Socialist Worker

China on collision course?

by Dave Sewell
Issue No. 2583

China’s president Xi Jinping aims to usher in “a new era of globalisation”—with China at its heart. His plan is the Belt and Road Initiative (BRI), measured in decades and trillions of pounds.

It has implications for global capitalist competition and could intensify imperialist rivalries between states.

Its full title—Silk Road Economic Belt and 21st-century Maritime Silk Road—harks back to the distant past. But its aim is to consolidate China’s growth into a very capitalist superpower.

China’s prime minister Li Keqiang was in Hungary last week. Work has begun on a Chinese-funded railway between the Hungarian and Serbian capitals.

Meanwhile local authorities in Lebanon were signing up to become a “hub” of China-led reconstruction in Syria. And China’s economic minister was in Georgia signing a trade deal.

Since BRI was launched in 2013, by some estimates more than £800 billion has already been committed to hundreds of infrastructure projects.

BRI is vaguely defined, like a global version of the former Tory chancellor George Osborne’s “Northern Powerhouse”.

Chinese firms rebrand existing projects as BRI to get around capital controls. Bandwagon-jumping developers hijack the slogan to attract investors.

But behind the hype is a real global investment drive. New railways are to run from southern China to Singapore, from the Chinese-owned Greek port of Piraeus onward into Europe, across Indonesia and from Djibouti to Ethiopia.

There are also ports, airports, motorways, industrial parks, power stations, farms and telecommunication networks.

The money mostly comes from loans from the Chinese government and banks it controls.

And much of it ends up paying Chinese companies, which closed deals worth £94 billion last year as part of BRI according to bank HSBC.

BRI is partly a way to “export overproduction” and avoid a crash in the Chinese economy.

Sustainable

China has gone through three decades of rapid economic growth. Such growth isn’t sustainable.

And some of the industries it created—particularly in heavy engineering and construction—have far outgrown the demand.

Despite plant closures, China still produces about half the world’s steel. “Ghost cities” of newly built tower blocks take years to fill.

The railway between Qinghai in China and Tibet

The railway between Qinghai in China and Tibet (Pic: Henry Chen )


Railways are central to BRI. No wonder. China will soon have more than 18,000 miles of high speed lines linking 80 percent of its cities.

China also has a foreign exchange reserve of more than £2 trillion. The Asian Infrastructure Investment Bank (AAIB) that finances BRI was launched to make better use of that hoard.

Many BRI projects are unlikely to make a profit. Their value lies in redrawing the map. Most of China’s exports go out through the seas to its south and east, where neighbouring states and the US jostle for control.

Its trade with Europe, Africa and South Asia and its energy imports from the Middle East go through the narrow Malacca Strait. That bottleneck makes it vulnerable.

Land links to the West and direct routes to the Indian Ocean (see box) would make all the difference.

BRI is impossible without stepping on other superpowers’ toes.

But China’s chequebook diplomacy has also won it allies—even inside the European Union (EU).

China set up the “16+1” group to develop links with the EU’s newer central and eastern European members.

And after being broken and humiliated by the EU, Greece became China’s “most reliable friend” in Europe. It blocked tougher EU screening of Chinese investments and EU statements criticising China’s human rights abuses and aggression in the South China Sea.

Republics

China is the biggest trading partner of former central Asian republics once ruled by Stalinist Russia. And it is the biggest backer of oil-rich Venezuela in what the US once considered its “back yard”.

Its immense footprint in sub-Saharan Africa also gives it political clout.

When Zimbabwe’s army began its coup last month, its chief Constantino Chiwenga had just returned from a meeting with his Chinese counterpart in Beijing.

Western media coverage of China’s growing global reach often accuses it of “a new colonialism”.

Today BRI is part of Xi’s “China Dream”—a “great renewal of the Chinese nation” to make it a global power by the state’s 100th anniversary in 2049.

This is sheer hypocrisy. When it comes to bullying and swindling the world, China lags far behind Western states and institutions.

BRI is often compared to the Marshall Plan—the US fund for the reconstruction of Europe after the Second World War.

But the Marshall plan was about Cold War manoeuvring. It excluded some countries and imposed harsh conditions on others.

The International Monetary Fund and World Bank have used their control of poor countries’ debt to force through free market reforms.

Chinas boom has come of the backs of workers

China's boom has come of the backs of workers (Pic: Silly Rabbit, Trix are for kids/Flikr)


Aid and loans from China don’t have these strings attached—and that’s central to its appeal. But that doesn’t mean that China’s policy is altruistic.

