How China exerts soft power with hard cash

By George Koo

The rapid closing of ranks in the formation of the Asian Infrastructure Investment Bank inevitably directed the world’s attention to China’s Silk Road initiatives as proposed by President Xi Jinping, which serve as companion pieces to the bank.

The initiatives, popularly abbreviated as “One Belt and One Road, has two parts. On the maritime side, it involves developing a string of ports and harbors from the coast of China around South China Sea and the Indian Ocean to Africa through the Suez Canal, ending in Athens, Greece, thus replicating and expanding China’s ancient maritime shipping lanes.

The landward side involves a high-speed rail line that runs from China across Central Asia to Istanbul. It then travels north to Moscow and then across Western Europe terminating in Holland.

No one can accuse of China of thinking small. But then this is a country that built a 3,000 mile Great Wall and 1,000 mile Grand Canal in ancient days relying on manual labor. More recently, it constructed a high altitude rail line across the Tibetan plains (one that Swiss engineers did not think was possible). China also erected the Three Gorges Dam in modern days using modern technology.

Therefore, when China proposes ambitious projects of this type, other countries quickly express interest. Whether China is a friend or possible foe becomes immaterial, they understand being a stop on the new Silk Road means the opportunity to participate in booming international commerce and share in the prosperity to come.

China is not going around offering handouts or free rides but the opportunity to partner with China.  Since the financial crisis of 2008, China has shown that they can take on mammoth infrastructure projects and get them done on time and within budget.  Since then, China has transferred its experience and expertise to Africa and Latin America to put up railroads, highways, hospitals, and schools.

In fact, the origin for the bank and the Silk Road initiatives can be traced to the financial crisis of 2008. The near collapse of the global economy caught all nations, including China by surprise. While the crisis dragged down the western European and Japan’s economy, China managed to build a seawall to shelter from the financial tsunami by investing heavily in domestic infrastructure projects. Now, they are ready to apply what they learned to help others.

The financial crisis also shocked Beijing and shook their faith in American leadership. Chinese officials began to doubt Washington’s ability to manage the U.S. economy responsibly and guard the value of the dollar from the rapacity of Wall Street. Beijing began to look for safer harbors and reduce China’s exposure to dollar holdings.

Thus, getting a decent return for the roughly $4 trillion in their reserve became a reason for the infrastructure bank and Silk Road initiatives. At the end of the day, upon completion of its Eurasian belt and road, China will become one end of an integrated world economy that spans the globe. In the meantime, China will be putting their money and their construction force to work.

As the Eurasia project moves forward, China will be working with as many as 65 countries that will be touched by either the belt or the road. They will have to sort through a host of political, economic, cultural, social and environmental issues. They will have to negotiate and conclude joint development agreements and plans motivated by common interests and shared returns. These will be formidable challenges.

If the plans proceed as envisioned by President Xi, it will become a constant reminder of China’s soft power and enhanced stature as a world leader and responsible stakeholder. China won’t have a ring of 1,000 military bases around the world garrisoned by American troops. But it will have the din of jackhammers to remind the local people of the economic benefits to come.

China Daily ran a supplement in the Wall Street Journal explaining the one belt and one road initiative. The full-page infomercial included a map of the world that laid out the high-speed rail and the seafaring routes moving westward to Europe.

Map of high speed rails-2

Intriguingly, the map also showed a conceptual line that ran from China through Siberia across the Bering Strait down Alaska and Canada all the way to the U.S. Such a rail link, connecting the frozen expanse of water between Asia and the U.S., can take people from one side to the other side of the Pacific in two days or less.

Technical experts inside China have expressed confidence that China has the technology and expertise to build such a high speed, trans-Pacific railroad. “All” it takes is the mutual political goodwill among four countries: Canada, China, Russia and the United States.

That’s one big Chinese dream to share with the world.

Dr. George Koo recently retired from a global advisory services firm where he advised clients on their China strategies and business operations. Educated at MIT, Stevens Institute and Santa Clara University, he is the founder and former managing director of International Strategic Alliances. He is a member of the Committee of 100, the Pacific Council for International Policy and a director of New America Media.



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