“Expanding China’s Friendship Group”: The BRI’s Rhetorical Utility Amid the U.S.-China Trade War

Introduction

Even before the White House applied 25 percent tariffs to $50 billion worth of Chinese imports in early April 2018, Chinese academics had argued that, in the event of a trade war between the United States and China becoming a reality, enhanced international economic interconnectivity through the Belt and Road Initiative (BRI) would offer some relief from its potential damage. As the trade war has unfolded, this argument has gained the support of Chinese officials and state media. This suggests that, beyond the typical view of BRI as part of China’s pursuit of increased international power and prestige, the initiative has also acquired a defensive political characteristic. The main function ascribed to BRI in mitigating the effects of the trade war is that it generates alternative sources for goods that would otherwise be acquired from the United States. However, there is only weak factual support for this analysis. Instead, BRI’s real utility within the context of the trade war is as a narrative propaganda device to strengthen domestic and international support for the Chinese government.

Scholars and State Media Connect BRI to Trade War Mitigation

The line of thinking that BRI will mitigate challenges raised by the trade war dates back to March 2018, when an adjunct professor at the China South China Sea Institute argued that “China’s BRI trade network will be an important buffer to stabilize the Chinese economy” in the event that “the trade war spreads, causing disruption to the global economy” (Sina, March 23, 2018).  It gained further traction in June 2018, when the state news agency Xinhua published an unsigned article on how the People’s Republic of China (PRC) should advance its interests during the “long-term, difficult, and complicated struggle” that is the U.S.-China trade war. Alongside a platitudinal reference to “deepening reform”, the article also argued that China “should strengthen economic cooperation with Europe, Japan, South Korea, and ASEAN to ‘broaden its friendship group’—and more broadly, further the expansion of BRI by “establishing closer economic and cultural ties with partner countries to develop new horizons for China’s development” (Xinhua, June 20, 2018). The underlying logic is that a diversified set of trade partners increases China’s ability to absorb the effects of attempts by the United States to exert pressure on the Chinese economy.

The prominence given to this assertion within the state media apparatus was made clear in August, when the “international sharp commentary” (国际锐评, guoji ruiping) column in the state media outlet Global Times declared that “China’s market diversification strategy has increased the stamina it can draw upon in responding to the trade war” (Sina, August 29). The same day, Wang Zhan, an official with the Shanghai Federation of Social Science Associations, said that using BRI to “broaden China’s friend group” would better position it to respond to the trade war (People’s Daily, August 29). The consistency of this message, along with its prominence in two state media editorials, suggests that this narrative message has been sanctioned by Chinese propaganda authorities.

The Message Spreads to an International Audience

This message is not intended solely for a domestic audience. Also in August, the English-language edition of the Global Times made the case that BRI will not only help China as a country, but also Chinese companies, to mitigate the fallout of the trade war: “The progress of BRI has provided some cushions to companies caught up in the tariff battle.” The article also quoted Wuhan University of Science and Technology Professor Dong Dengxin, who claimed that “because of the trade war, China will develop a closer and deeper economic relationship with more countries” (Global Times, August 4).

While the Global Times is not a widely-read publication outside of China and the China-watching community, the notion that BRI is countering the damage of the trade war was later featured in such outlets as Bloomberg (Bloomberg, August 13), CNBC (CNBC, August 25), and Al Jazeera (Al Jazeera, September 11), illustrating the spreading influence of this idea in more mainstream sources. The impact of this idea has led some foreign officials to reconsider their stance on BRI—including Slovakian State Secretary for Finance Dana Meager, who has stated that “The way out [from the shadow of the trade war] is through further economic integration via BRI” (Al Jazeera, September 11).

Does the Rhetoric Measure Up to Reality?

But has BRI actually offered a way out from the trade war? Since June 2018, the deficit felt by emerging market economies in their trade with China has eased by over $50 billion (Council on Foreign Relations, August 12). One explanation for this is that China is drawing upon alternative suppliers in emerging markets for goods that it ordinarily buys from the United States. Chinese government officials have identified this as a possibility. In November 2018, Development Research Center Rural Economic Director Ye Xingqing said that “The Sino-U.S. trade conflict, if it becomes long-term, will definitely impact the import origins of some products [and] countries with great trade growth potential will get a larger share in the Chinese market” (ChinaOils, November 15, 2018).

