Chinese investment remains lucrative and difficult to resist, even amid the controversy surrounding the coronavirus pandemic. For many global industries’ supply chains, cooperation with Chinese producers and manufacturers is irreplaceable. The nation’s economic rise has prompted concerns about relying on its goodwill, all the more given its recent moves in the Indian-administered Himalayan region of Ladakh and Hong Kong.
These criticisms often revolve around the Belt and Road Initiative (BRI), a loosely defined Chinese infrastructure investment scheme in over 70 countries. The West has met the project with resistance, with many opinion-makers accusing China of debt-trap diplomacy, imperialism, and interference in other states’ affairs.
This has caused hostile attitudes towards Beijing and reinforced the belief that China must be confronted with force.
However, this fixation has only resulted in retaliatory policies. Rather than negotiating the release of the Huawei CFO Meng Wanzhou from Canada, the Chinese Communist Party chose confrontation, detaining two Canadians on espionage charges. Similarly, China did not derail adopting the new Hong Kong national security law, notwithstanding warnings of sanctions. It did also not back down on the BRI.
Tonight I spoke to counterparts from 🇦🇺🇨🇦 🇳🇿🇺🇸 about #HongKong. We discussed the new national security law and the threat it poses to the basic rights & freedoms guaranteed under the Joint Declaration. China must live up its promises to #HongKong
— Dominic Raab (@DominicRaab) July 8, 2020
Conversely, even NATO members, namely Italy and Hungary, have gone for bilateral trade agreements with Beijing. Similar developments have been observed in South Korea. Evidently, China has been playing defense against us for quite some time and has certainly mastered this strategy.
Perpetuating the same hardline approach to China is therefore unlikely to produce results; after all, the majority of previous policies have ended in a bleak stalemate, and the post-pandemic world seems hardly promising about containing Beijing and its aspirations.
New Approach Toward China
A new approach is necessary, one that allows China’s regime to venture outside its comfort zone by compelling it to go on the offensive in the economic sphere. Ill-experienced and unprepared to lead, China will suffer politically and risk its expansionism becoming bogged down in a quagmire.
This approach appears particularly favorable to its alternative, considering that America has been weakened by the pandemic, and that calls to include Japan, India, and Australia in the NATO to counteract China have not yet materialized.
As it stands, China is an economic powerhouse where Western firms are reluctant to curtail their operations. A survey conducted by the EU Chamber of Commerce in China shows that only 11 percent of respondent businesses said they were “considering shifting investment to other countries,” representing a 4 percent drop from last year’s number.
Exporters are enticed by the nation’s 1.4 billion consumers, whereas importers benefit from the low labor costs to boost profits. Further commercial conflict with China – with tariffs on Chinese products and expensive awareness campaigns – would consequently be counterproductive.
China’s Tarnished BRI Brand
However, the Communist state is far less invincible to converting its economic might into soft power. Seven years after launching the ambitious Belt and Road Initiative, it has encountered considerable problems. Most analysts interpret the project as the China blueprint to centralize international trade around itself, but this ambition remains elusive.
Therefore, China must be pushed closer towards global economic responsibility, for which it is hardly prepared ideologically and diplomatically. Most of the deals Beijing has signed involve countries that have been marginalized by the West, including Russia and Pakistan. This bargaining chip would not help China’s talks with other Eurasian countries as much.
If Beijing is struggling to realize its objectives without robust Western resistance to the BRI, it would naturally stumble upon further obstacles once it roams freely.
Understandably, doing this is a gamble, but the recent developments in the BRI signal much optimism. In its pursuit of bilateral deals, China has failed to devise and diffuse clear standards for what qualifies as a Belt and Road Initiative project, resulting in its loss of control over the BRI’s public image.
As journalist Wade Shepard wrote in his article for Forbes, “The BRI became a broad term to describe anything China abroad,” while corruption scandals, apparent cancellations of Chinese enterprises in every corner of Asia, and debt-trap diplomacy accusations of “the BRI brand left it tarnished.”
Some projects have been retroactively added to the scheme, whereas others apply the BRI credentials, irrespective of their significance for China. This suggests the project has been designed randomly, leaving little substance to it upon closer inspection.
It does not help that many cargo containers traveling from Europe to China by rail constructed with Chinese money are empty. Some believe empty containers are transported only to receive Chinese state subsidies, introduced to encourage the use of the railways.
Limited Resources
While China is a hybrid economy and its government could exercise more powers over private enterprises than its Western counterparts, its resources are finite. By draining itself of them in such low-return projects, China will be weakened economically. Our involvement with, or rather allowance of the BRI, will despoil China of the means to attain the economic supremacy it desires.
China has been cautious of blanket agreements, fearing they might aggravate the local nationalists who are otherwise supportive of the government and spark discord with its diverse economic partners.
Yet, it is unlikely to revive the BRI without sacrifices, and the West should ensure it continues to confide in the initiative’s current, flawed version by offering it measured resistance.
China’s involvement abroad has already compromised its reputation and saw plentiful projects canceled or renegotiated, certainly not in favor of its government or the nationalist forces behind it. Furthermore, as more people in developing nations turn to China for education and employment opportunities, domestic xenophobia problems, which surfaced earlier this year, will inevitably be discussed worldwide.
Beijing is fast approaching dangerous gridlock. The last thing it wants is a forced opportunity to wield global leadership, even if exclusively in trade, China’s preferred realm of operation.
Disclaimer: The views and opinions expressed here are those of the author and do not necessarily reflect the editorial position of The Globe Post.
