© 2018 by Robert Person.  The views expressed on this website are my own and do not represent the official policy of the U.S. Army, Department of Defense, or U.S. Government.

alexschung
Jan 22

Mercantilism in the Belt and Road Initiative

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Edited: Jan 22

The Belt and Road Initiative, espoused by President Xi since 2013, is a coordinated effort by the Chinese government to expand trade and investment in the Indian Ocean, Africa, and in Central and Southern Asia. It pays homage to the old Silk Road connecting the Chinese Empire with their Muslim and European counterparts to the west, and is an effort aimed primarily at expanding Chinese influence in these regions. The initiative is, in Xi's rhetoric, part of China's centuries-long return to eminence as the world's greatest economic power and a dominant cultural power. Placing this within the framework of a decades-long United States hegemony, many see this as a move by China to fill the void as American leadership in the international order begins to wane.

 

In his article, Oplas Jr. refutes the claim that due to the rise of China as a competitor to the United States, nations should flock to China as a beacon of continued investment and the leader of a new global order in the twenty-first century. He does this by citing China's mercantilist economic policies. As of 2015, China has a mean tariff rate of 9.9%, in contrast to the United States at 3.5%. The United States has a lower tariff rate and less-protectionist policies than China. China runs a $31.5 billion trade surplus with BRI countries, accounting for a third of its global trade surplus (The Economist). These countries will additionally take on Chinese debt to pay for goods, which may forcibly lead to concessions if interest payments are missed, such as in the case of Sri Lanka's concession of the Hambantota port. By remaining under China's sphere of influence, these countries may see an outflow of capital and natural resources to pay for China's value-added technological exports, while being themselves unable to export as many goods of their own due to China's high tariff rate and protection of domestic industries. The conclusion is that the mercantilist, and in some instances, predatory financial and trade policies of China undermine their attractiveness as an alternative option to the American hegemonic order and structure of global trade.

https://www.bworldonline.com/china-mercantilism-in-the-belt-and-road-initiative-and-the-us-free-trade-challenge/

(http://country.eiu.com/article.aspx?articleid=1677389351&Country=China&topic=Politics - China trade surplus)

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