In 2019, Chinese imports of Russian soybeans are on track to triple by year-end, giving credence to Ye’s prediction (Foodmate, June 25). In September, China’s General Administration of Customs also permitted Russian, Brazilian, and Argentine soybean meal to be imported (Finance World, September 12). This diversification of replacement importers points to an underlying risk management strategy. However, as hinted at by Ye’s comments, the ability of a vendor to supply a given good (i.e., to have “great trade growth potential”) supersedes the question of whether they come from a country that has supported the Belt and Road Initiative – and indeed, despite otherwise warm political relations, Brazil continues to withhold declaratory support for the BRI (South China Morning Post, October 25).

Signs also exist that improvements in the trade balance between emerging market economies and China are part of a wider trend that began before China started to look for substitute imports. As found by the State Information Center (affiliated with China’s National Development and Reform Commission), imports from BRI countries outpaced exports in 2017, before the trade war began in earnest (Xinhua, May 7, 2018). This casts doubt on the linkage between China’s increased imports from emerging markets, and its efforts to substitute goods subjected to elevated U.S. tariffs.

Seeking the Moral High Ground

While there is no convincing evidence that BRI has allowed China to find alternative vendors for erstwhile U.S. imports, references to the Belt and Road have been used in attempts to paint China as the more moral and globally-minded of the two combatants in the U.S.-China trade war. Responding to a U.S. criticism of China’s trade policy at the United Nations General Assembly in September 2019, the Global Times retorted that:

“The vast majority of countries understand China, which advocates mutual respect, equality and mutually beneficial cooperation. It is a China that uses the ‘Belt and Road’ to jointly build and share with other countries.” (Xinhua, September 26)

Similarly, a white paper on “China and the World in the New Era”, released by the State Council Information Office on September 27 ahead of the 70th anniversary of the founding of the People’s Republic of China, declared that:

“Rather than forming exclusionary blocks, it aims to help China and the rest of the world jointly seize opportunities and pursue common development. It is intended to avoid ideological demarcation, zero-sum games, or any of the ‘traps’.” (Xinhua, September 27)

In such messages, there is an implicit juxtaposition between the BRI’s creation of opportunity and the Trump Administration’s supposed imposition of uncertainty. In that sense, the Belt and Road Initiative occupies an important position within the Chinese government’s efforts to win hearts and minds amid the trade war.

Conclusion: What Does This Say About BRI?

It is less than clear that BRI has provided China with meaningful economic support amid the trade war—and indeed, other research indicates that BRI investments have placed an increasing financial burden on the Chinese government, particularly in terms of its foreign exchange reserves (China Brief, September 26). As noted above, there is nothing to suggest that BRI itself has enabled China to buy goods that it would otherwise source from the United States. Rather than serving as an “important economic buffer to the Chinese economy” (Sina, March 23, 2018), it is more accurate to describe the Belt and Road Initiative as a rhetorical device. At the time of writing, 138 countries had signed memoranda of understanding related to the BRI. Notwithstanding the lack of clarity regarding its scope or intent, the BRI provides the Chinese government with a tool to persuade both its own citizens and foreign governments that it is not isolated amid the trade war. This rhetorical utility, rather than any transformative economic impact, is the most immediate benefit provided by the Belt and Road Initiative in China’s attempts to reduce the impact of U.S. economic pressure.

The development of a narrative linkage between the trade war and the Belt and Road Initiative adds another dimension alongside the prevailing wisdom that the BRI is primarily a tool for China to extend its international influence. While the BRI predates the trade war, its function in diversifying China’s pool of trade partners and routes lends itself naturally to alleviating economic pressure imposed by the United States. In that sense, it fulfills a defensive purpose. Likewise, spreading the message that China can withstand the escalation of U.S. economic coercion because of the Belt and Road shows the role it has been given in calming domestic unease—once again pointing to the utility of BRI as an instrument for defensive political propaganda.

Johan van de Ven is a Senior Analyst at RWR Advisory Group, a Washington, D.C.-based consultancy that advises government and private-sector clients on geopolitical risks associated with China and Russia’s international economic activity. He leads RWR’s research and analysis of the Belt and Road Initiative, the centerpiece of foreign policy under Xi Jinping, and also edits the Belt and Road Monitor, RWR’s bi-weekly newsletter.