The West must regain its confidence and compete with China’s economic might.
In November 2021, Xi Jinping held the Forum on China-Africa Cooperation (FOCAC). The message, delivered via video link, was warm but also had a warning within it. Rather than the extensive use of loans from China’s major development banks, China’s private sector was instead expected to make up a growing part of the Chinese investment in sub-Saharan Africa. The Western world has become increasingly concerned about a seemingly endless flow of Chinese funding for projects in the Global South. In fact, Xi’s message appeared to be that, from now on, China would no longer be the cashpoint for the development loans that have characterised its Belt and Road Initiative (BRI) over the last decade. Just six years ago in Johannesburg, Xi offered the continent some $60 billion as direct loans. In 2022, China’s banks will lend less, not more.
It’s become commonplace to argue that the primary purpose of BRI is to allow China to trap countries in debt. There is no doubt that the BRI is China’s strategy for gaining greater geopolitical influence, but in fact, some of the countries where China does best don’t need to be trapped in the first place. In Pakistan, China is developing the Gwadar port which will link East Africa and South Asia, and may provide future military access for the growing Chinese navy. But China’s relationship with Pakistan has been warm for decades, even as its links to the US have become scratchier. The poster child example of a Chinese loan that is impossible to service is the Hambantota port in Sri Lanka. But it’s worth noting that only 10% of Sri Lanka’s debt overall is owed to Chinese entities; the vast majority will have to be paid back to other lenders, many from the West. Beijing is becoming increasingly frustrated at projects, such as the planned East African railway link between Kenya and Uganda, which look unlikely to make their money back. Far from forcing these rail links onto these countries, China’s development banks are getting cold feet and demanding cost projections before handing out any more funding.
Of course, China is entirely serious, and entirely unsentimental, about using its financial muscle and control over supply chains and rare earths to consolidate its interests.The development of light rail systems in Southeast Asia are also likely to be lossmaking in the short term, but serve a strategic purpose in creating a new ecology that binds South China and Southeast Asia together. Within a few years, Vietnam and Myanmar may be accessible to the south of China via a two or three-hour high-speed train ride. The Greater Bay Area of southern China will use that connectivity to increase the role of Shenzhen as one of the most innovative hubs for tech development in the world. This links to China’s planned fate for Hong Kong: the city will continue to lose its cherished freedoms of speech and artistic and creative production, but will grow in strength as a pool of capital and centre for commercial law for China’s “southern powerhouse.” Since every country in the Asia-Pacific region has China as its largest trading partner, the force of economic gravity will be hard to resist.
China is entirely serious, and entirely unsentimental, about using its financial muscle to consolidate its interests. Since every country in the Asia-Pacific region has China as its largest trading partner, the force of economic gravity will be hard to resist.
Does this mean that the West should simply give up now? Not at all. There’s a unifying factor that brings the emerging societies of South and Southeast Asia, Latin America and Africa together: they want development, and they want a choice of providers. China has done well with its vaccine rollout in parts of Asia, but so far, Western vaccines are more effective and popular, when they are available. Chinese 5G provision is cheap and reliable, but it comes with the fear of political control. Ethiopia is just one example of an emerging economy that has chosen a US-backed 5G system rather than a Chinese one, even though China has supported the African state’s freight rail system and built a metro in Addis Ababa. In fact, the majority of vaccine provision and economic development in the Global South is still supported by the West (including actors such as Japan), a reminder in the exasperated phrasing of Ryan Haas, former China director for the US National Security Council, that “China is not ten feet tall.” But the West seems to have lost confidence in telling that story.
That’s in part because Western governments have become ambivalent about their own values. In 2017, European politicians were muted about the prosecution of illegal, but mostly nonviolent, Catalonian separatists for “secession” in holding a wildcat independence referendum. But Chinese commentators were quick to pick up the parallels with Hong Kong, asking why a European country could prosecute its secessionists but Chinese authorities were condemned for doing so. Shortly afterwards Beijing imposed a draconian National Security Law on the city. Politicians in liberal countries also need to respect their own institutions. It can sometimes appear as if the two major voices in the world demanding silencing of the BBC are activists from the Chinese Communist Party and commentators linked to the British Conservative Party. Liberal societies need to start acting, once again, as if they welcome diversity and dissent rather than regarding it as an inconvenience to elites. The latter position, after all, has already been taken by Beijing.
China now seeks global influence and it has to expect commentary on its actions from around the world. It cannot logically argue that the world should praise the higher living standards it has brought to millions in the countryside, but studiously avoid mentioning repression in Xinjiang. But the wider world needs to answer the challenge from the Global South. We all need green energy, high-speed rail transit, and reliable 5G - and Argentina, Malaysia or Uganda don’t see any reason why they should wait for those goods. For reasons that combine security, economics and values, the West does not want China to develop the monopoly that it seeks in those technologies. That is an entirely valid political aspiration. But it is the West’s job to turn it into reality.
