"Belt and Road": The intersection of multiple subjectivity

▍Introduction

As of the spring of 2022, 148 countries have signed the "Belt and Road" cooperation agreement, but the degree of participation of each country is different. Some are carried out in full swing, while others are nominally involved. The "Belt and Road" countries cover 65% of the world's population, 1/3 of GDP and 1/4 of total trade. A 2022 forecast states that "the total expenditure of global 'Belt and Road' projects may reach US$1.3 trillion by 2027", and other economic forecasts estimate that "there will be more than 2,600 projects worldwide, worth US$3.7 trillion." In 2014, China established a Silk Road Fund worth US$40 billion, and by 2018, it had invested US$126 billion. Between 2013 and 2018, Chinese companies invested US$86 billion in the Belt and Road countries, built 82 economic and trade development zones, created 240,000 jobs, and created US$2.2 billion in tax revenue for participating countries. At the same time, Chinese companies signed a construction contract worth about US$500 billion in the "Belt and Road" related to the construction, with an estimated loan amount of US$292 billion or US$350 billion. From 2013 to 2021, investment activities accounted for 40% of the "Belt and Road" projects, while infrastructure accounted for 60%. About 84% of China's investment in the Belt and Road countries flows to four regions: 27% in East Asia, 22% in West Asia, 21% in Sub-Saharan Africa, and 14% in the Middle East and North Africa.

As of the second quarter of 2020, 59% of the Belt and Road Initiative projects were "held" by government entities, with the private sector accounting for 27%, and the rest being public-private joint ventures. Most of the "Belt and Road" infrastructure projects are not huge. Between 2013 and 2018, projects worth more than US$1 billion accounted for 8% of the total projects, 32% accounted for 100 million to US$1 billion, while those worth less than US$100 million accounted for 60%. Projects cover energy (22% hydropower, 12% coal, 7% other), transportation (19% railroads, 7% roads, 8% ports), manufacturing (13%) and other industries (12%). However, by the first half of 2020, 46% of projects involved in the transportation industry accounted for 19%, energy accounted for 15%, real estate accounted for 8%, manufacturing accounted for 2%, and mining accounted for 2%. China's policy banks are the main investors: From 2013 to 2018, the China Development Bank invested US$190 billion and the China Export-Import Bank invested US$149 billion. In 2019, domestic banks provided an additional $113 billion in loans for the Belt and Road investment and infrastructure projects, but in the following two years, they only borrowed about $60 billion in funds each year.

The five major goals of the "Belt and Road" initiative are policy communication, facility connectivity, smooth trade, financial and social communication, and people-to-people communication, with multi-dimensional orientation. The Belt and Road Initiative will not only increase the "connection" between participating countries, but will also change the global investment model, financial structure, and even political relations.

Why did China initiate the "Belt and Road"? International scholars have different opinions on this, including China's pursuit of world dominance, achieving long-term economic development and self-confidence in soft power. They believe that the factors that China promotes the "Belt and Road" include: alleviating industrial overcapacity, deploying huge foreign exchange reserves, internationalizing the RMB, promoting technical standards, reducing supply chain costs, stimulating the development of ethnic minority areas in the western region, ensuring natural resources acquisition, strengthening energy security, enhancing China's position in the global economy, and maintaining sustained growth. And the attitude towards the "Belt and Road" ranges from support and enthusiastic pursuit to criticism and doubts mainly focusing on "debt trap" and "neocolonialism". So, what is the truth?

Several authors of this article conducted field research in Ethiopia, Pakistan and Indonesia respectively. The Three Kingdoms are participants in the "Belt and Road" and are in an important position in both economic and strategic direction. This article will conduct a theoretical discussion on the significance of China's "Belt and Road" initiative based on research.

