Geoeconomic challenges for Madani economy Malaysia

20th September 2023

(updated 18/02/2024)

Preamble

On 20th September 2023, in celebration of its 100th year anniversary event, the Kuala Lumpur Selangor Chinese Assembly Hall (KLSCAH) organised a National Affairs Conference where the dons of the country’s politico-economics: Professor K.S. Jomo, Professor Edmund Terence Gomez and Dr. Muhammed Abdul Khalid expanded from their various academic papers to an audience of KLSCAH constituent members, the media and academia.

What were presented at the Conference have been explored in this site and exposed on other platforms, too; this essay shall tepidly traverse the geoeconomic landscape on an Madani economy Malaysia approach.

1] Neocolonialism to the emergence of Financialisation ethnocapitalism

Jomo began his presentation to articulate the existence of a neocolonial economy – whence 70% of national wealth was owned and controlled by foreign enterprises – at the time Malaya gained her independence to the present challenges in an era with the end of trade liberalisation under a Cold War 2.0 regime  where countries have to remain steadfast to not only non-aligned  but pacifists to the resonnance drums of war, and whence the state of a nation has to retain, and maintain, an economic nationalism in capital deployment and to privilige domestic investments than to rely on foreign direct investments (FDI), and whence the management of a national economy has to be of a more progressive role than to be dependent of The Triad  monopoly-capital inflows to be captured by the technological elements of the infrastructural information systems platforms, (see Global Research, Sept 2023, G77 to reject digital monopolies; STORM March 2023, short-circuiting the rakyat; STORM January 2023, digitalisation-capitalism-and-smes) or even the Industrialisation 4.0 which the country does not have the process capacity nor the talented capability to attain those objectives.

Through the ownership and control of information, monopoly-capital dominates the digital capital, too. Capital accumulation permeates the entire production chain but through soft elements in the ownership of patents, copyrights, brands and logistical systems impoverishing the poors but enrich the bourgeoisie class by way of   financialization capitalism. It was such that by the decade leading up to 2019, the largest 100 firms in the world had increased their total market capitalisation by US$12.7 trillion. A third of that increase (US$4.2 trillion) can be said to be accounted for by just seven firms: Facebook, Amazon, Apple, Alphabet, Microsoft (the famous quintet ‘FAAAM’), Alibaba, and Tencent as enabled and enhanced by digital technologies: 

In the country, there is a growing centralisation of political and economic power in the Office of the Prime Minister and the Minister of Finance with a confluence of influence of the state over the GLCs that have the concentration of capital and accumulation of capital as Gomez laid out in Minister of Finance Incorporated: Ownership and Control of Corporate Malaysia, and more importantly, by offering higher dividend returns, cooperating closely with those local corporate capital that have connections to Global North monopoly-capitalists and through  internationalising their operations, they successfully link up electrical and electronic small manufacturing enterprises (SME) with products assembly, supplies and logistics competitiveness into the Global North supply chains.

Some of the input to the local Digital Infrastructure or DI is the physical medium, the infrastructure through which the traffic generated by the internet flows. This includes everything from telephone wires, cables (including optic fiber and submarine cables) to microwaves, satellites, and mobile technology such as fifth-generation (5G) mobile networks, IoT, and servers as well. On the server-side, major companies like Amazon or Microsoft stepped in to build and provide this growing digital infrastructure known as “the cloud”. Besides cables, cloud, and other things mentioned above, the data centers (hardware and software) and their administration is also a part of wide digital infrastructure work; see STORM Feb. 2023, deepening infrastructural platforms stronghold.

The later stages of the New Economic Policy (NEP), as Gomez reiterated, only reinforced a government-intervened economy besides the emergence of monopoly financialisation capitalism with the formation of government-linked companies (GLCs), and kleptocracy within an entrenched ethnocapitalism environment that most of the time collaborated, and colluded, with Global North monopoly-capital – in an age of new economic imperialism, (Suwandi, 2018).

Thus, after gaining political independence, the economic state of a nation is still being dominated (45%) by foreign-owned enterprise; see Gomez’s last line bottom right column presentation slide above.

