What’s So New About Xi Jinping’s Silk Road Diplomacy?

What’s So New About Xi Jinping’s Silk Road Diplomacy?

A dominant theme in China’s current diplomacy is the “One Belt, One Road” initiative, aimed to promote economic integration and “connectivity” across Asia, Europe, and Africa.  Since its introduction during President Xi Jinping’s visits to Central and Southeast Asia in 2013, Beijing has identified the initiative as its highest foreign policy priority in 2015 and most important new driver of national opening.  The National Development and Reform Commission, Foreign Ministry, and Ministry of Commerce released an action plan for the initiative in March, pushing ahead various new bilateral and multilateral deals in support of the plan, most notably the AIIB, whose charter was signed in Beijing last month.

But what is so new about Xi Jinping’s Silk Road diplomacy?  To many Chinese, “One Belt, One Road” marks a new, advanced phase in China’s reform and opening since 1978.  On the other hand, outside observers have raised alarm over the strategic intentions behind what is perceived as an effort to reconstruct the postwar international order in competition with the United States.  Such concerns, however, distract attention from the long-term significance of the Silk Road initiative, which ties together China’s enduring foreign policy goals and domestic development priorities.

China’s Reform and Opening Part II

China’s ambitious plans for regional integration in many ways reflect a natural progression in China’s rise as a global economic power.  First, China has more money.  Last year, Xi Jinping announced China’s creation of a $40 billion Silk Road Fund, and the AIIB specified $100 billion in total authorized capital.  While China joined many of Asia’s development programs in the 1990s as a beneficiary, such pledges demonstrate China’s emergence as a core benefactor over the past decade.  Similarly, while China in the past “welcomed in” foreign investment, it is now more actively “going out.”  Although China is the world’s number one destination for FDI, China’s non-financial outward investment increased by 14 percent in 2014 to reach $102.9 billion, approaching inward investment of $119.6.  According to the Commerce Ministry, China’s $2.56 billion investment in Silk Road countries during the first quarter of 2015 accounted for 10 percent its total overseas investment and surpassed inward investment from those countries, with Singapore, India, and Laos as the top three destinations.

Second, China is assuming a greater voice in regional multilateral institutions, where “One Belt, One Road” has appeared center-stage.  The China Development Forum and Boao Forum in March coincided with Beijing’s release of its Silk Road action plan and consolidation of AIIB membership from 21 Asian signatories of the October 2014 MOU to 57 founding members.  Xi’s April visit to Indonesia for the 60th anniversary of the Asian-African Conference in Bandung reinforced China’s vision for the postwar order in the context of South-South cooperation.  Last month in Europe, Premier Li Keqiang affirmed China’s participation in the European Fund for Strategic Investments, through which Chinese SOEs are seeking to advance their “go out” strategies.  And at the SCO summit in Russia on July 10, Xi Jinping and other member state leaders ratified a 10-year plan linking China’s Belt and Road to SCO development strategies, including Russia’s own Eurasian Economic Union framework.

Third, after more than three decades of coastal-led growth, Beijing has turned its attention to opening up China’s inland provinces.  Li Keqiang’s 2015 Work Report explicitly ties the Silk Road initiative to the development and integration of China’s own regions, and emphasizes the need to “make China’s interior and border areas more open.”  At the same time that Beijing has mobilized foreign support for China-centered economic integration, it has also revived provincial efforts to lead China’s opening to surrounding regions.  “One Belt, One Road” thus carries the same message of “peaceful development” a decade ago, supporting China’s continued quest to create an external environment conducive to stable domestic development.

Everyone But the United States (and Japan)

Despite Beijing’s insistence on inclusive development, its Silk Road diplomacy has instead raised concern over the strategic implications of the initiative, which includes “Everyone But the United States (and Japan).”  Chinese leaders at the March parliamentary session were clearly receptive to such concerns.  In response to references to the Marshall Plan, Foreign Minister Wang Yi argued that the initiative is “not a tool of geopolitics, and must not be viewed with an outdated Cold War mentality.”  Premier Li Keqiang exchanged pledges of cooperation with ADB President Takehiko Nakao ahead of the Boao Forum, where Xi vowed to “advance complementary and coordinated development” between the AIIB and existing institutions.  Silk Road Fund Chair Jin Qi has also affirmed the market-based principles of the Fund, which China’s Central Bank has described as a limited liability company rather than an aid agency.

Yet CCTV coverage of the countdown to the March 31 deadline for joining the AIIB focused exclusively on the successive applications of US allies, beginning with Britain.  One commentator in Xinhua described their decisions as “clear signals” to “a petulant and cynical Washington,” exclaiming “Welcome Germany!  Welcome France!  Welcome Italy!”  As part of its new package of information products on the Belt and Road, Xinhua in July released its own rating system on the investment environment of Silk Road countries, where China emerged among the top-performers.

Washington’s Response

Most of the Chinese public see nothing so surprising about China’s regional outreach, viewed as an effort to reflect China’s growing weight in the international economic system.   At the same time, many question how China will reconcile Chinese and global interests as it takes on greater international responsibilities.  But perhaps the most pressing question for Chinese is: What is the US response to China’s “One Belt, One Road?”  This question looms over the upcoming Obama-Xi summit, and as Hillary Clinton suggested at the 2012 S&ED, underscores the need for the United States and China to work together to find “a new answer to the ancient question of what happens when an established power and a rising power meet.”

See-Won Byun is a PhD candidate in the Political Science Department at GW.  She is a recipient of a Sigur Center summer research grant and is currently investigating the foreign economic strategies of China’s border provinces.