The views and opinions expressed or implied in WBY are those of the authors and should not be construed as carrying the official sanction of the Department of Defense, Air Force, Air Education and Training Command, Air University, or other agencies or departments of the US government or their international equivalents.
By Shannon McGurk
/ Published August 17, 2020
The People’s Republic of China’s (PRC) initial goals for the Belt and Road Initiative (BRI) were to use state-owned enterprises with strong links to the People’s Liberation Army to boost PRC domestic growth, solve internal demographic problems, and realize the PRC’s strategy for dominating global economic-security diplomacy.
The global COVID-19 pandemic has accelerated the export of China’s worst characteristics, while prompting delays and disruptions to BRI construction and investment plans. These delays risk years of planning and hundreds of billions of dollars in PRC economic diplomacy. Quarantine measures are keeping PRC workers from foreign building sites. PRC and target-country firms supplying BRI projects face acute labor shortages, and fears are growing that Chinese workers will inadvertently spread the virus to new locales. The outbreak of COVID-19 in Wuhan and its rapid global spread present China with a series of dilemmas in advancing the BRI.
The BRI and COVID-19
The BRI is the Chinese Communist Party’s (CCP) international, transcontinental, multidomain strategic infrastructure construction project. It includes at least 68 countries with an announced investment by participants as high as 8 trillion USD across Europe, Africa, and Asia. While originally envisioned in 2013 to be limited to 60 countries, the CCP has expanded the BRI—at the time of this writing, Italy was announced as the 130th participant country.
The BRI has become an infrastructure financing initiative for a large part of the global economy that will also serve key economic, foreign policy, and security objectives for the Chinese government. While launched as an infrastructure project, it is now a strategic foreign policy initiative that showcases China’s alternative vision of global economic and political order with concentric rings of public and private international stakeholders.
Today, BRI progress is slowing as participants confront COVID-19 and the reality of indebtedness to the PRC. BRI infrastructure contracts had been awarded almost exclusively to Chinese state-owned enterprises with strong ties to the People’s Liberation Army (PLA), employed PRC labor and supplies, and relied on cheap credit from Chinese state-owned banks to tie participant countries’ resources and economies back to China.
While it is easy now to infer that PRC divestment in BRI is due to COVID-19 (reports from Beijing indicated that funding for BRI projects dropped in early 2020 by 80 percent), some of these cuts were already under way before the pandemic.
The Urbanization Dilemma
The PRC has almost 20 percent of the world’s population but only seven percent of the earth’s water (and nearly 25 percent of China’s water is polluted). Chinese agriculture has not modernized to any great degree; in fact, China is perhaps more strategically dependent on imported food than any great power since Ancient Rome.
Growing urbanization has exacerbated these food and water shortages, as urban populations use far more water than rural societies. Urbanization also creates a demand for more water-intensive food (such as pork and beef), especially as city-dwellers become more prosperous. China’s urbanization rate continues to increase: by the end of 2017, some 58.52 percent of its population was urbanized, compared with only 17.92 percent in 1978.
To combat these critical problems, the PRC needs a profitable strategic outreach project that gives China access to resources, investment, and economies receptive to its exports, chief among which are its people—the BRI serves to address the aforementioned policy goals.
BRI and a Post-COVID World: Harsh Realities, Potential Opportunities?
China’s management of the pandemic is revealing an urgent need to manipulate narratives and contort the truth. Some critics suggest the CCP may have launched COVID-19 to attack the US economy.
All BRI participant nations represent sources of disruption to China. Falling oil prices, combined with spiraling demographic trends, run the risk of collapsing the Chinese economy and straining the CCP’s legitimacy to the breaking point.
Chinese health-related initiatives will come under more international scrutiny. Digital Silk Road efforts will be held to global legal standards, transparency and technical scrutiny. While greater scrutiny may ultimately strengthen PRC standards and performance, this may come at a cost that could strain CCP legitimacy.
