, for the next 35 years at a cost of US$738 million (McAuley, 2016). Although the agreement is valid for 35 years, it can be renewed for additional years. COSCO has been given 1200 metres of quay wall and adjacent land with a possibility to expand the space further in the future

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(ibid). The first 800 metres of the quay length was expected to begin operations in 2018 and the later 400 metres in 2020 (Rahman, 2016). When the new terminal by COSCO is completed, it is predicted to increase 2.4 million TEUs (20-foot equivalent units) to the existing capacity of 2.5 million TEUs at the Khalifa Port, and will serve as an important hub for COSCO Shipping Ports’ operations in the Gulf (ibid.). Xu Lirong, COSCO’s Chairman reasserted that the port presents a “unique geographical advantage for the development of terminal and logistics businesses” in line with the BRI (Gray, 2018).

It is also important to note that when Oman Wanfang planned the construction of the China-Oman Industrial Park and when the AIIB decided to invest in the projects, as I touched upon in the previous section, besides facilitating the flow of energy resources between China and the Gulf, the park is also expected to ease the internationalisation of Chinese non-energy firms in the region. Of the three sections of the Industrial Park, the largest sector is allocated to companies and investors from China concentrating on sectors including assembly and vehicle plants, halal beverages, logistics, batteries, e- commerce units, assembly units, and apparel production facilities (Walsh, 2017). Most of the companies involved in the Park are private, with the NDRC and Ministry of Commerce also announcing their support for the projects (Shepard, 2017). Gulf News2 (2017) even reported that the project receives financial support from the Chinese-state banks.127 In the CCP’s view, its location on the Arabian Sea between the Gulf of Oman and the Gulf of Aden, means that Duqm fits strategically into the initiative’s framework (Cafiero, 2017) as it enables Chinese firms to access markets in the region and beyond. Moreover, Duqm’s position in southeastern Oman with coastline on the Indian Ocean, the Arabian Sea, and a relative distance from the Hormuz Strait, makes it an important maritime hub and a safe transport corridor for the flows of trade, investments, and labour between China and the Gulf.

In the meantime, in Saudi Arabia, the China Electric Power Construction Corporation (CEPCC) has been involved in the construction of a desalination and power plant at Ras Al Khair. This is intended to support the activity of another Chinese firm, China Harbour Engineering, which has been constructing a bauxite-processing facility nearby (Neill, 2014: 218). In addition to their involvement in the development of Doha Port, Chinese companies are also participating in the construction of the Boubyan Port in Kuwait (ibid.). In an interview as part of this thesis, Mohammed Al-Sudairi128 asserted that the involvement of Chinese enterprises in these projects has three objectives:

127 Details are not yet available. 128 Mohammed Al-Sudairi is a Research Fellow at the Saudi-based King Faisal Center for Research and Islamic Studies, and Head of the Asian Studies Unit. His research largely concentrates on Chinese politics and normative links in China-Middle East relations.

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“directing overaccumulated capital, preparing for the facilities that would help the internationalisation of Chinese production and finance in the future, and the firms’ own commercial interests” (Al-Sudairi, 2016).

Fulton (2018) further reported that the CCP has introduced an “industrial, park-port interconnection, two-wheel, and two-wing approach” plan. The project would include Chinese-developed industrial parks in major Middle Eastern countries, including Oman, Saudi Arabia, and the UAE. “Two-wheel” refers to cooperation between oil and gas and low-carbon energy, while “two wings” urges cooperation in science and technology and finance (ibid.). Together, they offer a blueprint to direct China’s overaccumulated capital, while building facilities for financial integration and denser trade relations.

The BRI and the AIIB have also driven Chinese IT and telecommunication companies to expand into the Gulf’s IT sector. This corresponds with Vision and Action, which states that the initiative “promote[s] in-depth cooperation with countries along the Belt and Road in new generation information technology” (NDRC, 2015). One example is Huawei, that is participating in the construction of 4G mobile internet across Saudi Arabia (Neill, 2014: 218). Meanwhile, another Chinese telecommunication firm, ZTE, signed an agreement with Qatar’s telecommunication company, Ooredoo, in 2015 to provide technical support for the development of 5G in Qatar, including end-to-end networks, applications, and terminals (Tomas, 2018). In 2017, Alibaba also planned to develop a $600 million “Tech Town” – five times the size of the Pentagon in the U.S. – that is expected to house 3,000 Chinese enterprises working in robotics, mobile apps, and artificial intelligences near Jebel Ali in Dubai (Debusmann, 2018).

The BRI and the AIIB in the Gulf also focus on renewable technology. This dovetails with Vision and Action, which elucidates the spheres on which the emergent hegemonic project is focused are: “hydropower, nuclear power, wind power, solar power, and other clean renewable energy resources” (NDRC, 2015). This has been carried out by Chinese firms focusing on renewable energy. For example, the Ningxia Zhongke Jiaye New Energy and Technology Management Co has cooperated with Oman Investment Fund for the construction of the US$94 million solar panel in Duqm which would have an installed capacity to manufacture panels for power plants and residential buildings, generating around 1,000 megawatts of energy every year (James, 2017). In Saudi Arabia, the China National Nuclear Corporation (CNNC) has concluded a deal with the Saudi government for the exploration and assessment of uranium and thorium resources in Saudi Arabia (Zhang, 2017). The agreement, moreover, includes the export of high- temperature gas-cooled reactor projects to Saudi Arabia and the UAE.

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In the UAE, China’s National Nuclear Safety Administration (NNSA) has also signed a deal with the UAE’s Federal Authority for Nuclear Regulation (FANR) to exchange technical information, safety regulation, and training opportunities for FANR’s workers in China (Abubaker and Ismail, 2018). In the meantime, China’s Harbin Electric has also collaborated with the Dubai Electricity and Water Authority (DEWA) in building the Hassyan Clean Coal Project in Dubai (Bo, 2018). The project is expected to be the first clean coal power station in the Middle East when it is completed in 2023 and will provide 20% of Dubai’s future energy mix. Tie Sijia, Deputy Manager of the project, in an interview with Xinhua, affirmed the importance of the BRI as providing moral and intellectual legitimacy for the company to expand into the Gulf by stating that the project represents “a successful joint venture under China’s Belt and Road Initiative” (ibid.).

Chinese banks are also crucial social forces in this regard. In April 2018, the “big four”, together with the Silk Road Fund and China Minsheng Bank, decided to lend US$1.5 billion to fund the fourth phase of the Mohamed Bin Rashed Solar Park in south Dubai (Marray, 2018). The venture is expected to feature a tower and parabolic troughs to collect heat and store it in molten salt to supply electricity on demand during the day and through the night (ibid.). The first and second phases have already been delegated while the third phase has been contracted to Abu Dhabi Future Energy. Among the companies involved in this fourth phase are: Shanghai Electric, Dongfang Electric, and Harbin Electric. Zheng Jianghua, the Chairman of Shanghai Electric, has stated that the project is a manifestation of the BRI’s objective “to cooperate, promote, and benefit in energy and infrastructure development” (ibid.). The outcome of the project is expected to save 2.4 million tons of CO2 and half a million tons of LNG per year, helping to fulfill Dubai Clean Energy 2050, initiated by the UAE government (ibid.). In July 2018, the Silk Road Fund will also reportedly acquire 24.01% of the 700 MW world’s largest single-site solar-thermal plant in the UAE, which is being developed by DEWA and Saudi Arabia’s Power Barka SAOG (Chen, 2018).

In summary, besides securing energy resources, another important component of the material implementation of China’s emergent hegemonic project in the Gulf is directing Chinese capital in non-energy infrastructure projects across the region, with state and private firms and banks assisted by other state entities, acting as the main social forces. While in the short-term the activities of these social forces are expected to contribute to resolving the excess industrial capacity and other breaknecks in the economy I explored in Chapter 3 Section 5, in the long-term, the outcome of the projects that they carry out are expected to facilitate the flow of non-energy capital between China and the Gulf. As discussed above, this is evidenced by the kinds of projects on which those social forces are focused. Another component of the material implementation of the BRI and the

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AIIB in the Gulf is the increased internationalisation of Chinese finance. I explain this in the next section.

4.5 Further Internationalising Chinese Finance

The third important aspect of the realisation of the BRI and the AIIB in the Gulf is the increased internationalisation of Chinese finance. This corresponds to the Vision and Action document which states that “financial integration is an important underpinning for implementing the Belt and Road Initiative” (NDRC, 2015). While Chinese finance has internationalised around the world, including the Gulf, since the early periods of its internationalisation (as I explained in Chapter 3, Section 3), the Xi government, with its more assertive financial reform129 including greater integration in the global financial economy, wanted to reinforce this internationalisation through the BRI and the AIIB. The Gulf is no exception, given its position as one of the most crucial financial hubs in the world (Liu and Wang, 2017). This intention was uttered by Xi himself during his meeting with King of Bahrain, Sheikh Hamad bin Isa al-Khalifa, in 2013, in which he asserted that the CCP wanted to deepen financial cooperation with the Gulf countries (FMPRC4, 2013).

Chinese state and private banks and financial institutions, particularly those that have been active in the Gulf since the early period of China’s internationalisation, have been lured into Xi’s historic bloc. They have become the main social forces in the financial element of the emergent hegemonic project by increasing their cross-border financial transactions, presences, and activities in the region. This is particularly apparent in the UAE, the Gulf’s most important financial centre. According to the Dubai International Financial Centre’s (DIFC) 2015 annual Operating Review report, banks from China have doubled their balance sheet since mid-2014 (DIFC, 2016). In 2018, it was reported that Chinese financial entities make up nearly a quarter of the total assets in the DIFC (Bridge, 2018). The total value of these assets reached $33.4 billion by September 2017, a 30.5% increase from the $25.6 billion reported at the year-end for 2016 (ibid.). In addition, these banks have also elevated their licences at DIFC to Category 1, changing their presence from subsidiary to branch status (ibid.).

Moreover, following Vision and Action’s direction to “open and develop a bond market” (NDRC, 2015), these banks have increased their issuance of bonds in the region. In October 2016, the Hong Kong branch of the China Construction Bank (CCB) listed a US$600 million bond on Nasdaq Dubai, the Gulf’s global financial exchange (Gulf

129 See, for example, Hess (2014: 37-38) for an examination on Xi’s financial reform plans.

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News3, 2016). In the same month, the Agricultural Bank of China was approved by the DGCX (Dubai Gold and Commodities Exchange)130 as the first listed market-maker for Shanghai Gold Futures (DGCX, 2016). In addition, beyond the CCB and the ABC, the ICBC, after upgrading its branch’s services from strictly commercial to providing investment banking and asset management to its Gulf clientele (Kane, 2012), listed a $400 million bond on Nasdaq Dubai in mid-2017 (Arabian Business, 2017). The listing marked a total of five ICBC bonds that were listed on DGCX after the listing of a$500 million bond in May 2015 and a US$ 400 million bond in June 2016 (China Daily2, 2017).

Not long afterwards, the CCB listed another US$1.2 billion bond in Dubai (China Daily3, 2017). The CCB’s Chairman, Guo Yuo, stated in his interview with China Daily that the bonds are intended to support the bank’s activities in the region under the BRI (ibid.). In March 2018, the ICBC also raised $1.4 billion through the issuance of two bonds on Nasdaq Dubai, which brought the total amount of bond issuance via the exchange by Chinese banks to $5.4 billion (Fahy, 2018). Chinese financial institutions have also played a role in supporting these endeavours. For example, the Shanghai Stock Exchange signed an agreement with the Abu Dhabi Global Market (ADGM) in April 2018 to develop a platform, known as the “Belt and Road Exchange”, in the UAE. It is intended to support investors and businesses from China in the Gulf region (Meredith, 2018). Although to this date there are no specifics regarding the platforms via which the new exchange would trade or when it might be opened, they stated that it has been established to help Chinese enterprises finance investments undertaken as part of the BRI (Fahy, 2018). A few months later, ADGM launched its first overseas representative office in Beijing (Bridge, 2018). Previously, in April 2017, the Shanghai Stock Exchange also signed a deal with the DGCX to establish DGCX Shanghai Gold Futures, which marked the first-ever use of the Shanghai Gold Benchmark Price in global markets (Li1, 2018). In July 2018, Chinese state-owned Everbright Group, which operates across banking, securities, asset management, insurance and funds, as well as in futures and investment management, also signed a MoU with the DIFC to explore collaboration opportunities related to the implementation of the financial aspects of the BRI (Xinhua27, 2018).

The financial component of the BRI and the AIIB in the Gulf also comprises growing activities in the Islamic finance industry, with banks and other financial institutions as the social forces. As I stated in Chapter 3, there has been an increasing preference on the part of China for Islamic finance. With the introduction of the BRI and the AIIB,

130 Established in 2005, DGCX is the region’s leading derivatives exchange and the only one allowing participants to clear and settle transactions within the Gulf region. The Exchange has played a pioneering role in developing the regional market for derivatives.

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Chinese banks and institutions have increasingly acknowledged the importance of tapping into new increasing markets. This represents approximately 1% of the assets (about US$2 trillion) which is expected to increase to around $3 trillion by 2020 (Dey, 2016). Although information about which and how many companies are involved is not available, Ben Ping Chung Cheung, Asia Pacific Head of Shariah Advisory, asserted that Chinese state and private companies are now becoming more interested in developing Islamic Finance (MCH Halal, 2016). The HNA Group, which owns the well-known Hainan Airlines, for example, planned to increase borrowing to $150 million in Islamic loans in October 2015, to buy a number of new ships (Vizcaino, 2015). The purchase made the HNA Group the first firm in Mainland China to obtain financing through Islamic finance (MCH Halal, 2016). Vizcaino (2015) reports that “Gulf-based banks are working on this transaction” (ibid.).

In the midst of these developments, the Gulf, particularly the UAE, has become one of the most prominent Islamic financial centres in the world and in recent years has made important strides in becoming the capital of the world Islamic economy (Dey, 2016). Against this background, Chinese banks, in their activities in the Gulf, realise the importance of taking part in this sector. As asserted by the Head of Hong Kong’s Special Administrative Region, John Tsang Chun-wah, since many countries in the BRI are Muslim-majority countries, it is important for Chinese banks to become more involved in the Islamic finance sector (Maierbrugger, 2015). Since the BRI and the AIIB launched in 2013, Chinese banks, including the AIIB, have exerted efforts to establish outbound Islamic financing frameworks and to encourage relevant entities to provide Islamic financing products (ibid.). The AIIB, for example, has reportedly been engaged in discussions with the Saudi Arabia-based Islamic Development Bank (IDB) regarding Islamic finance projects in the region (ibid.). The plan was finalised in early 2018, with the partnership between the two banks to provide infrastructure loans in the “Islamic world”, which comprises the IDB’s member states (Kynge, 2018). Previously, the ICBC has also agreed to establish Sharia-compliant banking products in the Gulf and China (Maierbrugger, 2015) and, in April 2016, Fullgoal Asset Management in Hong-Kong partnered with the UAE Sharia-compliant company Mawarid Finance to issue Islamic finance (Emirates 24/7, 2016).

Another crucial bank is Chongqing-based Southwest Security, which in 2015 signed a cooperation deal with Qatar National Bank (QNB) and Qatar International Islamic Bank (QIIB) to develop Islamic-compliance finance products in Qatar (John, 2015). The deal focuses on establishing a framework for Chinese markets to access investor markets in the Gulf, and to open the Chinese market to the Gulf’s Islamic capitals (ibid.). As an outcome of the expanding interest among Chinese banking and financial institutions in the Islamic financial market, the AIIB has chosen Hong Kong as the first

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financial hub to issue Sukuk for large development projects (Maierbrugger, 2015). This is the result of a series of policies introduced by the Hong Kong government to cater to the growing activities related to Islamic finance in China. For example, the government of Hong Kong passed a law in March 2014 to enable the issuance of Sukuk by the Hong Kong Monetary Authority (HKMA) (ICD, 2017: 43).

The Loans (Amendment) Bill 2014 followed the introduction of the Inland Revenue and Stamp Duty Legislation (Alternative Bond Schemes) Ordinance 2013. Both laws together offered a taxation framework for Sukuk, similar to that issued by Hong Kong for conventional bonds.131As a consequence, in 2014, Hong Kong became the first government in the world to issue a dollar-denominated Sukuk and debuted its first placement worth S$1 billion (ibid.) The Sukuk was listed on Hong Kong, Malaysia, and Dubai bourses and created a crucial global benchmark. Several banks from the Gulf including National Bank of Abu Dhabi (NBAD), the Abu Dhabi Islamic Bank (ADIB), Emirates NDB, and QInvest were involved in the placement (ibid.). A year later, the Hong Kong Monetary Authority announced that it had sold another US$1 billion of five-year Sukuk (ibid.).

The expansion of Chinese financial institutions in the Gulf, and their growing activities in the regional Islamic finance sector under the BRI, have also been accompanied by growing efforts to expand the use of Chinese currency in the region. Even though it has been argued that the internationalisation of the Renminbi, which began in 2009, still faces obstacles and a number of further efforts need to be pursued for the currency to be internationalised,132 the BRI and the AIIB is also intended by Xi to complement the ongoing strategy to widen the use of the Renminbi around the world. This is reiterated in the Vision and Action document, in which it is stated that the initiative is intended to establish currency swaps and settlement mechanisms, to uplift the status of the RMB as an international reserve currency, and to incorporate the RMB in the IMF’s Special Drawing Rights (SDR)133 (NDRC, 2015). In the Gulf, this intent was echoed by Xi Jinping in his official speech at the Arab League headquarters in 2016:

131 See here for the full document of the Bill: http://www.legco.gov.hk/yr13-14/english/bills/brief/b20 1401101_brf.pdf. 132 See, for example, Xia (2018: 667-685) for analysis on the limitations of RMB internationalisation. 133 On October 1, Yuan was added to the IMF’s basket of currencies that make up the Special Drawing Right (SDR). The basket is used to calculate the average global exchange rate on a daily basis, which measures the SDR value of the 188 members in the SDR Department. IMF Managing Director Christine Lagarde said in a statement, “Adding the Chinese yuan to the fund’s currency basket is a historical event, and this change reflects the continuous development of the global economy and the IMF’s willingness to keep up with this progress” (RT, 2016). See Hakans and Hyness (2017) for more analysis on this subject.

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“We may sign more currency swap and mutual investment agreements, expand RMB settlement business […] under the Belt and Road Initiative” (China Daily4, 2016).

A number of Chinese banks have responded to Xi’s call by becoming driving social forces in promoting the use of RMB in the Gulf, mainly through currency swaps134 and trade settlement deals. The People’s Bank of China (PBC), for example, signed a 35 billion Yuan ($5.6 million) currency swap deal with Qatar Central Bank (QCB) (Bakr, 2015). The Bank has also renewed its $5.42 billion currency swap agreement with the UAE, after the latter was included as a RMB Qualified Foreign Institutional Investor (RFQI) with a quota of 55 billion Yuan, which paves the way for the Central Bank of the UAE to invest in China’s capital market (Wong, 2015). In September 2016, the PBoC also appointed the ABC to clear the RMB in the UAE, which made the latter the second clearing hub in the UAE for RMB transactions (Abdel-Qader, 2016). In the same year, the ICBC also decided to join the Dubai Commodities Clearing Corporation (DCCC), turning itself into a settlement bank for DGCX (Arnold, 2016), and a year later, the Bank was reportedly pursuing negotiations with a number of governments and entities in the Gulf about issuing RMB bonds in China (Arnold, 2017).

In addition to the currency swap agreements, these banks have also established RMB Clearing Centres across the Gulf. In 2015, the ICBC decided to establish a Renminbi Clearing Center in Doha (Bakr, 2015). The centre, which is the first in the Gulf region, allows trade priced in RMB to be cleared locally in Doha rather than in other centres such as Hong Kong or Shanghai. This is aimed to make the Renminbi “trade invoicing currency” in the Gulf, which also widens the currency net in the region. Banks in the Gulf are now able to skirt various custodial relationships with banks in Hong Kong to access currency at the Bank of China’s Doha branch, the sole designated offshore clearing bank. As the opening of Renminbi accounts can now be made in Qatar, this effectively enables the creation of a pool of liquidity in Renminbi, thereby enabling a push for trade across the wider region. In December 2016, the ABC was also appointed by the PBoC to operate another Renminbi Clearing Centre in Dubai (Salama, 2017).

134 The objective of these agreements is to permit swaps between Yuan and regional currencies, and typically have a maturity of a set number of years, which is extendable upon agreement by the parties involved. At a technical level, these swap facilities offer regional banks with Renminbi liquidity and encourage the Gulf authorities to allow their banks and companies to conduct businesses in RMB. The agreements additionally secure RMB liquidity in the case of financial breakdown. Apart from the liquidity-supporting function, the agreements can support the settlement of trade even when boosting trade is not the purpose of having swap facilities in the first place. The swaps allow the Gulf governments to provide local importers Renminbi trade financing to purchase goods from China, as these facilities provide a buffer against the trade contraction effect of the dollar shortage, which stabilises China’s export sector. See Liao and McDowell (2015: 401-22) for more explanations.

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Even though they remain limited, these developments have gradually expanded the popularity and use of Renminbi in the Gulf. According to the RMB Internationalisation Study by HSBC, there has been a noticeable increase in the number of UAE businesses using the Renminbi – increasing from 34% in 2015 to 46% in 2016 (HSBC, 2016). In January 2016, SWIFT’s RMB Tracker showed that the RMB had become the most active currency used in the UAE and Qatar for direct payments to China and Hong Kong (Jabarkhyl, 2017). Later that year, SWIFT further indicated that between August 2014 and August 2016, RMB-denominated payments in the UAE increased by 210.8% (Liu and Wang, 2017). The Emirates now possess a 50 billion Renminbi Qualified Foreign Institutional Investor quota that allows firms based in the UAE to invest offshore RMB in Chinese securities (Salama, 2017). It was additionally reported in 2016 that the rate of using the Renminbi in direct payments between Kuwait and China exceeded 10% (ibid.). Meanwhile, the government of Saudi Arabia, through its Vice Minister of Economy and Planning, Mohammed al-Tuwajiri, declared that the country is currently preparing for Renminbi funding (China Daily5, 2017).

