[Mihir Sharma] China should beware what it wishes for

To Indian eyes, Chinese President Xi Jinping’s big Belt and Road Forum -- which attracted 29 heads of government and representatives of 130 countries -- looked awfully familiar. It looked, in fact, like an imperial durbar -- the sort of grand spectacle that the British in India used to arrange periodically, with princelings from across the subcontinent turning up to pay their respects to the Raj.

Many, of course, would contest this comparison. The Belt and Road initiative, China’s grand plan to build trade-supporting infrastructure across the world, is being sold as a cooperative enterprise. Partner governments will, of course, have a say in what projects are approved and under what financial terms.

Even so, there are good reasons for disquiet. For one thing, the whole poorly-defined initiative might fail, burdening weak nations with unsustainable debt and stressing the Chinese economy. But even otherwise, it might ensnare China and its client states in something that will look perilously like a 21st century empire.

This shouldn’t come as a surprise. Few empires were consciously created. The British Empire may not have been born in a “fit of absence of mind,” as John Robert Seeley famously claimed, but it wasn’t exactly planned in advance, either. And we know from history how nations stumble into their imperial obligations. Trade follows domestic prosperity (or, in China’s case, enables it). Infrastructure follows trade.

That infrastructure is vulnerable to local security threats. Forts -- or more modern forms of power projection -- are built to respond to those threats. Political interference follows power projection and boots on the ground follow that.

As Peter Frankopan, the writer of a superb history of the original Silk Road, has pointed out: The process of acceleration -- from (economic) partners to having privileged positions to administrators and rulers -- was one echoed in many parts of the world that Europe came into contact with -- empire was not part of a European master plan. It just so happened that opportunities kept opening up which were too good to miss out on.

It’s easy to see how this centuries-old dynamic could play out today in places like Central Asia.

Perhaps the problem is that nobody studies the history of empires any more. They’ve been airbrushed out of the history of the West, where British Trade Minister Liam Fox could quite incredibly claim that “the United Kingdom is one of the few countries … that does not need to bury its 20th century history.” And China is one of the only two Asian countries never to be really colonized, although huge swathes of the country were occupied by the Japanese.

But the leaders of China’s Communist Party should at least have read Lenin -- and particularly the 1917 book that explains imperialism as “the highest stage of capitalism.” When capital and productive capacity builds up at home in excess of its ability to earn returns, Lenin argued, it must seek monopoly power and therefore returns elsewhere, which is how imperial projects come to be. Surely the parallels to the Belt and Road -- justified in part by the need for giant state-controlled Chinese companies to utilize their overcapacity -- are obvious.

A 21st-century empire would not look like those that came before. After all, did the East India Company look anything like the Ottomans, even when it ruled a fifth of humanity? It may be entirely true, as Belt-and-Road defenders like London School of Economics lecturer Keyu Jin have argued, that China’s “intentions are far from malicious.“ But history has a way of rendering intentions irrelevant.

Facts on the ground -- facts like unpaid debts, like terrorist attacks on your workers, like the threat of expropriation -- can change one’s thinking swiftly and reasonably enough. And the initial benefits of the scheme -- financing for infrastructure in a capital-starved developing world -- might seem powerful enough to obscure worries about the future.

As anyone in India can tell you, a controlled political environment is a big advantage when it comes to completing an infrastructure project. China’s enviable and near-unique success in this field has emerged from its own special circumstances: control of savings, control of land and control of political consequences.

But when its infrastructure-building projects fail to provide the returns that they should, when messy local politics begin to interfere with their construction and operation, then how will China’s companies and governments respond? Will they not blame the problems on failed local systems and attempt to correct those systems, to bring them into greater harmony with the successful system China has developed back home?

Infrastructure, throughout history, has never been a purely economic game. From Roman roads to American railroads to the Raj’s railways, they’ve influenced and been influenced by politics. We should not fear the economic failure of China’s grand scheme. We should worry about what will be required for it to succeed.


By Mihir Sharma

Mihir Sharma is a Bloomberg View columnist. -- Ed.


(Bloomberg)