Beginning in 2013 with President Xi Jinping's speech at Astana University in Kazakhstan, China has embarked on a multi-billion dollar investment program stretching across Eurasia, into Africa, and South America. Xi Jinping's signature Belt and Road Initiative, referring to maritime and overland transportation investments, has transformed economic relations impacting on more than half of the world's population. Today, there are dozens of rail corridors linking cities in the heart of China with markets in Western Europe. The Chinese investments have reduced both costs and travel times.
In a similar fashion, China has invested in port modernization from the Indian Ocean into the Mediterranean Sea. Gwadar port in Pakistan, a new deep water port in Sri Lanka, port modernization in Djibouti, warehousing and industrial free zones in the Suez Canal and modernization of the Greek port of Piraeus have given China maritime access to the same European and African markets.
After the International Monetary Fund failed to make long-overdue reforms, giving greater voice to leading emerging market economies, Brazil, Russia, India, China and South Africa formed the BRICS alliance and established a New Development Bank to provide coordinated capital investments in infrastructure projects throughout the South. China launched the Asia Infrastructure Investment Bank (AIIB), which now has over 80 charter member countries and an international staff and board that assure international lending standards are fully met.
At the time Xi Jinping launched what some have called "a new Marshall Plan with Chinese characteristics" the Obama Administration in the United States refused to participate and pressured allies to boycott the AIIB. European governments refused to boycott, and only Japan among Washington's leading allies stayed out of the bank. But recently Prime Minister Shinzo Abe has agreed to collaborate with China's BRI, while retaining strong security ties to the United States.
Critics of the Chinese global economic investment program have charged that China is employing "debt trap diplomacy"–lending to countries that cannot pay for the large infrastructure projects in order to exert future economic and political influence. Others charge that the maritime "Silk Road" is linked to Chinese naval expansion, and the ports built up by Chinese investments will eventually house Chinese submarine and surface ship bases.
Belatedly and on an initially small scale, Washington is waking up to the fact that China has stepped into a vacuum created by the failure of Western nations to invest in urgently needed infrastructure projects throughout the developing world. Where would the United States itself have been without the investments in canals, roads, the Trans-Continental Railroad, electrical power, including from more than 100 nuclear power plants, largely built during the 1950s and 60s? Infrastructure investment is one critical component of national economic development and sovereignty.
Last year President Trump signed the BUILD Act, which merged the Overseas Private Investment Corporation with USAID's Development Credit Authority to form the U.S. International Development Finance Corporation, with $60 billion in initial capital. It is a small first step towards the United States returning to the business of investing in overseas economic expansion. Even if the U.S. initiative is taken to counter a "threat" from China, it is a step in the right direction.
If there is legitimate basis for worry about China's BRI, then the best answer is to provide alternative financing for urgently needed infrastructure in the Southern Hemisphere. An even better alternative is to join in the Chinese effort, to assure it does not become a Chinese geopolitical trump card. Beijing has urged the United States to join the AIIB and participate in the investments, also proposing to invest China's $1 trillion-plus in U.S. Treasury holdings in a national infrastructure bank to redress America's crumbling infrastructure.
One way or the other competition, cooperation or conflict between the United States and China will frame the global future.