Although these developments are in accordance with Xi’s ambition to expand the use of the RMB, it is crucial to note that actually the CCP does not want this process to speed up or to go beyond control. As discussed in Chapter 3, Section 5, in recent years, China’s export-led growth model has generated imbalances in its economy. Double surpluses in both current and capital accounts have led to growing foreign exchange reserves, which were invested in its economy. Nevertheless, the global financial crisis indicated that investing foreign exchange reserves in the domestic economy was of no benefit in mediating the economic instabilities of an export-oriented production model. Profit was lost and Xi acknowledged that he needs to search for alternative outlets to reinvest these reserves. From his perspective, infrastructure investments under the BRI and the AIIB would have the double advantage of resolving overaccumulation while searching for potential new economic activities (Zhai, 2018: 86).

At the same time, however, Xi acknowledged that to help this process, he also needs to depreciate Chinese currency. The Hu Jintao administration (2002-2012) suspended the RMB appreciation process during the crisis period between 2008 and 2010, and Xi has decided to uphold the policy (Roach, 2015). The rationale is that internationalisation of the RMB will actually lessen China’s trade competitiveness and the policy autonomy of the Party to use exchange rates as one of the mechanisms for relief (Zhang and Tao, 2014: 15). China’s failed efforts to reform its own economic system, through consumer spending and accumulation in domestic financial markets, also puts pressure on Xi’s currency policy as a solution to relieve the country’s overaccumulation (Gwiazda, 2017: 491-2). It is against this background that despite the written objective of the BRI and the AIIB in internationalising the use of RMB, the AIIB, as the financial arm of the

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initiative, is not rejecting the U.S. dollar but using it as its main currency. The reason is that temporarily the initiative is primarily intended as a mechanism to resolve China’s overaccumulation.

This, nevertheless, does not rule out the possibility that the initiative could still be used as a mechanism for the internationalisation of Chinese currency, as reiterated in their blueprint. The Xi government simply does not want the process to accelerate, as it will be counterproductive to his efforts to resolve overaccumulation. In order to mediate Chinese imbalances, Xi needs to first re-invest foreign exchange reserves, rather than pursuing a long-term strategy to increase domestic consumption and to depend less on the U.S. dollar. As the AIIB’s President Jin Liqun asserted, to use the U.S. dollar is “less practical” (Hu, 2016). This decision the result of thinking that to quickly resolve the economic instabilities that China faces, the surplus of foreign exchange reserves needs to be reinvested in the U.S. dollar. Xi realises that the global status of its currency would not contribute to stability in capital accumulation and would be unable to serve as a relief. In order to mediate economic imbalances, the process of internationalising the Renminbi needs to be temporarily slowed down. Realising the potentially significant ability of the BRI and the AIIB to widen the use of the RMB, which would in turn contrast the strategy to lessen imbalances, Xi decided to proceed gradually with the currency-expansion strategy and not to use the RMB as the primary currency of the AIIB.

The use of the U.S. dollar in the AIIB and the decision not to use the AIIB as a means for currency internationalisation, are however, only short-term strategies, as Xi and his team have not ruled out using capital raised in Chinese currency in the future. Jin states that in the future the AIIB will use the Renminbi in its operations (ibid.). Overall, as the strategies initiated by the previous administrations were not able to provide profitable outlets for reinvestment, Xi needed to search for alternative strategies to diversify re- investments, particularly because the foreign exchange reserve was continuously rising rapidly. The BRI and the AIIB is, for now, a strategy by Xi to diversify reinvestment strategies and to solve imbalances in capital accumulation, inherent in China’s export- oriented growth production mode. These problems could not be resolved via domestic investments and the financialisation of accumulation strategy, and has resulted in an overaccumulation crisis and the inability to absorb sufficients amounts of capital. The BRI and the AIIB gives a geographical and profitable variability for capital investments. The gradual strategies of currency expansion and the use of the U.S. dollar in the AIIB are intended to help in the reinvestment of China’s foreign exchange reserves. This, however, does not rule out the initiative would changing course in the future.

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From Sections 4.3 to 4.5, I have discussed the material implementation of the BRI and the AIIB in the Gulf. While such material implementation may have been covered by the orthodox analyses, the deployment of neo-Gramscian perspectives enables us to move beyond the examination of the material interests and activities which underpin the BRI and the AIIB in the Gulf as disconnected from domestic contexts and state- only activities. Rather, it allows us to analyse how those material interests have come about and which specific actors were involved in the process. As shown in this chapter, the BRI and the AIIB did not arrive suddenly in the Gulf. Instead, it must be analysed against China’s interaction with the Gulf countries since the end of 1970s and the various economic challenges faced by the Chinese economy in the present. In addition, this chapter has demonstrated that the realisation of the initiative in the Gulf is a function of an alliance of different social forces composed of not only state elites and companies, but also private firms, banks, and other financial institutions. In the next two chapters, I will show how, even though it is ignored by the orthodox studies of the BRI and the AIIB, the implementation of the initiative in the Gulf does not simply revolve around material interests and activities. Instead, it also involves efforts to gain the social support of the Gulf countries for the initiative. This is to answer the second part of the main research question, which is why the Gulf state-society complexes are supporting and participating in the BRI and the AIIB.

4.6 Conclusion

To answer the primary questions of why China is implementing the BRI and the AIIB in the Gulf and why the Gulf state-society complexes are supporting and participating in the initiative, it is important to understand the basic contours of the implementation of the initiative in the Gulf. This chapter was therefore dedicated to answering the third sub-research question of the thesis through examining the material implementation of the BRI and the AIIB in the Gulf and the social forces involved, which constitutes the basic contours of the emergent hegemonic project. To do so, the chapter commenced by providing more background on the implementation of the initiative in the Gulf. The realisation of the initiative in the region, which was launched in 2014, was factored by four primary strategies.

Firstly, the Gulf not only possesses plenty of energy resources, but it also necessitates capital, knowledge, and capabilities to exploit those resources. In Xi’s view, investing in the regional energy sector is seen not only as a means to direct China’s excess capacity; the outcomes of these projects are expected to facilitate energy flows between China and the Gulf which would help fulfill the former’s energy needs. Secondly, the Gulf, which is presently devoting petro-dollars for infrastructures, represents a profitable

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place to direct China’s excess capacity. However, the emergent hegemonic project also has a long-term objective: the outcomes of these projects are expected to facilitate the flow of trade and investments between China and the Gulf. Third, given the Gulf’s place as one of the largest global financial hubs, the implementation of the BRI and the AIIB in the Gulf is also intended to be a catalyst for increased internationalisation of Chinese finance in the region, which is one of the Xi government’s priority policies.

Based on these strategic considerations, the material implementation of the BRI and the AIIB revolves around three primary components. The first, explored in Section 4.3, is the securing of energy resources. The social forces in this regard are state elites, who have engaged in negotiations with the Gulf elites and led to the signing of energy agreements, and NOCs, who have not only worked to finalise energy supply deals with the Gulf’s firms, but have also exerted efforts and resources to construct relevant infrastructures that will facilitate energy flow between the Gulf and China, such as refineries, pipelines, and ports. The second component, as explained in Section 4.4, is the directing of Chinese capital into various non-energy sectors in the Gulf, with state and private companies and banks as the main social forces. Given the objective of the initiative – expediting the flow of trade and investments between China and the Gulf- these firms are mostly involved in projects that would not only enable the directing of China’s overaccumulated capitals, but that also in the long-term would facilitate that objective, such as ports, retail shops and special economic zones.

The third element, which was the main focus of Section 4.5, is the internationalisation of Chinese finance in the Gulf. This has two primary elements: one is the increasing activities of Chinese banks and other financial institutions in expanding branches, increasing bonds, and becoming involved in the Islamic finance sector in the Gulf. The second is the regionalisation of Chinese currency, which has increased through the activities of Chinese banks in signing currency-swap agreements and in establishing currency centres in the region. I also discussed the widespread conviction about the AIIB being a mechanism for China to globalise its currency. I discovered that although in the long-term the AIIB may play a role in regionalising, and internationalising, the RMB, it is, for the time being, intended mainly as a solution to overcapacity in the Chinese economy. The decision to use the U.S. dollar instead of RMB in the AIIB’s operations is influenced by the need to mediate imbalances in the Chinese economy. This, however, as the AIIB’s President Jin Liqun has asserted, does not obviate the real intent of the BRI and the AIIB to use RMB in the future and to serve as a catalyst and mechanism to widen the use of RMB internationally.

Even though the implementation of the BRI and the AIIB in the Gulf revolves around material interests and activities as discussed in this chapter, what is often neglected by

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orthodox accounts is that the realisation of the initiative also involves an ideological struggle waged to attain the support of Gulf state-society complexes for the initiative. Rather than being implemented as an effortless project, a struggle needs to be carried out to universalise economic and material interests embedded in the initiative and to turn them into universal interests of Gulf state-society complexes. Beginning with the next chapter, I move beyond an analysis of the material aspects of the BRI and the AIIB by examining the ignored, yet vital, ideological and institutional processes that accompany the material implementation of the initiative. The concept of a regional historical bloc I constructed in Chapter 2 as “a complex of economic, political, and cultural institutions which [permit] the normal social development of a particular period and a particular economic system” (Murphy, 1994: 26-27) enables for such analysis to be carried out.

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Chapter Five The Ideological Struggle of the Chinese Emergent Hegemonic Project in the Gulf: Creating the Common Sense of the BRI and the AIIB

5.1 Introduction

The previous chapter investigated the material implementation of the BRI and the AIIB in the Gulf to answer in greater depth the question of why China is implementing the BRI and the AIIB in the Gulf and to provide background on the basic contours of the initiative. This also provided the basis to answer the second part of the main research question, which is why the Gulf state-society complexes are supporting and taking part in the initiative. It advances that the material implementation of the BRI and the AIIB in the region comprises three elements: the securing of energy resources, the directing of Chinese capital in the Gulf states’ non-energy infrastructure sector, and the increased internationalisation of Chinese finance. This chapter now examines why the Gulf state- society complexes are accepting and taking part in China’s emergent hegemonic project by analysing the ideological struggle taking place alongside the material implementation of the initiative.

Orthodox analyses have ignored that the realisation of the initiative in the Gulf is not restricted to the economic sphere. Rather, it involves struggle at the ideational level to translate the interests behind the initiative into a universal interest– what was defined in Chapter 2, Section 4, as a ‘common sense’ – to attain the social support of regional state-society complexes. This chapter answers the fourth sub-research question: how this ideological struggle is being carried out and who are the social forces involved. As explained in Chapter 2, Section 4, the ideological struggle could be divided into two components: ideational, which concerns how the objectives of the emergent hegemonic project are articulated to appeal to the regional society; and structural, which refers to the specific social forces involved in the ideological struggle.

To elaborate upon these two components, this chapter has three main sections. Section 5.2 focuses on the ideational component of the ideological struggle. Here I propose that an “equalisation” strategy is employed to align the objectives of the initiative so that they can be regarded as a ‘common sense’. Section 5.3 investigates the structural

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component of the ideological struggle. I advance that the ideological struggle has been carried out through what neo-Gramscianism terms organic intellectuals who go into elite and civil society institutions in the region to socialise the BRI and the AIIB and “to provide ideological coherence [and] legitimacy” (Shields, 2012: 59) for the project. These intellectuals include state elites, academics and education institutions, the media, and cultural entities. Section 5.4 then assesses the limitations of the ideological struggle to create a common sense of the initiative’s objectives. It discovers that the struggle remains at the incipient stage due to: the limited coherence of the initiative and the Chinese Dream as their legitimating idea; the widespread negative perceptions of China in the region; and the struggle itself, which is still limited not just to socialising the BRI, the AIIB, and the Chinese Dream, but also to addressing the prevalent resentment against China in the Gulf. This chapter is based on primary and secondary sources, including interviews, books, journals, and newspapers.

5.2 The Ideational Component: Articulating a Common Sense of the Chinese Dream

Departing from the view expressed in orthodox analyses, the realisation of the BRI and the AIIB is not being directly imposed on the Gulf. Rather, ideological strategies are waged to translate the material interests behind the initiative into a universal worldview. Since the initiative was launched, specific social forces unified in Xi’s historic bloc to carry out the emergent hegemonic project have struggled to “raise the great mass of the population to a particular cultural and moral level, a level which corresponds to the needs of productive forces for development, and hence to the interests of” the project (Gramsci, 1971: 258). This struggle constitutes two components: the ideational, which concentrates on generating a worldview that universalises the interests of the initiative and builds legitimacy for the emergent hegemonic project; and the structural component, which is concerned with particular social forces who carry out the ideological struggle. This section analyses the first component, before the next section scrutinises the agents involved in the struggle.

Specifically, I investigate how the objectives of the BRI and the AIIB in the Gulf are articulated to appeal to Gulf society. Neo-Gramscian perspectives, which pay attention to the creation of consensus between leading and lesser forces, offers useful traction in understanding this ideational aspect of the initiative. The most prominent aspect of this ideational component is the emphasis on the framing of the idea of Chinese Dream as everyone’s dream. This is reflected in Xi’s assertions that “everyone has their own ideals and aspirations, and all have their own dream and that the Chinese Dream is people’s

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dream, and must closely rely on the people for its achievement, and must constantly be for the benefit of the people” (Xi, 2013, cited in Callahan, 2017: 248-270). Domestically Xi also often attempts to convince the people not only to follow the CCP and to make sacrifices to realise the “dream” for the good of the country, but that the “dream [is] also for each individual Chinese” (Wang, 2013, cited in Callahan1, 2016: 226-243).

Xi’s emphasis on the collective nature of individual and national “dreams” can be seen as an endeavour to align his own interests with the broader ones of the people, and to engage in an active process of stimulating consensus (Bruff, 2008: 60). Internationally, this strategy is also obvious. In several of his speeches, Xi asserted that each country and region is entitled to its own “beautiful dream” – the Korean Dream, the Latin American Dream, the Arab Dream and the African Dream (Xi, 2014 cited in Callahan1, 2016: 226). Hegemony, in neo-Gramscian perspective, is a process through which lesser powers are articulated in a set of strategic alliances that ultimately serve the interests of the leading forces. The Chinese Dream is intended not only to reflect shared interests but more significantly to usher in a new ideological order through the BRI and the AIIB. Xi understands that consent to the idea that characterises his objectives – instead of simple acquiescence in exchange for economic opportunity – is important for the realisation of his initiative.

This “equalisation strategy” has also been an important component of the ideological struggle behind the implementation of the initiative to align its interests with the Gulf state-society complexes’ broader interests, or framing the Chinese Dream as the Gulf’s dreams. This, for example, is voiced in an article written by Wang Jinglie, an executive committee member of the Chinese Society for Middle East Studies, whereby he stated that:

“We wish that when we realise the “Chinese Dream”, the Arab countries will not be happy for us, but will also achieve their own “Arab Dream”” (Wang, 2014: 32).

The use of the word “Arab Dream” in his article can be seen as an effort to equate the Chinese Dream with the “dreams” that are broadly interpreted by the Gulf state-society complexes as theirs, thus a common sense. It is acknowledged that the implementation of the BRI and the AIIB requires the Chinese Dream as the legitimating idea to be seen as “natural” by Gulf’s society, upon whose consent a consensual rule is dependent.

As will be shown in Section 3, on several other occasions, some social forces have also been found equating the Chinese Dream with the Gulf’s “dream”. Another example

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was iterated by Chinese Foreign Minister Wang Yi in the seventh Ministerial Meeting of the CASCF in Doha in 2016:

“The Chinese people are striving to realise a moderately prosperous society in all respects and the Chinese dream of great national renewal […] Meanwhile, Arab peoples are working tirelessly to make their dream for peace, stability, and development come true. […] These common dreams and aspirations are a strong bond that links the two sides” (Wang, 2016).

Again, such statements can be considered as an effort to universalise the interests of the BRI and the AIIB as those of the Gulf countries. This constitutes an act of moral and political leadership which tries to resonate with the regional state-society complexes, framing their dreams as the dreams of all.

Another ideational component of the ideological struggle behind the BRI and the AIIB is the promotion of the idea that the initiative’s visions are in line with the development visions135 or foreign policy initiatives of the Gulf governments. For example, during the CASCF Forum in 2016, Wang Yi called Qatar to take part in the initiative by stating that it shares common goals with the Qatar National Vision 2030, a development plan launched by Qatar in 2008 (Rakhmat and Cafiero, 2016). Similarly, Vice Premier Zhang, in a meeting with Kuwait’s Emir, said that the BRI initiatives are highly compatible with “Kuwait 2035” (Xinhua7, 2017). The same strategy was also employed during King Salman’s visit to China in March 2017, where it was emphasised that Xi’s plan to revive the historical Silk Road is in line with the Saudi Vision 2030 (An, 2017). In the UAE, Wang Yi also asserted that China wants to integrate the BRI with the UAE’s “Look East” policy (Scott, 2015: 1).

Thirdly, another ideational strategy used to formulate a common sense among the Gulf state-society complexes is through socialising the idea that the BRI and the AIIB will not only benefit China, but also the Gulf region. This, for instance, was illustrated in Xi’s statement during the visit of the UAE’s Crown Prince Sheikh Mohammed Bin Zayed Al-Nahyan in 2015. Xi Jinping stressed that:

"The two sides should strengthen practical cooperation under the framework of co-building the “Belt and Road”, so as to realise mutual benefits, win-win

135 These are documents mainly outlining the GCC countries’ prioritisation strategies regarding how to achieve genuine diversification, to increase the capacities and capabilities of the private sector to lead overall economic growth, and to promote employment mechanisms through which the heavy reliance on foreign workers will be eased (Koch, 2016). The countries strategies are as follows: Bahrain Economic Vision 2030; Kuwait Vision 2035; Oman Vision 2040; Qatar Vision 2030; Saudi Arabia Vision 2030; and UAE Vision 2021. The links to the online versions of these documents can be found in the bibliography.

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results and common development” (Xi, 2015 cited in Oxford Business Group 2016: 33).

In this respect, the initiative is presented as the linchpin in the realisation of “mutual benefits and win-win results and common development” (ibid.). This was aimed at universalising the BRI’s objectives by emphasising that the implementation of the BRI and the AIIB will not only benefit China, but also the region.

Vision and Action also follows the established line of ‘win-win’ cooperation, declaring China’s values and interests to be everybody’s values and desires. For example, it begins its conclusion by declaring: “Though proposed by China, the Belt and Road Initiative is a common aspiration of all countries along the routes” (NDRC, 2015). In articulating the initiative’s energy objectives, for example, it also asserts that:

“We should promote cooperation in the connectivity of energy infrastructure, work in concert to ensure the security of oil and gas pipelines and other transport routes” (NDRC, 2015).

Terms such as ‘cooperation’ are used to reframe the initiative’s energy goals so that the goals are perceived as mutually beneficial.

Furthermore, as apparent during the early stage of China’s internationalisation in the Gulf (as showcased in Chapter 3, Section 4), part of the ideological struggle behind the BRI and the AIIB means becoming actively involved in regional issues and working to “equalise” China’s stances on them with those of the GCC countries, to present China as a good partner in promoting peace. This would contribute to offering legitimacy for Chinese interests in the region. For example, moving beyond the territorial integrity argument normally made, China advocated that Palestine be restored as an independent nation based on the 1967 borders. In order to reconcile Saudi Arabia’s dissatisfaction with China-Iran deals,136 China backed the Saudi stance on supporting the government of Yemen. Likewise, it supports the Gulf’s plan that UN Security Council Resolution 2254 should be implemented in Syria. Responding to the Israeli attacks on Gaza in May 2018, China also supported Kuwait’s proposal to end the conflict (Xinhua24, 2018). China moreover was also involved in the 2017 Gulf dispute137 when it organised a meeting with Qatari leaders to discuss potential solutions to the crisis (The Peninsula, 2018). As Armijo (2018) suggests in an interview, with the Gulf being surrounded by regional conflicts and entangled in its own political crisis, the Party-state acknowledges the importance of playing a more proactive role in those issues and being in parallel

136 See, for example, Ehteshami et al. (2018: 1-20). 137 See, for example, Al-Sudairi (2018: 1-14).

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with the Gulf’s position. It is part of the strategy to legitimise its interests in the region, including the BRI and the AIIB as its main current initiative.

These ideational strategies have attracted regional political and civil societies to become supportive of the initiative. Saudi Arabia’s energy minister agreed that the BRI parallels Saudi Vision 2030 based on the latter’s “common features and notions” (Cafiero and Wagner, 2017). Kuwait’s ambassador to China, Sameh Hayat has also asserted that the BRI’s goals correspond to Kuwait’s 2035 vision (Kuwait Times, 2017). In a meeting with the Chinese Foreign Minister in Doha in May 2016, Qatar’s Emir also pledged to take part in the BRI (Xinhua8, 2016). Meanwhile, Omar al Hinae’i, Deputy Chairman of the State Council of Oman stated in a meeting with Arken Imirbaki, President of China-Arab Friendship Association, that Oman fully supports fully the realisation of the BRI and the AIIB (Xinhua9, 2016). This is complemented by the Chief Executive of the Bahrain Economic Development Board, who asserted that Bahrain supports “China’s vision of the Belt and Road Initiative to build a community of shared interests between the Arab world and China” (China Daily6, 2017). A similar statement was also made by the UAE’s Minister of State, Sultan Ahmed Al-Jaber, in an interview with Xinhua, where he said that:

“The UAE is a founding member of the AIIB and committed to its central mission of bringing the Belt and Road vision to life” (Xinhua10, 2017).

These social supports have also been converted into concrete endeavours. In Kuwait, for instance, the government has devoted approximately $119 billion to constructing Silk City (Madinat Al Hareer) (Olimat, 2016: 20). This is a planned urban area which includes a 1,001-metre-tall skyscraper named Burj Mubarak Al Kabir, a duty-free area, a two-square kilometres nature reserve, as well as a business centre, conference areas, and other areas that focus on media, leisure, education, and industry (Xinhua11, 2016). In commenting on the project, Sami Alfaraj, President of the Kuwait Centre for Strategic Studies and an adviser to the GCC asserted: “We want to build railways all the way to China” (Bowcott, 2017). Another example is from the UAE, where the Middle East’s largest Chinatown is currently being developed to facilitate the expansion of Chinese businesses under the BRI (Khaleej Times, 2018). The UAE’s financial centre, DIFC, has also cooperated with the University of Oxford to create a legal framework to deal with regulatory and legal challenges inherent in the realisation of the BRI and the AIIB (Rousseau, 2018). It is said that the framework is for “enabling and safeguarding both Chinese and international commercial interests” (ibid.).

