How China Loses: The Pushback against Chinese Global Ambitions 0190061081, 9780190061081

Table of contents :
Dedication
Contents
Acknowledgments
Introduction: There Was a Moment
1. Waiting for Peace
2. Evils under the Ground
3. Nobody Hates Money
4. The Chinese Way
5. Few Illusions Left
6. What Is Best for Europe?
7. Behave Accordingly
8. A Distant Part of Asia
Conclusion: Big or Small
Notes
Index

Citation preview

 

How China Loses

 

 

Luke Patey

How China Loses The Pushback against Chinese Global Ambitions

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1 Oxford University Press is a department of the University of Oxford. It furthers the University’s objective of excellence in research, scholarship, and education by publishing worldwide. Oxford is a registered trade mark of Oxford University Press in the UK and certain other countries. Published in the United States of America by Oxford University Press 198 Madison Avenue, New York, NY 10016, United States of America. © Luke Patey 2021 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, without the prior permission in writing of Oxford University Press, or as expressly permitted by law, by license, or under terms agreed with the appropriate reproduction rights organization. Inquiries concerning reproduction outside the scope of the above should be sent to the Rights Department, Oxford University Press, at the address above. You must not circulate this work in any other form and you must impose this same condition on any acquirer. Library of Congress Cataloging-​in-​Publication Data Names: Patey, Luke A., author. Title: How China loses : the pushback against Chinese global ambitions /​Luke Patey. Description: New York : Oxford University Press, 2021. | Includes bibliographical references and index. Identifiers: LCCN 2020023555 (print) | LCCN 2020023556 (ebook) | ISBN 9780190061081 (hardback) | ISBN 9780190061104 (epub) | ISBN 9780190061111 Subjects: LCSH: China—​Foreign relations—​21st century. | China—​Foreign economic relations—​21st century. | China—​Military policy. | World politics—​21st century. Classification: LCC JZ1734 .P37 2021 (print) | LCC JZ1734 (ebook) | DDC 303.48/​251—​dc23 LC record available at https://​lccn.loc.gov/​2020023555 LC ebook record available at https://​lccn.loc.gov/​2020023556 9 8 7 6 5 4 3 2 1 Printed by, LSC Communications, United States of America

 

To Lilian Mattar Patey, for showing her sons what courage looks like.

 

“Nothing discloses real character like the use of power. It is easy for the weak to be gentle. Most people can bear adversity. But if you wish to know what a man really is, give him power. This is the supreme test.” —​Robert Green Ingersoll, American writer and orator, 1883

 

CON TEN TS

Acknowledgments  ix Introduction: There Was a Moment  1

1. Waiting for Peace  17



2. Evils under the Ground  41



3. Nobody Hates Money  63



4. The Chinese Way  89



5. Few Illusions Left  129



6. What Is Best for Europe?  159



7. Behave Accordingly  197



8. A Distant Part of Asia  227

Conclusion: Big or Small  251 Notes  271 Index  365

 

 

ACK NOW LEDGME NTS

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or the five years that I spent intermittently traveling and doing research for this book, I  was met with openness and generosity from a host of researchers, government officials, civil society activists, and business managers and executives around the world. Undoubtedly some will disagree with my arguments and conclusions, but their willingness to meet, debate, and share their insight and experiences was essential in helping me carry out this work. This dialogue between friends and colleagues on what were generally sensitive issues in their respective countries provides me with confidence that we can overcome the current tensions and troubles that stand between China and the world. In the years ahead, it is necessary to remain open to arguments that may unsettle our established perspectives if we are to avoid escalation of present-​day hostilities. Research for this book took me to East Africa, South America, East Asia, and around Western Europe. This lengthy travel demanded time and financial support. I was lucky to have both and much more from the Danish Institute for International Studies. I know of no better place in the world to carry out such independent work. For over a decade, I’ve benefited from working at an institute that maintains a rare combination of academic scholars and policy thinkers across foreign policy, defense and security, and development issues. Since the importance of China to all of these research areas is now clear, despite few working specifically on China, I gained much from discussions, support, and feedback from my current and former colleagues. These included Peter Alexander Albrecht, Louise Riis Andersen, Cecilie Felicia Stokholm Banke, Rasmus Alenius Boserup, Adam Moe Fejerskov, Kristian Fischer, Stefano

 

Guzzini, Matthew Fallon Hinds, Johannes Lang, Jessica Larsen, Lars Kristian Mathiesen, Mikkel Runge Olesen, Jairo Munive Rincon, Frederik Rosén, Peer Schouten, Ida Marie Vammen, and Lars Vissing. I also appreciate the research and translation assistance I received from Boukje Boerstra, Kirstine Lund Christiansen, Nina Theodora Heuser, and Cynthia Murillo. Each went above and beyond in diving into specific research queries and sharpening up my work. Sara Gro Vagtholm Sørensen deserves special thanks for designing the illustrative maps for each chapter. The book spans much of the world. Mapping it was meticulous work. For each illustration the focus is on the countries and areas covered in the book. These should not be considered official in any way. Rather they are meant to present readers with a basic geographical visual to situate themselves within the content of each chapter. Countries, cities, disputed borders, and other important distinctions that may not be relevant to the book’s focus have been left out in many places. This book started where my last one left off. My visit to South Sudan came shortly before political tensions boiled over into a long and devastating civil war. With hope that the worst is now behind the world’s youngest country, I’m thankful to Elizabeth James Bol, Nick Champion, Brian D’Silva, Tut Gatwech, Ilya Gridneff, Francois Henepin, Peter Justin, Francis Mila, Leben Moro, James Ninrew, Henry Odwar, Qian Fengzhang, John Ryle, Kathelijne Schkenel, Egbert Wesselink, Philip Winter, Zhang Hui, and Zhang Yi. In Argentina, I  discovered new research pastures. My warm reception there began with meeting University of Rosario professor Eduardo Oviedo at the Café de los Angelitos in central Buenos Aires. With framed black-​and-​ white photos of Carlos Gardel, Osvaldo Pugliese, and other famous Argentine singers and performers looking down on us, Oviedo not only went through the history of Argentina’s relations with China, but also exemplified the hospitality I  received in the country. Everyone I  met was not only willing to sacrifice their time and speak at length but also connected me with their respective networks. Particular thanks go to Gustavo Cardozo, Sergio Cesarin, Gustavo Alejandro Girado, Andres Lopez, Grete Sillasen, Monica Ynakiew, and Yung Lin. In Japan, I benefited greatly from wisdom and guidance availed on me by Miwa Hirono, Tetsuo Kotani, Masayuki Masuda, Jane Nakano, Yoshiji Nogami, Iwao Okamoto, Tomohiko Satake, Kiyoyuki Seguchi, Akio Takahara, Aki Tonami, Michito Tsuruoko, Noboru Yamaguchi, and Anthony Yazaki. In Western Europe, I  am grateful to Thorsten Benner, Ana Luisa Brito, Mikko Huotari, Ellen Margrethe Løj, Angela Stanzel, Luis Villalobos, and Zhang Jiyu. In China, I learned much from discussions with Guo Cunhai, x    Acknowledgments

 

Lucy Hornby, Jin Ling, Wang Suolao, Wu Hongying, and Xu Weizhong. There have also been many people, particularly in business and diplomatic circles, who while asking to remain unnamed, made invaluable contributions to this book. There are a number of friends and colleagues outside my home institution, and several helpful reviewers to the book, who took the time to read over selected draft chapters. Daniel Large and Ricardo Soares de Oliveira were sounding boards for early ideas and offered excellent advice throughout. I  also owe much gratitude to Adnan Aamir, Akiko Fukushima, Jonathan Hillman, Fermín Koop, Rohan Mukherjee, Juan Uriburu Quintana, Shutaro Sano, and Harry Verhoeven. They each saved me from mistakes, pointed out weaknesses, and encouraged me to push on. In times when research on China is all too quickly politicized, they renewed my faith in academic community. I’m grateful to my literary agent Andrew Stuart for his confidence in the book’s early sprouts and his advice moving forward. At Oxford University Press, thanks to David McBride for guiding the book from start to finish and Holly Mitchell for all her help along the way. Despite all the insight and assistance I received from others in the research, writing, and production for this book, I remain solely responsible for any mistakes, shortcomings, and the arguments and perspectives put forward. My greatest debt is to Thea, Victor, and Gregory. We made many of the trips for this book together as a family and I could not be more fortunate to have their unwavering love and support. This book is dedicated to my mother, Lilian Mattar Patey. At a young age, political unrest and conflict upended her life. Rather than embrace anger and revenge, she dedicated her time to spreading hope and helping others, and never shied away from questioning unjust power. Luke Patey Copenhagen July 2020

Acknowledgments 

 

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How China Loses

 

 

 Introduction: There Was a Moment

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omething new was happening. Xi Jinping was in Davos. Once a year, the small Swiss alpine town plays host to the World Economic Forum, a gathering of political leaders, business executives, celebrities, academics, and activists to discuss globalization, free trade, and current global issues from climate change to artificial intelligence. The Davos crowd is an affluent one. Often associated with liberal ideals of limited government, free markets, and democracy, it is not a place where one expects to find the man who holds the titles of the general-​secretary of the Chinese Communist Party and head of the People’s Republic of China. It is not where one anticipates hearing a keynote speech from the leader of a one-​party state known for its brand of political authoritarianism and state capitalism. But in January 2017, China’s paramount leader, Xi Jinping, headlined Davos. Along with him was the largest delegation China had ever sent to the annual meeting. It included the likes of Jack Ma, founder of China’s largest e-​ commerce company, Alibaba, among other Chinese corporate executives and high-​level government officials. Xi’s presence marked the changing current in global affairs. The Chinese leader had arrived to assuage the anxieties of the global elite. Just two months earlier, Donald J. Trump had won the 2016 American presidential elections. On the campaign trail, Trump threatened to shake up America’s long-​standing trade and security partnerships in Western Europe and East Asia. His victory, paired with Britain’s yes vote in a 2016 referendum to leave the European Union, confirmed to many that the West was in disarray.

 

For China, this was a golden opportunity. After the 2008 financial crisis weakened liberal markets in the United States and Europe, the rise of populism was now shaking political stability in Western democracies. From Beijing’s vantage point, a new power vacuum had opened to advance China’s interests, norms, and values on the world stage. Unlike the incoming American president, Xi wanted to show the over 3,000 influential delegates in attendance at Davos that he was a rational and responsible statesman, and that China was ready to seize the mantle of globalization and free trade. “ ‘It was the best of times, it was the worst of times,’ ” Xi said in his speech, quoting the opening line of Charles Dickens’s A Tale of Two Cities. “Today, we also live in a world of contradictions,” Xi continued. “Many people feel bewildered and wonder: What has gone wrong with the world?”1 The Dickens classic is set in the late eighteenth century during the First Industrial Revolution and French Revolution. But Xi refused to blame economic globalization, and the merger of digital technologies with physical systems of the Fourth Industrial Revolution, for political and social turmoil in the world. He rejected Trump’s calls for protectionism in response to unfair trade practices by America’s largest trading partners. “China will keep its doors wide open,” Xi said. “Pursuing protectionism is like locking oneself in a dark room. While wind and rain may be kept outside, that dark room will also block light and air.” There was skepticism about Xi’s promise of keeping China’s domestic economy open. Foreign trade and investment in China have long faced considerable restrictions and controls. But the Chinese leader’s speech was nonetheless met with praise from the global political and corporate elite. It was a step in the right direction. Xi told the champions of global commerce what they wanted to hear. That the walls of protectionism were not closing in around them, that there would still be room to expand their trade, investment, and finance, that China would show the way forward. Klaus Schwab, the founder of the World Economic Forum, summed up the mood in his introduction of the Chinese president. “In a world marked by great uncertainty and volatility,” he said, “the international community is looking to China.”2 The world’s discontent towards the United States under President Trump, combined with China’s elevated internaitonal standing, animated sentiments that one superpower will replace the other. But this perspective misses the bigger picture. China wields considerable global power, but its rise to the commanding heights of the global economy and world affairs is not preordained. If America remains deeply politically fractured and continues to look on multilateralism with disdain, this will open opportunities for China to extend its influence overseas. The COVID-​19 pandemic may also reshape 2     How

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the global economy and geopolitics in the coming years. But we will not be entering a future with China in charge anytime soon. China will not wield ubiquitous and overwhelming global power simply by the inertia of the sheer size of its home market and economic engagement abroad. Its potential evolution into a global superpower, with a deep presence and strong influence over economic, political, military, and culture abroad, will rather be conditioned by how China behaves toward the rest of the world, and how the world responds. The outside world wrestles with a paradox when it comes to China. While many countries hold conflicting political values and security positions with China, they are still eager to derive economic benefits from the relationship.3 It is hard to miss the immediate economic attraction of China. Responsible for some 30  percent of global economic growth for much of the past decade,4 China has the largest economy in the world by purchasing power measures. While its growth is slowing, China’s economic size alone, particularly its burgeoning middle class, will still draw high levels of foreign trade and investment for the foreseeable future. China is also the largest trading partner for well over 125 countries, a major foreign investor across a variety of industries, and a leading provider of overseas finance for developing countries. For decades, many countries around the world avoided confronting these political differences with China. In the United States, Western Europe, and East Asia, the assumption was made that trade and investment would lead to economic and political liberalization in China.5 But the resolve of China’s political authoritarianism and state capitalism is now clear. Engagement has integrated China into the global economy and world affairs, but at the same time, it brought on new challenges as Beijing’s authoritarian politics and state-​led capitalism stretched out into the world. This book shows that the political differences and security tensions between many countries around the world and China are still present, and in some cases larger than before. But for developed and developing countries alike, there is also recognition that engagement with China can produce strategic vulnerabilities to their own competitiveness and foreign policy and defense autonomy. Despite the drawing power of China’s economic edifice of market size and consumer buying power, what were once latent concerns with how China restricts and controls its economy at home have grown considerably and expanded to how China engages in trade, investment, technology, politics, and security beyond its borders. *** Introduction: There Was a Moment 

 

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Two years after Xi Jinping’s Davos speech and Trump’s presidential inauguration, I was in Berlin. It was here where the last titanic shift in global politics began, symbolized by the fall of the Berlin Wall in November 1989, when revolution across Soviet Europe cascaded into East Germany and brought down the concrete barrier dividing Berlin and the geopolitical barriers of the Cold War with it. The reunification of Germany and the collapse of the Soviet Union heralded the beginning of a period of triumph for Western democracy, with the United States standing tall as the sole global superpower. In the former East Berlin district of Prenzlauer Berg, I met a German official close to a park where the Berlin Wall once stood. During the Cold War, Mauerpark was the site of the so-​called Death Strip, where armed guards on watchtowers gunned down eastern Germans seeking to escape to the west. Today, some thirty years later, it is quite a different setting. The attack dogs and barbed wire are long gone. In a united and free Berlin, the park is better known as a weekend spot for picnicking locals and crowds of tourists to watch street performers and stroll through flea market stalls. In light of America’s foreign policy under Donald Trump and the promises of Xi Jinping that China would defend globalization, I asked the German official how his government was coping with the changing state of world affairs. “There was a moment when the United States turned inward that led China to become our most preferred partner,” he told me. “When it came to open trade and climate change, China was saying all the right things. But it quickly turned out to be more difficult than we thought. The conflicting issues, like on human rights, remained the same, but the complementary ones became less and less evident. Germany had its own political and business problems with China.” America’s longtime allies were confounded by Trump’s victory over front-​ runner Democratic leader Hillary Rodham Clinton in the 2016 US elections. Days after Xi spoke in Davos, Trump gave his inaugural address from outside the Capitol in Washington, DC, and decried America’s military partnerships and free trade agreements. “From this moment on,” he promised, “it’s going to be America First.” Trump sought to tear down long-​standing structures of multilateralism that American leaders had worked hard to build following World War II. The new president pushed forward with a more abrasive, instable, and transactional American foreign policy. The world’s leaders were on edge. Portugal’s prime minister António Costa saw Xi’s “pro-​globalization” speech at Davos and Trump’s “America First” inaugural address as a turning point.6 “I was quite surprised to see the Chinese president make the speech that was supposed to be made by the American president, and the American president make a speech that the Chinese president was supposed to make.” 4     How

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On his first day, President Trump began to follow through on his campaign promises. He pulled the United States out of the recently signed Trans-​Pacific Partnership trade deal, which was set to cover over a third of the global economy. Months later he withdrew the United States from the Paris Agreement on climate change, and later the Joint Comprehensive Plan of Action to roll back Iran’s nuclear program. Under Trump the United States then went on to not only designate China as a strategic competitor and launch a trade war with Beijing in 2018, but also instigate trade disputes with Japan, the European Union, Canada, and Mexico, as well as question the usefulness of the North Atlantic Treaty Organization and America’s other security alliances. Trump’s arrival to the White House gave new life to debates on America’s decline as a global superpower, the end of an American-​led global order, and the rise of China.7 But in dismissing the rules, norms, and niceties of international affairs, the Trump presidency brought on fears in the United States, and among its longtime allies, that American global power was now not in a slow and steady decline, but in complete free fall. Prominent American thinkers view Trump’s foreign policy as an abdication of America’s global leadership in setting the international rules, building security alliances and free trade deals, and advocating democracy and human rights.8 Without America at the helm, they argue, the world will sink deeper into disorder. Since many see the Trump presidency as a symptom rather than the cause of divisive and inward-​looking American politics, even in Trump’s absence, American multilateralism may remain limited. And where one finds American angst, Chinese triumphalism follows closely after. For well over a decade, some experts have argued that China has been on a clear ascent to rule the world thanks to its unparalleled economic rise at home.9 Today, America’s decline is seen as opening new space for China’s international presence to grow, and for Beijing to rival, and in time surpass, the United States as the world’s perennial superpower.10 Leading Chinese thinkers have called on the international community to recognize China’s growing global power and understand and respect its strategic thinking and visions for the world.11 They are now debating how China will shape the future international order, to put an end to ideas of global political integration, universal rights and values, and advance its own interests in the world. Just as Trump’s “America First” has rejected ideals of multilateral cooperation and international rules, the hierarchical global order that China envisions unsurprisingly deems Chinese interests as second to none. But the world is bigger than the United States and China. There is a tendency among politicians, businesspeople, analysts, and academics to Introduction: There Was a Moment 

 

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focus on the relationship between the United States and China, the declining and the rising power, as dictating the future of global order.12 There is good reason to emphasize the relationship. Together, the United States and China make up roughly 40 percent of the global economy and command the world’s two most powerful militaries. Trade wars, strategic competition over new technologies, and potential war between the United States and China will shape our lives, and that of our children, more than any other relationship in the world. But a fixation on such a global contest is too simplistic. Taking only the vantage point of Washington and Beijing to view the direction of the global economy and world affairs limits our understanding of the importance of on-​the-​ground changes in Africa, Latin America, Europe, and Asia. Although many Americans and Chinese may struggle to comprehend such diversity, this broader picture—​the other 60 percent of the world economy, the other major militaries, technology leaders, and cultural hubs—​will be significant in shaping the future world. The rest of the world is not standing still as great powers rise and fall. Just as countries around the world are re-evaluating their relations with the United States, big and small countries alike are critically assessing their relationship with China too.13 *** Taking a look back at the past few decades, it is not hyperbole to see China’s rise as one of the most important stories in the global economy and world affairs. In the span of fifty years, China went from being a poor, largely isolated country to an aspiring global superpower today. China’s military strength and technological capabilities have grown tremendously, but it is China’s economic reach around the world that most closely touches all of our lives. From refrigerators to smartphones, we use a growing line of sophisticated Chinese-​made products every day. Chinese corporations are exploiting their advantageous competitive positions at home, and searching global markets for new opportunities and acquisitions, to take a commanding position in advanced industries, from telecommunications to artificial intelligence. China’s ambitious Belt and Road Initiative, a trillion-​dollar grand strategy to connect East Asia to Europe through new ports, railways, digital communications, and financial, political, and cultural cooperation, has the potential to reshape entire regions. Today, China seeks to regain the great status and respect it once held in the world. For hundreds of years, China was the world’s largest economy before what became known as its century of national humiliation began in 6     How

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the mid-​nineteenth century due to internal turmoil and external intervention from colonial powers. Gradual economic reform and opening to the outside world in the late 1970s brought on an economic miracle and decades of fast-​paced growth. China’s political authoritarianism and state capitalism strongly limit political rights and maintain state monopolies over key industries, but at the same time, allow for privatization and foreign investment. By the turn of the century, China became the “factory of the world” thanks to its low labor costs and high levels of outside investment and technology. This brought hundreds of millions of Chinese out of poverty, led to large-​scale migration from rural areas to cities, and an infrastructure boom of highways, railways, and modern skyscrapers and urban housing. This economic miracle at home elevated China’s standing in the world. It passed Germany to become the largest exporter in 2009 and then the United States as the world’s largest manufacturer two years later. As of 2014, China could claim the title as the world’s largest economy in buying power. The World Bank projects that China will surpass the United States as the world’s largest economy in nominal terms by 2030.14 But just as the economy is central to China’s global power, it remains a critical weakness going forward. China simultaneously boasts modern and wealthy megacities such as Beijing, Shanghai, Shenzhen, Guangzhou, and Chongqing, and an enlarging middle class, but by Chinese government estimates, China is still struggling to overcome entrenched poverty among tens of millions of its population and ensuring many times more do not slip back into impoverishment. China has the most billionaires in Asia, but also the fastest-​growing inequality rates in the world, and a widening economic, educational, and social welfare gap between rural and urban areas.15 The priority of economic growth above all for decades on end has also left China with large-​scale environmental degradation of its air, water, and soil. Despite President Xi Jinping’s efforts to root out corruption in a long-​running anti-​graft probe, according to watchdog Transparency International, China remains the most corrupt large economy in the world, at the same level as Serbia in the former Yugoslavia and West Africa’s Benin.16 To overcome its remaining economic challenges and become a rich nation, China must escape “the middle-​income trap.” This is a phenomenon where low labor costs initially fuel a country’s development through manufacturing growth, but later as wages increase, growth stagnates, and income levels remain suppressed and unable to move up further. Most emerging market economies have failed to escape this trap. If China is going to buck the trend, such as South Korea and others have done, it will need to foster a new economy based on innovation and services.17 And since the 2008 global financial crisis, Introduction: There Was a Moment 

 

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the Communist Party has stimulated economic growth by taking on higher levels of debt, which with a rapidly aging population, threatens to drag down growth levels. One common refrain is that China will grow old before it gets rich. Yet China’s economic model has defied critics in the past. China’s state-​ driven mandates, including allowing some market forces to take hold, as well as its vast internal, regional diversity, make it difficult to compare its economic approach and trajectory to others.18 Domestic savings and tight capital controls may ward off an economic meltdown from high debt levels. The Chinese government may be able to continue to exert control over state companies, and significant influence over private firms, to manage swings in the economy, and exploit domestic economies of scale to elevate the position of its industries in the global economy.19 Despite lofty predictions, however, extrapolation of China’s future economic size is prone to error and will depend on the success of the Chinese government to further reform the economy and drive forward productivity.20 Whether weak or strong in the future, the health of China’s economy holds widespread geopolitical consequences. Just as China has not become a full-​fledged market economy, it also remains a one-​party state. The Communist Party has long been seen as a responsive authoritarian regime—​some public criticism is accepted to improve governance standards and its own legitimacy in the process. But these political and economic reforms have been rolled back under President Xi Jinping.21 This includes reinforcing its Great Firewall to regulate the Internet, harsh penalties for those criticizing the Communist Party, pervasive, high-​tech surveillance systems, and most strikingly, the forced detention of an estimated 1 million people from the minority Uyghur ethnicity in its Xinjiang region. The Communist Party’s apprehension and sensitivities toward granting some political rights, and its drive to expand techno-​ authoritarianism through strict social media control and facial-​recognition technologies, have only been reinforced by protracted protests in Hong Kong in recent years. Widespread disapproval of Beijing’s reneging on its international treaty of self-​governance to the territory until 2047 by Hong Kongers represents a powerful rejection of the developmental model of political authoritarianism and state capitalism that Party leaders are eager to legitimatize globally. Beijing’s imposition of a new national security law for Hong Kong in the spring of 2020 signaled a determination to not back down from its authoritarian political approach. China’s economic well-​being, particularly the internal threat of a slowing economy from rising debt, productivity challenges, and aging demographics, coupled with the Communist Party’s sensitivities toward maintaining 8     How

