The Challenges of Globalization
Responding To: Opportunities and Challenges on the Belt and Road Initiative
The New Silk Road: Should Washington Cooperate or Not?
Washington cannot keep largely ignoring or undermining China’s Belt and Road Initiative (BRI). Announced by President Xi Jinping in 2013, BRI aims to connect China and Europe through a web of roads and to create new maritime trade corridors that will provide BRI members access to new markets. BRI is China’s most ambitious attempt yet to expand its economic power westward, with the intent of creating the largest economic bloc in the world. Yet, despite the magnitude of the initiative and its influence on almost every region in which the United States has strategic interests, the U.S. Congress has not hosted a single hearing examining the BRI plan. The United States is focusing solely on the challenges and ignoring the multitude of benefits in collaborating with the initiative.
First, the fact that the BRI is China’s mechanism for moving its foreign-exchange assets from buying U.S. debt to investment in developing foreign economies presents a challenge. During the past few years, China has been increasing its share of U.S. treasuries; however, the new economic conditions have made Beijing reconsider this arrangement. This means that the BRI is China’s path towards withdrawing from being the U.S.’s banker and investing its capital in infrastructure.
Second, BRI serves an important purpose within China’s foreign policy. Since the announcement of the BRI, China’s geopolitical power has gotten stronger. Beijing has developed multi-billion dollar infrastructure initiatives, has made significant acquisitions in Europe, and has created huge, Asia-centric financial institutions. As the Trump administration slowly pulls the United States out of more and more international political and economic agreements—citing the “America First” plan—China is stepping in to pick up the reins. Many of the countries already involved in the BRI would have formerly received economic development funding from the United States or U.S.-run programs, and they are feeling those cuts sorely. With this single dramatic proposal, China is both spearheading the development agenda around the world, and attempting to steal the United States’ position as the most influential economic powerhouse.
However, Gal Luft, co- director of the Institute for the Analysis of Global Security, said, “[The Belt and Road initiative] is a generational project and it will take a long time, but the United States needs to engage now.” Luft advocates that by engaging now, the BRI can be an area of cooperation between both countries. During the Obama administration, climate change was the topic that brought the United States and China to the table when negotiations were deadlocked. However, for the Trump administration climate change is not a priority, and therefore BRI, or more general infrastructure development, can be the new common ground that allows them to move forward.
Additionally, the BRI could also allow us to expand our conversation on trade with China. The current way countries engage in trade is based on bilateral or multilateral trade agreements. This system lead to a zero-sum game that is not conducive to a stable relationship between the United States and China. BRI offers a new way to talk about trade. Instead of discussing what they’re trading, countries are discussing how to trade; more specifically, international infrastructure such as trains, pipelines, aviation hubs, and high-speed railways. These systems will reduce transportation costs for all players.
Despite these aspects of the BRI deal, many might think that U.S. collaboration on the Belt and Road initiative will only advance China’s interests and will actually hurt the United States. However, this is a limited view of the nature of political economic collaboration: it ignores the option to join the initiative in a limited capacity, and only endorse what aligns with national interests. By participating in the initiative we are not necessarily agreeing to invest in the whole package, but to give them all due consideration, before deciding on the United States’ particular investment stance.
The most important opportunity that U.S.- China cooperation on the Belt and Road Initiative will bring is foreign direct investment and infrastructure development. The United States cannot miss out on the opportunity to take part in the creation of the geopolitics and geoeconomics of this international system, and it cannot deny American businesses and investors the opportunity to partake in the world’s newest economic bloc.
Yamillet Payano is a senior at American University majoring in economics and mathematics with a minor in Chinese.
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