Why is the Belt and Road Initiative at the Centre of the US-China Conflict?

Credit: denstoredanske.lex.dk

WHAT IS THE BELT AND ROAD INITIATIVE?

It’s the infrastructure projects that China is building mainly in Eurasia continent to link up China on land with the commodity supply nations and China to the export markets in Europe.

The investment is huge which cost trillions of dollars. These are the biggest infrastructure projects in the history of mankind. 

The infrastructure includes railways, ports, oil and gas pipelines.

WHY IS CHINA SPENDING SO MUCH MONEY FOR THIS?

The first and the most important reason is to avoid a US blockade in the East China Sea.

The US is surrounding China in the Pacific Ocean with military bases in Japan, Korea, Taiwan, The Philippines, Singapore, and Australia.

With these military bases, the US is controlling the sea lanes to China. If the US decides to block these sea lanes, China economy will suffer because it can’t import resources and export its products to the world. 

In order to avoid the above scenario, China is building another “road” to avoid the “bully” (USA). That’s why they are building these BRI projects on land in the Eurasian continent linking the West of China to Europe and Africa. No superpower wants to be bullied by others.

Reason number 2 is to reduce the shipping costs of importing to and exporting from China. 

The shipping costs will reduce with these BRI projects because land transport is faster and cheaper. Also, the distance is shorter on land than the current sea transport around South East Asia.

Cost reduction means more prosperity and economic growth.

Reason number 3 is to move away from USD holding by reinvesting straightaway the USD receipts from trade surplus. 

Every year, China has trillions of USD coming to the country due to trade surplus. 

Why does China want to reduce the USD holding? Because when China holds USD, they are in effect lending money to the USA to spend and enjoy. The USA can and is always printing money to get free stuff from around the world. The losers are the ones who hold USD. USD is like a hot potato and smart people/countries don’t want to hold it too much or too long. 

What are the implications?

The US will try to disrupt this BRI because if it’s successful, China will become much more powerful than the US. 

How can the US do that? The US will try to influence or sabotage the relationship and the deals that China is having or plan to have with countries in the BRI. Expect more conflicts, tension and regime change in Africa, Middle East, South Asia and Eastern Europe in the coming years.