As an instance, M&E vendors like AIDA, SKF, Cohu, VAT, Oerlikon Balzers, Favelle Favco, Bromma, Vitrox, etc.; presently, Digi, Nestles and British American Tobacco are, by market capitalisation, leading the list of foreign companies that dominate the local businesses nowadays, see  STORM 2021, Dominance of Financial-Monopoly Capitalism.

A TNC can be a 100% foreign-equity company; and there are over 5000 such sendiran berhad in the country, commanding an overarching external ownership and control of the national economy, (Charles Brophy, Ownership and control in 21st century Malaysia, newmandala, 17/01/2018; Puthucheary 1960) .

2] Shared Community Wealth or Poverty of a Nation

Khalid pointed out that with the wholesome withdrawal of the Employee’s Provident Fund (more than $145 Billion) during the Covid-19 pandemic.

The country has more than 2 million below the poverty line, with Sarawak consisting 1 in 10 under the poverty line, Sabah the poorest state, and where the vulnerability is widespread because even in states like Selangor and Penang having 14% and 15% of their populace being in the poverty category.

The fact that many rakyat2  had not attained parity despite +60 years of neo-liberal enforced economic development is the existence of a new class of compradore capitalist nurtured by political elites.

It also come to pass that throughout Malaysia’s post-NEP economic history, and including the National Development Policy (NDP) (1990-2000) and National Vision Policy (2000-2010) – the inclusiveness agenda continues in the New Economic Model (2010-2020), where the policy goal is for Malaysia to become a high-income country by 2020 as well as sustainable and inclusive whereby the latter is defined as “enabling all communities to fully benefit from the wealth of the country” (National Economic Advisory Council, 2010) – the economic development processes have not bear out to support an equitable progressive domain.

It has come to a situation where many a B20 malay child shall have only 1% of his/her generation peers being able to attain socio-economic mobility migration upwards; see Khalid lse research paper.

This economic nationalism posturing capriciously as affirmative action policy differs from those of other countries. It is “the politically dominant majority group which introduces preferential policies to raise its economic status as against that of an economically more advanced minorities“.

[see Puthucheary seminal work, written while in a prison, on the Ownership and Control of the Malaysian Economy, and the continuous in-depth studies by Gomez, with Jomo and Lim Mah Hui – collectively critical of  selective privatisation and bumiputera equity quotas, and in the promotion of money politics that are acutely detrimental to national economic development; read also the  50 years NEO hasn’t worked and those articles in  NLM#10.]

We are also at a juncture where the GLCs being money-suckling, their existence has had hindered the development of the true bumi enterpreneur class, as aspiring bumi enterpreneurs are either enticed into taking short cut to wealth through lucrative projects with high-priced and high-profit margins that inevitably in any long-term infrastructure project exhausted and expired them. However, once on board, very few bumi contractors would ever disembark from the enticing gravy train.

Any wonder then that despite 40-odd years of bumiputra policies and assistance to the bumis in the construction industry, there is not a single successful bumi contractor?

Ahmad Zaki Bhd, the most “successful” or prominent 100% bumi contractor listed on KLSE is on the verge of bankruptcy, while Panzana Enterprise SB a 35 years old 100% bumi contractor with good track records is in ICU after being stabbed in the back by Turnpike Synergy, a subsidiary of Prolintas which is 100% owned by PNB – a financial capitalism entity under a sovereign fund management.

3] The Challenges

i) Gomez opined that one has to clean up the GLCs so that there is public governance without resource wastefulness, and to curb rampant corruption so that there would be no pandering to the political and capital powerful forces. Otherwise, as it is – the Ministry of Finance has hydra-like tentacles to own and control various types, categories and identities of GLCs entities.