In order to answer the question of why the Gulf state-society complexes are supporting and taking part in the implementation of the BRI and the AIIB in the Gulf, this section

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discussed the ideational part of the ideological struggle that accompanies the realisation of the initiative. In particular, I showed how the ideational strategies to establish moral and intellectual legitimacy for the initiative are carried out. The chapter now examines the structural component of the struggle, namely identifying the social forces involved. As Gramsci argues, these forces can be called “organic intellectuals” who are formed “in connection with the dominant social group [of the hegemonic project]” (Arjmand, 2017: 10) and whose task is to transform:

“the interests of the leading class into harmony with those of subordinate classes and incorporate these other interests into an ideology expressed in universal terms” (Cox, 1983: 168).

5.3 The Structural Component: The Organic Intellectuals behind the Ideological Struggle

Neo-Gramscian perspectives do not only involve the ideational strategies adopted to intervene and shape common sense to serve the interests of the emergent hegemonic project. Rather, it also involves the specific agents who carry out these strategies. These agents, as clarified in Chapter 2, Section 4, are referred to as organic intellectuals who have spread throughout the government and civil society to socialise and elaborate upon the hegemonic project with the primary objective of universalising the interests behind the project as a “common sense” (Pimlott, 2017: 120). They are not necessarily academics and include any individuals or institutions who exert effort to shape people’s common sense (Chege, 2018: 407-28). The ideological struggle behind the BRI and the AIIB also relies on the roles of individuals and entities serving as organic intellectuals who have been exerting efforts to negotiate a consensus (Martins, 2017: 84) for the initiative. This part identifies these organic intellectuals, which will provide us a more nuanced answer to the question of why the Gulf state-society complexes are supporting and taking part in the initiative.

It suggests that, in the case of the BRI and the AIIB in the Gulf, these intellectuals can be grouped into four categories. Namely: 1) state elites; 2) the media; 3) academics and educational institutions; and 4) cultural exchanges. This is elaborated in the following sub-sections.

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5.3.1 State Elites

Since the BRI and the AIIB were introduced in the Gulf, the task of propagating the initiative has been carried out by state officials who have increased the frequency of their diplomatic activities in the region. This corresponds to Ryner who argues that:

“Politicians and mass parties play a strategic role […] as ‘organic intellectuals’, as [they often] take on the task of ensuring this coherence” (Ryner, 2002: 6).

One such exemplifications occurred just three months after Xi’s launch of the initiative, where Foreign Minister Wang Yi organised a meeting with GCC’s General Secretary Abdullateef Al Zayani in Riyadh (FMPRC2, 2013) to promote the initiative as bringing benefits to the Gulf and to urge regional countries to take part. The Chinese Dream was first mentioned to Gulf society in an article by Wu Sike, Chinese Special Envoy to the Middle East, titled “The Chinese Dream Needs Arabic Support and Cooperation” (Wu, 2013). The article attempted to form a common sense among the Arab nations by aligning the Chinese Dream with Arab development goals. He stated that “the process of realising our nation’s dream complements Arab’s nation’s efforts to achieve peace and development” (ibid.).

In subsequent years, these strategies were also employed by Chinese officials during their interactions with Gulf counterparts. One example was in a meeting between Xi and the Emir of Qatar in November 2014, which led to the ratification of the China- Qatar Strategic Partnership (FMPRC3, 2014). In the meeting, Xi called upon Doha to become involved in the BRI and socialised that the BRI and the AIIB offer benefits for both (ibid.). In the 6th Ministerial Conference of the CASCF in 2014, Wang Yi, through a written statement, also promoted the notion that the Arab countries are “natural and important cooperation partners” in implementing the BRI and that the Chinese Dream should be manifested in growing China-Arab relations:

“Today, China and Arab states are working together to build the economic belt and the maritime silk road to revive the modern-day silk road. […] China will work with Arab states […] to achieve China’s great dream of national revival in the course of deepening China-Arab cooperation” (Wang, 2014).

The statement was again an attempt to translate the interests of the initiative into the general interests of the Gulf countries. The same strategy was also apparent during Xi’s visits to Saudi Arabia, Egypt and Iran. In his speech at the Arab League, Xi declared that:

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“China is ready to work with Arab states to jointly build the Belt and Road and expand common ground in our respective effort to achieve national renewal” (Xi, 2016, cited in China Daily4, 2016).

Xi attempted to establish a common sense by stating that the goal to achieve national renewal does not belong just to China, but also to the Arabs. Xi was complimented by the Chinese Ambassador to Bahrain, Qi Zhenhong, who in the same month published a statement urging the Gulf countries to cooperate with China “to realise the Chinese Dream and to revitalise the Arab states” (Bahrain News Agency, 2016). China’s officials also frequently propagated the notion that the initiative parallel the regional countries’ development visions. For instance, in the 7th CASCF’s Ministerial Meeting in Doha in 2016, Wang Yi asserted that the BRI’s objectives are consistent with the Qatar National Vision 2030 (Xinhua12, 2016). During the visit of the Saudi Deputy Crown Prince Mohammed Bin Salman to China, Xi also promoted the Chinese Dream, saying it was consistent with the Saudi 2030 Vision and “with the dreams cherished by the Saudis” (Arab News, 2016).

Chinese officials moreover, have also used regional newspapers to shape public opinion in favor of the BRI and the AIIB. Xi, for instance, wrote a piece entitled “Be Good Partners for Common Development” in a Riyadh-based paper Al Riyadh in January 2016 (Xinhua13, 2016). Xi promoted the initiative, and highlighted Saudi Arabia’s role in them. In trying to build a common sense, Xi wrote that the BRI and the AIIB’s goals parallel Saudi Arabia’s development strategies and interests. One day before his visit to the UAE in July 2018, Xi also wrote a piece for two UAE newspapers, Al Ittihad and The National entitled: “Work together, create a better future” (CGTN, 2018). The article not only promoted the initiative, but also attempted to establish moral and intellectual legitimacy for it by stating that: “there are overlapping visions in the development strategies between the two nations” (ibid.). Gramsci (1971: 340) notes that the media as “the whole complex system devised to construct and generate, to communicate, store, retrieve knowledge, and information” has a central role in shaping the worldview of the masses. Xi seems to acknowledge this role and uses the media to articulate his interests.

State institutions have also increasingly worked to incite public debates on the BRI and the AIIB. In August 2017, for example, the NDRC held a roundtable discussion in the UAE titled: “Sukuk and Economic Development: Opportunities and Challenges” to discuss the initiative’s opportunities for the UAE (Annuar, 2017). A panel discussion entitled: “Saudi Vision 2030 and the Belt and Road Initiative: Together for a Promising Future” was also held during Prince Salman’s visit to China in 2016. The panel aimed to widen the conversation on the initiative by discussing its relevance in the Gulf, and how it can benefit the region (ibid.).

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The strategy to “equalise” China’s stances with those of the Gulf one regional issues has also been done mainly by state officials, especially through diplomatic exchanges at both regional and international levels. For example, during the 2017 Gulf crisis, the CCP invited Qatar to discuss possible solutions to the dispute (Xinhua23, 2017). In the meeting, Wang Yi sketched a parallel between China’s position and that of the Gulf in appreciating Kuwait’s mediation proposal (ibid.). In addition, during Israeli attacks on Gaza in mid-2018, China also voted in favour of the Kuwaiti-drafted Security Council resolution on the protection of the Palestinians. China’s representative to the UN, Ma Zhaoxu, asserted that the draft reflected the actual situation on the ground and would help defuse the tensions (Xinhua24, 2018). Aside from diplomatic exchanges, Chinese officials have also organised high-level meetings on regional issues to present China as a ‘good partner’ for creating regional peace. For example, an “International Symposium on the Prospect of a Political Settlement of the Syrian Issue” was held in May 2018 (Pauley, 2018), which was the first global forum hosted by China on the Syrian conflict. Commenting on the forum, Pauley argues that:

“Considering that the forum was held in Shanghai and was co-hosted by the Shanghai Institute of International Studies and Shanghai International Studies University, it is likely that China aimed to use the symposium as a legitimising force for [its interests]” (Pauley, 2018).

Overall, state elites have played the role of “organic intellectuals” in the ideological struggle to attract the Gulf countries into supporting and participating in the BRI and the AIIB. They serve as a “permanent persuader” (Xifra and Heath, 2015: 196-211) to forge common interests and assert them externally to demonstrate the overlap between the initiative’s objectives with the Gulf society’s interests (Macartney, 2011: 74). They do so by not only socialising the project and the idea that it would benefit the regional countries, but also by becoming actively involved in regional issues and by promoting the overlap between China’s stances and the Gulf countries’ positions. This has been done not only in elite-to-elite exchanges, but also on media platforms and in public debates.

The involvement of these elites in the ideological struggle has lured the regional elites to the initiative. In late 2018, for instance, the Qatari Ambassador to China, Sultan Almansouri, expressed Qatar’s support for the BRI and the AIIB in a special interview with The Global Times, in which he stated that:

“I think this initiative is [beneficial] for all Asian countries, and the whole world and we will keep on supporting it. Qatar will […] play an important role in it” (Wang, 2017).

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A few months earlier, such increasing interest was also demonstrated by a forum held by Saudi Arabia’s Ministry of Energy, Industry, and Mineral Resources titled “Belt and Road Initiative, a Joint Vision for Cooperation and Prosperity”. The forum coincided with a meeting of the Saudi-Chinese High-Level Committee, and concentrated on the potential cooperation and investment opportunities being stimulated by the BRI and the Vision 2030 (Trade Arabia2, 2017). A similar forum was also organised by First Abu Dhabi Bank, the UAE largest bank, in late February 2018 (Combes, 2018). During the panel discussions, the conversations emphasised that the BRI and the AIIB present opportunities for the UAE and the wider region, and that the UAE is well placed in the framework of the BRI (ibid.).

5.3.2 Mainstream Media

The mainstream media also plays an important role in the ideological struggle behind the BRI and the AIIB the Gulf. In line with Gramsci (1971: 13), they act as a messenger that frames and disseminates hegemonic ideas and norms. Targeting broader audiences in the digital era, the strength of the mass media has been recognised as a dissemination device for socialising the BRI and the AIIB. The most notable example is the television program titled USILK which was launched during Chinese New Year in January 2017 (Al Arabiya, 2017). The programs that come under Quest Arabiya’s USILK initiative resulted from a strategic partnership between one of China’s largest production houses, China International Communication Centre, and the UAE-based production company, Image Nation, in November 2016. The agreement also resulted in the establishment of a $300 million international film fund, the Culture China-Image Nation Content Fund, intended to provide investment for films and television from China (Hill, 2016).

USILK broadcasts a number of TV programs and series on Chinese culture politics, entertainment, and foreign policy under Xi Jinping. The program that is run by the UAE-based Arabic TV channel, Quest Arabiya, is the first Chinese TV program in the Gulf and in Arabic language. The program constitutes an important effort not only to promote the BRI and the AIIB, but also to attain social support for the initiative. This is evident from the programs that USILK is offering. “Wonder of China” is a five-part documentary focusing on the interaction between Chinese people and modern society, from biodiversity expeditions to Wudang Kung-Fu. “Back to Village” provides a real- life comparison of cosmopolitan China with present-day rural China. In the meantime, “New Face of China” highlights the development of present-day China and the CCP’s current strategies within politics, economics, and the environment. It also looks at new Chinese initiatives, from e-commerce to basketball, and the BRI and the AIIB.

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Another program is “Changing Times”, a documentary series that offers a glimpse into the lives and dreams of the Chinese people preserving Chinese cultural heritage – from Kunqu opera to Bokh wrestling, and “Old Tune” music to throat singing. The last one is “Modern Life in China”, a series that brings together the dreams and aspirations of strangers, with the series acting as a common thread that binds them as they fight to make their dreams reality.138 Indeed, in all these programs, the notion of ‘dream’ and encouraging people to have dreams are apparent. It can be said that USILK is not only intended to increase Gulf society’s awareness of China and its initiative, but also, and more importantly, to establish a common sense by instilling a belief in having and fighting for one’s dreams in the people’s minds. Armijo (2016) in an interview also said that “if we look at these programs, we can see that there is a clear attempt by China to form a common worldview under the Chinese Dream with the Gulf’s society”.

Also in 2017, a Chinese TV channel, CGTN Arabic, was relaunched with a regional office in Dubai. It was originally launched in 2009 as an Arabic arm of CCTV. The channel aims to “show real China” to the regional audience, and to connect both sides (Al Tamimi, 2018). The 24-hour channel broadcasts on both ArabSat and NileSat, with 13.5 million followers on its Facebook page. Its programs include entertainment series, political news, and cultural and tourism shows. Other programs concentrate on learning Chinese, and on Islamic cuisine and halal food, alongside movies and documentaries on countries related to the BRI (ibid.). The importance of the channel in forming a moral and intellectual legitimacy for the BRI was stated by the Director of CGTN Arabic, Jia Peng, when he said:

“We have three goals: Introduce China to the Arab audience, introduce the Chinese viewpoint vis-à-vis international problems, including Arab issues, to Arab viewers, and cover Chinese-Arab joint activities” (Jia, 2018, cited in Al Tamimi, 2018).

The television program is also supported by printed publications. The most important of these efforts is the distribution of the Arabic translation of the well-known book entitled Xi Jinping: The Governance of China, which discusses in detail China’s current policies and initiatives under Xi, including the BRI and the AIIB. The book, published by the government-associated Foreign Language Press, is a compilation of 79 official speeches, conversations, and instructions by Xi covering the period of November 2012 to June 2014. Compiled by the Central Committee of the Communist Party of China Party Literature Research Office, the State Council Information Office, along with the China International Publishing Group, the 500-plus page volume is organised into 18 sections and intended to socialise Xi’s ideology and initiative to a wider audience, since

138 These are my own observations.

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it covers strategies, concepts, and ideas from Xi, including the BRI and the AIIB, and the Chinese Dream. During my fieldwork, I discovered that the Arabic and English versions of the book are widely available in both small and large bookstores across the Gulf. The book is also available in several libraries in the region, such as at Georgetown University in Qatar and Sultan Qaboos University in Oman.139

The publication strategy was also apparent in the participation of China’s publishing houses in various book fairs in the Gulf. For instance, in 2017, some publishing houses participated at Abu Dhabi International Book Fair when “China” was appointed as the guest of honour. Promoting the theme of “Reading China”, more than 3,500 books were exhibited during the fair (Global Times, 2017). Global Times (2017) reported that the event was held as the BRI “gains more ground” in the region and the participation of these publishers helps increase the awareness of Gulf society concerning China and its initiative. In the event, important publications on the BRI and the Chinese Dream including the well-known Xi Jinping: The Governance of China, Keyword to Understand China and The Belt and Road Initiative: What Will China Offer the World in its Rise? were showcased, and Arabic translations of the latter two books were also launched (Global Times, 2017). Moreover, the event also marked the launch of Chinese-Arabic Inter- Translation by the New World Press, which aims to translate several Chinese books into Arabic. Aside from classical and modern Chinese literatures, the project also aims to translate works concerning the BRI, the AIIB, and the Chinese Dream (ibid.).

This, however, is not the first publication strategy pursued by Chinese social forces to raise Gulf society’s awareness about China and its initiative. As Wu Shangzi, Deputy Head of the State Administration of Publication, Radio, Film and Television stated, at least 750 copyright agreements were signed between China and the Gulf in 2016 (ibid.). Armijo, (2017) in an interview, agrees that these publication fairs and agreements are efforts to socialise China and its initiative within the regional society. Such efforts have also taken place elsewhere in the region. In March 2018, an exhibition of over 1,000 Chinese books was organised in Kuwait (Xinhua14, 2018). The books, covering topics including Chinese history, culture, and politics, were then bequeathed to the National Library of Kuwait. The event’s objective was, as the Chinese Ambassador stated in an interview with Xinhua, “to enhance both people’s understanding of each other’s society and culture, and strengthen the people-to-people bond within the framework of the BRI” (ibid.).

Chinese newspapers have also been vital in this struggle; quotations, interviews, opinion pieces on the BRI, the Chinese Dream, and Chinese stances towards the regional issues,

139 This information is obtained from the libraries’ websites.

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by Chinese politicians, diplomats, and academics, are published widely. Global Times, for instance, published an article titled: “B&R initiative to help fix problems caused by the West in Mideast” (Yang, 2017) which voiced a strong opinion that the various issues present in the region have been created by the West and that the BRI is a solution to those problems. In early 2016, the newspaper also published an article stating that the BRI is the right development path for the region.

“[…] the US-designed blueprint for the Middle East development has failed. The region is now tracing future puzzles. The turmoil will be intensified if the regional nations fail to find a right development path. […] Xi’s visit has brought a new blue print for development – realizing peaceful development via the “One Belt, One Road” initiative […]. It is the only ideal for the region to realise peace and development” (Jia, 2016).

From the analysis above, the roles of the media in the ideological struggle behind the BRI and the AIIB in the Gulf should not be understated. The mainstream media, which for Gramsci connoted “the whole complex system devised to construct and generate, to communicate, store, and retrieve knowledge and information” (Fontana, 2009: 83), has been crucial in explaining the BRI and the AIIB to Gulf society and in establishing ideological legitimacy for the initiative in the region.

5.3.3 Academics and Educational Institutions

The roles of academics and educational institutions in the ideological struggle should not be neglected either. From the time the initiative was introduced, a variety of social forces, consisting of academic intellectuals and institutions, have played a crucial role in the struggle. When drawing up the plan for the BRI and the AIIB, Xi and his teams seemed to acknowledge the importance of intellectuals and academic establishments in the implementation of the project. Vision and Action states that the initiative will involve academic efforts, such as sending “more students to each other’s countries”, granting “government scholarships”, and establishing “cooperation in jointly running schools” (NDRC, 2015). Such objectives have manifested in the implementation of the BRI and the AIIB in the Gulf as a means to create legitimacy for the initiative.

One important institution is the Qatar-PKU Chair in Middle Eastern Studies, which was established during the Emir of Qatar’s visit to Beijing in mid-2014, between the Qatar government and Peking University (PKU) (Wang, 2014). The most noticeable initiative by the centre was a public lecture entitled: “China’s Foreign Policy and the GCC” at Qatar University. Chairs of the conference included the Coordinator of Gulf Studies Program at Qatar University, Khaled Al-Mezaini; PKU Professor and Institute

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of International and Strategic Studies (IISS) President, Wang Jisi; PKU State of Qatar Chair in Middle Eastern Studies, Wu Bingbing, and Assistant Professor of International Affairs at Qatar University, Imad Mansour (Qatar Tribune, 2017). The main topic of the discussion was the BRI; one of the speakers, Professor Wu, talked about the BRI and the AIIB, and how the initiative would benefit Qatar and the Gulf (ibid).

Shanghai University also played a role in inciting public debate about the initiative in the Gulf. In March 2016, the university cooperated with the Centre for Turkish Studies, the Maltepe University, and Sociology of Islam Journal to organised a conference at Qatar University.140 The conference titled: “Neoliberalism with Chinese Characteristics in the Middle East” was attended by prominent scholars on China and, in an attempt to provide more legitimacy, Chinese Ambassador to Qatar, Li Chen, was invited. Among the topics discussed was the “One Belt, One Road: Politics to Economy”, where topics related to the BRI, the AIIB, and the Chinese Dream were discussed, including the Chinese model of development and the implications of the BRI in the Gulf. Academic institutions are also crucial in forming moral and intellectual legitimacy for the financial aspect of the BRI. For example, the China-UAE Conference on Islamic Banking has been held in China since 2015 (Zawya, 2018). The conference, which is held by various Chinese and Gulf institutions, such as China Islamic Finance Club as well as the Dubai Centre for Islamic Banking and Finance, discusses issues such as ways to enhance the Islamic finance aspect of the BRI’s implementation in the Gulf (ibid.).

The Confucius Institute is another academic institution that plays an important role in the consensus-building efforts behind the initiative. At a conference in summer 2015, the Confucius Institutes’ Chief Executive proclaimed that the Institutes, which are the Chinese Ministry of Education-affiliated institutions founded to teach Chinese language and other China-related courses globally, involve themselves in the implementation of the BRI and the AIIB (Williams, 2016: 46). Internationally, the Confucius Institutes have organised several training programs for the construction of infrastructures related to the BRI and the AIIB (Hanban, 2015). Additionally, the institutes have held public conferences and seminars on the initiative as an effort to socialise the project.141 In the Gulf, such efforts have also been increasingly apparent. It is vital to note that several branches of the Confucius Institute were established in the Gulf at the beginning of China’s internationalisation in the region. The first branch was established at Zayed

140 For more information, see here: http://chinaandthemiddleeast.blogspot.co.uk/2015/08/cfp-china-in- middle-east-neoliberalism.html. 141 A number of Confucius Institutes around the world have organised conferences on the BRI, the AIIB, and the Chinese Dream such as, among others, the Confucius Institute at Durban University of Technology in South Africa (DUT, 2017), Confucius Institute of Khartoum University in Sudan (Awadallah, 2017), and Groningen Confucius Institute (GCI, 2016). The official website of Confucius Institute Headquarters (Hanban) has the most detailed and up-to-date news on events or conferences organised by Confucius Institutes around the world.

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University in 2010 and was followed by the second at the University of Dubai in 2011 (Olimat, 2014: 26). The third branch of the Confucius Institute in the region is located at the University of Bahrain, and was founded in 2014 (ibid.).

