President Xi Jinping made his vision quite clear – he sees the future of China as a power with a significant role in shaping international politics and trade. This motive, which it shares with many of the other global powers, determines many of the strategies and tactics used by China. One of the main ways it is achieving its goals is by strengthening political and economic relations with the global south, particularly with the Belt and Road Initiative and the Global Development Initiative. Although this topic has been discussed numerous times, this article will explore whether both initiatives are going anywhere.
The Belt and Road Initiative focuses primarily on establishing and developing the physical infrastructure for trade routes connecting many countries. The Global Development Initiative “aims to support developing countries in poverty alleviation, public health, and other issues” and is achieved through grants and capacity building. Of course, this is not done out of pure altruism, as with any political initiative. Not only would both initiatives increase the weight and role of China as a global power, but also ripen great economic returns. For instance, if we take China's engagement with many resource-rich African and Latin American countries with poor infrastructure, extending finance ensures that Chinese companies will be called on for extraction.
Of course, this tactic of financing in return for securing natural resource rights and other benefits is not the invention of China. As Yun Sun from the Brookings think tank states, “… commodity-backed loans were not created by China – leading Western banks were making such loans to African countries, including Angola and Ghana, before China Exim Bank and Angola completed their first oil-backed loan in March 2004.” The evidence that China finances projects in return for natural resource rights is quite clear and the Brookings report cites many instances. Here are a few: “In 2010, Sinopec’s acquisition of a 50 percent stake in Block 18 coincided with the disbursement of the first tranche of Exim Bank funding, and in 2005, Sinopec’s acquisition of rights to Block 3/80 coincided with the announcement of a new USD 2 billion loan from China Exim Bank to the Angolan government.”
However, as stated by Dr Yu Jie, China's recent aggressive lending model has been reduced to defend its strategic interests and create a global reputation of being a reliable partner rather than a fierce predator. In addition, spending on both initiatives has been reduced as China is facing a domestic economic slowdown.
For China to achieve what it wants, it will have to focus on robust development and infrastructure initiatives rather than financial investment conditional on business. An initiative that alleviates poverty and is tailored to the benefit of all the countries involved can help China be this brotherly figure for the global south.
