China’s New Deal could usher in new world order

By Ralf Ostner

China´s Belt and Road Initiative and the Asian Infrastructure Investment Bank have created both: hopes and fears. Underdeveloped countries see a huge opportunity to develop their stagnating countries because the World Bank, the Asian Development Bank and Western investors failed to deliver credits and infrastructure buildings for decades, especially in Africa, the Greater Middle East and Central Asia. As the world population will increase to 12 billion people in 2050, especially in underdeveloped countries development and infrastructure building becomes a question of survival. 

The 1,000th freight train linking China and Europe this year departs from the Yiwu West Railway Station in Yiwu, east China's Zhejiang Province, May 13, 2017. From Jan. 1 to May 13 this year, the number of Sino-European freight trains has increased by 612, or 158 percent, compared with the same period last year, according to China Railway Corp.[Photo: Xinhua]

While the West concentrates on free trade, China has a two-track approach: While encouraging free trade China also has a sort of a new Keynesian New Deal with its massive expansion in infrastructure building, which is known as the Belt and Road initiative. The initiative comes at a point when Chinese internal market for steel, concrete, construction building becomes saturated. As China has come in an era of normal growth rates of 7%, it also needs new foreign markets for international production capability cooperation. For the underdeveloped countries this creates the opportunity that China will engage in credit spending for infrastructure building in other countries—by this creating economic hubs and new economic centers at the periphery which will be connected with the economic centers of the world economy. A win-win situation.

However, the BRI and AIIB also create fears. On the one side there are countries that fear that China might become too strong and will perform some sort of neocolonialism. Skeptics fear that the underdeveloped countries might become too dependent on China. Even the EU was suspicious when China engaged with over a group of Eastern European countries for its Belt and Road projects as it thought that China would create an Eastern sphere of influence within the EU. However, China and the EU signed a framework agreement which coordinates the infrastructure projects of the EU and the China-proposed initiative and the European skepticism has vanished and the initiative is now better understood by all European countries.

But there also some jealous groups in the West who don’t want to see a strong China that might shift the power balance in the direction of multi-polarity or a new type of great power relations. In the USA the election campaign is strongly dominated by slogans like “Make America great again” and focused on China as a main competitor, portraying a China threat and hopes that confrontation with China could revitalize the old unipolar world order of a Pax Americana. Therefore many of these interest groups will try to portray the Belt and Road initiative as kind of neo-imperialism and neo-colonialism and wish that it will have no success.

China is still accustomed to its domestic standards of labor and environment regulations as well as relevant investment policies. As it reaches out to other countries it will face labor unions, environmentalist groups, NGOs, protectionist governments and varied political climates due to different cultures. These differences will naturally create some barriers when executing the projects of the Belt and Road initiative. While pushing its infrastructure projects overseas, China may also be questioned by those unaware of its green efforts.

In summary, China should try to prove that the Belt and Road initiative is protecting workers and the environment. If China makes clear that it will comply with international standards, then the initiative will be welcomed by most countries and people as a huge development project, a global New Deal for the elimination of hunger, starvation and underdevelopment, an initiative to revitalize the sluggish world economy and by this creating welfare for all mankind.

(Ralf Ostner is a German political scientist and Chinese translator.)