One notable BRI-related activity of Confucius Institutes in the Gulf was a conference held at the Abu Dhabi branch in March 2017, in cooperation with the Emirates Policy Centre. It was entitled “Prospects of Partnership between China and the UAE under the One Belt, One Road Initiative” (CCTV, 2017). The seminar, attended by over 50 academics and scholars from China and the UAE, discussed the relevance of the BRI and its impact on the UAE. In May of the same year, the Confucius Institute in Bahrain held the first “Belt and Road” International Seminar, attended by over 500 scholars from seven countries. Among the attendees were China’s Ambassador to Bahrain, Qi Zhenhong, and Shanghai University’s Vice President, Wu Xueying (Hanban, 2017). At the event, topics related to how the BRI and the AIIB are being implemented in the region were presented, such as the importance of energy in the initiative and the various projects that are currently being pursued in the Gulf. One important activity during the conference was a seminar on cross-cultural communication which over 20 delegates from China and from regional countries attended, including Bahrain Foreign Ministry officials, the former Egyptian Ambassador to China, and teachers of related majors from both the University of Bahrain and SHU (ibid.) to discuss issues that included how the initiative would benefit China’s relations with Bahrain.

Another role of the Confucius Institutes in the ideological struggle of the BRI and the AIIB in the Gulf is through promoting the Chinese language across the region. This parallels Gramsci, who argues that language is important for understanding the leading forces and their ideology (Ives, 2005: 455-468). Such language efforts have taken the form of offering Chinese language classes to the Gulf’s peoples, who in recent years have experienced an increase in the number of students (Kirk, 2015). Other institutes have also become involved in this effort. For instance, in 2015 the Chinese Embassy in Qatar signed a MoU with the Translation and Interpreting Studies Faculty at Qatar’s Education City to collaborate in language teaching and cultural activities (TII, 2015). The deal has manifested in Chinese language classes being offered to the Qatari public. Al-Sudairi (2016) in an interview for this thesis argues that the increasing interest in the Chinese language among the Gulf society not only helps the implementation of the BRI and the AIIB in the Gulf by raising people’s awareness of China. It has also improved communications among relevant stakeholders in the implementation of the initiative.

In addition to academic institutions, the role of academics should also be noted. In most cases, these intellectuals contribute to the promotion of the BRI and the AIIB and the dissemination of the Chinese Dream through their publications. For example,

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as stated earlier in this chapter, Wang Jinglie published an article for Journal of Middle Eastern and Islamic Studies (in Asia), in which he asserts that the Chinese “wish that when we realise the ‘Chinese Dream,’ the Arab countries will not only be happy for us, but will also achieve their own ‘Arab Dream’” (Wang, 2014: 32). Sun Degang of the Shanghai International Studies University and Yahia Zoubir of Kedge Business School in France also published an article in the same journal, where they stated that “Chinese and Arabs share similar dreams of achieving their respective national rejuvenation in the 21st century. As two great civilizations, the ‘Chinese Dream’ and the ‘Arab Dream’ share similarities” (Sun and Zoubir, 2014: 98).

The growing efforts by educational institutions and academics have not been without consequence. In the recent years, there has been a proliferation of political subjects (organic and traditional intellectuals) “necessary to the leadership that underpins the hegemony” (Borg et al., 2002: 1-23). Specifically, what has been occurring is the rise of new social forces from within the region, who, directly or indirectly, are involved in the ideological struggle of the BRI and the AIIB, functioning as organic intellectuals for the initiative who:

“engaged participation in everyday life as agents within the economic, political, and cultural arenas acting as organisers, constructors, and persuaders [of the hegemonic project]” (Tanji and Broudy, 2017: 131-56).

Academic institutions in the Gulf have increasingly published studies and held seminars on the BRI, the AIIB, and the Chinese Dream. In May 2016, for example, the Arab Centre for Research and Policy Studies in Qatar held a conference: “The Arab World and China: Future Prospects of Relations with a Rising Power” (Gulf Times, 2016). There, the BRI and its significance to the region were presented through a discussion entitled: “The Belt and Road and Sino-Arab Economic Interaction”. Kuwait University organised a similar conference in early 2017 entitled: “Sino-Kuwait Joint Effort for the Belt and Road initiative” co-hosted with Chinese Embassy in Kuwait. The conference discussed how the BRI can bring positive changes to Kuwait and the wider Gulf. Some prominent Chinese figures also attended the event, including Wu Sike, Special Envoy to Middle East, and Wang Di, Chinese Ambassador to Kuwait (CDI, 2017). Meanwhile in the UAE, the Emirates Centre for Strategic Studies and Research also held a similar seminar in July 2018 entitled “Prospects for UAE-Chinese Relations”. The conference, attended by the Chinese Ambassador to the UAE, Ni Jian, discussed opportunities for the BRI in the region (Alfaham, 2018).

Aside from publishing studies and organising conferences about the BRI and the AIIB, these regional institutions have also become interested in bolstering partnerships with

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Chinese institutions. In September 2017, the UAE University concluded an agreement with Zhejiang University to cooperate in student exchanges and collaborative research, and in academic activities such as courses and seminars (Xinhua15, 2017). Academics and public intellectuals in the Gulf have also increasingly engaged in promoting public debates on the BRI and the AIIB. For example, the GCC’s Assistant General Secretary, Abdel Aziz Aluwaisheg, wrote an article on the BRI for Saudi-based newspaper Arab News, whereby he stated that:

“the initiatives could usher in a new economic and political alliance between China and the rest of Asia, including the Middle East” (Aluwaisheg, 2014).

Another example is Mohammed Selim, a lecturer at Kuwait University who published a piece entitled: “The Chinese Dream: An Arab Perspective” whereby he argues that there is a correlation between the Chinese Dream and the Gulf people’s dreams (Selim, 2015). The emergence of pro-China intellectuals within the region is a vital moment in the ideological struggle behind the initiative, as regional social forces are now not only supporting it, but even turning themselves into:

“‘knowledge molecules’, […] become free floating thinkers and capable intermediaries between the dominant [forces of the hegemonic project] and the subaltern classes” (Yu, 2015: 411).

The rise of the new social forces from within Gulf society is also rooted in the offering of scholarships to regional intellectuals. As mentioned in Chapter 3, Section 4, since the beginning of China’s internationalisation in the Gulf, many intellectuals from the Gulf have been given scholarships to study in China. These scholarships are offered mainly by the China Scholarship Council (CSC), which is the Chinese Ministry of Education’s non-profit organisation that offers financial aid and scholarship to both Chinese and non-Chinese to study overseas or in China. The CSC has worked with different Gulf universities and ministries, and funded students from the region to study in China (Olimat, 2016: 145)142 since the early years of China’s presence in the Gulf. Such efforts have been complemented by Chinese academic institutions which participate annually in educational exhibitions across the region. These include the International Education and Conference on Higher Education in Riyadh and the Dubai International Education Exhibition (Cheng, 2016: 56), which have led to Gulf students becoming interested in studying in China (ibid: 144-45).

142 These scholarships are usually promoted through Chinese embassies in each Gulf state. For example, see here: http://sa.china-embassy.org/eng/zsgx/jyjl/t1256389.htm.

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When the BRI and the AIIB were introduced, Xi also pledged to increase the number of scholarships to students from the countries along the routes (NDRC, 2015). Gulf students are included as recipients of this scholarship. As Xi announced in his speech at the Arab League headquarters, his government intended to provide 10,000 scholarships and 10,000 training opportunities to Middle Eastern students (China Daily4, 2016). The China-Oman Industrial Park at Duqm has also cooperated with the Omani government to offer scholarship to Omani students to study in China with funding from the park (Xinhua28, 2018). The quantitative impact of the BRI-related scholarships, however, has not been clearly reported, although Al Sudairi (2016), who is a Saudi studying in China himself, states in an interview that the number of students from the Gulf is rising in the post-BRI period. In the last few years, many of the scholarship recipients have returned to the Gulf. As an example, in June 2018, the first batch of 39 Omani students have returned, following completing vocational training at Ningxia Polytechnic, to work at the Duqm park (Xinhua28, 2018).

This has resulted in the emergence of organic intellectuals from within the Gulf who are acquainted with Chinese politics, economics, and cultures, and are well-versed in the Chinese language. Even though not all of them are pursuing careers as academics, the experiences of living and studying in China have made these scholarship recipients not only very interested in imitating the Chinese way of life, but also in educating the public about China and what they have learnt there. A Qatari business owner who studied in China told me that:

“I told my friend at Qatar University that we should increase our efforts to educate the society about China. In this China age, we need to strengthen our ties with China and, to do so, our people need to know more about China” (Unnamed interviewee, 2017).

Due to the increasing interest in China among politicians, intellectuals, and the general public, numerous universities in the Gulf have begun to offer China-related courses.143 Qatar University, for example, now teaches classes on Chinese politics and philosophy in Arabic.144 Other universities, such as Zayed University and New York University in

143 China-related courses are also offered by several regional universities, such as at Kuwait University, (“Modern and Contemporary History of Asia, Africa, or America”), the American University of Sharjah (“East Meets West: Colonial and Post-Colonial Encounters” and “East Asian Societies”), the University of Sharjah (“China in International Relations”, “Foreign Policy of Great Powers”, and “East Asian Politics”), and King Saud University in Saudi Arabia (“Mongols and Islamic Orient” and “Islamic Orient”). These are my own observations from universities’ websites. 144 At Qatar University, the most important course is “Chinese Society and Politics in the 21st Century”. However, other general courses such as “Freshman Seminar”, “Special Topics”, and “Area Studies” often focus on China. When I took these courses in the final year of my undergraduate studies, they were all concentrated on China. In my interviews, some students informed me that in the past three years, some of these courses have continued to focus on China.

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Abu Dhabi, also offer classes on Chinese language and politics.145 Similarly, since mid- 2016, Sultan Qaboos University (SQU) in Oman has been teaching Chinese language courses (SQU, 2016). It was also reported in mid-2014 that SQU planned to establish a Confucius Institute (Times of Oman, 2014). 146 In July 2018, the UAE Ministry of Education announced that it would begin offering Chinese classes in 100 schools, starting in 2019 (Li2, 2018).

Furthermore, there is also an increasing phenomenon among these universities to hire scholars who are China specialists.147 Armijo in an interview argues that:

“With China’s growing activities in the region, Gulf universities increasingly realise that it is not possible to not have academics who specialise in China” (Armijo, 2016).

For example, one interviewee for this thesis, Jonathan Fulton,148 whose doctoral thesis and current research focus on China-Gulf relations and the BRI, is now teaching various courses on Chinese foreign policy at Zayed University in Abu Dhabi. Another example is Shaojin Chai,149 a Chinese academic from the Northwest China, who is now teaching at several universities in the UAE, while working as a Senior Research Fellow at the Ministry of Culture, Youth, and Community Development of the UAE. Such academics have been actively taking part in increasing awareness on China and the BRI through their writing150 and participation in public discussions about China and the initiative.

Gramsci (1971:103-4) made explicit the connection between the hegemony of a leading class and the activities of intellectuals in creating and sustaining hegemony. One way of doing this is:

145 China-related courses offered at Zayed University include “Foreign Policy of Emerging Powers”, and “East Asia”. At New York University in Abu Dhabi, the courses include “Asian Borderland”, “Empires and Imperialism in East Asia”, and “Environmental History of China”. 146 Chinese language courses are also offered at universities in the Gulf, including Ahlia University in Bahrain, and the New York University in Abu Dhabi (the university also offers an undergraduate minor in Chinese). 147 Examples are Dr. Imad Mansour, who has published and spoken about China and its foreign policy on the region; and Dr. Jacqueline Armijo (who resigned during the writing of this thesis). 148 Jonathan Fulton is an Assistant Professor of Political Science at Zayed University in Abu Dhabi, UAE. His teaching and research interests focus on China’s relations with the Gulf countries. He is the author of China’s Relations with the Gulf Monarchies (Fulton, 2018) and the co-author of External Powers and the Gulf Monarchies (Fulton and Li-Chen, 2018). 149 Shaojin Chai was born in Northwest China and attended college in Beijing before he received his Ph.D from the University of Notre Dame. He is currently based in Dubai, where he serves as a senior research fellow in the Ministry of Culture, Youth, and Community Development in the UAE. 150 See, for example, Fulton (2017).

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“a scholastic programme, an educative principle and original pedagogy which interests that fraction of the intellectuals which is the most homogeneous and the most numerous (the teachers, from the primary teachers to the university professor), and gives them an activity of their own in the technical field” (ibid.).

In the realisation of the BRI and the AIIB in the Gulf, the ideological struggle waged by the academics and educational institutions from China has not only contributed to the consensus-building efforts for the initiative, but also resulted in the rise of new organic intellectuals who have been directly or indirectly involved in not only socialising the emergent hegemonic project, but also in “shaping the public mind, [or] which Gramsci called “intersubjective forms of consciousness” (Tanji and Broudy, 2017: 38). These strategies appear to have borne fruit. Interactions I had with several students who took courses on China at Qatar University, for example, reflected their deep understanding of China, the BRI, and the AIIB. The majority of them stated that there is nothing wrong with the initiative being implemented in the region and the rest of the world.

5.3.4 Cultural Exchanges

When Xi initiated the BRI, he also thought of using cultural activities in its realisation. The Vision and Action document emphasises “cultural exchanges” as a crucial part of the implementation of the initiative (NDRC, 2015). These cultural exchanges have become a crucial platform for the promotion of the BRI and the AIIB and for the mobilisation of consent among Gulf society. One such effort took place in late 2016, when the CCP partnered with Qatar to organise the 2016 Year of Culture in Doha, an event that is called in Vision and Action “culture years” (ibid.). In the event which I also attended, efforts to increase people’s awareness of China and the Silk Road were very noticeable. One notable highlight was the exhibition “Silks from the Silk Road”, which showcased 100 pieces of Silk from ancient to modern times and was intended to show the history of silk and its cultural significance for China and Arab world relations (China Daily7, 2016). A similar event was also held in Kuwait in March 2018, whereby the Chinese Embassy in Kuwait partnered with the National Council for Culture, Arts and Letters of Kuwait to organise a cultural performance titled “Splendid China” (Xinhua16, 2018). During the event, dancers, artists, and acrobats from Sichuan Vocational College of Art staged performances intended to “bridge better understandings among the younger generation in Kuwait about China” (Arab Times, 2018).

The Confucius Institutes also play a part in the effort to increase the awareness of the Gulf people through cultural events. In May 2016, for example, the Confucius Institute in Bahrain organised the China Cultural Week (Ren, 2016). The event was to promote Chinese culture to the Gulf’s society. Activities during the event included an exhibition

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of Chinese paintings, martial arts, foods, and a conference on Chinese dragon cultures and medicine. Al Sudairi (2016) in an interview stated that these events have also been organised in other parts of the Gulf, including in Saudi Arabia, where previously such activities were seen as contradicting religious and cultural values. As an example, in May 2018, Chinese Spring Festival was held at King Fahad Cultural Centre in Riyadh (Ben Gassem, 2018). The event, which included a showcase of Lion Dance, Foshan Dragon, and Martial Arts was attended by the Chinese Ambassador to Saudi Arabia Li Huaxin and other Chinese diplomats (ibid.). The importance of this event in forming a common sense of Chinese interests was stated by Li:

“These cultural events are very important to create cultural knowledge, traditions and a friendly relationship between the two countries. Both have a rich culture, traditions, and history, and by introducing that it will create a strong relationship to serve the common interests of the two countries” (ibid.).

Citing the Enlightment’s influence on the French Revolution, Gramsci (1994: 10) noted how “every revolution” is usually “preceded by a long process of intense critical activity of new cultural insight and the spread of ideas”. In the case of the BRI and the AIIB in the Gulf, cultural activities have played a crucial role in the ideological struggle behind the initiative. In a society where the awareness of China remains limited, these cultural activities are crucial. It is implausible to expect the emergence of a common sense around the interests behind the BRI and the AIIB without them. In a conversation at a public market in Doha, a man I asked about whether he has ever heard of the Silk Road answered: “How can I know ‘little things’ about China when I do not know much about it in general?”. Meanwhile, my conversation with a woman at the Year of Culture event at Qatar National Museum revealed the importance of cultural efforts in shaping the general consciousness of the people: “There are indeed many things I did not know about China that I learned from this event”.

Other institutions have also played a role in these cultural strategies. Dragon Mart in Bahrain, for example, held a Chinese Folk Arts Exhibition in July 2016, which displayed Chinese painting, calligraphy, and handicrafts (Trade Arabia3, 2016). Several institutions that were formed in the early period of China’s internationalisation have also taken part. Ahmad (2016), for example, reported that the Kuwaiti-Chinese Friendship Association have been active in organising cultural activities, celebrating Chinese New Year, and exchanging cultural delegations. These cultural efforts have also encouraged the rise of “new organic intellectuals” from within the region, manifested in regional institutions involving themselves in the struggle. For example, Chinese Spring Festivals and New Year events have been held by New York University in Abu Dhabi, Dubai Mall, and

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Airports across the region (NYU Abu Dhabi, 2013; de Leon, 2016; China Daily8, 2016; Gulf News4, 2018).

One important exemplification occurred during Xi Jinping’s visit to the UAE in July 2018. The UAE’s Ministry of Culture and Knowledge Development held UAE-China Week between 17th and 24th July, which featured several China-related activities such as a Chinese Film Week and Chinese Book Exhibition Week (Zaatari, 2018). The same event also held daily exhibitions featuring traditional musical performances and Chinese plays (ibid.). Noora Mohammad Al Kaabi, the country’s Minister, asserted that the event aimed to banish misconceptions between the two nations (ibid.). After the event, it was also announced that UAE-China Week will be held annually (Debusmann, 2018). It is important to note that during such events or other China-related occasions, many public places in major Gulf cities have increasingly been decorated with Chinese-related ornaments (Yao, 2015; Gulf Times, 2017). Remarking on these developments, Armijo (2017), in an interview, suggests that:

“These cultural activities have not only contributed to the efforts in increasing the Gulf people’s awareness about China, but also highlight that the people in the region have been increasingly participating in the efforts”.

Until now, I have discussed the ideological struggle behind the realisation of the BRI and the AIIB in the Gulf, which constitutes two parts: ideational and ideological. From the analyses above, it can be argued that the implementation of the BRI and the AIIB in the Gulf is not restricted to the productive sphere but is also waged at the ideological level. The objective of this ideological struggle is twofold: to raise awareness of China, and the BRI and the AIIB among the people of the Gulf, and secondly, to transform the objectives of the initiative into a common vision. It is thus, as Morton2 (2003: 636) suggests, an emergent hegemonic project intended to tackle wider issues “grounded not only in the economy but the whole sphere of state-civil society relations”. It is, however ‘emergent’ because, even though to some extent the struggle has mobilised support and participation from the Gulf state-society complexes, it continues to face limitations that hinder its complete effectiveness in forging a social consensus for its implementation. I discuss these limitations in the next section.

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5.4 Knowing Little about China: The Limits of the Ideological Struggle

This final section assesses to what extent the ideological struggle behind the realisation of the BRI and the AIIB in the Gulf contributes to the formation of a ‘common sense’ of the initiative’s objectives among the Gulf society. From neo-Gramscian perspectives, the struggle at the ideational level by organic intellectuals that accompanies the material implementation of the BRI and the AIIB is crucial. Even though the state plays a vital role in the formation and re-formation of hegemony, it is the activities of the organic intellectuals

“in the forging of new historic blocs, based upon the creation of collective wills […] and waging battles to disseminate [certain] world-view within diverse civil societies” (Hussein, 2015: 22). in the region that contribute to the formulation of common sense that is universally authorised throughout all social movements (Levy and Egan, 2003: 805). That said, the ideological struggle in socialising the Chinese initiative and in gaining the social support of the regional state-society complexes continues to encounter limitations. The Gulf’s civil societies continue to have limited awareness of China, let alone of the BRI, the AIIB, or the Chinese Dream. For example, in one class at Qatar University that I was allowed to observe during the field research, none of the students was able to name Xi Jinping, or any other Chinese figure beyond Jet Li or Jackie Chan.

Besides limited knowledge on China among Gulf society, there are three other issues that limit the ideological struggle of the BRI and the AIIB in the region. First, there is a lack of a unified narrative regarding the initiative’s visions and details at both a political and entrepreneurial level. The limited clearly defined set of guidelines for the BRI and the AIIB is believed to suit China’s pragmatic approach and allow the CCP to simply change plans during the implementation process whenever new opportunities arise (Yu, 2018: 1-14). However, this approach, alongside the lack of rhetoric that clearly spells out its foreign policy, often generates ambiguities for many stakeholders, including the Gulf states. This is also the case with the Chinese Dream as the legitimating idea of the initiative. There is no precise meaning of the Chinese Dream. As Callahan2 (2016: 243) proposes, distinct from the previous ideologies propagated by Chinese leaderships to articulate their interests and ideals, Xi’s Chinese Dream is historically encompassing, multi-layered and timely, which allows for diverse interpretations, depending on the interests of the interpreters. Simpfendonfer (2016), in an interview, also agrees that these circumstances often cause confusion among the Gulf stakeholders concerning the

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BRI, the AIIB, and the Chinese Dream, making it difficult for regional societies to fully understand the initiative and to gather around a universal worldview.

Second, as noted by Cheng (2016: 53), in the past few years regional public opinion on China has not been very positive. This has resulted in some factions within society having negative perceptions of the BRI, the AIIB, and the Chinese Dream. The Gulf’s elites in general want a change in the region’s existing geopolitical situation, and the support of a non-traditional emerging regional player not associated with the current U.S. hegemony, is welcome. China’s relatively active cultural diplomacy, its support of the Gulf’s stances over various regional issues, its emphasis on its unique historical and religious relationship with the Arab world, and the principles it upholds such as non- interference, has generated a favorable reception among Gulf’s elites (ibid.). However, the Gulf’s civil societies have expressed some pessimism and skepticism regarding China’s rise in the region. As Cheng (2016: 56) reports, there is an increasing “China threat” perception among the Gulf’s civil society. They are concerned that the history of the relationship between the region and Western hegemonies could be repeated between themselves and China.

