Chinese and US Engagement with Developing Countries News Roundup: Feb. 1 – Feb. 11, 2019

Every two weeks, The Carter Center’s China Program releases an overview of major events involving Chinese and US global engagement, with a particular focus on emerging issues in Africa and Latin America. In addition to using news sources, the news roundup will analyze papers and reports from academic journals, governmental bodies, and NGOs, and will also summarize debates and other events organized by think tanks on select issues. The news roundup is intended to be a platform and resource for both China watchers and for readers interested in political and economic development in developing countries. It aims to deepen the understanding of China’s foreign policy, and emerging issues and trends in developing countries, as well as to enhance the prospect of multinational cooperation among China, the U.S., Africa and Latin America.

CHINA’S RISE:

The Unpredictable Rise of China 

(The Atlantic, Daniel Blumenthal) 2019-02-03

Daniel Blumenthal, director of Asian Studies at the American Enterprise Institute, discusses the common misconceptions in the West regarding both China’s desire and ability to overtake the United States as the leader of the international system. Blumenthal argues that China’s increasing global involvement and ramp up of domestic security measures may indicate growing power but that conversely, China is on the verge of a downfall, as it is facing a buildup of internal political issues and a weakening economy. Additionally, he states that China’s rise and goal of rejuvenation does not mean that Beijing is trying to claim power over the entire world but that it just wants to reclaim the political and cultural importance it once had. This is not to say China is not growing in geo-political and -economic importance; it’s Belt and Road Initiative is undoubtedly improving its relations with critical neighbors and various developing countries. However, Blumenthal believes that China’s rise may not be as predictable or threatening as many political science theorists may think.

China’s Rise and (Under?) Balancing in the Indo-Pacific: Putting Realist Theory to the Test 

(War on the Rocks, Jeff M. Smith) 2019-01-08

Jeff M. Smith, a Research Fellow in the Heritage Foundation’s Asian Studies Center, discusses realist theory’s predictions of balancing against China’s rise in the Indo-Pacific and where the theory’s predictions have held true versus the differences between the predictions and reality. He points to a general regional increase in military spending and defense collaboration and China’s deteriorating relations with the “Quad” (Australia, India, Japan, and the United States) as examples of Indo-Pacific nations’ balancing against China’s growing power. However, Smith states that what is more significant is the lack of balancing in the economic and diplomatic sectors. Most Indo-Pacific countries have actually greatly increased trade and investment with China. Consequently, he says, any hard acts of balancing by countries that are so deeply connected to China economically pose the risk of threatening their own economic prosperity, rendering them less likely. This economic independency caused by China’s investment in foreign countries, especially lesser-developed nations, creates an environment in which traditional balancing against China’s rise, should it pose a threat to them, is more costly to them and therefore more improbable.

China’s Grand Strategy 

(Forbes, Daniel Araya) 2019-01-14

Daniel Araya, a Forbes Contributor and policy analyst, lays out China’s shift to advanced technologies, which can be promoted by the expansive trade network offered by the Belt and Road Initiative and the threat this poses to existing industrialized democracies. Specifically, many countries are worried about Chinese companies’, which they suspect are controlled by the government, heavy involvement and subsequent influence in Africa and Latin America. Where the United States is retreating, Chinese conglomerates are stepping in to offer investment in a wide array of needed areas- such as infrastructure, agriculture, telecommunications, and more. Latin America and China now enjoy a relationship in which China is Latin America’s largest creditor, and Latin America is the second largest recipient of Chinese foreign direct investment. Araya argues that skeptical Western economies should be wary of China’s grand strategy, which he believes is to ultimately cultivate long-term new markets for its new advanced technology sector.

The Coming China Shock

(Project Syndicate, Arvind Subramanian and Josh Felman) 2019-02-06

Arvind Subramanian and Josh Felman argue that China’s economic exceptionalism, led by a unique and norm-defying development model, will expire soon due to its internal debts and foreign overinvestment. They expect that China will not be able to continue defying typical economic development trends, which suggest that economies succeed more in open political climates, which foster competition, innovation, confidence, and dynamism. Their concern is that China may either need to or choose to depreciate the renminbi, leading to a global wave of deflation and devaluation, which would be detrimental to the global economy. The authors warn that this “China shock” is inevitable and that the rest of the world should prepare itself.

