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Following in America’s footsteps?

 

One of the common debates about Belt and Road is how well it matches up to the Marshall Plan, an American initiative to help rebuild European economies after the devastation of the Second World War.

In fact, Chinese commentators have been frosty about talking about the similarities, with Xinhua quoting one scholar as saying that any comparison between the two is a “perversion”.

That sounds a bit extreme, although most analysts seem to agree that close comparisons are off the mark.

For a start, the Marshall Plan was an aid package from Washington. The funds being made available through Belt and Road are loan financing, not aid. The Marshall Plan’s goals were different too – not only to rebuild war-ravaged regions and open the way for American goods, but also to prevent the spread of communism.

Of course, Belt and Road is designed to fortify China’s interests around the world, but it has been conceived primarily as a commercial and financial mission, and it lacks the same explicitly political objectives.

Another difference is the scale of the Chinese plan. At maturity, total investment in Belt and Road could reach $4 trillion, much more than the spending under the Marshall Plan, which provided about $13 billion in aid, now equivalent to roughly $100 billion.

And while the American effort ran for four years from 1947, Belt and Road is expected to be a longer-term undertaking.

So is there any common ground between the two schemes? The Marshall Plan was a bid for political support in Europe as a bulwark against an expansionist Soviet Union. Belt and Road is more global in scope, although Europe is the end point of many of its transport routes and the Chinese won’t mind if they undermine American influence there.

After the war, the United States was struggling with surplus industrial capacity in the same way as the Chinese are today, and the terms of the Marshall Plan made sure that European countries should accept American investment and American goods. Naturally, the dollar was the currency of choice for its subsidies and the renminbi looks likely to be established as the dominant currency for much of the funding for Belt and Road too.

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