Such a threat has been perceived in different ways. Some view Chinese state capitalism in the region as constituting neo-colonialism (ibid: 65). Furthermore, in view of the weak industrial base in the Gulf, the inflow of manufactured products from China is regarded as a possible threat to the development of local industries. This is exacerbated by the fact that some Chinese businesses in the region frequently violate local laws on the labour force, environmental protection, and so on, contribute to the negative image of China (ibid). Many conservative Muslims in the region are also afraid of the threat China’s socialist culture may present to local Islamic culture and resent the treatment of Muslims in China, especially in the case of Xinjiang, by the Chinese authorities (Armijo, 2016). In the social arena, there are also rising resentments against the “ugly Chinese” phenomena (Cheng, 2016: 56). As more Chinese are moving to the Gulf to settle and to engage in economic and other activities, devout Muslims dislike some of their conducts involving drinking, prostitution, careless dressing habits, and others, and consider it as disrespectful of the local culture (ibid.), which has resulted in an increasingly negative perception of China in the Gulf.

To illustrate, research by Al-Sudairi (2013: 32) entitled “China in the Eyes of the Saudi Media” reveals that media commentaries as a whole in Saudi Arabia in recent years have demonstrated new trends of skepticism and pessimism concerning China. The author asserts that these phenomena are grounded in Western criticisms such as China’s poor human rights records, the old Cold War perceptions of Communist China in Western countries, and new negative observations such as the unsatisfactory quality of Chinese

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products, the Xinjiang riots, and Chinese vetoes on the Syrian issue at the UN Security Council. Cheng (2016: 54) discovered that these trends are also widespread within other GCC countries’ media. This phenomenon, as several interviewees also agree (Armijo, 2016; Simpfendorfer, 2016), is still prevalent and causes hindrances in gaining the social support of the regional society for the implementation of the BRI and the AIIB.

The third reason is that the ideological strategies discussed above have still been limited in not only socialising the BRI and the AIIB and establishing a common sense, but also in tackling the prevalent negative perceptions of China in the region. As Fulton (2017) argues in an interview, although the struggle has been relatively satisfactory at the elite level, the strategies to penetrate regional civil society have been minimal. Meanwhile, for Gramsci, civil society is considered as the main terrain “for the intellectual struggle” (Gramsci, 1971: 16). It serves as “the vital ideological groundwork that establishes those structures of social and cultural consent that support and enable” the creation and re- creation of consent (Spicer and Bohm, 2007: 13). The Party-state has acknowledged the inadequacy of efforts to gain Gulf civil society’s consent, however their responses tend to concentrate on propaganda attempts instead of genuine understanding. As stated by Qian Xiaoqian, the Deputy Head of State Council Information Office:

“Compared with other aspects of China-Arab relations, especially the polity and economy states, the communication of media between China and Arabian far lags behind” (Qian, 2015, cited in Cheng, 2016: 53).

To this date, there are only limited reports on the development of China’s presence in the Gulf, reflecting the positive and notable changes in various aspects of people’s lives. News about history, culture, and even the travel industries in both China and the Gulf remain infrequent as well. Furthermore, as discussed in the previous section, the effort of the media is only carried out in certain parts of the Gulf, without any provision for other regional states. Endeavours to penetrate regional television, such as USILK or the establishment of CGTN Arabic, are only carried out in one or two regional countries. A newspaper, China Today (Jinri Zhongguo), has tried to reach the civil society of the wider Middle East with its Arabic version. The monthly magazine, known as Al-Sin AlYawm and has a regional office in Cairo, is a slick tabloid of 80 pages with content targeted at an Arab audience (Alterman, 2009: 74). Each issue has a section entitled, “We’re All East”, highlighting joint activities between Arabs and Chinese, besides a section on Chinese life (“A Changing Society”), money and politics. It also looks at the story of the Arab community in China with a section titled “In a Coffeehouse on a Chinese street” (ibid: 74). While Al-Sin Al Yawm is in many ways an impressive effort to reach out to Middle East society, this is the only Chinese magazine in Arabic and it has no market sales network outside Egypt; hence, its impact on the Gulf is limited (ibid.).

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Meanwhile, radio broadcasts by China Radio International in Arabic actually started in the 1960s and have reached the GCC (ibid). However, its impact has been in decline since the 1990s because of keen competition from satellite television, which has been increasingly popular in the region. Furthermore, this broadcast is still transmitted by shortwave, and the reception is inconvenient and frequently of a low quality (Cheng, 2016: 55). These examples demonstrate the limitedness of China’s ideological struggle in the region and highlight how much more energy the U.S. hegemony has been putting into welding its regional presence. For all of its objectives, China Today is a far less ambitious effort than, for example, the U.S.-produced and now-closed Hi magazine, an even glossier effort if compared to top-quality lifestyle magazines in the U.S. (Alterman, 2009: 74). This demonstrates the limitations upon strategies to increase Gulf society’s awareness about itself and the initiative, and also to address the negative perceptions on China in the region.

The inadequacies of the ideological struggle are also reflected in educational efforts. For example, although the number of Gulf students studying in China is increasing, the majority of them are not interested in Chinese politics, culture, or foreign policies. As Tim Niblock states: “So far, the educational and human resources exchanges have been geared to short-term and practical needs with most students from the Gulf studying technical courses rather than engaging in China’s culture and history” (Niblock, 2016, cited in Sawahel, 2016). Al Sudairi (2016) in an interview also affirms that most of Gulf students in China are majoring in engineering and natural science majors instead of social science majors, a situation that does not contribute significantly to the creation of representatives of an historic bloc from within the region. Additionally, although they are starting to be organised, public conferences and seminars on the BRI and the AIIB in the Gulf are also still relatively limited. Besides not being widely organised across the region, such seminars and conferences remain focused on China’s relations with the region or socialising the BRI and the AIIB in general, with no further effort in fostering consensus. In a public talk on China-Gulf relations I attended in Qatar, the information shared was mainly basic information on the BRI and the AIIB without any discussion of how they benefit the region.

The efforts to teach Chinese language in the Gulf also pale compared to the far more ambitious endeavours by the U.S. Agency for International Development or the British Council, which directly teaches approximately 20,000 to 25,000 people in the Middle East every year (Alterman, 2009: 73). Although several regional institutions have begun to offer China-related courses, this phenomenon, as showcased above, is not yet taking place widely across the Gulf. The same goes for the Confucius Institutes, which can be considered as crucial institutions in teaching Chinese languages, but have only been founded in three out of six GCC states, making China’s educational efforts unevenly

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implemented. Furthermore, Cheng (2016: 55) also reports that since the launch of the CASCF, numerous contracts have been concluded on the translations and publications of Chinese books into Arabic language, but the implementation remains unsatisfactory. Meanwhile, in view of the regional resentment against Chinese policy in Xinjiang, there has been no explanation of the Chinese stance in Arabic. The only Arabic publications on Xinjiang are reports on the investment policy in Xinjiang (ibid.).

A number of observers have affirmed that state elites in Beijing are well aware of these inadequacies and are planning to make more effort, especially with the introduction of the BRI and the AIIB. In my interviews with Al Sudairi (2016), Simpfendorfer (2016), Armijo (2017), and Fulton (2017), they were ready to admit that China’s Gulf policy had been encountering challenges since China’s regional involvement had deepened economically and yet the regional society still knows less or has negative perceptions of China. This, as Al Sudairi (2016) affirms in the interview, is also because of the fact that there is still a lack of expertise on the Gulf region within policy-making circles in China. He further states that different from those in Washington, regional studies have never been taken seriously by the CCP, which has resulted in the limited presence of experts on the Gulf and the Middle East in the Party. Yu (2018: 1-14) also reports that there are less than twenty Central Asia and Middle East experts inside China who are closely following the region. Most of them do not even have direct access to key state officials, influential academics, or business leaders. Al Sudairi (2016) added that many of these experts do not even speak Arabic and are unable to read it. Only a few of them have ever travelled to the region for research. As a result, much of their existing research is based on arbitrary collections of evidence instead of systematic analyses of the target countries, causing China’s policy-making process on the Gulf to be badly informed.

The same goes with the cultural endeavours. Gramsci (1971: 26) contends that culture is a crucial platform for the formation of a common sense. It cannot be ignored that cultural efforts have contributed to the socialisation of the BRI and the AIIB among the Gulf state-society complexes. With these efforts, regional societies have become increasingly aware of China and its cultures. It is, nonetheless, important to note that popular culture has not been utilised effectively in the same way as Gramsci perceives. Chinese strategies are still limited and not being pursued evenly across the region; they have not been used effectively to raise regional consciousness about the initiative and the Chinese Dream. The cultural activities carried out still revolve around socialising Chinese cultures, not really on establishing a common sense for the BRI, the AIIB, and the Chinese Dream. Meanwhile, as a comparison, Gow (2016: 92-116) discovered that cultural outlets have been used to establish a common sense of the idea of the Chinese Dream among the Chinese population. Even in other regions such as Africa, cultural

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activities have been used as effective platforms to promote the Chinese Dream as a common vision (Tembe, 2015: 2).

Based on the analysis above, it can be argued that the ideological struggle waged behind the material implementation of the BRI and the AIIB in the Gulf still faces limitations; making the initiative an emergent, instead of fully in place, hegemonic project. In the process of establishing a consensus, there is a need to enhance the various strategies to not only increase consciousness about China, the BRI and the AIIB, but also to counter the prevalent negative perceptions towards China in the Gulf. Having said that, this struggle still provides evidence that the emergent hegemonic project is not restricted to the economic sphere, but is also exercised via ideological and intellectual leadership. If these strategies are continued and improved, it is possible that the initiative will find stronger traction within the Gulf state-society complexes. This, however, will be a long and arduous process, reliant not only on how this ideological struggle evolves, but also to a great extent on the ability to tackle the prevalent negative perceptions of China in the region.

5.5 Conclusion

This chapter has tried to answer the main research question of why the initiative attains the support and participation of the Gulf state-society complexes through answering the fourth sub-research question of the thesis: how the ideological struggle to attract the Gulf state-society complexes into supporting and participating in the BRI and the AIIB is being carried out and which social forces are involved. Specifically, the chapter identified the social forces that carry out the ideological struggles, their strategies, and examined to what extent they contribute to the formation of a common sense around the objectives of the BRI and the AIIB among Gulf state-society complexes. It showed that the implementation of the initiative is not a struggle-less process. Rather, in parallel with Gramsci, it requires a continuous stream of ideological forces to harmonise a long- term basis for political and economic interests. Gramsci (1971: 16) recognises that “the capitalist entrepreneur creates alongside himself the industrial technician, the specialist in political economy, the organisers of a new culture, of a new legal system, etc”. In the case of the BRI and the AIIB in the Gulf, besides those social forces who carry out the material implementation of the initiative, there are those who are waging ideological struggles in an attempt to naturalise the objectives of the initiative, so that they are seen as a common sense.

This chapter discovered that the ideological struggle behind the BRI and the AIIB in the Gulf consists of two components: ideational and structural. The first focuses on the

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ideational strategy to articulate the interests behind the initiative in order to increase their appeal in the Gulf. In this respect, I argued that the social forces of the emergent hegemonic project have primarily employed an ‘equalisation strategy,’ whereby they attempt to promote the idea that the objectives of the BRI and the AIIB are consistent with the interests of the Gulf countries, or that the Chinese Dream, as the legitimising idea of the initiative, corresponds with the ‘dreams’ of regional countries. The forces also propagate that China’s stances over regional issues are parallel to those of the Gulf states. These efforts are intended to establish a common sense in which the BRI and the AIIB are accepted and their objectives are viewed as “natural” by the Gulf’s state- society complexes. Meanwhile, the second component constitutes the specific social forces involved in the ideological struggle. In parallel with Gramsci, these social forces can be termed “organic intellectuals”, given their function and capability to socialise the initiative to the masses and to establish a basis for the negotiation of a consensus around the interests of the project. These organic intellectuals comprise state elites, the media, academics and educational institutions, and cultural exchanges.

Having identified the social forces and their strategies in the ideological struggle behind the BRI and the AIIB in the Gulf, the final section investigated the limitations of the struggle to translate the objectives of the initiative into the general interests of the masses. I argued that the ideological struggle that accompanied the implementation of the BRI and the AIIB in the Gulf still has some limitations. Civil society in the Gulf still possesses limited knowledge about China, let alone about the BRI and the AIIB, and does not have a universal worldview. This is for three reasons: 1) the lack of a clearly spelt out plan for the initiative and the limited incoherency and precision of what the Chinese Dream as the legitimating idea of the initiative attempts to represent; 2) the negative perceptions about China in the Gulf; and 3) the ideological strategies that remain limited to socialising the initiative and to forming a common sense around its objectives, and also to addressing the widespread negative perceptions of China in the Gulf.

Despite these limitations, this ideological struggle has, to some degree, succeeded in transforming the popular consciousness about China and the BRI and the AIIB in the Gulf. This is not only evident in the growing interest among elites in the Gulf regarding the initiative, but can also be observed at the civil society level, where people have gradually become more aware of the initiative and increasingly believe that the BRI and the AIIB would benefit the region. Furthermore, as demonstrated in this chapter, there has also been an emergence of new organic intellectuals who are now involved in the ideological struggle, helping to galvanise the social support of the masses. The struggle, if continued and upgraded, will increase the transformative potential that the BRI and the AIIB hope to use to find traction within the Gulf countries and, over time, become

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a constituent of common sense in the region. This, however, needs a long process that is likely to unfold over the next few decades. As Xi (2014) himself stated, “Preparatory work must be done. One must not worry about it taking too long, for the work will be accomplished in the fullness of time” (Xi, 2014, cited in Gow, 2017: 109).

These ideological struggles, however, not only help to answer the question of why the BRI and the AIIB is attaining the support and participation of the Gulf state-society complexes, but also point to broader phantasms that the Chinese state acknowledges: the importance of moral and intellectual leadership, instead of simple acquiescence in return for economic benefits, in increasing its role in the world. It understands the importance of aligning its interests with the interests of others, to appeal to them, and to engage in an active process of fostering consensus behind its activities. The BRI and the AIIB in the Gulf present an alternative insight to both academia and policy-makers, that, similar to that of the U.S., China’s active role in the world is likely to go beyond its economic and material capabilities to the formation of moral and political leadership. It will achieve this by diffusing its own ideas and values and by increasing its appeal to resonate with the people who will be impacted. Even though much remains to be done, the BRI and the AIIB in the Gulf reveals that such phenomena can begin to be seen. With Xi being in the highest leadership position of the CCP for life, it can be expected that Chinese conduct in the world will more or less remain unchanged.

While the role of organic intellectuals is important in trying to gain the social support of Gulf society, the effort to co-opt the regional state-society complexes and attract them to support and to participate in the BRI and the AIIB has also been underpinned by the set of institutional frameworks embedded in the initiative. This is discussed in the following chapter.

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Chapter Six The Institutional Frameworks of the Chinese Emergent Hegemonic Project in the Gulf: Co-opting the Regional State- Society Complexes

6.1 Introduction

The last chapter investigated the ideological struggle that is being waged alongside the material implementation of the BRI and the AIIB in the Gulf and which is intended to gain support and legitimacy for the initiative in the regional state-society complexes. In specific, I analysed the roles of certain social forces – “organic intellectuals” – working to provide an ideological basis for the realisation of the initiative in the Gulf. The main finding of the chapter was that even though to some extent the ideological struggle has contributed to increased awareness and acceptance of the BRI and the AIIB among Gulf state-society complexes, there remain a number of obstacles to the formation of a common sense around the objectives of the initiative, which makes it still an ‘emergent’ hegemonic project. These hindrances include the lack of clarity and coherency of the initiative and the legitimating ideas; the widespread negative views of China in the Gulf; and the ideological struggle itself that is still limited not only to socialising the BRI and the AIIB and creating a common sense around their objectives, but also to addressing the widespread resentment against China in the region.

Continuing to answer the second part of the thesis’ main question with the theoretical framework developed in Chapter 2, I now turn to answering the final sub-research question. This concerns how the institutional arrangements embedded in the initiative help to attract Gulf state-society complexes into supporting and participating in the emergent hegemonic project. The social forces behind the BRI and the AIIB appear to acknowledge that it is impossible to forcibly impose their interests on others. Instead, strategies need to be forged to attain a green light from those who would be affected by the initiative. As a consequence, aside from an ideological struggle, the implementation of the BRI and the AIIB in the Gulf region is also supported by certain institutional arrangements embedded in the initiative that enable the carrying out of what neo- Gramscian perspectives describe as a method of co-optation, or a strategy to gain the consent of the subordinate masses for the pursuance of a hegemonic project (Kakizaki, 2010: 234, cited in Yaman, 2012: 71). This chapter intends to outline the roles of these

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institutional structures in establishing the consensual ground for the BRI and the AIIB in the Gulf.

As discussed in Chapter 2, Section 4, in order to understand the roles played by the institutional elements of the BRI and the AIIB in consolidating their realisation in the Gulf, I deployed the institutional element of the regional historical bloc, after Cox’s (1993: 62) typology of international institutions. It is important to mention again the fact that Cox proposes institutions contribute to the hegemonic process because they:

“(1) embody the rules which facilitate the expansion of hegemonic world order; (2) they are themselves the product of the hegemonic world order; (3) they ideologically legitimate the norms of the world order; (4) they co-opt elites from peripheral states; and (5) they absorb counter-hegemonic ideas” (Cox, 1993: 62).

While this is a powerful typology through which it is possible to understand the roles of institutions in the production and reproduction of hegemony (as I explored in Chapter 2), I have incorporated the sixth element (the provision of material incentives to lesser forces in order to co-opt them into the dominant worldview) to better understand the institutional elements of the BRI and the AIIB in the Gulf.

This chapter has three major sections. In Sections 6.2 and 6.3, I identify the two most crucial institutional elements of the BRI and the AIIB, and discuss their roles in gaining the support and participation of the Gulf state-society complexes. These include the co- optation of the regional countries into the policy-making process of the initiative and the provision of material incentives. This chapter then continues in Section 6.4 with an investigation of the effectiveness of these institutional elements in co-opting the Gulf state-society complexes. The chapter finds that, as part of their ideological struggle, the institutional aspects of the BRI and the AIIB have been important in legitimising the initiative in the Gulf. There are, however, several obstacles preventing the realisation of the hegemonic project. This chapter relies on scholarly works, official documents, and interviews as the foundation of the analysis.

6.2 Co-opting in the Policy-Making Process

Despite the ideological struggle, the realisation of the BRI and the AIIB in the Gulf has also been facilitated by certain configurations of institutional frameworks entrenched within the initiative. These frameworks are designed to gain legitimacy for the BRI and the AIIB in the Gulf and to reconcile potential conflicting interests from the regional countries. They comprise: 1) facilitating the participation of the Gulf countries in the

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policy-making process of the initiative; 2) giving material incentives to the Gulf states. I discuss these institutional elements in this section and the next.

The first of these institutional elements is the incorporation of the Gulf countries into the policy-making process of the initiative. This corresponds to Cox (1993: 62) who suggests that hegemonic institutions co-opt elites from their subordinates to assimilate potential opposite interests. In the context of the BRI and the AIIB in the Gulf, this is made possible by a number of institutional elements of the initiative, mainly the AIIB, which, as Li (2015: 125) argues, can be considered as the main institutional platform for implementing the BRI, particularly for joint participation and consultation. While the BRI currently has no specific mechanism for conducting the negotiation process with countries along the routes, the AIIB, the majority of whose member states are countries where the BRI is realised and its capital contributed by those states’ governments, has become a quasi-official cooperation platform for negotiation and talks on multilateral issues and achieving integration and negotiation (ibid.).

The AIIB’s regional ‘Asian’ nature means that it tries to ensure that Asian countries are the dominant voices of the institutions. The AoA of the AIIB stipulates that the voting rights of the Bank are divided into two fundamental parts: Asian countries and regions, which have 70-75 percent of the votes, and countries outside Asia, which have 25-30 percent (AIIB2, 2016: 4). The voting rights of individual states consist of three parts: share of capital, basic voting rights, and 600 votes for every Prospective Founding Member (PFM). To be more specific, the share of capital is calculated according to the weighted average of GDP (60% market exchange rate and 40% purchasing power parity). The basic voting rights constitute 12% of the total voting rights and are divided evenly among all the member states (ibid.). Meanwhile, the basic voting rights and PFM votes constitute 15 percent of the total voting rights. As an outcome of this complex formula, Asian countries, with the exception of China, have a combined 30% voting power in the Bank.

When it comes to the Gulf countries, as iterated in the Bank’s AOA, the regional states are included as regional Asian members (AIIB2, 2016: 29-31). This regional member status means that the regional countries have greater decision-making powers than the non-regional member countries and are able to hold the majority of the Bank’s capital stock. According to the data provided by the AIIB, the Gulf states (except Kuwait)151 have a total of 59,327votes in the Bank.152 This allocation provides the Gulf countries with a larger influence in the AIIB than non-Asian member countries that have only

151 As stated in the AIIB’s website, Kuwait has not ratified the AIIB’s AOA. 152 The full list of voting shares can be accessed here: https://www.aiib.org/en/about-aiib/governance/ members-of-bank/index.html.

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20percent votes. This large voting share is further complemented by the fact that four of six GCC member countries (Saudi Arabia, Qatar, the UAE, and Oman) are among the founding members of the AIIB, along with fifty-four other countries (Cary, 2015). As founding members, these countries are given additional privileges that are not available to countries that became members of the Bank at a later point. In an interview for this thesis, Dr. Thia Jang Ping, 153 Head of the Economics Unit at the AIIB, explained that the founding members, besides obtaining extra votes,154 are also given rights to lay out the rules of the Bank’s activities, while the new members are unable to take part in any rule-making procedures (Thia, 2017).

In addition, as founding members, the Gulf state-society complexes are given privileges to be elected as Directors and Deputy Directors of the Board. As stated in the AIIB’s AoA, the Board of Directors are representatives from each member state elected by the Board of Governors and are appointed to handle the everyday operations of the AIIB, such as grants and loans (AIIB2, 2016: 14-17). The Board incorporates twelve different nations from Asia, Europe, Oceania, and South America. It differs from the IMF and the World Bank, which have resident directors who are based in and operate out of Washington DC; the Board of Directors in the AIIB comprises non-resident directors who live and operate in their respective home countries (ibid.). With their status as founding members, this means that the Gulf countries are given the right to appoint individuals from their countries to be directors and deputy directors. In addition, since the electoral districts are based on region, founding members are allowed to hold the position alternately or permanently (ibid.). This differs from non-founding members, who can only get positions by way of elections.

