Commentary: Belt and Road Initiative, China’s biggest brand that is too big to fail

Commentary: Belt and Road Initiative, China’s biggest brand that is too big to fail

China's Belt and Road Initiative is a marketing tool to promote Xi Jinping and the China Communist Party's right to rule, argues one observer.

China's footprint abroad is growing with its One Belt, One Road infrastructure project, with $1
China's footprint abroad is growing with its Belt and Road Initiative, with US$1 trillion in investments across Asia and Europe. (Photo: AFP/Nicolas Asfouri) 

SYDNEY: Most public discussion of China’s Belt and Road Initiative (BRI) tends to paint it as a coherent strategy of the Chinese Communist Party. 

One school argues that this strategy is largely economic in focus, the other major approach focuses on the political drivers.

What both need to consider is that either way, the BRI is actually just a brand. 

It’s a marketing tool, a label applied with a sweeping generosity to a huge range of projects being undertaken by a vast array of actors – a large proportion of which existed well before President Xi Jinping announced his pet project in 2013.

This vast web of projects and deals around the world is less about China attempting to attain global domination than about desperately promoting, among Chinese people, Xi and the Chinese Communist Party’s right to rule.

BRI companies and projects are vigorously highlighted through events such as the Belt and Road Brand Expo in Shanghai. The Chinese government has released BRI rap songs, bedtime stories, and cutesy pop songs (the latter was ruthlessly and controversially mocked in the US by comedian John Oliver).

READ: The Belt Road Initiative, a vision of a new global economic order, a commentary

READ: China's Belt and Road Initiative paved with risks, red herrings and rent-seeking behaviour, a commentary

Some of these BRI projects are state-owned, and some are private. Some are huge, powerful “national champions”. Some are small, near-to-collapse and desperate. 

Every one of these actors has their own agenda and motivation, and this is by no means necessarily to further the strategic goals of the motherland.

The 'One Belt, One Road' initiative, unveiled by Xi in 2013, envisages linking China with
The Belt and Road Initiative, unveiled by Chinese President Xi Jinping in 2013, envisages linking China with Africa, Asia and Europe through a network of ports, railways, roads and industrial parks. (Photo: AFP/Janek Skarzynski) 

ZOMBIE COMPANIES, OLD PROJECTS

What are termed “zombie companies” are an excellent example of how many actors currently implementing BRI projects are not primarily focused on serving the strategic goals of the state. 

Premier Li Keqiang has said repeatedly that zombie companies should be allowed to fail. Despite this, there are cases where the BRI is facilitating their continued staggering march.

One example of a BRI project facilitated by a zombie company is the Shaanmei project in Kyrgyzstan. 

It is an oil refinery, designed to import crude oil from Kazakhstan and Russia for refinement and use, being developed by the Shaanxi Coal and Chemical Company. 

According to van der Kley, this refinery is running at maximum 25 per cent of capacity. It is unlikely to be making ends meet, let alone making a profit.

But since it was struggling to survive in its home province, it has opted to try its luck abroad. The company is able to survive only thanks to concessional loans and state subsidies. 

There are many other examples both in Central Asia, and all over the world.

East Coast Rail Link groundbreaking
The East Coast Rail Link is part of China's Belt and Road project. (Photo: Melissa Goh)

In addition, the BRI throws its net around a huge number of People’s Republic of China infrastructure and investment projects that were already underway. 

The Shaanmei project is one such example – it commenced in 2009. 

Another is the Kunming-Kyaukpyu Oil and Gas Pipeline running through Myanmar to the Indian Ocean, which began construction three years before the BRI was unveiled. 

The pipeline itself has been plagued with difficulties and delays. Analysts have argued that the short-term benefits to Myanmar are minimal. 

Despite all of this, Kunming-Kyaukpyu Oil and Gas Pipeline has since had the BRI tag retrospectively applied and is now mapped as a BRI project by leading think tanks.

A SUCCESS IN THE EYES OF CHINA

Just because the BRI isn’t a coherent and beautifully orchestrated strategy – whether economic, political, or a bit of both – doesn’t mean it doesn’t matter. 

It absolutely does, but we have to be clear about how and why. 

Some projects will succeed, and some will fail. The progress of some, such as the ports in Gwadar, Djibouti, or Hambantota, may be more consequential to the rest of the world than that of others. BRI will be hailed as a success in China regardless.

Why BRI as a clever branding exercise matters to the rest of the world is what it tells us about what’s going on within China. 

We should not take Xi at his word and just accept the promotional imagery of China as strong, coherent, and in top shape to take on a global leadership role. 

READ: The great disconnect between China the 'developing country' and China the great power, a commentary

Chinese President Xi Jinping attends a summit at the Belt and Road Forum in Beijing
Chinese President Xi Jinping attends a summit at the Belt and Road Forum in Beijing, China, May 15, 2017. (Photo: REUTERS/Thomas Peter)

Poverty, development, unemployment, social unrest, environmental degradation, economic uncertainty, among others, are all huge headaches for the communist party.

The continued obsession with maintaining legitimacy by means of the two key pillars – national pride and material well-being – are still at the core of Chinese public policy, including its foreign policy. 

Like many things that the Chinese Communist Party does in the broader world, the BRI is aimed far more at addressing domestic issues than Xi would like to admit.

Dr Merriden Varrall is a nonresident fellow at the Lowy Institute. This article first appeared on Lowy Institute's blog The Interpreter. Read it here.

Source: CNA/nr

Bookmark