China’s trading relationships are often based on draining raw materials to feed its own development while contributing as little as possible to the host economy.

Miners in Zambia frequently clash with Chinese bosses. And the 2011 election was won by Michael Sata who rose to prominence by making anti-Chinese rhetoric—although he has since changed his tune.

China’s foreign policy has evolved alongside its economic development, following a decidedly capitalist pattern. Though carried out in the name of Communism, the Chinese Revolution of 1949 unleased the development of Chinese capitalism.

Before 1949 China was dominated by foreign powers. The Communist Party, led by Mao Zedong, won independence—then had to grow an economy and state strong enough to keep it.

The state directed the economy in place of the market, but in pursuit of the same goal. It built up China’s industrial base—at the cost of millions of lives and workers and peasants’ expense.

Mao’s successor Deng Xiaoping introduced market forces and integration with the world economy. Mao’s loyalists resented Deng’s “betrayal”. But his market-based “Socialism with Chinese Characteristics” built on the results of their state capitalism.

Most successful capitalist economies initially relied on the state to lead their development—and keep out foreign competition.

Britain certainly only became a “great trading nation” by protecting its own textile industries while smashing those of rivals.

And as capitalist firms get bigger, they come to rely on the state to open up new markets.

Competition

By the 20th century this led to fierce competition between European states—first the colonialist “Scramble for Africa” then two world wars.

They only stopped fighting each other to band together against the rest of the world and to attack the working class. Deng’s other legacy was a cautious foreign policy.

His slogan of “keep a low profile and bide your time” was followed long after his death.

But the economic growth that “low profile” helped incubate eventually made his policy untenable.

Today BRI is part of Xi’s “China Dream”—a “great renewal of the Chinese nation” to make it a global power by the state’s 100th anniversary in 2049.

BRI’s success is far from guaranteed. Nepal and Pakistan both cancelled Chinese plans to build hydro-electric dams because they considered the terms unfair.

If the state spends too much of its reserves it risks spooking private investors. And a crisis in China’s economy could reduce BRI to a global network of abandoned building sites.

But if Xi’s China Dream does succeed, it can only grant a new lease of life to a capitalist system well past its use-by date.


New routes rubbing old sores

BRI’s most important section runs through Pakistan from Xinjiang in western China to a huge new port at Gwadar.

This £42 billion China-Pakistan Economic Corridor (CPEC) will bring Chinese ships an ocean closer to Europe and Africa and within spitting distance of the Persian Gulf.

Gwadar—along with similar projects in Myanmar and Djibouti—is also part of the “String of Pearls” plan to surround the Indian Ocean with Chinese ports.

The US army and navy are trying to limit Chinas control of the South China Sea

The US army and navy are trying to limit China's control of the South China Sea (Pic: Headquarters Pacific Air Forces Public Affairs)


Gwadar is in Balochistan, where a separatist movement opposes CPEC for bolstering Pakistani rule.

China’s support for the regime and its persecution of Muslims in Xinjiang also makes its nationals a target for jihadist insurgents.

So China is exporting social control too. CPEC’s “Safe Cities” initiative ranges from training the military and police to reshaping cities with cameras, lighting and whole new buildings.

CPEC also runs through disputed territory, administered by Pakistan but claimed by India.

The Indian government said it could not “accept a project that ignores its core concerns on sovereignty.”

The Indian government has become BRI’s greatest opponent. It has teamed up with Japan to launch BRI’s rival, the Asia-Africa Growth Corridor.

And to avoid being hemmed by the “string of pearls”, it is waging a scramble for Sri Lanka.

A Chinese loan paid for Chinese firms to build a deep water port at Hambantota, then when Sri Lanka couldn’t pay a state?owned Chinese firm bought it out. India’s government responded with a bid to develop ports at Trincomalee and Colombo.


Paths to peace?

Chinese propaganda for BRI emphasises a rose-tinted version of the historic Silk Road trading routes. It promises that commerce can turn the world’s nations into “one big happy family”.

But a better parallel might be the Berlin-Baghdad railway in the early twentieth century.

At first it seemed a great way to make money. French investors got the ball rolling, cheered on by the British business press.

But within a few years the threat of competition for oil in the Middle East and access to colonies in India and Africa caused bitter clashes.

Rows over the railway pitted France, Britain and Russia against Germany and the Ottoman Empire.

The argument that economic links could prevent conflict was made then too. German Marxist Karl Kautsky predicted that rival states could form a united “cartel” with too much common interest to lose by fighting each other.

He published his theory of “ultra-imperialism” in 1914. Months later the First World War broke out.


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