OBOR: How infrastructure funding trumps geopolitics
You know Donald Trump’s “America First” policy is “working” in the Asia Pacific when Japan wholeheartedly shows its interest in two Chinese-led initiatives – in the same week. In an unexpected about-face, Tokyo sent a big delegation to China’s first Silk Road forum, while also signaling its readiness to join the Beijing-led Asian Infrastructure Investment Bank (AIIB). The vast transnational project, the One Belt, One Road (OBOR) initiative, that Tokyo seems to be flirting with is symptomatic of a tectonic shift in international diplomacy: the retreat of Cold War-era power dynamics and the ascent of infrastructure-building as a major diplomatic tool.
Securing the involvement of 68 countries with initial costs rising to over US$1 trillion, OBOR is a clear challenge to the regional leadership of the United States in the Asia-Pacific
Securing the involvement of 68 countries with initial costs rising to over $1 trillion, OBOR, also known as Belt and Road, is a clear challenge to the regional leadership of the United States in the Asia-Pacific. As President Donald Trump continues his baffling “America First” approach to international politics, more and more foreign leaders should be excused for looking towards China for economic and political leadership.
Opportunities and integration across Eurasia
The OBOR initiative is reviving Chinese involvement across Eurasia, delivering much-needed economic aid to impoverished countries while simultaneously facilitating China’s strategic objectives both regionally and internationally. In the next decade, the Asian Development Bank has identified $8 trillion in infrastructure shortfalls across Southeast Asia, one of the most populous and poorly integrated regions in the world. This explains why Asean countries have been some of the earliest recipients of OBOR funds, with Chinese economic assistance kickstarting the construction of transnational transportation infrastructure and modern port facilities.
In northern Laos, a 417-kilometer-long high-speed rail network is being built with the assistance of Chinese investment and technical expertise, connecting the impoverished state to the economic hub of Vietnam, Vientiane. As part of OBOR, China has allocated funding for a further 2,700 kilometers of high-speed rail in Thailand, Malaysia, and Singapore as well as investing towards modern port facilities in Myanmar, Indonesia and Malaysia, linking the region’s rural populations and reinforcing economic integration across Southeast Asia. Undeniably tinged with political motivations, China’s investment in Southeast Asia will boost the regional economy, expand bilateral relations… and degrade the local influence of the United States.
Pakistan has also been among the first to benefit from OBOR, partnering with China to develop the China-Pakistan Economic Corridor (CPEC), a “flagship” project that focuses on upgrading and constructing energy, port and transportation infrastructure in Pakistan. A key fixture of CPEC has been the construction of the Gwadar Deep Sea Port, a critical trade terminus that promises to create a land route from China’s isolated Xinjiang Province to the Indian Ocean, reduce China’s energy import dependency on the Malacca Straits route, and increase China’s naval reach.
It is also hoped that China’s investment in Pakistan will have a stabilizing effect on neighboring Xinjiang province, which has been affected by ethnic nationalism and terror attacks. However, obstructions to OBOR projects in Pakistan have shown that the initiative is not inoculated against setbacks, which include India’s increasingly hostile political view of CPEC and the threat of regional militancy targeting infrastructure projects. China’s success in dealing with these setbacks, and any other future issues, will have broader implications for the long-term credibility of the OBOR initiative.
But what about Trump?
Even the US seems to be considering a role in China’s OBOR. In a surprising development, Trump backtracked on his widely publicized Sino-skeptical stance and sent a US representative to this month’s OBOR summit in Beijing. Trump’s implicit endorsement of the OBOR initiative may be an indication that his administration is taking a backseat in the Asia-Pacific, allowing Beijing to spearhead investment and infrastructure development in the region.
In the wake of the controversial US withdrawal from the Trans-Pacific Partnership (TPP) and lethargic engagement with institutions like Asean (Association of South East Asian Nations), more and more states, including major American allies like Japan and Australia, are slowly gravitating towards China. But the pull towards China is not restricted to countries either. American corporations are eyeing their potential profit margins and titans like General Electric are already vying for a seat at the table. For the next 18 months, GE is hoping to get US$7 billion in orders for natural gas turbines, up from $400 million in 2014.
For the United States, China’s OBOR initiative has become a multidimensional challenge, influencing domestic matters as well has international politics. Primarily, China’s focus on multilateral development projects has highlighted an uncomfortable domestic issue for Trump: the decrepit state of America’s civil infrastructure and Congress’s resistance to the allocation of the funds needed to address it. While on the campaign trail, Trump repeatedly touted a $1 trillion plan to rebuild and modernize America’s roads, bridges, schools, sewage systems, airports and dams.
America’s second-largest city, Los Angeles, epitomizes the state of America’s crumbling infrastructure. Despite hoping to secure the rights to host the 2024 Olympics, the city is held back because of its potholed and traffic-congested roads, an aging telecommunications system, and the lack of reliable public transport. Mayor Eric Garcetti even made a heartfelt plea to Trump’s transportation secretary, Elaine Chao, to fast-track a $1.3 billion package for the city’s subway line – but it’s unclear whether the administration will indulge him.
Worse, Congress shows little resolve to help Trump with his infrastructure plan, with many lawmakers expressing doubts that the US can afford such a massive expense at a time when the public debt is hovering around $22 trillion. If Washington refuses to cough up the money, could officials like Garcetti end up turning to Chinese funding instead?
The idea may not be as far-fetched as it sounds, but flirting with China’s initiatives in Asia or at home has far-reaching geopolitical implications. Instead of sidelining Beijing and embedding a US-led security and institutional architecture across the Asia-Pacific – like the TPP set out to do – Washington is actually laying the groundwork to follow China’s lead. By 2027, Goldman Sachs predicts that China will overtake the United States as the world’s preeminent economic power. As China broadens its commitment to initiatives like OBOR, will the international influence of a rudderless United States continue to decline?