The BRI between China and the US

Andreea Brinza | 29 March 2019

A route that spans around Eurasia, an infrastructure project that encompasses over 70 countries, a branding strategy, are just some of the ways in which the Belt and Road Initiative (BRI) has been described until now. But the narrative has begun to change lately. From a beneficial strategy, the BRI has become a bogeyman for the Western World.

The main purpose of the BRI is not to build cheap infrastructure around the globe, but to present China as a great, powerful country. In fact, the BRI is a branding strategy to enhance China’s image around the globe.

But starting with the European Union’s (EU) disdain and continuing with the Malaysian problems, the BRI has faded and lost its shine as a benevolent strategy. Although we can’t speak about a clear failure of the BRI, it hasn’t either led to a reshaping of the international system.

But things may change, because Xi Jinping, the president of China and the mastermind behind the BRI, visited Italy and France in order to promote the BRI, and China’s interests abroad. If Italy has already signed a memorandum of understanding (MoU) regarding the BRI at the highest level, France refrained from such actions. France’s stance regarding the BRI was predictable. In fact, during his visit to China, in 2018, Emmanuel Macron, the president of France, has pointed out that the BRI must not be only “one way” – expressing his disagreement regrading its current implementation. As a twist, Macron already convened German Chancellor Angela Merkel and European Commission President Jean-Claude Juncker to join the meeting with Xi Jinping, in Paris. But in an unexpected move, during Xi’s visit to Paris, China signed a 35 billion dollars jet deal with Airbus, in an attempt to lure France on its side.

Italy is very important as a new BRI partner. First of all, the two BRI routes, the Silk Road Economic Belt and the 21st Century Maritime Route, meet in Venice, as a platonic finish point. Moreover, Italy is one of the largest and most important EU members, and it can start a domino effect, regarding the signing of MoUs for the BRI in the EU, as it happened with the Asian Infrastructure Investment Bank (AIIB), after the United Kingdom’s decision to join. But this is a far-fetched scenario, because many European countries are against the initiative, arguing that it didn’t bring in policies that would help partner countries, like: preferential interest rates, a bigger percentage of autochthonous workforce, the guarantee that the country that accesses the loan wouldn’t fall into a debt trap and so on.

Although Italy has recently entered the group of populist and eurosceptic governments, its importance is greater than the other members of this group. First of all, Italy is one of the founding members of the EU. Secondly, it is one of the most important economies of the EU, after Germany, the UK and France, and thirdly, it is just the second country from Western Europe which signed such a BRI agreement.

In order to understand how the BRI works, let’s take a look at what are the BRI projects that China proposed to Italy and how they will be implemented. The Port of Trieste will be the leading topic on the Italy-China negotiations agenda. Once modernized by China, the Port of Trieste could become the new Chinese maritime gateway to Europe, competing with the Port of Piraeus. Longing to have the same destiny as the Port of Piraeus, Italian officials are hoping to transform the Port of Trieste into an infrastructure hub. During Xi’s visit, Italy and China signed more than two dozen agreements in different areas, which were evaluated at 20 billion euros (22.62 billion dollars). The two countries also agreed to the largest return of cultural relics in the past 20 years, of almost 800 Chinese relics which were seized in Italy in 2007, because of the suspicion of illegal traffic.

But the Chinese investments in Italy aren’t limited to the Port of Trieste, as ChemChina acquired Pirelli, Bank of China has been present on the Italian market for over two decades, Huawei launched a research center in Segrate in 2011, and as there are many other Chinese companies on the Italian market, such as Haier, Cosco, Baosteel, China Ocean Shipping Company, or Jihua Group, which is active in apparel. Actually, China is very interested in investing in the fashion industry. Italian companies like I Pinco Pallino, Miss Sixty, Sergio Tacchini, Roberta di Camerino, Mariella Burani and Krizia have been fully acquired by Chinese companies. A small amount of Chinese FDI goes to Italian companies like Unicredit, Monte dei Paschi di Siena, Intesa Sanpaolo, Generali Assicurazioni and Mediobanca, in which the People’s Bank of China holds up to 2%, and other FDIs to Fiat Chrysler Automobiles, Telecom Italia, Eni and Enel.

One of the main points of criticism against the BRI is that projects aren’t implemented or they are stuck in endless negotiations. The most important argument that the BRI may fail is the idea that many of the big Chinese projects touted as BRI projects are at a standstill. Italy will have to see whether it can avoid this fate.

“The more powerful you become, the more scrutinized you will be” could be the motto of the international system nowadays, and China knows it best. Today, China is engulfed into one of the biggest international Chinese scandals: the Huawei problem. The Huawei scandal reached its climax when Sabrina Meng Wanzhou, the daughter of the Huawei founder, Ren Zhengfei, was arrested in Canada, under accusations of bank fraud and violating US sanctions against Iran. Moreover, US national security agencies like the CIA, the FBI and the NSA started to ring alarm bells against using Chinese technology for the 5G infrastructure in the US and in its allied countries, because there is the risk that Huawei could anytime leak intelligence information to the Chinese government. In order to secure its communications network, the US advised its allies to refrain from using Huawei technology in building their 5G infrastructure. Countries like Australia, New Zealand, or Japan decided to ban Huawei, while other important allies of the US, such as the United Kingdom or Canada, are still pondering it.

The Huawei scandal somehow has drawn a new digital iron curtain, China and the US starting to choose their allies. If Western countries are more prone to stand with the US, many developing countries took China’s part. These alliances may not lead to a new Cold War, but to a “Thucydides trap” and a power transition period. Today, China and the US seem to have fallen into this trap, even if only for a trade war.

There is no theory that can better explain the trade war and the US-China today’s frictions as the power transition theory can. The power transition theory teaches us that a challenger and a dominant power will fight to gain supremacy on the international stage, but emphasizing that a war will be waged only when a power parity between the two will be reached. The war will be, in most of the cases, caused by the challenger, but there are some exceptions, like a preemptive war started by the dominant power. The US is today the dominant power, while China, the challenger, is still some time away from reaching power parity. Yet, it seems that the fear which China has started to generate in the US led to a kind of preemptive war that took the shape of a trade war. In the past, wars were conducted to gain more territories, colonies or spheres of influence, leading to millions of casualties. Today, because the specter of nuclear war makes such conflicts unlikely, the power transition war can embrace the form of ideological conflicts like the Cold War or trade conflicts like the war that China and the US have stepped into.

The Belt and Road has also become a battle front in this conflict. If Italy will become the maverick on the US side, then, the fight for power, allies and supremacy, as well as the power transition period, has started between China and the US.

Photo Credits: Chinese President Xi Jinping and Italian Prime Minister Giuseppe Conte at Villa Madama, during Xi’s visit to Italy, in March 2019 (Governo Italiano); Chinese President Xi Jinping at the BRICS summit in Xiamen, in September 2017 (Flickr/Palácio do Planalto)

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Andreea Brinza

Andreea Brinza is a researcher and the Vice President of RISAP. Her interests are related to the geopolitics, geostrategy and geoeconomics of the Asia-Pacific region and especially China. Her research focuses on the Belt and Road Initiative.

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