AFRICA:

Competing Against Chinese Loans, U.S. Companies Face Long Odds in Africa 

(The New York Times, Edward Wong) 2019-01-13

The United States is scrambling to help U.S. businesses compete on the same level as Chinese businesses do in Africa, as shown by Washington’s new Africa strategy, aimed at challenging Chinese infrastructure investment. However, African leaders, such as Ugandan President Yoweri Museveni, have acknowledged that the U.S. seems to be late to the game, whereas China has shown this level of attention to Africa for much longer. Museveni also acknowledged the competition between the U.S. and China in Africa and asked why African nations shouldn’t take advantage of both powers? Edward Wong outlines many examples of U.S. companies competing with Chinese companies for various project proposals, often with the Chinese bid winning out due to financing concerns.

Bolton Outlines a Strategy for Africa That’s Really About Countering China

(The New York Times, Mark Landler and Edward Wong) 2018-12-13

Last month, John R. Bolton, President Trump’s national security advisor, outlined the Trump administration’s new Africa strategy, which placed the continent as a critical arena for the U.S. to compete with China, which he named as a greater threat to African nations than poverty or terrorism. He also rolled out the U.S.’ new program, “Prosper Africa”, which seeks to offer an American alternative to Chinese Belt and Road infrastructure investment. However, experts like Grant T. Harris have criticized the U.S.’ purely economic approach to involvement in Africa, highlighting China’s success in fostering high-level communication and people-to-people relationships. Another key aspect of the new Africa strategy is that the U.S. intends to be harsh on countries or leaders that aren’t effectively making use of the aid provided. The Trump administration needs to prove that it can treat African nations with the same level of respect China does if it wants to have similar success in the region.

LATIN AMERICA:

China and Russia Loaned Billions to Venezuela—and Then the Presidency Went Up for Grabs 

(CNBC, MacKenzie Sigalos) 2019-02-07

Over the past decade, China and Russia have loaned tens of billions of dollars to Venezuela in order to access the cheap oil available there. However, as Venezuela is amidst a power struggle between dictator Nicolas Maduro, who China and Russia worked with to strike these lending deals, and opposition leader Juan Guaido, backed by the United States, Beijing and Moscow face concerns that the billions of dollars of debt owed to them will never be paid back. There are reasons to believe that if Guaido assumes power, Venezuela’s relationship with China may persevere: China is Venezuela’s biggest market, and Beijing might be incentivized to support Guaido, so as not to exacerbate current tensions with the United States.

Washington Can Learn from China’s Moves in Latin America

(Real Clear World, Jason Marczak) 2019-02-04

Whereas China’s trade relationship with Latin American nations have traditionally been centered around the import of Chinese manufactured goods, there is now a shift towards services and value-added goods. Through its significant increase and spread of foreign direct investment in Latin America, Beijing intends on helping transform Latin America into a new, more developed region. As trade tensions with the United States grow, so too does China’s involvement and influence in Latin America. Jason Marczak, Director of the Adrienne Arsht Latin America Center at the Atlantic Council, argues that the United States should recognize the importance of Latin America and emulate China’s show of efforts in the region. He suggests that the U.S. needs to pay more attention to Latin American relations now sooner than later so that it doesn’t miss out on the burgeoning economic opportunity there.

Salvadoran President-Elect to Assess Relationship with China: Aide

(Rueters, Nelson Renteria & Sandra Maler) 2019-02-07

Frederico Anliker, a member of Salvadoran President-elect Nayib Bukele’s team, said Thursday that the Bukele team will reassess El Salvador’s decision to break diplomatic ties with Taiwan in favor of China, which occurred in August 2018. Anliker commented that El Salvador’s previous administration did not justify this decision, and the new administration wants to investigate the issue of China, cross-Strait relations, and El Salvador’s economic ties with China in order to determine what would be “best for the nation, not what is best for a political party”.

Latin America and the US-China Agenda 

(China-US Focus, Eric Farnsworth) 2019-01-28

Eric Farnsworth, Vice President of Council of the Americas, says that Presidents Donald Trump and Xi Jinping should gave talked in more depth about issues in Latin America, as these issues are continuing to grow in severity and relevance. One such issue is Panama, El Salvador, and the Dominican Republic’s decisions to break ties with Taiwan in favor of Beijing, which the United States has spoken out about and may act against by removing preferential trade benefits from those countries. The U.S. has also maintained a steady dialogue of “warning” Latin American countries about possible downsides to economic involvement with China. Farnsworth argues that rather than competing for regional influence, Washington and Beijing should prioritize looking for intersections of their interests and work in order to preemptively address potential conflicts or difficulties in the area. He ends the article by reiterating the necessity of U.S.-China upper level dialogue on Latin American issues at these kinds of meetings.