International Policy Digest

Xinhua
World News /05 Dec 2019
12.05.19

The Rise of Chinese Neo-Imperialism

In recent world history, there has been “colonialism” and then what was termed “neo-colonialism,” which was first coined by the Ghanaian leader Kwame Nkrumah.

The first stage of colonialism was based more on the establishment of colonies which was to be for the economic benefit of the colonial power. The colonies would supply the colonial power with the raw materials which were used to manufacture those goods which were then sold to the colonies, creating a dependency between both the colonial power and the colonies themselves.

In contrast to colonialism, neo-colonialism was characterized by the use of economic and cultural relationships between former colonial powers without the use of blunt military force.

The second stage of neo-colonialism began at the end of World War Two, with the rise of the economic, political and military dominance of the United States. From 1945 to 2003 (the beginning of the Iraqi War) the United States was the preponderant economic, political and military power of the world. Medhi Ben Barka characterized the United States as the premier neo-colonial power, as it was the primer capitalist power in the world after World War Two. Medhi Ben Barka disappeared in October 1959, and it was later established that he had been murdered by Moroccan and French intelligence agents and his body disposed of.

The terms “colonialism” and “neo-colonialism” can both be grouped together under the concept of “imperialism.” Imperialism is generally accepted to be from the 3rd century BC to the mid-1800s. The term “neo-imperialism” is described from the mid-1800s to the end of World War Two.

The United States prior to the start of World War Two had been a rabid anti-colonial power; yet practiced colonialism in its control of the Philippines after the Spanish-American War. With the end of neo-colonialism, or the first stage of imperialism at the end of World War Two, the United States, as discussed above, emerged as the dominant force in world politics and practiced a form of neo-imperialism through the use of politics, economics and military power. This dominance has waned largely as a result of its disastrous involvement in the Iraqi War which began in 2003.

Power Abhors a Vacuum

A new type of neo-imperialism is beginning to emerge with the rise of China, and at the same time, the rise of sovereign wealth funds as U.S. power wanes.

With the economic and political power of the United States waning throughout the world, coupled with the rise of China as the world’s manufacturing factory along with a new source of economic power with the rise of sovereign wealth funds, a new form of neo-imperialism appears to be dawning on the world political scene. This article will discuss the Chinese use of its newfound economic power, coupled with the use of Chinese sovereign wealth funds to describe the Chinese “rising imperialism.”

China

With the economic reforms in China beginning in 1978 championed by Deng Xiaoping and his reformist allies after the ouster of the Gang of Four, China’s economy began to dramatically expand. Prior to these reforms, the Chinese economy was closed to the outside world and dominated by state-owned enterprises and central planning. Up to 1973, the Chinese average GDP was 2.9%. Since the reforms began, the average GDP rate has been 9.5%, but recently growth has slowed to an average of 6% a year.

The reforms of 1978 began with the de-collectivization of agriculture, and permission being granted by the Chinese Communist Party (CCP) for individual businesses to emerge without control of the CCP. It should be noted that this freedom has recently been restricted by the Xi Jinping regime. By placing CCP cells in privately owned businesses and the passage of the 2017 Chinese National Intelligence Law, the current CCP regime has the authority and the right to have Chinese private companies assist the Chinese intelligence services in collecting intelligence in any country these businesses have offices in, as well as obtaining western technology that is vital to the Chinese military.

While the growth of the Chinese economy has been stunningly successful, a closer look at the dismal state of the Chinese economy before the economic reforms began, can shed some light as to the dramatic increase of wealth in China. The majority of Chinese economic growth can be explained by the absolute poverty of China prior to the reforms in 1978. There was a tremendous vacuum for growth, and the reforms faced little resistance by the CCP.

The Chinese Belt and Road Initiative as A New Type of Imperialism

The Chinese Belt and Road Initiative (BRI) was launched by Xi Jinping in 2013 during visits to Indonesia and Kazakhstan. The “Belt” portion of the BRI refers to the overland roads and rail transportation, where the “Road” portion refers to the sea routes. The BRI is also known as the “One Belt, One Road” project.

The Road portion of the BRI is also known as the “String of Pearls” strategy. Simply explained, the String of Pearls is China attempting to encircle India with a series of Chinese military sea and airbases which would have the ability of strangling India’s sea trade routes and having the military ability of destroying the Indian navy.

The Chinese version of the BRI is a bid to enhance regional connectivity and embrace a brighter future together. As of October 2019, the BRI touches 138 countries with a combined GDP of $29 trillion and over 4.6 billion people.

The BRI has been using loans to countries that have opted into the BRI as a means of what is being called debt diplomacy. Unlike the Marshall Plan at the end of World War Two which was mostly in the form of grants to European nations most affected by the war, the BRI is a series of loans to countries that do not have the ability to pay back these loans. For example, the BRI is funding the construction of a high-speed rail line in Laos that will cost the equivalent to half of the countries GDP. The Chinese Investment Corporation, a Chinese sovereign wealth fund, is heavily involved in the financing of this high-speed rail project.

Eight countries are particularly vulnerable to the Chinese “debt trap” that the BRI offers: Djibouti, Kyrgyzstan, Laos, the Maldives, Mongolia, Montenegro, Pakistan, and Tajikistan. By entrapping these countries in debt, the Chinese government has demanded, and in the case of Djibouti and the Maldives, demanded and obtained strategic control of ports capable of being expanded into military bases that threaten India.

Pakistan is already home to a Chinese port at Gwadar which Pakistan purchased from Oman in 1958 for $3 million. The Chinese company, the China Overseas Ports Holding Company Pakistan (COPHC-Pakistan) was created by the Chinese government specifically to develop the Gwadar region. As such it is a Chinese state owned enterprise (SOE) under the control and governance of the Chinese Communist Party. In 2017, the port of Gwadar was leased to China for a period of 40 years. In a move which has been under-reported in the West, due to security concerns in the Balochistan province, it has been reported that China intends to deploy military units from the People’s Liberation Army in Balochistan province. Given the political unrest in Balochistan, this is a recipe for a protracted asymmetric conflict, which could bog China down in its first foreign war, comparable to the U.S. experience in Vietnam and the Russian experience in Afghanistan.

China’s arrival on the world scene as an imperialist power is by no means an accomplished fact. While the world has marveled at China’s economic rise, its economy has yet to reach the 5th stage of Walt Rostow’s Stages of Economic Growth. While a nominal view of the Chinese economy might indicate a modern and viable economy, a closer look would show the weakness of the Chinese economic model.

The rate of current Chinese growth was recently rated at a 6% annual GDP growth. While this growth is impressive by any other standard, it is a far cry from the economic growth needed to absorb new workers entering their prime earning years. China is a net importer of food, and the current crisis in the pork industry as a result of swine fever has decimated its pork production. Indeed, one of the reasons for Chinese aggression in the South China Sea is to procure rich fishing grounds to feed its hungry population.

China increasingly has resorted to debt financing in its government spending and for her domestic industries. With corporate bankruptcies increasing, China alternates between deleveraging and shoring up key state owned enterprises which threaten the entire Chinese economy.

So, it still remains to be seen if China can withstand the economic rigors of being an imperialist state and the costs of such a state.