While several U.S. presidential aspirants are looking inward and attacking U.S. participation in the North American Free Trade Agreement (NAFTA) and Transpacific Partnership (TPP), China is moving in the opposite direction. It is using its economic power to build what amounts to a new “Silk Road,” strengthening and solidifying its links to the outside world. China’s on the right road, America is not.
“For more than 2,000 years, China’s commercial ties with the outside world have been symbolized by the ancient Silk Road, which began as a tortuous trading network of mountain paths and sea routes that provided a lifeline for the Chinese economy.” So begins a recent briefing paper from the Peterson Institute for International Economics.
The paper is not a historical overview; it’s an examination of an extraordinary new Chinese work in progress, known as the “Belt and Road Initiative,” to build and improve the ports, railways, highways and other infrastructure assets of China’s Asian, African and European trading partners: as many as 65 countries in all.
One of the many reasons for America’s unprecedented prosperity following the devastation of World War II was our embrace of the world. We reached out with the Marshall Plan and other aid programs, designed to promote free-market standards, curtail economic protectionism, benefit the U.S. economy by generating orders for American-made products, and combat the spread of communism.
Rather than retreat into the presumed safety of xenophobic isolationism, post-war America committed itself to rebuilding Western Europe, Japan and the global economy. We’ve been building economic bridges to the rest of the world ever since, and it has served us well.
Now, some leading U.S. politicians from both parties illogically would have us reverse course.
China knows better. Thus, the projected $1 trillion the Chinese government has dedicated to the so-called Belt and Road initiative, which the Peterson paper describes as an “elaborate effort to dramatically upgrade the infrastructure” of some 60% to 75% of the world’s population – read that Chinese customers – “increasing their mutual economic dependence on China and each other.”
This new Silk Road, writes Simeon Djankov, Bulgaria’s former deputy prime minister and minister of finance, will, in effect, “redraw the trade routes for Chinese products. One arm, the Silk Road Economic Belt, extends from China to Europe through Central Asia, and the other, the 21st century Maritime Silk Road, links China to Southeast Asia, the Middle East, and Africa along sea routes.”
And, of course, “China expects that its own companies will plan, construct, and supply the projects it funds,” which means Chinese companies will be getting orders for concrete, steel and heavy equipment, and Chinese construction workers will be getting jobs.
Much of the ambitious plan is still on the drawing board. But several major pieces already have been put in place, including the two main financing arms: the Asian Infrastructure Investment Bank in Beijing, which The Economist likens to “a new ‘World Bank’ for Asia,” and the $40 billion Silk Road Fund.
Several projects also are underway, including a gas pipeline “from the Bay of Bengal through Myanmar to Kunming,” in Southwest China, and a rail line from Beijing to Duisburg, Germany, a distance of more than 4,800 miles. If nothing else, planners of the Belt and Road Initiative are thinking big. All this while U.S. infrastructure is in serious need of modernization, as I discussed in this space late last year.
Silk Road economics demonstrates the kind of boldness and vision one normally expects from the United States. While the Silk Road initiative is still a work in progress, and much can (and will) go wrong, at least the Chinese understand the benefits of engagement.
The benefits extend beyond economics. Writing in The National Interest, John Moser, co-director of the Ashbrook Center’s master’s degree program for high school history and government teachers at Ashland University in Ohio, points to one more benefit of trade: It encourages peace. Or as Immanuel Kant wrote more than 225 years ago, “commerce … is incompatible with war.”
This is the wrong time – as if there ever was a right time – for the United States to withdraw from the world. This is the wrong time for U.S. policy makers to stand idly by while America’s infrastructure deteriorates before their eyes.
The choice before us is simple. The United States can do everything that is necessary to successfully compete in tomorrow’s world or we can go into decline. If we become a trade prima donna, we open the door to the Chinese, who are ready, willing and able to fill any void we create.
Allowing our infrastructure to decay sends an equally clear signal: that the United States has not only lost its way, but has lost the will to compete.
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