Khalid Al Khudairy, a former economic adviser to Saudi Arabia’s Ministry of Finance and an Executive Director on the Board of the World Bank since 2014 has been appointed as one of the directors in the AIIB’s Board of Directors.155 Meanwhile, Adel Al Hosani, the Director of the Operations Department at the Abu Dhabi Fund for Development (ADFD), and Ahmad Hassan Alobaidly from Qatar, have been selected as the alternates. They are given the authority not only to act in the interests and voices of its Gulf constituency members (in addition to Jordan),156 but also to approve the Bank’s strategy, annual plan and budget to formulate policies; to take decisions out the

153 Dr. Thia Jang Ping is the Head of Economics Unit at the AIIB. Previously, he was a Director of Security and Resilience Programmes in the Singapore ministry, and a director at the Institute of Governance and Policy at the Civil Service College of Singapore. Dr. Thia obtained his doctorate degree in Economics from the London School of Economics. 154 Each founding member have extra 600 votes (AIIB2, 2016: 16). 155 See Minutes of the Meeting of the Board of Directors of the AIIB (AIIB5, 2017). 156 As stated on the AIIB’s website, see https://www.aiib.org/en/about-aiib/governance/board-director s/index.html.

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Bank’s operations; to establish an oversight mechanism; and to supervise the Bank’s management and operations (AIIB3, 2016: 15-16).

These settings in the AIIB’s institutional structure can be regarded as a strategy to co- opt the regional countries into the policy-making process of the AIIB (which is also connected to the BRI) and to integrate their interests into mainstream policy dialogue. This nevertheless, is actually intended to make it appear as though their concerns and interests are being considered and taken seriously. As Cox (1993: 162-175) proposes, the hegemonic institutions involve subordinates to establish an appearance of broad representation and to absorb counter-hegemonic ideas in order to make it seem as if their concerns are being incorporated. In the process however, as Gilpin (2001: 379) suggests, these concerns are recapitulated to fit dominant interests. On the one hand, the large voting share given to the Gulf countries and the incorporation of the regional states into the AIIB’s Board of Directors enable them to voice their concerns and interests. However, China’s veto power over the initiative allows it to manipulate those concerns to fit the objectives of the initiative.

U.S.-led institutions such as the IMF and the World Bank have granted the U.S. a veto and voting power that have allowed it to legitimise Pax Americana by providing a platform to spread neo-liberal ideas and by transforming potential opposite worldviews. However, the institutional elements of the AIIB also give China a similar platform. According to the calculation of capital shares, China, which possesses over 30% of the AIIB’s capital (a proportion which is significantly larger than any other member state of the Bank), has 26.06 percent of the total voting rights (Peng and Tok, 2016: 736-753). As a result, China has the largest voting share and hence the leading position in the policy-making of the AIIB. This is further complemented by China’s privilege of being able to block any matter that requires a ‘super majority’ (75% voting support). As iterated in the Bank’s AoA, the Board of Directors requires 75% of the total voting power of the member countries to:

“[…] take decisions on major operational and financial policies and on delegation of authority to the President under the Bank policies” (AIIB2, 2016: 15).

This indicates that the institutional elements of the AIIB have been designed by Xi and his policy-makers to give China unilateral veto power in the Bank’s major decisions. The decisions in the AIIB for which China possesses veto power include: increasing the Bank’s capital; raising the capital subscription of a member; expanding the operations of the Bank; changing the size of the Board of Directors; changing the structure of the

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board; appointing or removing the president; suspending a member; closing down the bank and distributing its assets; and amending the Articles (AIIB2, 2016: 13-14).

Notwithstanding Xi Jinping’s administration’s assertions that the successive entrance of new members would eventually minimise China’s voting power in the Bank, and that it will not utilise its veto power (China Daily9, 2016), the reality is that it still needs a large economy such as Japan to actually minimise China’s voting shares to under 25 percent. This structure enables the CCP to maintain a dominant position over the institutions. Chow (2016: 1286) further said that there are additional settings that further consolidate the dominant power of China in the BRI and the AIIB. It was the CCP headed by Xi that began the initiative, China is the largest contributor to them, and the main office of the initiative is located in Beijing. Looking at these facts, Chin argues that:

“China finally has its own international institutions, whereby it is ‘sitting at the centre of the table, setting the agenda, defining priorities, and rethinking rules” (Chin, 2016: 11).

While the institutional arrangements of the BRI and the AIIB allow the Gulf countries to be incorporated into the policy-making process, they also enable China to remain in control of major decisions regarding the initiative. This enables China to recapitulate possible counter-interests of the Gulf state-society complexes as inconsistent with the interests of the initiative. As neo-Gramscian perspectives would argue, the primary objective of engaging the Gulf state-society complexes in the policy-making process of the BRI and the AIIB seems not to be incorporating their concerns and ideas, more making the initiative appeal to the Gulf countries and to attain legitimacy. The idea of participation has thus been transformed from the ability to influence the policy-making process and to shape policies, to mean nothing more than information sharing and consultation on primarily predetermined sets of policies. As Chow (2016: 1288) reports, the quarterly meetings of the Board of Directors comprise reports by management and a casting of votes on matters that have been already prepared for discussion by AIIB’s management team, and members of the CCP, all handpicked by the President.

The apparent incorporation of the Gulf countries into the policy-making process of the BRI and the AIIB could be considered as merely part of the co-optation strategy: a method to attain the consent of the subordinate masses for the rule of the hegemon (Cox, 1993: 63). It is intended to attract the Gulf state-society complexes to the BRI and the AIIB’s framework, which would in turn lead them to offer their consent for the realisation of the initiative in the region. This, however, is not the only institutional element to co-opt the Gulf state-society complexes. As I discuss in the next section, the strategy to incorporate the Gulf countries into the policy-making process has also been

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supplemented by the major focus of the BRI and the AIIB on infrastructure projects and loans, which could be considered a strategy to provide material incentives to attract the regional state-society complexes to the initiative.

6.3 Co-opting through Material Incentives

As I explained in the theoretical chapter, to better comprehend the institutional element of the BRI and the AIIB in the Gulf, I have added one more component to Cox’s typology. I suggest that besides the five primary functions of hegemonic institutions proposed by Cox, the hegemonic institutions also require the provision of material incentives to lesser social forces in order to co-opt these forces into their hegemonic worldview. This is also consistent with other neo-Gramscian scholars’ contention that in order to legitimise the pursuance of certain policies and interests, the dominant social forces also usually offer material incentives to buy the consent of the subaltern class or to incorporate potential challengers into the existent hegemony (Gramsci, 1971: 161; Rupert, 1995: 80-81; Kakizaki, 2010: 234, cited in Yaman, 2012: 71). This addition offers a powerful lens through which we can understand the implementation of the BRI and the AIIB in the Gulf, because aside from co-opting the regional state-society complexes through incorporating them into the policymaking process of the initiative, co-optation is also being carried out with the lure of material incentives. This is made possible by the two institutional elements of the BRI and the AIIB, which I discuss in the subsequent sub-sections.

6.3.1 Focusing on Giving Infrastructure Loans to Developing Countries

One important institutional element of the BRI and the AIIB in this regard is the main objective of the initiative, which is to provide loans for infrastructure projects to less developed countries. As I discussed in the previous chapters, according to Article 1 of the AIIB’s AoA, the main purpose of the Bank is to:

“improve infrastructure connectivity in Asia by investing in infrastructure and other productive sectors” (AIIB2, 2016: 2).157

157 The AoA also stated that “The establishment of the Bank as a multilateral financial institution focused on infrastructure development will help to mobilise much needed additional resources from inside and outside Asia to remove the financial bottlenecks faced by the individual economies in Asia” (AIIB2, 2016: 2).

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Besides this, the BRI’s Vision and Action document also states that:

“Building a network of interconnected infrastructure is the primary domain of “One Belt, One Road” […] [The BRI] will promote the construction of the backbone of international transportation and gradually from a network linking every sub-region of Asia with one another and with Europe and Africa” (NDRC, 2015).

Although the main focus of the BRI and the AIIB is on infrastructure developments related to China’s accumulation strategy (as I have explained in Chapters 3 and 4), the loans can also be considered from neo-Gramscian perspectives as part of the co- optation strategy. Since the initiative was launched, Xi and other Chinese elites have enunciated the idea that based on China’s economic reforms and opening-up, for the developing countries to increase their national power, the primary emphasis should be on economic development. To accelerate that development, infrastructure is the main foundation (Bhattacharya and Romani, 2013: 349). When it comes to the Middle East, the Chinese leaders also frequently voice the idea of “security through development” (Fulton, 2018). In an interview with Al Jazeera in 2014, Foreign Minister Wang, for example, made this point explicitly by saying:

“We believe that development holds the key and serves as the foundation for solving all problems. Any solution to hot-spot and political issues hinges on economic growth and better life for the people. As far as Arab countries are concerned, the most crucial task facing them is national development and economic revitalisation” (Wang, 2014, cited in Fulton, 2018).

Through invoking this first principle of infrastructure, the BRI and the AIIB are aimed at “mobilis[sing] much needed resources from inside and outside Asia” (AIIB2, 2016: 2). Furthermore, the initiative provides sovereign and non-sovereign financing for the building of projects in production and infrastructure industries, including infrastructure and agriculture development, telecommunications and transportation, water supply and sanitation, urban development and logistics, and energy and power (NDRC, 2015).

In the Gulf, the initiative’s focus on infrastructure loans has been turned into concrete efforts in recent years. As I mentioned in Chapter 4, the AIIB has, for example, approved two major loans for construction projects in Oman: one for the development of the port of Duqm and the other for the building of a rail connection. In an interview for this thesis, Thia Jang Ping said that the Bank is also currently discussing further projects in the region, with all of them being related to infrastructure (Thia, 2017). In his speech in front of Arab leaders, including the Gulf, at the Arab League headquarter

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in Cairo in January 2016, Xi also asserted that through the BRI and the AIIB, he plans to establish a US$15 billion special loan for industrialisation in the Middle East to be utilised on production capacity cooperation and infrastructure projects. He also intends to offer $10 billion of commercial loans for production capacity cooperation and $10 billion of concessional loans for regional countries. In addition, there is also a plan to launch a US$20 billion joint investment fund with the UAE and Qatar to invest in traditional energy field, high-end manufacturing, and infrastructure development in the region (China Daily4, 2016).

This proves that the initiative’s pledge to foster infrastructure projects is not simply rhetoric. In August 2017, Xi Jinping’s government, through Xinhua, also iterated the BRI’s intent to concentrate on infrastructure developments in the Middle East region:

“[…] China has also welcomed all countries in the region to join its Belt and Road, which aims to build trade and infrastructure networks along ancient Silk Road trade routes to seek common development and prosperity. The initiative is designed to enable participating countries to create more jobs and bring a better life to their people. With projects for new roads, bridges, railways, and ports, among others, China has offered real hope for building a new Middle East that will enjoy peace and prosperity in a foreseeable future” (Xinhua17, 2017).

Whilst it is true that the infrastructure projects under the BRI and the AIIB are carried out on the basis of maintaining China’s accumulation strategy, the primary focus of the initiative on infrastructure projects could be considered from neo-Gramscian sense as an attempt to provide material incentives for the Gulf countries. This is being done to allure them not only to support and participate in the initiative, but also to give their consent for the implementation of the BRI and the AIIB in the Gulf. By concentrating on infrastructure projects which would benefit China’s economic growth as well as the Gulf’s economic development, Xi hopes that the BRI and the AIIB will find traction among the Gulf state-society complexes and that it will subsequently attract the latter to ‘accept’ the realisation of the project in the region. This corresponds to neo-Gramscian belief that hegemony can be established and maintained via the provision of “material concessions to subaltern classes” (Neufeld, 2001: 98).

6.3.2 The Doctrine of Non-Conditionality

The strategy of providing material incentives has been further supported by the fact that the BRI and the AIIB uphold the principle that politics should not be taken into account regardless of whether a development project is worth pursuing (Peng and Tok,

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2016: 740). Deviating from existing Western principles that attach guidelines and loan conditions, which are frequently a source of criticism from developing countries, including those in the Gulf, the BRI and the AIIB are committed to not placing any conditions on loans and to taking into greater consideration the actual conditions and needs of the developing nations, putting an emphasis on the efficiency, simplicity, and transparency of lending procedures. This commitment has been transformed into the incorporation of the doctrine of non-conditionality in the operational procedures of the BRI and the AIIB (Koh1, 2015; Harpaz, 2016: 123-47).

The principle of non-conditionality dates back to the foundation of PRC. In the 1960s, the then Chinese Premier Zhou Enlai, put forward “eight principles of foreign aid” with an aim to further elaborate upon the principle, purpose, and impact of China’s foreign aid programs to African countries and to better rule China’s overall economic and technical assistance (Peng and Tok, 2016: 740). The first two principles state that the Chinese position on providing aid to other countries is based on the “principle of equality and mutual benefit”, in which China never acknowledges its assistance as unilateral charity, rather as mutual aid. It “never attaches any conditions or asks for any privileges in its foreign aid programs” (China Daily10, 2010). These long-held principles have been reaffirmed by Xi and manifested in his foreign aid policy, as specified in the 2014 Foreign Aid White Paper (State Council, 2014). Principles such as mutual benefits and non-conditionality are notable for their coherence and consistency.

“When providing foreign assistance, China adheres to the principles of not imposing any political conditions, not interfering in the internal affairs of the recipient countries and fully respecting their right to independently choosing their own paths and models of development. The basic principles China upholds in providing foreign assistance are mutual respect, equality, keeping promises, mutual benefits and win-win” (State Council, 2014, cited in Karimova, 2016: 27).

This commitment to non-conditionality has been manifest in the implementation of the BRI and the AIIB, whereby the principle has been incorporated into the institutional design and policy framework of the initiative.

Nowhere in the AoA does the Bank allude to the principle of conditionality. Additional support for the non-interference policy is contained in Article 31 (2), which states that the “Bank, its President, officers and staffs shall not interfere in the political affairs of any member, nor shall they be influenced in their decisions by the political affairs of any member concerned. Only economic considerations shall be relevant to their decisions” (AIIB2, 2016: 18). At the same time, Vision and Action states that the BRI:

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“uphold[s] the Five Principles of Peaceful Coexistence: mutual respect for each other’s sovereignty and territorial integrity, mutual non-aggression, mutual non- interference in each other’s internal affairs, equality and mutual benefit, and peaceful coexistence” (NDRC, 2015).

The BRI and the AIIB’s adherence to the principle of non-interference has also been voiced to the people of the Gulf. For example, the same principles are asserted in the NDRC as are articulated in the second and third parts of China’s Arab Policy Paper.158

The first sequence of AIIB projects also goes to demonstrate that the principle of non- conditionality is the primary operational principle of the Bank. The AIIB has approved several infrastructure projects since 2016: the national motorway project in Pakistan; the Dushanbe-Uzbekistan Border Road Improvement project in Tajikistan; the national slum upgrading project in Indonesia; and the distribution system upgrade and extension project in some parts of Bangladesh.159 When it comes to the Gulf region in particular, as explained in Chapter 4, Sections 2 and 3, the AIIB has granted loans for two projects in Oman: one for the building of the port at Duqm and the other for the preparation of a railway link (Thia, 2017). The official documents of these projects demonstrate that none of them has any political or economic conditions.160 Thia, (2017) in an interview for this thesis, says that the projects manifest the initiative’s commitment to uphold its principle of non-conditionality as beyond rhetoric. In the realisation of the BRI and the AIIB, the social forces involved would have nothing to say when it comes to policy implications and conditionality.

The decision to formulate a set of risk assessment standards that are consistent with the principle of non-conditionality in implementing the BRI and the AIIB in the Gulf can be viewed as part of a strategy to provide material incentives to its countries in order to win their hearts and minds for the implementation of the initiative. Xi hopes that by providing infrastructure loans without any strings attached, the BRI and the AIIB can find traction among the regional states that have long been dissatisfied with the policies of the Western aid and loans. These incentives are, in neo-Gramscian perspectives, a method of co-optation: a strategy to attain the consent of the subordinate masses for the

158 Part II of the Paper said that “China upholds the Five Principles of Peaceful Coexistence, namely mutual respect for sovereignty and territorial integrity, mutual non-aggression, mutual non-interference in each other’s internal affairs, equality and mutual benefit, and peaceful co-existence” (Xinhua18, 2016). Part III stated that “In the principle of independence, equality, mutual respect and non-interference in internal affairs, the Communist Party of China is willing to further enhance exchanges with friendly political parties and organisations in Arab countries, consolidating the political foundation of China-Arab relations” (ibid.). 159 The full list of AIIB’s approved projects can be found here: https://www.aiib.org/en/projects/appro ved/index.html. 160 These documents can be accessedon the AIIB’s website: https://www.aiib.org/en/projects/approve d/index.html.

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rule of a hegemony, through offering material incentives (Kakizaki, 2010: 234, cited in Yaman, 2012: 71). They offer leverage to attract the Gulf state-society complexes into the visions of the BRI and the AIIB and to make them supportive of their realisation.

Even though such efforts have ignited criticisms from the U.S. and its allies, who claim that China is allowing non-democratic regimes to remain and indirectly providing them support through loans and funding (Chen, 2016: 100), they appeal to the people of the Gulf. A number of newspapers and observers in the region have stressed how China’s efforts to provide loans without any conditions attached have attracted regional elites in the Gulf. A Dubai-based online weekly, AMEinfo, for example, has reiterated that the “promise of no-strings-attached infrastructure financing” is one of the reasons why the Gulf countries support and participate in the BRI and the AIIB (El-Namaki, 2017). This takes place in the midst of widespread U.S. opposition to the initiative. They state that it would not operate in accordance with the best practices upheld by international institutions, such as offering loans to countries on condition of their transparency, environmental sustainability, and recognition of workers’ rights (Chow, 2016: 1258). This should not be surprising, given how the Gulf countries have in the past expressed their resentment toward the U.S.-led institutions’ practices in imposing conditions on loans to the recipients (Momani, 2009: 7). With the principle of non-conditionality being upheld by the main operational framework of the initiative, Gulf countries such as Saudi Arabia, Bahrain, and Qatar, which have chequered human rights histories, are also allowed to be the Bank’s loan recipients.

6.4 The Limits of the Institutional Elements of the BRI and the AIIB

In the previous two sections, I have demonstrated that there are two major institutional components of the BRI and the AIIB, specifically designed to co-opt Gulf state-society complexes by incorporating them into the policy-making process and by providing them with material incentives, which have helped the consensus-building processes behind the initiative’s implementation. The first element is made possible through the provision of large voting shares to the Gulf countries and the incorporation of the Gulf countries in the Bank’s Board of Directors. The second element is facilitated through the primary focus of the initiative being on providing loans for infrastructure projects in developing countries and the adoption of the doctrine of non-conditionality as the main working principle of the BRI and the AIIB. This, in line with Cox (1993: 62), enables not only the co-optation of the Gulf state-society complexes and recapitulating potential opposing interests to be in tune with the visions of the emergent hegemonic

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project, but also to establishing an appearance of inclusivity in an attempt to increase the appeal of the initiative in the eyes of the Gulf societies and to attract them into supporting their implementation in the region.

These arrangements have, to some extent, successfully attracted the support of the Gulf state-society complexes for the implementation of the BRI and the AIIB in the region. For example, an editorial published by a UAE-based newspaper, Gulf News, in response to the UAE’s decision to join the AIIB, states that:

“A decision to join the bank would not normally be controversial, but the Obama administration took a surprisingly vicious line against the new China-led bank, fearing that its superpower rival may have set up a rival institution that will allow China to extend its influence in the Asia, and challenge the American- led World Bank and European-led IMF. […] To date, neither institution has ever allowed any variation on the rigid convention that the IMF is led by a European and the World Bank by an American, and neither has ever had an Asian or African leader” (Gulf News5, 2015).

While the institutional elements of the BRI and the AIIB have to some extent attracted the support and participation of the Gulf state-society complexes, there are a number of circumstances that hinder the complete effectiveness of these elements in making the initiative a fully-in-place hegemonic project. First, it is crucial to note that not all the GCC countries have become member states of the AIIB. To this date, Kuwait is still listed as one the prospective member countries of the Bank, since it has not ratified the latter’s Articles of Agreement.161 This shows that the co-optation strategy explained in the previous two sections which is intended to attract the Gulf state-society complexes into the framework of the BRI and the AIIB has not been implemented evenly across the region. The privileges and provisions provided by the initiative cannot be felt by every facet of the regional society. As an example, Kuwait has not been included in the list of countries that are represented on the Board of Directors.162 This indicates that the strategy to co-opt the Gulf countries is not widely carried out.

Secondly, although the institutional arrangements of the AIIB offer China a platform to have authority over the bank and the BRI, which in turn enables it to entrench and diffuse its norms and worldview into and through the initiative, there are circumstances that pose a challenge to China’s authority. The keenness with which non-Asian member states from the Western world participated in the establishment of the AIIB was both a

161 This information is gained from the AIIB’s website: https://www.aiib.org/en/about-aiib/governance /members-of-bank/index.html. I also received further information in my interview with Thia Jang Ping. 162As stated in the AIIB’s website, https://www.aiib.org/en/about-aiib/governance/board-directors/ind ex.html.

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surprise and a source of considerable confidence for the Party-state in Beijing (Koh2, 2015). A notable number of member countries are considered by the CCP as a weighted source of legitimacy for the AIIB, especially in the face of U.S. hostility. It is, however, important to note that even as its broad membership has increased its world reputation, the continued participation of the Western countries is becoming an important segment of the AIIB’s ongoing viability. As a consequence, the decision- making and operations of the initiative cannot deviate too far from Western member countries’ preferences, which are mainly supportive of the status quo.

