Remarks to a Center for Naval Analysis Workshop<br> with the Rajaratnam School of International Studies
“One belt, one road” (OBOR) was a slogan before it became a concept in search of content. It is now evolving into many plans and projects, some of them with huge implications. It has become an operative policy framework that puts excess Chinese savings and industrial capacity to work in China's national interest. OBOR is now a grand plan to reengineer China’s strategic environment, project Chinese economic power, secure Chinese access to energy and mineral supplies, and boost economic growth in western China. OBOR seeks to accomplish these objectives by fostering greater and faster connectivity between China and Europe via intermediate points in Central, West, and South Asia as well as Russia.
OBOR amounts to a proposal to unite the Eurasian landmass1 economically under common rules and transport regulations. It envisages bilateral agreements with sixty-five countries to reduce impediments to trade, the creation and endowment of new financial institutions, and the execution of enormous infrastructure projects. New roads, railroads, pipelines, ports, airports, and inland telecommunications links are to boost the efficiency of overland travel and economic transactions across Eurasia. The vast space from the Atlantic to the Pacific and from the Pacific to the Middle East and the Indian Ocean is to be laced with industrial development corridors that draw on these links to create centers of economic activity. Network effects assure benefits not just to China as the leader of OBOR but to every country touched by it.
If any significant portion of this ambitious vision is accomplished, it will alter the logistics of commerce and cultural intercourse between three-fourths of humanity. It will facilitate multiple forms of communication over an expanse even greater than that ruled by the Great Khan. The 13th and 14th century Pax Mongolica was — till now — the largest contiguous economic zone in history. The Mongols used force to unite China, Central Asia, Russia, and much of Western Asia in a single area with multinational governance and no significant barriers to trade, travel, and cultural exchange. But China’s integration with the lands to its west and south is to rely on peacefully negotiated commerce, trade, investment, and construction, not military coercion or conquest. And it will leave Westphalian notions of sovereignty intact.
Politico-military power pressures and repels those to whom it is applied. Economic power assimilates and entices others. It is attractive rather than coercive. China will not exercise politico-military dominion over the vast transnational domain created by OBOR. But, given its size and dynamism, it expects to be socioeconomically primus inter pares in an interconnected Eurasia. And all roads will lead to Beijing.
In the aggregate, China’s “one belt, one road” development initiative constitutes the largest and potentially the most transformative engineering effort in human history. At $1.4 trillion, China’s stated financial commitment to these projects is eleven times the size of the Marshall Plan, restated in current dollars. Most projects will be overland. 2 Relatively few will be maritime.
But whether on land or over water, these projects promise to have major strategic impact, not least on the role of sea power in geopolitics. They will greatly increase the speed and efficiency of land transport from one end of the Eurasian landmass to the other. In peacetime, they will divert much air cargo and some time-sensitive ship-borne cargo to railways. In time of war, trans-Eurasian railways and roads will provide secure, if relatively expensive alternatives to transport by sea, avoiding any risk of interdiction by foreign navies by traveling on overland, interior lines of communication.
By the middle of the next decade, passenger travel by train from London to Beijing is projected to take less than three days while the transport of goods may take no more than a week. Transport by sea will continue to take four to five weeks. Both the increase in overland mobility and the dramatic shrinkage of travel times on land envisaged by OBOR amount to a revolution in military as well as commercial logistics.
After OBOR's build-out of land communications in Eurasia, sea power will no longer be able to block commerce as thoroughly as it once could. And at any point on the shores of Eurasia, a naval force will have to expect prompt opposition from land forces with greatly shortened interior lines of communication. One long-term effect of OBOR will thus be to diminish the traditional strategic advantages of sea power. For a primarily naval power like the United States this is an unwelcome prospect. From the perspective of most of the countries participating in OBOR, it is a welcome one.
OBOR envisions the construction of fiber optic cable connections overland from China to Europe and the Middle East. At present, telecommunications between, say, Tokyo and London rely on undersea cables that either cross the Pacific, the United States, and the Atlantic or transit the Straits of Malacca, the Suez Canal, and the Mediterranean. The shorter distance overland across Eurasia will shave a few milliseconds off transmission times, something that is worth a lot of money to hedge funds and others trading in capital markets. It will also provide internet routings that avoid vulnerability to interception on the sea bottom or in the United States and that are less easy to sever in time of war.
The projects under “one belt, one road” are not all new. OBOR incorporates many preexisting Chinese activities. But the fact that these are now to be implemented within an approved strategic policy framework makes a big difference. Most projects under OBOR are outside China, They are now included in China’s five-year plans. This provides authority for Chinese policy banks to finance them. The initiative also encourages the formation of internationally co-financed funds and banks like the $40-billion Silk Road Fund, the $100-billion Asian Infrastructure Investment Bank, and the $16-billion Maritime Silk Road Bank. And it incentivizes countries with new projects to issue Renminbi bonds to pay for them, thereby boosting the international role of China’s capital markets and its currency.
