Joshua Kurlantzick: China a global power at last

Chairman Mao (L) with KR Brother No. 1 (C) and Ieng Sary (R)

September 28, 2009
Joshua Kurlantzick, China series
National Post

In Cambodia, where average people once resented Beijing for its role in supporting the fanatical Khmer Rouge regime, China has become the largest donor and investor, and Chinese construction firms are rapidly reshaping the skyline of Phnom Penh, Cambodia's once-sleepy capital.

Oct. 1, 2009, will mark the 60th anniversary of communist rule in mainland China. To mark the occasion, the opinion pages of the National Post present a week-long examination of communist China's past, present and future. Today, Joshua Kurlantzick examines the country's growing influence around the world as it emerges as a leader in aid, investment and development.

China is arguably in the best economic shape of any country in the world today. Chinese consumers have upped their purchases, and the government is furiously building infrastructure and using stimulus money to retrain companies. Indeed, in just the past six months Chinese companies have embarked on a global acquisition spree, attempting to buy up mining giant Rio Tinto, and locking up oil and gas supplies from Brazil, Iran and Russia, among other countries.

With its economy flourishing, Beijing, long shy of making its presence felt internationally, now is striding onto the global stage. In fact, in some regions, like Southeast Asia, China already may have surpassed the influence of the United States, the traditional foreign power. In many other parts of the world, too, China now promotes a model of economic development that, for the first time, poses a real challenge to the free market, democratic Washington Consensus.

Only a decade ago, China was content to play but a slight role in international affairs. It wielded little influence at the United Nations, and paid limited attention to regions, like Africa and Latin America, far from its borders. Chinese companies had almost no international presence; asked to name one Chinese firm, most Western consumers or executives would have drawn a blank. This was not an accident: Deng Xiaoping, the architect of China's economic reforms, launched in the late 1970s, told his colleagues that Beijing should take a low profile in global policy.

But now, China has cast off that reticence. Starved of natural resources to power its turbocharged economy, China desperately needs oil, gas, metals and other commodities, and China's large, state-linked natural resources firms now prospect for deals across the globe, competing directly with Western and Japanese giants. In Angola, to take one example, China has become one of the largest investors in the oil industry, while Australia's entire economy, based around mineral extraction, has become dependent on selling to China. Overall, China now may have surpassed the World Bank in lending to Africa, partly in order to facilitate oil and gas deals.

As China begins to have global economic demands, it becomes, by necessity, more involved in global politics, and even more concerned about its international image. Now that China has become the major investor in Sudan's oil industry, for one, it has to play a role in the ongoing conflict in the south of the country. Criticized by human rights groups for abetting genocide in southern Sudan by buying Sudanese oil, Beijing, which once would simply have ignored these complaints, took action. It appointed a special envoy to the conflict and has put public pressure on Khartoum.

The financial crisis has solidified China's newly confident approach to the world, marking the point at which China finally became a global power. With Western countries retreating from the free market themselves, and using massive state intervention, China's model of economic development guided by a state-dominated industrial policy and combined with authoritarian politics, suddenly looks more enticing.

After all, according to the International Monetary Fund, China alone will comprise nearly 75% of all global economic growth between 2008 and 2010, proving, without a doubt, that the People's Republic has become the world's economic engine.

This success turns heads. At summits of African and Southeast Asian leaders in China, finance officials pack seminars to learn about Chinese economic planning. Even in Russia, hardly known for its history of warm relations with China, the public admires China's economic model. According to one study by the Program on International Policy Attitudes, nearly 70% of Russians have a positive view of China's model.

Since Chinese companies are among the few, internationally, not contracting, Western and Asian firms now look to these Chinese corporations for investment and even jobs. (After the collapse of Wall Street last year, many laid-off bankers flocked to job fairs held to recruit them to work for China's state-owned sovereign wealth fund.) And many Western companies have placed their bets on Chinese consumers as a way to keep sales stable. (Retail sales in China have risen by more than 15% this year.) General Motors, in desperate shape, has staked a major claim to the Chinese automobile market, even as it shutters factories and jettisons models in North America. In China GM can hardly expand fast enough. Within five years, GM claims, it will increase its China sales from roughly 700,000 vehicles per year to two million annually.

Chinese leaders clearly are feeling confident. Once unsure whether to join the G8 of industrialized nations, Chinese officials now quietly talk of a "G2," China and America, ruling the world -- a moniker White House officials have not tried to downplay. Once willing to just quietly buy up U.S. treasury notes, today Chinese officials suggest the world needs to become less reliant on the greenback. In an essay released in May, China's central bank governor, Zhou Xiaochuan, suggested the international community should find another reserve currency to replace the dollar.

