Is China is Losing its Appeal as a Global Leader?
A good way to measure China’s appeal to the rest of the world is to gauge the success of the Belt and Road Initiative (BRI). As of September 2019, Beijing had signed more than 190 cooperation documents with more than 160 countries and international organizations in support of the BRI. Its cumulative investment in BRI countries had already exceeded $100 billion, with the value of construction projects alone being valued at a staggering $720 billion.
Yet, the Initiative had already begun to slow down by 2018. Beijing’s overseas lending began to flatten out and the number of new overseas construction projects had notably declined. The total value of new projects spread across 61 countries had fallen 13% (to $126 billion) in 2018 compared with the previous year, and another 7% through August 2019 (when existing contracts had also dropped another 4% for the period). In the first half of 2019, China’s investment and construction activity around the world plunged by more than 50% compared with the first half of 2018; new projects had also declined precipitously.
This was due, in part, to a decline in the amount of Chinese funds available to invest in other countries. Chinese state banks had become more cautious about lending following the commencement of the trade war with the U.S. Chinese state-owned enterprises (SOEs) were still moving car and steel capacity overseas, and building new motorways and cement plants in developing economies, but on a much smaller scale compared to their 2016 investment peak. In addition, some of the Initiative’s member countries (such as Myanmar, Sierra Leone, and Tanzania) had become hesitant to continue borrowing large sums of money for fear of falling into the debt trap.
It seems that Beijing had also become more attuned to the flip side of debt-trap diplomacy: not being paid back. The fear of balance of payments not being aligned, combined with exchange rate weakness as a result of the trade war with the U.S., caused a rationing of the hard currency used to make investments and finance construction. Beijing had at last come to realize that some BRI projects had led to excessive levels of debt for developing countries. Although Xi had pledged to improve project sustainability, the crucial issue became how this enhanced “sensitivity” would be implemented in practice, and the impact this would have on Chinese SOEs, many of which had come to attribute much of their profitability to the BRI.
Rather than expand China’s soft power, as originally intended when the Initiative was launched in 2013, the BRI appeared to be achieving the opposite in many of the countries in which it was supposed to have the greatest impact. As a result of debt-trap diplomacy, countries around the world must now worry not only about the costs associated with having agreed to accept BRI projects under sometimes onerous Chinese terms, but about the sustainability of their debt loads and their ability to continue borrowing in international markets.
Host governments are now more carefully scrutinizing BRI projects and their associated costs. Beijing is being criticized by the very same countries that were supposed to be praising China for promoting development via BRI projects. It has learned that, just as the world no longer simply stands at attention when the U.S. snaps its fingers, it also cannot simply dictate the terms of engagement for bilateral relations or cross-border trade and investment.
In gatherings of the world’s leaders, President Xi has become accustomed to casting himself and China as natural heirs to lead the global system, but is a country that regularly violates global norms, standards, and laws really the right country to lead the world? During Xi’s Davos speech in 2017, he spoke of economic globalization but made no mention of the political, security, cultural, or normative aspects of globalization. He argued that China’s rich history and current success qualified it to lead the trade and investment regimes that have enabled its rise, but made no argument about why else it might be qualified to lead. He made no mention of China’s ability or inclination to uphold established values or institutions that advance the rule of law, the free flow of information, representative government, or the social, cultural, and political pluralism that are representative of the global system.
Xi was proposing to lead a global economic system whose principles China frequently violates with high tariffs, non-tariff barriers, a semi-closed economy, state-owned enterprises, and a willingness to use trade to punish partners for political sins, whether by banning banana imports from the Philippines or rare earth minerals to Japan.
While Beijing has clearly made progress, it remains a long way from establishing the type of track record of good governance that would otherwise warrant claiming to be the natural heir to lead the global system. That is, until and unless it were to create an alternative global system in its own image that was accepted and utilized by the majority of the world, as the existing system is.
There are very few global challenges for which Xi has proposed his own (or China’s) solutions. Rather, he (and the Chinese government) are more in the habit of signing onto initiatives that other individuals, countries, or institutions have advanced. If China wants to claim the mantle of leadership it believes it should have, it can start by making some meaningful proposals to tackle the world’s most pressing problems and demonstrate that it can gain the backing of the world’s leading nations to implement it.
Much of the rest of the world not only does not trust the Chinese government, but it also does not want to be like it. It is almost as if the ability of the Chinese government to say that it does not wish to invade other countries is supposed to be a lottery ticket that allows it to claim moral authority over the rest of the world.
Unfortunately for Xi, he cannot change the fact that the international stage on which he wants China to play a central role already hosts actors steeped in skepticism, irony, irreverence, logic, common sense, debate, and the critical interplay of ideas, all of which are forbidden in Chinese public discourse. This is directly contrary to the CCP’s concern that liberalization at home may create instability and jeopardize its rule. How can a ruling body afraid of its own shadow possibly expect that the rest of the world would be interested in emulating its governing style, or believe that it is itself prepared to assume a leadership role in a world seeking to embrace debate, rather than make it illegal?
That is a quality the U.S. possesses in abundance. Say what you will about the slippery slope the U.S. government has been on since Trump came to power, it has a rich history of promoting creative thought, running head-first into particularly uncomfortable subjects, and encouraging robust debate internally and among its allies and partners. The world’s nations know that Trump, and what he stands for, has a limited shelf life. Once he leaves the scene, America is sure to be perceived as having briefly lost its senses and will come charging back into the mainstream of global thought and debate. China has entered the arena crippled by its own ideology, but with a clear sense of its interests, capabilities, and strategy. Ultimately, the U.S. is better equipped to lead the world. It knows that, and so does much of the rest of the world. Someone had better tell China.
A version of this article first appeared in the South China Morning Post.