GLCs and GLICs (government-linked investment corporations) collectively controlled 68% of the Kuala Luimpur Stock Exchange: commanding more than RM$440 Billion in total assets. Further, this overwhelming overall control of government agencies and state corporations is connected to the Prime Minister Department and the Ministry of Finance :

Read Capitalism State Corporations, newleftmalaysia 30/11/2021; a Gomez presentation slide on 20/09/23 @trx has an even more intrigued web-complexity of MoF control.

ii) There is an existential need to protect the informal sector zero-hour labour where the social security elements should be holistically implemented to ensure a socio-economic wellbeing safety net rather than exploiting, and short-circuiting digital platform workers ;

iii) with the increasing cooperation between nation states, the public state corporations SOE-SOE relations need to be better redefined, and key actors must be held responsible otherwise ecological disasters will occur like the Melaka Gateway and Lynas rare-earth extractions pollution; see also Raub gold mining and Malmut copper mining.

iv) what new banking roles could be promoted by Bank Negara Malaysia as a banker intermediation between SMEs and the Big Bank which have a tendency to collarise transactions to the disadvantages of small firms, and where there is a powerful banker class attached to the financialisation capitalism in the country.

The financial oligarchs and capital rentiers are so dominant that it is truly an  ethnocapital assertion in the national banking sector.

v) with an encirclement of China, an imminent US-CHINA conflict arising, (RAND Corp. 2021) in what ways would a pacifistic Non-Aligned posture shall position the country foreign affairs, and her foreign trade which contributed in 2022 140.75% to the gross domestic product has to be geostrategically assessed, too, especially with possibly decoupling and fractionalisation of global commodity chains.

Indeed, it is also at a period when Malaysia’s economy only grew 3.7% in 2023, according to Bank Negara Malaysia data, coming in below the target of 4% to 5% due to “prolonged weakness” of external demand. The annual result was far off the 8.7% pace recorded for the previous year, (asia-nikkei, 16th. February 2024; as was concurred by AHAM Capital Malaysia.

EPILOGUE

We have come a long way from private enterprises to privatisation to GLCs in a capital-endowed environment that is no more than neoliberal policies with neoimperialism in context that indebted a nation in a dependency syndrome.

Can we do better?

World Bank and DRC have identified the whole-of-government and whole-of-society approach in any economic development endeavour – and Malaysia has to do sama².

Long-term – strategically – we need to visionise on building communal  organizations and governance to step onto a progressive path  beyond capitalism and the capitalist state to TAPAO economic development and socioeconomic management, and towards a socialist undertaking that shall benefit everyone than the very few.

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 RELATED READINGS

The MADANI Conversation

The MADANI Economics Narrative

MADANI in a Defractionalised Geoeconomy

Madani Model towards economic development sustainability

PRAXIS with structural sustainability in economic development practices

 

China’s Socio-Economic Rise and the Collapse of America capitalism

Collective on Geoeconomics

4th September 2023

Preamble

In a previous mini-essay, we presented the positive argument of China’s socialism compared to the inherent imperfection in the U.S. capitalism system from a macro-economic perspective by applying the incremental capital output ratio (ICOR) principle that demonstrated the superior application of state-controlled entities and their processes compared to singular enterprise capital endowment. In this article, at a micro-level, we shall display some of China’s deployment of infrastructures and implementation of socio-economic provisions that enable an emerging economy surpassing a developed economy that is at a loss to its financialisation capitalism praxis.

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[ A selective repost from The Unz Review ]

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Look carefully at the chart below. What do you see?

You see the development of a high-speed rail loop system that is unrivaled anywhere on earth. You see the actualization of plan to connect all parts of the country with modern-day infrastructure that reduces shipping costs, improves mobility and increases profitability. You see a vision of the 21st century in which state-directed capital links rural populations with urban centers lifting standards of living across the board. You see an expression of a new economic model that has lifted 800 million people out of poverty while paving the way for global economic integration.

You see an an industrial juggernaut expanding in all directions while laying the groundwork for a new century of economic integration, accelerated development and shared prosperity.

Is there a high-speed rail system in the United States that is comparable to what we see in China today?

No, there isn’t. So far, less than 50 miles of high-speed rail has been built in the United States.  (“Amtrak’s Acela, which reaches 150 mph over 49.9 miles of track, is the US’s only high-speed rail service.”) As everyone knows, America’s transportation grid is obsolete and in a shambles.

