The BRI is being implemented through large Government to Government (G2G) infrastructure projects with initial financing support from the AIIB. Private companies are also being actively encouraged to invest along the Belt and Road.
The planned BRI projects largely focus on infrastructure and economic development, they are seen as a bold move towards globalization and an attempt by China to benefit not only itself, but also its neighbors and beyond. With talks of integrating Latin America & the Caribbean into the equation, the BRI is expected to expand to 65 percent of the world’s population, cover 60 percent of global land-based trade, 30 percent of the maritime trade, and 40 percent of its GDP.[3] With a non-political agenda, the impressive development plan has a tangible promise to help a lot of people in a lot of countries, with cooperation priorities reinforcing that it is potentially a well-rounded model for inclusive development. And by constantly emphasizing on BRI as initiative not strategy, it signals China’s intent to work within the existing international order and the country’s active avoidance of “Thucydides Trap” whereby the dethroning of one great power by another is a certain path to war. A matter further stressed by Chinese Foreign Minister Wang Yi when he insisted that “China is not building a rival system. On the contrary, [the country is] seeking to play a bigger role in the existing international order and system.”
As a geographically-targeted development initiative, the Belt and Road follows the concept of “economic corridors”; an economic model based on creating paths that facilitate the movement of people and goods, and consequently stimulating economic growth. Corridors can be either terrestrial or maritime; national, regional, or even international. The concept gained popularity in the late twentieth century when a direct correlation was found between improved infrastructure (roads, energy, telecommunication) and economic development. Most planned BRI spending will be concentrated along the following corridors: China-Mongolia-Russia; New Eurasian Land Bridge; China-Central and West Asia; China-Indochina Peninsula; China-Pakistan; and China-Myanmar-Bangladesh-India. Indeed, for a successful corridor, experts argue that proponents will need three main components: industries (for the creation of goods), transportation (for the movement of goods), and cities (for the trade of goods).
In May 2017, the Chinese government held the Belt and Road Forum for International Cooperation (BRFIC), in Beijing. Representatives from more than 130 countries were in attendance of which 57 were at Head of State or Ministerial level as well as 70 international organizations. The objectives of the forum were establishing action plans for implementing planned BRI projects across several sectors. It was also intended as an opportunity to assemble world leaders and international organization to reach agreement on several fronts including (a) financial cooperation mechanisms, (b) science, technology and environmental protection cooperation; and (c) enhanced exchanges and training of talent. As a matter of fact, 68 states and international organizations signed agreements furthering BRI cooperation. The forum ended with officially inducting the BRI into the Chinese constitution.
BRI and opportunities for the GCC
During the 8th Ministerial Meeting of China-Arab States Cooperation Forum which was held in Beijing on July 10, 2018, and gathered representatives of 21 Arab nations, President Xi pledged a total of USD 20 billion in loans, and about $106 million in financial aid, to Arab nations, that will be used to spur economic growth in the region. Another aid worth 100 million Yuan (USD15 million) to Palestine to support economic development, besides providing a further 600 million yuan (USD 90.6 million) to Jordan, Lebanon, Syria and Yemen. A consortium of banks from China and Arab nations, with a dedicated fund of USD 3 billion, will be also set up, President Xi said, and a further 1 billion yuan will be offered to support social stability efforts in the region. This commitment comes as Beijing is reinforcing its ties with the Arab nations, having a key role in the Belt and Road initiative.
According to the Chinese President, the loans will fund a plan of “economic reconstruction” and “industrial revival” that would include cooperation on oil and gas, nuclear and clean energy.
This move was preceded by several declarations of mutual cooperation between China and the GCC:
1. In, 2014, on the occasion of the sixth ministerial conference of the China-Arab States Cooperation Forum, President Xi Jinping stated: “in the next 10 years, we will strive to increase the bilateral trade volume from last year's 240 billion USD to 600 billion USD, increase China's non-financial investment stock to the Arab states from last year's 10 billion USD to over 60 billion USD, accelerate negotiations on and promote the establishment of the free trade area between China and the Cooperation Council for the Arab States of the Gulf, and push forward the Arab states' participation in the Asian Infrastructure Investment Bank to get an early harvest.”
