China is strengthening its soft-power in the Eurasian area

China is strengthening its soft-power in the Eurasian area


From our office IC&Partners Asia


Some scholars have seen similarities between the stimulus program promoted by USA in Europe after World War II, known as the Marshall Plan, and the plan One Belt, One Road (promoted by Chinese government in order to improve the connectivity and cooperation between China and the countries of  Eurasian area). However, it’s important to mention that there is an important differences: while the Marshall Plan had for the USA also the evident objective of limiting the expansion of the Soviet Union in Europe, China’s leaders have always stressed that the plan One Belt, One Road does not intend to create a new political and military hegemony in this area that will repeat, in the twenty-first century, the bipolar conflict arisen during the Cold War.

Despite the reassuring statements of the Chinese leadership, it is clear that the Chinese goverment is still building up, by means of these infrastructure investments, a new economic order in Central and Eastern Asia, and the other countries in this area will be in a growing relationship of dependency on China. In fact, the plan One Belt, One Road is largely based on bilateral agreements and has a structure in which Beijing is the hub of an extensive network of economic and political relations: this will allow China to reposition itself as the dominant country in the region and guarantor of stability in Central and Eastern Asia.

To realize the plan One Belt, One Road, the Chinese government has promoted in 2014 the establishment of two new financial institutions: the Asian Infrastructure Investment Bank (AIIB), a development bank with an initial capital of US $ 100 billion to which acceded 57 countries (including Italy, Britain, France and Germany), and the Silk Road Fund, a fund with USD 40 billion.

During the opening ceremony of ASEM Industry Dialogue on Connectivity, held in Chongqing on May 2015, the Chinese Vice Premier Zhang Gaoli said that China, through the AIIB and the Silk Road Fund, would invest over the next several years 900 billion USD in order to finance the infrastructures that will arise along the new Silk Road that will help to promote the integration between Asia and Europe.

Also the set-up of AIIB, that it is widely regarded as a complementary institution to the Bretton Woods system, is the evidence of the newfound Chinese power in the international community. Just consider that most of the financial resources made available for AIIB come from China and that AIIB’s Regulation allows China to exercise a power of veto on the bank’s strategic decisions. Several analysts believe that China could also use AIIB as economic diplomatic tool in order to manage the tensions resulting from its future increasing power  in the region.

During his recent trip to Uzbekistan (June 2016), Chinese President Xi Jinping (in addition to signing an agreement that raises the relations between China and Uzbekistan to the comprehensive strategic partnership level) has made a first assessment of the results achieved so far by the plan One Belt One Road: “China has signed economic cooperation agreements with 20 countries and has established 46 overseas cooperation zones in partnership with 17 countries along the Silk Road. Chinese companies have invested a total of more than USD 14 billion, creating 60,000 new jobs. AIIB officially went into operation, with 57 signatory countries, and have been effectively established the Silk Road Fund and the China-Eurasia Economic Cooperation Fund. The realization of the plan One Belt, One Road has already completed its preliminary phase and is going to begin its phase of development.

In the speeches of the President Xi Jiping it is confirmed that the Chinese soft-power does not impose ideological and military blocs but builds an inclusive community of interests through the so-called diplomacy of infrastructure, and today it is also evoking the romantic aura of the legendary Silk Road.

This is a policy already adopted and tested in the past years by the Chinese government that combine the funding to build the infrastructure with the transfer of the winning aspects of its development model: this strategy is even more effective with the countries of Centre-East Asia who share with Beijing a model of consensus and political legitimacy based on the levels of economic growth that the government can guarantee. Considering these aspects, China’s engagement along the new Silk Road will be surely oriented to guarantee the efficiency and to respect the commitments.

The plan One Belt, One Road also represents a further step of China to strengthen its presence in Eastern European countries and the Balkan area. This is demonstrated by the recent visits of President Xi Jiping in Warsaw (where China and Poland signed agreements to raise their bilateral relations to comprehensive strategic partnership level) and in Belgrade (where the Chinese President has signed 22 cooperation agreements with government of Serbia to strengthen a cooperation between the two countries that has already led many Chinese investments in Serbia).

Before this, in June 2015, China and Hungary have signed an agreement (as part of the plan One Belt, One Road) that provides for the modernization of the Budapest-Belgrade railway and the construction of the land-sea express line that will link Budapest with the Greek port of Piraeus (in 2009, the Chinese company Cosco acquired 50% of commercial rights of Piraeus): the Hungarian capital will become a hub from where the goods can travel to the east towards the Ukraine and to the north towards the Poland and the Baltic Sea. It is a high capacity railway (not high speed railway) with four tracks for freight trains and a path without slope so as to be able to handle extremely long wagons, capable of carrying a much larger number of containers compared to normal cars.

A case that testifies the competitiveness of China (also because of its financial power) in implementing infrastructure projects abroad is represented by the events related to the construction of the highway Bar-Boljare, the first is the part of the large highway that connects the Montenegrin port of Bar with Belgrade: initially, a Croatian company was appointed to implement this project but this company had to withdraw from the contract because it was unable to find investors; from this, a Chinese company took advantage and proposed a “turnkey” project supported by a grant, on very favorable terms, provided by the Exim Bank of China amounted to 700 million euro, able to almost entirely cover the costs of the project.