The Chinese plans of investing more than $45 billion in Pakistan to set up the China-Pakistan Economic Corridor have some commentators already comparing the investment to the Marshall Plan. This kind of investment is unprecedented but China seems to be making it a habit nowadays: it has invested tens of billions of dollars in improving African infrastructure in the last few years. It intends to invest $250 billion in South America over the next decade. This May it announced a $50 billion project with Brazil and Peru, which includes a massive trans-continental railway link running through the Amazon rainforest. The scope and scale of these investments is staggering and brings to mind the logical question: has the Chinese century begun?
Let’s consider some of the giant strides China has made recently. These stories have been reported individually but the underlying political dynamics and the economic implications have rarely received much analysis. For the last decade, China has laboured hard behind the scenes laying the bedrock for its superpower ambitions.
First, China is building megacities to cope with a level of urbanisation that is unprecedented in human history. This relentless phase of construction can be summed up with just a few breathtaking statistics: for instance, in just three years, 2011 to 2013, China used more cement than the US did in the entire 20th century. In the next 10 years, China plans to relocate 100 million people from the countryside into newly built cities. Hundreds of mountains will be flattened, the debris will be used to fill valleys, and cities will be built on the levelled land. The Chinese have advanced the art of prefabricated construction to the point where, to the astonishment of Western experts, entire skyscrapers can be constructed in mere days. In March, in Changsha province, a developer erected a 57-storey building with 800 apartments in just 19 days.
On the economic front, in 2013, China became the world’s biggest trading nation and in 2014, overtook the US as the world’s largest economy. Trade relationships are a source of immense soft power which significantly re-shape traditional geopolitical realities. A 2012 policy brief by the European Council on Foreign Relations noted that it was Chinese demand for German goods that rescued the German economy after the economic crisis of 2008. We saw a taste of this earlier in the year when Pakistan successfully bore Saudi pressure on the issue of Yemen with China’s explicit support. China has also helped revive the Iran-Pakistan gas pipeline project, which the US had successfully suppressed for several years.
And China’s immense wealth is not just concentrated at home. Apart from investing in infrastructure in developing nations, China is now the world’s leading creditor and the largest holder of US foreign debt (the US is incidentally the world’s largest debtor). Chinese investors are powering real estate booms in several cities in the US, the UK, Australia and Canada, to the point where house prices have skyrocketed beyond the reach of local buyers. As per the Heritage Foundation (which runs an online China Global Investment Tracker) Chinese investments overseas include billions invested in companies dealing in resources, metals, ores, petroleum, banks, food, including big names such as IBM, Rio Tinto, Ford, Volvo, Barclays, BP, Total, Telefonica, Morgan Stanley, etc.
However, it is this year, 2015, that China started truly flexing its muscles on the global stage and directly challenging Western global dominance. The first step was founding the BRICS alliance with Russia, India, Brazil and South Africa. A handful of nations doesn’t really seem like a ‘bloc’ until one realises that these five countries account for nearly half the entire world’s population. As per the BRICS vision, Brazil and Russia are on course to become the world’s largest raw materials suppliers, and China and India the largest suppliers of manufactured goods. The economic possibilities of such an alliance are overwhelming.
The second step was the creation of the Asian Investment Infrastructure Bank (AIIB). This saga is illuminating in its own right and deserves broader coverage: for much of last year, China has floated the idea to regional partners for a megabank to finance badly needed infrastructure in Asia. With $50 billion worth of founding capital, this bank would dramatically expand Chinese influence and be a potent counterweight to the US-dominated IMF and World Bank and the Japanese-led Asian Development Bank. The US, which has worked tirelessly to limit China’s influence in the aforementioned institutions, predictably tried to sink the plan and leaned heavily on Australia and South Korea to reject the Chinese invitation.
However, out of the blue, Britain shocked everyone by joining the AIIB, terming it “an unrivaled opportunity for the UK and Asia to invest and grow together”. This completely unexpected move by the US’s closest ally completely deflated US efforts at sabotage. The US expressed its displeasure publicly: “We are wary about a trend toward constant accommodation of China, which is not the best way to engage a rising power,” but the words fell on deaf ears. France and Germany hopped on and Australia and South Korea reversed their previous refusals. China itself was caught off-guard by the tidal wave of applications and The New York Times dubbed it a “stampede”. Some 57 countries signed up, including India, Russia, Malaysia, Iran, Indonesia, Singapore, Saudi Arabia, the Philippines, Pakistan, Brazil, Norway, Denmark, Finland, Egypt and Spain, Italy, Kuwait, Qatar, Turkey, etc.
This is not just a public relations victory for China; the ramifications are profound. Former US treasury secretary Larry Summers, one of America’s most well-known economists, sounded the alarm for a “new economic era” announcing: “This past month may be remembered as the moment the United States lost its role as the underwriter of the global economic system,” and that he could “think of no event since Bretton Woods” which compared with this Chinese victory.
China has also flexed military muscle recently: it is actively reclaiming land in the disputed South China Sea by building artificial islands and setting up military and civilian facilities. So far, 2,000 acres have been reclaimed, prompting a row with neighbours Japan, the Philippines, Vietnam and Malaysia. The US publicly called for a stop. A Chinese government-run newspaper promptly warned that this stance would make US-China war “inevitable”.
And there have been symbolic gestures indicating that change is in the air. The entire world watched earlier in the year when Chinese ships evacuated hundreds of Chinese and foreign refugees from Yemen. China’s state media hyped the fact that the passengers on the ships were treated like royalty while ‘heroic’ Chinese soldiers made do with eating pickles.
These are all signs that serious change is in the air. So has the Chinese century begun? The trend thus far is unmistakable: the diminishing influence of the Western guard is quite obvious as is China’s sudden ascendancy. We may be witnessing the early assertive steps of a new superpower. And the year is only half done; there are a lot more fireworks expected in the coming months.
Published in The Express Tribune, July 24th, 2015.
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