▍The actual situation of the Three Kingdoms survey

Ethiopia is known as the "Belt and Road Demonstration Country". Chinese companies have undertaken many large-scale transportation and energy infrastructure projects in Ethiopia. Ethiopia itself also hopes to replicate East Asia's industrialization experience through investment in manufacturing. Ethiopia is the second largest populous country in Africa. Its capital, Addis Ababa, is the informal "capital" of the African continent and is also the seat of the African Union, the United Nations Economic Commission for Africa and other important institutions. Ethiopia has ushered in strong economic growth this century, but it also has problems such as severe poverty, low education, debt, inflation, and war. Although the country's ruling party wants to take China as a model for development, Ethiopia has been consistent with the United States in military and economic terms, which has the largest and most influential diaspora community in Ethiopia. Despite this, Ethiopia is still a model country in Africa's "Belt and Road". China has raised and built key infrastructure projects such as the Agriculture-Djibouti Railway (Adis Ababa-Djibouti Railway), the Addis Ababa Ring Road and the Light Rail System. Chinese private enterprises have also opened many factories in Ethiopia. Despite the problems of bureaucratic obstacles, foreign exchange shortages and ethnic conflicts, the proportion of Chinese companies in all foreign-invested projects in the country is still rising steadily.

Ethiopia uses the Belt and Road Initiative to achieve its own development, and there is no sign that China has played any decisive influence in Ethiopia's governance. Through the comprehensive data set, we can see that with the development of the "Belt and Road" project, China's investment in Ethiopia is becoming more and more important. Neither the COVID-19 pandemic nor the Ethiopian civil war has changed this trend. Ethiopian government officials, non-governmental organizations and academics interviewed by the authors of this article, generally believed that Ethiopia enjoys considerable autonomy in dealing with Chinese companies. At the same time, we have noticed that there are some criticisms in the local area. People do not believe that the "Belt and Road" has brought about all positive impacts, but they do not agree with the United States' statements such as "China's new colonialism" and "China's debt trap". The U.S. sanctions on the Ethiopian government, especially its exports, could prompt the country's Belt and Road related activities to increase further in the coming years.

Pakistan is China's "hardcore friend" and is strategically important because it can enter the Indian Ocean waters through Pakistan without going through the Strait of Malacca, and Pakistan is one of the largest Chinese investment recipients in the Belt and Road Initiative. The China-Pakistan Economic Corridor is called the "vanguard" project of the "Belt and Road" initiative by Chinese leaders. It connects China with the Arabian Sea and can eventually reach the Middle East to obtain oil supply. Regarding the China-Pakistan Economic Corridor, two factions have emerged in Pakistan and have put forward completely different views on the impact of the bilateral agreement.

One view believes that the China-Pakistan Economic Corridor may bring breakthrough development to Pakistan. It is expected that the China-Pakistan Economic Corridor will revive Pakistan's struggling economy and solve problems such as frequent power outages, lack of foreign investment, and high long-term unemployment rates, so as to obtain various benefits in energy, economic and social aspects. For example, by October 2021, ten coal, hydropower, solar and wind energy projects will be completed; the expressway connecting western China and Guadal will be built or improved; local commercial activities will be developed through trade and the creation of at least nine "special economic zones". In addition, the China-Pakistan Economic Corridor will create thousands of jobs for most young Pakistanis, encourage Pakistani students to study in China, and invest in health care and educational facilities, which will transform Guadal from a sleepy fishing town into a prosperous port city. These plans give the China-Pakistan Economic Corridor the potential to promote Pakistan's economic and social development, allowing it to compete with developed economies of comparable size.

Another opinion is concerned that it will be the "New East India Company" to bring about economic "colonization" and that China's plan for Pakistan will turn it into a vassal state rather than a prosperous and independent country. The possibility of the China-Pakistan Economic Corridor becoming a "New East India Company" depends on military, economic and social factors. If the Guadal port is turned into a large naval base, it proves China's view that it has a military influence on Guadal's planning. There have been criticisms that Chinese labor is treated preferentially locally, while many residents are driven away. Some are also worried about the long-standing huge trade deficit between China and Pakistan, believing that the China-Pakistan Economic Corridor may put the country in a long-term debt trap.

Based on extensive literature reviews and 80 semi-structured interviews with key stakeholder representatives, the two authors, Belle Belle and Ata Mansour, believe that the reality is between these two extremes. Since the results of the China-Pakistan Economic Corridor are still uncertain, we believe that if Pakistan treats the China-Pakistan Economic Corridor carefully, at least it will see an increase in employment rate, a stable energy supply, and through absorption technology, it will enhance its position in the global value chain.

