'It's a Mistake to Underestimate China'

The country’s massive infrastructure project is a blueprint for growth in the developing world.

Chinese President Xi Jinping raises a glass of red wine
Nguyen Huy Kham / Reuters

BEIJING—At the recent APEC CEO Summit in Vietnam, President Donald Trump said the United States would refocus its existing development efforts in Asia toward infrastructure investment that promotes economic growth. While the room was full of hundreds of corporate and government officials from the region and around the world, Trump was delivering his remarks to an audience of one: China. “We are … committed to reforming our development finance institutions so that they better incentivize private sector investment in your economies, and provide strong alternatives to state-directed initiatives that come with many strings attached,” he said.

But there are few signs that Washington has the political appetite to compete with the kinds of investments China has been making around the world. The most visible aspect of Beijing’s ambition to extend its economic and political influence around the world is the Belt and Road initiative, a massive infrastructure plan that aims to connect China to its Asian neighbors and farther afield. Think of it as a hub-and-spoke model: China, the hub, builds infrastructure in countries around the world, the spokes, in order to facilitate trade. China is building roads, bridges, seaports, and airports in more than 60 countries to facilitate the import of raw material in order to further fuel its own economic growth while it searches for new markets. Unlike the West, China offers cheap loans, doesn’t ask questions about human rights or the environment, and doesn’t export its political ideology.

As a result, thousands of China’s workers are overseeing projects as far afield as Belarus, Ethiopia, and Sri Lanka—places in dire need of infrastructure investment. “The Chinese are good at marrying market needs with geopolitical goals,” Daniel Kliman, the senior fellow in the Asia-Pacific Security Program at the Center for a New American Security in Washington, told me. “It’s a mistake to underestimate China’s ability,” he added.

And yet, that’s often exactly what America seems to do. In the Obama era, Washington’s reaction to China’s growing clout ranged from ignoring its efforts at regional economic integration to unsuccessfully urging regional allies to reject a Beijing-led infrastructure initiative, to finally negotiating a massive multilateral trade deal that offered regional nations a viable alternative to Chinese investment. So far in the Trump era, U.S. policy has constituted withdrawing from that Obama-era trade deal, the Trans Pacific Partnership, to calling the financial terms China offers for its projects “predatory,” and, finally, to Trump’s indirect remarks about China in Vietnam. (Asian countries are going ahead with the TPP without the United States.) But for those countries that might be looking for an alternative to Chinese investment, the United States, of late, has had little to offer beyond words.

To be sure, there are challenges to China’s ambition. For one thing, the market logic underpinning some Belt and Road projects is questionable. One example: China’s investment in a Sri Lankan port didn’t get the traffic or cargo it had expected, saddling the Sri Lankan government with massive debt that it had trouble paying off. For another, the reaction to Belt and Road-funded projects isn’t always positive. Vietnam and Burma are good examples. In those countries, China is accused of importing workers, degrading the environment, building shoddy infrastructure, and eroding sovereignty. Meanwhile, regional rivals like India, Japan, and Russia, which fears China’s influence in Central Asia, are wary of Belt and Road.

But, ultimately, Kilman pointed out, “none of these challenges are insurmountable” for China. Indeed, if Beijing has shown one thing, it’s the ability to learn from its mistakes. For instance, while some of its projects may be white elephants, such as the one in Sri Lanka, they serve an important geopolitical goal; following complaints and protests in other countries, China has built local capacity and provided jobs. “Not all of what China is doing is market-driven, but there are infrastructure needs in the Indian Ocean area,” Kliman said. China is meeting those needs.

Ultimately, while America and its allies figure out a coherent response to Belt and Road, China has a singular advantage: It is offering the countries where it is investing a vision for the future. In a sense, through Belt and Road, it seeks to replicate what it has done within its own borders for the past three decades—investments that have helped lift more than 700 million people out of poverty and into the middle class. During that time, globalization has brought low-wage but steady jobs to China in sectors such as manufacturing. The tangible benefits include massive infrastructure projects, near-perfect roads, and futuristic skylines in places beyond the Western consciousness like Nanchang, not to mention major cities like Shanghai. In other words, China is telling the world it can achieve those same results.

“We’re in a new era, a globalized world,” Shao Yuqun, director of the Center for American Studies at the Shanghai Institutes for International Studies, a government think tank, told a group of U.S. reporters in Shanghai last week. “We won’t be isolated.” The Belt and Road Initiative will make sure of that.