“The Utterly Dysfunctional Belt and Road”, 2019-05-08 (; similar):
The always excellent Stella Zhang directed me to a newish paper by political scientists Lee Jones and Zeng Jinhan on the domestic politics of China’s Belt and Road. Long term readers will remember that I am bearish on Xi’s grand dream. Here is how I described the central problems with the scheme for Foreign Policy:
There is also a gap between how BRI projects are supposed to be chosen and how they actually have been selected. Xi and other party leaders have characterized BRI investment in Eurasia as following along defined “economic corridors” that would directly connect China to markets and peoples in other parts of the continent. By these means the party hopes to channel capital into areas where it will have the largest long-term benefit and will make cumulative infrastructure improvements possible.
This has not happened: one analysis of 173 BRI projects concluded that with the exception of the China-Pakistan Economic Corridor (CPEC) “there appears to be no statistically-significant relationship between corridor participation and project activity…[suggesting that] interest groups within and outside China are skewing President Xi’s signature foreign policy vision.”
This skew is an inevitable result of China’s internal political system. BRI projects are not centrally directed. Instead, lower state bodies like provincial and regional governments have been tasked with developing their own BRI projects. The officials in charge of these projects have no incentive to approve financially sound investments: by the time any given project materializes, they will have been transferred elsewhere. BRI projects are shaped first and foremost by the political incentives their planners face in China: There is no better way to signal one’s loyalty to Xi than by laboring for his favored foreign-policy initiative. From this perspective, the most important criteria for a project is how easily the BRI label can be slapped on to it…
The problems China has had with the BRI stem from contradictions inherent in the ends party leaders envision for the initiative and the means they have supplied to reach them. BRI projects are chosen through a decentralized project-management system and then funded through concessional loans offered primarily by PRC policy banks. This is a recipe for cost escalation and corruption. In countries like Cambodia, a one-party state ruled by autocrats, this state of affairs is viable, for there is little chance that leaders will be held accountable for lining their pockets (or, more rarely, the coffers of their local communities) at the entire nation’s expense. But most BRI countries are not Cambodia. In democracies this way of doing things is simply not sustainable, and in most BRI countries it is only so long before an angry opposition eager to pin their opponents with malfeasance comes to power, armed with the evidence of misplaced or exploitative projects.1
The key points to take away from my account is that the failures of the BRI seem to factor back to a few central points: first, that project selection is mostly driven by the priorities of folks working in SOEs, provincial governments, and a plethora of different policy banks. The central government in Beijing has difficulty directing their efforts. Secondly, that these people do not have a good understanding of the countries in which they are investing, and face little incentive to gain this understanding. This leads to the sort of corruption and ‘predatory’ funding that has given BRI its poisonous reputation in countries long exposed to it.
Jones and Zeng agree with this general picture, but provide a far more detailed account of what is happening ‘behind the scenes’ when BRI projects are chosen and funded. The process they describe is not unique to the Belt and Road. It starts as Communist high leadership paints bold words in the sky:
Foreign-policy steering happens through several important mechanisms. The first is top leaders’ major speeches, which are usually kept vague to accommodate diverse interests and agendas. Rather than ‘carefully-worked out grand strategies’, they are typically ‘platitudes, slogans, catchphrases, and generalities’, offering ‘atmospheric guidance’ that others must then interpret and implement. Examples include: Deng’s tao guang yang hui, whose meaning is ‘debatable’; Hu’s ‘harmonious world’—’more of a narrative than a grand strategy’; and Xi’s ‘new type of great power relations.’ As discussed below, Xi’s vague 2013 remarks on the ‘silk road economic belt’ (SREB) and ‘maritime silk road’ (MSR) exemplify this tendency.2
But bold words are not policy. The Party often has difficulty transforming grand visions into detailed policy proposals. This is sometimes quite intentional—in a closed system like the People’s Republic, it may be better to have politicos arguing over how to make the Core’s vision possible, instead of whether the Core’s vision is worth making possible in the first place.
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