Student Insight: Anthony Pellegrini, May 2018

By Julia Stout, SECWAC Intern

On May 16, SECWAC hosted local scholar Anthony Pellegrini for a presentation on China’s Belt Road Initiative (BRI). Mr. Pellegrini began with giving a background on China’s ancient Silk Road and then drew parallels to the BRI, bringing up possible benefits and risks.

Mr. Pellegrini covered how China’s Silk Road stretched throughout China and the Mediterranean, with land and maritime routes. He explained that the Roman empire was China’s main goods department destination at the time. These routes were opened by China around 130 BC and flourished until around 1450 AD due to the Ottoman Empire’s boycotts. One crucial route of the Silk Road, from Xian to Rome, covered upwards of 4,300 miles. With vast routes such as this, no caravan traveled the entire length, but buyers and sellers converged at several trading centers. Goods originating from China, as an example, would be bought and sold many times along a route, exchanging hands several times over. Cities and states along the routes would greatly profit off of this by charging taxes and dues to the caravans and traders, and if these fees seemed to be too great, other routes would be opened up. Silk was a widely useful commodity, being used for clothing, banners, drapery, hand fans, and even as a medium for writing before paper was commonly used. By 30 BC, trade between the West and China was firmly established and silk was highly valuable and was the most sought-after material. However, silk eventually proved to be detrimental to the Roman economy, as the empire’s gold and silver were going off the market. Inflation became an alarming issue and an attempt was made to ban the import of silk, due to its negative effect on the balance of trade. Other luxury items, such as paper, gunpowder, printing presses, and magnetic compasses were also traveled across the Silk Road. There was also a massive cultural impact, with the exchange of ideas, science, technology, architecture, music, religion, art, and disease as well.

The presentation then moved onto the discussion of the “new Silk Road.” Mr. Pellegrini stated that the BRI is a new policy initiative by China, that he believes has the potential to be the biggest foreign policy initiative in modern history. Announced by China’s President Xi Jinping, The BRI supports the building of roads, railways, airports, oil pipelines, logistics facilities, ports, electricity networks, and others. Its objective is similar to that of the old Silk Road, with that of boosting global trade, cultural exchange, and innovation, and with China as its heart. Mr. Pellegrini stated that “it’s the most important thing happening in China right now.” It involves some 72 countries, with a population of over 4.8 billion people, and with economies worth over 60% of the world GDP.

However, Mr. Pellegrini said that “it’s a strategy; it’s not a fixed, well-defined program. The objectives are laid out, but the details are being worked out.” China has been signing agreements with other countries (at least 40 as of now) and there have been a large number of ongoing projects underway. For finances, a dedicated BRI Fund is capitalized at $40 Billion with billions of dollars pledged by the China Development Bank, China Export-Import Bank, and AIIB to name a few examples. All Chinese financial institutions are being encouraged to expand overseas funds by $50 billion for BRI projects as well. The BRI is not a grant program; it has some grants, but mostly loans.

Some major motivations behind the BRI are new markets for Chinese goods, the desire to promote development in China’s Western region, securing energy supply routes, and the desire to strengthen economic and political ties with China’s neighbors. Mr. Pellegrini also believes that China has a desire to assert a larger leadership role on a global stage.

Mr. Pellegrini says that the BRI has risen many questions; doubting whether China can deliver on this strategy, what the risks will be when depending on other countries, and how it will affect the U.S. economy. The BRI has been doubted as it relies on some countries with fragile infrastructures — such as Pakistan, whose road and rail infrastructure is estimated to cause a loss of 3.5% GDP and is known to have power outages that often last 12 hours a day with a 2.5% loss of GDP. Another source of concern is the Strait of Malacca, a very popular trade route, which is now a choke point that contains a tremendous amount of traffic. Moreover, discussion revolving around contracting has been held in secret between China and Hungary, and strong concerns about transparency in BRI dealings have been raised by many individuals and countries. “The question of whose labor will be used is clearly an important point,” Mr. Pellegrini added. Many of these projects for the BRI will also be operated in unstable and remote areas, where poorly run governments and corruption could complicate the successes of the BRI. He also added that cross-border projects are notoriously known for logistics and customs problems, and the fees and wait time could possibly negate the BRI trade. In short, many valid concerns have been brought to light and there are many skeptics and critics of the BRI.

To wrap up his presentation, Mr. Pellegrini stated: “You would think that counties would buy into the idea that infrastructure to enhance foreign trade is a good idea and that they should be working to support that kind of program and they’d be happy to get infrastructure to support foreign trade. But if you think that, you’d be wrong.” He explained that countries essentially want to improve the local economy and local employment first and foremost. Therefore, they would be reluctant to put in so much effort, support and funds into the BRI if its successes were to go to somewhere and someone else. He stated that the BRI is an incredibly large and bold foreign policy initiative that could prove to be beneficial for China and BRI countries and will certainly create enormous risks for any country involved and is an economic challenge to the U.S. In conclusion, Mr. Pellegrini said that the BRI will only be successful if sustained value is created for all BRI countries.

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The mission of the Southeast Connecticut World Affairs Council (SECWAC) is to foster an understanding of issues of foreign policy and international affairs by study, debate, and educational programming, primarily through a Speakers Series of 8 to 10 monthly meetings.