Political Economy of Connectivity: China’s Belt and Road Initiative

Tolga Demiryol

doi:10.2139/ssrn.3434077

Abstract

There are ongoing academic and public debates on the nature of China’s Belt and Road Initiative (BRI). While some observers hold that the BRI is primarily about economic development, others see it as a grand strategy of a great power with hegemonic aspirations. Is the BRI about development or geopolitics? This article adopts a political economy approach to bridge the developmental and geopolitical perspectives. The main argument is that the BRI signifies an attempt by the Chinese state to manage internal problems of capital accumulation by externalizing development on a trans-regional scale. The problems of capital accumulation under China’s export-oriented growth model indicates a particular form of spatial fix via the BRI, which goes beyond the exportation of excess industrial/financial capacity and seeks to transform external productive spaces through inter-regional connectivity. The process of constructing new nodes and infrastructures of capital creates space for new forms of asymmetric interdependencies, rendering it prohibitively costly for most BRI partners to exit China-centered networks. To the extent that such asymmetric dependencies can be leveraged for strategic purposes, the BRI serves a geopolitical as well as a developmental function.

Highlights

President of the People’s Republic of China, Xi Jinping, announced the Belt and Road Initiative (BRI) in late 2013
To the extent that such asymmetric dependencies can be leveraged for strategic purposes, the BRI serves a geopolitical as well as a developmental function
In the process of creating new nodes and infrastructures of capital, China creates space for new forms of asymmetric interdependence, raising the costs of exit for others that depend on China-centered networks, which in turn indicates the geopolitical nature of the initiative

Summary

Introduction

President of the People’s Republic of China, Xi Jinping, announced the Belt and Road Initiative (BRI) in late 2013. Foreign Minister Wang Fi said in a 2015 speech, “The Belt and Road Initiative...is born in the era of globalization It is a product of inclusive cooperation, not a tool of geopolitics, and must not be viewed with the outdated Cold War mentality” (Ministry of Foreign Affairs of the People’s Republic of China 2015). In the process of creating new nodes and infrastructures of capital, China creates space for new forms of asymmetric interdependence, raising the costs of exit for others that depend on China-centered networks, which in turn indicates the geopolitical nature of the initiative. Two aspects of this process are highlighted here: the internationalization of RMB and loan-debt contractuality

Domestic Economic Liabilities

From Domestic Liabilities to External Assets

Findings

Conclusion