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political power at home, largely defines China’s relations with the outside world today. If China is indeed destined to suffer from a deep economic crisis, its relative power in the world could very well be peaking. This presents a narrowing window of opportunity over the next two decades for Xi Jinping and China’s leadership to transform the global economy and world affairs to suit Chinese interests, norms, and values.22 Alternatively, if China keeps crisis at bay, the Communist Party may be emboldened to advance its global ambitions with more assertiveness. Either way, after decades of amassing considerable economic and military power, China’s leaders are now keen to reshape the world. *** What does China want from the world? Xi Jinping gave a lot of important speeches in 2017. But his over three-​hour-​long, 65-​page speech at the 19th National Congress of the Communist Party that October holds the most significant consequences for the world. Xi said that by 2035, China should develop into a modern economy and become “a global leader in innovation” with both material and normative power extending beyond its borders. By the centennial of the founding of the People’s Republic of China in 2049, Xi predicted that China will achieve “the Chinese Dream,” the “great rejuvenation of the Chinese nation,” and become “a global leader in terms of composite national strength and international influence.”23 Xi pledged that China would build world-​class armed forces and resolve the Taiwan question, reunifying the de facto independent island with the mainland, by force if necessary. The following year, Xi Jinping Thought was enshrined into China’s constitution and presidential term limits abolished so he could potentially rule for life as the most powerful Chinese leader since Mao Zedong, the founder of the People’s Republic of China. Pursuit of this agenda demonstrates China’s move from a defensive and inward-​looking approach to the world to an offensive and expansionist view.24 While there is a diversity of opinion, interests, and power in Chinese society and in its interactions abroad, the Communist Party remains the most powerful single actor in shaping China’s relations with the outside world. Just as the Communist Party has established its power at home, its leadership now wants China to become the perennial global power. Engaging the outside world presents the Communist Party with opportunities to alleviate China’s economic problems at home and project their political legitimacy and strength in the eyes of the Chinese population. Ultimately, however, China wants to replace the United States at the top of the world hierarchy and Introduction: There Was a Moment 

 

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reshape global norms and international institutions to better accommodate and advance its economic, political, and security interests in the long run. Xi’s assertive political moves at home reflect where he intends to take China on the world stage. But they are not new for China’s leadership. And while they may evolve in the future in the face of domestic economic and political challenges, just as America’s political disorder and nationalist foreign policy may outlive Trump’s presidency, China’s assertiveness may very well continue even in the absence of Xi as leader. In the early 1990s, at the end of the Cold War and after its brief international isolation after the Tiananmen Square Massacre, paramount leader Deng Xiaoping’s popular instruction was for China to keep a low profile in global politics and “hide capabilities and bide time.” But Deng never expected China to fully integrate into an American-​led international rules-​based order. Instead he believed China should avoid confrontation with the United States and its allies until it was certain it could win.25 The modesty attached to the strategic guideline of “hide and bide,” in the meantime, reduced the risk of China’s estrangement and containment and allowed room for China to develop its economic and military power. As China’s power grew at home, it moved to extend its influence abroad. There was a gradual ramping up of China’s outward confidence under President Jiang Zemin in the 1990s and early 2000s, and China’s assertiveness began to clearly show its face in the final years of President Hu Jintao’s leadership era until 2012. In the wake of the global financial crisis, Hu advanced China’s military capabilities, laid the groundwork for China’s assertive stance in territorial disputes in the South and East China Seas, as well as the idea for what would become Xi Jinping’s foreign policy signature, the Belt and Road Initiative.26 Ambitious and outwardly self-​assured, Xi is now attempting to bring these long-​standing goals of the Communist Party to fruition. China has gained much from the current international rules-​based order, but in contradiction, its history has also taught it to view the outside world as threatening to its domestic political stability and economic welfare. To ensure that the global economy and world affairs are better suited to China’s interests, its leaders believe they should “take an active part in leading the reform of the global governance system,” as President Xi stated in June 2018.27 In realizing the Chinese Dream of national rejuvenation and promoting the building of a “community of common destiny” for humankind, Xi plans for China to displace the United States as the world’s superpower and play a leading role in reshaping global governance.28 The success of China’s leadership in achieving its global political, ideological, economic, and security ambitions, but also their aggressive behavior abroad in response to domestic instability, can both hold significant consequences for the world. 10     How

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This book examines whether China will realize its global ambitions: resolving overseas conflicts to expand its economic and security agenda, attaining far-​reaching global influence through its Belt and Road Initiative, quelling criticism and cementing the political legitimacy of the Communist Party and its model of authoritarian capitalism overseas, advancing China’s economic growth and modernization at home through interactions with the outside world, and establishing hegemony over Asia through its military and economic power. To begin with, as Chinese economic interests expand overseas, Beijing is determined to demonstrate that it can protect Chinese workers and investments around the world. This is particularly the case in conflict-​prone and unstable developing countries in Africa, the Middle East, and South Asia, which are sites of key Chinese investments in energy, mining, and transportation. At the inaugural forum for the Belt and Road in 2017, Xi Jinping said that the initiative “requires a peaceful and stable environment.”29 China will “always be a builder of world peace, contributor of global development and keeper of international order,” he later pledged in a New Year address.30 China aspires to the role as a global peacemaker in order to protect its national and economic interests abroad, lifting up the political legitimacy for the Communist Party in the eyes of the Chinese populace, and to shape global norms by advancing its own approach to establishing peace and security abroad. Legitimizing China’s developmental model of political authoritarianism and state capitalism in the world is another global ambition. For decades, American and Western officials, non-​governmental organizations, and media have both criticized and attempted to influence China, with a goal of guiding the one-​party state toward liberalism and democracy. Today, it is the United States, Western Europe, Japan, India, and other democracies around the world that face the challenge of resisting China’s authoritarian influence. For Xi, there is fierce competition in the ideological sphere with the West, but also in keeping regional challengers, such as India, firmly subdued.31 As a globally engaged and economically powerful one-​party state, China seeks to challenge the core values of the world’s liberal democracies:  individual liberty, freedom of speech, and rule of law.32 This begins with buttressing the Communist Party’s international image and quelling critique of the Party and China at an international scale. Xi Jinping sees China’s model as worthy of admiration and emulation, a replacement for the instability and decline of Western liberal democracies. In the “community of common destiny” that Xi promotes as his vision of the world, China provides an authoritarian counter to democracy as the guiding Introduction: There Was a Moment 

 

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light for world development. In his 19th National Congress speech, Xi said that China “offers a new option for other countries and nations who want to speed up their development while preserving their independence.”33 Similar to the United States, China imbues an exceptionalism and moral superiority in international affairs that guides its worldview and foreign policy.34 China’s bid for soft power comes mainly through its economic growth and widespread poverty reduction at home, but also its long history as a civilization and rich culture, which Beijing promotes through hundreds of Confucius Institutes and other organizations around the world.35 The sensitivity of the Communist Party to its international image was on full display in early 2020 when the COVID-​19 pandemic grew out of the city of Wuhan in Hubei province and around the world. While later putting some 800  million Chinese under various degrees of lockdown to slow spread of the coronavirus, Chinese authorities initially failed to publicly acknowledge its human-​to-​human transmission, even suppressing early warnings by medical personnel and scientists.36 After the pandemic began inflicting deep and widespread human and economic loss across continents, the Chinese government, foundations, and corporations started donating and selling medical resources and supplies to affected countries, reciprocating what other countries had done for China when the virus first broke out there. But Beijing also launched a global public relations campaign in which outspoken Chinese officials sought to obfuscate China’s initial delay in reporting the virus, pointing to the US military as the potential source.37 As the economic consequences of the pandemic began to bear down on the world, with Europe, the United States, and others initially neglecting its threat and severity, Beijing sought to rewrite its role in an effort to secure both its domestic and international legitimacy as a global power. China also seeks to leverage its engagement with the outside world to advance its economic agenda at home. The Belt and Road, China’s global connectivity initiative, strives to increase its trade and finance in the world, with the aim of helping to transform China’s middle-​income economy into a modern and rich one. Hundreds of billions of dollars for finance to build ports, railways, and digital communications networks from Southeast Asia to Africa provide Chinese companies the opportunity to offshore overcapacity in heavy industries at home and to capture new markets and elevate their positions in global value chains where Chinese industrial and technological standards can take hold. China also wants to develop its state-​owned and private corporations to become global leaders in advanced industries. Launched in 2015, China’s “Made in China 2025” policy aims to innovate China’s manufacturing industry with advanced technologies to produce high-​value goods and services, 12     How

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targeting automotive, aviation, robotics, information technology, and other high-​tech industries. By leveraging access to its large domestic market to gain new technology and expertise from leading multinational corporations, offering large subsidies and favorable formal and informal regulation to improve the market positions of its industries, and engaging in corporate acquisitions overseas, China seeks to enhance the global competitiveness of its corporations to ensure continual growth and modernization at home. Building and demonstrating China’s military power is also essential for Beijing. Xi wants to build world-​class armed forces that are “ready for the fight, capable of combat, and sure to win.”38 China first seeks hegemony in East Asia, and to reclaim what it sees as lost territory in the South and East China Seas, bringing other regional powers to heel, and pushing the United States out of the western Pacific. Then China’s leaders also seek to elevate Chinese military power to project its might across the globe. Warfare is not necessarily required to achieve these regional and global aims. The threat of economic and military force alone can be compelling for China’s neighbors in Southeast Asia to far-​off countries in Latin America to ensure they do not cross China’s red lines. Similar to the use of sanctions by the United States and big powers before it, China weaponizes its trade, investment, and finance to punish and coerce countries, multinational corporations, universities, and non-​governmental organizations that fail to respect its foreign and defense policy. *** Beyond drawing from the well-​researched and insightful work of Chinese and international relations scholars outlining China’s global ambitions, this book’s focus is not on what China wants. Neither is it preoccupied with how the United States can compete with its new rival. While there are lessons for both Chinese and American officials and businesspeople in the pages ahead, I am more interested in understanding the views and experiences of the rest of the world toward China’s rise and what might lie ahead. To discern China’s power in the world, and avoid both underestimating and exaggerating its influence, it is necessary to take on a grounded understanding of how China fits into domestic politics, markets, and societies around the world. My travels and research began in South Sudan, an East African country where some of China’s earliest and largest overseas oil investments have been threatened by political instability and civil war. I was interested in examining whether, by getting involved in peace talks after decades of promoting non-​ interference in the affairs of foreign countries, Beijing could protect its people far from home and ensure that Chinese investments were safe and productive. Introduction: There Was a Moment 

 

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Closer to its borders in Pakistan and Afghanistan, China is also engaging with its own approach to peacemaking that looks to draw on its experiences with domestic security and counter-​terrorism at home and preparing for the possibility of future military intervention near and far from home to protect its interests. I then headed to Argentina in South America, where in late 2015 a new president had taken power and called for the suspension and possible cancellation of large-​scale, multibillion-​dollar Chinese infrastructure projects. How did China react to democratic change that threatened its economic interests? Do domestic pressures from the private sector, labor unions, environmentalists, and others in Argentina reflect the broader challenges China is facing in its ambitious Belt and Road Initiative across Africa and Asia? Can China’s developmental model find root in these regions while simultaneously advancing its economic and strategic objectives? Next I  traveled around Western Europe, from big economies like Germany, China’s largest European trading partner, to smaller ones such as Denmark and Portugal, which one assumes are more prone to China’s outsized influence. Europe’s liberal democracies serve as venues for Beijing to normalize its political values overseas, by ensuring even the world’s vibrant democracies respect its expanding political red lines, particularly on Taiwan, Tibet, Xinjiang, and Hong Kong, and maintain an acritical outlook toward China’s rise, or else face the threat of losing access to the Chinese marketplace. While China’s economy continues to impose restrictions and controls on foreign companies, for much of the past decade, Europe’s advanced economies have offered Chinese state-​owned and private corporations access to new technologies and expertise for China’s modernization at home. Can Beijing expect to maintain limits to foreign trade and investment in its home market while having much greater access to others? Is Europe’s economic dependency on China so significant that Beijing can influence European foreign and defense policy and bend democratic norms and values? Finally, I  traveled to Japan, a major trading partner to China, but one with a long history of hostile relations. In seeking regional hegemony as a major step in its global rise as a superpower, China is determined to retake what it sees as lost territory in the South and East China Seas through economic coercion and the threat of force. After building deep trade ties with its Asian neighbors, how would China’s use of informal sanctions and consumer boycotts impact these relationships? Can Japan, India, and other Asian countries push back against this assertiveness? What I  found was that despite clear demonstrations of its new power around the world, China’s current strong-​arm approach to foreign relations is 14     How

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struggling to overcome a host of challenges. Despite China’s new peacemaking efforts, Chinese investments are under attack and languish in conflicts in Africa and South Asia. Critical politicians and environmentalists are upending China’s plans to build new roads, railways, and digital communication networks from Southeast Asia to Latin America. European democracies are pushing back against China’s political interference and economic protectionism, and Japan, India, and many of China’s Asian neighbors are mobilizing their economic and military power to resist its hegemonic ambitions. The global pushback against China’s assertiveness is a consequence of both Beijing’s strategic missteps and overreach. China’s leaders are ill prepared to accept economic and political compromise with the wider world, often viewing it through their own domestic authoritarian lens. They repel rather than attract potential partners to help fulfill strategic goals. As a result, China will struggle to protect its people and investments in overseas conflicts, legitimize its developmental model, fully advance the Belt and Road as a global connectivity plan, readily acquire foreign companies for new technology and expertise to leverage its position in advanced industries in the global economy, and establish military hegemony in Asia. None of this implies that China will become insignificant to the global economy and world affairs or that its actions at home and abroad should not be taken seriously by others. Neither does it mean that China’s assertiveness is unprecedented among global powers in modern history and that all its ambitions in the world should somehow be contained by others. Rather it is how China’s leaders have chosen to exercise their country’s elevated economic and military power which largely is eliciting pushback. Even if China’s economy soldiers on and avoids crisis in the future, this does not guarantee it will gain new, significant influence if leaders in New Delhi, Tokyo, Berlin, and other foreign capitals, see its behavior as jeopardizing their own interests and values. Without reform and adoption of a genuine openness to compromise and cooperation, China’s predatory economic agenda, headstrong diplomacy, and military expansion undermines rather than advances its standing in the world. China’s leaders maintain a long-​standing hierarchical worldview. It is no wonder that maps showing plans for Xi’s signature foreign policy, the Belt and Road, only include Eurasia, and visually leave out the United States and the Western Hemisphere. While there are economic and geostrategic reasons for this geographical focus, it also reinforces the idea that a future with the United States out of the picture is a future with China in command. But this view is mistaken. Xi’s 2017 Davos speech did not represent a changing of the guard in global superpowers. China is currently pressuring the wider world, but is still far from persuading it. Introduction: There Was a Moment 

 

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Chapter 1

Waiting for Peace

“We are suffering from the fighting,” Qian Fengzhang wrote to me in a halting message. “We are staying [safe] in the shelters. We are waiting for peace.” In July 2016, gunfire erupted outside the compound of China’s largest oil company, the China National Petroleum Corporation (CNPC), in South Sudan’s muggy capital, Juba. A director at the Chinese oil giant, Qian and his colleagues took shelter for several days before they could evacuate. The booming artillery, heavy movement of tanks, helicopter gunships overhead, and scores of bodies on the streets were clear signs that South Sudan’s civil war was far from over. The street battle in Juba was between South Sudan’s military, loyal to President Salva Kiir, and opposition forces backing the former vice president Riak Machar. The fighting spelled an end to yet another ceasefire in the conflict, which began in late 2013 when political discord between Kiir and Machar boiled over into violence. Clashes between members of the presidential guard rapidly escalated into a full-​blown civil war, spreading out of the capital and across the country. The conflict was largely along ethnic lines, pitting the majority Dinka of President Kiir against the Nuer of Machar. Like Qian and other Chinese oilmen stationed in Juba, many of the city’s residents were forced to remain in their homes. In an attempt to avoid stray bullets piercing the walls, some spent long hours lying on the ground or crouched together in bathrooms. Many others flooded the compounds of the United Nations peacekeeping mission, joining thousands already living there for protection.1 Throughout the conflict, extrajudicial killings, rape,

 

and torture were employed as weapons against ethnic populations perceived as supporting the opposite side. In the years to follow, close to 400,000 died from the violence and millions were displaced.2 At CNPC’s compound, Chinese oilmen frantically called the local office of Beijing DeWe Security Services, a Chinese private security company that had set up shop in Juba.3 Led by a former veteran of the People’s Liberation Army, DeWe and its local staff evacuated CNPC personnel once the fighting ended, along with several hundred Chinese civilians around the city. At Juba’s international airport, workers from the China Harbor Engineering Company, building a new terminal, locked themselves in steel-​ plated containers 4 surrounded by sandbags until help arrived. China Central Television later broadcasted scenes of relieved Chinese workers reaching the safety of nearby capitals in East Africa. Oilmen and construction workers under fire in a foreign capital, multibillion-​dollar projects in jeopardy: this was not an outcome the Chinese government wanted to see for its overseas investments. And unlike in the past, when Chinese leaders often elected to stay on the sidelines of conflicts abroad, Beijing marshaled a response. At the start of South Sudan’s civil war, China’s special envoy for African affairs, Zhong Jianhua, flew to regionally brokered peace talks in Ethiopia and urged both sides of the conflict to settle their differences without further violence. Such crisis diplomacy seemed a natural reaction for any country. But Zhong’s engagement was a deviation from China’s long-​standing foreign policy of non-​interference in the domestic affairs of foreign countries. Long aggrieved by the harsh intervention of colonial powers in its past, and fearful of foreign interference in its politics, the Communist Party promoted non-​interference in its official foreign policy since the early 1950s. Beijing did not always maintain strict observance. In the 1960s and 1970s, it supported revolutionary movements in Africa and Asia and fought border wars with India, Russia, and Vietnam. But more often than not, China has not become party to overseas conflict or engaged in peacemaking. By the turn of the century, however, circumstances changed faster than the Chinese government could keep pace. After over a decade of economic reform and opening up at home, Chinese state-​owned enterprises began to gradually increase overseas investments in the early 1990s in search of new growth opportunities. It was a slow process at first. Even by 2001, China’s total foreign investment only amounted to $7 billion. But over the next decade, China became one of the world’s largest overseas investors. Annual Chinese foreign investment crossed the $100 billion mark for the first time in 2013. And because when they first invested abroad, Chinese companies, 18     How

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particularly in energy and construction, deliberately sought to avoid heavy competition from their American, European, and Japanese counterparts, they eventually ran into trouble in unstable countries overseas. South Sudan presents an early example of how China responds when its economic interests come under threat overseas. In the new African country, China’s leading national oil company, CNPC, worked to improve its security practices and corporate responsibility; Chinese diplomats engaged in conflict resolution; and Chinese soldiers joined the Blue Helmets of United Nations peacekeeping. But South Sudan is hardly an isolated example of China responding to safeguard its economic interests and nationals in overseas conflicts. To the north in Sudan, Chinese-​run oil fields had been targeted by rebels and local armed groups since the late 1990s. In neighboring Chad, when rebels sped across the country in a caravan of gun-​mounted Land Cruiser pickups to threaten the capital of N’Djamena in 2008, hundreds of Chinese nationals working for CNPC, Huawei, and other corporations were evacuated with the aid of the French military.5 In early 2011, the rapid escalation of conflict in Libya put billions of dollars in Chinese construction ventures in jeopardy. By land, air, and sea, Beijing hastily patched together a rescue effort to extract some 36,000 Chinese nationals. The rescue mission represented the largest overseas evacuation in China’s history, the first time the Chinese navy crossed the Suez Canal to the Mediterranean, and arguably, with some $20 billion in deals at stake, the largest loss of Chinese international projects due to the outbreak of civil war.6 When conflict broke out in Yemen in 2015, the Chinese navy, learning from the Libya experience, played an instrumental role in rescuing hundreds of its citizens and foreign nationals. Not only do China’s political leadership and top corporate executives need to come to grips with how to react when Chinese interests come under threat overseas, but they also face the difficult question of how to put an end to long-​standing conflicts to ensure the sustainability and expansion of Chinese investments abroad. Driven by the self-​interest of ensuring that Chinese investments and workers are safe overseas, and the political legitimacy that comes along with this in the eyes of the Chinese population, Beijing aspires to be a global peacemaker. In a 2017 speech mapping out China’s diplomatic agenda, Foreign Minister Wang Yi said that China was “ready to take part in the peaceful settlement of hotspot issues, and actively explore a Chinese approach of constructive engagement.”7 This was an answer to international calls for China to play a larger role in solving some of the world’s most intractable conflicts. After watching the United States stumble through long and costly foreign military interventions in Afghanistan and Iraq, Beijing Waiting for Peace 

 

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remains eager to contrast its own international engagement, and demonstrate a positive impact on global peace and security. A growing number of crises facing Chinese interests have pushed Beijing to discard its commitment to staying out of the domestic affairs of foreign countries.8 But can China succeed in protecting its economic interests in crises overseas and help settle protracted conflicts? *** The car shook as we drove through a deep rut on the rust-​colored dirt lane. “This is a new country,” the South Sudanese driver said with a halfhearted smile, excusing the dilapidated roads of South Sudan’s capital. Once a provincial capital and garrison town when it was still part of Sudan, Juba underwent a transformation in the lead-​up to South Sudan’s independence in 2011. South Sudanese from across the region and around the world flocked home in search of new opportunities. Traffic clogged the streets. Walled residential compounds, offices, and stores sprung up across what were once overgrown fields, and hotels and restaurants replaced tent camps for out-​of-​town guests on the bank of the White Nile. The backwater became a boomtown. There was a new vibrant energy and hope for the future in Juba, but poverty still gripped much of the capital. Many live in traditional tukuls, grass-​ thatched mud huts, and shantytowns of flimsy plastic tents. But Juba still stands out from the dreary state of much of South Sudan, where well over half the population of twelve million live in poverty with few health and education services to speak of. For much of the twentieth century, first under the rule of a British-​Egyptian condominium, then by independent Sudan’s leaders in the northern capital of Khartoum, the region that is now South Sudan was deliberately cut off from development opportunities and exploited for its resources. Decades of civil war grew out of the resulting grievances from its treatment by outsiders. Sudan’s conflict was one of Africa’s longest and deadliest. It led to two million deaths and displaced millions more until its end in 2005. After a six-​year interim period and referendum, the southern Sudanese rebel group, the Sudan People’s Liberation Army, fulfilled the long-​ coveted dream of the southern Sudanese and won independence, spitting in two what was then Africa’s largest country. Unlike most countries emerging from conflict, South Sudan had considerable wealth to kick-​start the aspirations of its rebels-​turned-​rulers. It took three-​quarters of the once united Sudan’s valuable oil resources with its independence. Yet this was hardly a blessing. Instead South Sudan suffers from the resource curse, a phenomenon in which developing countries with lucrative 20     How

