The Belt & Road Initiative as Power Resource: Lessons from Japan

In 2013, the Chinese government announced its plans to establish the Asian Infrastructure Investment Bank (AIIB) and to pursue a massive regional infrastructure plan initially called either the “New Silk Road” or the “One Belt, One Road” (OBOR), and now officially termed the Belt and Road Initiative (BRI). An extraordinary move by China, the BRI has inspired widespread speculation about China’s intentions, the potential economic impact and the effect on regional politics. 

In a 2016 journal article published in the ASAN Forum, William Grimes draws on the history of Japanese aid, trade and investment in East Asia in the 1980s and early 1990s to examine the conditions under which the BRI may lead to an unabated growth in China’s regional influence. Although the BRI is not directly analogous to Japan’s efforts to support industrialization in East Asia through infrastructure and regional production networks, the concerns voiced by American and Japanese observers today bear an uncanny resemblance to those of US observers a quarter century ago.

Main findings:

• Large-scale, coordinated investment in commercial infrastructure and connectivity is likely to have significant benefits for recipient countries. 
  • China’s BRI and AIIB efforts should contribute to the material well-being of those countries, regardless of whether Chinese intentions are altruistic or selfish.
  • Efforts to somehow dissuade emerging economy governments from accepting Chinese largesse out of political concerns will mostly be unsuccessful and counterproductive.
• China’s transactional power, the ability of Chinese leaders to use the BRI and AIIB to push their regional political agenda, like excluding economic rivals or pursuing political or even security goals, will be limited. 
  • Transactional power is ephemeral and using it can create backlash from target governments and societies.
• Despite the prevalence of state-owned enterprises and the deep interconnectedness of Chinese firms and government, multiple internal divisions will reduce the ability of the central government to implement a cohesive strategy to take advantage of transactional power.
• The appropriateness of a given piece of infrastructure, the domestic politics of target economies and links between firms and both the home and host governments mediate potential transactional power.
• China’s structural power gains will be tempered by competition from foreign players, because infrastructure projects provide public goods. 
• The Chinese model of state capitalism and authoritarian government is not intrinsically attractive to neighbors and economic partners.
  • Over the long-run, soft power at the international level requires a positive vision of collaboration and fairness, rather than the gravitational pull of market demand alone. 

For Grimes, US, Japanese and Korean policymakers need not worry about the creation of an exclusive Chinese economic zone. He concludes the BRI will, most likely, benefit Chinese firms more than foreign firms, and China’s influence will certainly grow. Grimes suggests the US and its partners at the regional level participate in regional economic development to benefit from the BRI. He asserts that the answer is not to disengage or try to force rules on unwilling states, but to pursue the globalist agenda that has served them well in the post-war period.