The Belt and Road Initiative (BRI), Xi Jinping’s seminal foreign policy agreement, has drawn a mixture of criticism and praise from foreign affairs analysts. Many western political commentators and leaders have levied the accusation that China is engaging in ‘debt-trap diplomacy’. Others believe that the initiative has produced desirable results in developing countries, such as enhanced transportation and infrastructure arrangements.

This commentary will argue that the initiative has created mutually beneficial agreements between China and developing nations across the world. I will utilize the Marxian concept of overaccumulation, world systems theory, and other data to make this argument.

Background

Using the Marxian theory of overaccumulation, we can begin to understand how China benefits from its trade with the third world. In this theory, Marx draws on the idea of the tendency of the rate of profit to fall, even as production techniques advance. Simply put, as more capital is invested in production, the socially necessary labor time required to produce a good decreases. This means that the value of a good, and subsequently its exchange value, will decrease relative to the production capital invested. If demand stays the same, this means that profits will decrease.

When this devaluation of goods occurs, the capital needed to produce the goods is also devalued. This leads to a cascading effect where devalued capital and goods sit side-by-side. To temporarily “fix” this phenomenon, capital may move to different socio-spatial areas where there is greater demand. This has traditionally been part of the logics of imperialism that were elucidated by Lenin.

Overaccumulation and the Belt and Road

By many accounts, the Chinese economy has excess capacity in the heavy industries sector. This is particularly true for the cement, steel, and coal industries. To find more profitable outlets for investment, China must find large spatial “fixes”. This comes in the form of the Belt and Road, which attempts to strike infrastructure deals across the entire developing world.

This benefits Chinese enterprises, as they once again have profitable outlets to fix their capital in. Many commentators would argue that this constitutes imperialism, as China is exporting capital to underdeveloped regions of the world in order to make profits. However, this ignores how capital, and in particular infrastructure, exports can help developing countries end imperialist dependence with the global North.

Core-Periphery Relations

Using the core-periphery model used by World Systems scholars, where the core produces advanced manufacturing goods while the periphery produces primary commodities, we can begin to see why Chinese infrastructure projects are vital for third world countries. Not only can Chinese enterprises force the Western world to give more favorable terms for infrastructure development due to competition, but they can also assist developing countries in starting their  indigenous industries. This means third world countries can become less dependent on western monopolies for their manufactured goods.  They can also use their primary commodities in manufacturing instead of exporting them to the West. In essence, Chinese infrastructure projects could help sever core-periphery relations that have continued into post-colonial times.

Initial Results

While the BRI is still in its infancy, there have been some promising results regarding the development of the third world thus far. First, Chinese banks have offered cheaper credit to third world countries than their western counterparts. This means developing countries can use their financial resources towards more productive development rather than paying rent in the form of debt repayment.  There are also studies suggesting that Chinese infrastructure products have contributed to long-term economic growth in patroning countries, particularly in Ethiopia. Another example of BRI success is the Malaysian East Coast Rail, which is expected to contribute 2.7% growth to the Malaysian economy. While it's too early to examine the effects of many BRI projects due to their recency, initial studies show promise in the BRI’s ability to achieve mutual cooperation.

Conclusion

Many western analysts have mourned over the supposed deleterious effects of the BRI. However, examining the BRI’s effects not in isolation, but in an environment of ongoing imperialism, reveals its potential in breaking core-periphery relations that have plagued the globe for centuries. It’s yet to be seen what Chinese macroeconomic policy will look like after their oversupply problem is fixed. Instead of fixing the lack of domestic demand, China may resume core-periphery relations across the world, only with itself as the global hegemon. However, this is more of an imagined problem rather than one occurring in material reality. Right now, third world countries should utilize China’s excess capacity in heavy industries and cheap credit to assist in industrialization.

Kaushik Sampath is an undergraduate student at Stanford University and currently is a desk editor for the school newspaper, The Stanford Daily. He is planning to major in Computer Science and Chemistry. 

Works Cited

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Zhaoqin, L. (2022, July 9). Almost a third of the Chinese-constructed Mega Railway in Malaysia has been completed. China Global Television Network. Retrieved September 23, 2022, from https://news.cgtn.com/news/2022-07-09/Chinese-constructed-mega-railway-in-Malaysia-30-completed-1bwwaNBwIj6/index.html