Bonus: The Emperor’s New Road

so generously allowed me to take over her feed. I leave you with an interview I recorded with Jonathan Hillman of the Center for Strategic and International Studies in Washington about his new book called The Emperor's New Road, China and the Project of the Century. That project, of course, is the Belton Road initiative, the grand strategy of Chinese President she Jimping, who has made it his foreign policy signature.

But what is it exactly? An imperial effort, certainly, but according to Jonathan, not of a organized one, and one that could repeat the mistakes of empires long gone. Take a listen. The title of your new book is The Emperor's New Road, the Emperor being j and paying the Chinese leader, the road being belt, and road is globes spanning infrastructure connectivity project. How important is this project to see and to his historical legacy. Well, this is his

signature foreign policy vision. Um. And so this is so important that it's been written into the Chinese Party Chinese Party constitution. UM. So tough to imagine it being more important than it is. And in fact, I think that the importance of this thing has almost become a liability. UM. It's it makes canceling these projects all the more difficult. UM. No one ever wants to be the person to cancel

an infrastructure project. But if you're a Chinese official, you certainly don't want to be the person to cancel the infrastructure project affiliated with shij and Ping's signature foreign policy vision. Let's talk about roads. The Romans built roads too, straight roads, and they marched their armies along these osteries. Is the Belt and Road in your view more and imperialist project

like the Roman roads? Is it more about China find finding outlets for his industrial surplus, is creating new markets where products, goods, services, or as China would have it? Is it all about providing public goods, highways, fiber optic cables and so on, like the US martialled plan, but for the whole world? So I do call it an imperial project in the book, but it's different than the

imperial projects that have come before it. And that's something I try to do, is I I lay out, UM, you know, how this compares to UM, what European powers were doing in Africa and Asia, what Japan was doing in Southeast Asia, what the United States has done UM in Pakistan. I think all of those experiences provide almost a yardstick against which you can measure China's activities and against which you can come to some conclusions about Chinese power.

And I think that this, this imperial project UM is more gradual, UM, more incremental, It's more commercial in nature, and I think China faces barriers to this project that many of its predecessors did not face UM. But it is going into some very risky markets. You mentioned the Marshall Plan UM, and I think the Marshall Plan really stands out because the Marshall Plan was a finite uh, you know, it was going to last for a certain number of years. It involved a specific number of countries.

There was a you know, a budget for the most Marshal Plan. You could say what was in it and what wasn't in it. You can't do that with the Belton Road. It is open ended um and ever expanding UM. And it involves developing countries. And I think one of the lessons here um. You know, the United States learned this in Pakistan as well. Um, Developing countries is a lot more difficult than rebuilding developed economies. Skolars often note that the original Silk Road was a two way into

change or exchange. China sent silk con pulsman one way, and then in the other direction came ideas from other civilizations, including Buddhism, which changed China. Two questions, One, what are the most important Chinese exports along the Belton Road and what comes back into China. So I think the most important exports are China's state owned enterprises. I mean, they are really the number one beneficiary of this undertaking. China

has seven of the world's ten largest construction companies. As you know, they've built so much at home that they've run out of things to build, and so now they're they're eager for work abroad. Um. They are in many cases the most influential actors on the grounds. They bring with them, um, their own workers. In many cases, they bring with them their own equipment. UM. So that that is a major export UM. You know, and from that also comes um. You know in some cases Chinese standards,

Chinese practices for for for building projects. UM. So, I don't want to discount the standard setting importance of this as well. UM. And then what comes back UM, I think a lot less than is often advertised. Countries I think signed m o US for the Belton Road and politicians will say that this is going to increase our exports to China. UM. I think, you know, the evidence for that is pretty limited. UM. This is definitely something that's financed by China, intended to benefit China UM and

benefiting most of all its stay enterprises. Sin Jong, the major western gateway for the Belt in Road China explains it's cracked down on the weak. Is there The u N says more than a million weeks are incarcerated in re education cats um. In terms of combating terrorism, the security of Belton Road is clearly talk of mind. What did you learn about Si Joan in writing this book and how c looks at the whole question of security there so, I think of the early days of Belton Road.

One of the arguments that was made for it domestically within China, was that it was going to benefit less developed regions, Western China being you know, an important part of that. It was gonna help balance growth right between the more developed coastal regions and the region's inland. UM.

That hasn't happened. And I think if you if you go UM as I had the opportunity to do UM a few years ago into Shinjin and UM, I think it was very striking UM that this is an area that's supposed to be critical for connecting China to other countries through the Belton Road UM, and it is plagued with UM, security checkpoints, UM, with police stations, UM. Economic activity UM was quite slow, but you know, the security

sector was thriving. And so I think, to me, this is a real UM, a real contradiction in the Belton Road, a real tension between China's UM it's focus on connectivity and how it describes the Belton Road and it's unwillingness to give up control UM. And so I think you see that really historically in Shinjin. I mean, you know, even beyond the enormous human cost there, there's also this economic cost of UM. You know, this is not a place to do business to you know, have goods and

people moving freely. Um, that comes. That comes with a high toll. And I think the bigger point here too with the Belton Road initiative, this tension between connectivity and control. It's that if those physical barriers, but it's also in some ways you know, China's approach to connectivity. Um. You know it's great firewall, um that it's sharing with other countries, you know, sharing technology to limit the spread of ideas and information. Um, you know, putting capital controls in place

to limit the flow of finance. So this is really UM to me, a a core, a core tension in this global vision of connectivity. Roads require plants. They are rather precise engineering projects. But you look at Belton Road rather differently. To you it's anything but carefully laid out. Great explain that. So sometimes you'll see you'll see maps of the Belton Road, um, you know, and there are many maps, and they're they're there are not. I don't think that there really is an official Belton Road map.

