US Congress 2019 China Report Calls China’s Belt & Road A “Preference For A Multipolar World Order.”

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Op/Ed By Chris Devonshire-Ellis

The annual China report to the US Congress, titled “Military and Security Developments Involving the People’s Republic of China 2019”, has just been released by the US Department of Defense. The first item on the report, indeed on the front cover, is a curious note stating that “Preparation of this report cost the Department of Defense a total of approximately $181,000 in Fiscal Years 2018-2019. This includes $12,000 in expenses and $169,000 in DoD labor.” It is not therefore, the type of report one would expect from the likes of a commercial organization such as McKinsey, Navigant or Dezan Shira & Associates. It is also odd to note such an important strategic document only warranted $181,000 in production costs as against a Department of Defense annual budget of what in 2017 was $583 billion and is now running at some $649 billion just two years later.

Nevertheless, the document, which runs to 136 pages, is notable for its Belt & Road comments, its statements about the China-Russia axis, and the implications for what this means in understanding how the United States views global trade and a multipolar world.

In terms of the Belt & Road, the document states “China’s leaders are leveraging China’s growing economic, diplomatic, and military clout to establish regional preeminence and expand the country’s international influence. China’s advancement of projects such as the “One Belt, One Road” Initiative (OBOR) will probably drive military overseas basing through a perceived need to provide security for OBOR projects.”

It is not impertinent to note that the term “One Belt One Road” (OBOR) was discontinued by Beijing three years ago and replaced with the “Belt & Road Initiative”, as the Chinese government considered the emphasis on the word “one” was prone to misinterpretation. The DoD need to catch up with current terminology. What is interesting is the lack of supporting data to support the mention of “probably”. Although in the DoD statement that China will need to finance security along the BRI is correct, there is no data providing the evidence of any militarization this, or even anticipated spend. It is also important to note that providing military support overseas is not generally a Chinese thing; the Chinese people are not familiar with the sights of Chinese soldiers coming home in body bags and in any event there is a huge sovereignity issue. While many countries who have signed up to China’s Belt & Road have done so for commercial and trade considerations, I don’t know any who have done so for military support. It is not a component part in the Belt & Road MoU. The DoD also says that the Belt & Road Initiative is intended to shape other countries’ interests to “align with China’s” as well as “silence confrontation or criticism against it.” Well, I’ve been doing business in China for coming up to 30 years, and have often been critical about it, and especially in it’s legal reforms. But never have I been subject to any requests for silence. In fact, when it comes to the Belt & Road Initiative, it is American media who have been attempting to criticize China. Here are just a few examples the past week. All are from US media sources:

There is a barrage of US led Belt & Road criticism out there. If that is purely an attempt to bat against China’s international development projects then that is subversive media in itself.

Elsewhere, the reports’ “Special Topic: China in the Arctic” the DoD state that “China has increased activities and engagement in the Arctic region since gaining observer status on the Arctic Council in 2013. China published an Arctic Strategy in January 2018 that promoted a “Polar Silk Road,” self-declared China to be a “Near-Arctic State,” and identified China’s interests as access to natural resources and sea lines of communication (SLOCs), and promoting an image of a “responsible major country” in Arctic affairs. The strategy highlights China’s icebreaker vessels and research stations in Iceland and Norway as integral to its implementation. Arctic border countries have raised concerns about China’s expanding capabilities and interest in the region. Civilian research could support a strengthened Chinese military presence in the Arctic Ocean, which could include deploying submarines to the region as a deterrent against nuclear attacks.”

The Arctic issue is almost, but not quite, a Russian sovereignty play as China’s interest in the Arctic is essentially linked to the faster, greener, and more cost-effective transportation of goods from China to Russia and Europe. This route, which includes Russia’s Northern Sea Passage, cuts two weeks off the alternative shipping routes across the Indian Ocean and via Suez to European Ports such as Piraeus. I wrote about the joining together of Russia’s Northern Sea Passage with China’s Maritime Silk Road recently here. The DoD also get it largely wrong about Chinese nuclear submarines in the Arctic – the Russians would be unlikely to tolerate that and anyway already have a submarine deterrent.