2. In 2016, China released “China’s Arab Policy Paper”, a blueprint for the China-Arab cooperation, offering the guiding principle for developing China-Arab relations. The paper defines the cooperation as such: “China is willing to have pragmatic cooperation in the principle of mutual benefit and win-win results with Arab states. In particular, in the process of jointly pursuing the Silk Road Economic Belt and the 21st Century Maritime Silk Road initiative, China is willing to coordinate development strategies with Arab states, put into play each other's advantages and potentials, promote international production capacity cooperation and enhance cooperation in the fields of infrastructure construction, trade and investment facilitation, nuclear power, space satellite, new energy, agriculture and finance, so as to achieve common progress and development and benefit our two peoples.”
The Chinese paper proposes the establishment of a "1+2+3" cooperation pattern (energy cooperation will form the core (“1”), infrastructure construction and trade and investment facilitation as the two wings (“2”), and cooperation in the fields of nuclear energy, space satellite and new energy as (“3”) ).
The Belt and Road Initiative is a translation of this cooperation pattern, through investments in infrastructure, roads, high-speed rail, ports and airports, to revive the old Silk Road that used to link Chinese and Arab nations over two thousand years ago.
The six member-countries of the GCC (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE) are considered an important trade platform. According to The Economist, GCC exports to China are expected to reach USD 160 billion in 2020, while China will also dominate the GCC import market, providing about USD135 billion of goods to the Gulf. GCC is China’s 8th largest source of imports and 8thlargest export market, this can be expected to increase substantially with the proposed Free Trade Agreement.
The Belt and Road will support China-GCC cooperation and industrial capacity cooperation, by pumping resources into infrastructure construction; the Gulf states’ development plans of industrialization and urbanization offer business opportunities for the Belt and Road construction and foreign investment. Long-term development plans include: Saudi Arabia’s Vision 2030, the UAE’s Vision 2021, Oman’s Vision 2020, Kuwait’s Vision 2035, and Qatar’s and Bahrain’s respective Vision 2030s. It is worth noting that between 2005 and 2014, construction and infrastructure projects valued at USD 30 billion were awarded to Chinese firms in GCC states.
The projects spurred under the BRI include: Oman’s Duqm, a Chinese consortium is investing USD 10.7 billion to establish Oman’s next Industrial Centre – to be known as the Duqm Special Economic Zone. In 2018, China and Kuwait signed a memorandum to collaborate on the construction of the 250 square kilometers Silk City, an USD 86 billion project. China is also interested in the USD 160 billion project to develop an integrated economic free zone across five islands in the northeastern part of the country. In December 2015, China and the United Arab Emirates established a USD10 billion co-investment fund, and in 2016The UAE has signed an agreement with Cosco, China’s largest shipping company, to build new terminals to support the flow of trade along the Belt and Road maritime routes.
With regards to financial integration, Iran, Oman, Qatar, Saudi Arabia and the UAE are founding members of the AIIB; which is offering currency swap agreements to facilitate financing regional projects in Chinese Renminbi.
Finally, to ensure an effective impact of BRI, efforts are being implemented to strengthen people-to-people bond through interactions and cultural exchanges in the fields of scientific research, education, culture, health, youth, tourism and religion, providing a solid base of public support.
The closer connectivity in policy, infrastructure, trade, finance and people-to-people ties, strengthened industrial capacity cooperation under the BRI, and greater cooperation in the planning of GCC infrastructure and industrial development will lend new impetus to the win-win cooperation and common development between China and THE GCC.
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[1]Shepard, W. (2017) “The Real Role of The AIIB in China's New Silk Road”. Available on www.forbes.com
[2]Asian Infrastructure Investment Bank (2018) “AIIB Annual Report for 2017”. Available on www.aiib.org
[3]Teufel Dreyer, J. (2019) “The Belt, the Road, and Latin America” - Foreign Policy Research Institute, www.fpri.org