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natural resources paradoxically experience volatile economic growth, weak governance, and high levels of corruption. In 2012, corruption was so out of hand that President Kiir publicly admitted senior officials had stolen as much as $4 billion in government funds. “We fought for freedom, justice and equality,” Kiir wrote, “yet, once we got to power, we forgot what we fought for and began to enrich ourselves at the expense of our people.”9 Despite gross corruption and economic mismanagement, South Sudan still received ample support from the United States and international donors. Washington helped usher South Sudan toward independence and offered billions in aid to build a development-​orientated government. And if South Sudan needed another sign of good fortune, not only did it have backing from the reigning superpower, but also its main contender. Oil tied China to the new country. Before its breakup, Sudan provided 5.5 percent of China’s average annual oil imports from 1999 to 2011, often representing its sixth largest supplier. But Sudan was valued by China’s oil industry mainly as an investment destination. Sudan’s civil war pushed out much of the competition in the 1990s and early 2000s, and China’s oil giant, CNPC, came to dominate the industry. Sudan made up 40  percent of the company’s annual overseas oil production between 2003 and 2007, and CNPC built oil pipelines, roads, and even a major refinery outside Khartoum.10 Top Chinese government and Communist Party officials, including former president Hu Jintao, feted the company’s activities, and dubbed its refinery China’s “Pearl on the African Continent.” But a new political landscape opened up after South Sudan’s independence. Chinese oilmen needed to win over the new government and its people. Before he was taking cover during fighting in South Sudan’s capital in July 2016, I met the CNPC country director, Qian Fengzhang, at CNPC’s offices in Juba. At the time, just months before the civil war started, Qing was on the frontline of his company’s new charm offensive. He told me that when he arrived in South Sudan the locals began to call him “Juba boy,” a moniker recognizing his young appearance. But Qian is hardly a novice on the oil patch, with close to two decades of experience overseas from Central Asia to Africa. His office was in an off-​white, prefabricated unit on a compound shared with the Chinese embassy, where the company kept in close contact with Chinese diplomats. As we settled into two small sofa chairs, Qian said that he first arrived in South Sudan three years before its independence. The longevity of his posting is a rarity in the international oil business. While his Western peers rotate in and out of overseas appointments every couple of years, he stays put. He has a special purpose in South Sudan, tasked with mending the mistrust of South Waiting for Peace 

 

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Sudan’s government and local communities toward the Chinese oil company. “Production is our priority,” Qian told me, “but we want to get feedback on our work from different parties so we can learn to minimize risk.” During the civil war in Sudan, southern Sudanese rebels regarded CNPC as an enemy of war. As Sudan’s most prominent investor, the Chinese company and its partners generated the revenues that underpinned the Sudanese government’s ability to wage war. Billions in petrodollars empowered the scorched-​earth tactics Sudan’s army employed in killing and displacing southern Sudanese communities to make room for oil operations.11 Similar to other companies, CNPC feigned ignorance of the violence unfolding around it. “We do our own business,” a CNPC spokesman said at the time, “nothing else.”12 This was echoed by Beijing, which directly supplied arms to the Sudanese military and protected the Sudanese government from punitive action from its veto-​wielding, permanent seat on the UN Security Council. “We try to separate politics from business,” China’s deputy foreign minister Zhou Wenzhong said, asserting Beijing’s non-​interference foreign policy line.13 In the years following Sudan’s civil war, much of the violence ended, but CNPC developed a reputation for poor environmental and social standards. Much like their European and American counterparts before them, Chinese companies have been chastised for poor business practices across Africa.14 And similar to the reputation of other foreign workers in Africa, the Chinese are notorious for living in enclaves, working long hours during the day, and holing up in walled compounds away from local communities at night. But Qian’s work in South Sudan has the potential to break these stereotypes. Engaging and talkative in nearly fluent English, he was learning to open up to outsiders since his arrival. Rather than avoid social interactions and ignore environmental laws, Qian pushed his company to be transparent and responsible. In 2012, CNPC established a partnership with the British non-​governmental organization Saferworld, a rare engagement for a large, state-​owned Chinese company. The partnership’s aim was to open up dialogue with South Sudanese civil society and local communities in oil areas and design new environmental and social policies.15 “I tell my South Sudanese friends,” Qian informed me, “when you encounter a problem, be patient and we will try to explain. We will not hide any info from you.” Self-​interest drives this change of approach. Qian hopes that building better relations with a broader set of groups in South Sudan will be good for business, ensuring the company does not get blindsided by intrusive policy decisions from South Sudan’s government, and avoid costly protests, theft, kidnappings, and attacks against its staff and facilities. The company had 22     How

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already taken steps to improve its security after a kidnapping incident in Sudan in October 2008 resulted in the deaths of five CNPC workers.16 Now it wants to prevent such attacks from occurring in the future. But it was difficult for many South Sudanese to turn the page on its history with the Chinese oil company. Before his death in a helicopter accident in 2010, John Garang, the rebel leader and founding father of South Sudan, saw Chinese oilmen as “legitimate targets” during the civil war.17 A decade after the conflict ended, with a picture of Garang and South Sudan’s president Salva Kiir on her desk, Elizabeth Bol, the deputy petroleum and mining minister, told me that tensions with the Chinese oil company were still fresh in her mind. “During the civil war, CNPC just watched at the expense of the Southern Sudanese. They did not interfere.” At South Sudan’s parliament, Henry Odwar, then chairperson for the energy committee, echoed this sentiment to me. “How can China call it non-​interference when people are being killed?” From the South Sudanese perspective, China was hardly neutral in the conflict. As South Sudanese were killed for the sake of oil development, non-​interference in itself was viewed as a crime. It was hard to imagine how Qian would succeed in warming relations between his company and the South Sudanese, to move on from the past, open up, and make peace. A year after visiting Qian in Juba, I joined a small group of South Sudanese and international civil society representatives in Beijing meeting face-​to-​face with CNPC executives. The tall glass façades, marble foyers, and modern conference halls of CNPC’s headquarters stood in sharp contrast to the company’s makeshift offices in Juba. At the meeting, the South Sudanese civil society leaders traced out how the industry’s environmental harm, polluting local water sources, resulted in social unrest when people and cattle became sick, and then political problems for companies when communities blocked roads in protest. “You need to be very mindful of local politics,” the Reverend James Koung Ninrew said to Chinese oil managers across the table. “How the companies and the local people come together has been missing for so long.” But the criticism drew a defensive response. “I have stayed in Sudan for twelve years, and I  really think Sudan, including South Sudan, is my second home,” said Jiang Xingwei, CNPC chief representative in the Sudans. “But when I  first came to South Sudan, the first impression from the top level, to the communities, to even the vendor on the street, was that they see the Chinese as the enemy,” she said. “I think we trust South Sudanese more than you trust the Chinese.” Despite growing evidence of environment negligence,18 Chinese executives argued there was no pollution in oil areas, that the South Sudan government was uncooperative in advancing the Waiting for Peace 

 

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company’s community initiatives, and that the activists simply had too high expectations. From his vantage point, Qian Fengzhang saw the need for reform, but his superiors in Beijing had different priorities. The meeting in Beijing alone was an acknowledgment of changing discourse at the Chinese oil company. But whether this engagement would change the company’s behavior was doubtful. No specific commitments were made to the visiting South Sudanese. A senior company manager told me afterward that any new environmental and social guidelines required approval from top management, and in any case, would only move forward if the South Sudanese government was also on board. It was also a question of money. An international oil trader working in South Sudan was pessimistic that CNPC would invest the time and resources in reforming its practices in the future. Production from South Sudan’s oil fields was in decline and what was left was poor-​quality crude that fetched low prices on international markets. “South Sudan is just such small beer. You can spend 16 hours a day working on a million-​dollar deal or you can spend 16 hours a day working on a billion-​dollar deal. Do you really want to bang your head for those last percentages in a basket-​case country?” American and European companies certainly do not always perform to high international standards in Africa. But it is hard to imagine China raising the corporate responsibility bar.19 Reform of China’s long-​running, growth-​at-​all-​costs approach to its economy is still a work-​in-​progress. New policies and regulations for Chinese companies to improve conduct are in place, but enforcement of these measures, particularly overseas, remains weak. It is difficult for Chinese state-​owned companies to overcome well-​ ingrained mindsets and practices of operating at home. In China, corporate transparency, accountability, and responsiveness to social and environmental issues have largely been neglected for decades, and the sharing of information and dialogue between the state and society remains limited.20 Reacting to and negotiating with civil society and media are still not in the repertoire of many Chinese executives and senior managers. New social and environmental initiatives tend to be episodic and founded within CNPC subsidiaries abroad, such as Qian’s work in South Sudan, rather than advanced through the headquarters in Beijing, and thus often have a short life span.21 Chinese companies typically demonstrate good behavior overseas when local governments and civil society have the political will and regulatory strength to hold industries accountable.22 South Sudan’s political leaders had pushed forward new social and environmental policies after independence. But implementation was disturbed by war and regional power 24     How

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struggles over sharing government oil revenues. This left local concerns over oil development underprioritized. In early 2020, reports of water and soil contamination from toxic chemicals used in oil operations causing severe health problems for local populations, including birth defects and miscarriages, confirmed the worst fears of South Sudan’s civil society activists.23 Allowed to go unaddressed, animosities between communities and oil companies are likely to continue well into the future. If its peacetime troubles were not enough to keep China’s largest oil company occupied in South Sudan, wartime threats were far from over in the new country. The outbreak of South Sudan’s civil war in late 2013 tore Qian’s attention away from relationship building to crisis management. But he was not alone in his efforts to keep Chinese oilmen, and billions of dollars in assets, out of harm’s way. *** It was Zhong Jianhua’s job to make sure Chinese oilmen stayed safe. The veteran diplomat, a former ambassador to South Africa, was appointed as China’s special representative for African affairs in 2012. While his remit covered the entire continent, Zhong’s time and attention were overwhelmingly captured by events stemming from South Sudan’s civil war. Zhong’s job was twofold: protect Chinese nationals and investments and help achieve a lasting peace. And to do it, Beijing permitted its envoy to enter largely uncharted territory. In engaging directly in peace talks and meeting formally with both warring sides, Zhong knew the novelty and gravity of his position. “This is a challenge for China. This is something new for us. It is a new chapter for Chinese foreign affairs.”24 He was also straightforward about taking China a step further away from its long-​standing non-​interference policy. “When you talk to a rebel force that means stepping into internal affairs.”25 Early on, Zhong was confident that China could play a unique and useful role in ending South Sudan’s civil war compared to the United States and Europe. “African nations like South Sudan view China and its mediation efforts in a completely different light, given that China has never invaded African countries, nor hurt the self-​esteem of African people.”26 China’s engagement was welcomed by African, American, and European diplomats. Kenya’s president, Uhuru Kenyatta, commented that China “possesses substantial political, diplomatic and financial assets, which, if fully applied, would be a game-​changer in the region’s peace and security.”27 Over time, however, China’s special envoy discovered he had less control over the fate of Chinese oil investments than he hoped. Waiting for Peace 

 

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Zhong’s challenges were not all unlike those of China’s first special envoy to Africa. His predecessor, Liu Guijin, took up the post in May 2007. But Liu’s tenure was also dominated by Sudan, where another civil war, in the western region of Darfur, brought an international spotlight on China’s relationship with the Sudanese government.28 At the time, China was preparing for the 2008 Summer Olympic Games, a global coming-​ out party to show the world its fast-​paced modernization.29 Liu was tasked with deflecting accusations linking China’s oil investments and political support to Sudan with genocide and atrocities in Darfur. The criticism stuck and threatened to tarnish the image of the Beijing Olympics. With its national interests at stake, China shelved its non-​interference policy, and President Hu Jintao pressured his Sudanese counterpart Omar al-​ Bashir to open the way for a United Nations peacekeeping mission.30 It was the first time that China actively pushed a sovereign government to go against its expressed position and political will, and accept outside intervention in its territory.31 Not long after, it was newly independent South Sudan’s turn to show the eroding utility of Beijing’s long-​standing non-​interference policy. South Sudan had won its political freedom in July 2011, but its economic future still relied on oil pipelines transporting its oil through Sudan and on to international markets. The fragility of this bond, however, became clear after a dispute erupted over the transit price South Sudan should pay to move each barrel of oil through Sudan.32 In response to Sudan’s unilaterally confiscating oil as payment in kind, South Sudan announced it was preparing to shut down its oil industry altogether. This was a shocking move, economic suicide for the new country, as oil was its main source of revenue.33 Chinese officials were utterly baffled. Alongside other international and regional negotiators, they urged the two Sudans not to go to war, and for South Sudan to continue its oil production.34 CNPC and its corporate partners even offered to pay Sudan a temporary compensation package if it allowed South Sudanese oil to flow without interference.35 But China’s new crisis diplomacy fell short. Despite international and regional pressure, Sudan and South Sudan did not budge from their positions. Beijing could not protect the company’s most prized international asset. At Chinese-​run oil fields, South Sudanese soldiers burst into control rooms and told Chinese technicians to shut down production. When the Chinese protested, an international oil consultant related to me, the soldiers raised their weapons. “We’ll come back in thirty minutes,” they said. “If you’re not finished, you will die.” The oil fields were shut down soon after. For CNPC, it was a devastating loss of income. Sudan and South Sudan represented a 26     How

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quarter of its international production in 2011. In 2012, for the first time in its history, the Chinese oil company’s international revenues fell.36 It took over a year for Sudan and South Sudan to make amends and end the oil shutdown. Its economic fallout fueled the political discord that later gave rise to the next crisis, South Sudan’s civil war.37 The long absence of oil revenues fueled political divisions between South Sudan’s top leadership, and in December 2013, conflict erupted in the capital. South Sudan’s oil industry was hit hard by the civil war. Opposition forces succeeded in taking control and closing off several large oil fields in an effort to cut off the government’s main revenue stream. The civil war brought Chinese diplomats back to regional mediation alongside their African, American, and European counterparts. China monitored developments and offered financial assistance for the peace talks, marking a gradual increase in its involvement in the multilateral effort. But Beijing also deepened its bilateral presence. Zhong Jianhua met directly with and told the warring factions that “in the short run, you must ask the troops to safeguard our oil fields. In the long run, you have to stop fighting and implement the ceasefire.”38 But Zhong denied that it was oil that motivated China’s crisis diplomacy. He rightly noted that Sudan and South Sudan oil exports only amounted to 1 to 2 percent of China’s total import needs in 2016.39 Instead, Zhong argued that it was the economic importance of oil for South Sudan’s eventual post-​conflict recovery that warranted the industry’s protection.40 His boss, foreign minister Wang Yi, doubled down on the benign position. China was mediating “not for its own interests,” Wang said, “but acting on the responsibilities and obligations of a responsible world power”; that China was an “active promoter of peace.”41 Despite the words of China’s top diplomats, their actions told another story. One of China’s largest international oil investments—​billions of dollars in assets—​was in jeopardy from South Sudan’s civil war. If the fighting overran the oil industry, China’s global reputation and the Communist Party’s legitimacy at home would suffer. In January 2015, Beijing arranged a special consultation session between the South Sudanese government and opposition forces in Sudan’s capital, Khartoum. It announced that these talks were part of regional mediation efforts, but had particular goals of its own in mind. At the meeting, Chinese officials implored opposition forces not to attack the remaining operating oil fields in Upper Nile state and offered financial inducements as motivation.42 But China could not dictate the direction of events on the ground. Months later, fighting grew around the Upper Nile oil fields. But it was not opposition forces that targeted Chinese-​run oil fields. Rather, it was a breakaway Waiting for Peace 

 

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faction of South Sudan’s armed forces. The militia of Johnson Olonyi, from the minority Shilluk ethnic group, allied with the South Sudanese government at the outset of the civil war. He and his men served as a protection buffer against attacks on the country’s largest oil fields at Palogue. But the fluid and volatile political and security environment of South Sudan shifted allegiances over time. Many of the militias underneath the South Sudan army and the opposition are in fact primarily focused on maintaining control and security within their own immediate territory, occasionally changing loyalties at the national level to advance their local interests.43 Olonyi switched sides in the conflict after a dispute erupted with a nearby pro-​government ethnic group. His subsequent march to the heart of South Sudan’s economy at the Palogue oil fields forced hundreds of Chinese and foreign oil workers to evacuate. The change in events for China fit well with a popular Chinese saying: “Heaven is high and the emperor is far away.” Just as powerful central government ministers in Beijing struggle to direct the actions of provincial officials, who know the immediate environment better, China is unable to influence the ebbs and flows of South Sudan’s conflict. Rather than China controlling politics inside South Sudan, China’s actions were conditioned by South Sudanese politics.44 South Sudan’s army later regrouped and pushed back Olonyi and his fighters.45 But the episode underlined the multiple challenges China faced in navigating South Sudan’s conflict. Ironically enough, the advance of Olonyi’s forces was made possible thanks to twelve Chinese-​made machine-​gun-​ mounted amphibious vehicles, supplied to his forces by the South Sudan government.46 Changing allegiances within South Sudan’s opposing forces could suddenly threaten Chinese nationals and economic interests, and financial and military support could one day be the root of considerable blowback, including the repeated occurrences of Chinese-​made weapons threatening Chinese-​run oil fields.47 In Sudan’s Darfur conflict, Chinese arms had also found their way into rebel hands. “All the weapons we took from the soldiers were Chinese. The Sudan government is using the oil money it gets from China to buy weapons to kill our people,” a Darfuri rebel said.48 His group later targeted Chinese-​run oil fields in a series of attacks. China’s engagement in peacemaking in South Sudan and other conflicts, paradoxically, grew alongside its sharp rise as one of the world’s leading arms sellers. In Africa, the level of Chinese arms sales by the China North Industries Group Corporation, better known as Norinco, the China Poly Group Corporation, and others, trails only Russia.49 Everything from military aircraft, drones, tanks, and even surveillance technology is on offer to African governments. But China’s mark in Africa’s arms industry is mainly 28     How

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in small arms and light weapons, like the Chinese Type 56, a near copy of the Russian Kalashnikov AK47, which proliferates in conflicts as stocks of old Soviet weapons from Eastern Europe dry up. Shortly after South Sudan’s independence, Norinco started selling weapons to the new country. Two large shipments were dispatched in May 2014, eight months after the outbreak of civil war. The transaction was legal. A United Nations arms embargo was not put in place on South Sudan until 2018. But knowing the moral grounds of supplying arms to a government accused of ethnic killings, in June 2014, China’s ambassador in Juba, Ma Qiang, said that China had cut off negotiation on a new arms deal.50 When news broke that the South Sudanese government had bought nearly $40 million in arms from China, however, Ma was pushed to defend his previous position.51 “When the conflict broke out, that shipment was already on the way,” Ma pleaded. “We could have stopped it if we’d known. But most of the stuff was logistics equipment, not artillery and tanks. Business is business, and it’s separate from diplomacy.”52 Either the Chinese ambassador was trying to deliberately mislead, or he demonstrated a disconnect between the Chinese foreign ministry and the Chinese state-​owned arms seller, Norinco. The company understood its shipments were entering an active war zone. In the transfer documents to South Sudan’s defense ministry sent weeks after the conflict began, company vice president Zhang Yi penned, “Wish safety to all of you!”53 In contrast to what Ma told the international press, Norinco’s shipments included much more than logistical equipment. Hundreds of machine guns and pistols, over 2,000 grenade launchers, nearly 10,000 assault rifles, and 2 million rounds of ammunition were sent from China and made up a significant proportion of the South Sudan army’s ammunition in the years to follow.54 Ma’s utterance of China’s trope of “business to business” demonstrated that Chinese diplomats were still not connecting the dots on how the commercial engagements of its companies upset politics and security. China did stop making official arms sales to South Sudan after the Norinco controversy. But Chinese, East European, and other foreign arms were still entering the country through porous borders in East Africa.55 What is evident from China’s engagement in South Sudan is that Chinese actors are uncoordinated and often frustrate one another’s interests when filtered through local politics. Non-​interference seems to be rolled out by Beijing when it suits its interests. But when China must act, the alternative of intervening has been a mess. China’s foreign ministry is hardly pleased in having to find ways to protect Chinese companies venturing into war zones. Zhong Jianhua privately complained that CNPC was arrogant and reckless Waiting for Peace 

 

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in investing in Sudan and South Sudan in the first place. As for Norinco, much like American and other foreign suppliers of arms in conflicts overseas, Chinese arms fell into the hands of multiple sides of the conflict. Rather than Beijing executing a well-​coordinated plan, an assortment of Chinese actors pursued their own narrow goals, upsetting China’s stated foreign policy to demonstrate its role as a global peacemaker and provide a stable environment for its economic interests to grow. Neither does China coordinate well with other foreign powers. In South Sudan, the Chinese continued to resist showing a public, common front alongside American and European interlocutors. Beijing avoided joint statements and rejected Western proposals to place strong sanctions on South Sudanese leaders. Mediators were keen on the Chinese side’s becoming deeply involved, but its overall engagement was “sparing and inconsistent by comparison,” spiking when opposition forces threatened Chinese-​run oil fields.56 European and African diplomats privately echoed this concern.57 The inconsistency allowed warring sides to manipulate their international mediators, which together could only muster watered-​down agreements.58 Zhong Jianhua asserted that China was a newcomer to multilateral peace talks, and it would take decades for its knowledge to match that of other foreign powers.59 But by prioritizing its narrow interests over long-​term peace in overseas conflicts, Beijing was actually following a well-​traveled road of foreign powers. The United States and European countries, in response to political pressure constituencies at home, provided assistance to the southern Sudanese rebels during the 1990s and early 2000s despite the group’s human rights abuses and corrupt practices. There have been efforts to improve cooperation between China and the United States. In 2014, the Chinese special envoy joined his American counterpart and Ethiopia’s former foreign minister Seyoum Mesfin to find common ground.60 Through pursuing common goals on preventing disease, combating terrorism, and supporting peacekeeping in Africa, the envoys hoped to avoid a future of “zero-​sum competition” between China and the United States on the continent, to ward off “mistrust, military rivalry, commercial competition and different approaches to governance.”61 But similar to Qian Fengzhang’s approach to corporate responsibility, while the frontline diplomats saw the potential gains in developing closer cooperation between their countries, political winds in their respective capitals were headed in another direction. Even before Donald Trump entered the White House, his transition team was weary of China’s activities in Africa, asking the State Department, “Are we losing out to the Chinese?”62 Later Trump’s Africa strategy, “Prosper Africa,” focused on countering 30     How

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China and Russia’s “corrupt” and “predatory” influence on the continent.63 But the Trump administration’s criticism, while crass in its deployment, was formalizing growing anxiety in American politics on China’s role in Africa. In 2011, Hillary Clinton, then serving as US secretary of state, said that America did not want to see “new colonialism in Africa,” that China’s approach was “to come in, take out natural resources, pay off leaders, and leave.”64 Larger geopolitical differences and strategic competition between China and the United States continue to hold back significant international collaboration, even when mutual interest is plainly present. Even China’s international engagement in anti-​piracy efforts in the Gulf of Aden, with its relatively straightforward common interests, was done largely in isolation from other contributing militaries. China did collaborate with the United States and European countries, but it still prefers unilateral escort missions to multilateral ones that place it within Western rules and procedures.65 Beijing’s focus later shifted to building power projection capabilities of its blue-​water navy in the region.66 Through the diligent work of Zhong Jianhua, Beijing wanted to win global recognition as a responsible stakeholder working toward building peace in one of the world’s deadliest conflicts. But these efforts were undercut by an overriding preoccupation with advancing its own narrow interests before working with others to help secure peace. In the process, China’s once coveted international oil investments in South Sudan became mired in repeated crises. Swept up by local politics and conflict, Beijing’s new approach to peacemaking failed both to protect its investments on the ground and to demonstrate any noteworthy success in helping to end the conflict. *** When fighting broke out in Juba in July 2016, China’s oilmen were not the only Chinese who found themselves in trouble. Wearing the blue helmets of the United Nations Mission in South Sudan, a battalion of 700 Chinese peacekeepers, hailing from a People’s Liberation Army brigade in Shandong province, was serving in Juba alongside Chinese medical and engineering peacekeepers. Southwest of the city center, they were tasked with protecting the UN House base and adjacent camps for internally displaced South Sudanese civilians. It was the first overseas mission for most of the Chinese peacekeeping troops, who arrived in South Sudan in early 2015. When gun battles erupted between government soldiers and opposition fighters a year