The DoD report additionally makes note of China’s relationship with Russia, acknowledging that the imposition of sanctions upon Russia did have an unintended reaction, and one that involved China. “In the wake of Western sanctions against Russia, China has increased investment in Russia’s economy” the report states, without mentioning figures. I can help here, last years trade turnover between the two countries hit a record $108 billion, demonstrating a growth of around 25 percent. That growth is likely to continue as well, with projections of Chinese-Russian bilateral trade reaching $200 billion by 2025, a sustainable growth rate of 20% per annum for the next five years. In certain Russian quarters, the sanctions have become something of a joke; and have certainly damaged the EU, probably irreparably. All Russia did was turn its double headed eagle symbol East, and buses that used to be purchased from Scania and Volvo are now marked KingLong and Daewoo.

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The China-Russia axis gets a mention too, in that it recognizes that China often partners to Russia “mitigate US pressure tactics.” It also reminded that Moscow and Beijing often make a joint front against US propositions at the United Nations Security Council (UNSC) as they both “share a preference for a multipolar world order.”

That last sentence is telling. From a democratic perspective, a multipolar world order would be preferable, and to some degree, was the entire purpose of establishing the United Nations. However, with the demise of the old Soviet Union less than 30 years ago, the United States has risen to effectively dominate the world. The change has been that in the past it was content to do so purely from the military aspect, and as we know the US spends more on defense than the next seven largest defense spenders globally combined.

Since then the United States has grown to dominate the global economy and financial systems, and has increasingly using these to gain a commercial advantage. In controlling the global banking and financial systems, (such as interbank routing and networks such as SWIFT) it is able to track who is spending what and where, and if necessary, as was the recent case with Iran, lock them out of such systems.
Sanctions have been used for restraining trade with countries the US considers competitors, as has been the case with certainly Iran, Russia, and to a certain extent China. Often these are dressed up in excuses, such as the Iran nuclear power issue, Crimea, which is a debatable issue over sovereignty, and China trade imbalances.

Increasingly however, one feels that like it or not, countries like China, Russia, Iran and Turkey among many others are going to start to push against this trade dominance. Developments are occurring along the Belt & Road that will probably, over time, cut away the lines of communication that have kept the continent depending upon the United States. With new anti-American sentiment creeping in, new technologies are disentangling the entire region from US controlled global systems. This includes trade de-dollarization across Russia and Eurasia, the rise of Cryptocurrencies, and a move to place economic sustainability on natural assets rather than the US debt backed system.

The DoD is a military organization, it doesn’t do finance. But with a creeping move to keep American hegemony in place and pushing against a “multipolar” alternative, the United States is putting itself in the firing line for having its strengths whittled down. The US DoD is largely irrelevant in this, as the battle for global dominance as shifted to controlling trade and economic flows. Currently the US is ahead in this, but a joint China-Russia axis, increasingly antagonized by what they see as unfair business practices, is a different matter. In which case, the 2019 DoD report on China misses the point of what is actually happening out there.

The issue the United States has is that from the DoD perspective, its China policy seems aligned to protecting American hegemony in the world order and not allowing a “multipolar” system to emerge. In other words, it’s become a world where it is the US way or no way, with a defense in place to back that up, but no deep-rooted sense of global awareness, repercussions of punitive actions taken, or any particular development plan at all. As such, and as a strategic document for China policy being given to Congress, the DoD have instead shown they are out of touch, still focused on a Cold War mentality, and are determined to militarily protect, including within the trade sphere, any moves that threaten US global dominance. When such reports also discuss nuclear weapons, that is a concern. One wonders how the US Department of Commerce can square that one off.

The full report can be downloaded here.

 

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Silk Road Briefing is published by Dezan Shira & Associates. Chris Devonshire-Ellis is the firms Chairman. The practice advises foreign businesses and governments throughout Asia and has offices across China, ASEAN, India, and Russia. To contact the firm over Belt & Road intelligence and strategy, email to silkroad@dezshira.com or visit us at www.dezshira.com

 

 

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