The world is experiencing a paradigm shift from unipolarity to a bipolar power struggle between China and the well-established superpower the United States. In order to achieve its ambitions, the Chinese regime launched the ambitious Belt and Road Initiative, which has become recognized as a “New Silk Road,” in 2013 to counter the presence of the US in Asia as well as across the globe. The huge influx of investment under the BRI has opened the door for many countries that had been desperate for direct foreign investments.
Despite the slowdown in the world’s economy, China pledged to invest more than US$1 trillion within a decade. In fact, US investment bank Morgan Stanley has predicted that total investment under the BRI could reach $1.3 trillion by 2027. The total money flowing from China toward the world for its Silk Road is equivalent to nearly half of the total economy of the United Kingdom. China’s investment initiative has so far grabbed the attention of more than 60 countries including key allies of the US.
With this project, China is using its financial clout to persuade beneficiary countries to take its side in many significant issues. According to a report by Rhodium Group, a US research firm, China has invested $120.75 billion in Europe in the past three years. Apart from pumping billions of dollars into Western countries, the Chinese are also using hawkish diplomacy to break Western unanimity.
In a major ruling of the Permanent Court of Arbitrations, Hungary and Greece prevented the European Union from joining the US and Japan in siding with the Philippines in a dispute with China over maritime borders in the South China Sea. This was not the first time Western countries lacked unanimity against China. Thus investment under the BRI is coming at a cost to some countries’ foreign policy. Also, in 2017, the EU for the first time did not offer any statement on Chinese human rights violations in Xinjiang at the UN Human Rights Council after it was blocked by Greece.
The Americans are failing to persuade their allies to spurn the BRI. Italy delivered what is seen by some observers as a slap in the face to Uncle Sam when it became the first NATO and G7 country to join the BRI. The United States had issued numerous warnings but they were not enough to dissuade the Italian government, which was desperately seeking billions of dollars in foreign direct investment.
One possible cause behind the rise of the “dragon” is the failure of Uncle Sam to fulfill the needs not only of the developing world but also of Western countries. China is giving plenty of cash to developing countries to bolster their struggling economies. But in return, China is seeking political and diplomatic gains in the international arena.
Nayan Chanda, the former editor of the Far Eastern Economic Review, called the BRI an “overt expression of China’s power ambitious in the 21st century.” However, the BRI is a Chinese response to a renewed US focus on Asia initiated by the Barack Obama administration in 2011.
Many Chinese economic experts claim that the country’s leaders are determined to restructure the economy to avoid the so-called middle-income trap. To accomplish this, and project itself as a new alternative to the US, the Chinese are working on a three-point “LDC” formula – language, diplomacy and currency. China is determined to maintain the liquidity of its currency by investing in yuan and to challenge the international dollar system. They are also focusing on increasing the number of Chinese speakers in the world. Moreover, all the roads and maritime projects related to the BRI offer information mainly in the Chinese language. Thus the hawkish diplomacy of the regime has already shown its colors in international forums.
Most recently, Saudi Crown Prince Mohammad bin Salman supported China’s crackdown on Uighur Muslims just to bolster his kingdom’s ties with Beijing. This is a glaring example of Chinese diplomacy and the country’s growing presence in the MENA (the Middle East and North Africa) region. Saudi Arabia, a key ally of the US, has 30% more exports to China than to the US, according to International Monetary Fund (IMF) data. Major oil and gas producers are highly dependent on China for a big chunk of their revenues.
According to IMF Direction of Trade Statistics data, in some cases, key US allies such as the United Arab Emirates export nearly three times as much to China as to the US. But even worse situations for the US are indicated by the statistics on China’s trade with Kuwait, Qatar and Oman, which is nearly eight, nine and 29 times, respectively, as much as their trade with America.
China makes the MENA region its battlefield against Uncle Sam and it has an edge over the US. The American Enterprise Institute’s China Global Investment Tracker has claimed that China has invested more than $86 billion in this region since the launch of the Belt and Road Initiative. The unimpeded flow of yuan around the world has resulted in many countries that rely on China choosing to stand by its side.
Because of the failure of the US to fulfill the needs of its allies and other major countries, the world is now looking for new options
But beyond Africa, Eurasia and the MENA region, the Chinese have also invested a lot in America’s backyard. Before 2010, China had only invested $5 billion into Latin America and the Caribbean (LAC). But now, the US lags behind China in terms of investment in this region as well. According to the Economic Commission for Latin America and the Caribbean, the US is responsible for only 28% of the investment, whereas with 42% of the total investment, China leads the way.
The American Enterprise Institute believes China has invested more than $182 billion in Latin America since the launch of the BRI. Also, Chinese investments are running ahead in Australia with a total investment of $54.95 billion from 2013 to 2018. Moreover, the US has attracted more than $138 billion in Chinese investment in the past five years.
China’s defiant posture toward US hegemony is most probably due to its grand economy, billions of dollars in hand, hawkish diplomacy and its ability to sell its advanced technology at the lowest price.
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The Chinese government has so far invested more than $125.5 billion on developing infrastructure to connect the world with China under its New Silk Road project. Apart from investing money in different countries, China is doing everything it can to eliminate America’s technological edge. It is, for example, investing billions of dollars in Shenzhen for the promotion of new technological developments.
According to Bloomberg, nearly 50% of the mobile phones sold in the first quarter of 2019 were manufactured by Chinese companies, 25% were made by South Korea’s Samsung, and the remaining 25% were made in other countries. Moreover, it’s annual spending on research and development has increased by 71% in the last five years, and it has also tripled its military budget to bolster its muscular power in the region.
Because of the failure of the US to fulfill the needs of its allies and other major countries, the world is now looking for new options, which makes the presence of China more prominent. China is giving all possible assistance to countries that once had doubts about China’s ambitions and investments.
In every scenario, the Chinese want to establish hegemony over the United States. With the new developments in the regions, it is becoming clear that China is creating a new alternative to the United States and it might be possible that in the future the world will have two superpowers engaging in a proxy war, as we saw during the Cold War.