{"id":42344,"date":"2018-09-28T12:30:48","date_gmt":"2018-09-28T02:30:48","guid":{"rendered":"https:\/\/www.aspistrategist.ru\/?p=42344"},"modified":"2018-09-28T12:24:59","modified_gmt":"2018-09-28T02:24:59","slug":"the-china-backlash","status":"publish","type":"post","link":"https:\/\/www.aspistrategist.ru\/the-china-backlash\/","title":{"rendered":"The China backlash"},"content":{"rendered":"
<\/figure>\n

On a recent official visit to China, Malaysian Prime Minister Mahathir Mohamad criticised his host country\u2019s use of major infrastructure projects\u2014and difficult-to-repay loans\u2014to assert its influence over smaller countries. While Mahathir\u2019s warnings in Beijing against \u2018a new version of colonialism\u2019 stood out for their boldness, they reflect a broader pushback against China\u2019s mercantilist trade, investment and lending practices.<\/p>\n

Since 2013, under the umbrella of its \u2018Belt and Road Initiative,\u2019 China has been funding and implementing large infrastructure projects in countries around the world, in order to help align their interests with its own, gain a political foothold in strategic locations and export its industrial surpluses. By keeping the bidding process on BRI projects closed and opaque, China often massively inflates their value, leaving countries struggling to repay their debts.<\/p>\n

Once countries become ensnared in China\u2019s debt traps<\/a>, they can end up being forced into even worse deals to compensate their creditor for lack of repayment. Most notably, last December, Sri Lanka was compelled<\/a> to transfer the Chinese-built strategic port of Hambantota to China on a 99-year, colonial-style lease, because it could longer afford its debt payments.<\/p>\n

Sri Lanka\u2019s experience was a wake-up call for other countries with outsize debts to China. Fearing that they, too, could lose strategic assets, they are now attempting to scrap, scale back or renegotiate their deals. Mahathir, who previously cleared the way for Chinese investment in Malaysia, ended his trip to Beijing by cancelling Chinese projects worth almost US$23 billion.<\/p>\n

Countries as diverse as Bangladesh, Hungary and Tanzania have also cancelled or scaled back BRI projects. Myanmar, hoping to secure needed infrastructure without becoming caught up in a Chinese debt trap, has used the threat of cancellation to negotiate<\/a> a reduction in the cost of its planned Kyaukpyu port from US$7.3 billion to US$1.3 billion.<\/p>\n

Even China\u2019s closest partners are now wary of the BRI. In Pakistan, which has long worked with China to contain India and is the largest recipient of BRI financing, the new military-backed government has sought to review<\/a> or renegotiate projects in response to a worsening debt crisis. In Cambodia, another leading recipient of Chinese loans, fears of effectively becoming a Chinese colony are on the rise.<\/p>\n

The backlash against China can be seen elsewhere, too. The recent annual Pacific Islands Forum meeting was one of the most contentious in its history. Chinese policies in the region, together with the Chinese delegation leader\u2019s behaviour at the event itself, drove the president of Nauru\u2014the world\u2019s smallest republic, with just 11,000 inhabitants\u2014to condemn<\/a> China\u2019s \u2018arrogant\u2019 presence in the South Pacific. China cannot, he declared, \u2018dictate things to us\u2019.<\/p>\n

When it comes to trade, US President Donald Trump\u2019s escalating trade war with China is grabbing headlines, but Trump is far from alone in criticising China. With policies ranging from export subsidies and nontariff barriers to the theft of intellectual property and tilting the domestic market in favour of Chinese companies, China represents<\/a>, in the words of Harvard\u2019s Graham Allison<\/a>, the \u2018most protectionist, mercantilist, and predatory major economy in the world\u2019.<\/p>\n

As the largest merchandise exporter in the world, China is many countries\u2019 biggest trading partner. Beijing has leveraged this role by employing trade to punish<\/a> those that refuse to toe its line, including by imposing import bans on specific products, halting strategic exports (such as rare-earth minerals), cutting off tourism from China and encouraging domestic consumer boycotts or protests against foreign businesses.<\/p>\n

The fact is that China has grown strong and rich by flouting international trade rules. But now its chickens are coming home to roost, with a growing number of countries imposing antidumping or punitive duties on Chinese goods. And as countries worry about China bending them to its will by luring them into debt traps, it is no longer smooth sailing for the BRI.<\/p>\n

Beyond Trump\u2019s tariffs, the European Union has filed a complaint<\/a> with the World Trade Organization about China\u2019s practices of forcing technology transfer as a condition of market access. China\u2019s export subsidies and other trade-distorting practices are set to encounter greater international resistance. Under WTO rules, countries may impose tariffs on subsidised goods from overseas that harm domestic industries.<\/p>\n

Now, Chinese President Xi Jinping finds himself not only defending the BRI, his signature foreign policy initiative, but also confronting domestic criticism<\/a>, however muted, for flaunting China\u2019s global ambitions and thereby inviting a US-led international backlash. Xi has discarded one of former Chinese strongman Deng Xiaoping\u2019s most famous dicta: \u2018Hide your strength, bide your time\u2019. Instead, Xi has chosen to pursue an unabashedly aggressive strategy that has many asking whether China is emerging as a new kind of imperialist power.<\/p>\n

International trade has afforded China enormous benefits, enabling the country to become the world\u2019s second-largest economy, while lifting hundreds of millions of people out of poverty. The country cannot afford to lose those benefits to an international backlash against its unfair trade and investment practices.<\/p>\n

China\u2019s reliance on large trade surpluses and foreign-exchange reserves to fund the expansion of its global footprint makes it all the more vulnerable to the current pushback. In fact, even if China shifts its strategy and adheres to international rules, its trade surplus and foreign currency reserves will be affected. In short, whichever path it chooses, China\u2019s free ride<\/a> could be coming to an end.<\/p>\n","protected":false},"excerpt":{"rendered":"

On a recent official visit to China, Malaysian Prime Minister Mahathir Mohamad criticised his host country\u2019s use of major infrastructure projects\u2014and difficult-to-repay loans\u2014to assert its influence over smaller countries. 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