Over the weekend, while the world’s largest economy was focused on internal fallout from the presidential sacking (and subsequent threatening) of the United States’ FBI Director (and amid calls for impeachment of President Trump), China hosted its ‘One Belt, One Road’ Summit, grandly showcasing its US$1 Trillion spending plan for transport and other infrastructure connectivity projects throughout Asia, Africa, and Europe. (See map below of covered countries in the One Belt, One Road initiative covering six east-west or north-south transregional corridors, affecting 4.4 billion people, and around 65 countries. Also available here.)
On its own, the scale, frequency, magnitude, reach and undisclosed duration of the One Belt, One Road initiative significantly outspends traditional project-by-project development finance decisions of established international financial institutions such as the World Bank and the Asian Development Bank, with its funding sourced from the China Development Bank, the China-led Asia Infrastructure and Investment Bank, four state-owned commercial banks, China’s Export-Import Bank, and China’s Silk Road Fund. The One Belt One Road initiative has been hailed as “perhaps the world’s largest platform for regional collaboration”, with Chinese President Xi Jinping declaring that the initiative underscores “the need to improve policy coordination and reject beggar-thy-neighbor policies…[the] need to seek win-win results through greater openness and cooperation, avoid fragmentation, refrain from setting inhibitive thresholds for cooperation or pursuing exclusive arrangements and reject protectionism.” While Human Rights Watch raised concerns about the long-term and short-term human rights impacts of the behemoth development projects under the One Belt, One Road initiative, others have raised geopolitical caution with a China-dominated global development trajectory.
No other country will be in a position to directly influence regional and/or global development outcomes, with projected greater impact than the United States’ reconstruction assistance to Europe under the Marshall Plan. The irony here is that while the United States under the Trump administration may keep publicly lionizing the virtues of bilateralism in the international economic order by threatening to withdraw from (or when that proves difficult, settling on renegotiating) the terms of multilateral trade (whether under the World Trade Organization or the North American Free Trade Agreement), China is literally leading the path through a bilaterally-negotiated ‘Globalization 2.0’ through its One Belt, One Road Initiative. While much of the technical contours of One Belt, One Road projects remain undisclosed, this post examines some aspects of the rising de facto Chinese global monopoly on bilaterally-negotiated development finance standards and foreign investment governance.