For example, the then UK Chancellor of the Exchequer George Osborne asserted in a public statement addressing the UK’s membership of the AIIB that the UK “will play a key role in ensuring that the AIIB embodies the best standards in accountability, transparency and governance” (Ikenberry and Lim, 2017: 14). Moreover, at the signing of the AIIB’s MoU in 2014, the Chinese government had actually aimed to contribute 50% of the bank’s capital, which would have offered it a simple majority voting power and therefore unilateral power over the Bank’s decision-making (ibid: 14). Membership applications by a number of Western countries, however, triggered the CCP to lessen its contribution to 26%, sufficient for veto power only over supermajority decisions (ibid.). Some officials from Western member states were also given top management positions and the AIIB adheres to a principle of not limiting procurement to member countries, a more permissive policy than those of the existing institutions (ibid.). As an example, a former chief secretary of the UK’s Treasury, Daniel Alexander, has been designated as the corporate strategist, and Germany’s Joachim von Amsberg, a World Bank officer, has been appointed as the AIIB’s vice-president of policy and strategy (de Jonge, 2017: 1067).

The incorporation of Western countries, despite providing China with confidence, has already made the Party-state sacrifice its formal authority, rendering it incapable of exerting unilateral control over the AIIB to advance its national interests. In spite of the fact that undeniably the institutional arrangements of the BRI and the AIIB provide China a platform to own an influence over its initiative, this influence is reliant upon it being seen as a “responsible stakeholder”. This circumstance could make the BRI and the AIIB have less legitimacy in the eyes of Gulf societies, who have been attracted to the initiative due to their stances and breakthroughs, which are seen as alternatives to the established institutions led by Western hegemonies that have neglected the interests of developing countries, including those of the Gulf.

The third obstacle is associated with its strategy to provide material incentives to the Gulf countries. As in the case of the World Bank, the AIIB is not funding its lending program directly from cash contributions from its member states, rather from capital

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raised on global financial markets, supported by the collateral of member contributions (Ikenberry and Lim, 2017: 14). In this respect, the AIIB needs to acquire a bigger return from its loans than it initially pays to borrow the funds. There is no other international development bank that has had a borrower’s default on its loan, and if a project by the AIIB was to fail, aside from making a loss, the Bank’s own borrowing costs would rise (Tian, 2015). As a consequence, the AIIB is reported to be adopting a cautious strategy through partnering with the existing institutions in providing loans (Ikenberry and Lim, 2017: 14). Of the four AIIB projects approved in 2016, three were co-financed with other institutions, including the National Slum Upgrading Project (co-financed with the World Bank); the Tajikistan-Dushanbe-Uzbekistan Border Road Improvement Project (co-financed with the EBRD); and the Pakistan National Motorway M-4 Project (co- financed with the Asian Development Bank (ADB).163 In the Gulf, the AIIB’s Duqm port development is also co-funded with Oman’s Special Economic Zone Authority of Duqm (SEZAD) (AIIB1, 2016: 1-4). In February 2018, the AIIB further announced that it will cooperate with the IDB to co-lend to several projects in the region (Kynge, 2018).

In this case, in providing material incentives, the initiative has to be dependant on other institutions. Stuart-Haentjens (2017) has also agreed that for now the BRI and the AIIB are unable to operate independently. Even the President of the AIIB has asserted that the Bank is going to cooperate with well-established institutions and benefit from their strengths. This is also further aggravated by the fact that the Bank remains understaffed and its system is not yet well structured (Beniflah et al., 2017: 33). The main potential consequence of this circumstance, besides having less legitimacy in the eyes of recipient countries, is that these projects disable China from exerting a leadership role in project implementation and force the AIIB to submit to the lending terms of well-established institutions. The BRI and the AIIB remain unable to go beyond the existing institutions as the standing and operation of the initiative are still relying on their inclusion within the status quo. There is a great deal of evidence for this. For example, environmental protection has been included in the Foreign Aid White Paper as one of the CCP’s goals and achievements in the field (State Council, 2014). The CCP has also included urban development and environmental protection in the AIIB’s areas of engagement, and the Board of Directors has additionally approved an Environmental and Social Framework to regulate the Bank’s operation (AIIB4, 2016: 1-24).

These circumstances demonstrate how the BRI and the AIIB have not been able to move beyond the dictates of other institutions’ norms and principles. Furthermore, due to the lower level of return on infrastructure projects, construction postponements and

163 The AIIB’s List of Approved Projects can be seen here: https://www.aiib.org/en/projects/approved /index.html.

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cancellations maybe another issue (Ikenberry and Lim, 2017: 14). Even when there are investments from SOEs, and other state agencies that follow a longer-term investment strategy, the sustainability of the projects may be in question (ibid). Thus, in providing material incentives in the form of infrastructure loans, the BRI and the AIIB would not only need to rely on other institutions, but there would also be a necessity to overcome various challenges. Notwithstanding these limitations, it is difficult to actually determine now the extent to which they place constraints on the effectiveness of the institutional frameworks of the BRI and the AIIB in contributing to the consensus-building efforts behind the material implementation of the initiative in the Gulf, given the infancy of the initiative. What is, however, obvious is that the implementation of the BRI and the AIIB in the Gulf is not only assisted by the ideological struggle, as explored in Chapter 5. Rather, it is also supported by certain institutional arrangements embedded within the initiative, which are intended to co-opt the regional state-society complexes and to attain their consent, thus creating an emergent hegemonic project.

6.5 Conclusion

In this chapter, I continued to attempt to answer the second part of the main research question of the thesis: why the Gulf state-society complexes are supporting and taking part in the implementation of the BRI and the AIIB in the Gulf. I aimed to do this by answering the last sub-research question: how the institutional arrangements embedded in the BRI and the AIIB contribute to attracting the support and participation of the Gulf state-society complexes. This chapter finds that the implementation of the BRI and the AIIB in the Gulf region is also supported by certain institutional arrangements embedded in the initiative that enable the implementation of a strategy to co-opt the Gulf countries and to attract them into the interests behind the initiative (Kakizaki, 2010: 234, cited in Yaman, 2012: 71). Through deploying the institutional element of a regional historical bloc analytical framework developed in Chapter 2, which was built from Cox’s (1993: 62) typology of international institutions, I discovered that there are two institutional elements of the BRI and the AIIB that have served to further their implementation in the Gulf.

The first of these, explained in Section 6.2, is the incorporation of the Gulf countries into the policy-making process of the initiative, which is enabled through the provision of a large share of votes to the Gulf countries and the incorporation of those countries into the Board of Directors of the AIIB. This, in line with Cox (1993: 62), is aimed not only to co-opt the Gulf state-society complexes and to recapitulate potential opposite interests to be consistent with the visions of the BRI and the AIIB, but also to provide an appearance of inclusivity in order to increase the appeal of the initiative in the eyes

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of the Gulf states and to attract them into supporting their realisation. The provision of large voting shares and the incorporation of the Gulf states into the Board of Directors could be viewed as an attempt to appear as though the regional state-society complexes are being incorporated in the policy-making process while in reality China still have the largest voting share and veto power over all the decisions of the Bank.

The second institutional element, elaborated upon in Section 6.3, is the co-optation of the regional state-society complexes via the provision of material incentives. Consistent with my addition to Cox’s typology, another way the initiative co-opts the Gulf state- society complexes into their framework and provides supports for its implementation in the Gulf, is through providing material incentives to the regional countries. I argued that this is made possible by two institutional components of the initiative. One is the main focus of the initiative on providing infrastructure loans to developing countries, and second is the inclusion of the doctrine of non-conditionality in the operational procedures of the BRI and the AIIB. In neo-Gramscian perspectives, provision of loans to the Gulf states without imposing political and economic attachments can be viewed as part of China’s strategy to offer “sacrifices of an economic corporate kind” (Gramsci, 1971: 161) to saturate “both productive and ideological relations across the social formation” (Mann, 2009: 340).

The final section of the chapter, however, discovered a number of hindrances to the complete effectiveness of these institutional elements in galvanising the consent of the Gulf state-society complexes for the BRI and the AIIB. The first potential hindrance is the fact that not all the Gulf countries are members of the AIIB, which has led to the co-optation strategy not being implemented evenly across the region. The second limitation is the inclusion of Western countries, which limits China’s full control over the initiative. The third obstacle is that providing material incentives is expensive and will require the CCP to have considerable financial resources. This may not only lead to the initiative being heavily reliant on other existing institutions in providing material incentives, but also problems such as construction delays. Such circumstances have two implications: the initiative remains unable to move beyond the terms and conditions of the status quo and to completely entrench their norms and values; and it could cause the initiative to have less legitimacy in the eyes of the Gulf people.

Even though it may be too soon to measure to what extent these institutional elements contribute to the attainment of the regional state-society complexes’ social support for the initiative, especially in the infancy of the BRI and the AIIB, these hindrances do not negate the importance of these institutional elements’ contribution to the consensus- building strategies behind the realisation of the initiative in the Gulf. This can be seen through the increasingly positive views from Gulf state-society complexes towards the

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institutional elements of the BRI and the AIIB. Writer Lo’ai Bataineh, in the Oman Observer, has praised the AIIB’s focus on offering infrastructure loans to developing states. He writes that:

“The establishment of the bank has been very crucial in addressing the growing pressures to finance infrastructure projects especially in the emerging economies. AIIB is expected to provide practical solutions to challenges facing these countries and is also expected to contribute to the growth of national economy” (Bataineh, 2016).

The institutional settings of the BRI and the AIIB further demonstrate how today the CCP in Beijing is aware of the importance of co-opting others to advance its interests. Although it is not yet fully in place, an emergent hegemonic project is being developed through mobilising the support of those impacted. Such a co-option strategy is not only carried out by promoting certain ideas, equalising its interests with those of others, or presenting China as a good partner for peace, but it is also being done, as the U.S. did, through establishing institutions and incorporating others into the latter, and providing material incentives.

In a broader context, the institutional settings of the AIIB can be seen as China’s early step in introducing a counter-hegemonic institution in the Gulf and beyond. Control of the AIIB by the CCP represents a first in their history: control of an international-level institution that consists of all the U.S.’s closest allies but where neither the U.S. nor Japan is a member. The institutional settings formulated by the initiative enable China to be the leading force in the AIIB. As with any other powerful Chinese institutions, the AIIB, with a permanent office in Beijing, is under the command of the CCP, which has the power in decision-making processes. As the AIIB’s directors are non-resident directors who live in their respective home countries, it should be apparent that the day-to-day operations of the Bank would be conducted by the AIIB’s President, his management team, and his staff, who live in Beijing and work at the Bank’s headquarter on a daily basis. Chow (2016: 2178) further reports that the Bank’s senior management are either CCP members or at least individuals approved by the Party. This indicates that the Party, through the Bank’s President and his management team, could control the everyday operations of the AIIB.

This is an important development for China. The BRI and the AIIB have reinvigorated debates over intentions behind Chinese foreign policy. For some years, observers have rejected the contention that Chinese foreign policy is outwardly revisionist in intent or result, typically situating it towards the conservative end of the spectrum (Johnston, 2003: 5-56; Breslin, 2010: 709-29). Nonetheless, the introduction of the BRI and the

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AIIB has been regarded as the first and most prominent transformation in the China’s foreign policy where a deliberately revisionist endeavour is concerned, at least in the economic domain (Ren, 2016: 435-42). Unlike some observers, I find it unrealistic to expect that China will act otherwise. Just as the U.S. has utilised the World Bank and the IMF as hegemonic institutions to promote its worldview and to co-opt other states, so China may act in the same way, as shown by the case of the BRI and the AIIB in the Gulf. After all, the CCP is the source and the most vital actor in the initiative. However, at this point in the infancy of the BRI and the AIIB, it is too early to understand how the CCP may act. It is a development well worth watching, since it will demonstrate whether China is able to resolve the various constraints on the initiative and how it will begin to succeed as a strategy to solve different challenges faced by the Chinese economy.

This chapter ends the empirical parts of the thesis. I now turn to offer the conclusion of the thesis by revisiting the research questions and presenting the wider implications of the thesis, as well as making suggestions for further study.

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Chapter Seven Conclusion

This last chapter intends to review the major findings of the thesis and to provide an overview of the arguments put forward by revisiting the thesis’ research questions. It also assesses the wider implications of the study, its limitations and contributions, as well as making suggestions for further research. This chapter has three sections. Section 7.1 revisits the research questions of the thesis. Section 7.2provides an examination of the wider implications of this study’s findings. Meanwhile, the final section gages the limitations of the thesis and suggests avenues for future research.

7.1 Revisiting the Research Questions

The main research question of this thesis was why China is implementing the BRI and the AIIB in the Gulf, and why the Gulf state-society complexes are supporting and participating in the initiative. In order to answer that question, I built five sub-questions which have been answered throughout the thesis and are summarised as followed.

RQ1: How can neo-Gramscian perspectives advance the analysis of the implementation of the BRI and the AIIB in the Gulf?

This question is aimed to explain the prominence of neo-Gramscian perspectives as the thesis’ main analytical framework in explaining the implementation of the BRI and the AIIB in the Gulf. To answer it, Chapter 2 began by analysing the existing literature on the BRI and the AIIB. In Chapter 2, Section 2, I argued that the existing approaches to the BRI and the AIIB, which are mainly dominated by realist, liberal institutionalist, and constructivist perspectives, are unable to fully answer the questions of why China is implementing its initiative in the Gulf and why the Gulf state-society complexes are supporting and participating in the BRI and the AIIB for three reasons. First, due to their ahistoricism, these existing studies disregard the historical context behind the BRI and the AIIB in the Gulf, and the interests behind the initiative are assumed. As a result, the question of why China is implementing the initiative in the Gulf cannot be fully answered. Second, emphasising state-centrism, they consider states as the primary actors behind the initiative and they are unable to account for the connection between domestic and international contexts surrounding the BRI and the AIIB in the Gulf.

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This also leads to them being limited in analysing the factors that have driven China to implement its initiative in the Gulf. Lastly, because of their deterministic trait, they regard the implementation of the BRI and the AIIB as a struggle-less process. They are therefore unable to account for the consensus-building process that takes place behind the initiative, and the question of why the Gulf state-society complexes are supporting and participating in the project cannot be answered.

It was then explained that neo-Gramscian perspectives provide a tool to answer the thesis’ research questions. First, neo-Gramscian perspectives are a theory of history which enables us to situate the implementation of the BRI and the AIIB in the Gulf within a historical period. As explained in Chapter 3, the BRI and the AIIB in the Gulf must be historicised against four main stages: the process of globalisation and its impact on China and the Gulf countries; interactions between China and the Gulf countries since 1979s; and the various economic problems presently encountered by China. It is through these historical contexts, which have been neglected by the orthodox analyses, that it is possible to understand in a nuanced way why the initiative is being introduced in the Gulf. Second, the perspectives place an emphasis on social forces, which are defined by their position in the production process, as actors in world order. This lets us not only capture the interplay of domestic and global variables that have formed part of the initiative, which would enable more nuanced examinations of the factors that led to the implementation of the BRI and the AIIB in the Gulf, but also move beyond the orthodox analyses of the BRI and the AIIB as a ‘state-only’ initiative. As Chapters 3, 4, and 5demonstrated, there are domestic and international variables that influence the implementation of the BRI and the AIIB in the Gulf and, departing from the orthodox literature, it has been discovered that the implementation of the BRI and the AIIB in the Gulf should not be considered a state-only process. It is rather a function of social forces comprised of state elites, state and private companies, financial institutions, and organic intellectuals.

Third, neo-Gramscianism eschews any notion of determinism in its study, which gives us a tool to help understand the political project behind the BRI and the AIIB in the Gulf, and through which we could answer the question of why the Gulf state-society complexes are supporting and participating in the initiative. As analysed in Chapters 5 and 6, the BRI and the AIIB in the Gulf is not a spontaneous phenomenon, where the initiative is being realised effortlessly. Instead, it has been an outcome of an open-ended struggle between numerous social forces. This is supplemented by neo-Gramscian perspectives’ incorporation of the liberal institutionalist and constructivist conceptions of ideas, which allows us to pay adequate attention to the roles of ideas. In this respect, the role of the Chinese Dream and other worldviews as the legitimating ideas of the BRI and the AIIB could also be investigated.

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Based on the neo-Gramscian concepts of hegemonic projects and historical structures, this thesis then developed the concept of a regional historical bloc as the primary analytical framework. The concept has three core elements: material implementation, which is intended to study the material interests and activities surrounding the BRI and the AIIB in the Gulf; ideological struggle, which is developed to capture the ideological struggle carried out alongside the material implementation of the initiative; and institutional frameworks, designed to investigate the institutional elements of the BRI and the AIIB and their roles in the consensus-building efforts for the implementation of the initiative in the Gulf. Overall, the concept of a regional historical bloc provides a more nuanced analysis of the implementation of the BRI and the AIIB in the Gulf. It overcomes the shortcomings of existing approaches, with a focus on history, social forces involved, domestic-global variables, and the consensus-building processes that accompany it.

RQ 2: What is the historical context of the implementation of the BRI and the AIIB in the Gulf?

The second question is developed, in parallel with neo-Gramscian perspectives, to historicise the implementation of the BRI and the AIIB in the Gulf. Answering this question not only allows us to situate the analysis in the subsequent chapters in a wider historical context, but also helps to answer the first part of the main research question, which is why the BRI and the AIIB is being implemented in the Gulf. As explained in Chapter 3, this thesis argues that the BRI and the AIIB in the Gulf is historically rooted in the process of globalisation which took place during 1970s, which, resulted, among other things, in the opening-up of Chinese and Gulf economies to the global economy and led to the growing interactions between the two. Then, as elaborated in Chapter 3, Section 5, inherently under pressure to resolve a number of challenges in the Chinese economy – inter alia declining growth, high energy needs, overcapacity in manufacturing capitals and foreign exchange reserves, demographic dividend, and regional discrepancy – Xi Jinping, who became the General Secretary of the China’s Communist Party in 2012, initiated the BRI and the AIIB as the strategy and appealed to internationally- oriented social forces to realise the initiative around the world, including in the Gulf.

Just like previous CCP leaders, who considered the Gulf an important location for the internationalisation of Chinese production and finance, Xi also regards the region as a fruitful place for realising the BRI and the AIIB, for three main reasons as explored in Chapter 4, Section 5. First, the Gulf is a region with large energy resources, which need capital, knowledge, and capabilities to exploit. Investing in the Gulf’s energy sector is seen not only as a way to direct China’s excess capacity; the outcomes of these projects are expected to solve the country’s energy insecurity by providing facilities for the flow of energy resources between the Gulf and China. Second, the Gulf countries, which are

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currently devoting their petro-dollars to building infrastructures, is viewed as a lucrative place to direct China’s overaccumulated capital. This strategy, however, also has long- term objectives. The outcomes of these projects would facilitate the flow of trade and investments between China and the Gulf. Lastly, due to the Gulf’s position as one of the largest hubs in global finance and the Xi government’s key policy (which is greater integration in the global financial economy), the implementation of the BRI and the AIIB in the Gulf is also expected to be a catalyst for advancing the internationalisation of Chinese finance in the region.

RQ3: What constitutes the material implementation of the BRI and the AIIB in the Gulf and which social forces are involved in the process?

Based on the regional historical bloc analytical framework built in Chapter 2, Section 4, the third sub-question that I asked was what constitutes the material implementation of the BRI and the AIIB in the Gulf and which social forces are involved in the process. This question was asked not only because it would enable us to further answer the question of why is China is implementing the BRI and the AIIB in the Gulf, but also because to answer the second part of the primary research question, which is why are the Gulf state-society complexes supporting and participating in the BRI and the AIIB, it is crucial to understand the basic contours of the implementation of the initiative in the Gulf. As argued throughout the thesis, China’s emergent hegemonic project stems from material interests and revolves around economic endeavours, although it involves ideological struggle and institutional frameworks to “[bring] about a unison of different interests” (Morton, 2007: 153). The neo-Gramscian concept of historical structures, upon which the analytical basis of this thesis is built, and which is designed:

“to indicate the way in which a hegemonic class combines the leadership of a bloc of social forces in civil society with its leadership in production” (Simon, 1982), allows us to remain able to examine the material aspects of the BRI and the AIIB in the Gulf. Departing from the orthodox literatures, enables us to move beyond considering the initiative as ‘state-only’ to examine the domestic contexts of those material interests.

As explored in Chapter 4, this thesis discovers that, based on the domestic and regional contexts discussed above, the implementation of the BRI and the AIIB in the Gulf revolves around three components. The first is the securing of energy resources in the region. The main social forces involved are primarily state elites, who have increased their diplomatic activities in the region to conclude energy agreements with the Gulf governments and established institutional facilities and frameworks to support the BRI

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and the AIIB in the Gulf. Energy companies have also worked to finalise supply deals with the Gulf’s energy companies and to construct the necessary infrastructures that will facilitate the flow of energy from the Gulf to China, including refineries, pipelines, and ports. I also argued that these energy-related projects have double objectives. While over the short-term these projects provide an opportunity to productively use China’s overaccumulated industrial materials, in the longer term the outcomes of these projects are expected to facilitate flow of energy resources between China and the Gulf.

The second component is the directing of Chinese capital into the Gulf’s non-energy infrastructure sectors. This also has short- and long-term objectives. While for the time being investments in the regional infrastructure sectors are intended to direct China’s excess capacity, in the long-term the outcomes of these investments are expected to be facilitation of the flow of capital, investments, and trade between China and the Gulf. The primary social forces in this regard are state and private companies, especially those specialising in infrastructure, who have mainly focused on projects that will achieve the longer term goal of the initiative, which is facilitating the flow of trade and investments between China and the Gulf, such as ports, industrial parks, special economic zones, and retail shopping malls.

The third component is the growing internationalisation of Chinese finance in the Gulf. While Chinese finance has internationalised around the world, including the Gulf, since the early periods of its internationalisation (as I explained in Chapter 3, Section 3), the Xi government, with its more assertive financial reform,164 including greater integration in the global financial economy, wanted to reinforce this internationalisation through the BRI and the AIIB. In the context of the Gulf, this comprises two elements: the increasing activities of Chinese banks and other financial institutions in expanding their branches, increasing bonds, and increased involvement in the Islamic finance sector in the Gulf; and the regionalisation of Chinese currency, which has been increased by Chinese banks concluding currency swap agreements and establishing currency centres in the region.