OBOR coordinates and rationalizes previously unconnected projects. It multiplies the utility of port projects by insisting that these become intermodal transportation nodes connected to newly industrializing hinterlands. Both Gwadar and Djibouti illustrate this.
Gwadar is a former Omani enclave with a deep-water port, located in Pakistani Balochistan. It is strategically situated on the Arabian Sea near the mouth of the Persian Gulf, just 300 miles from the Strait of Hormuz. It will now become a significant international commercial port, airport, and entrepôt, connecting Pakistan to China as well as Afghanistan, Iran, and Central Asia by road, rail, air, and oil and gas pipelines as well as fiber optic cable. The corridor from Kashgar [喀什] through the Khunjerab Pass to Gwadar is to absorb about $33 billion in investment in new power plants and transmission lines in addition to about $11 billion in infrastructure investment.
Once Gwadar's planned land and air connections to western China are in place, it will also, presumably, serve as a support facility for the Chinese navy in the Indian Ocean. Gwadar and Djibouti illustrate an OBOR focus on creating facilities that are much more than the modern-day equivalent of coaling stations – fuel and supply dumps unconnected to the lands behind them and dependent on foreign subsidies. These are viable port operations as well places where the PLA Navy can reprovision and, if necessary, repair its ships.
Two dozen deployments of small People’s Liberation Army (PLA) Navy flotillas to the Gulf Aden for anti-piracy operations have convinced China that its navy needs onshore support facilities in Africa as well as elsewhere on the Indian Ocean littoral. The result is the establishment of a PLA Navy logistics support base in Djibouti. Many other foreign militaries, including the United States, are also based in Djibouti. But only the Chinese have looked beyond military support requirements to develop Djibouti as an economic and commercial enclave for trade with the African interior.
The Chinese-built railroad from Djibouti to the Ethiopian capital of Addis Ababa has just entered service. (About 70 percent of Ethiopia’s foreign trade goes through Djibouti. Now that China's labor costs have risen to uncompetitive levels, its investors are putting a lot of money into Ethiopian light industry, especially textiles and shoes, and Ethiopia's exports are rapidly expanding.) Farther south, a $13.8 billion project under a new Chinese-developed East African Railway Masterplan is connecting the Kenyan port of Mombasa to Nairobi as well as South Sudan, Uganda, Rwanda, and Burundi.
Closer to home, China has built a major port at Kyaukpyu in western Myanmar. Oil and gas pipelines now connect Kyaukpyu to Kunming. This chops 700 miles off the distance oil shipped from Africa or the Middle East must travel to China, cuts delivery times by 30 percent, and avoids the need to transit the strategic chokepoint of the Straits of Malacca. A railroad is planned to parallel the pipelines, but not yet approved. Some Indian defense specialists speculate that the PLA Navy plans a presence in the Bay of Bengal based at Kyaukpyu. (There is as yet no evidence of this, and much previous Indian alarmism has proven groundless.)
Under a recent agreement, a standard gauge railway is also to connect the sleepy but ice-free Russian port of Zarubino, on the Sea of Japan, to Jilin Province and the Chinese railroad network, beginning in 2018. This $3-billion project aims to create a port that will ultimately be capable of handling 60 million tons of cargo a year. By eliminating the need to circumnavigate the Korean Peninsula, China can cut two days’ sailing time off shipping across the Pacific to the west coast of North America or — equally importantly — to Europe and the east coast of North America through the Bering Strait via Arctic routes opened by global warming. In time, the new Arctic passages will divert significant ship traffic between China and Europe from traditional routes through the Straits of Malacca, the Indian Ocean, and the Suez Canal. This will add to the value of Chinese rail access to ports in Russia and Korea (where Rason, in north Korea, and Busan, in the south, are both on offer), and further diversify China's transportation options.
Seven of the world’s ten largest ports are in China and China has emerged as a major exporter of port management services. The terminus of the “China-Europe land-sea express route” is the Greek Port of Piraeus, now under Chinese management. China aims to make Piraeus and a significantly upgraded Balkan railway network its maritime gateway to Central Europe. As part of this project, a Chinese-built high speed rail line from Belgrade to Budapest will open next year.
As this and other examples show, strategic competition in infrastructure investment can have significant collateral benefits for those countries affected by it. Pakistan has finally persuaded China to develop Gwadar. India has countered Pakistan’s strategy of making landlocked Afghanistan and other Central Asian states dependent on the Port of Gwadar by developing a rival outlet for Afghanistan at Chahbahar in Iran. Georgia has just undertaken to build a new deep-water Black Sea port at Anaklia that takes advantage of China's investments in Eurasian land-bridge projects to connect itself to China and Central Asia.
The Chinese-built ports at Hambantota and Colombo in Sri Lanka, the China-Suez Economic and Trade Cooperation Zone in Egypt, Kazakhstan's negotiation of the right to clear its imports and exports through the Chinese port of Lianyungang, and a new alliance between ports in China and Malaysia3 are further illustrations of China’s ability to leverage its new prowess as a port modernizer and manager to support its strategy. The Sino-Malaysian alliance’s purpose is to fast-track trade, reduce customs bottlenecks, attract Chinese investment in Malaysian ports, and develop the Port of Malacca, which aims to be the largest in Southeast Asia by 2025. This collaboration with Malaysia also significantly mitigates the risk of closure of the Straits of Malacca to Chinese trade.
