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Foreign Policy

China Model Hits the Road: Xi Jinping’s Middle East Trip in Context

Feb 05 , 2016

Late last year a China watcher noted that President Xi Jinping had traveled to 33 countries since assuming office 31 months earlier.  But, wrote Kerry Brown, there were two notable omissions from the list: North Korea and every country in the Middle East. North Korea has still not made it on Xi’s list, but the Middle East has, with visits to Egypt, Saudi Arabia, and Iran in January.  As with most of his travels, Xi’s baggage contains two virtual items: his “China Dream” and the China Model of economic development.

The China Model: Theory and Practice

The China Model may not be a term used by many Chinese foreign affairs specialists or by China’s leaders, but it has gained considerable attention in recent years as representing an alternative for developing countries to the “conditionality” of Western-dominated aid agencies and the official development aid (ODA) of the major economies.  The model promises capital, technology, and skilled labor on the basis of equality, mutual benefit, and noninterference, staples of China’s “five principles of peaceful coexistence” originally invoked in the 1950s but still central to foreign policy today. Quite a few developing-country leaders, including some partial to the West, find China’s aid (now mainly low-interest loans) and investment packages attractive because they are not conditioned either on the austerity or structural adjustment demands of the International Monetary Fund (IMF) and the World Bank, or on improvements in human rights, labor and political reforms, and environmental protection that may accompany U.S. and other countries’ ODA.

China’s development model has strong selling points, and they resonate with President Xi Jinping’s “China Dream.” The “dream” is yet another effort by a Chinese leader to use history’s humiliations and China’s rise to bestir the people to greater efforts. It is about achieving prosperity, strengthening the military, improving people’s livelihoods, and rejuvenating the nation—in a word, giving priority at China’s present stage of development to rapid economic growth and stable politics.  By implication, China abroad must seek secure access to energy and other resources that will sustain that growth and satisfy a potentially restive society with consistent material progress.

The China Dream and the China Model are thus complementary in Xi’s strategic vision, of which relations with the developing world are a central part.  When it comes to choosing partners in the global South, China’s preference is for strong states—those with powerful, predictable leaders who, like China’s, seek rapid economic growth without challenges from social and political groups. Emulating (within national conditions) China’s “neo-authoritarian” path requires luring an economy away from dependent relationships with the West and especially its financial institutions.  China has been an active facilitator in that regard, both on its own and multilaterally.  As one recent report notes, for example: “The China Development Bank and the Export-Import Bank of China now provide more loans to the region [Asia-Pacific] than the World Bank and the ADB [Asian Development Bank] combined” (New York Times, October 6, 2015). And through various multilateral groups, such as the BRICS and the Asian Infrastructure Investment Bank (AIIB), China has spearheaded additional independent sources of development financing.

Of course there is a major contradiction here, since China’s rise has not followed the path the model lays out.  To state the obvious, its economy is deeply intertwined with the major Western economies and those same financial institutions.  Its market reforms would not have been possible without assists from overseas Chinese and Western capital, technology, and technical advisers, not to mention China’s own history of entrepreneurship. Nor is that the only contradiction with the spirit if not the letter of the China Model. The actual record of China’s commercial activities in developing countries does not demonstrate improvement over the West’s very spotty record when it comes to promoting human development, human security, and civil society—that is, putting grassroots-level improvements, reduction of rich-poor income gaps, and capacity-building (via higher literacy rates, gender equality, health and safety rules, water accessibility, and strong environmental protections) above top-down strengthening through centrally-controlled big-ticket projects such as rail lines, mines, dams, and port construction.

Moreover, while Chinese assistance has modernized some developing countries’ manufacturing, there is little evidence that it has limited corruption, promoted the rule of law, or protected tropical forests and other natural resources.  Little wonder that nongovernmental organizations, such as unions, environmental groups, and small business are among the critics of Chinese development assistance in (for example) Brazil, Peru, Chile, Philippines, Myanmar, and Niger.  We hear the charge of Chinese “neocolonialism” with increasing frequency—a charge that Beijing vigorously rejects. Yet even in countries that favor China’s development aims—for example, support of the “Silk Road” strategy by Sri Lanka, Kazakhstan, Myanmar, and Mongolia—resistance has cropped up to certain Chinese-financed projects. One reason is that China’s proclaimed goal of interdependence has become overdependence (Gan Junxian and Mao Yan, “China’s New Silk Road: Where Does It Lead?” Asian Perspective, vol. 40, no. 1 [2016], forthcoming).

Xi’s Middle East Trip

One of China’s chief strategies in dealing with the developing world is to step in where the West fears to tread, and this is where Xi Jinping’s January trip to the Middle East comes in.  That practice has a long history, starting with aid to build the Tan-Zam (Tanzania-Zambia) railway in the 1950s, when China’s official aid program was in its infancy. Iran is the latest major example of this opportunism: While sanctions on Iran because of its nuclear program were in place, Chinese businesses thrived, much to the delight of the ayatollah and Iranian business people. Finding ways around Western banking sanctions, Chinese investors “filled the void,” as one European diplomat puts it, importing Iranian oil, selling cars, undertaking all manner of large construction projects, and in the process becoming Iran’s biggest trade partner. As the result of Xi Jinping’s visit in January, seventeen agreements were signed covering energy and industry cooperation.  The Ayatollah Ali Khamenei is quoted as having told Xi:

The government and nation of Iran have always been and [still] are looking for the expansion of relations with independent and reliable countries like China and on this basis, the agreement between the presidents of Iran and China for [promotion of] 25-year strategic relations is totally correct and endowed with wisdom. The Western [governments] have never been able to win the Iranian nation’s trust.

