Though often attracting negative commentary in the Western Press the Belt and Road initiative follows a path thread by the Western countries themselves in the 19th century. A couple of decades after the first trains had been built in Britain the rail revolution spread around the world. This was in essence based on British finance offered to countries to avail of British technology. This kept the factories humming from Birmingham to Glasgow turning out locomotives and track. Often the terms consisted of a concession whereby a British company would build the railway in return for the license to operate it (they built it they owned it).

The Belt and Road is not dissimilar. Recipient countries get infrastructure they otherwise would not have built using loans from China which, if not repaid, will mean China takes ownership of the asset. China benefits by creating a market for it’s construction companies and manufacturers and binds the host countries into it’s commercial network. Inevitably it will benefit some of the recipient countries more than others. If Western countries disapprove one could well ask what they are offering the developing world in it’s stead.

This does, of course, mean that China’s diplomatic influence continues to expand and this will have consequences that go beyond the pros and cons of the economic arguments. The dominance of the West in much of the developing world has traditionally rested on a number of pillars but which by 2020 have much changed:

(i) Trade - when the G7 was formed in 1987 it’s seven members were the world’s largest trading economies.

2020 China is now the world’s largest exporter and the largest export market for a large number of developing countries.

(ii) Investment - even with the end of formal colonies almost all foreign investment in developing countries originated in the US and it’s partner countries (EU, Canada, Japan, S Korea, Taiwan) until about the turn of the millennium.

2020 China is now a major source of direct investment.

(iii) Education - the Western countries were the most advanced and their education systems were the models to follow. Studying in Western Universities was very highly valued in the developing world.

2020 In education there is a much more level playing field now and with the internet access to knowledge is democratised. Furthermore some Western countries have recently started to make things difficult for foreign students.

(iv) Institutions - the West had political and other institutions which were upheld as a model. They also controlled access to the IMF, World Bank and international finance in general.

2020 The question of political institutions was always a tricky subject in the developing world as many countries bore grudges against the Western powers. In addition the merits of Western Institutions were often recited without regard to their historical evolution over several centuries as if they could simple by transplanted to societies at an earlier level of economic development. Access to finance is more broadly spread nowadays.

(v) Military - the West (the US, in particular) had an enormous lead in military technology excepting the Soviet Union which was not an attractive partner for most developing countries.

2020 On the military/diplomatic front it is instructive to consider the aftermath of World War II. Most of the countries in Asia were then under the formal or informal control of Western Countries. These same countries (Britain, France, Netherlands) were seriously weakened by the War and as soon as the conflict had ended once dormant independence movements had become unstoppable.

The US is the dominant military/diplomatic power in Asia by default but not necessarily due to goodwill on the part of the individual countries especially in the Islamic world. Most of the factors which sustained the dominance of the West are now on the point of becoming obsolete. It may just require a single crisis (which could be the current Covid 19 crisis or some future crisis) for the order to be overturned and for China to become the dominant military/diplomatic power.

Latin Report is not legally responsible for any decisions taken based on the views offered here or in our Reports.

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