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On Reflection | Why tensions are inevitable on China’s New Silk Road

Much-vaunted project is a thinly veiled aggressive export policy that will make mutually beneficial partnerships impossible – and offer a test for its diplomats

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Cranes at Rizhao port in Rizhao, east China's Shandong province. The New Silk Road has to help China siphon off some of its record trade surplus. Photo: AFP

China today boasts one of the most capable foreign services in the world. I have learned to appreciate its young diplomats as remarkably diligent, perceptive, and acculturated. Yet, even those bright officials struggle with an increasingly pressing challenge: to reconcile China’s promise of mutually beneficial foreign relations with a reality of unequal economic partnerships. China’s New Silk Road, also known as One Belt, One Road, is set to make that problem much worse as it is, in reality, not much more than a guise for a very aggressive export policy that will inevitably spark new tensions.

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A Chinese cargo train, to be used as part of China-Iran efforts to revive the Silk Road, arrives in Tehran in February 2016. Photo: EPA
A Chinese cargo train, to be used as part of China-Iran efforts to revive the Silk Road, arrives in Tehran in February 2016. Photo: EPA

A careful review of dozens of policy papers recently issued by various government departments affirms the need for an open world market and for China to cement stable economic relations with its partners. But it is impossible to comprehend how this can be squared with some of the other statements.

The general argument of the Chinese government seems to be that the world is in for more trouble, that protectionism looms, and that it has to act more vigorously to preserve the world market as a safety valve for its own congested economy.

Roadblocks and detours aplenty on China’s New Silk Road

The promotion of exports of manufactured goods remains key. For all China’s promises about rebalancing, its economy has become only more imbalanced. Last year, the trade surplus hit a record of US$293 billion. This trade surplus represents as much as 42 per cent of production in the manufacturing sector and the dependency of factories on exports continues to increase. The New Silk Road has to help China siphon off some of this glut.

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Employees work at a factory of XCMG Group, in Xuzhou, Jiangsu province. Two years after China unveiled a sweeping plan to rebuild Silk Road trade links with Europe and Asia, machinery maker XCMG Group has opened a factory in Uzbekistan, sent 300 staff abroad and set ambitious goals to grow overseas. Photo: Reuters
Employees work at a factory of XCMG Group, in Xuzhou, Jiangsu province. Two years after China unveiled a sweeping plan to rebuild Silk Road trade links with Europe and Asia, machinery maker XCMG Group has opened a factory in Uzbekistan, sent 300 staff abroad and set ambitious goals to grow overseas. Photo: Reuters
In one of its notes, the industry ministry vows to defend China’s international market share in labour-intensive manufacturing, given the millions of unskilled workers at home.
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