Within the discussion of the third material component, this thesis also investigated the widespread conviction about the AIIB as a mechanism to globalise the use of RMB and found that for the time being the AIIB is mainly used as a solution for China’s crisis of overcapacity, rather than to globalise the use of Chinese currency. This is primarily demonstrated by the decision to use U.S. dollars, instead of Renminbi, in the AIIB’s operations, which is a result of the calculation that to quickly resolve China’s economic instabilities, the excess of foreign exchange reserves would need to be reinvested in U.S. dollars. The global status of the Renminbi would not contribute to stability in capital

164 See, for example, Hess (2014: 37-38) for an examination on Xi’s financial reform plans.

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accumulation and would be unable to serve as relief. To mediate economic imbalances, steps to globalise the Renminbi to be temporarily slowed down. Realising the potential significant ability of the BRI and the AIIB to widen the RMB would conflict with the strategy to lessen imbalances, Xi consequently decided not to go overboard with the currency-expansion strategy and not to use the RMB as the main currency of the AIIB. This situation, nonetheless, as the bank’s President Jin Liqun has asserted, does not rule out the real intent that the Bank would be used to internationalise the use of Yuan in the future.

RQ 4: How do ideological struggles attract the Gulf state-society complexes into supporting and participating in the BRI and the AIIB, and which social forces are involved?

After examining the basic contours of the implementation of the BRI and the AIIB in the Gulf, the next question that this thesis attempted to answer was: how do ideological struggles behind the BRI and the AIIB attract the Gulf state-society complexes into supporting and participating in the implementation of the initiative, and which social forces are involved? In this case, I tried to answer the second part of the main research question – which is why the Gulf state-society complexes are supporting and taking part in the initiative – through investigating the consensus-building efforts employed by the Chinese state-society complex in regional countries. Neo-Gramscianism’s emphasis on the consensual aspect of power enables us to examine such efforts. This thesis finds, as I discussed in Chapter 5, that, departing from existing examinations of the BRI and the AIIB, the implementation of the initiative, especially in the Gulf, is not restricted to productive activities. Instead, in parallel with neo-Gramscian perspectives, it requires certain struggles waged at the ideational level to attain the consent of those who are affected.

This thesis advanced that the ideological struggle that takes place alongside the material implementation of the BRI and the AIIB in the Gulf constitutes two components: ideational and structural. The ideational component concentrates on the formulation of certain worldviews to turn the objectives of the initiative into a common sense. In this regard, this thesis proposed that an ‘equalisation’ strategy has been employed, which includes: 1) propagating the Chinese Dream as consistent with the ‘dreams’ of Gulf society; 2) socialising the idea that the initiative’s objectives are parallel with the Gulf’s development plans; 3) promoting the understanding that the BRI and the AIIB benefit both China and the region; 4) becoming more actively involved in different regional issues and presenting China as a ‘good partner’ in promoting regional peace through highlighting the overlap between China’s stances on these issues with that of the Gulf.

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Meanwhile, the structural component constitutes the social forces who are involved in the ideological struggle. Consistent with neo-Gramscianism, these social forces could be described as “organic intellectuals” who infiltrate regional civil society not only to explain the BRI and the AIIB to the masses, but, more crucially, to establish the basis for the formation of a common sense around the objectives of the initiative. This thesis suggested that these organic intellectuals can be placed into four categories. The first is the government elites, who, since the BRI and the AIIB were launched, have increased their diplomatic visits to the region and helped to promote the initiative at the elite level. The second are the mainstream media, which have played an important role in the struggle by creating television programs for regional TV channels, through distributing certain printed publications on China, Xi Jinping, the BRI, and the AIIB, and through participating in various book fairs in the Gulf, as well as by translating a number of relevant publications into Arabic. Then there are academic intellectuals and institutions. The thesis found that Chinese institutions, such as universities and Confucius Institutes have been organising conferences, seminars, and public debates on the BRI and the AIIB across the Gulf which contributes not only to socialising the initiative, but also to propagating the idea that the initiative benefits everyone.

This has been assisted by the increasing number of academic intellectuals who infiltrate the Gulf’s civil society through their publications and by the provision of scholarships to students from the region. One important finding of the thesis is that this academic effort has resulted in the emergence of new political subjects (organic and traditional intellectuals) necessary “to the leadership that underpins hegemony” (Borg et al., 2002:1-23). What precisely has been taking place is the emergence of new social forces from within the region who, directly or indirectly, are involved in the ideological struggle of promoting the BRI and the AIIB and of creating legitimacy for the realisation of the initiative. These social forces, which primarily consist of academic intellectuals and institutions, are turning themselves into organic intellectuals due to their activities in explaining the regional society about China and the initiative, but also in turning a plethora of diverse issues into a universal vision. Another group of organic intellectuals who are involve in the ideological struggle behind the BRI and the AIIB in the Gulf are those social forces who carry out cultural exchanges and activities across the region. The roles of these cultural exchanges, which include events such as Chinese New Year celebrations, and other cultural exhibitions, should not be underestimated. In a region where knowledge and awareness about China remain limited, they contribute to raising awareness and understanding among regional societies. It is hard to expect the creation of a virtual consciousness for the BRI and the AIIB in the Gulf when the people have little, if any, knowledge about China.

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Despite this ideological struggle, the thesis finds that the formation of a common sense for the implementation of the BRI and the AIIB in the Gulf still faces obstacles, thus meaning the initiative remains an emergent hegemonic project. There is still limited awareness about China in the Gulf, let alone about the BRI and the AIIB, or gathering around a universal common sense. There are three main reasons for this. First, the lack of a precise and coherent plan and detail of the initiative, and of the Chinese Dream, as the legitimating idea of the emergent hegemonic project. Second, the prevalent negative perceptions of China within the Gulf’s society. Lastly the ideological struggle that is being carried out remains limited to not only socialising the BRI and the AIIB among the people of the Gulf, but also to increasing regional awareness about China and to addressing the prevalent negative perception of China in the region. Overall, however, to answer the thesis’ research question, it has been demonstrated that the realisation of the BRI and the AIIB also involves a struggle being waged at the ideational level to attract the Gulf’s society into supporting and participating in the initiative. The process, however, of co-opting the regional state-society complexes into the initiative has not only been done through ideological struggle. It has also been supported by certain set of institutional frameworks embedded in the initiative. This was explained through the next sub-question.

RQ5: How do the institutional arrangements embedded in the BRI and the AIIB help to attract the Gulf state-society complexes into supporting and participating in the initiative?

This final question was asked to further answer the second portion of the main research question. Aside from the ideological struggle, this thesis has found that the realisation of the BRI and the AIIB in the Gulf has also been supported by certain institutional frameworks entrenched in the initiative. As investigated in detail in Chapter 6, these institutional frameworks enable the pursuance of what neo-Gramscian perspectives conceptualise as co-optation, which is a strategy to attain the consent of the masses for the pursuance of the hegemonic project (Kakizaki, 2010: 234, cited in Yaman, 2012: 71). The first of these frameworks is the inclusion of the Gulf states into the policy- making process of the initiative. This is made possible through particular institutional arrangements of the AIIB which could be considered as a support platform for joint participation and consultation in the realisation of the initiative (Li, 2015: 125), namely the provision of large voting shares to the Gulf countries and the incorporation of the Gulf state-society complexes into the Board of Directors of the AIIB. This, in parallel with neo-Gramscian perspectives (Cox, 1993: 62), is intended not only to co-opt regional state-society complexes and to recapitulate potential conflicting interests to be in line with the objectives of the BRI and the AIIB, but also to establish the appearance of inclusivity in an effort to increase the appeal of the initiative in the eyes of the people of the Gulf.

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The second institutional framework is the co-optation of Gulf state-society complexes through the provision of material incentives. This is made possible by two institutional components of the BRI and the AIIB, specifically the focus of the initiative on offering infrastructure loans to developing countries and the upholding of the doctrine of non- conditionality in their working procedures. The thesis argues from the neo-Gramscian viewpoint that giving infrastructure loans to the Gulf countries without imposing any political and economic conditions can be considered a strategy to offer “sacrifices of an economic corporate kind” (Gramsci, 1971 161) in order to saturate “both productive and ideological relations across the social formation” (Mann, 2009: 340). Overall, while the ideological struggle constitutes a vital element in the implementation of the BRI and the AIIB in the Gulf, material pay-outs have also been vital to establishing the consent for the initiative.

This thesis, nevertheless, has also discovered a number of limitations that may hinder the effectiveness of these institutional elements in putting the initiative fully in place as a hegemonic project that has the consent of the Gulf state-society complexes. The first is that not all the GCC states have become members of the AIIB. To this date, Kuwait is still listed as a prospective member because it has not ratified the AIIB’s Articles of Agreement. This means that the co-optation strategy cannot be carried out across the region. The second reservation is the inclusion of Western countries into the initiative, which makes China unable to have full control over them and means that the initiative remains, to some extent, dictated by the terms and conditions of the Western member countries. Third, providing material incentives is expensive and necessitates the CCP to be dependant on more well-established institutions to provide material incentives to the countries in which the BRI and the AIIB are being carried out. The implication of this is that it often means the initiative is unable to move beyond the norms and standards of the status quo and to fully entrench Chinese values. This also leads the BRI and the AIIB to have less legitimacy in the eyes of the people of the Gulf region, who hold a belief that the initiative represents a breakthrough vis-a-vis the established international institutions headed by the West. On the whole, however, these institutional frameworks have played an important role in attracting the Gulf state-society complexes into the frameworks of the BRI and the AIIB, as demonstrated by some of the regional elites’ responses.

Overall, it is by answering the five subsidiary questions above from neo-Gramscian perspectives that this thesis was able to answer its main research question: why is China implementing the BRI and why are the Gulf state-society complexes supporting and participating in the initiative. In answering these questions, the thesis has also pointed towards a number of wider empirical implications and generated several contributions, as presented below.

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7.2 The Wider Implications

Despite still being an emergent hegemonic project, the implementation of the BRI and the AIIB in the Gulf highlights two important phenomena. First, it appears that China under Xi Jinping now recognises “moral and intellectual leadership”, rather than simple acquiescence in exchange for the economic opportunity, as essential for its increasing role. It acknowledges the necessity of aligning its interests with the broader interests of others, to appeal to them, and to engage in an active process of fostering consensus for its activities. The BRI and the AIIB in the Gulf signposts that, in a similar fashion to the U.S., China’s active role in the world is likely to be exercised through moral and political leadership. It will achieve this through diffusing its own ideas and values and by increasing its appeal to resonate with the people who will be impacted. While there are a number of remaining limitations, as the case of the BRI and the AIIB in the Gulf demonstrates, the success of this strategy will most likely be seen and felt in the future. With Xi being in the CCP’s leadership for life, it can be expected that Chinese conduct in the world will generally remain the same.

Secondly, the institutional elements of the BRI and the AIIB represent a first for China: the establishment of a prestigious multilateral institution, which consists of many of the U.S.’ partners in which neither the U.S. nor Japan are present. As with any powerful institution in China, the BRI and the AIIB, with its main headquarters in Beijing, is under the sole control of the CCP, and it is likely to be used as an instrument to further Chinese interests and influence in the Gulf and beyond. China, as some have proposed, may act with a light touch and not use the initiative to pursue its policy goals, but such a move would be inconsistent with the CCP’s long history. The CCP has dominated all governmental and non-governmental organisations of any importance in China since the PRC was founded; it is possible, if unlikely, that the BRI and the AIIB will be an exception. Instead, what is more likely, as shown by the institutional structures of the initiative, is that the CCP will exercise ultimate influence. As the Gulf case shows, it is possible that sooner or later the BRI and the AIIB could function as a platform for the CCP to write its own rules for the international politics in the 21st century, and to be an alternative to the existing institutions.

International institutions such as the World Bank and the IMF are dominated by the U.S. and a number of other developed countries. These institutions have established neo-liberal norms and ideas to preserve the U.S. hegemony, the latter being embedded within these institutions’ governance structures, particularly its voting system, which is maintained through quotas held by each country. These quotas are determined by the financial resources that each member country can contribute, which evidently favours larger economies. The World Bank and IMF are perceived as being dominated by the

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U.S and its Western allies: the headquarters of the two are located in Washington, the World Bank’s Presidents have been Americans and IMF Directors have always been Europeans (Chow, 2016: 1270). Both institutions also work closely with the Secretary of the Treasury. This privileged position in the U.S., within the wider Bretton Woods framework, has given the U.S with disproportionate influence over both development financing and conditions placed on loans, in parallel with neo-liberal principles and, to some extent, U.S. foreign policy interests. Consequently, they are utilised to further the policy objectives of the U.S., which promote its own style of capitalism in the member countries.

The institutional structures of the AIIB, the role of the Party-state in it, and China’s own ambitions, suggest that the BRI and the AIIB could be utilised as a policy-making tool by China, just as the U.S. and its closest allies have utilised the World Bank and the IMF. The AIIB, for example, issues loans with no conditions, which is different to Western-led institutions. This stands in stark opposition to the U.S. stance of using loans to promote its political goals of Western capitalism and political reform regarding, for example, environmental protection and human rights. The BRI and the AIIB could challenge the prevailing view that only countries complying with the U.S.’s conditions can engage in global affairs. Overall, the initiative has been a contrast to the norms of the existing global system.

Several Chinese politicians and intellectuals have affirmed China’s intent. Wang Jian of Fudan University affirms that a collective interest in resisting foreign intervention – especially the U.S. – had significant influence in the establishment of the AIIB (Wang, 2014, cited in Suzuki, 2015: 6). The Chinese politician, Zhang Xiaolan, also refers to China’s long-held interest presenting an alternative to existing international institutions headed by the U.S. and its allies (Zhang, 2015, cited in Suzuki, 2015: 6). This has also been contended by the Chinese government. For example, the Arab Policy Paper states that China:

“[…] will improve and reform the international financial system and increase the voice and representation of developing countries. China welcomes the Arab countries to join the Asian Infrastructure Investment Bank and their active role in it” (Xinhua18, 2016).

Moreover, soon after the visit of Palestinian President Mahmoud Abbas to Beijing in July 2017, Xinhua also published an article declaring the CCP’s intent to provide an alternative to the Western hegemony through the BRI and the AIIB. The article asserts that:

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“Disappointed at the West, many people in the Middle East are longing for a new voice, or a new initiative from parties beyond the Western world to help push forward the regional peace process. A rising China ready to take more international responsibilities stands out as an alternative” (Xinhua17, 2017).

Therefore, the BRI and the AIIB can be considered a manifestation of the early steps China is taking to become what van der Pijl (2012: 503-515) terms as the “contender state”, displacing the U.S. as the new arbiter of the rules of regional and international politics. This is the first crucial blow to U.S. dominance over global politics and may portend that China, not the US, will write the international rules in the near future. The initiation of the BRI and the AIIB can be viewed as a diplomatic triumph and, at the same time, a setback and embarrassment for the U.S., as China was able to attract dozens of the former’s allies, in defiance of the White House’s opposition. Beyond this geopolitical shift, there are also larger potential repercussions for international politics. The competing roles of the BRI and the AIIB, and Western institutions, could mean a future elevation of the long-standing confrontation between China and the U.S. over international trade rules to the multilateral policy level for the first time. This indicates a larger struggle over who may write the rules for global affairs in the future.

Overall, that the BRI and the AIIB could be used to further China’s goals seems to be a foregone conclusion. It is accepted that hegemons use the multilateral institutions they control as platforms to further their own interests. It would therefore be unrealistic to believe that while the World Bank and the IMF were used to promote the U.S.’s goals and norms, the BRI and the AIIB – under the CCP’s firm control – will not be used to further China’s policy goals. Of course, it is plausible that it will not succeed, due to opposition from the countries involved in the initiative, but it is difficult to see how the BRI and the AIIB’s development will unfold as yet. It is, nevertheless, a development worth watching as it will point to whether China will begin to succeed in displacing the U.S. as the arbiter of the rules of regional and international politics.

7.3 Contributions and Further Research

To summarise, this thesis has tried to examine why China is implementing the BRI and the AIIB in the Gulf, and why the Gulf state-society complexes are supporting and participating in its implementation. In answering this question, the thesis has made vital contributions to the existing corpus of knowledge, both theoretically and empirically, and to policy-making circles. The theoretical contributions have demonstrated that neo- Gramscian perspectives provide a more nuanced analysis of the BRI and the AIIB in the Gulf by taking into consideration the historical context behind the initiative, the

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influence of domestic variables, the social forces involved, and the consensus-building efforts that are happening alongside its implementation. There are, nonetheless, several points to be emphasised. First, as already iterated in Chapter 1, Section 7, the thesis’ findings cannot be generalised and transferred to the implementation of the BRI and the AIIB in other parts of the world as, for instance, in the case of ASEAN. It is not the goal of critical theories like neo-Gramscianism to generate general discoveries.

In addition, even though neo-Gramscianism is an alternative to the orthodox theories deployable in analyses of the BRI and the AIIB, it is not the only possible one. There are other approaches that can be used to examine the initiative, especially with regard to how they are being implemented in the Gulf. These include Bashkar’s critical realist theory, which also rejects positivism and interpretivism (Bashkar, 2008) and has the advantage of neo-Gramscian perspectives, namely the ability to integrate historicism with an ontological openness to the concept of power (Patomaki and Wight, 2000: 213- 237). The realisation of the initiative in the Gulf and elsewhere can also be examined in the context of the recent framework on Chinese State Transformation developed by Shahar Hameiri and Lee Jones (Hameiri and Jones, 2015: 72-98). Unlike IR theorists, they suggest that China should no longer be viewed as a unitary state. Rather, reflecting epochal transformations in the international political economy since the 1970 economic reform, it is becoming disaggregated, decentralised, and internationalised. As a result, various segments of the country may follow distinct or contradictory agendas, with the outcomes being conflict and disorganisation, not a grand strategy.

This approach could also be deployed to reject the orthodox analyses which view the initiative as state-only and to identify the various actors involved in the implementation of the BRI and the AIIB. Overall, through deploying neo-Gramscian perspectives, this thesis was able to provide a critical alternative to the existing analyses of the BRI and the AIIB. Neo-Gramscianism would gain more relevance in examining not only the realisation of the BRI and the AIIB in the Gulf and elsewhere, but also the changing role of China in global politics. This could be a future research avenue. Concurrently, however, it must also be emphasised that it is not the only alternative critical approach available; others, such as critical realism and state transformation could be options.

Empirically, the thesis contributes to a number of important spheres of knowledge. The first is the increasing corpus of investigations of the BRI and the AIIB. As mentioned in Chapter 1, Section 3, the Gulf region has been neglected in existing studies. While a number of studies have investigated the implementation of the BRI and the AIIB in several countries and regions around the world, there are few studies focusing on the implementation of the initiative in the Gulf. These studies, moreover, are opinion and journalistic works, and therefore unable to offer theoretically-grounded comprehensive

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analyses. By specifically concentrating on the Gulf, this thesis has presented the first in- depth study of how the BRI and the AIIB are being implemented in the region. The second contribution is to the increasing debates within the fields of Middle East and Chinese studies on China’s changing role in the Middle East. Within these two fields, China’s expanding role has increasingly been one of the most discussed and debated topics. In this respect, the contribution of this thesis is a focus on the implementation of the most recent and vital Chinese initiative in the most crucial part of the Middle East, the GCC.

In the wider sphere, this thesis also contributes to the intense debate in Middle East or Gulf studies on the power transition in the region. In recent years, many observers focusing on the Middle Eastern affairs have debated the issue of power transition in the region, particularly the U.S.’s decline and the rise of alternative powers, such as BRICS (Ennis, 2016: 132-161). This thesis contributes to the debate by invoking a further perspective: whether the transition is moving to China. The fourth input of the thesis is that it also adds to the burgeoning examinations of China’s conduct, both in the Gulf and the world, which mainly focus on its material or economic aspect. It helps give further insight into the debates by concentrating on the widely neglected ideological and institutional components of China’s conduct. As showcased in this thesis, the CCP has been employing various consent-building strategies and institutional frameworks in advancing its interests and implementing its initiatives, exemplified not only in the BRI and the AIIB in the Gulf, but also in its economic reforms and interactions with the Gulf countries. The thesis has thus demonstrated to academia, policy-makers and relevant stakeholders the importance of paying attention to consent-building strategies, including the role of ideas and institutional frameworks, in studying China’s behaviour, domestically or internationally.

As the BRI and the AIIB in the Gulf is still being implemented, it would be fruitful to continue recording and examining the evolution of the initiative in the coming years. Not many studies of the initiative, particularly their implementation in the Gulf, have yet been undertaken, but they are vital. It would be particularly useful to investigate the various implications of the continuously evolving regional dynamics in the Gulf and the wider Middle East regarding the implementation of the BRI and the AIIB, including the intra-regional dispute among the GCC countries, the growing threat of the Islamic State, and other security issues. It would also provide insight into how China’s growing relations with Iran, its stance in Syria and the Israeli-Palestinian conflict could impact the implementation of the initiative in the Gulf, specifically the responses of both Gulf societies and China to them. It can be expected that the BRI and the AIIB, and China’s involvement in the region, is likely to evolve and transform with the developments of numerous domestic, regional, and global circumstances. It could also have substantial

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impacts within those three spheres. Future research opportunities are not only available, but crucial.

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Appendix A: List of Interviews

Name Organisation Position Month, Year Type Interviewee Location

Ben Silk Road Researcher November, In Person Hong Kong Simpfendorfer Associate 2016

Mohamed Al The University Ph.D student/ November, In Person Hong Kong Sudairi of Hong Researcher 2016 Kong/Gulf Research Centre

James Frankel City University Professor November, In Person Hong Kong of Hong Kong 2016

Jacqueline Independent/ Scholar April, 2017 Skype The U.S. Armijo Qatar University (Resigned)

Jonathan Fulton Zayed Lecturer December, Skype The UAE University 2016 - April 2017

Giorgio Cafiero Gulf State Researcher April, 2017 - E-mail The U.S. Analytics December 2017

Thia Jang Ping The AIIB Economist April 2017 - E-mail Singapore January 2018

Shaojin Chai Zayed Lecturer April, 2017 E-mail The UAE University

Mingqiao Zhao Arabia Monitor Researcher November, E-mail London 2017

Unnamed Qatar Student March, 2017 In Person Qatar University

Unnamed UAE Student March, 2017 In Person Qatar University

Unnamed Unnamed Businessman March, 2017 In Person Qatar

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Unnamed Unnamed Businessman March, 2017 In Person Qatar

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