But it is on a more local level that China's growing global influence is most deeply felt, and where Beijing is really winning hearts and minds. In Thailand, one of the first countries where China began to exert its new influence, Beijing wields impressive tools of soft power, including training programs for Thai officials, educational exchanges and funding for Thai universities and cultural programs. With new free trade links to Thailand, Chinese entrepreneurs have flocked to the north of the country, where they ink deals to buy up local agricultural plantations, import cheap electronics and invest in Thai real estate development, at a time when Thailand's economy, like most export-dependent nations, desperately needs new markets.

Back in Bangkok, Beijing also has expanded its charm offensive. The Chinese ambassador, a longtime Thai expert, appears on local television stations to talk up the China-Thai relationship -- the type of media courting once unthinkable by the previous generation of Chinese diplomats, who once saw no value in public relations.

This strategy pays off. Once banned because of Thai government fears of Communist China, today the Chinese language is taught across Bangkok, with little Chinese tutoring shops opening up across the city and catering to young Thais who now believe Chinese will be the key to their business future. China has successfully inked a comprehensive free trade deal with Thailand, even as anti-trade groups in Thailand protest other free trade agreements.

China has played a similar winning hand across Southeast Asia -- and now in many other parts of the developing world. In the Philippines, a former U.S. colony with close historic ties to America, China's influence has grown so rapidly that the Philippine armed forces now send officers to China for training. In Cambodia, where average people once resented Beijing for its role in supporting the fanatical Khmer Rouge regime, China has become the largest donor and investor, and Chinese construction firms are rapidly reshaping the skyline of Phnom Penh, Cambodia's once-sleepy capital.

In other parts of the developing world, too, China's influence has expanded rapidly in just the past five years. In Central Asia, where countries once looked to Russia as the major outside power, nations like Uzbekistan, Tajikistan and Kyrgyzstan now look to China for aid and investment. China has launched large-scale training programs for Central Asian judges and other justice officials, and China's money has helped build expansive new networks of roads linking Central Asia to the People's Republic. In Tajikistan alone, China this summer promised to invest over US$1-billion in infrastructure over the next two years, a sizable sum in such a poor country.

In Latin America, meanwhile, where Beijing once took a hands-off approach so as not to anger the U.S., which historically viewed the region as its backyard, China also has become more aggressive, working with Hugo Chavez to reorient Venezuela's oil infrastructure tomake it easier for the country to ship to China, and solidifying the relationship by launching training programs for Venezuelan officers, as well as armed forces officers from at least 11 other Latin nations. Chavez, as well as many other Latin leaders, welcomes a chance to reduce the influence of the United States; Chavez already has vowed to decrease oil exports to the U.S., his major customer, and promised to increase exports to China this year by at least 25%.

But it is in Africa where China's influence has expanded the most rapidly. Though Beijing played a role, in the 1950s and 1960s, in supporting African liberation movements, for decades afterwards it largely retreated from the continent. Now, Chinese firms have come to dominate new investments in oil producers like Angola and Sudan; in Uganda, where exploration companies recently have discovered several new oil fields, most local analysts believe Chinese state-linked petroleum companies will buy in and develop the fields.

China may already have become the largest aid donor on the continent, and in many nations now has become the largest new source of foreign direct investment -- Chinese firms, with a high tolerance for risk, often are willing to invest in countries Western firms would not touch. From a very low base, China now has become the continent's third-largest trading partner. And in a region historically ravaged by Western colonial powers, China's supposed mantra of non-interference in countries' internal affairs goes over well -- even though, in reality, when China develops significant interests in a country, like Sudan, it too becomes unwilling to just stand aside.

With its aid, investment and seemingly successful model of development, China has won over not only African leaders but also much of the African street. To be sure, there are exceptions: In South Africa, powerful domestic trade unions resent China's poor labour practices, and at times have blocked Chinese aims in the region, such as by preventing a Chinese firm from delivering arms to neighbouring Zimbabwe. But overall, China's popularity in Africa crosses class boundaries. Polls by Gallup, the BBC and other major organizations consistently reveal that, among all regions of the world, China's image remains the strongest in Africa.

There's a new star on the world stage. And it looks as though China's international influence will only continue to get stronger.

Joshua Kurlantzick is a Fellow at the Council on Foreign Relations and author of Charm Offensive: How China's Soft Power is Transforming the World.