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and a half later, they found themselves caught in some of the most intense fighting the city witnessed. Guarding the entrance to the UN House base, Chinese peacekeepers had to abandon their poorly protected watchtowers and take cover below. Because some opposition forces secretly lived within the displaced persons camp, Chinese peacekeepers were caught in the middle between warring sides. “Militia soldiers were shooting at government troops and approaching our location simultaneously,” said Chinese major Zhang Yong.67 Outgunned and outmanned by both the government and opposition, there was little the peacekeepers could do. As the fighting escalated, a rocket-​propelled grenade struck a Chinese armored personnel carrier.68 Six Chinese peacekeepers were injured in the explosion. And in the chaotic scene that followed, Chinese peacekeepers were seen treating the wounded and yelling frantic orders at one another.69 Whether it was a deliberate attack or an unfortunate crossfire, two Chinese peacekeepers were left seriously wounded.70 The first, Corporal Li Lei, had the most critical injuries, with head and chest wounds requiring immediate assistance. The medical clinic on site at the UN House, however, had neither a surgical team nor facilities to make the blood transfusions necessary. Within a few hours, Li died from his wounds. The other peacekeeper, Yang Shupeng, was in relatively better condition, but still needed to be evacuated to another UN base 15 kilometers away in central Juba. Unfortunately for Yang, no one from the United Nations was willing to drive through a city at war. Chinese officials in Beijing made a direct plea to the South Sudan government to send a military escort. China was South Sudan’s largest trading partner and investor, and Beijing was now seeking to leverage its economic weight to save one of its own. But it was not until the evening of the day after the attack that the South Sudanese army arrived. By that time, Yang had succumbed to his wounds. Chinese peacekeepers suffered two preventable deaths. South Sudan was not the only place in the world where Chinese peacekeepers had died in combat. Just weeks earlier, a Chinese peacekeeper serving in the UN mission in Mali was killed by insurgents in a rocket attack. Together, the three deaths represented the first overseas combat casualties suffered by China since its border war with Vietnam in 1979. Back in South Sudan, the fighting outside the UN House base had not yet ended, but the deaths demoralized the remaining Chinese peacekeepers, who abandoned their posts. “You can do all the planning and training in the world,” one United Nations Mission in South Sudan official said. “But you’re not going to get a peacekeeper to stay in the tower if he has seen his buddy bleed to death.”71 32     How

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There were consequences for the peacekeepers’ inaction. South Sudanese civilians faced abuse, rape, and looting from soldiers within eyesight of the UN House. The day after the Chinese peacekeepers were attacked, a distress call was also made from a privately run hotel, the Terrain, frequented by foreign humanitarian aid workers. A large group of soldiers were robbing the hotel, and threatening foreigners and South Sudanese residing there. While peacekeepers could have reached the Terrain in minutes, both the Chinese and Ethiopian forces refused to deploy.72 For hours, the soldiers assaulted and raped the guests, executing a local journalist before leaving. The inaction of Chinese and other peacekeepers in Juba highlighted a common problem facing the United Nations. In Sudan’s Darfur conflict and others around the world, peacekeepers had a mixed track record of protecting civilians.73 These incidents prompted Scott Gration, US special envoy to Sudan under President Barack Obama, to chide UN commanders to do more. “This is why God gave you bullets,” he reportedly said. “Use them.”74 Ellen Margrethe Løj, a former Danish diplomat, was head of the UN peacekeeping mission in South Sudan. I met her less than a year after the July 2016 fighting. She knows better than most what UN peacekeeping is capable of, and where it still faces significant challenges. Shortly after first arriving in South Sudan, Løj visited the camps of the various contributing countries and was struck by the effectiveness of the Chinese. “I visited the Ethiopian camp, the Nepalese camp, and the Chinese camp,” she said, “and I tell you the difference was like night and day.” She found the Ethiopians were living in old tents, arriving with very little, and in need of the United Nations to establish their base. The Nepalese had standard facilities, but the Chinese camp was well organized and well equipped. “They came with their own containers packed like Lego bricks. They opened up and there was everything to get set up inside,” she told me. “The Chinese consciously decided to invest and make sure their people had good facilities. It was a prestige thing for them.” Løj was witness to the sharp rise in China’s engagement in UN peacekeeping. For decades, Beijing had shunned involvement. It regarded peacekeeping as a Western tool of intervention in weaker, third-​world countries. It was not until the early 1990s that China became involved in peacekeeping, albeit still not deploying combat troops, but sending so-​called enabler forces: the engineers, logisticians, and medical staff that kept peacekeeping missions running. It was not until 2012 that China sent its first combat unit to South Sudan to protect Chinese peacekeeping engineers already serving in the northwestern town of Wau.75 The People’s Liberation Army division from which the troops in South

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Sudan hailed had not been deployed since it was sent to Beijing to crack down on protests at Tiananmen Square in 1989.76 The following year, the arrival of 400 Chinese infantry troops to Mali, where a UN mission was tasked with pushing back insurgents and Islamic extremists, signified China’s new willingness to engage in peacekeeping. Among the five permanent members of the UN Security Council, China contributed by far the largest number, at over 2,500. In a September 2015 speech, President Xi pledged to establish an 8,000-​strong standby peacekeeping force to meet UN needs in the future. China also became the second largest financial contributor to UN peacekeeping after surpassing Japan in 2016, but still well behind the United States. China’s commitment is a striking contrast to decades of rejecting peacekeeping as a tool of intervention. Beijing does not shy away from publicizing its change of approach. Chinese leaders see peacekeeping activities as an answer to its international critics’ calling on China to play the role of a responsible power.77 But its peacekeeping commitment is still narrow and limited. South Sudan accounted for over 40 percent of personnel stationed overseas in 2018.78 Xi Jinping’s announcement of a standby force was impressive. But its future deployment and mandate require Beijing’s acceptance. Similar European initiatives have been shelved in the past after years of inaction.79 Finally, China’s financial commitment to peacekeeping is simply a procedural consequence of its growing economy, with UN contributions decided by the relative wealth of member states. Beijing also looks to deploy Chinese peacekeepers to protect its overseas economic interests. Before the Chinese troops arrived in Juba, the Chinese delegation at the United Nations headquarters in New  York pushed through wording in the mission’s mandate that peacekeepers protect not only South Sudanese civilians, UN staff, and aid workers, but also oil personnel and installations.80 Ellen Margrethe Løj’s predecessor at the UN mission in South Sudan decided that the optics of placing Chinese peacekeepers near Chinese-​run oil fields would be terrible. But Løj took exception to the point of view that the Chinese were somehow unique in seeking to watch out for their investments through peacekeeping. “I’m not naïve. I know China is pursuing national interest,” she said, “but so is everyone else. Don’t tell me the Americans, the French, and the Brits are not.” Chinese peacekeepers did not end up guarding oil facilities in South Sudan. But they did keep an eye out for Chinese nationals. When the civil war broke out in December 2013, Chinese peacekeeping police helped evacuate Chinese construction workers. Chinese peacekeepers continued to 34     How

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work in cooperation with the Chinese embassy and Chinese businesses to maintain daily contact and knowledge of the location of nationals in South Sudan, often using the UN mission’s intimate knowledge of the security situation.81 These actions were not hidden, but publicized in Chinese state media as the rationale for the peacekeepers’ presence.82 There are also military goals behind China’s increased peacekeeping engagement. The People’s Liberation Army is undergoing significant reform under Xi Jinping. But the Chinese military still has not fought in an overseas conflict for decades. “Since China typically rejects joining multinational forces in places like Iraq, Libya, and Syria, and is conventionally against such intervention, UN peacekeeping is one of the only avenues for the Chinese military to gain experience overseas,” Zhang Jiyu, a Chinese defense official, told me. Zhang is a former director of China’s peacekeeping training center, established in 2009 outside of Beijing. Its language courses, simulation rooms, training grounds, and shooting and driving ranges prepare Chinese peacekeepers before they head out. Real-​life experience is lacking at the infantry and command levels. China has held UN force commander positions in Western Sahara, Cyprus, and South Sudan, and it may soon seek leadership of the UN’s peacekeeping department, which is traditionally in French hands.83 Representing another driver of its increased engagement in UN peacekeeping, Chinese peacekeepers have the opportunity to interact and learn from other militaries. There are no large Chinese economic interests in Mali, for example, but Chinese peacekeepers have reportedly gathered intelligence on the operations of European militaries also taking part in the mission there. Dutch peacekeepers grew suspicious after USB memory sticks gifted to them by their Chinese counterparts were found to contain spyware.84 This served to fray already uneasy relations between the NATO forces and Chinese peacekeepers. The results in South Sudan, however, demonstrate that China has not overcome the inherent problems in modern peacekeeping. South Sudan is an example of a peacekeeping mission where there is “no peace to keep.” As the July 2016 fighting demonstrated, despite the signing of numerous ceasefires and resolutions, the civil war was not yet settled, putting peacekeepers in the middle of an active conflict. Similar to other peacekeeping missions, South Sudan’s government frustrated the activities of peacekeepers by prohibiting military helicopters and drones. Even though South Sudan is one of the largest missions in the world, peacekeepers still lack the size and mobility to protect citizens within its expansive territory.85 Waiting for Peace 

 

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More distressing, however, is the poor command and control within the UN missions. A common trait in South Sudan and other civil wars is that instead of a top-​down structure, warring sides tend to fragment into smaller armed groups that operate and pursue interests locally, and not always with common objectives of the broader group in mind. But a similar pattern existed with UN peacekeeping missions and their various national contributors. “I experienced that many contingents, including with Western peacekeepers, didn’t fully appreciate that it was not the local ambassador that was giving them orders, it was the [UN] mission,” Løj told me. “And certainly, the Chinese ambassador did not fully appreciate that once the battalion was there it was under my command and not his.” In UN peacekeeping missions, national contributors each have their own individual rules of engagement, or national caveats, that are often more limited than the broader mission mandate. This might, for example, stipulate that certain national forces will not carry out night patrols, or only fire warning shots in the air rather than directly engage belligerents. Strikingly, these caveats are often unknown to UN heads of mission like Løj, sometimes not until events, such as the July 2016 fighting in Juba, put the mission’s mandate to the test. The national caveats of the Chinese peacekeepers in South Sudan were to protect the UN House, not necessarily to engage perpetrators attacking civilians, even if they were in eyesight or minutes away. Peacekeepers have lost their lives trying to protect civilians in South Sudan and elsewhere. The Mongolians stood out in South Sudan in protecting civilians.86 But the varying degree of engagement on the ground from different national contributors continues to challenge the overall effectiveness of missions. Neither were Chinese peacekeepers isolated from the contradictions between the interests of multiple Chinese actors in South Sudan. After the deaths of two peacekeepers in July 2016, UN officials discovered that a Chinese weapon, allegedly fired by the South Sudanese army, caused the deaths. Beijing’s response was a borderline admission:  “We need to focus on who used the weapon, not who manufactured it,” a Chinese official said.87 China’s arms sales were very likely used in the killing of the Chinese peacekeepers. Beijing may have drawn a clear line between its peacekeeping and commercial engagements in South Sudan. But warring sides found it more difficult to disassociate the two, with South Sudan government forces broadly seeing the United Nations as aiding the rebels. The incident highlighted the tensions between China’s government ministries on engaging in peacekeeping. While the foreign ministry is eager to demonstrate global involvement in crisis diplomacy and peacekeeping, the 36     How

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defense ministry prefers a gradual ramping up of efforts due to the military’s lack of experience overseas.88 Rather than drastically change the nature of peacekeeping, China has to date been absorbed by existing constraints in these multinational engagements. Chinese troops, medics, and engineers contribute to global peace and security, but Beijing has offered few ideas to enhance peacekeeping missions. Its interest appears driven firstly to help burnish China’s image as a responsible power, while Chinese peacekeepers suffer the consequences of weak mandates and poorly equipped missions operating in the midst of conflict in places like South Sudan and Mali. Chinese corporate interests, in supplying arms to the South Sudanese military, have even come to harm its peacekeepers. China’s multinational peacekeeping engagement may end up being a low priority for Beijing as it looks to other avenues to protect its economic interests overseas. *** South Sudan is an early case of China facing the urgent need to protect its economic interests overseas and help resolve conflicts through corporate responsibility, crisis diplomacy, and peacekeeping. But it is not an isolated case. China has also discarded its non-​interference policy to get involved in the peace process to end Myanmar’s multiple conflicts. In northern Myanmar, fighting between the Myanmar government and ethnic armed groups in Kachin and Shan states has destabilized the border with China at Yunnan province. This frustrates Beijing’s plans, as part of its Belt and Road Initiative, to develop an extensive economic corridor of roads, railways, and pipelines from Myanmar’s southwest Rakhine state, at Kyaukphyu port on the Bay of Bengal, to its western border.89 China has been engaged in the Myanmar peace process through a special envoy since 2013. But like South Sudan, it also focuses heavily on its narrow interests in the conflict, such as maintaining close relations with the Myanmar government and ethnic armed groups operating on its border, rather than working toward securing a long-​term peace. Beijing neglects and even undermines efforts to coordinate a broader peace deal across the country out of fear that stability and unity would improve Myanmar’s negotiating positions with China in economic cooperation.90 Wary of losing its influence in the country, China also operates independently, and guardedly, from the United States and other outside powers in Myanmar. Beijing and Washington wield considerable resources and influence, but too often have viewed their relationship largely in zero-​sum terms.91 Waiting for Peace 

 

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Beijing has exploited the international backlash Myanmar faces from its campaign of ethnic cleansing against its Muslim Rohingya population as a way to improve its relations with the Myanmar government, in particularly by blocking UN sanctions. At the same time, similar to South Sudan, Chinese commercial players, particularly from neighboring Yunnan province, have been heavily involved in smuggling illicit jade, timber, and other natural resources. This has fueled conflict by providing resources to both the Myanmar government and ethnic armed groups. Retired PLA soldiers have also reportedly acted as mercenaries in the conflict. This fragmentation of Chinese interests in the conflict upset Beijing’s broader policy of securing its border. In South Sudan, the Chinese oilman Qian Fengzheng showed how Chinese companies need to reform deeply rooted domestic practices of poor social and environmental standards in order to improve relations with local communities and other stakeholders, and ensure their own long-​term security in the process. China’s Africa envoys, Liu Guijin, and after him, Zhong Jianhua, brought Beijing to the negotiating table. But these efforts are still largely focused on advancing China’s own narrow interests. Beijing’s willingness to strike short-​term, transactional deals with rebel groups to not attack Chinese investments undermined long-​term stability by signaling the value of sustained militancy. The engagement of Chinese companies and diplomats in international peacemaking was a step in the right direction, but China could not solve overseas conflicts on its own. As China’s economic investments in South Sudan, Myanmar, and other conflict-​prone countries mature and become further entangled in local politics, Beijing has discovered that even after abandoning its long-​standing non-​ interference policy in practice, to protect its interests on the ground, it still struggles to manage security risks on its own. Rather than a well-​functioning, coordinated approach, Chinese diplomats and oil and arms companies find their interests can work against one another to upset Beijing’s broader policy in overseas conflicts. Sustaining its investments in war-​torn countries, while reversing deep-​seated political and ethnic divisions, and repairing fragile governance, requires China to engage in a multinational and coordinated peacemaking effort. China’s leverage over local actors in conflict is often limited. China cannot bring peace alone. For such efforts to gain traction, China must work in concert with its international and regional counterparts, including the United States, to pursue common interests. Otherwise, warring sides can exploit a divided international community to fulfill their own political and security objectives at the expense of their populations. China’s peacekeeping engagement, much like its foray into crisis diplomacy, showed

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few results in protecting Chinese oil investments. The role of peacemaker for Beijing was still an aspirational one. In my last visit to CNPC headquarters in Beijing, I stopped by the office of Zhang Jun at the International Department. Zhang is the Chinese oil company’s overseas security director and has been working with the company’s activities in Sudan, and later South Sudan, since the 1990s. Since CNPC first invested, however, the company expanded its international portfolio with investments dotting the globe. On the wall of the meeting room was a map of Sudan and South Sudan. It must have been hanging there for quite some time as it was watermarked, and its corners and sides torn and withered. Its sorry state stood in contrast to the clean and crisp map of Iraq, a Middle East oil giant, beside it. The failure of China and the international community to help build a lasting peace in South Sudan undermined the Chinese company’s investments in the country, where even compared to Iraq’s larger reserves and production, it had a commanding position to profit from due to the absence of strong competition. In late 2018, without China, the United States, and other international players looking over their shoulders, South Sudan’s warring sides pushed forward a peace deal with the help of regional brokers. A long string of previously broken ceasefires made all of the actors cautious as to whether the agreement would hold, and since essential problems of governance were left unresolved, the risk for renewed conflict remained. China’s diplomacy did little to stem the violence and protect Chinese oil investments from harm’s way in a hostile environment. South Sudan’s oilfields are likely to languish for years to come, producing significantly below their potential due to decades of conflict. Zhang, the experienced Chinese oilman, remains skeptical that South Sudan’s leaders and main ethnic groups can find a lasting peace. “South Sudan is uncertain. Everything changes from day to day,” he told me. “The Nuer, the Dinka, these groups have been fighting for 100  years,” he said. “There’s nothing you can do. You just watch.”

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Chapter 2

C

Evils under the Ground

hinese officials usher their foreign guests and dignitaries into a dining room. The blinds are shut, lights dimmed, and a projector set turned on. It is the eighty-​ninth anniversary of the founding of the People’s Liberation Army (PLA), and the Chinese embassy is hosting a midday celebration. Before they serve lunch, however, a promotional appetizer is on offer in the showing of a short video. Set to dramatic music, “The Chinese People’s Liberation Army of Today” shows the PLA on parade, in military exercises, and engaging in international anti-​piracy and peacekeeping missions. The video’s first sequence praises President Xi Jinping’s military reforms. These are ultimately aimed at modernizing the PLA into a world-​class fighting force. But for the foreign audience in attendance at the embassy, the focus is placed on how the reforms restructure and downsize China’s military, and thus affirm the benign intentions behind China’s global rise. The video argues that China’s military pursues a purely defensive agenda “to uphold global peace and stability,” and is “dedicated to peace, development, and win-​win cooperation.” After the video comes to an end, the lights are turned back on, and the embassy’s guests gravitate toward lunch and conversation. It is not until the following summer that the world’s attention is caught by a new vision of Chinese military force overseas. Hitting theaters across China in July 2017, the action movie Wolf Warrior II presents a decidedly different characterization of China’s military power. Its main star, Wu Jing, plays Leng Feng, a former PLA soldier from an elite group known as “wolf warriors.” Shortly

 

after arriving to the shore of a fictional African country, Leng finds himself caught in the middle of a civil war. The Chinese navy is at sea, but its hands are tied by the absence of a UN resolution sanctioning foreign intervention. So Leng decides to launch a mission to rescue Chinese and African citizens trapped behind enemy lines. He cuts down innumerable rebel fighters on the way and even defeats a menacing group of American and European mercenaries backing the rebellion. At a time when Hollywood action films avoid casting Chinese characters as proverbial villains to not lose access to China’s massive box office sale,1 Chinese movies are at the same time ironically placing Western faces in the bad-​guy role. But Wolf Warrior II repeats well-​worn clichés from American movies that portray Africa as a continent embroiled in conflict and poverty and in need of outside assistance. Much like the United States presents its own role in Africa, China is similarly shown as a benevolent and powerful actor, with the Chinese hero saving the day. African characters in the film are largely subjects of influence, in need of security, humanitarian aid, and medical assistance, rather than actors who can change the course of events. Consistent with this viewpoint, Leng explains to a friend that he came to Africa for “the great food, nice scenery, and hot women.” Wolf Warrior II became the highest-​grossing Chinese film of all time. At the end of the film, an image of a Chinese passport is showed alongside the message: “Don’t give up if you run into danger abroad. Please remember, a strong motherland will always have your back!” In response, some audiences in China gave the film standing ovations. Others stood and sang the national anthem. In trying to explain the film’s success, lead actor Wu Jing connects its story to China’s history.2 “In the past, all of our movies were about, say, the Opium Wars, how other countries waged war against China. So Chinese people always wanted to see our country one day would have the power to protect its own people and contribute to world peace.” The United States also wanted to see China contribute to global peace and security. In a 2005 speech, Robert Zoellick, then US deputy secretary of state, invoked the long-​standing objective in Washington, DC, by calling on Beijing to become a “responsible stakeholder” in the international system. “China should take more than oil from Sudan—​it should take some responsibility for resolving Sudan’s human crisis,” Zoellick argued. “It could work with the United States, the UN, and others to support the African Union’s peacekeeping mission, to provide humanitarian relief to Darfur, and to promote a solution to Sudan’s conflicts.”3 In 2014, US president Barack Obama laid that criticism at Beijing’s feet directly again, arguing that Chinese leaders had been “free riders for the last 30  years” by reneging on their 42     How

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responsibilities to help maintain global peace and security.4 Today, Beijing disagrees with any sentiment that it is irresponsible, pointing to its active role in South Sudan and other overseas conflicts. But it is not a matter of whether China engages, but how it engages. Obama may wish that China stayed on the fence. Wolf Warrior II set the scene for the very real-​life dilemma that China faces when its nationals and companies enter unstable countries around the world. This is a common problem among all foreign powers that China is by no means immune from. In South Sudan, corporate responsibility, crisis diplomacy, and peacekeeping failed to keep Chinese nationals and investments safe. The Chinese government, with its newfound confidence and capability on the world stage, will find it difficult to avoid intervening into overseas conflicts when its interests are at stake. Direct military intervention is no longer an unthinkable option. Official propaganda and popular commercial films like Wolf Warrior II build up public expectations that Beijing is both able and willing to protect Chinese abroad. No matter how often Chinese officials tried to demonstrate their exceptionalism to other major powers in not condoning military intervention, reality forces Beijing to act against its own discourse and principles. In his 2017 speech at the Communist Party’s 19th National Congress, Xi Jinping pledged that “China will continue to play its part as a major and responsible country, take an active part in reforming and developing the global governance system, and keep contributing Chinese wisdom and strength to global governance.”5 For Beijing, there are clear lessons to learn from the hundreds of thousands of lost lives and trillions of dollars in costs from America’s interventions in Iraq and Afghanistan. But this does not mean that China will do nothing when its interests are threatened. Rather, Beijing believes it can do it better. In Pakistan and Afghanistan, China is facing a pull, like what it experienced in South Sudan, to engage in conflict resolution to secure its own economic and strategic interests. Just as in South Sudan, China’s diplomatic efforts to make peace are complicated by this priority to protect its national interests. And rather than work closer with other foreign and regional countries to settle conflicts in the long run, Beijing largely acts alone and is increasing its military presence. Taking full ownership of its role as a “responsible stakeholder,” a Chinese model for establishing peace and security may soon emerge in full. For China, the approach of the United States and NATO over the past two decades, of invading and destroying the governing institutions of foreign countries, and overthrowing their leaders, unleashed only chaos. Chinese officials have also come to regard their own domestic Evils under the Ground 

 