Indonesia is the largest economy in Southeast Asia and plays a leading role in the Association of Southeast Asian Nations (ASEAN) and plays an important role in China's Maritime Silk Road Program. Joko was elected president of Indonesia in 2014, and his re-election in 2019 consolidated the new era of China-Indonesia bilateral relations. Weiduo's concept of development is reflected in a series of master plans aimed at promoting national economic development by increasing urgently needed infrastructure. In addition, his "Global Marine Pivot" ( ) plan has three similarities with China's "Belt and Road" initiative: First, Indonesia was once the "fulcrum" of marine civilization and had a brilliant maritime history; second, it focused on maritime trade and connectivity to unlock the bottlenecks in the eyes of the World Bank; and finally, it increased the urgently needed energy, transportation and commercial infrastructure. The coordination of macro strategies such as "Global Marine Pivot" and "Belt and Road" has promoted Chinese companies' investment in Indonesia.

Indonesia achieves national development goals by introducing new funds, technologies and infrastructure. Through case analysis, Angela Trito, the author of this article, believes that Indonesia is skilled and autonomous in practice. For example, Chinese companies have funded and built several coal-power plants, vigorously promoting the 35,000-megawatt power plant project in Vidodo. In addition, a joint venture between China and Iceland took over a series of mismanaged geothermal power plants and eventually successfully operated. Chinese companies have also cooperated with Indonesia's enterprise alliance to build toll roads and industrial parks, making great contributions to job creation and economic growth. Furthermore, Indonesia's Morovali Industrial Park (Park) has attracted more than US$8 billion in investments in Chinese conglomerates led by Qingshan Group, the world's largest stainless steel producer. The industrial park is currently the largest among similar industrial parks in Southeast Asia. It converts Indonesia's rich nickel resources into a product with higher added value, which has significantly improved Indonesia's export structure.

Another example of the Indonesian government leading the transaction negotiations is the Jakarta-Bandung High-Speed ​​Railway, which requires China to make longer-term and preferential commitments in technology transfer and labor localization. In order to win the construction contract for the first high-speed railway in Southeast Asia, the China Development Bank provided loans without government guarantees. Unlike other railway construction projects, in which Chinese companies and Indonesian companies form a consortium to build and operate the railway for 30 years. During the construction process, technical training should be provided to employees and a joint venture company should be established to produce rolling stocks and vehicles.

China's new investment in Indonesia has also brought challenges to the governance of both countries. As anti-China sentiment is deeply rooted in the local people, China and India need to adjust and adapt quickly to deal with the harsh and unfounded criticism that occurs from time to time. However, sometimes such criticism can also help improve the environmental and social governance of such investments. Dialogue between government officials and business circles of the two countries has also led to several changes that could improve the well-known cumbersome business environment in Indonesia.

▍The world system theory, the theory of development-oriented countries and the autonomy of countries participating in the "Belt and Road"

How to understand the impact and significance of China's "Belt and Road" initiative? Different theories will have different explanations. We believe that the theories of the world system and development-oriented countries are relatively effective, but when implemented in the specific practice of the "Belt and Road", they also face the challenges of theoretical innovation. The world system theory can explain China's motivation to create and coordinate the Belt and Road Initiative, and why other countries accept, support or oppose it. The theory of development-oriented countries can explain how different participating countries can impose the "Belt and Road" into their own development framework.