But, why? Why is the United States so far behind China in the development of critical infrastructure?

It’s because China’s state-led model is vastly superior to America’s “carpetbagger” model. In China, the government is directly involved in the operation of the economy, which means that it subsidizes those industries that enhance growth and spur development.

In contrast,  American capitalism is a savage free-for-all in which private owners are able to divert great sums of money into unproductive stock buybacks and other scams that do nothing to create jobs or strengthen the economy. Since 2009 US corporations have spent more than $7 trillion on stock buybacks which is an activity that boosts payouts to rich shareholders but fails to produce anything of material value. Had that capital been invested in critical infrastructure, every city in America would be linked to a gigantic webbing of high-speed rail extending from “sea to shining sea”.

But that hasn’t happened, because the western model incentivizes the extraction of capital for personal enrichment rather than the development of projects that serve the common good. 

In China, we see how fast transformative changes can take place when a nation’s wealth is used to eradicate poverty, raise standards of living, construct state-of-the-art infrastructure, and lay the groundwork for a new century.

Here’s more from a report by the Congressional Research Service on “China’s Economic Rise…”

Since opening up to foreign trade and investment and implementing free-market reforms in 1979, China has been among the world’s fastest-growing economies, with real annual gross domestic product (GDP) growth averaging 9.5% through 2018, a pace described by the World Bank as “the fastest sustained expansion by a major economy in history.” Such growth has enabled China, on average, to double its GDP every eight years and helped raise an estimated 800 million people out of poverty. China has become the world’s largest economy (on a purchasing power parity basis), manufacturer, merchandise trader, and holder of foreign exchange reserves…. China is the largest U.S. merchandise trading partner, biggest source of imports, and the largest foreign holder of U.S. Treasury securities, which help fund the federal debt and keep U.S. interest rates low.( source: China’s Economic Rise: History, Trends, Challenges, and Implications for the United States,  Congressional Research Service.)

Here’s more from an article at the Center for Strategic and International Studies titled Confronting the Challenge of Chinese State Capitalism:

China now has more companies on the Fortune Global 500 list than does the United States… with nearly 75 percent of these being state-owned enterprises (SOEs). Three of the world’s five largest companies are Chinese (Sinopec Group, State Grid, and China National Petroleum). China’s largest SOEs hold dominant market positions in many of the most critical and strategic industries, from energy to shipping to rare earths. According to Freeman Chair calculations, the combined assets for China’s 96 largest SOEs total more than $63 trillion, an amount equivalent to nearly 80 percent of global GDP; see also China Socialism Efficiency

And here’s one more from a report by the IMF titled “Asia Poised to Drive Global Economic Growth, Boosted by China’s Reopening”:

China and India together are forecast to generate about half of global growth this year. Asia and the Pacific is a relative bright spot amid the more somber context of the global economy’s rocky recovery.

In short, the Chinese state-led model is rapidly overtaking the US in virtually every area of industry and commerce, and its success is largely attributable to the fact that the government is free to align its reinvestment strategy with its vision of the future. That allows the state to ignore the short-term profitability of its various projects provided they lay the groundwork for a stronger and more expansive economy in the years ahead. Chinese reformer Chen Yun called this phenom the “birdcage economy”, which means the economy can “fly freely” within the confines of the broader political system. In other words, the Chinese leadership sees the economy as an instrument for achieving their collective vision for the future.

China’s success is only partially due to its control over essential industries, like banking and petroleum. Keep in mind, “the share of State-Owned Enterprises (SOEs) in the total number of companies in the country has dropped to just 5%, though their share of total output remains at 26%.” And even though the state sector has shrunk dramatically in the last two decades, Chinese President Xi Jinping has implemented a three-year action plan aimed at increasing competitiveness of the SOE’s by transforming them into “market entities” run by “mixed-ownership.” Simply put, China remains committed to the path of liberalization despite sharp criticism in the West.