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methods of cracking down on their Uyghur minority in Xinjiang as a potential useful approach to international crisis management. “Saddam and Gaddafi were bad men,” Zhang Jiyu, the former director of the Peacekeeping Center of China’s Ministry of National Defense, told me. “But they kept some evils under the ground.” *** In Pakistan and Afghanistan, Beijing’s efforts to advance its strategic interests of developing new industrial corridors between South Asia and China’s western region face the challenge of overcoming protracted regional insecurity. China has long had an “all-​weather friendship” of a close economic and military partnership with Pakistan. Since 2015 its engagement has focused on following through on a plan to build a massive $60 billion industrial corridor of highways, railways, oil pipelines, and coal plants from Pakistan’s Arabian Sea coast to its northern border with China’s Xinjiang region. Known as the China Pakistan Economic Corridor (CPEC), the massive undertaking is one of the largest projects in Beijing’s global infrastructure and trade drive, and Xi Jinping’s signature foreign policy, the Belt and Road Initiative. CPEC is primarily positioned to help spark new development in China’s west by linking it with South Asia. For China, the land route through Pakistan will offer an alternative way to access oil and other strategic resources rather than having to traverse potential chokepoints at sea. China’s support to Pakistan also buttresses the position of its key ally against Beijing’s regional competitor, India. As part of the Belt and Road, the industrial corridor in Pakistan can advance China’s economic and strategic interests in South Asia. But to the world, China’s leadership presents the initiative as a vehicle to spread peace and stability, a “road for peace,” as Xi Jinping called the Belt and Road at its first forum in 2017.6 China’s message for global peace and security stood out from the United States and the West, which despite many contradictions in practice, promoted liberal market and democratic principles overseas. China’s position is to centralize power in the state and usher in state-​led economic development as a pacifier for war-​torn countries.7 But if CPEC is to materialize in the future, it needs to be developed and operate in some of the most unstable regions of Pakistan. From its starting point at Gwadar port in Balochistan to its ending destination to the north at Gilgit-​Baltistan, which crosses through the disputed Kashmir region between Pakistan and India, the corridor faces considerable political and security risks. 44     How

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Pakistan’s restive province of Balochistan has noticeable similarities to South Sudan before its independence in 2011. Southern Sudanese were isolated from development opportunities by the central government in Sudan and brutally exploited for their land and resources. The people of Balochistan are also alienated from economic opportunities and face violent oppression from the political and security elite ruling Pakistan in Islamabad.8 And just as regional conflicts intermingled with South Sudan’s civil war over the years, with porous borders allowing opposition fighters safe haven and access to arms and supplies from neighboring countries, the cross-​border conflict in neighboring Afghanistan has fed the Baloch insurgency in Pakistan. China also plays a similar historical role in Pakistan as it did South Sudan. Before South Sudan’s independence, southern Sudanese rebels regarded Chinese oil investments as legitimate targets during Sudan’s long-​running civil war. In Balochistan, when Chinese construction companies first arrived in the early 2000s, they too were seen as supporters of the central government in Islamabad, particularly because they offered few benefits for local populations. A  decade before CPEC was launched, the China Harbour Engineering Company unsuccessfully tried to develop the port at Gwadar. But the company and other Chinese projects faced persistent security threats. These included a car bomb attack in May 2004 that killed three Chinese staff and the shooting of three Chinese engineers at a cement plant in 2006. In fact, despite China’s close relations with Pakistan, it is arguably the deadliest country for Chinese workers abroad.9 A decade later, when China and Pakistan launched CPEC, Pakistani authorities were keen to ensure history did not repeat itself. Gwadar port was turned into a militarized zone, and a 15,000-​strong Pakistani security force was established to protect some 30,000 Chinese nationals in Pakistan, many of whom worked on infrastructure projects.10 Yet with few economic benefits filtering down to locals in Balochistan, a separatist militant group, the Balochistan Liberation Army (BLA), among others, continues to regard China as a foreign “oppressor.”11 Militants in Balochistan have killed dozens of Pakistani workers and despite the heavy security continue to strike at Chinese targets as well.12 In early February 2018, China’s ambassador to Pakistan, Yao Jing, renounced BLA fighters as “not true Pakistanis.” He also claimed that the militants were no longer a threat thanks to the heavy blanket of security forces provided by Islamabad.13 As separatists, many Baloch fighters likely agreed with the Chinese ambassador on their birthright. But throughout the year, they challenged his assertion that they were no longer a threat to Chinese activities. Just two days after the ambassador made his comments, a Chinese Evils under the Ground 

 

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shipping executive was killed in the affluent Zamama district in Karachi, Pakistan’s largest city.14 In August 2018, a bus carrying Chinese engineers from Dalbandin airport to a Saindak mining project in Balochistan was hit by the BLA in a suicide car bomb attack.15 Three Chinese were wounded in what was an otherwise very narrow call where the death toll could have been much larger. In November, three BLA fighters attacked the Chinese consulate in Karachi, failing to breach the compound, but leaving four Pakistanis dead in the assault.16 The attacks continued in 2019. Before being overwhelmed by security forces, three BLA fighters killed five Pakistanis at a high-​end hotel in Gwadar frequented by Chinese guests.17 The following year, the BLA claimed an attack on the Karachi stock exchange as a symbolic rejection of Chinese investors in the country.18 Islamabad’s strategy of blanketing the Chinese endeavor in security not only had holes, but also continued to feed dissent rather than pacify local populations.19 Security threats will likely impact the ultimate size and scope of the corridor and, along with technical and economic challenges, have deflated initial aspirations. By early 2020, seven years after its start, less than a third of its projects had been completed, according to the Pakistani government’s official figures.20 Coal power plants were built in the early years, but these are mainly outside Balochistan, with the three-​berth Gwadar port and other infrastructure underused since construction. Airports, roads, and factories are meant to follow, but the high electrical and toll fees charged by Chinese companies to maximize profits may stunt the competitiveness of Pakistan’s industrial development compared to lower costs offered in Bangladesh, limiting the economic payoffs Beijing hoped to demonstrate through its engagement.21 Similar to its evolving position on non-​interference in South Sudan, as early as 2013, Chinese officials reportedly met with Baloch armed groups to offer financial payments to fighters who agreed not to target Chinese activities.22 But these efforts could not overcome the long-​standing grievances and clear lack of benefits, in particular the few job opportunities available to local populations. In surveying the potential benefits and spillovers offered by CPEC for Balochistan, Adnan Aamir, an independent journalist and researcher based in Pakistan, found that none of the planned major highways and special economic zones China is building for the corridor will be located in the province, and only two of the twenty-​one energy projects. This despite the dangerous road conditions in the province and severe lack of electricity.23 Even the Gwadar port presently offers few economic payoffs for locals. Similar to previous arrangements with foreign operators, Islamabad granted the Chinese Overseas Port Holding Company 91 percent of future

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revenues of the port while only allocating 9 percent to the central government in Islamabad.24 China was not standing still in Balochistan. Aamir explained to me that Chinese authorities had sponsored research on the sentiments of the Baloch people to understand why insurgents targeted their interests. “China is doing this because it believes that the government of Pakistan is not providing it with a clear picture of the situation in Balochistan,” he noted. “However, I believe that it will be really difficult for China to directly engage with the local population and the Baloch insurgents while bypassing Pakistan.” He argued that allowing China to engage freely with the Baloch was not in Islamabad’s interests because it would damage the legitimacy of the Pakistani state and may empower separatist demands. Rather, China is now being pulled into this long-​running political discord and conflict in Balochistan. “China will not risk its good relations and strategic partnership with Islamabad just to placate the Baloch insurgents,” Aamir informed me. Balochistan continues to play its historic role as an isolated hinterland, where outsiders exploit land and resources and offer little in return. Similar to the domestic political and security dynamics shaping China’s engagement in South Sudan, if the local population in Balochistan is left out of economic opportunities by Islamabad, the insurgency will press on and threaten the stability of China’s infrastructure and industrial corridor well into the future. Chinese managers hope to defy negative forecasts. For Beijing, the corridor may be “too big to fail”—​a linchpin project for Xi Jinping’s ambitious Belt and Road Initiative. But it will need to demonstrate developmental benefits for Balochistan and Pakistan as a whole if it is to be seen as a success story. China’s geostrategic interests in Pakistan are interlinked with its recent efforts to help bring peace in neighboring Afghanistan. For years, China kept its distance from America’s war with the Taliban. But after the drawdown of American and NATO forces in 2011, Beijing began to get more formally involved in the peace process. China engaged in negotiations between the Afghan government and the Taliban as well as brought together Islamabad and Kabul to resolve their regional differences. The Pakistani military has long accused Afghanistan of supporting separatists in its territory, including in Balochistan. In contrast, Afghanistan, the United States, and neighboring India regard Pakistan as playing a “double game”—​playing sometime ally with the US and Afghan governments while supporting the Taliban and Islamic groups, such as Lashkar-​e-​Taiba, to launch cross-​border attacks in the region.25

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China has some economic interests in Afghanistan. Chinese companies are pursuing mining and infrastructure projects, including the massive but largely unexploited copper deposits at Mes Aynak outside Kabul. But these have mainly been driven by Chinese companies, not directed from Beijing, and most ventures have run afoul of persistent security and regulatory risks. Rather, Beijing’s main strategic objective in the borderlands of Afghanistan and Pakistan is counter-​terrorism. Before the US invasion of Afghanistan, Beijing maintained contact with the ruling Taliban. Months before al-​Qaeda carried out its September 11, 2001, terrorist attacks on New York and Washington, DC, Chinese ambassador to Pakistan Lu Shulin met with Taliban leader Mullah Mohammad Omar to attain guarantees that Afghan territory was not serving as a staging ground for attacks in China.26 Beijing feared that Afghanistan and Pakistan, as Muslim-​majority countries, and potentially sympathetic to China-​based separatist militant groups, would offer shelter and support for their activities in China. Since the 1990s, the East Turkmenistan Islamic Movement (ETIM), later known as the Turkistan Islamic Movement, has killed hundreds in multiple terrorist attacks in China. The group is made up of mainly Uyghur Muslims, a minority ethnic group in China, based out of the northwestern Xinjiang region. While the vast majority of Uyghur have nothing to do with ETIM and its activities, Beijing’s response to the terrorist attacks has been a harsh and disproportionate crackdown on the religious and personal freedoms of the entire population. This includes a program to resettle Han Chinese to Xinjiang in order to alter the region’s demographics. Later, Beijing began to harness the full powers of modern technology to monitor and control Uyghur lives.27 Beijing’s grouping of separatism, terrorism, and extremism as the “three evils” has left little room for negotiation with Uyghur groups seeking greater political rights for the region. The US military and NATO did much to root out ETIM in Afghanistan. China pushed Pakistan to do the same in its territory. But with the withdrawal of Western forces, Beijing is now concerned that Uyghur militants will once again find safe haven in its mountainous border regions, and has edged closer to playing a larger security role itself. Similar to its oil interests in South Sudan, China’s peacemaking efforts in Afghanistan derive mainly from its counter-​terrorism goals, and as a result, can at times be counterproductive to efforts to find a lasting resolution to the conflict.28 For instance, China has a selective approach to counter-​terrorism, targeting the ETIM but not other groups supported by Pakistan, which are the source of insecurity in Afghanistan and elsewhere in the region.29 48     How

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Beijing is keen to steer the Afghan government and Taliban toward a power-​sharing agreement. That would allow China to better harness state-​ to-​state financial and military support to ensure that Afghanistan does not serve as a safe haven for terrorist groups in the future. But the lack of close coordination with the United States and India, which are key partners for the Afghan government, handicaps China’s role as a peacemaker. It is hard to see how small-​scale joint activities between the United States and China, such as training activities for Afghan officials, can act as confidence-​building measures to overcome broader challenges of strategic competition in the region where China remains wary of the American military presence on its western flank.30 In early 2020, as the United States signed a peace deal with the Taliban and advanced its plans to draw down more troops from Afghanistan, China’s security role looked to grow further. To secure its western borders, Beijing has deepened its military ties with countries in Central and South Asia over the past decade. This has partly been facilitated through the China-​launched Eurasian political and security bloc, the Shanghai Cooperation Organisation, which has drawn comparisons to the North Atlantic Treaty Organization, but still far from a military alliance. China has used these new regional bonds to advance its counter-​terrorism interests. In early 2017, Chinese and Afghani security forces began conducting joint patrols in the Wakhan corridor of Afghanistan’s Badakhshan province on the border with China, Pakistan, and Tajikistan.31 Two years later, it was confirmed that China had established a military base for its People’s Armed Police, from which it draws its special forces, in Tajikistan near the Afghani border.32 Deeming their Tajik counterparts incapable of stemming the flow of militants without assistance, Chinese security forces have reportedly taken over large swaths of land across the Tajikistan-​Afghanistan border.33 A large recipient of Chinese finance, Tajikistan was once the staging grounds for the 2001 invasion of Afghanistan by the United States, and before that a bulwark for the Soviet Union’s invasion in the 1980s. Still at a comparatively subdued level, with operations in collaboration rather than confrontation with the Afghan government, China is nonetheless heavily involved in the region’s security dynamics, and potentially being drawn into a quagmire that has drained the resources of global powers before it. *** To see modern-​day China as a resolute defender of non-​interference and peaceful coexistence with its neighbors and the international community is to misread parts of Chinese history and misinterpret the future trajectory Evils under the Ground 

 

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of China’s present-​day engagement in military intervention. Throughout its history, China has long sought isolation from the world. But going as far back as the fifteenth century, and the famed treasure voyages of Admiral Zheng He in the Ming dynasty, China has at times also pursued territorial expansion and imperial power. Often historicized as benign expeditions and employed as a juxtaposition against the violent colonization to come, Admiral Zheng served during a time of great Chinese military conquest and expansion. In Everything under the Heavens, Howard W. French shows that the official remembrance of Zheng in and outside China often conveniently rewrites the history of voyages. Zheng was hardly on a peace voyage. His fleet of two hundred armed ships, carrying a vast and capable army, operated at a time when China conquered and colonized much of its present-​day perimeter.34 Pulling on these historical threads guides us to China’s recent history, when border wars with India, the Soviet Union, and Vietnam in the 1960s and 1970s demonstrated its continual use of military force to protect and advance its interests. In March 1988, the Chinese navy gunned down over sixty Vietnamese troops at Johnson Reef of the Spratly Islands over its territorial dispute with its smaller neighbor.35 Such overwhelming force, albeit still largely without deadly consequences, is now employed today by Beijing’s militarization of much of the South China Sea. Placing non-​interference in this historical light allows us to better understand, and demystify, China’s subsequent behavior toward overseas conflicts. It has been China’s interests and capabilities that have held it back, not necessarily any overarching norm on non-​interference. After taking over the permanent seat on the UN Security Council from the Republic of China in 1971, Beijing rarely used its veto power to block the imposition of punitive sanctions and allow for international intervention. China only cast three vetoes over the next thirty-​five years and watched as the United States and NATO led military interventions in Kosovo, Iraq, and Afghanistan. Chinese diplomats at times worked behind the scenes to water down such resolutions, but Beijing nonetheless often decided to abstain from voting altogether rather than upset its relations with other permanent seat holders: the United States, France, the United Kingdom, and Russia. Not upsetting those relations was prioritized over vigorously defending its non-​interference policy. But there has been a noticeable change in Beijing’s stance on intervention over the past decade. After witnessing NATO’s intervention in 2011, Beijing worried that Western powers were construing protection of civilians and human rights to justify interventions that advanced their geopolitical interests through regime change. China and other countries, including Russia and India, accused European and American forces of over-​stretching the UN 50     How

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mandate, and ushering in the fall and violent death of Libya’s longtime leader Muammar al-​Gaddafi. While few tears were shed for Gaddafi, who was far from a reliable, close friend to China, there was likely still regret in Beijing that it did not take the decision to veto the Western intervention.36 The sight of an authoritarian leader overthrown with the help of foreign forces, and subsequently dragged through the streets to his death, was not the image of intervention China’s leadership wanted its own people, and the world, to see as the international norm. When conflict then grew in Syria, Beijing no longer stood by and watched Western intervention against another foreign regime take place. Its interests had changed. China now wants to shape global governance, is more confident in its voice in international affairs, and is more willing to use its veto power in the UN Security Council. Similar to its response to conflicts in Sudan, South Sudan, and Afghanistan, China appointed a special envoy for the Syrian crisis, presented a four-​point plan to solve the conflict, supported the peace plans promoted by the Arab League and United Nations, and even brought the Syrian opposition to Beijing for dialogue. But Beijing was no neutral peacemaker in Syria. Foreshadowed by some of its earlier positions on Sudan’s Darfur conflict, there was a noticeable shift in China’s use of its veto on Syria that pointed toward its support for Assad and Russian military intervention. China has vetoed multiple Western-​tabled resolutions since 2011 in order to stop efforts to apply punitive measures against Syria.37 Counter-​ terrorism is part of China’s rationale. Beijing was keen to curtail the flow of hundreds of Uyghur militants from its Xinjiang region to join international terrorist and militant groups fighting in Syria, such as the Islamic State and Jabhat fath al-​Sham, and return to China to launch attacks. But Beijing was particularly determined to block any attempt by Western powers to overthrow Assad, making the point that forceful intervention by Western powers is no longer permitted. Beijing now actively seeks to shape international norms on military intervention. Rolling back the gains interventionists have made in the United Nations in the wake of failures to intervene in the Rwandan genocide and Srebrenica massacre in the 1990s, China drew a line to separate intervention from foreign-​led regime change.38 This also strengthens the basis for China to advance its own approach to intervention. As Chinese scholar Xue Lei argues, “China’s deeper involvement into UN peacekeeping operations will inevitably lead to a comprehensive change in the UN conflict management system.”39 Beijing’s actions in the United Nations show its interest in prioritizing host state consent for foreign intervention, such as Syria’s green light for Evils under the Ground 

 

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Russia to use force, and stopping the United Nations from focusing on human rights and democracy promotion in peacekeeping missions. One Western diplomat told me simply that “China believes that a bad government is better than no government.” For Beijing, the failing institutions of Iraq and Libya pointed to the senselessness and irresponsibility of forceful regime change by foreign powers. China’s influence in the United Nations has grown, in particular thanks to American disdain for the world body under President Donald Trump’s “America First” foreign policy agenda.40 China headed four of fifteen UN agencies by early 2020, more than any other country.41 It was also making inroads on global peace and security issues. For instance, a top Chinese diplomat, Huang Xia, was appointed UN special envoy to Africa’s Great Lakes region in 2019 despite opposition from the United States.42 China is not opposed to military intervention. Chinese officials and experts agree that force is necessary at times to uphold international peace and security. It is more how intervention takes place where Beijing stands out. Rather than overpower sitting governments, as the United States did in Afghanistan and Iraq, and NATO in Libya, China wants to stabilize and strengthen sitting governments.43 This position has support in the international community, including in some political circles in the United States and Europe.44 But geopolitics still drives sharp divides between foreign powers on intervention. Strategic competition between the United States and China, over issues such as future technologies and China’s territorial claims in the South China Sea, severely undermine potential for international unity in settling overseas conflicts. While Russia, Iran, and China backed the Assad regime in Syria, for years the United States, Saudi Arabia, France, and the United Kingdom pursued the Syrian president’s ouster. Any possible intervention into Venezuela’s unstable politics in 2018 and 2019 would have mirrored this standoff. A return to Cold War–​style politics, and growing divergences in interests between the great powers, threatens to intensify and prolong civil wars as foreign powers become more likely to choose sides.45 Some view China as the money and Russia as the muscle in this new divide,46 but China also wields considerable firepower and may soon demonstrate this when its interests are in jeopardy overseas. The threats faced by Chinese companies abroad led to growing pressure from the Chinese public for Beijing to respond. After the July 2016 killings of Chinese peacekeepers in Juba, for example, a Chinese defense ministry statement condemning the attack was met with anger at home: “What use is condemnation? Can it return a life?,” one Chinese netizen wrote. “Fight those who have injured us, don’t just condemn!”47 Party propaganda building up the image of China as a rising superpower, and flashy new action films 52     How

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such as Wolf Warrior II, did much to create expectations that “no Chinese will ever be left behind.”48 A sequel to the film was canceled after the government decided it did not want China to appear aggressive to foreign audiences.49 But with Chinese companies facing some 350 security incidents abroad from 2010 to 2015,50 including the killing of three Chinese executives of a national railway company in a hotel attack in Mali, an inability to back up such promises, particularly in light of displays of American military force overseas, undermined the domestic legitimacy of the Communist Party at home. What held back Chinese military intervention over the past decade is not the absence of will, but the lack of capability and experience in protecting Chinese nationals and investments far from home. When Chinese oilmen ran into trouble from civil wars in Sudan and South Sudan, Beijing had few options on the table to protect them. “Interference has to be backed up with capability,” Liu Guijin, China’s former special envoy to Africa, told the International Crisis Group. “Although China was a big power, its capability to project power was not sufficient.”51 On the sidelines of a conference in Beijing, Liu told me how, after a Sudanese armed group kidnapped eight Chinese oilmen in October 2008, there was little he could do but try to persuade Sudan’s president Omar al-​ Bashir to peacefully negotiate their release. “Bashir told me that Sudanese security forces would handle it, and that I should relay this to my president,” Liu said. “But before I could board the plane to return home, I was informed of the tragedy.” Sudanese security forces had spooked the kidnappers, and in the ensuing gun battle, five Chinese oilmen were killed. This was an embarrassment to the Chinese—​one that Beijing is determined to stop from repeating in the future. In this light, similar to its nationalist rhetoric on reclaiming lost territory from Japan in the East China Sea, or defending its claims to vast swaths of the South China Sea, China may become a “victim of its own rhetoric,” as Howard W. French argues.52 China’s nationalism may combine with its new and powerful capabilities to drive Beijing to respond with military force as retribution for lost Chinese lives in far-​off overseas conflicts. What does Chinese military intervention of the future look like? The heroics of Leng Feng, the former PLA elite soldier turned mercenary for hire in Wolf Warrior II, may be part of the story, but likely only a last resort, and a risky one at that. China has more options on the table than direct intervention. Chinese officials typically call on host governments to ensure the safety of Chinese nationals and investments in unstable countries. China’s growing defense cooperation and military assistance across Africa, Latin America, and Asia has built the capacity of local militaries to maintain control and Evils under the Ground 

 

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stability at home,53 and thus their ability to defend Chinese interests. But in many conflicts around the world, as China experienced in South Sudan, even with strong and supportive foreign patrons, or an international peacekeeping force, incumbent governments still struggle to exercise authority within their borders. In response, Chinese private security companies, such as the China Security and Protection Group and Beijing DeWe Security Services, which helped evacuate Chinese oil workers from South Sudan, are expanding their overseas activities.54 These new outfits, staffed by PLA veterans, are welcome by Chinese companies. This is in part to avoid the high costs of working with international firms, such as G4S and Control Risks, but also due to an ease of language and cultural similarities.55 At the same time, the military background of Chinese private security puts their independence in question, and potentially offers Beijing some strategic ambiguity to protect overseas assets but avoid responsibility should these firms engage in unlawful behavior overseas. But the lack of experience of these outfits, and the absence of international regulation, may nonetheless lead to potential local political backlash for Beijing.56 After employees of the US private security firm Blackwater killed seventeen civilians at Nisour Square in Baghdad in 2007, the United States discovered that, in the eyes of local populations, it is difficult to separate the US military from American private security firms. Yet China has nonetheless allowed Chinese private security firms to proliferate. A Chinese state-​owned investment group even worked with former Blackwater head Erik Prince to establish the Frontier Services Group, which has been involved in evacuation and reconnaissance missions in South Sudan and elsewhere.57 But local military and private security may fall short of protecting Chinese nationals and investments. China is readying for direct military intervention too. The People’s Armed Police has an elite counter-​terrorism force, known as the Snow Leopards, which already protects Chinese diplomatic missions in Afghanistan and Iraq.58 In 2015, a new counter-​terrorism law sanctioned the Chinese army and police to operate overseas with Chinese government approval. Since the definition of terrorism is abstract in the law, and host country consent is unmentioned, the discretionary power for China to respond to international incidents is left wide open. *** Modernizing eighteenth-​and nineteenth-​century mercantilist thinking that “trade follows the flag,” the Chinese flag is following in the footsteps of its 54     How