(I) World System Theory

According to the division of world system theory, most of the "Belt and Road" countries belong to peripheral or semi-peripheral countries, and they strive to maintain a semi-peripheral state, or try to move from peripheral to semi-peripheral. The core countries in the world system theory mainly refer to North America, Japan and Western Europe. These economies have high-level industrial or knowledge-based development, focus on high-skilled, capital-intensive production, and have high productivity advantages and financial and military power. Peripheral countries include many countries in Africa, the Middle East and Central Asia, as well as some former Soviet countries, which are mainly engaged in the export of primary products and labor-intensive production of low-skilled, low-wage. Unlike the theory of dependence that the way core countries exploit marginal states is to transfer wealth and resources from marginal states, the world system theory emphasizes that the form of exploitation is mainly the use of the "global" market for enterprises in core economies to transfer the production surplus of "all" workers, and the prosperity of core economies stems from their political, socio-economic and cultural structures of Asia, Africa and Latin America, thus transferring their surplus value. The world system theory also recognizes the existence of semi-peripheral countries, including most East Asian, Latin American countries and some former Soviet countries. The semi-peripheral characteristics are that they have some characteristics of core countries and peripheral countries at the same time. Compared with the core and the periphery, the semi-periphery is the most complex. As the world system theorist Emmanuel Wallerstein said, the semi-periphery is the periphery for the core and looks like the core for the peripheral countries. China is considered a semi-peripheral economy, but has the ambition to catch up with its core economy.

Some international financial institutions believe that the "Belt and Road" is "Chinese-style globalization." China is indeed promoting globalization. In the world system that is still dominated by core countries, China, as a semi-peripheral power, promotes globalization by partially abandoning American-style institutional domination. Globalization has largely inherent inequality and environmental harm. The characteristic of the "Belt and Road" is to strengthen mutual promotion with developing countries, strengthen the construction of trade, investment, loans and infrastructure, and also engage in political and cultural ties. China and other non-core countries expect to improve their global status. However, the assumption that the Belt and Road Initiative aims to replace the United States by demolishing the existing order is unfounded. Some American analysts sensationally asserted that China regards the "Belt and Road" as a path to global dominance, which is even less convincing. Until 2022, the "Belt and Road" has only been implemented for seven years. It was previously predicted that 2021 would be the best time for the promotion of the "Belt and Road" and was postponed due to the epidemic and global economic recession.

World System Theory provides at least three ways to help understand China's "Belt and Road" initiative. First, China's vision from semi-peripheral to core may fuel its increasingly bold and confident foreign policy. So, is the essence of the "Belt and Road" a grand strategy to achieve global leadership, or is it just a "spatial restoration" of China's economy? Some large Belt and Road infrastructure projects have indeed furthered China's geopolitical goals, perhaps even military strategic goals, by diversifying trade routes, such as through Pakistan to the Arabian Sea, through Southeast Asia, or through Djibouti and Ethiopia to other parts of Africa. But at the same time, examples from Pakistan and Ethiopia show that unlike core countries' activities in peripheral/semi-peripheral areas often lead to deindustrialization, China's economic and trade activities do not cause deindustrialization locally, but are consistent with the development goals of the "Belt and Road" participating countries. In fact, the "Belt and Road" and China's support for other peripheral countries can be regarded as a means for China to reduce its economic peripheral characteristics.

Second, in this context, we can see how Indonesia and other countries use the "Belt and Road" project to promote their own development. Peripheral countries are seeking to enter the semi-peripheral. For example, Ethiopia strives to enter the category of "low and middle-income countries" designated by the World Bank by 2025, and semi-peripheral countries try their best to maintain their status and strengthen their core economic strength.

Third, whether empirically or theoretically, research on South-South investment and cooperation can be enriched through field surveys of the "Belt and Road" project. There have been more theories on the interaction between core and peripheral countries, and core and semi-peripheral countries, but there are more complexity and uncertainty in the interaction between semi-peripheral and peripheral countries and semi-peripheral and semi-peripheral countries.

(II) Theory of a developing country

The first to propose the theory of a development-oriented country was Chalmers Johnson (), who studied Japan's industrial growth in the late 20th century and believed that Japan was a "rational planned capitalist development-oriented country that combines private ownership and state guidance." Other scholars quickly adopted this concept to analyze other emerging industrialized countries in East Asia. Peter Evans and Patrick Heller pointed out that South Korea was once a colony, and its income level after World War II was even lower than that of some African countries at that time, so South Korea can better illustrate the transformative role of the country than Japan. Such academic works have a profound impact and even prompted the World Bank to publish the East Asian Miracle: Economic Growth and Public Policy in 1993. Since then, research on developing countries has continued to develop. Evans proposed the concept of "embedded autonomy" to describe how developmental countries are closely linked to the private sector to align capital interests with national development, while trying to avoid becoming a predatory country with political elites controlling key resources and damaging social welfare. The debate on the theory of development-oriented countries in recent years mainly concerns what kind of political and institutional foundation is needed for long-term economic development and how to balance the relationship between the country, the market and the society.