The endorsement of China is quite different from the ongoing suspicions the ayatollah has voiced concerning the nuclear agreement reached with the United States and its European partners.

Xi’s visit to the three Middle East countries is interesting from a strategic point of view.  For one thing, it enhances China’s energy picture as it becomes increasingly reliant on Middle East oil.  Second, it involves some risk-taking inasmuch as the deals with Iran and Saudi Arabia put China directly in the path of their dispute over the civil wars in Syria and Yemen and their deep sectarian differences, which have led to a break in relations.  Third, Xi’s itinerary seeks to build relations with three authoritarian regimes that have frayed relations with the United States but are important to the long-term Silk Road strategy based on extending land and maritime links westward. In Egypt, for example, a country that has an estimated 4,000 political prisoners and whose military junta has completely gutted the Arab Spring’s democratic potential, Xi signed a five-year strategic partnership agreement.  Egypt’s leader lauded the Silk Road initiative. Twenty-one agreements were signed in all, including one for a Chinese company to “design, build, and operate” two technology zones.  And in Saudi Arabia, which is carrying out a horrendous bombing campaign in Yemen and executing political opponents with no pretense of respect for legal formalities, Xi presided over a major oil deal between Saudi Aramco and Sinopec worth over $1 billion.

The Africa Difference

Africa is an entirely different case, however.  Lacking Iran’s resources and coping capacity, the African Continent has been deeply affected by the downturn of the Chinese economy and consequent dramatic reduction in demand for Africa’s exports.  Chinese imports from Africa plunged 40 percent in 2015, and the trade balance leaned heavily in China’s favor ($102 billion in exports to $67 billion in imports). Nigerian oil, Zambian copper, South African iron ore, and other typical exports to China have taken a major hit, leading to rising unemployment and difficulty repaying loans. How Xi Jinping’s pledge of $60 billion in aid at the December 2015 China-Africa summit in Johannesburg will help Africa “realize sustainable self-development” seems like a remote possibility.

What these developments in the Middle East and Africa show, first of all, is just how large a factor China now is in economic globalization. Second, they show that however different the China Model may seem to be from the Western model, in the end it is just as self-interested.  China’s international businesses and trade agencies are not going to shape exports to suit the long-term basic development needs of host country populations (though that is really as much the host’s job). The Chinese are in business to do business, just like their Western counterparts; and Beijing is going to utilize business, state-run and private, to serve larger strategic objectives—just as Western governments do.  There is no room for bargaining about human rights and democracy.

Third, money talks; but an inundation of money, such as China has brought to Nigeria in the form of numerous large-scale construction projects, risks local resentment when the greatest rewards accrue to the donor.  Nigeria is among several countries where Chinese goods have often proven shoddy (such as electrical conduits), Chinese industries have copied local products and thus caused unemployment (such as dyed textiles), and construction projects have used Chinese rather than locally products (such as steel).

Fourth, promoting self-reliance and abiding by noninterference are fine principles, but China does not always practice them.  Investing in extractive industries such as mining, and exchanging manufactured goods for natural resources, is a neocolonial pattern all too familiar to African and Latin American countries. Chinese aid, like Western aid, may be touted as not coming with political strings; but it certainly comes with political expectations. And aid often runs up against local political interests (opposition parties, unions, and other civil-society groups).  More than a few cases have been reported in which Chinese aid and investment sidelines local labor, encourages bribery, is tied to purchases of Chinese goods or contracts with Chinese state-owned enterprises, and becomes an issue in elections. China’s big-ticket projects, such as railroads across the face of northern South America, are in trouble due to a combination of local politics, corruption, and resistance by NGOs.

Fifth, rhetoric is no substitute for generous action, in particular for some sacrifice by a great power such as China in order to provide effective help to struggling countries.  Talk of “Africa’s rise,” “Africa for Africans,” and “win-win cooperation for development” only has meaning if it enhances job creation and training, environmental sustainability, and social justice—in other words, human security and human development.  But those are not the aims of the China Model any more than they are of Western models.

Last, in some cases China is a free-rider in some important development projects, dependent on others yet not paying for the service.  Its mining operations in Afghanistan, for example, rely on the US military’s counterterrorism operations, and its oil imports from the Middle East are secured by the US Navy. That may change in the future as China enhances its naval capabilities, but for the immediate future its military focus is on protecting close-in interests such as in the South and East China Seas. Neighboring countries, notably Japan, Philippines, and Vietnam, may well wonder if Xi’s emphasis on territorial sovereignty is also part of his China Dream. Certainly their deeply troubled relations with China stand in sharp contrast with Xi’s diplomatic successes in the Middle East.

Can the China Model Last?

In short, the China Model presents a very mixed picture, representative of the unpredictability of international political economy generally and of aid-giving in particular.  Local politics and cultural sensitivities in recipient countries are always potential barriers to aid and investment projects.  Respect for human rights, law and regulations, and the environment are important to some governments and civil society even if not to China’s state enterprises and business people. These complications suggest a final conclusion: The more economically powerful and globally involved China becomes, the less attractive will the China Model be to developing countries.  This is not just because the scale and intensity of China’s aid, trade, and investments are bound to run into increasing local resistance.  It is also because, as the West has found, deeper Chinese economic penetration creates resentment among developing-country leaders: dependent development, demands for support of the donor’s policies and for military concessions, and efforts to establish spheres of influence to protect investments. Separating economics from politics becomes increasingly impossible, in short.

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