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growing trade and investment. China’s economic power is the core of its global influence, and protecting its expansion is critical to Beijing. In 2009, China’s oil giant, CNPC, called on “powerful departments,” such as the PLA Special Forces, to follow Chinese companies and “go global” to deter attacks and respond to kidnappings of Chinese workers abroad.59 It took time, but by July 2017, they finally arrived with the finished construction of an overseas Chinese naval base in Djibouti. China’s military intended to take Xi Jinping’s Belt and Road, his “road for peace,” to expand its overseas presence to protect China’s interests. Djibouti marks the beginning of the PLA’s “go out” strategy. Sited on a tiny but strategically located country on the Horn of Africa, China’s new Djibouti naval base was established officially to support China’s anti-​piracy and peacekeeping operations. But since it is close to regional hotspots in both the Middle East and Africa, it can also serve as a launching pad to defend Chinese overseas interests in both regions as well as advance China’s broader global security objectives. The base is a natural next step for China. As a major power and the world’s largest trader, it is following in the footsteps of other powers that established the means to protect their overseas commerce. It was already a crowded field of foreign militaries in Djibouti when the Chinese arrived. Djibouti was leveraging its geostrategic position to reap the economic benefits of engaging multiple foreign powers. The United States, France, and Japan already had bases, among other European troops stationed in the country. America’s Camp Lemonnier opened for counter-​terrorism operations after the US terror attacks of September 11, 2001, and houses up to 4,000 troops. But unlike the other foreign bases, which were clustered relatively close together, China’s was located seven to eight miles away: close enough to not go unnoticed, but far enough away to signify a normative distance from the American, European, and Japanese allies. China’s new naval base, coupled with its offers of finance and investment to Djibouti, was met with much trepidation in the United States. American officials worried that the Chinese presence would “seriously affect the West’s attempts to collect intelligence on Islamic State and al-​Qaeda.”60 There is a sizable dose of hypocrisy to American criticism of China’s expanding global military presence. America established its first overseas base in Guantánamo Bay, Cuba, during the 1898 Spanish-​American War. In exchange for granting Cuba its official independence, the United States received a lease with no termination and no possibility for eviction.61 At the time, the United States was an upstart global power, not much unlike China today, and framed its growing international military engagement with anti-​colonial, peacemaker rhetoric.62 (Guantánamo later became the site of America’s infamous offshore Evils under the Ground 

 

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detention camp, where imprisonment and torture were employed against suspects in its War on Terror.) David Vine, in his book Base Nation, estimates that today the United States maintains 800 bases in dozens of countries around the world. These range from city-​sized “Little Americas” with thousands of troops and supporting infrastructure, such as Ramstein in Germany or Kadena in Okinawa, Japan, to so-​called lily pads, small covert sites housing drones and surveillance aircraft.63 Official Pentagon figures place close to half of its bases in Germany, Japan, and South Korea alone,64 but even the remaining hundreds still dwarf the number of all other countries’ foreign bases combined. But it was not only American double standards at play in the criticism directed at China for establishing a naval base in Djibouti. Chinese officials had done much to nurture the idea that China would never build overseas bases as the United States and European powers did before it. Beijing persisted that overseas bases were tools of neo-​colonialism and American hegemony, that China’s economic expansion would not be accompanied by a global military presence. In 2010, China’s Ministry of National Defense said that reports that China was planning to establish an overseas base were groundless.65 Then when construction began in Djibouti, China’s defense ministry downplayed the nature of the base, arguing it was merely a “support facility” for peacekeeping and humanitarian operations.66 In fact, the idea for a naval base in Djibouti had been discussed in China as early as 2009, and later was part of the PLA Navy’s 2015 strategy on “near seas defense far seas protection.”67 That same year, Chinese major general Wang Weixing, director of the Foreign Military Studies Department at the Academy of Military Sciences, wrote that the Belt and Road was not only a national development strategy for China, but also a national security strategy.68 Wang saw China’s economic expansion going hand-​in-​hand with its military expansion. He argued that airports and other infrastructure built and operated by Chinese construction companies in the Belt and Road should be utilized directly by Chinese military when needed in the future. Depending on one’s perspective, Djibouti is not China’s first overseas base. Despite the disputes with neighboring countries in Southeast Asia, similar to Vietnam and other claimant countries, China has established nearly thirty outposts, some with advanced weaponry, located hundreds of kilometers from its shores in the Parcels and Spratly islands of the South China Sea.69 Yet recognizing the significance of the Djibouti base, the opening ceremony was held on the ninetieth anniversary of the People’s Liberation Army on August 1, 2017. Soon after, Chinese forces, including tank destroyers, engaged in live-​fire exercises.70 Hardly only a logistics facility, the 200-​acre 56     How

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base had accommodation for up to 10,000 troops, helipads to deploy a dozen Chinese attack helicopters, and a pier to dock a navy flotilla.71 It is capable of supporting Chinese counter-​piracy engagement, but also intelligence collection, non-​combat evacuation, peacekeeping, counter-​terrorism, and more. One of the first military engagements the Chinese were involved in had little to do with Beijing’s stated purpose for the base. In May 2018, Pentagon officials accused Chinese forces stationed in Djibouti of targeting American pilots with military-​grade lasers.72 The year before, a Chinese destroyer and frigate refueled at Djibouti on their way to the Baltic Sea to join the Russian navy in joint military exercises.73 The United States was far from the only country concerned with the expanded Chinese military presence. Indian admiral Sunil Lanba watched with caution as Chinese ships and submarines, likely gathering critical intelligence and gaining experience in New Delhi’s neighborhood, crossed South Asia on the way to the Horn of Africa.74 Long-​ held concerns that China held plans to encircle its regional rival in a so-​called string of pearls to control strategic waters in the Indian Ocean seemed to be materializing as China’s military presence stretched westward. India’s military leaders had plenty of reason to be suspicious. Djibouti made for an unassuming place to begin China’s overseas military expansion because of the numerous existing foreign bases already there, but it opened the door for a wider and deeper Chinese global military expansion. In January 2019, all pretenses were dropped when the PLA publicly acknowledged that additional bases were possible.75 This came five years after the Chinese military denied reports that it sought to establish eighteen military bases across South Asia, East Africa, and even on Africa’s Atlantic coast.76 The Chinese strategic community saw plenty of tactical reasons to establish future bases, and policy experts noted the importance of linking these with expanding China’s international responsibilities, such as anti-​piracy operations in Djibouti.77 Many of the prospective bases, such as in Pakistan, Sri Lanka, Cambodia, and Myanmar, similar to Djibouti, are located near critical chokepoints and sea-​lines of communication for international trade across Asia, or the main regional corridors of China’s Belt and Road Initiative in East Africa, South Asia, and Southeast Asia. This offers not only defensive possibilities to protect Chinese commercial interests, but also offensive options by cutting off the trade and strategic resources of adversaries. Together, the current and future bases also provide the capability to fulfill China’s potential for military intervention in the future. The focus of the Chinese military and development of new, modern hardware is squarely directed toward a potential cross-​ strait conflict over Taiwan, which Xi Evils under the Ground 

 

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Jinping and his fellow Chinese leaders seek to retake by 2049; other unresolved island and maritime sovereignty claims in its near seas; and pushing back any involvement from the United States and its East Asian allies.78 But with PLAAF long-​range Y-​20 heavy transport aircraft; Type 071, or Yuzhao, landing platform dock vessels; and the new Type 075 amphibious helicopter assault ship, China is now also in the position to intervene directly further afield.79 Chinese military can engage in many aspects of modern warfare, from drones for reconnaissance, precision strikes, Special Forces hostage rescue, assassinations of high-​valued targets, and even boots on the ground in foreign countries where Chinese interests are in jeopardy. But just as America’s foreign military bases have bred radicalism and anti-​Americanism, particularly in the Middle East and South Asia,80 China’s growing global collection of bases and military capabilities may draw it into conflicts that produce long-​term security consequences. By making it easier for China to fight, military intervention may become a repeated policy choice for Chinese decision makers. The Chinese military “go out” strategy suggested by Chinese major general Wang Weixing might take Chinese forces into multiple conflict settings in Africa, South Asia, and the Middle East to protect exposed assets and nationals overseas. These are places, such as South Sudan, where local politics and security dynamics have already shown the ability to pull control out of Beijing’s hands and may in the future draw a deeper Chinese military footprint into protracted conflicts. Strategic restraint on Beijing’s side may prevail. Other Chinese military experts and strategists have recommended that China rely on host country forces and private security companies instead of necessarily sending the PLA overseas.81 The close defense ties and arms sales China is establishing in Africa, the Middle East, and elsewhere can serve to smoothen host country consent for its military intervention, such as to support putting down a rebellion or coup d’état, should it deem such an action necessary. After all, China has witnessed Britain’s 2000 intervention into Sierra Leone and France’s in Mali in 2012 move forward, made on humanitarian and counter-​insurgency grounds, respectively, but nonetheless to defend European interests. These interventions advanced before receiving international consent, and were only later backed by the UN Security Council, which transformed them into UN peacekeeping missions.82 How Beijing will react to a host government no longer working in its interests is a growing predicament for decision makers in Beijing as Chinese nationals and investments spread overseas. Usually Beijing relied on its trade, finance, and investment to ensure the support of new leaders. But a situation where a leader remains actively hostile to Chinese interests will disrupt its 58     How

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narrative on intervention. Instances where there is a complete breakdown of a government overseas also present Beijing with a problem. Suddenly its approach of supporting national sovereignty and state institutions will have little ground to build on. Without international consent from the UN Security Council, China could look to regional bodies, such as the African Union, and in Central Asia, the Shanghai Cooperation Organization, to legitimize its intervention to protect a foreign government partner, or back the creation of a new government altogether. But as the United States experienced in Latin America, Africa, and the Middle East, such as the 1953 US-​sponsored Iranian coup d’état against the government of Mohammed Mossadegh, the precursor for the 1979 Iranian revolution, or the Soviet invasion of Afghanistan, installing and backing regimes overseas could lead to considerable blowback. China’s counter-​terrorism response at home also suggests the role it will play in overseas intervention. After the Turkestan Islamic Movement killed five in a car bomb attack at Tiananmen Square in 2013 and left twenty-​nine dead after a gruesome knife attack in a Kunming train station the following year,83 Xi Jinping called for “nets spread from the earth to the sky.”84 The same counter-​terrorism law that sanctions the use of military force abroad to combat terrorism also laid the groundwork for the large-​scale detention of the Muslim Uyghur population in Xinjiang. Cracking down further on religious practices, Chinese authorities imposed tight security measures and a large and modern surveillance system employing big-​data analytics, artificial intelligence, and forced DNA sampling to monitor and control the movement and activities of the Uyghur population. Up to 1 million Uyghur are estimated to be detained in re-​education camps.85 Xinjiang has become a “frontline laboratory for data-​driven surveillance” that many fear is already being rolled out across China.86 China justified its actions in Xinjiang as a preemptive hard strike against potential future terrorist attacks. “A wise man should never stand on a falling wall,” a security expert at a prestigious Chinese government think tank in Beijing told me. After initially denying the existence of large-​ scale detention camps, China changed tactics in early 2019. It held up its counter-​terrorism and de-​radicalization efforts as “worthy of praise”—​new methods in the global fight on terror that other countries should learn from.87 China is already exporting its Internet control systems and surveillance technologies, including artificial intelligence systems for law enforcement, to countries in Africa, the Middle East, Latin America, and Southeast Asia.88 The United States and European countries do the same, but China and the telecommunications company Huawei are leading suppliers of AI surveillance systems.89 Without Evils under the Ground 

 

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the resources, and with large, undeveloped environments unfit for mass surveillance, those facing insurgencies in countries like South Sudan and Mali might only find limited use for such technology in their capitals. But for others, including both authoritarian regimes and weak democracies, it is possible to import Chinese methods of heavy security, surveillance, and even mass detention/​re-​education to suffocate unrest among ethnic minorities as well as stamp out political opposition, independent media, and civil society groups. In the short run, Beijing’s crackdown on its Uyghur minority may stifle new terrorist attacks, but the international consequences are still developing. Most Muslim political leaders, including Pakistan’s Imran Khan and Saudi Crown Prince Mohammed bin Salman, stay quiet, feign ignorance, or openly accept and even praise Beijing’s Uyghur crackdown.90 But China’s actions have been openly criticized by others, including among political leaders in Malaysia and Turkey.91 Then there are those who see China’s counter-​terrorism at home as a security threat outside its borders. Before his death, Maulana Sami ul Haq, a Pakistani Islamic cleric who was instrumental in teaching many of the Taliban’s top leaders, said he welcomed China’s engagement in peace negotiations in Afghanistan, but also viewed China’s growing interest in the region with some skepticism. The so-​called father of the Taliban compared Beijing’s actions with the Indian subcontinent’s historical occupation. “I don’t approve of a relationship that leads us to slavery,” Haq said. “Given their handling of Muslims at home, the Chinese will behave like the British East India Company once they dig their feet deeper in Pakistan.”92 The detention of Uyghur Muslims in China sowed fertile ground for Chinese Uyghur militants to rally their international counterparts. In a 2014 speech, Islamic State leader Abu Bakr al-​Baghdadi named China among the militant group’s main targets, blaming Beijing for forcibly seizing “Muslim rights.” While Beijing sought to sever links between Uyghur militants and the international terrorist groups al-​Qaeda and the Islamic State, its domestic policies are laying the groundwork for closer bonds.93 This has opened a new, long-​term front for Uyghur militants, who were purportedly responsible for the August 2015 Bangkok bombing killing nineteen at a shrine frequented by Chinese tourists, and one on the Chinese embassy in Bishkek, Kyrgyzstan, a year later.94 China may be in the early stages of a global backlash against its interests for its crackdown in Xinjiang. ***

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From South Sudan to Afghanistan, China has turned the page on non-​ interference. What comes next for China’s involvement in overseas conflicts is fraught with risk. Unilateral military intervention by foreign powers may become normalized in the years ahead, as the UN Security Council becomes paralyzed by geopolitical competition between the United States, China, Russia, and others. As calls at home continue for Beijing to defend Chinese nationals and investments overseas, and its capability to intervene increases, Beijing may soon respond to crises that draw it deeper into protracted and costly conflicts. Beijing has thus far promoted its own brand of intervention and won some international backing of its methods against its Uyghur population in Xinjiang, even among Muslim countries. But just as injustices committed in America’s foreign intervention gave rise to future security threats, China’s Orwellian methods employed on its own population, support for oppressive regimes, and its growing security activities abroad will also produce blowback. Despite the heroics witnessed in Wolf Warrior II, which neatly begin and end within a two-​hour timeframe, China’s challenges in building lasting peace to protect its growing economic interests around the world threaten to bog Beijing down in quagmires for decades to come. “The People’s Liberation Army of Today,” as discussed at the Chinese embassy’s lunch gathering, will very likely continue to support humanitarian and peacekeeping operations. But the PLA of tomorrow may take China in dangerous new directions.

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Chapter 3

H

Nobody Hates Money

e was not supposed to win. For months, Mauricio Macri trailed in Argentina’s 2015 presidential election polls. On the day of the vote, there was little doubt that his opponent, Daniel Scioli, the heir apparent of the long-​serving leftist president, was the clear favorite. Scioli’s campaign workers were so confident their man would come out on top that, even before the results were announced, they handed out orange t-​shirts and hats inscribed with the word “president.” “The governors are with me, the presidents of the regions are with me, the mayors are with me, and the legislators are with me,” Scioli said brashly. But the people were not with the frontrunner. When the count came in, Scioli’s supporters were left dumbstruck. Macri forced a runoff election, the first in the South American country’s history.1 A month later, in the second-​round vote, the favorite’s voters were in tears. In a stunning political upset, Macri narrowly won the presidency. A wealthy businessman and former mayor of Buenos Aires, Macri promised to take Argentina in a new direction: away from the populist policies and fiery anti-​American rhetoric of his predecessor Cristina Fernández de Kirchner, and toward a center-​right agenda of liberalizing the economy and restoring relations with the United States and Europe. Big changes were in store for Argentina. To revitalize an ailing private sector and draw in foreign investment, Macri immediately moved forward with his plan to remove long-​standing currency controls on the Argentine peso, slash export taxes, and cut government spending on large subsidy programs. China had a lot riding on the election. The changing of the political guard threatened Beijing’s budding relations with Argentina. In the summer of 2014, Cristina Kirchner agreed to take on over $20 billion in loans from China

 

to build a series of large infrastructure projects. Plans were set in motion for Chinese construction companies to rehabilitate aging railway lines to improve commuter and commercial transportation and build new hydropower dams and nuclear power plants to bolster the country’s flagging energy supply. But Macri questioned the lack of transparency in the loan for infrastructure agreements, which had never been released to the public, and was wary of the possible negative environmental footprint of the Chinese-​built infrastructure. While his opponent Scioli promised that, if he won, he would “carry certainty and confidence” to Argentina’s relations with China,2 Macri vowed to review and even cancel China’s mega deals. The new Argentine president was pushing back against more than just a few large construction projects. He was also resisting China’s global strategy to place its industries at the center of the global economy. From high-​speed railway lines in Turkey, hydropower dams in Ethiopia, to new ports and highways in Pakistan and Sri Lanka, China was already a key global builder of infrastructure. Under President Xi Jinping’s signature foreign policy, the Belt and Road Initiative, China intends to take this activity to another level. With initial plans to involve well over a hundred countries, totaling a third of the global economy and half the world’s population, the core of the $1 trillion global strategy was to finance, build, and connect new transport infrastructure, industrial corridors, and trade routes from China to Central Asia, the Middle East, Africa, and Europe. President Xi first announced China’s aim to develop the Silk Road Economic Belt, a modern remake of the ancient trade route—​but with high-​ speed railways and fiber optic cables instead of camels and caravans—​on a visit to Astana, Kazakhstan, in September 2013. A year later in Indonesia, he upped the ante in announcing the twenty-​first-​century Maritime Silk Road, an ocean route connecting ports from Southeast Asia to the Mediterranean Sea. His plan is a bold one. Beijing plans to provide over $1 trillion in finance overseas to build infrastructure and economic connectivity. The China Development Bank is the main engine of the initiative,3 but the China Export-​Import Bank, the Silk Road Fund, and China-​backed multinational financial organizations, the Asian Infrastructure Investment Bank and the New Development Bank, are also expected to power the initiative forward through finance and assistance overseas. Such vast sums of finance are not simply being sent abroad by China to build new infrastructure, trade links, and establish China as a leader in global technology standards, but also to expand Beijing’s political influence across the Eurasia region and beyond. Even far-​off Latin America is seen as a natural extension.

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But China’s grand plan is not necessarily destined for success. It requires political acceptance from foreign governments and societies over the long run. Just as insecurity is a threat to China’s investments in war-​torn countries in Africa, the Middle East, and South Asia, new political leaders and domestic opposition, cautious about their countries getting too close to China, also can stand in its way. China’s financial reserves can easily absorb a failed project here and there. But if financial uncertainties and political risks topple a large number, the initiative can cascade to a major foreign policy disaster for Beijing. The Belt and Road could become known for producing a long line of white elephants, large and expensive projects with little use or value, and amount to a global embarrassment for China and its ambitious leader. In this light, Argentina is an early story of how the Belt and Road, China’s aspiration to cement its superpower status through concrete and steel, began to face local pushback. One of South America’s largest economies, Argentina is a microcosm for how China, a one-​party authoritarian state, is reacting to democratic political change endangering its interests overseas. But it was neither the first time, nor the last, that China’s economic interests around the world have been jeopardized by the politics of incoming leaders. On his rise to power in 2010, Michael Sata, the late Zambian president, did not mince words on China’s investment in the mineral-​rich southern African country. “Instead of creating jobs for the local workforce, they bring in Chinese workers to cut wood and carry water,” Sata said, with a critical eye to the labor practices of Chinese companies in his country.4 In 2016, Britain’s then new prime minister, Theresa May, caught Beijing off guard when she put plans made by the previous government for a Chinese-​financed nuclear power plant under review.5 There are also new leaders who welcome close engagement with China. Facing staggering financial troubles, Greece’s prime minister Alexis Tsipras in 2015 opened his country’s doors to Chinese investments and economic support in the face of calls for heavy austerity measures from the European Union. The anti-​American posture Rodrigo Duterte of the Philippines took on after becoming president in 2016, and his at times nonchalant attitude to China’s military expansion in the South China Sea, were gifts for Beijing’s geopolitical ambitions. Over time, however, while the Macris and Dutertes of the world will come and go, China is discovering that the deep reach and heavy hand of its economic interests overseas engender a local pushback that is far broader, and sustained, than what changes in political leadership alone can muster. Argentina represents an early test case for the challenges China’s global infrastructure initiative will face far into the future.