Potential Future A
Continuation: China Plays Not to Lose
China continues BRI economic policy at its most fundamental level, increasing participant-nation debt dependency and using BRI trade relationships to justify infrastructure development that accommodates PLA deployments. However, the scrutiny of the post–COVID-19 world means the CCP, accustomed to controlling almost every aspect of its initiatives, loses control of the broader BRI narrative. Loss of control at the speed of effective strategy is not something the CCP is prepared to weather.
Potential Future B
Discipline: China Plays to Win
China rebounds from COVID-19, consolidating gains and accelerating the BRI on its pre–COVID-19 trajectory. PLA expeditionary forces deploy along the BRI network. Participant BRI countries with lower financial reserves and fewer options are hardest hit, leading to BRI governments across the spectrum tightening control of their respective populations. In this scenario, COVID-19 may serve as a trigger event for a global financial reset.
Potential Future C
Systemic Collapse: China, Asia, or the World?
Demand for international transparency in a post–COVID-19 BRI world becomes a cascade to Beijing. The CCP is overwhelmed by a loss of information control, decrease in direct influence over BRI member nations, and the demand signal for openness. China attempts to fulfill higher manufacturing quality expectations associated with new norms in global trade. European countries lower protectionist barriers in response to trade competition. To compete, Chinese companies must make higher quality investments in better European companies. The CCP tries to exert greater influence on these transactions with increasingly less success.
China begins to look outward to export its domestic problems. Having already neutralized resistance in Hong Kong, Taiwan is the first external actor to feel threats to its stability. Exploiting COVID-19 uncertainty, China attempts to take control of Taiwan using Chinese civilians and civilian maritime vessels. Advances in algorithmic warfare enable China to employ digital twins of US forces, equipment, and leadership in a disinformation campaign against Taiwan. At the same time, wary of North Korea’s nuclear capability, China feels compelled to intervene militarily and stabilize the country.
Potential Future D
Transformation: Fierce Competition with Clearer Eyes
Driven to cooperate as well as compete, the CCP scales back global investment, increases the leverage its banks exert on BRI participant countries, and exploits emerging technologies deployed in the developing world to mature trade opportunities and BRI interdependence. The CCP sees the United States as an existential threat to manage but also as a means of political and economic exploitation to ensure CCP survival. This continues the dangerous dynamic currently in place in which the CCP simultaneously hates, fears, but also needs the United States. The United States slowly rebounds from COVID-19 and repatriates critical domestic manufacturing. PRC exports decrease from 15 percent to as little as 5 percent of China’s economy, driving Beijing to access currency reserves and scale back BRI adventurism. Washington encourages building a mutually respectful and beneficial long-term bilateral relationship, maximizes use of the BRI so both sides win based on realistic expectations, competition, and cooperation in an agreed upon framework.
COVID-19 reveals the harsh reality that China launched the BRI to address existential domestic needs, which, if unaddressed, may contribute to a collapse of the CCP’s leadership. BRI regression will present renewed opportunities for cooperation with the United States as well as further friction points for competition. This is particularly critical in terms of which strategic narrative—Washington’s or Beijing’s—is embraced by global opinion in the aftermath of COVID-19.
Mr. McGurk is a retired US Army Foreign Area Officer (China). While on active duty, he commanded at the troop level and served as an executive officer at the squadron level. He served on the Joint Staff, Army Staff, as the Defense Intelligence Agency China desk officer, and as an assistant Army attaché at the US Embassy, Beijing. Upon retirement from the Army, he worked throughout the intelligence and operations communities for Northrop Grumman, TASC, ManTech and General Dynamics and throughout the interagency community on the Air Staff as an Air Force civilian. Mr. McGurk recently returned from Afghanistan and is currently working as a long-term analyst and futurist consultant for the Air Force Warfighting Integration Capability, Strategic Foresight and Futures Branch (AFWIC).
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