In recent years, the theory of development-oriented countries has been used to analyze developing countries in Asia, Africa and Latin America. Our research starts from the theory of development-oriented countries, but pays more attention to the autonomy of participating governments in the process of selecting and coordinating the "Belt and Road" project. In participating countries, China's "Belt and Road" projects are intertwined with the development plans determined by the internal political needs. The internal needs of participating countries come from many factors, such as the historical relationship that affects the local people's perception of China, the connection between leaders and their own regional interests, departmental interests, social groups, and the timing of political elections. Scholars argue that political leaders tend to prioritize projects that support their electoral basis and have a broader impact on the national development agenda. For example, Malaysia's East Railway Project connects Selangor, the most developed region on the west coast of Malaysia, and three less developed states on the east coast: Kelantan, Terengganu and Pahang - the homeland of Prime Minister Najib Razak, which was negotiated by Najib. These three states are dominated by Malays. Attracting investment and growth through an affirmative policy has gathered supporters for Najib's "Malay-centric" development vision, allowing UMNO, a long-standing Malaysian party before President Mahathir took office in 2018, to form a coalition with the Islamic Party, which is UMNO's rival in the East Coast states.

In Indonesia, the influence of national politics has given priority to economic development in some regions. In order to eliminate China's investment sensitivity, projects have been invested in areas with low concentration of tough Muslims and stronger supporters of Vidodo. These regions have high support for Joko Widodo and a large non-Muslim population. The government has chosen certain "Belt and Road" projects as national strategic projects and development achievements that can be demonstrated in political campaigns. The Ethiopian government’s eager support for the Belt and Road Initiative is in line with its vision to promote Ethiopia to become a center of manufacturing in Africa, which also includes making Addis Ababa the “capital” of the continent. In Pakistan, if we consider the long-term relationship between the "Belt and Road" and China-Pakistan, we can better understand the "Belt and Road" project. In fact, the China-Pakistan Economic Corridor was officially released earlier than the Belt and Road Initiative. Having said that, due to the change of regimes, good relations between China and Pakistan also have a ceiling. Therefore, Pakistan's blueprint for development goals will inevitably be restricted by the domestic political situation - or it can be said to be used.

Indonesia combines its national development strategy with the "Belt and Road" initiative and actively establishes a cooperation mechanism. Weiduo’s concept of “maritime toll road” is consistent with China’s “Belt and Road” project goals. From the top-level strategy perspective, the two countries have successfully created operational frameworks, policies and systems to enable large-scale infrastructure projects to be completed, making the Belt and Road Initiative a promoter of Indonesia's national-level planning. Although Ethiopia lacks such a top-level cooperation framework, it also attracts and manages the Belt and Road capital flow by enhancing institutional capabilities, and uses China's investment to promote its industrialization. The U.S. government's attempt to shift its focus in Africa to Ethiopia in 2019 shows that the U.S. believes that Ethiopia has strengthened its ability to absorb Chinese investment and thus tried to break China-Ethiopia ties. In contrast, Pakistan's situation shows that some participating countries in the Belt and Road Initiative may also have such a situation: with the entry of Chinese investment, the management of these investments will increase day by day, which may overburden the local bureaucracy.

Normally, the selection of Belt and Road projects and trade negotiations can reflect the resource endowments of countries in natural resources or special skills and technologies. In Indonesia, most of China's investments have entered the metals and mineral manufacturing industry. Because Indonesia bans raw ore exports, foreign companies are forced to invest in smelting plants in Indonesia, which is China's largest source of nickel ore. As the leader in smelting technology, some Chinese companies have entered Indonesia as a result. Indonesia was able to adjust its export structure and switch from exporting raw materials to exporting high value-added industrial products. When seeking investment in China and other manufacturing industries, Ethiopia, which lacks resources, emphasized the national adaptability to industrial production, and Chinese investors are also very sure of this advantage.

