The Chinese Communist Party enshrined President Xi Jinping’s Belt and Road Initiative (BRI) into its constitution at the 19th National Congress in October. This move signaled the depth of the Chinese commitment to its massive infrastructure investment plan and ostensibly prompted last week’s quadrilateral meeting between senior officials from the United States, Japan, India, and Australia on the future of a “free and open Indo-Pacific.” India’s participation in the dialogue is yet another signal that China’s method of implementing the BRI is driving a wedge between these neighbors and creating an opportunity for the United States to strengthen its ties with New Delhi.
The unveiling of the BRI in 2013 signaled a new direction in Chinese foreign policy. The initiative harkens to antiquity when merchants followed the “Silk Road” to trade goods between Europe and Asia. The modern version is a China-led pan-Eurasian infrastructure development program designed to increase connectivity between China and its world markets. A successful initiative presents the People’s Republic of China (PRC) a significant opportunity to demonstrate leadership on the world stage and reap dividends in increased economic and diplomatic power. How the PRC chooses to use these instruments will affect its relationship with neighboring states—particularly a rising India.
An increase in tensions between these regional heavyweights is not an outcome China advertises for the BRI. The PRC promotes the initiative as “win-win” cooperation between states and enumerates its five goals of “policy coordination, facilities connectivity, unimpeded trade, financial integration, and people-to-people bonds.” Chinese funding, using vast PRC currency reserves, will help offset Asia’s substantial infrastructure needs which have been estimated at $1.7 trillion annually by the Asian Development Bank . Participating states will receive funding, primarily as loans from PRC controlled financial institutions, and China will gain improved connectivity to world markets. This arrangement could produce the mutual benefits that are the cornerstone of BRI branding.
BRI: Chinese Economic Motivations
A successful BRI could help the PRC tackle significant economic challenges. China has vast financial reserves it can invest into infrastructure and excess construction capacity that could weigh down the Chinese economy. Loaning other countries its excess reserve funds with the potential employment of its excess construction capacity in return is a “win-win” for China. Additionally, improving connectivity with its less developed neighbors could enable China to outsource low paying jobs and move up the value chain. This move up would be a key step in helping China avoid the “ middle-income trap .” In this light, the BRI is a tool for the PRC to revitalize its economy while addressing both current and future economic pressures. If it can implement its vision for BRI and reap these rewards, China will emerge a stronger diplomatic and economic force on the world stage.
Regional Tensions: Questions of Sovereignty
China will need its neighbors’ cooperation to reap those rewards; however, Beijing’s handling of territorial disputes in the era of BRI has increased tensions in the region. The BRI vision statement claims “Principles of Peaceful Coexistence” which include a “mutual respect for each other’s sovereignty.” Contrary to this principle, China has escalated sovereignty disputes by pressing territorial claims against its neighbors. In the South China Sea, China has challenged Vietnamese claims by moving a state-owned oil rig into disputed waters and constructed airstrips suitable for military aircraft on disputed features in the Spratly Islands. On the Doklam Plateau in 2017, China challenged Bhutan’s sovereignty by attempting to extend a road into disputed territory leading to a military standoff with India, Bhutan’s security guarantor. These actions directly contradict the BRI vision statement and send a signal to China’s neighbors that it will aggressively use its instruments of power to assert claims over disputed territories. Neighboring states are now forced to consider how China’s BRI investments may be leveraged to strengthen its position on competing territorial claims.
India: Sovereignty, Encirclement, and Skepticism
Tensions between China and India predate the introduction of the BRI. New Delhi and Beijing both claim land that India sees as part of Kashmir in its north and Arunachal Pradesh in its east. A Chinese invasion of Indian controlled territory in 1962 led to war between the Asian powers, but the territorial disputes remain unsettled. Unfortunately, the BRI is already increasing the pre-existing Sino-Indian tensions as indicated by India declining its invitation to the May 2017 Belt and Road Forum citing concerns over sovereignty, fiscal responsibility and transparency.
In addition to the previously highlighted territorial disputes, BRI investments are challenging India’s sovereignty claims in Kashmir. The PRC has sponsored development along the China-Pakistan Economic Corridor (CPEC) through territory in Kashmir that Pakistan controls and India claims. From the Indian perspective, China has abandoned its neutral stance on the dispute to side with Pakistan and has sponsored an initiative that violates Indian sovereignty. China’s failure to address Indian concerns was the initial cause of New Delhi’s reluctance to join the Belt and Road Initiative. China’s unilateral implementation of its vision for the BRI over Indian objections has increased bilateral tensions.