There's just different depictions of this. UM. But at some point Chinese officials started saying that there were six corridors in the Belton Road. Um. And so there's broad sweeping lines across the Eurasian Supercontinent and it gives this this feeling of form and structure that when you actually go and look, does not exist. UM. So no evidence that China is channeling economic activity into these corridors, with the exception of the China Pakistan Economic Corridor, which by the way,

is not very focused on connectivity at all. And so in a way it's the exception that proves the rule. Um. But a lot of the activity is really more opportunistic, more disorganized, sometimes chaotic, um. But you don't get that impression from listening to a Shijian Pings speech at a Belton For him, that really requires going and looking at individual projects and stepping back and asking whether they reflect a lot of the rhetoric that's being used the US.

Of course, portrays Belton Road is a debt trap China forcing expensive infrastructure onto emerging economies like Sri Lanka and then swooping in to take over ownership when debts go unpaid. What does that narrative get right about the Belton Road and what does it obscure? So the debt trap narrative, I think in a way gives Chinese officials too much credit. This idea that they have strategically raised a country's debt levels to a point that they can then take hold

of a strategic asset. UM. That's very that's very sophisticated. Economic statecraft involves having lots of different actors on the same page. UM. To me, it's much more likely the Hammond Tode case in Sri Lanka that so much has been made of the poster child for debt trapped diplomacy. It's much more likely to me that China was trying to limit its losses UM in taking over that court, but not that it's set out to have this be its ultimate goal, because I think, frankly, the project has

been a stain on the Belton Road on China's reputation. UM. And you know, not a lot of economic activity happening at him and Tota Port Um. And so the real story of him and Tote port which I get into in the book, I think, is a little bit less spy thriller, a little bit more Shakespearean drama. UM and domestic politics are are the key. UM. It's really you know about um politicians, unchecked ambission and ego UM, and the facts unfortunate fact that Sri Lanka now has to

pay the price for that. Well, what about Chinese financial liabilities? China itself is sitting and amounted a debt and here it is lending to shake the economies and what you just described as some of the risk es places on Earth, including Pakistan. Does that come a point where China runs out of money to fund this grand road building ambition. Yes. The risk runs both ways, and I think that's important

to remember. I think there's this idea sometimes that even when China fails, it wins, and I don't think that that's the case. So there is financial risk, there's reputational risk um. And in fact, even before the pandemic we saw a really a pretty pronounced pull back in Belton road activity. So you know, peak Belton road activity was probably a big pull back. UM. And now the pandemic

has really frozen things. You know, Chinese officials are saying, um, you know close to projects are impacted by this, but they will still tell you don't worry, no major projects have been canceled. Again, I think, going back to this idea that this is Shusun paying signature foreign policy vision. So the risk is there, and I think because of how important this is politically, you know, I think that the risk has been underappreciated and UM and and maybe

overlooked to some extent. You say, of the projects have have have been put on hold. Is is this a permanent set back to Belton Road or just a temporary phenomena that and it gets restarted when COVID is under control. So I think this is this year and you know in the next year, is I think the great renegotiation along the Belton Road. I think UM, Chinese officials are

spending more time renegotiating deals than negotiating new deals. The project pipeline was already slowing down before the pandemic, and so I think this, you know, will accelerate a process that was already in place. UM. Recipient countries are you know, have are going to be quite limited in what they can can do, what they can take on. So that's

going to impose a constraint around this. UM And also if you just imagine what the world of infrastructure projects looked like when this was announced, you had some some targets that were ready to go. But the longer you do this, the more difficult it becomes to find those, you know, the low hanging fruits. So the low hanging fruit has been picked um and it turns out that some of it was rotten. How much? How much has

China spend on it so far? So all of these estimates, any Belton Road estimate, including the one that I'm about to give, should be taken with a grain of salt. Um. It depends on what you count for countries participating and

what activities and so on. The best data that I have seen suggests that this is still a little bit south of five billion dollars in terms of total activity across country is participating in the Belton Roads and since it was announced in so not the one trillion that's often assigned to it, certainly not the four trillion that's sometimes assigned to it, and definitely not the eight trilli

and um that you occasionally here. Final question you your book is pot Egano makes Pocio politics, but also pot travelogue. You actually road railways in Africa helped cargo ships a carls the Caspian. When we all start traveling a gating off to COVID, what pots of Belton road would you recommend visiting, particularly for those of your rita's with a taste for adventure. So I think it's becoming easier now to find um the boat that I took from Kazakhstan

into Azerbaijan Um. You know, when I was looking for it, I was told it was going to come to one port. Um. Then I'm on on online tracking ships trying to get a sense for whether it's actually gonna show up. Showed up at at a port, a new port that was an hour away, UM, and so I had to scramble to get on it. It was a thirty two hour ride.

But really unlike anything you know, I have done before, you know, to be on the on the roof of a U ship going across the Caspian Um, it's something special, and so it's a it's a adventure that most people don't take. It was me and a gang of Russian bikers actually who wanted to get their motorcycles from Kazakhstan to Azerbaijan Um. So some interesting company. Jonathan Hillman The Emperor's New Road, Thanks for your time. It's been great

talking with you. Thanks to having me, Thanks for listening. I hope you'll tune in later this year for a digital edition of the annual Bloomberg New Economy Forum. With business and government leaders from around the world, we'll talk about the challenge of building a more sustainable and equitable post COVID economy.