Since it was announced in 2013, China’s Belt and Road Initiative (BRI), the massive economic initiative to build infrastructure across the Eurasian landmass and beyond, has become indicative of China’s effort to become a global superpower. While seemingly a purely economic venture, an increase in political support from recipient nations is undoubtedly part of the Chinese Communist Party’s (CCP) reasoning for the BRI. The BRI has even been called a world order in itself by some, which speaks to the geographical and economic scope of the project, and to the grandeur with which the CCP views its most important piece of foreign policy.
For Canada, a middle-power nation heavily embedded in the liberal international order of the post-World War II era, the changes in global governance brought by the BRI have three main implications. First, the BRI will change how credit is issued for developmental purposes, as it operates outside the historical credit-issuing institutions in which Canada plays a part. Second, existing international norms will shift in parallel to China’s exponential growth and influence in global affairs. Third, in 2018 China announced that through the BRI, it intends to pursue an arctic expansion program named the ‘Polar Silk Road’, which may pose potential security implications for Canada in this region. Together, these three issues will leave Canada’s government facing a reckoning on its position in international affairs.
In just the past few years, China has become the world’s largest creditor, signalling a major shift in international finance. Historically, the issuance of credit for developmental purposes has been dominated by the International Monetary Fund and World Bank, both financial institutions founded in 1945, which by their very structure are heavily influenced by Western nations. Canada is a founding member of these institutions and is furthermore part of the Paris Club, an informal group of mostly rich nations that set the terms for which administered loans must follow, such as environmental and human rights standards.
Seeking an alternative to this status quo, China has instituted, partly through the BRI, its own regime of international credit while simultaneously working within the existing system. Many have raised concerns that loans issued through the BRI do not require the same standards as the traditionally Western-backed ones. While this in many cases is true, the nature of the loans themselves is also very different. In recent decades, Western lending has transitioned from hard infrastructure projects for developing countries towards democracy promotion and social services as primary loan types, with infrastructure totalling only 30% of all loans. Meanwhile, the BRI focuses on the infrastructure many developing countries desperately need, albeit with loan terms that grant some cause for concern for excessive debt. If a creditor nation like Canada views loan standards as important, more direct linkages determining the specific needs of debtor nations will be a necessary policy moving forward.
The changes in international credit and finance derived from BRI loans are also causing changes to the norms and rules on which this system is based. In international relations, scholars often refer to “norms” as general standards of behavior, expectations, and obligations which have come to be accepted practice over time, but which are not officially written in international law. In development finance, examples of norms in administered loans would include transparency, accountability, and flexibility towards the countries in need of assistance. In contrast, China has been accused of flouting many of these norms and administering loans without transparency, in a likely attempt to further its political agenda.
The change in global norms wrought by the BRI extends beyond finance, and into realms of territorial ambition and greater influence in multilateral settings that reflect its growing power. The sheer size of the BRI through its funding of projects in over 65 countries increases China’s political leverage in the international realm. By providing financial support for critical infrastructure projects in countries such as Cambodia, China may come to expect a greater degree of diplomatic support. Such diplomatic solidarity from other nations is crucial for helping China improve its image, which has been partly tarnished by international criticism over human rights and lending practices.
Canada’s intelligence agency (CSIS) is wary of this strategy and has recognized that the BRI represents ambitions far grander than just access to new markets, signaling that it views China’s use of the BRI as a mechanism to create a new political order. Therefore, Canada may have to prepare for the BRI to bring with it a generational or even centurial shift in international norms, transitioning away from the order that it has grown accustomed to.
New Security Concerns
Finally, with the announcement that China would be adding the ‘Polar Silk Road’ to its official Arctic policy, Canadian officials will be forced to consider a host of security implications for its northern regions. With the advent of climate change and melting sea ice, the Arctic has already become a new focal point of security for the countries of the Arctic Council that border this region. Points of contention include the reserves of untapped natural resources and the development of newly available shipping lanes which closely border northern states. The latter is of relevance to Canada as the increased navigability of the northwest passage reduces the voyage of ships sailing from Shanghai to New York by 2000 miles. Therefore, there is an obvious economic incentive for China to develop infrastructure along this northern route and to increase its use over time, which in turn is likely to cause greater political tension with Canada.
The United States and European Union are currently contesting Canada’s claim that the northwest passage belongs to its domestic waters, and are instead asserting that it is international water subject to freedom of navigation. If China were to diplomatically side with the US and EU on this issue, it would put huge political pressure on Canada, isolating it on a matter of its own sovereignty. Canada currently requires all ships passing through these waters to ask permission to do so. An increase in commercial traffic could complicate territorial and economic matters and necessitate an increase in surveillance throughout the region. Canada views its Arctic territory as vital to its territorial security, and the increase in activity that the Polar Silk Road could highlight the need for it to dedicate more resources to this region to ensure continued security in the region.
In many ways, the BRI represents China’s ambitions to become a global superpower and alter the norms and procedures of international affairs. More than most countries, Canada has benefited heavily from and played a large role in the current order, which has certainly come under strain in recent years. If successful, the BRI will only hasten the decline of the post-WWII order, leaving middle-power states like Canada in a position where they are unsure whether the existing norms and institutions can withstand this fundamental shift, or if they must adapt to a new order.