It’s also worth noting that the so-called Chinese Miracle never would have taken place had China implemented the programs that were recommended by the so-called “western experts”. Had China imposed the radical reforms (like “shock therapy”) that Russia did following the dissolution of the Soviet Union in 1991, then they would have experienced the same disastrous outcome. Fortunately, Chinese policymakers ignored the advice of the western economists and developed their own gradual reform agenda that produced success beyond anyone’s wildest dreams. The story is summarized in a video on You Tube titled “How China (Actually) Got Rich”. I have transcribed part of the text below. Any mistakes are mine:

The single most stunning economic story of the last few decades has been the rise of China. From 1980 to 2020, China’s economy grew more than 75-fold…. It was the largest and most rapid improvement in material conditions in modern history…. China had been one of the poorest countries on earth but now it is an economic powerhouse… Economists predict it will overtake the US as the largest economy in the world by the end of the decade. People call it The Chinese Miracle. Some people describe this miracle as a straightforward story of the “free market”. They say “it’s a simple story. China was poor (but) then the economy was freed from the grip of the state. Now China is rich.” But this is misleading. China’s rise was NOT a triumph of the free market. ...

Since the 1980s, free market policies have swept the globe. Many countries have undergone far-ranging transformations. Liberalizing prices, privatizing entire industries, and opening up to free trade. But many of the economies that were subjected to the market overnight have since stagnated or decayed. None of them have had a growth record like the one seen in China. African countries experienced brutal economic shrinkage. Latin American countries experienced 25 years of stagnation. If we compare China to Russia, the other giant of Communism in the 20th Century, the contrast is even more staggering.

Under state socialism, Russia was an industrial superpower while China was still largely an agricultural economy. Yet during the same period that Chinese reforms led to incredible economic growth, Russia’s reform led to a brutal collapse. Both China and Russia had been economies that were largely ordered through state commands. ….Russia followed the recommendations of the most “scientific economics” at the time, a policy of so-called “shock therapy” As a basic principle, the idea was that the old planned economy had to be destroyed, to make space for the market to emerge…. Russia was expected to emerge as a full-fledged economy overnight. …When Boris Yeltsin took power he eliminated all price controls, privatized state-owned companies and assets, and immediately opened up Russia to global trade. The result was a catastrophe. The Russian economy was already in disarray, but shock therapy was a fatal blow. (Western economists) predicted some short-term pain, but what they didn’t see coming was how severe and destructive the effects would be. Consumer prices spiraled out of control, Hyperinflation took hold, GDP fell by 40%.

The shock therapy slump in Russia was deeper and longer than the Great Depression by a large margin. It was a disaster for ordinary Russians…. Alcoholism, childhood malnutrition and crime went through the roof. Life expectancy for Russian men fell by 7 years, more than any industrial country has ever experienced in peacetime. Russia did not get a free market overnight. Instead, it went from a stagnating economy to a hollowed-out wreck run by oligarchs. If just getting rid of price-controls and government employment didn’t create prosperity but did destroy the economy and kill huge numbers of people, then clearly, the rapid transition to “free markets” was not the solution. …

Throughout the 1980s, China considered implementing the same type of sudden reforms that Russia pursued. The idea of starting from a clean slate was attractive, and shock therapy was widely promoted by (respected) economists… But in the end, China decided to not implement shock therapy. …Instead of knocking over the entire (economy) at once, China reformed itself in a gradual and experimental way. Market activities were tolerated or actively-promoted in non-essential parts of the economy. China implemented a policy of dual track pricing…. China was learning from.. the world’s most developed nations, countries like the US, UK, Japan and South Korea. Each of these managed and planned the development of their own economies. and markets, protecting early-stage industries and controlling investment.

Western free market economists thought this system would be a disaster …. But China’s leaders did not listen, and while Russia collapsed after following the “shock therapy” program, China saw remarkable success. The state kept control over the backbone of the industrial economy, as well as the ownership over the land.