The autonomy of participating countries is also reflected in how they implement their political and economic planning by deploying their relations with China and with other countries. Indonesia's example shows that the Vidodo government balanced Indonesia's relations with Japan in the negotiations on the Jakarta-Bandung high-speed railway, and also took advantage of China and Japan's competition in the export of high-speed railway technology to avoid excessive national budgets. Ethiopian officials have also made it clear that they use their relations with China to attract investment and aid from core countries.

▍Bidirectional perspective, multiple relationships

With the aid of the world system theory and the theory of development countries, it is not difficult to see that the "debt trap", "neocolonialism", and "geo-strategy" and other conclusions on the "Belt and Road" have problems such as "thinking too much" (conspiracy) or "thinking too little" (one-sided, unilateral) problems. "Thinking too much" is because these statements are excessive speculations about the "Belt and Road". We have no reason to think that China's leaders have this kind of thinking, and we should not ignore the subjectivity of the participating countries themselves; "Thinking too little" is because experts who study investment, finance, and international relations may mainly focus on the aspects they are interested in, and tend to believe that only some aspects play a decisive role in the "Belt and Road". However, judging from the research cases, the "Belt and Road" is more likely to seek multiple goals, and the interpretation and implementation of these goals are diverse.

Our research shows that studying the "Belt and Road" requires a two-way perspective - especially the perspective of participating countries. Participating countries embed the Belt and Road Initiative into their national development agendas to leverage their own advantages and direct investment to areas that are in line with national interests. In our view, the Belt and Road Initiative is a complex network composed of the activities, interactions and interests of multiple stakeholders. At the same time, we also believe that the "Belt and Road" is vague and loose, which not only has a broader diplomatic purpose at the national level, but also includes the spontaneous behavior of Chinese provincial governments and state-owned enterprises, as well as the autonomous driving factors of participating governments and other entities.

In the process of implementing the Belt and Road Initiative, China and all participating countries have experienced a steep learning curve, especially when there are large cultural differences between the two sides and limited contact before the project is implemented. These difficulties may undermine the implementation of the project and even lead to protests and criticism of the Belt and Road project. Chinese companies are learning how to deal more effectively with local business partners, bureaucrats, workers and customers, but this learning process takes time. Chinese managers may soon be disappointed by the slow approval of local governments in terms of permits, work visas, land use, etc. and local inefficiency. Chinese managers may also be trusted by local stakeholders to varying degrees.

Multiple stakeholders in participating countries are also experiencing a steep learning curve, including politicians, bureaucrats, businessmen and people. The huge scale of Chinese investment is unprecedented, even if it is invested in multiple departments over a long period of time. Participants in the country need to adapt to the new reality brought about by Chinese investment, which may lead to the emergence of new government structures and departments, or expansion and adjustment of existing institutions – as it has happened in Indonesia and Ethiopia. These changes are accompanied by strict supervision of the Belt and Road projects by the media, politics and the public, and may immediately attract criticism once opaque procedures appear.

Some criticize China's projects exploit loopholes in local laws and regulations to harm the local environment, and some studies have recorded polluting projects that trigger public opposition or social protests. This reflects the objective contradiction: the development focus of local governments is not exactly consistent with the people's views. Chinese companies should gradually realize that even if a project is supported by local governments, it is in their own interests to maintain constraints during the implementation process. At the second Belt and Road Summit in 2019, President Xi Jinping promised to promote the green Belt and Road Initiative, and the Chinese government promised not to build new coal-fired power plants abroad. Such commitments and self-discipline by the Chinese government are in the interests of many parties. As the COVID-19 pandemic puts pressure on society and global markets, in addition to economic goals, it becomes even more important for developing countries to incorporate social and environmental goals into their national agendas. Similarly, as Chinese companies are increasingly under pressure to take the banner of the Belt and Road Initiative, they must take social and environmental goals into account and consult with local stakeholders in participating countries to prioritize their needs.