JOSEPH DANA
China’s “project of the century” is undergoing some profound changes.
Less than a decade ago, Chinese President Xi Jinping unveiled the Belt and Road Initiative (BRI) to connect China to Eurasia through extensive maritime and overland trade routes. Despite the grand rhetoric of the BRI physically linking the global economy to Beijing, the initiative’s aims are straightforward.
The BRI is a Chinese investment platform that employs Chinese capital across infrastructure projects in emerging markets for geopolitical gains. Remarkably, this investment strategy is now turning away from traditional countries like Russia and African nations to focus on Saudi Arabia and the Middle East.
Critics have argued that the BRI is a form of debt-trap diplomacy by another name. The economic saga unfolding in Sri Lanka gives weight to these arguments. Yet this narrow focus misses the larger geopolitical dimensions of the BRI’s true aims.
Like many wealthy countries worldwide, China will always engage in predatory lending. That’s just how the global economy works. What’s more interesting is how the BRI has evolved into a vehicle of Chinese geopolitical influence and how this influence has shifted to focus on the Middle East.
The countries that make up the Gulf Cooperation Council have been on the official list of BRI countries since its inception, but they weren’t a primary focus of the initiative in its earlier phases. This is partly because GCC countries don’t need access to cheap Chinese credit like some African and East Asian countries.
Aside from being vital nexus points for trade in emerging markets, the GCC’s role in the BRI has traditionally been focused on regional partners, construction projects, and energy.
From the Gulf region’s perspective, the BRI is a vital support link for allied countries such as Pakistan and Egypt. China has played a pivotal role through the BRI in the Gwadar port and pipeline project in Pakistan as well as Egypt’s Suez Canal Area Development Project.
In recent years, the Chinese have grown more aggressive in their interest in the Middle East, specifically the Gulf region. When Saudi Aramco was exploring various ways to become a publicly traded company, Chinese investors (some of which were backed by the government) were ready to buy large stakes in the economy. We will come back to why this interest belied deeper goals.
BRI investment has grown in Saudi Arabia recently as China has drawn down investment in other countries like Russia. The Financial Times reported last month that BRI spending in Russia dropped to zero, with no new deals taking place in the first half of 2022. In the same period, Beijing struck US$5.5 billion worth of deals in Saudi Arabia.
The full extent of what these deals include is unclear, as not all have been made public, but analysts believe that many are focused on energy resources.
This shift reveals how China will use the BRI in the future and the extent of Beijing’s long-term ambitions in the Middle East.
The quick reallocation away from Russia and into other parts of the world demonstrates the flexibility of the BRI. This is not a monolith investment vehicle that is resistant to change. Rather, BRI capital can be easily diverted based on geopolitical considerations.
In this case, Russia is at the mercy of Western sanctions stemming from the Ukraine conflict. At the same time, Saudi Arabia’s relationship with the US is anything but warm. Sensing an opportunity to solidify its position in the region, Beijing has shifted the funding focus of BRI to ride the geopolitical tides.
Instead of thinking about the BRI as a way of connecting the global economy to China, perhaps we need to think of the BRI as a way of China exporting its geopolitical will on to the rest of the world.
With the end of its combat mission in Iraq and the complete withdrawal of forces from Afghanistan, the US is pulling back its interests in the Middle East. US President Joe Biden’s recent trip to Saudi Arabia and Israel revealed a tepid American interest in the region. China has long sought a significant foothold in the Middle East in its battle with the US for global hegemony.
The ultimate realization of this goal will be upending the US-dollar-dominated global oil trade. That’s one reason China took an early interest in a significant stake in Saudi Aramco. While that bid was unsuccessful, China’s recent BRI investment push at the precise time that the US pivots away from the region will surely bring Beijing’s goal one step closer.
China’s long-term plans to replace the US as the world’s superpower aren’t a secret. Just track BRI funding for clues of what Beijing will do next.
No comments:
Post a Comment