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China's Belt and Road initiative is pinnacle of president's ambitions

Federico Gambarini/dpa

China is preparing to host regional leaders at a summit to promote the "New Silk Road." How far do Beijing's ambitions go?

Beijing (dpa) – When Chinese President Xi Jinping takes a group photo with some of Eurasia’s most powerful political leaders later this month in Beijing, it will mark a new milestone in his quest to cement China's position as the top regional power.

High-ranking officials from more than 100 countries, including Turkey’s Recep Tayyip Erdogan and the Philippines’ Rodrigo Duterte, will convene from Sunday for the two-day Belt and Road Forum.

The initiative lending its name to the forum is China’s bid to create a trade and infrastructure network to better connect it with countries in Central and South-East Asia, Europe, Middle East and Africa.

Belt and Road is Xi’s signature project and one of his most ambitious economic and geopolitical goals.

First announced in late 2013, China has invested some 40 billion dollars to bankroll the initiative, with the total pot set to top 1 trillion dollars. The China Development Bank says it is already tracking more than 900 projects in 60 countries worth more than 890 billion dollars.

Despite the big money, the initiative is broad and unstructured in nature.

The "belt" signifies overland transportation and trade routes, and the "road" represents maritime connections between ports in China, South-East Asia, Africa and Europe.

But in addition, Beijing has thrown in telecommunications, technology partnerships, the study of foreign languages and a film festival as part of the project, among other things.

"Almost everything is Belt and Road," says Tom Miller, author of a book about the New Silk Road. "Almost any project in any of the countries along the Belt and Road is now seen as [part of the initiative] whether or not it has anything to do with connectivity."

While selling the scheme as a win-win for all sides, China has its own twin geopolitical and economic goals, observers say. On one hand, it wants to expand its influence over its neighbours through "infrastructure diplomacy"; on the other it needs the scheme to address pressing domestic economic concerns.

"China wants once again to dominate Asia, and it’s using its foreign policy to do this," Miller says. "The US dominates the Western hemisphere; China wants to dominate the Eastern hemisphere.

"China is trying to build, through better connectivity, a trade nexus centered on China, with almost every road leading back to Beijing."

But for China it is paramount that Belt and Road supports its domestic objectives. First among these is helping underdeveloped regions – such as the western Xinjiang province – catch up with the affluent coastal area, writes Peter Cai of the Lowy Institute for International Policy, an Australia-based think tank.

"Instead of showering these provinces with more central government money, Chinese policymakers want to integrate them into regional economies," Cai says.

One such example is the China-Pakistan economic corridor, which will connect the restive Xinjiang province with the Port of Gwadar. China has pledged 45 billion dollars to energy and infrastructure construction in Pakistan, making it one of the most prominent projects in the Belt and Road initiative.

Secondly, as China upgrades its industry to produce high-end products for Western markets, it is also looking at ways to facilitate exports.

For the Dalian Huarui Heavy Industry Group, a manufacturer in the eastern Liaoning province, the initiative brings better access to participating countries and increased financial support from the government, says Qu Hong, the managing director of the company’s international division.

Qu says he expects the initiative to boost the company’s exports from 35 per cent of its total business currently to 50 per cent in three years.

Looking to the longer term, China wants to use its high-end exports to help the wider adoption of Chinese technical standards in areas such as high-speed rail, energy and telecommunications.

Thirdly, China hopes to relocate some of its factories to neighbouring countries under the banner of Belt and Road, thus reducing domestic overcapacity in sectors such as steel and cement production, Cai says.

Chinese factories "are very much welcomed in South-East Asia," as they can bring jobs and support local economic growth, says Brian Eyler, a director at The Stimson Center, a Washington-based think tank.

But considering that nearly two thirds of Belt and Road countries have sovereign credit ratings below investment grade, China is exposing itself to financial risks that could exacerbate its own debt crisis, observers say.

There may also be a political risk. In some countries, China's massive investments are facing an official and public backlash for a perceived lack of concern about for example local political disputes, and human rights.

India for one is a vocal critic of the initiative because part of the China-Pakistan economic corridor goes through the disputed Kashmir region.

With guests such as Erdogan and Duterte - who are commonly singled out for criticism by Western leaders - joining the forum this weekend, the project has been described by one European official as "globalization with Chinese characteristics."

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