When the Trump administration sounded a triumphant chord announcing a set of trade deals with China this week, the most striking new policy was the announcement that the United States would be sending a delegation to a forum in Beijing devoted to China’s ambitious “One Belt, One Road” international investment, infrastructure and trade program.
One Belt, One Road, often known by the ugly acronym OBOR, is China’s scheme to create a network of roads, railways and ports connecting the Euro landmass from East China to Europe through south and central Asia. Since President Xi Jinping launched One Belt, One Road in 2013 many countries in Europe and Asia–and most recently, Canada–have signed up to participate in this giant investment and infrastructure program.
Obama administration, however, reacted with indifference and, behind the scenes, even hostility. Many policymakers in the U.S. viewed it as either a giant, wasteful boondoggle or a threat to American leadership. Japan also refused to play along with One Belt, One Road.
The decision by the Trump administration to send a delegation to the One Belt, One Road forum caught many by surprise. Given President Donald Trump’s tough talk on trade and rejection of the Trans-Pacific Partnership, the conventional wisdom was that Trump would continue or even amplify the Obama administration’s resistance to playing a role in One Belt, One Road.
Perhaps it took an economic nationalist to recognize how the U.S. could benefit from participation in One Belt, One Road. In the first place, Trump’s tough stance on trade puts him in the position to negotiate a U.S. role in the project without fear of seeming to be selling out U.S. interests. Think about the famously anti-communist Richard Nixon opening U.S. relations with Communist China.
It seems likely that Trump sees One Belt, One Road as bearing a family resemblance to the the massive infrastructure program he would like to launch in the U.S. The combination of innovative financing with ambitious plans to build roads and railways could present a learning opportunity for Trump administration.
There’s also a more practical aspect. One of the motivations behind the launch of One Belt, One Road was to give massively overbuilt domestic Chinese industries–including construction, cement, steel and coal–new sources of demand. Reducing excess industrial capacity in China, however, could have the effect of bolstering prices globally. Steel makers in the U.S. would be beneficiaries of a Chinese government program that sent Chinese steel to build rails, bridges and tunnels across Eurasia instead of into the U.S. market.
Trump has surprised many political and economic “thought leaders” by seeking better relations with China but that is more of a reflection of their misunderstanding than a change on the part of Trump. When he rejected the consensus in favor of free trade agreements, they saw the only alternative as hostility and trade wars. Trump never presented his views on trade in those terms, instead insisting that better leadership could lead to better outcomes for the U.S. economy and U.S. workers.