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*** Palermo Hollywood is different from the rest of Buenos Aires. Populated by hipster cafes, upscale restaurants, and boutique hotels, the leafy neighborhood owes its namesake to the TV and radio studios that first arrived in the 1990s.6 Its cobblestone streets and quaint and colorful low-​rise houses exude a calm and relaxed atmosphere, offering refuge from the boisterous daily grind that grips much of Argentina’s capital. Mornings are slow, lunches late, and on weekends, restaurants and nightclubs fill with young and affluent crowds. But like the rest of the sprawling city of over 15 million, locals in Palermo Hollywood rely on dozens of small Chinese-​run supermarkets for their everyday staples. The tight quarters and dim lighting of the stores fit poorly with the trendy surroundings outside. But over the past decade, it was no surprise that the number of supermercados chinos swelled to over ten thousand locations across Argentina. After living through a devastating economic crisis in 2001, for many Argentines, the arrival of the low-​cost supermarkets was a godsend. In an economy struggling to regain its feet, they offered affordable prices on everything from laundry detergent to wine. Often located only a few blocks apart in Buenos Aires and other large cities, Chinese-​run supermarkets are today an essential part of Argentina’s modern urban landscape. From the growth of Chinatowns across America, to one-​man Chinese shops in the most distant African villages, their success is synonymous with the far reach of Chinese entrepreneurs around the world. But on one intersection in Palermo Hollywood, a new side of China’s global presence can be found. The neon lights of a red-​brick building mark Restaurante Beijing, a fine-​dining Chinese establishment catering largely to the city’s affluent Asian residents, particularly to satisfying the appetites of the Chinese business community. Inside, its subtle décor and private dining rooms provide an ideal setting for visiting Chinese executives. Here they can unwind after a long day, or celebrate new deals, while enjoying fried eggplant, spicy pork, and other tastes of home. As one of the largest economies in the region, it was only a matter of time before Chinese investors arrived in Argentina. Beginning in 2010, headlines of China’s multibillion-​dollar business deals eclipsed stories of the ubiquitous Chinese-​run supermarket. China’s state-​owned companies bought up large stakes in Argentina’s oil industry and made inroads in mining to extract gold, silver, copper, and lithium. Setting up shop at the capital’s glitzy Puerto Madero waterfront, China’s Industrial and Commercial Bank, the largest bank in the world, bought a majority stake in Standard Bank of 66     How

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Argentina to establish a strong presence in South America. The investment in Argentina is another example of how China is quickly becoming a major global investor, with state-​owned and private Chinese companies stretching their arms out into the world. But China is making even bigger waves with its provision of official finance. Long before the official launch of the Belt and Road, Latin America was one of the main destinations for Chinese loans overseas. It received over $140 billion between 2005 and 2018, outpacing the World Bank and Inter-​ American Development Bank.7 The lion’s share of its support, however, is concentrated within a small group of resource-​rich countries. Venezuela stands out, receiving close to half of the total at $67 billion, with Ecuador, Brazil, and Argentina making up much of the remaining share. Chinese finance also gravitates toward energy and transportation infrastructure projects—​mega deals, like those in Argentina, to build new roads, railways, hydropower dams, and nuclear power plants. In many ways the success and setbacks of Chinese infrastructure projects in Latin America were a precursor of what was to come for the Belt and Road. Standing in front of Restaurante Beijing on a breezy autumn evening, I  hoped to hear about the latest wave of Chinese money flowing into the South American country. I had arranged to meet a Chinese diplomat serving in Buenos Aires to discuss the long line of loan-​for-​infrastructure deals signed between Beijing and Argentina’s former leader Cristina Kirchner. But after watching several goldfish navigate the confines of a large tank inside the restaurant’s entranceway, I  began to worry that my dinner companion might be a no-​show. It was still only a few months since Mauricio Macri became Argentina’s president, and his critical position toward China’s mega deals was a hot topic in the press. Any diplomat would have been reluctant to discuss the possible loss of billions of dollars in projects for his country, let alone one from China, where officials are known for their preoccupation with saving face and guarded approach to outside questions. But just when I thought I might end up eating alone, I heard my name being called from a black jeep pulling up to the front of the restaurant. Sporting a crew cut and walking with a confident stride, my dinner companion arrived with a bottle of Malbec, Argentina’s famous wine, tucked under his arm. Once seated at a large round table in the far corner of the restaurant, our conversation initially fell on everyday life for Chinese diplomats in Argentina. To my surprise, even though the diplomat had served in Liberia, Sudan, and the Democratic Republic of Congo, African countries affected by civil wars and political instability, he still viewed Argentina as a hardship post. For one,

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returning home to China is a rare luxury because of the grueling 18,000-​km journey between Beijing and Buenos Aires. But it is mainly the fear of violent crime that kept Chinese diplomats on their toes. Although still widely regarded as one of South America’s safest cities, armed robbery remains a problem in Buenos Aires. “In the evenings, we rush from one event to another, and then head directly home,” the diplomat told me. “You never know when someone is going to stick a gun in your chest.” As our meal progressed, and a plate of finely cut Peking duck was placed in front of us, I asked about the potential loss of multibillion-​dollar infrastructure projects under the new Macri government. Like any skilled diplomat, he quickly steered the question away by downplaying the importance of the threat. From China’s global perspective, Argentina is a relatively new partner, but it is not a particularly big one. The roughly $10 billion in annual trade is hardly a factor in China’s over $4 trillion global total. Even in Latin America, there are more opportunities in Brazil, Argentina’s larger neighbor, and at any rate, Chinese companies are far more eager to enter European and North American markets. The diplomat also brushed aside the new Argentine government’s concerns over the transparency of China’s loans to Argentina, and possible links to corruption scandals plaguing high-​level officials under former president Cristina Kirchner. “I say to our new Argentine friends, ‘go take a look at the agreements, we’ll wait,’ ” he said. “And if they find nothing wrong, they should respect the contracts.” The diplomat knew his country was in a position of power. Macri had much to lose by upsetting relations with Beijing. China had become one of Argentina’s largest trading partners and financial lenders over the past decade. An economic downturn during Cristina Kirchner’s final years as president was instrumental in bringing him to power. If the new president was going to make good on his promise to turn around Argentina’s floundering economy, spurning China hardly seemed a wise move. As our dinner ended, the Chinese diplomat maintained an air of certainty that ultimately Macri would not cancel the infrastructure deals. China’s offer of some $20 billion in loans was too large to turn down. China would stay the course in Argentina, confident that the new leader would turn around in time and understand the importance of maintaining positive relations. Expressing a simple rule of thumb that helps explain Beijing’s worldview, the Chinese diplomat ended our conversation flatly, “Let me put it this way, nobody hates money.” Mauricio Macri was trying to do something few leaders in the developing world at the time dared: say no to China. It was an antithetical position for 68     How

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Macri, who was staunchly pro-​business. The son of a construction magnate, and a former boss of the Boca Juniors, one of Argentina’s most successful football clubs, Macri after being elected president promoted banking and energy executives to key cabinet roles. But his personality is more nuanced than the stiff businessman-​turned-​politician background Macri portrays. Known for streaks of flamboyance, Macri belted out a rendition of Queen’s hit “Somebody to Love” at his fiftieth birthday party in 2009. Following his swearing-​in as president in late 2015, he danced for the crowds that gathered at the capital’s famous Plaza de Mayo. A playboy in his younger days, currently married to his third wife, Oxford-​educated fashion designer Juliana Awada, Macri is not a man fearful of change or unwilling to take risks. It was a twelve-​day kidnapping ordeal at the hands of rogue police officers in 1991 that first compelled him to start a political career to fight against corruption. Changing course on China was another bold move. Under Cristina Kirchner, and her late husband Néstor Kirchner, who preceded her as president, Argentina fostered close ties with Beijing, while maintaining an acrimonious relationship with the United States and Europe. Relations with Washington were in disrepair ever since Argentina’s devastating financial crash and massive default in 2001 made it a pariah in international debt markets.8 Kirchner blamed a group of Manhattan-​based hedge funds, which she called “vulture banks,” for seeking to profit from buying Argentine debt at distressed prices. She refused to negotiate with the Americans, turning to China for help instead. Macri’s agenda was an affront to the groundwork Kirchner had laid in steering the country toward China over the past decade. After coming to power, he quickly settled Argentina’s outstanding debt with American and international lenders. It was still going to be an uphill climb to revitalize the Argentine economy. Inflation was biting deeply into livelihoods. But Macri succeeded in ending over a decade of isolation from global credit markets and raised $16.5 billion in Argentina’s initial bond sale, a record-​breaking amount for an emerging market.9 He then set about rekindling ties with the West to diversify and expand sources of investment. “If everything comes from China, this will be an imbalance,” he said on the sidelines of an investment conference in Sun Valley, California.10 “We are mainly descendants of Europeans, so it’s easier to deal with Europe than Asia.” Shortly before President Obama’s visit, I  spoke with Diego Guelar about Argentina’s changing position in world affairs. Guelar is an experienced Argentine politician and well-​traveled diplomat, with postings in the United States, Europe, and Brazil. In early 2016, he was preparing to become Argentina’s next ambassador to China. He quickly made it clear that Nobody Hates Money 

 

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the tone of relations with Beijing was going to change. By warming ties with the United States, Macri opened alternatives for Argentina, giving it the potential to bring in fresh competition to sectors that Chinese companies currently dominated in the country. “China is still a very important partner to Argentina, and I expect it to be very active in the future” Guelar told me. “But the relationship was based on Argentina’s isolation. There is a new environment now. China is not going to be alone.” One of Macri’s first forays on the international scene was the 2016 World Economic Forum in Davos. The perfect setting to kick off his new agenda, the annual gathering at the Swiss mountain resort town brought together presidents and prime ministers with the global business elite. Enjoying the spotlight of bringing Argentina back into global markets, Macri met not only with CEOs of American, European, and Japanese corporations, but also with then American vice president Joe Biden and David Cameron, at the time Britain’s prime minister. In the months to come, he would go on to welcome a line of visiting Western leaders back in Buenos Aires, capped off with the arrival of then US president Barack Obama. Following his historic visit to Havana, re-​establishing diplomatic ties with Cuba after decades of estrangement, Obama went to Buenos Aires in March 2016 in an effort to rejuvenate America’s relationship with Argentina. The high-​profile visit was testament to Macri’s skill in steering Argentina’s new foreign policy forward. The teal-​blue fuselage of Air Force One on the tarmac of Ezeiza International Airport, emblazoned with a presidential seal and the American flag on its tail, was a sign of just how quickly Argentina’s approach to world affairs could change. Pictures of the US president meeting cordially with Macri and later locking arms with world-​renowned tango dancer Mora Godoy in a short strut at a state dinner dominated international news. These images of lively reunion stood in contrast to the more formal proceedings between China’s president Xi Jinping and Cristina Kirchner in previous years. Yet like Kirchner before him, Macri was eager to break from Argentina’s dependency on exporting large quantities of raw soybeans to China and instead diversify its partners. The goal was to move up the value chain by shipping higher-​profit soy oil and soy meal and other value-​added agricultural goods like wine and beef. “We have to go from being the breadbasket of the world,” Macri said, “to the supermarket of the world.”11 Early on, Macri’s economic reforms and new outreach to the West paid dividends. Halfway into 2016, foreign investment was already higher than all of 2015.12 His government lined up $30 billion in new investment pledges from foreign companies, with American blue-​chip corporations, including General Motors 70     How

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and Dow Chemicals, at the front of the queue. Praise for Macri’s reforms was widespread across North America and Europe. “No one is naïve enough to believe that Macri is a savior,” a senior Western diplomat told me, “but it is political change.” While so many world leaders were looking to China for new trade and investment opportunities, after years of isolation Macri was succeeding in drawing interest in Argentina from the West. “Macri hasn’t cut off China, but he wants to lower Argentina’s dependency on it,” the diplomat said. “Now the Chinese need to get in line like everyone else.” *** Whether it is oil from Venezuela, copper from Peru and Chile, or iron ore from Brazil, China’s demand for natural resources was instrumental in reviving many Latin American economies at the turn of the century. After two decades of sluggish growth in the 1980s and 1990s, Latin America experienced one of its best decades in modern history, with average growth levels of 3.6 percent between 2003 and 2013.13 For Argentina, the importance of China to the country’s resource boom began to be revealed to me after an hour’s drive northwest of Buenos Aires. Along the highway, a sea of green soybean plants, stretching out in neat rows, appeared across the horizon. This was the beginning of Argentina’s pampas, a massive stretch of fertile lowlands extending out of Buenos Aires to cover an area over twice the size of Germany.14 The soybean helped to restore Argentina’s lost economic pride after a massive $100 billion debt default in 2001 shut the country out of global credit markets, leading to a massive 11 percent contraction in the economy, 25 percent unemployment, and putting millions of middle-​class Argentines into poverty. It was China’s love for pork that gave Argentina’s soybean boom its strength and longevity. Beginning in the 1980s, China’s miracle of three decades of high levels of economic growth vaulted hundreds of millions of Chinese into the middle class. As a result, Chinese were consuming more meat with their staple rice and noodles, and pork was the national favorite. Lacking arable land, soybean imports from Argentina, but also Brazil and the United States, played a key role in meeting China’s growing demand for pork because the introduction of soymeal into animal feed was found to raise protein levels in livestock, particularly for pigs. China’s trade with Argentina won it plenty of friends. Bespectacled, goateed, and outspoken, economist Gustavo Girado was thankful for China’s role in helping revive Argentina’s economy. “We thought it was impossible to have hunger here,” Girado said, “but after the 2001 financial crisis, there it was on the streets around us.” We were sitting at El Ateno Grand Splendid, an early Nobody Hates Money 

 

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1900s theater house and later cinema in central Buenos Aires, which most recently had been converted into a large bookstore. High above our heads, the frescoed-​painted ceiling of the theater remained, but aisles of books had replaced seating rows, and former theater boxes were transformed into reading areas. Just as the El Ateno reinvented itself over the years, so did Argentina. Facing high borrowing costs on global financial markets due to its debt default at the turn of the century, Argentina had limited spending power. But then it turned to China. Girado argued that access to more affordable Chinese imports offered his country the opportunity to grow again. “We had a lot of arguments to go ahead with China,” he said. “Argentina was struggling outside of the international financial system, and then China appeared, not only with money, but also with technology. It was as if Santa Claus arrived.” But Girado also argued that China had not simply come to Argentina bearing gifts. Macri’s ascent to power did not mark the beginning of tensions with China. As China’s significance as a trading partner rose, tensions appeared even given outwardly warm relations under President Kirchner. Argentina may have been a periphery country for Chinese companies, but high-​level Argentine officials saw China as a job killer as its exports undercut local industries.15 “Chinese enterprises were flooding the world in textiles and destroying Argentine producers,” said Girado. “Since many of our companies are small and medium-​sized enterprises, we had to defend them.” Facing an influx of Chinese imports, the Argentine government, still under Kirchner, responded by applying anti-​dumping measures on Chinese products it argued were selling at lower prices in Argentina than in China and elsewhere. In response, China went after the heart of Argentina’s economy, its industrial soy complex. China was not about to restrict its import of Argentine soybeans. It depended on outside suppliers. But in April 2010, its Ministry of Commerce announced a ban on imports of Argentine soy oil for sanitary reasons. This was not the first time China applied such restrictions. In 2004, it blocked the product on similar technical grounds, so-​called non-​tariff barriers. Argentine officials saw these bans as retaliation for its anti-​dumping measures on Chinese goods. For China, however, periodic restrictions are also a means to protect and boost the capacity of its own agricultural industry. China could do little about its inherent lack of arable farmland, but to the great frustration of Argentina and other Latin American producers, Beijing offers tax exemptions and reimbursements to Chinese agro-​producers.16 Protectionism was hardly a practice invented by the Chinese, but it stood in sharp contrast to Beijing’s rhetoric of mutual benefit and co-​development. China’s trade war with the United States would later work in Argentina’s favor in gaining some access to Chinese soy markets, but 72     How

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this is likely an exceptional, temporary condition. Trade restrictions on Argentine agro-​industrial goods reflect China’s broader trade behavior with Latin America. In contrast to Latin America’s other trading partners, such as the United States and the European Union, China is heavily focused on sourcing natural resources from the continent.17 China takes in just 3 percent of total Latin American manufactured exports.18 In fact, China is a fierce competitor for Latin America’s largest economies. In Argentina, Brazil, Mexico, and Colombia, neoliberal reforms advanced in the 1990s that ended import substitution policies, combined with a lack of investment in innovation and China’s increasing ability to compete, shrank manufacturing significantly (and job creation with it) as a share of the total economy.19 China is also upsetting regional economic relations within Latin America. “From my point of view, the challenge from China is not in the national market, but in the third market,” Girado told me. “China is outcompeting Argentine companies in the Brazilian market, and the Brazilian companies in the Argentine market.” Trade fell between the two South American economies even before Brazil went into recession in 2014, and Brazilian officials pointed the finger at an influx of competitive Chinese goods in both countries for the decline.20 There was a silver lining for Argentina in the wake of China’s soy oil ban in 2010. Argentine producers were able to find alternative markets. Iran, Egypt, Turkey, and Southeast Asian countries are all buyers, but India stands out. A carnivorous demand for pork still brings Argentine soybeans to China, but the cooking needs of India’s vegetarians offer Argentine soy oil a new market.21 If Argentina and Latin America are to climb the trade value ladder in the global economy, they need to both improve their negotiating position with China but also look for growth in new markets. Argentine scholars, however, view China’s trade practices as threatening the continent’s industrialization—​ a return to asymmetrical relations experienced with Europe and the United States.22 In July 2010, President Kirchner looked to settle Argentina’s trade dispute during a visit to China. Not all Argentina’s trade woes with China were solved, but her signing of $10 billion in new infrastructure deals, some of which Macri would later disrupt, were widely seen as a silent quid pro quo for China to end its soy oil ban.23 “China wanted to move on from trade,” André López, an Argentine economist told me. “These projects were more profitable for China than selling dolls.” *** Nobody Hates Money 

 

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It was in the ornate reception hall of Casa Rosada, the presidential palace in Buenos Aires, that Cristina Kirchner endorsed billions in new loan-​for-​ infrastructure agreements with China’s president Xi Jinping. In July 2014, the mega deals would lock Argentina into a generation of debt payments. But in return, among other smaller projects, China agreed to bankroll and build major upgrades to Argentina’s ailing railway network as well as two large hydropower dams in the south of the country. China also offered financial support through an $11 billion currency swap to shore up Argentina’s dwindling foreign exchange reserves, easing the burden of large purchases in Chinese imports. “China was a political ally,” a senior Western diplomat in Buenos Aires told me. “But unlike others, such as Russia, China was an ally with money.” Kirchner was jubilant at the ceremony. The 2015 national election was on the near horizon, and she was leaning on China to inject life into an economy hard-​hit by falling commodity prices. While constitutionally restricted in running for a third consecutive term, Kirchner hoped China’s support would improve the chances of her party, the Front for Victory, remaining in power. Her praise for Beijing was not unlike other leaders in Latin America and Africa, boxed out of Western credit markets due to their failing economies, and looking for economic support from China to help advance their political positions at home. “The emergence of new actors will offer our countries new and better opportunities,” Kirchner said of China’s engagement in Argentina.24 “Because it will no longer be a world where one rules over others; it will be a world of cooperation and that should be the new global model.” Kirchner continued to strike deals with China toward the end of her presidency, signing a $15 billion agreement with China to build two nuclear power plants.25 “Kirchner was desperately passing bills until her last weeks in office,” the senior diplomat told me. “This was a minefield for Macri to undo.” Immediately after coming to power, Macri got to work by placing over $20 billion in China’s mega deals under a financial and environmental microscope. In hopes of finding out what was at stake for Argentina and China, I  went to the offices of Electroingeniería, a construction company that was one of the main domestic partners in some of the projects. Juan Uriburu Quintana, responsible for legal and institutional affairs with China, had agreed to discuss the fallout of Macri’s review. It was easy to see why Quintana was a well-​suited interlocutor between Argentina and China. For nearly a decade, he lived and worked in Mainland China and Taiwan, where he earned a PhD in Taipei, and could switch almost effortlessly between Spanish, English, and Mandarin Chinese. 74     How

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Originally from the city of Salta in northwestern Argentina, Quintana also had experience with the Argentine national railways company, the main domestic partner in a $2.4 billion project with China to rehabilitate a fleet of trains and 1,500 kilometers of railway line in the Belgrano network. “We call it ‘Train to the Clouds,’ ” Quintana told me. One of the highest railways in the world, the Belgrano network included a popular passenger train for tourists that ascended into the towering Andes mountains. But it held tremendous potential as a freight line, where Chinese activities first focused on connecting Argentina’s soy and agricultural heartland to its river port at Rosario. Similar to many developing economies in the world, after years of failing to encourage private and foreign investment, Chinese finance was one of the only options on the table for Argentina. Its railway network dearly needed attention. Heavy cargo transport trucks moved the majority of goods in the country,26 and the Chinese rehabilitation promised to improve both the speed and capacity of commercial transportation, providing new competitive benefits for Argentina’s agricultural industry.27 Eventually Argentina planned to revamp the entire railway network. “We want to use it to get access to the Chilean ports,” Quintana said. “From there, you can go anywhere.” Launching out of the western coast of South America, cargo ships could more readily access the American West Coast, but Quintana was implying that by improving the railway line, Argentine products had a quicker route to China and Asia. Beijing was not offering billions of dollars in loans for altruistic reasons. “China is interested in the railway because it gives faster and cheaper access to our raw materials,” Quintana said. In the late 1800s, British firms constructed Argentina’s railway network to drive trade of the country’s agriculture resources to the Atlantic and on to European markets. Over a hundred years later, China had arrived with a similar rationale, but one that steered the flow of Argentina’s resources to the Pacific. Under harsh conditions, Chinese laborers built many of the early railways in North America and worked the mines of South America over a century ago. Now it was not only Chinese muscle arriving again to shape the region but also Chinese finance, machinery, steel, and concrete. It is a pattern taking place down the western coast of Latin America, with Chinese construction firms building new roads and railways, and ports from Mexico to Chile.28 The China Development Bank provided over three-​quarters of the $2.4 billion loan for the Belgrano railway project. To mitigate the risk of providing billions in loans for such projects in financially risky countries like Argentina, Chinese loans conditioned repayment in the form of natural Nobody Hates Money 

 

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resources, such as oil shipments from Venezuela and Ecuador, and in the case of the Belgrano project, the revenues the rail line would produce in the future.29 The loan also stipulated that most of the contracting work and supply contract go to Chinese firms. It was an important overseas undertaking for the China Machinery Engineering Corporation, a state-​ owned enterprise, and a large order for the national train manufacturer, China Railway Construction Corporation, in supplying 100 locomotives, 3,500 freight wagons, 2.5 million concrete ties, and up to 200,000 tons of rails.30 By funneling its goods through loan agreements, China is able to both burn off overcapacity from heavy industries at home and bypass anti-​dumping measures set up by foreign governments to offset trade imbalances. While the overlapping interests for China’s policy bank and construction companies were clear, there was less cohesion on the Argentine side. At the July 2014 signing ceremony in Buenos Aires, Xi Jinping betrayed the positivity of the event by calling on the two sides to focus on implementation of the projects. It was not the first time a Chinese leader signed the agreement. Kirchner’s late husband, President Néstor Kirchner, had originally tried to secure the financing from China as far back as 2004. At the time, Beijing wanted a guarantee that the project would go to its companies. But because Argentine law prohibited direct, no-​bid awards for public works projects, stipulating a merit-​based bidding process, China did not provide the financing.31 It was not until Néstor’s wife became president, and the ruling political party, the Front for Victory, held a strong majority in the Argentine Congress, that the project gained a second life. In 2010, China’s president Hu Jintao agreed to move forward with the railway rehabilitation. Yet Cristina Kirchner could still not get the railway project out of the starting gate. One of Argentina’s largest unions, Confederación General del Trabajo, the General Confederation of Labor, representing truck drivers, among other groups, would lose its control over the transportation of goods if an improved freight railway line went ahead.32 Political pressure was applied on Kirchner. “Argentina might be the only country in the world where the truck drivers are in charge of the trains,” Quintana told me. “And this means no trains. Because freight trains don’t vote, truckers do.” In 2012, frustrated with the delays, Beijing dispatched then-​premier Wen Jiabao to Buenos Aires to urge his Argentine counterparts to move forward.33 But still, little progress was made. The perseverance of the Chinese side was remarkable, as was the persistent frustration of the deal by domestic politics and competing interests in Argentina. Eventually, a decade after it 76     How

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was originally conceived, there was an opening after a split between Kirchner and a prominent union boss allowed the project to move forward, with Xi reconfirming the agreement during his 2014 visit. After Xi left Buenos Aires, Kirchner rammed the framework agreement with China through Argentina’s Congress with little transparency or time for analysis and debate. The terms allowed for a direct award to Chinese companies and the use of Chinese manpower, overriding laws that typically subject public works to rules of tender and labor legislation. Not only the political opposition and labor unions, but also the domestic private sector, were at odds with the government’s agreement stipulating that Chinese construction firms would rehabilitate the Belgrano railway line and complete other large-​scale projects. “It caused a lot of protest because we can produce some of those things here,” Quintana explained. The Chinese loans had favorable terms compared to global credit markets, but Argentine experts nonetheless feared they had no control over what the country would receive in return. “There are long-​term and low-​rate credits, but they will be applied to poor-​quality goods that Argentina will buy at a very high price,” warned Raúl Cuello, a former director general for Argentina’s tax collection agency. “Beware of those who come bearing gifts.”34 Resentment toward the conditionality China applied to the loans overshadowed the potential benefits the large-​scale projects could bring to Argentina. “China does not have rule of law. They have rule of men,” a businessman close to the projects told me. “They do whatever they want.” *** But just when Chinese construction companies started to begin their work on the railway and other large infrastructure projects, Mauricio Macri won Argentina’s 2015 national election and put everything on pause. While the railway project did not energize the local construction industry, there were still straightforward benefits for Argentina’s agriculture sector. As a result, the new president’s main target among China’s mega deals was the $4.7 billion agreement to build two hydropower dams on the Santa Cruz River in southern Argentina, the largest public works project in Argentine history. On the face of it, the terms of the Chinese loans for Argentina are generous compared to what the county could fetch in global credit markets. But it is a mistake to compare Chinese finance to international development assistance provided by the World Bank and other multilateral funders. Despite the development rhetoric often attributed to their activities, the Chinese banks are not charities, but in fact, profit-​seeking. The loans offered Nobody Hates Money 

 

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to governments like Argentina had interest rates at near market levels, but they were still considerably higher than comparable ones from the World Bank.35 In general, less than a quarter of Chinese finance can be considered development aid.36 Chinese finance also came with economic strings attached. China Development Bank was putting up most of the finance, but its initial offer was conditioned to the exclusive use of Chinese labor. After Argentina’s unions demanded local involvement, however, Argentine government officials buckled to the local pressure and negotiated further with China to ensure that only Chinese technicians and engineers would take part.37 The strong push from domestic interests outside the ruling government created some 5,000 jobs, although most were temporary. But Quintana reminded me that China was still benefiting immensely from projects in Argentina. “It doesn’t mean it was a bad deal for China,” he remarked. “They already got the procurement. The labor was just an extra strawberry in the cake.” The negative externalities of the hydropower dams worried Macri. Some 2,500 kilometers from Buenos Aires, within the larger Patagonia region, Santa Cruz is known for its breathtaking natural beauty and iconic glaciers, including the Los Glaciares National Park, a UNESCO World Heritage Site. The towering mass concrete to come from the Chinese hydropower dams threatened to leave a deep scar in the raw wilderness. Over 116,000 acres were to be flooded, altering the watercourse of the glacial river and ravaging a large segment of the region’s pristine ecosystem.38 To make matters worse, the main Chinese contractor, Gezhouba, was once banned from taking part in World Bank–​sponsored infrastructure projects due to its poor environmental record. Once completed, the hydropower dams promise to diversify Argentina’s energy sources.39 But an Argentine government report still ranks the hydropower dams as some of the least attractive energy projects in terms of economic, social, and environmental viability. The feeling was that China was trying to export dated technology, leftovers from its own construction boom, even though it is a world-​leading producer in renewable energies. The sparsely populated Santa Cruz province did not even have the transmission capacity to handle the 1,740 megawatts of electricity that would be produced from the dams, and the original construction did not include a transmission line to reach energy demand centers in and around Buenos Aires. In a December 2015 meeting with prominent environmentalists, Macri reportedly voiced his concerns regarding the hydropower dams.40 “We will try to stop them,” he told the group.

