THE ROLE OF THE BRI IN CHINA-TAIWAN COMPETITION

In international relations, there's often a tendency to view world politics, power, and resources as interchangeable and fungible. This perspective might lead one to assume that the Belt and Road Initiative and China's global economic engagement, particularly in the Global South, would be directly integrated into or affected by a potential crisis in cross-strait relations. However, it needs to be emphasised that these are distinct issues involving different actors, and thus it is important to exercise caution against oversimplification. 

The potential costs and benefits of China's economic engagement in the Global South in the event of a crisis are multifaceted. One key question is whether China's extensive economic involvement over recent decades has produced political, diplomatic, or other forms of capital that might prove helpful in a crisis scenario. While there would undoubtedly be direct economic costs for China's interests globally, the situation is complex and requires careful analysis. 

The Chinese government supported much of China's economic cooperation with developing countries during the first decade of the BRI. The BRI, often described as a massive global infrastructure spree, represents a significant investment. However, it's important to note that despite its scale, the BRI's volume is still relatively small compared to the size of the Chinese economy and its domestic debt.

The changing nature of the BRI and China's global engagement adds another layer of complexity. There's been a shift from predominantly state-financed projects to increased involvement of both public and private Chinese companies. These entities are investing in projects and serving as contractors for infrastructure and other initiatives worldwide. This evolution complicates any direct comparison or substitution one might consider between cross-strait conflict and China's global economic activities.

The potential impact on China's global reputation may be more significant than the direct economic costs. A severe crisis or conflict could lead to fewer countries engaging economically with China, for example. This reluctance could stem from changes in governance preferences, shifts in public opinion, or concerns that engagement with China might be perceived as politically costly. Historical precedent suggests that such reputational damage can have significant effects. For example, After the Tiananmen Square incident in 1989, China experienced temporary setbacks in its relationships with major lenders like Japan and European states, faced an arms embargo, and saw a decline in people-to-people engagement. However, it is worth noting that these effects proved temporary, mainly due to China's economic growth and its increasing importance in the world economy. 

All of this said, the Taiwan issue of course represents one of China’s core interests. In a potential crisis scenario, the marginal calculations about economic costs, benefits, and spillover effects might become secondary considerations in Chinese decision-making. These economic factors may not be at the forefront of China's strategic thinking in such a situation. It's also important to recognise that China's government has been working to make various sectors of its economy more resilient to international tensions, partly in response to growing friction with the United States and perceived attempts by the US and its partners to contain China in vital technological industries.

An alternative perspective to consider is whether China's extensive investments could instead pay off in a crisis. Over recent decades, well before the BRI, China’s government has worked to cultivate relationships with political leaders across the Global South. China-Taiwan competition for diplomatic recognition has been intertwined with China's foreign aid strategy almost from the beginning, highlighting an important geopolitical dimension of China's foreign engagement. 

In terms of China’s position on the Artic, it has evolved significantly. Beijing is emerging as a major player in the Arctic and within a decade, China has moved from being a peripheral partner to an active member of the Arctic Council. China has its own white paper on the issue, which is included within the BRI.

While the soft power benefits of China's economic investments remain unclear, it can be argued that these efforts have produced significant high-level political support on critical issues. This could potentially serve to blunt international criticism in the event of a cross-strait crisis. 

While the economic costs and benefits of China's global engagement should not be exaggerated in shaping its approach to cross-strait relations, they represent a complex combination of factors that warrant careful consideration. The interplay between China's economic interests, diplomatic relationships, and core strategic objectives creates a multifaceted landscape that defies simple analysis. As tensions persist, the global community must navigate these intricate dynamics, recognising the far-reaching implications of any potential cross-strait crisis or conflict on the world stage.

These remarks were presented by Dr. Austin Strange at the Global Conference for New Sinology (GCNS), 2024.