As China grew into the new dynamics of its economy,  state institutions were not degraded to fossils from the past, but were often the drivers at the frontier of new industries, protecting and guaranteeing their own growth. China today is not a free market economy in any sense of the word. It is a state-led market economy. The government effectively owns all land, and China leverages state ownership through market competition to steer the economy. The shock therapy approach advocated around the world was a failure.

The fact that China’s SOEs are shielded from foreign competition and receive government subsidies, has angered foreign corporations who think China has an unfair advantage and is not playing by the rules. That is certainly fair criticism, but it’s also true that Washington’s unilateral sanctions — which have now been imposed on roughly one-third of all the countries in the world — are also a clear violation of WTO rules. In any event, China’s approach to the market under Xi has been ambivalent at best. And while “the state sector’s share of industrial output dropped from 81% in 1980 to 15% in 2005”, (in the spirit of reform) Xi has also ensured that the CCP has greater influence in corporate management and corporate decision-making. Naturally, none of this has gone-over well with US and EU businesses titans who firmly believe that corporate stakeholders should rule the roost. (as they do in the West.)

The larger issue, however, is not that China subsidizes its SOEs or even that China is set to become the biggest economy in the world within the next decade. That’s not the problem. The real problem is that China has not assimilated into the Washington-led “rules-based order” as was originally anticipated. The fact is, Chinese leaders are strongly patriotic and have no intention of becoming a vassal-state in Uncle Sam’s global empire. This is an important point that political analyst Alfred McCoy sheds light on in an article at Counterpunch:

China’s increasing control over Eurasia clearly represents a fundamental change in that continent’s geopolitics. Convinced that Beijing would play the global game by U.S. rules, Washington’s foreign policy establishment made a major strategic miscalculation in 2001 by admitting it to the World Trade Organization (WTO). “Across the ideological spectrum, we in the U.S. foreign policy community,” confessed two former members of the Obama administration, “shared the underlying belief that U.S. power and hegemony could readily mold China to the United States’ liking… All sides of the policy debate erred.” In little more than a decade after it joined the WTO, Beijing’s annual exports to the U.S. grew nearly five-fold and its foreign currency reserves soared from just $200 billion to an unprecedented $4 trillion by 2013. (The Rise of China and the Fall of the US), Counterpunch.

Clearly, US foreign policy mandarins made a catastrophic error-in-judgement regarding China, but now there’s no way to undo the damage. China will not only emerge as the world’s largest economy, it will also control its own destiny unlike western nations that have been subsumed into the oligarch-led system (WEF) that decides everything from climate policy to mandatory vaccination, and from transgender bathrooms to war in Ukraine. These policies are all set by oligarchs who control the politicians, the media, and the sprawling deep state. Again, the issue with China is not size or money; it’s about control. China presently controls its own future independent of the “rules-based order” which makes it a threat to that same system.

If we look again at the first chart (above), we can understand why Washington rushed into its proxy-war with Russia. After all, if China was able to spread its high-speed rail network across all of China in just 12 years, what will the next 12 years bring? That’s what worries Washington.

China’s emergence as regional hegemon on the Asian continent is a near-certainty at this point. Who can stop it?

Not Washington. The US and NATO are presently bogged down in Ukraine even though Ukraine was supposed to be a launching pad for spreading US military bases across Central Asia and (eventually) encircling, isolating and containing China. That was the plan, but the plan looks less likely every day. And remember the importance that national security advisor Zbigniew Brzezinski placed on Eurasia in his classic The Grand Chessboard nearly 3 decades ago. He said:

“Eurasia is the globe’s largest continent and is geopolitically axial. A power that dominates Eurasia would control two of the world’s three most advanced and economically productive regions. ….About 75 per cent of the world’s people live in Eurasia, and most of the world’s physical wealth is there as well, both in its enterprises and underneath its soil. Eurasia accounts for 60 per cent of the world’s GNP and about three-fourths of the world’s known resources.

