Credit: Pixabay/CC0 Public Domain
Credit: Pixabay/CC0 Public Domain
China is currently facing Daunting challenges in its domestic economy. But weakness in the real estate market and consumer spending at home is unlikely to curb its rising influence abroad.
In mid-October 2023, China celebrated the 10-year anniversary of its Belt and Road Initiative, or BRI. The BRI seeks to connect China with countries around the world through land and maritime networks, with the aim of promoting regional integration, increasing trade and stimulating economic growth. Through the expansion of the BRI, China sought to extend its global influence, especially in developing regions.
In its first decade, it faced this challenge A barrage of criticism from the WestMainly for debt-ridden countries, indifference to environmental damage and corruption.
It also faced unexpected challenges—notably the COVID-19 pandemic, which led to massive supply chain problems and restrictions on the movement of Chinese workers overseas. Nevertheless, as the BRI enters its second decade, global economic trends suggest that it will continue to play an important role in spreading Chinese influence.
I am an Associate Professor of Global Studies at the Chinese University of Shenzhen, Hong Kong. Business-Government Relations In emerging economies. In my new book, „A chance to lead China,” I discuss which countries are already benefiting from Chinese spending. Understanding this helps explain why China and the Belt and Road Initiative are poised to benefit greatly from the global economy over the next several decades.
Malaysia’s lack of importance
In October 2013, Chinese President Xi Jinping announced the launch of the maritime component of the BRI. Speech in Jakarta. At the time, Indonesia appeared to be a prime candidate for Chinese infrastructure spending, but Malaysia—surprisingly—emerged as the most enthusiastic participant.
Compared to Malaysia, Indonesia’s economy was Three times bigger and its population Almost nine times largerYet its gross domestic product is only GDP per capita One third. Indonesia also had enormous potential to increase already significantly Natural resource exports to China. Taken together, these factors point to a high demand for infrastructure to support Indonesia’s economic growth.
Furthermore, Indonesia’s democratic institutions were more conducive to attracting foreign investment. Its checks and balances improved policy stability and reduced political risk. In contrast, the Malaysian government, dominated by a single ruling party coalition, lacks comparable checks and balances.
Despite Indonesia’s many advantages, Malaysia attracted the largest amount of BRI spending in its first several years. Data provided China Global Investment Tracker The value of newly announced infrastructure projects in Malaysia increased from US$3.5 billion in 2012 to US$8.6 billion in 2016. Spending in Indonesia, meanwhile, rose from $3.75 billion to $3.77 billion over the same period.
Malaysia also participated enthusiastically Digital Silk Road, or DSR, was launched in 2015. DSR is the technology dimension of BRI that aims to promote digital connectivity in Belt and Road countries. Malaysian Prime Minister Najib Razak hired Jack Ma, co-founder of Chinese tech giant Alibaba, in 2016 as an adviser to develop e-commerce. This led to its creation in 2017. Digital Free Trade ZoneAn international e-commerce logistics hub next to Kuala Lumpur International Airport.
With this foundation, Malaysia’s capital became the first city outside of China to adopt Alibaba City brain Smart City solution in January 2018. City Brain uses a wealth of urban data to effectively allocate public resources, improve community governance and promote sustainable urban development. Dubai and other cities in the Middle East continuously.
Digital Silk Road projects in Indonesia during that period were few, slow and less ambitious. They were primarily involved in expansion Chinese smartphone and e-commerce companies In Indonesia.
What accounts for these varied responses? Short answer: their political regimes. An understanding that could be key to the global spread of Chinese influence in the coming years.
Government owned business and customer
Ahead of the May 2018 elections, Malaysia’s ruling party and its allies Worried that they might lose power After six decades of rule. Desperate to bolster support, Najib quickly recognized that Many infrastructure mega projects In this, Chinese state-owned enterprises can partner with Malaysian counterparts.
In contrast, Indonesia placed greater emphasis on private business-led projects. For example, Indonesia Morowali Industrial Park, “The world’s center for nickel production,” is one of the largest Chinese investments in Indonesia and is a joint venture between private Chinese and Indonesian companies.
As I discuss my book, when autocratic rulers with semi-competitive elections like Malaysia have a tenuous grip on power, their appetite for Chinese spending increases. It is related Clientelismor providing goods and services in exchange for political support.
A greater degree of state control in autocracies gives political leaders more leverage in allocating client interests, which helps leaders’ reelection efforts.
Economic trends benefiting China
Although China’s future growth will be lower than in the pre-pandemic period, these four aspects of the global economy are poised to benefit China and the Belt and Road Initiative over the next several decades.
1. Global Rise of Dictatorships
For decades, the World Bank and its affiliated regional development banks were the only game in town for development financing for low- and middle-income countries. As a result, these global creditors may demand liberalization reforms that are sometimes contrary to the interests of incumbent rulers, particularly autocrats.
China’s rise has created an attractive alternative to authoritarian regimes, especially since it has not imposed conditions such as loosening state controls on the corporate sector and less clientelism. Between 2014 and 2019, 77% of total BRI spending on construction projects went to autocracies, primarily those with semi-competitive elections.
2. Demand for Chinese infrastructure spending
The economies of developing countries have grown Twice as fast As advanced economies since 2000 and predicted Outpace advanced economies In the following decades. Before the dissolution of the Soviet Union in 1991, developing economies accounted for 37% of global GDP; By 2030, the IMF plans to take them into account About 63%.
At the same time, the global infrastructure financing gap—that is, the money needed to build and upgrade existing infrastructure—is estimated at approx. $15 trillion By 2040. To fill this gap, the world will need to spend less than $1 trillion more by 2040 than the previous year, with most spending directed toward low-income economies.
As most of these fast-growing, low-income countries are semi-autocracies, China is poised to expand its global influence through the Belt and Road Initiative.
3. Emerging technology
By creating New technical standards For use in these emerging digital technologies, China aims to lock out Chinese digital products and services and lock out non-Chinese competitors wherever its standards are adopted.
For example, in Tanzania, a Chinese company was contracted to deploy the national ICT broadband network. Compatible with routers only Manufactured by Chinese company Huawei.
Incorporating digital technologies into hard infrastructure projects – digital traffic sensors on roads, for example – gives China more opportunities to use the Belt and Road Initiative to promote global adoption of its technologies and standards.
Finally, developing countries Urban people It is expected to increase from 35% in 1990 to 65% by 2050. The largest increases will occur in semi-competitive autocracies in Africa. The desire for sustainable urbanization will increase demand for infrastructure that incorporates digital technologies – again amplifying the opportunity for China and the BRI.
Understanding what drives the demand for the Belt and Road Initiative, and the trends that will drive it in the future, is essential to formulating an effective strategy for the West to counter China’s growing global influence.
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