Despite the strategic implications of China’s development initiatives under OBOR, they have attracted remarkably little attention in the United States. Perhaps this is because their geo-economic nature does not conform to America's current, primarily military approach to foreign policy. Whatever the reason, there has been no significant American response to OBOR other than the rejection of membership in the Chinese-sponsored Asian Infrastructure Investment Bank (AIIB). That is widely regarded as having been a mistake.
Japan also stayed out of the AIIB but has put forward its own initiative to improve Asian infrastructure. In the main, these reactions have served to highlight the limited capacities of China's strategic rivals in Asia. Japan's and India's efforts to imitate OBOR underscore the fact that — whoever their sponsor — expanded connections between nations benefit all who participate in them. In practice, OBOR and similar programs facilitate healthy politico-economic competition without predetermining its strategic outcome.
Elsewhere, in Europe, Russia, Central and Southeast Asia as well as East Africa, attention has focused only on those parts of OBOR that directly affect the commentator's own country or region. There has been a striking lack of analysis of the overall vision or its potential for the commercial and geopolitical transformation of Eurasia and adjacent areas. This seems likely to change as the military relationship between China and the United States continues its unhappy evolution from uneasy coexistence to outright hostility.
China now imports very large volumes of oil, gas, and raw materials by sea from the Persian Gulf and Africa. Despite (or perhaps, in part, because of) "one belt, one road," this trade seems certain to continue to grow. To date, China has intervened against pirates in the Gulf of Aden who interfered with it. But — like all other countries since World War II — China has depended on the U.S. Navy's stewardship of the global commons to defend its freedom of navigation and thereby assure the overall security of its supply lines in the Indian Ocean and adjacent areas.
Now China has no choice but to contemplate the possibility of armed conflict at sea with the United States. In the event of various contingencies that might trigger war in the Taiwan Strait or the East and South China Seas, it is widely expected that the U.S. Navy would attempt to interdict China's trade and deny it freedom of navigation in both the South China Sea and the Indian Ocean. Japan is becoming more assertive in the maritime arena. There is also a lot of talk in India about Indian Navy operations against China's energy supply lines should conflict break out along the two countries' disputed Himalayan frontiers. In the event of a repeat of the 1962 Sino-Indian war, it seems likely that the United States would side with India against China, as it did the last time.
China now sees itself as left with no alternative to becoming able to defend its strategic lines of communication at sea against American, Indian, or Japanese interference. So, once the Chinese have the capacity to do so, we can confidently expect them to establish a permanent and growing naval presence of their own in the Indian Ocean. The same logic will drive them to deploy their navy along newly opened shipping routes through the Arctic. In its broadest strategic sense, OBOR represents implementation by China of a decision to reject its historic status as a land power only and to become a maritime power as well.
OBOR is a set of civilian projects. Ultimately, however, it is intended to serve China's interest in protecting its economic lifelines in times of war as well as in peace and to offset the threat it perceives from the United States and Japan. If OBOR works, it will significantly reduce the vulnerability of China's economy to foreign disruption of its trade. It will add to China's sense of security, though not enough to cause it to refrain from developing independent naval capabilities. China's inevitable naval expansion will have the effect of diluting the global dominance of the United States Navy and devaluing its self-appointed role as the sole guardian of freedom of navigation on the high seas.
The irony in this should be obvious. China and the United States share a vital interest in the uninterrupted flow of global commerce and hence in freedom of navigation. For seven decades, the U.S. Navy has borne the sole burden of defending this common interest. Americans have become accustomed to this monopoly and the honors, rights, and responsibilities it confers. The deployment of China's navy to protect commerce and assure the unimpeded transit of shipping of concern to it beyond its near seas will — in China's view — support the U.S. Navy's mission, while also hedging against possible American transgressions. Many in the United States will not see it that way.
China's assumption of the mission of assuring freedom of navigation for shipping of direct concern to it will challenge the two countries to find ways to work together rather than at cross purposes. It will also require the U.S. Navy to adapt to a world in which, for the first time since World War II, it is no longer the only significant conventional naval power in every region. China and the United States must work out a mutually agreeable modus vivendi and a relationship — even a partnership — that reflects both the realities OBOR is creating and the enhanced role of China in global and regional affairs.
1 As in this essay, “Eurasia” means Asia plus Europe.
2 Planned corridors run from Kunming to Singapore and to Kolkata; from Kashi [Kashgar] to Gwadar, to Tashkent, and to Tehran; from Xi’an to Istanbul and to Moscow, Rotterdam, and Lisbon.
3 Ten Chinese ports – Dalian, Shanghai, Ningbo, Qinzhou, Guangzhou, Fuzhou, Xiamen, Shenzhen, Haikou, and Taicang will collaborate with six Malaysian ports – Port Klang, Malacca, Penang, Johor, Kuantan and Bintulu.