The consensus opinion among foreign policy mucky-mucks is that the United States must become the dominant player in Central Asia if it hopes to maintain its current lofty position in the global order. Former Undersecretary of Defense Paul Wolfowitz went so far as to say that Washington’s “top priority” must be “to prevent the re-emergence of a new rival, either on the territory of the former Soviet Union or elsewhere, that poses a threat on the order of that posed formerly by the Soviet Union.” Wolfowitz’s sentiments are still reiterated in all of recent US national security documents including the National Security Strategy and National Defense Strategy. The pundits all agree on one thing and one thing alone; that the US must prevail in its plan to control Central Asia.

But how likely is that now? How likely is it that Russia will be forced out of Ukraine and prevented from opposing the US in Eurasia? How likely is it that China’s Belt and Road Initiative will not expand across Asia and into Europe, the Middle East, Africa and even Latin America? Check out this brief excerpt on China’s Belt and Road plan:

China is building the world’s greatest economic development and construction project ever undertaken: The New Silk Road.The project aims at no less than a revolutionary change in the economic map of the world…The ambitious vision is to resurrect the ancient Silk Road as a modern transit, trade, and economic corridor that runs from Shanghai to Berlin. The ‘Road’ will traverse China, Mongolia, Russia, Belarus, Poland, and Germany, extending more than 8,000 miles, creating an economic zone that extends over one third the circumference of the earth.

The plan envisions building high-speed railroads, roads and highways, energy transmission and distributions networks, and fiber optic networks. Cities and ports along the route will be targeted for economic development.

An equally essential part of the plan is a sea-based “Maritime Silk Road” (MSR) component, as ambitious as its land-based project, linking China with the Persian Gulf and the Mediterranean Sea through Central Asia and the Indian Ocean. When completed, like the ancient Silk Road, it will connect three continents: Asia, Europe, and Africa. (and, now, Latin America) The chain of infrastructure projects will create the world’s largest economic corridor, covering a population of 4.4 billion and an economic output of $21 trillion…

For the world at large, its decisions about the Road are nothing less than momentous. The massive project holds the potential for a new renaissance in commerce, industry, discovery, thought, invention, and culture that could well rival the original Silk Road. It is also becoming clearer by the day that geopolitical conflicts over the project could lead to a new cold war between East and West for dominance in Eurasia. The outcome is far from certain. (“New Silk Road Could Change Global Economics Forever”, Robert Berke, in Oil Price).

The Future Is China

Xi Jinping’s “signature infrastructure project” is reshaping trade relations across Central Asia and around the world. The BRI will eventually include more than 150 countries and a myriad of international organizations. It is, without question, the largest infrastructure and investment project in history which will include 65% of the world’s population and 40% of global GDP. The improvements to road, rail and sea routes will vastly increase connectivity, lower shipping costs, boost productivity, and enhance widespread prosperity. The Belt and Road is China’s attempt to replace the crumbling post-WW2 “rules-based” order with a system that respects the sovereignty of nations, rejects unilateralism, and relies on market-based principles to affect a more equitable distribution of wealth.

The BRI is China’s blueprint for a New World Order. It is the face of 21st century capitalism and it is bound to shift the locus of global power eastward to Beijing which is set to become the de facto center of world.

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This article was originally published in The Unz Review.

Michael Whitney is a renowned geopolitical and social analyst based in Washington State. He initiated his career as an independent citizen-journalist in 2002 with a commitment to honest journalism, social justice and World peace.

He is a Research Associate of the Centre for Research on Globalization (CRG). 

(All images in this article are from TUR and csloh.substack.com unless otherwise stated.)

Related Readings

World Bank, 2022, Lifting 800-million out of poverty

STORM, 2023 Fractionalisation in Deglobalisation

Firestorms, 2023, China socialism US capitalism

The reason that China’s overall investment could remain high is the large size of China’s state sector. Whereas U.S.A. in 2022 only 16%, less than one sixth, of U.S. fixed investment was in the state sector, accounting for only 3.4% of GDP.

Indeed, to offset a 10% decline in private investment, U.S. state investment would have to pump up by 50%.

Thus, China’s large state sector has a powerful ecosystem mechanism in keeping her ICOR down and maintaining a high level of investment – and economic growth – with dynamic efficiency.

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