Written by Andrea Ghiselli.

Every country’s foreign policy, especially the big ones noted Edward Luttwak, is the result of the goals its leaders want to achieve domestically and how much time they can actually dedicate to foreign affairs. Along with the billions of dollars made available for China’s overseas projects, Chinese President Xi Jinping’s diplomatic shows in speeches at Davos and elsewhere, and the Belt and Road Cooperation Forum for International Cooperation which concluded in Beijing mid-May, China’s Belt and Road Initiative (BRI) is not an exception in Chinese foreign policy. While the BRI is now the background (and sometimes foreground) of every Chinese diplomatic activity, its goal is primarily domestic: supporting the Chinese government efforts to achieve the “Chinese Dream” in tandem with the “China 2025” project. Such a strong domestic imprint produces two interconnected effects. First, the space for domestic institutions in Chinese foreign policy seems to be expanding. Second, policy innovation and implementation is slowed down somewhat.

The Belt and Road Initiative is economically and politically strong and its implementation will affect many countries around the world. Nonetheless, its main target is within China’s own borders.

By pushing forward economic integration and what Chinese scholars call “international production cooperation” (国际产能合作), the BRI aims at influencing the global supply chains, making it easier for the Chinese economy to climb up the value-added ladder. Given this prominently economic aim, it is not surprising that China’s relations with the other “great powers” (especially the US) have been ideally placed in the “New Type of Great Powers Relations” (NTGPR)’s portfolio. The NTGPR has no real economic elements, but instead aims at conveying one message: peace, or at least not war, is what China wants and needs.

While such an interpretation of the BRI might appear to stretch the vague but nonetheless important slogans of the Chinese government, a look at the institutions leading the implementation of the BRI confirms the general trend in reducing the role of diplomats in China’s foreign policy. In particular, the composition and the position of the Leading Small Group for Advancing the Development of the “One Belt One Road” (“一带一路”建设工作领导小组) within the architecture of the Chinese polity shows this very well.

First of all, among the top Party leaders that compose the Group, State Councillor Yang Jiechi is the only one directly involved in foreign policy. The other members (Zhang Gaoli, Wang Yang, Wang Huning, and Yang Jing) are associated with other areas of domestic politics, from conceptualising the “Chinese Dream” to restructuring the economy.

The strong connection between today’s BRI and the past policies can also be seen in the fact that the Leading Small Group’s office was established within the National Development and Reform Commission (NDRC) and that its daily activities have been managed first by Ou Xiaoli and, more recently, by Xu Shaoshi – both high ranking officials in the NDRC (especially Xu) who have built their careers managing the development of China’s West, natural resources, and the gap between urban and rural areas.

Although it is difficult to tell whether the government was influenced by leading scholars or vice versa, the Chinese academic debate about the BRI also tends to focus more on how to smoothly connect China’s prosperity and that of other countries, rather than trying to envision a completely new strategy for China’s foreign policy. This embodies contrasting positions of two of the most influential Chinese experts of international affairs, Wang Jisi and Yan Xuetong. Wang envisions the rebalancing of China’s development strategy, a process starting within the country’s western regions before expanding outward to include China’s Central Asian neighbours. Intellectually inspired by past influential scholars like Wang Xiaodong, Wang Jisi’s idea represents a continuation and expansion of the concept behind the “Great Western Development” policies of the late 1990s and, partially, of the “Go out” strategy launched a few years later. On the contrary, Yan Xuetong, consistent with his previous works, is more ambitious in describing the BRI as the first step towards the creation of China’s system of alliances, complete with military bases in friendly countries to protect Chinese interests abroad.

The preference for returning to concepts already operationalised in the past suggests that the initial input from the government about the direction of the BRI in terms of foreign policy was not enough to “put flesh on the bones” of it, leaving Chinese scholars to adopt a “wait and see” approach to this issue. Indeed, searching the Chinese-language academic database CNKI for publications on “Silk Road,” “One Belt One Road” and other similar buzzwords shows an exponential increase in 2015. This was, coincidentally, the year the Chinese government released the first official document explaining the BRI.

Creating new policies and simultaneously managing colossal investments in many high-risk regions is no easy task for any country. However, since policy implementation rests primarily in the hands of domestic institutions, and experts spearheading policy innovation have shown a preference for past policy ideas, some of the same issues that have plagued the expansion of China’s economic footprint abroad remain unresolved. Hence, after years of investments in risky areas,  Chinese companies are less willing than in the past to strictly follow general policies that might lead to the repetition of the same mistakes.

Indeed, according to data from the Chinese Ministry of Commerce, while in 2014 and 2015 Chinese investments in BRI countries respectively accounted for 12.2 percent and 12.6 percent of total Chinese non-financial direct investments abroad (+18.2 percent growth from 2014 to 2015), in 2016 their share decreased to 8.5 percent (-2 percent year-on-year). During the first three months of 2017 the investments further decreased by 17.8 percent in comparison to the same period of the previous year despite the fact that their share grew to 14.4 percent. The situation looks better if one looks at the loans provided by the Chinese “policy” banks (政策性银行) for BRI-related projects. For example, 30 percent of the overseas lending of the China Development Bank in the 2013-2016 period went to projects in the 64 BRI countries. The disparity between investments made by companies and loans provided by “policy” banks shows that Chinese companies are not so easily swayed into investing in risky countries.

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To conclude, the BRI is economically and politically strong and its implementation will affect many countries around the world. Nonetheless, its main target is within China’s own borders, something that is clearly reflected by the institutions at the helm of BRI projects. Such a strong domestic focus also appears to influence the Chinese community of foreign policy experts. Unfortunately, the result is that the problems that have been plaguing the expansion of the Chinese companies abroad remain unresolved, thereby reducing the chances of effectively remoulding the economic environment outside China’s border in support of Xi Jinping’s “Chinese Dream.”

Andrea Ghiselli (@AGhiselliChina) is a Ph.D. candidate at the School of International Relations and Public Affairs of Fudan University, and a non-resident Junior Research Fellow for the Torino World Affairs Institute (T.wai), Italy, where he manages the website of the ChinaMed project. Image credit: CC by Joe Hunt/Flickr.

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