In the postwar world, globalization was led by the West but it benefited only a few advanced economies. After China’s three decades of rapid growth, the Belt and Road initiatives hold potential for more inclusive globalization.
LAST May, the Belt and Road Forum for International Cooperation flooded Beijing with almost 30 heads of state and government leaders, 1,500 delegates from over 130 nations, and over 70 international organizations. It underscored commitment to more inclusive globalization, particularly by emerging and developing economies. By 2050, their contribution to global GDP growth is expected to climb to 80 percent.
For half a decade, my great concern had been that the Philippines would be left in the margins of the initiative, due to geopolitics. Consequently, I have often spoken about the benefits, costs and trade-offs of the plan to policymakers, senior executives and NGOs. It is difficult to see how the “Asian Century” could ever be realized without the One Belt, One Road (OBOR) initiative.
Thanks to the recalibration of the Philippines’ foreign policy by the Duterte administration, things are now changing. But more than four years were lost. It translates to billions of pesos of missed opportunities.
OBOR as ‘shared destiny’ with Asean
In the West, the One Belt One Road (OBOR) is portrayed as a new plan. Yet, it was unveiled already in September 2013. It was promoted by Premier Li Keqiang during state visits in Asia and Europe. However, it is instructive to recall that it was first officially proposed by President Xi Jinping in a speech to the Indonesian Parliament in October 2013. The place, the time, and the content matter.
In the past, many regional initiatives have been driven by smaller but more advanced economies in Southeast Asia. Xi made a point by unveiling the plan in Southeast Asia’s largest emerging economy. He spoke at the time when the Obama administration was pushing hard the Trans-Pacific Partnership (TPP), which superimposed advanced-economy norms on emerging economies and excluded China.
In turn, the content signaled China’s Asean policy under the new leadership. Xi highlighted the “shared destiny” of China and Asean members, saying that China is ready to open itself wider to Asean countries and to enable Asean countries to benefit more from China’s development. Xi also said Beijing welcomed a constructive role by countries from outside the region in the development and stability of Southeast Asia, but these countries should respect the diversity of the region and do more to facilitate regional development and stability.
If the original Silk Road reflected the ancient world economy until the Italian Renaissance, the contemporary OBOR includes countries on the original Silk Road through Central Asia, West Asia, the Middle East and Europe. It also features a maritime road that links China’s port facilities with the African coast, through the Suez Canal into the Mediterranean.
The OBOR has potential to redirect domestic overcapacity and capital for regional infrastructure development to improve trade and relations with Southeast Asia, Central Asia and Europe – and over time across the Americas and Sub-Saharan Africa.
In the West, the OBOR has often been seen as a “Chinese counterpart” of the postwar US-led Marshall Plan, by both the proponents and critics of OBOR. There are parallels, but differences matter more.
Marshall Plan vs OBOR
Beginning in 1948, the Marshall Plan was created to help rebuild economies in Western Europe for four years and to insulate the Soviet Union. However, its time perspective was very limited. It endured roughly three years. In contrast, the time perspective of the OBOR is far longer; it could last for decades.
Ultimately, the Marshall Plan was designed not just to support European recovery, which was critical to US long-term growth, but to insulate the Soviet Union in the Cold War. In contrast, the OBOR has no enemy. It is not exclusive, but inclusive.
Third, the Marshall Plan did speed up European postwar recovery but it was predicated on participation in the US-led North American Treaty Organization (NATO). Some 75 percent of the total aid went to just five countries: the UK, France, West Germany, Italy, and the Netherlands, which also became the NATO’s core members over time. Today, the NATO still accounts for over 70 percent of all military spending in the world (US: 38 percent, non-US NATO: 32 percent), although friction about NATO financing by members reflects underlying pressures among the members.
Unlike the Marshall Plan, the OBOR does not predicate participation on membership or tacit support of military alliances. You are not expected to join the Shanghai Cooperation Organization (SCO) to participate in the OBOR. The latter is focused on 21st century economic development – not on 20th century Cold War.
Finally, the key to the OBOR is economic development. While there is no consensus on exact amounts, the cumulative aid in the Marshall Plan may have totaled $13 billion (some $130 billion in 2016 dollar value). These efforts pale in comparison with the OBOR, which involves far greater cumulative investments, which are currently anticipated at $4 trillion to $8 trillion, depending on timeline and scenario estimates (see table).
Need for global economic cooperation
Irrespective of the intentions of its original founders, NATO’s rearmament contributed to the Cold War, and an ideological division of the world. As a result, the postwar internationalization benefited mainly a few advanced economies but not the decolonizing nations, which were penalized by costly conflicts that were exported to the Third World as the direct result from the Cold War.
It is these historical failures in economic development that the OBOR has potential to alleviate over time, through renewed global cooperation, the rise of more inclusive multilateral inter-governmental development banks, and new and massive infrastructure initiatives in a number of pivotal emerging and developing economies that are still amid industrialization or the drive to industrial maturity.
The Belt and Road does not preclude advanced economies, which can participate as well. But this time the results must benefit emerging and developing economies. It is a bold plan and like all plans it has to adjust to realities over time. Nevertheless, OBOR has the potential to change the 21st century – for the better.
The author is the founder of Difference Group and has served as research director at the India, China and America Institute (USA) and visiting fellow at the Shanghai Institutes for International Studies (China) and the EU Center (Singapore). For more, see http://www.differencegroup.net/