China and a New World Dynamic
What do the South China Sea, Sri Lanka, Pakistan, Djibouti, and Ecuador all have in common?
At first glance, not much. These locations are spread out over thousands of miles. A closer look, however, tells an entirely different story. Each of these locations represents an integral pawn in the proverbial chessboard of international relations.
Starting in 2008, China began a policy of expanding its geopolitical footprint across nations and continents by way of a theory called ‘string-of-pearls.’ This refers to a geopolitical theory of Chinese intentions in the Indian Ocean region which involves efforts to increase access to ports and airfields, expand and modernise military forces, and foster stronger diplomatic relationships with trading partners.
China seeks to expand its influence in the Indian Ocean in order to extract a maximum benefit and combat India’s hold in the region. The Chinese government insists that China’s burgeoning naval strategy is entirely peaceful and is only for the protection of regional trade interests. However, the international community, and India in particular, differ. From the Indian perspective, Chinese ‘encroachment’ into the Indian Ocean represents a significant threat to Indian power projection, trade, and territorial integrity.
The Chinese expansion has not been by way of military might, far from it. The spread of their influence has arisen by way of economic lending to developing nations that have few alternative sources of funds. Case in point, Sri Lanka.
Hambantota Port in inland Sri Lanka perfectly demonstrates China’s approach to a changing world dynamic in the 21st century. The port was funded 85% by China, who loaned the amount to Sri Lanka, ignoring significant indicators that Sri Lanka would be unable to repay the amount. True to expectations, Sri Lanka defaulted in their payments and consequently were forced to lease the port back to China for 99 years. The port, to date, handles no more than one ship a day on average which demonstrates China’s new philosophy of preferring a strategic push over commercial viability.
Sri Lanka isn’t the only country entrapped by the Chinese form of “debt trap diplomacy.” Djibouti, China’s first overseas military base, is also on the list of nations heavily indebted to Beijing. The country will most likely cede the port’s operations to a Chinese state-owned enterprise which is a worrying trend emerging across the world. The Reventador Dam in Ecuador represents another aspect of China’s far-reaching policy of exploiting precariously positioned nations for their vast resources, a concept neatly termed as neo-colonialism.
China is now one of the world’s largest consumer of oil, most of which is imported. To elevate its demand, China has now devised novel methods to obtain petroleum at prices far lower than market rates. By extending over $19 billion in loans to Ecuador, China has managed to establish a ready source of oil, as the overextended Ecuadorian government repays the China contracts in oil and not currency. In fact, China gets the oil at a discount, then sells it for an additional profit giving China, not only a steady supply of oil, but also substantial control over the supply of oil in the world market.
While Ecuador does not constitute a part of the ‘string-of-pearls’ in the Indian Ocean, it is representative of the burgeoning influence of China which translates into lending to unstable countries with few alternative sources of funds. This Chinese push is furthered by the gigantic investments in Xi Jinping’s crown jewel, the Belt and Road Initiative.
Announced in 2013, the BRI constitutes an infrastructure project of gargantuan proportions, covering more than 68 countries, including 65% of the world’s population, 40% of the global gross domestic product and 75% of known energy reserves as of 2017. The project spans over Europe, Asia, the Middle East, Latin America, and Africa and calls for investments that could total up to $8 trillion. The project harkens back to the original Silk Road, which connected Europe to Asia centuries ago. Xi’s vision includes creating a vast network of railways, energy pipelines, highways, and streamlined border crossings, both westward and southward, to Pakistan, India, and the rest of Southeast Asia. Under Xi, China now actively seeks to shape international norms and institutions and forcefully asserts its presence on the global stage.
With the United States under Trump following a myopic America First strategy and the UK sidelined by the ill-planned Brexit, China’s aggressive expansion poses a serious threat to the global order without the existence of a counterweight and expansive investments by international institutions in order to develop precariously positioned nations and counter the influence of China’s debt diplomacy.