Global Caravans: The Impact of Institutions, Power, and Geography On China’s One Belt, One Road

Abstract

In September 2013, Chinese President Xi Jinping announced the One Belt, One Road (OBOR) initiative, which comprises the land-based "Silk Road Economic Belt" (SREB) and the oceangoing "Maritime Silk Road" (MSR). A development strategy and framework, OBOR has become President Xi’s main foreign policy agenda. It aims to utilize infrastructure investment, trade, and other forms of economic engagement to advance Chinese interests abroad and promote connectivity, regional stability, and cooperation among the countries on the Belt and Road. This thesis asks two related questions: (1) How has OBOR affected its various host countries’ relationships with China? (2) What are the main determinants explaining the variation in OBOR’s effects on the host countries’ relationships with China? To answer these two questions, this thesis conducted a most-similar systems paired case study test where we looked at the impact of three intervening variables on OBOR’s effect on the host countries and their relationship with China: institutional robustness, power differential, and geographical distance. Within each case study, we oscillated one intervening variable while holding the other two constant. We then utilized process tracing to analyze the effects of the oscillating intervening variable on OBOR’s effects in the host country and its relationship with China. The conventional wisdom assumes that OBOR and its efforts to promote regional interconnectivity, economic interdependence, and positive-sum growth have deepened China’s relations with countries along the Belt and Road and advanced China’s foreign policy agenda. This thesis, however, contends that under certain conditions OBOR has actually increased backlash, protest, and contestation within host countries, thereby straining and even damaging China’s relations with such states. In these cases, rather than promote economic growth, OBOR has in fact inhibited and undermined economic and social development in a variety of ways. While we do not claim that all Chinese economic engagement with developing countries produces negative outcomes, this thesis argues that countries that have weak institutions, experience a large power differential with China, and are geographically closer to China are particularly vulnerable to Chinese structural power, and as a result more likely to contest and protest OBOR and China’s presence in their country. On the other hand, countries that have robust institutions, experience a smaller power differential with China, and are geographically farther away from China are more likely to support OBOR, benefit from its projects, and further value Chinese economic and political engagement. To explain these findings, our analysis suggests that while developed states with stronger institutions and more robust economies are able to mitigate negative outcomes so that economic exchange with China for the most part remains a net positive activity, the same is not true for the weak states. Inefficient governance and internal instability, together with growing economic dependence on China, limit these weak states’ ability to reduce the negative aspects of asymmetric economic exchange. Furthermore, these negative aspects of asymmetric economic exchange are exacerbated the closer the weak state is geographically to China as the country is more likely to perceive OBOR as a tool for Chinese exploitation and imperialism. This increases contestation and protest within the host country against Chinese economic engagement, thereby straining and even damaging the country’s relations with China.