A hybrid mechanism of multilateral economic cooperation as a new form of foreign policy of China

Abstract

The authors analyze current trends in multilateral international cooperation determined by the global stagnation and the changing role of developing countries that reflects their growing political and economic potential compared to developed countries. China is one of the leading actors in the process of modernization of the multilateral cooperation. The authors examine the scale and potential influence of two China-led multilateral cooperation and development initiatives in Eurasia: the Silk Road Economic Belt and the Asian Infrastructure Investment Bank (AIIB). These initiatives imply a new kind of initiator different from the traditional participant in international multilateral initiatives. China's growing global role has reached a qualitatively new stage related to the fact that the country has moved into first place among world economies and has accumulated significant financial resources, although per capita income remains relatively low. Furthermore, China's internationalization model has required it to be more actively involved in the global governance system as a responsible superpower. The awareness to address important issues of economic growth, sustainable development and the provision of global public goods forces China to go beyond the standard profit-seeking trade and investment models of internationalization. The explication of its enormous economic potential at the regional (African, Asian and Latin American) and global levels directly or indirectly contradicts the interests of the leading developed and developing countries concerning foreign markets, mineral resources access and political influence in Eurasia. The authors offer an objective assessment of the potential impact of the Silk Road Economic Belt and AIIB on the associated national economies. The Silk Road Economic Belt is an integral part of the "One Belt and One Road" project and involves the construction of transport and logistics infrastructure from East to West across the Eurasian continent. It will be implemented through traditional Chinese economic diplomacy using preferential or free trade agreements with participating countries and funding conditional on the procurement of Chinese infrastructure goods or access to raw materials in the borrowing countries. The AIIB is a regional bank for reconstruction and development promoted by China together with European countries in support of the Silk Road Economic Belt. Based on an analysis of expert opinions and official statements as well as the system of banks for reconstruction and development in Eurasia, the authors conclude that China is making exceptional organizational and financial efforts for its economic expansion into the Eurasian continent using a hybrid model of cooperation and development.