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There were political reasons for Macri’s opposition. Santa Cruz is the backyard of his main political rival, the Kirchner family. Cristina Kirchner and her late husband had struggled for years to find funders for the project before Chinese bankers arrived. The larger of the two dams was to be named after Néstor Kirchner. Electroingeniería, the main Argentine partner in the project, is also closely associated with the Kirchner family. If Macri allowed the Santa Cruz dams to be completed, he would be cementing the legacy of his chief political rivals. In the spring of 2016, hoping to reverse the hydropower dams agreement, Macri was set to meet China’s president Xi Jinping on the sidelines of the Nuclear Security Summit in Washington, DC. It was the first meeting between the two men since Macri was elected president. His decision to suspend and review China’s mega deals brought a degree of tension to the encounter. But the meeting did not last very long. After sitting with the Chinese president for half an hour, Macri later addressed the situation of the hydropower dams and other Chinese projects, telling the Argentine press that Beijing was “willing to revisit agreements” in order “to deepen the relationship instead of reducing it.”41 The Argentine president’s tone toward China was far more conciliatory than it had been earlier. What happened? Before even arriving in Washington, Macri learned that his hands were tied in negotiating with China. Some weeks earlier, Zheng Zhijie, president of the China Development Bank, paid a visit to Buenos Aires with a large delegation.42 As leader of the world’s largest development bank, and the main lender to Argentina’s infrastructure projects, Zheng wanted to learn more about the suspension. He even traveled to the Santa Cruz dams building site without informing his Argentine corporate partners. He later told Argentine officials to read the fine print of their loan agreement. The Kirchner government had not disclosed the terms of the contracts with China, and Macri’s people had access to the official documents only after coming to power. The Chinese delegation pointed out that the hydropower dams contained a cross-​default clause: in the event the project was canceled, China’s loan for the Belgrano railway project would also be stopped.43 Macri was flying blind on the contractual terms of the mega deals because of the secrecy in which Cristina Kirchner’s government dealt with China. Xi Jinping had personally endorsed the Santa Cruz hydropower dams. After experiencing long delays for the Belgrano railway project, Chinese officials were not about to let another Chinese leader lose face. They bet that Macri was not about to sacrifice the important railway project, not to mention Argentina’s larger relationship with China, to stop construction of the controversial dams. Back in his Buenos Aires office, Juan Quintana believed the Nobody Hates Money 

 

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project was too big to fail. “Macri inherited the situation of being very linked with China,” Quintana said. “We cannot afford to upset one of our biggest trading partners. Otherwise, there are going to be consequences.” Shortly after the spring 2016 meeting between Macri and Xi, Argentine officials gave the go-​ahead for construction to continue. Since President Macri’s hands were tied in the contracts with China, he did the next best thing and worked toward renegotiating the deals instead. For the Belgrano railway deal, Argentina’s minister of transport, Guillermo Dietrich, committed China to providing more locomotives without raising the loan amount.44 Argentina also successfully pushed China to lower the loan for the hydropower dams from $4.7 billion to $4 billion. At the same time, to dampen the negative environmental impact, the capacity of the dams was lowered 25 percent by taking out turbines, and an additional transmission line was added to the agreement to ensure the resulting power could be properly harnessed by the national grid.45 Macri, however, was not acting alone. Similar to Kirchner before him, he was responding to local pressures to revise the country’s deals with China. Argentina’s civil society played an important role in this process. Adding to the long delays brought on by Argentine labor unions and the private sector, environmental groups were successful in pushing the government to downgrade the scope of China’s mega deals. They successfully challenged the dams in the Argentine Supreme Court and forced new environmental assessments and remedial measures. The concept of independent judicial powers delaying the mega project even longer was not very popular among Chinese officials. None of these changes completely satisfied conservationists. Santa Cruz’s rare wildlife and natural glaciers are still under threat by the flooding the dams will cause, but the pushback would likely help to lessen the damage. Macri was able to rename the dams to Condor Cliff and La Barrancosa, removing the Kirchner label from the huge infrastructure initiative. But the legacy of his political opponents, and the future of the project, would still face scrutiny moving forward. Chinese finance had entered a country with a history of systemic political corruption. Months after leaving office, former President Kirchner was indicted on charges of embezzlement, bribery, and money laundering.46 A growing line of former high-​level officials from her government, including the public works secretary, the minister of planning, and a vice president, were also indicted on corruption allegations related to public funds and infrastructure.47 The president and vice president of Electroingeniería, the construction company close to Kirchner, were also charged with paying bribes to 80     How

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obtain the public works contract for two dams with China’s Gezhouba in Santa Cruz.48 Already in 2014, the conservative-​leaning newspaper La Nación had raised questions of the potential overpricing of the hydropower dams proj­ect compared to previous estimates.49 The Chinese operator, Gezhouba, was forced to purchase the Argentine company’s shares in the project and search for a new local partner. While calling for a crackdown on corrupt officials, President Macri also came under pressure when IECSA, a construction company once run by his cousin, was also put under investigation.50 Macri himself was implicated in the massive 2016 Panama Papers tax evasion scandal. Controversy dogged some of China’s other projects in Argentina. A few months after entering office, Macri negotiated with China to amend the terms of a project for China to build and operate a space observatory in southern Argentina. Under Kirchner in 2015, the Argentine Congress passed an agreement with China’s official China Satellite Launch and Tracking Control General, responsible for China’s deep space exploration, to run a ground station for tracking, command, and data acquisition. Since the space division is under the General Armaments Department of the People’s Liberation Army, the principal fear in Buenos Aires is that the new facility could be used for dual civilian and military purposes, superseding Argentina’s sovereignty.51 “We have signed a 50-​year agreement to build an observatory that depends on the Chinese armed forces, without any provision guaranteeing that it will not be used for military purposes,” said Guelar. “Who knows what conflicts will arise in half a century and whose side we will be on?”52 A similar space facility run by the European space agency is a civilian program, and staffed and managed primarily by Argentines.53 The Chinese facility, including a sixteen-​story-​tall antenna and 35-​meter-​diameter dish, is located on a remote 200-​hectare compound in Neuquén province surrounded by 8-​foot-​tall barbed-​wire fencing. The station can be used for intelligence-​ gathering aims or to disrupt foreign satellites. The Macri government was successful in adding a clause to the existing agreement to specify that the space observatory be used for civilian and peaceful purposes only, but former foreign minister Susanna Malcorra, who negotiated the deal, remarked there is no enforcement mechanism. The Chinese are working with virtually no oversight from the Argentine side.54 Some businesspeople close to the deals made during Kirchner’s final years believe a trade-​off was made, granting the Chinese land for the observatory in exchange for the loan for the Santa Cruz hydropower dams. The hydropower dams project lumbered on, but Argentina was learning how to shape Chinese finance toward its own national interests. A $1 billion Nobody Hates Money 

 

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expansion of China’s rehabilitation to Argentina’s railway was pushed forward in 2019.55 Developing its agricultural industry remains critical for Argentina, and new transport boosted these prospects. Similar to the hydropower dams situation, Macri renegotiated Argentina’s agreement for China to build two nuclear power plants at a cost of $15 billion. One plant was shelved altogether. The other, Atucha III, is moving ahead, with a planned loan of $10 billion from the Industrial and Commercial Bank of China for much of the financing, and will be built with Chinese technology.56 Macri faced pressure, including from four former Argentine environment ministers, to focus on clean, renewable energy projects.57 A  Chinese-​funded solar power park in Cauchari, the largest in Latin America, represents a step toward Argentina’s goal of harnessing its renewable energy potential. At roughly $400 million in financing, it has a slimmer price tag than many of China’s other infrastructure projects in the country. But as with other projects, the solar power park did little to lift up Argentine industry, with Beijing’s conditions supporting the international expansion of Chinese companies instead.58 Saying no to China’s mega deals was not possible for Argentina’s president. In the wake of its 2001 financial crisis, a period in which the United States and Europe were unwilling to offer much help, China provided Argentina with new trade and finance opportunities.59 Macri attempted to “look west” to diversify Argentina’s relations further but found China difficult to pull away from. And what Macri saw when he gazed toward the United States was no longer the Obama administration’s policy to revive ties with Latin America, but the face of Donald Trump in the White House. Even before Trump’s arrival, Beijing had done much to leverage its economic power to win political allies in what Washington viewed as its backyard. Much of Chinese finance to Latin America went to countries with strained relations with the United States. This included Argentina under Kirchner, but particularly Venezuela and Ecuador.60 Trump’s withdrawal from the Trans-​Pacific Partnership, an American-​led trade pact between Pacific Ocean countries, including several in Latin American, forced more countries in the region, even in the face of large trade imbalances with China, to continue to look for opportunities coming from Beijing. Unlike many other leaders, however, Macri was able to use personal ties with Trump to mitigate the same trade tensions with the United States. Macri knew the American president from his business days. His father, Franco, and Trump shared a failed real estate project in Manhattan. After losing a round to the future Argentine president, Trump reportedly even broke one of Macri’s golf clubs.61 The businessmen then connected as presidents when Trump entered the White House. The United States helped 82     How

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Argentina secure access to over $56 billion in lending from the International Monetary Fund (IMF), albeit with austerity demands imposed, and advance some trade agreements. But ironically, Macri at the end of his term in 2019 found himself in a similar position as his predecessor, Cristina Kirchner, facing a sinking economy and grasping for growth opportunities in hopes of winning a second term.62 With the economy failing, one slogan going around the country was “anyone but Macri or Kirchner.”63 As a sitting senator in Argentina, the former president Kirchner was immune to prosecution in cases investigating alleged corruption offenses, but the resulting negative publicity encouraged her to step away from running for the presidency again. Instead she stepped forward as a vice presidential candidate, with Alberto Fernández, a former cabinet chief of her late husband, in the presidential slot. Unlike Macri’s unexpected victory four years earlier, there were no surprises this time around. With Macri’s reputation battered by Argentina’s dismal economic performance, Fernández went on to win the general election in late October 2019. With the new center-​left government, and Cristina Kirchner back in the mix, relations with Beijing are likely set to warm further in the future. Argentina continues to find itself facing dire economic straits, particularly in the wake of the COVID-​19 pandemic, and outside support is welcome. Argentina now intends to sign up to the Belt and Road. Strikingly, despite all the infrastructure deals with China, as of mid 2020, the South American country had not yet officially endorsed China’s grand strategy. The two other largest economies in the continent, Brazil and Mexico, have also not signed up. At the same time, however, China’s economic engagement in Latin America is changing. China’s trade and investment remained strong in 2019, and if the fallout from the coronavirus in 2020 leads to a major economic slump on the continent, China may yet increase its economic diplomacy even further.64 But overall, Chinese finance to Latin America has steadily declined since 2015. China’s policy banks financed just $1.1 billion in loans to the continent in 2019. In some countries, China is providing loans directly to its state-​owned companies, but as of 2019, sovereign lending from the World Bank and the Inter-​American Development Bank since 2005 again exceeded that of China’s.65 While Fernández and Kirchner are keen to engage China, the discontent and pushback on China’s mega deals in Argentina came both during Macri’s tenure and when Kirchner was president. The new leader Fernández did not summarily disown relations with the United States and Europe when he came to power and is still looking to balance Argentina’s relations between China and other partners. His more protectionist agenda may even frustrate Nobody Hates Money 

 

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Chinese traders compared to the neoliberal Macri.66 For Argentina, its trade imbalance with China, particularly a lack of access for Argentine exports to the Chinese marketplace, is still a pressing issue.67 China enjoyed broad favorability among Argentines in 2019,68 but even with Washington disinterested in Latin America, China’s elevated trade, finance, and investment position did not award it unfettered influence. *** Elsewhere in Latin America a number of large Chinese infrastructure projects face the same delays and downgrades, and outright cancellations, as those in Argentina. In Brazil, for example, private sector and environmental interests stood together to block a Chinese railway plan to link South America’s largest country to neighboring Peru—​the former to protect river ports currently used for transport, and the latter to preserve the world’s largest tropical rainforest through the Amazon.69 In Mexico, the government canceled a $3.75 billion high-​speed railway deal with China after it was discovered that the wife of then-​president Enrique Peña Nieto had done business with the domestic firms involved in the deal.70 Elsewhere, Venezuela represents China’s most cautionary tale of the risks in over-​financing foreign countries. Awash with the world’s largest oil reserves, under its late leader Hugo Chávez, Caracas borrowed some $67 billion in oil-​backed loans, close to half of China’s total finance to Latin America. Oil-​ for-​infrastructure agreements were manageable when commodity prices were high. But since Venezuela’s economy fell into severe crisis under President Nicolas Maduro, the political center may still crumble in the years ahead and Beijing may find itself in a similar situation as Washington did with Argentina nearly two decades earlier. Beijing did not provide new loans to Venezuela from 2017 to 2019. The instability alone has undermined China’s plans in the country, such as a major high-​speed railway already being shelved along with tens of billions of dollars meant for projects that are now on ice. At first glance, the survival of China’s mega deals in the face of political change in Argentina appeared to be a success story for Beijing. The outcome was not unlike others in the world where domestic political change threatened China’s economic interests. The firebrand Zambian president Michael Sata was fiercely anti-​Chinese in the run-​up to his 2010 presidential victory, but he softened his rhetoric after entering the statehouse due to China’s importance as a trading partner and investor to the mineral-​rich African country.71 In Britain, after Prime Minister Theresa May was elected, she put the Chinese-​funded Hinkley Point nuclear plant project involving 84     How

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China under review. But she later green-​lighted the deal after receiving frosty warnings from Beijing on the precarious future of the “golden era” of UK-​ China relations, particularly as the threat of Brexit and the need for new, large trade and investment deals loomed, should the project be stalled for too long.72 China may serve as a punching bag for opposition politicians to undermine the initiatives of incumbents. Once in power, however, new leaders typically tone down the tough talk. For China, however, it is less consequential who leads Argentina and other countries around the world where it has large infrastructure projects, than the strength and willpower of the broader society in accepting or pushing back against its influence. Macri was not China’s problem. It was Argentina’s democracy. Chinese economic power can bend the will of new political leaders, but not wider society. Long delays and large downgrades of China’s multibillion-​dollar projects are often the result of resistance from political opposition, labor unions, the private sector, and environmentalists, which revealed the inequitable terms and negative externalities of engaging China and brought on pushback to advance domestic interests. The changes brought about to China’s mega deals in Argentina and elsewhere in Latin America, often subtle and behind-​the-​scenes, foreshadow the wider geostrategic challenges facing the Belt and Road. The one-​sided economic conditions of China’s loans hold important political, social, and environmental consequences for host countries that over time can swing back against Chinese interests. Once the ceremonial signing of government-​to-​ government agreements is finished, implementing new projects, in some cases simply getting them out of the starting gate, proves a more complex and difficult task. Unlike at home, where Chinese officials are used to pushing through massive infrastructure initiatives in the face of social and environmental protest, overseas Beijing’s political influence has clear limits. Despite newfound confidence, if Chinese diplomats are to help their leaders in Beijing get what they want out of the Belt and Road, they need to shift their gaze from the goings and comings in presidential palaces and statehouses, to the power of political, business, and social groups on the ground.

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Chapter 4

B

The Chinese Way

ritish pop singer Adele’s 2015 hit “Hello” played over the car’s sound system as we glided through central Beijing. In the driver’s seat, an East African diplomat sang along to the chorus and hummed his way through the verses. It had been years since we last met, and after several unanswered emails, I was surprised he invited me to dinner on the last night of my stay in the Chinese capital. Similar to many encounters between foreigners in China, we marveled at the modernity and fast-​paced development around us. Driving past towering glass office complexes, tall towers, and expansive shopping centers, the setting was a world away from his home country. But despite the Western pop music in the background, the cityscape outside was perhaps a glimpse into its Chinese future. Pulling into our destination, a large, gaudy, and mostly empty Lebanese restaurant, the diplomat mused about China’s approach to Africa and what it entailed for development on the continent. “We tried the American way,” he told me. “It didn’t work. There were too many conditions. The Chinese way is easier.” The United States, Western Europe, and Western-​led multilateral financial institutions, the World Bank and International Monetary Fund (IMF), have long attached stipulations to official development assistance. In Africa and elsewhere, recipient governments were required to pass new liberal market and democratic reforms. While the participation of African political and corporate elites in the widespread plundering of Africa’s oil and mineral wealth and privatization went unmentioned, the diplomat expressed an opinion shared by many of his peers that the Western approach to Africa was a failed project. The diplomat argued that Beijing put economic development first in its engagement with Africa and had no political strings attached. His comments

 

demonstrate Beijing’s success in creating a “win-​win” narrative around its African engagement. After all, China’s economic assistance to the continent, largely through financial loans, is tied to the use of Chinese corporations and products to build infrastructure, providing lucrative contracts directly to its own firms and crowding out African and international companies in the process. There are also political expectations that come with engaging China. These include recognizing Beijing’s “One China” policy by opposing the independence of Tibet and Taiwan and avoiding criticism of China’s policies in Xinjiang and Hong Kong. But the diplomat’s observations reflected the widespread sentiment in Africa that China is engaging Africa more broadly than the United States and Western Europe. “There is enormous business attention from China at home,” the diplomat said. “Every evening at the airport, Chinese businessmen arrive to invest in agriculture and mining. We have millions of hectares of land to offer, unused since God created it.” The vehicle that Beijing boldly claims will bring new development and prosperity to Africa and the world is the Belt and Road Initiative. Despite delays and downgrades of projects in the face of local pushback in Latin America and elsewhere before the initiative started, by launching the Belt and Road, Chinese leaders doubled down on their efforts to leverage China’s experience building infrastructure and industrial zones at home to advance their global ambitions. The Belt and Road also goes well beyond infrastructure and trade alone, extending its reach into technology, political, legal, and cultural engagements. In May 2017, standing in front of twenty-​nine heads of state at the inaugural Belt and Road Forum in Beijing, Xi held up China’s rapid economic growth and new outreach to the world as an opportunity for partner countries to seize. “Development,” Xi said, “holds the master key to solving all problems.”1 Leaders across Africa, Latin America, and Eurasia have responded. They look to the new and large economic opportunities offered through China’s promise of some $1 trillion in finance to the world as a means to advance their political and economic agendas at home. By the second Belt and Road Forum in 2019, while it is difficult to separate Belt and Road projects from China’s broader economic engagement, both past and present, hundreds of billions of dollars in loans and construction contracts are estimated to have been disbursed in the initiative. According to Chinese officials, some 1,700 projects, largely in South and Southeast Asia, have been taken forward by dozens of Chinese stateowned enterprises in energy, transport, and other sectors.2 Yet the Belt and Road “is not simply an economic development project, nor is it value-​free,” argues Nadège Rolland in her authoritative work on the initiative.3 “Its ultimate purpose is to build a Sinocentric Eurasian order in 90     How

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which Beijing’s influence and power have significantly expanded, authoritarian regimes have been consolidated, and liberal norms have receded.” The Belt and Road, as Rolland writes, was itself a strategic reaction from Beijing to Washington’s “Pivot to Asia” under President Barack Obama in 2011, and the American agenda of advancing the Trans-​Pacific Partnership and other trade agreements at the time.4 With the grand strategy, China wants to make the world both its material and normative construction site, and, by doing so, raise its long-​term standing in the global economy and world affairs. Some China experts in the United States and elsewhere argue that concerns over any strategic or military aims in China’s Belt and Road are overblown and that the initiative is largely commercially orientated.5 Beijing’s international promotion of the China model is seen as “less a grand strategic effort to undermine democracy and spread autocracy than the Chinese leadership’s desire to secure its position at home and abroad.”6 These studies, however, fail to consider how China’s policy and military decision makers may nonetheless seek to leverage the business of Chinese state-​owned and private corporations to fulfill strategic and military aims. They may fail to do so in the end, but that does not imply such intentions do not exist, and that foreign countries should not be concerned. China’s leaders have made it quite clear that, like the past initiatives of other major powers in the world, there are in fact clear political, economic, and strategic aims behind the Belt and Road. First, the geopolitical ambition behind the Belt and Road is to legitimize China’s developmental model of political authoritarianism and state capitalism. In his famous maxim, Deng Xiaoping, the former Chinese paramount leader, called on his compatriots to hide their capabilities and bide their time on the world stage. But after decades of unparalleled economic growth at home, Xi Jinping, seen as the most powerful Chinese leader since Deng, has a different message. Xi wants China to be a trailblazer for the developing world. China “offers a new option for other countries and nations who want to speed up their development while preserving their independence,” Xi said at the 19th National Congress of the Communist Party.7 This does not imply the wholesale copying of China’s model,8 but for foreign countries to see China’s economic and political practices as legitimate and worthy of emulation. If foreign countries accept China’s model, and become closer economic partners, Beijing expects they will also in return be more favorable to China’s foreign policy wishes, from its territorial claims in the South China Sea to its positions on human rights. Engaging with China and accepting its practices will also enhance China’s position to reshape global governance in institutions, such as the United Nations and World Trade The Chinese Way 

 

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Organization, away from democratic and liberal market values promoted by the United States and its allies. But China is not passively waiting for foreign countries to see the value in its model.9 It is engaged in direct training of foreign officials across Africa, Southeast Asia, and beyond, on how to “guide public opinion,” and has programs to teach foreign journalists how “to tell China’s story well.”10 But it is also significant how China indirectly promotes emulation of its model through the Belt and Road. By foreign countries accepting the terms of its financial and diplomatic engagement, for example by changing or outright ignoring domestic legislation and procedures to allow Chinese projects to advance without competitive tenders and public scrutiny, China is normalizing its state-​led, authoritarian economic and political practices and values. Many of the loans foreign countries sign with China come with little transparency and oversight by independent media, non-​governmental organizations, and civil society groups, and limited involvement from local companies and entrepreneurs. These activities thus socialize characteristics of China’s model into foreign countries by re-​enforcing state control over the economy, offering plenty of room for political and corporate elite corruption, limiting public participation, and neglecting social and environmental issues. China also has clear economic aims in the Belt and Road. It firstly seeks for the initiative to facilitate growth in China’s western regions, which have lagged behind the growth experienced to the east. The Belt and Road is also a key driver behind the global expansion of China’s state-​owned enterprises and private corporations. Far from coming with no strings attached, the conditions on China’s loans stipulate Chinese companies must be contracted to build railways, ports, and telecommunication networks. In expanding the reach of its companies overseas, the initiative is seen by Beijing as a pressure valve to vent China’s overcapacity in heavy industries, such as steel and cement, and ease the way for China’s economy to develop further into one centered on services and knowledge-​ based industries, spreading Chinese industrial and technology standards worldwide, and helping China escape the middle-​income trap and fully develop and modernize. Finally, Beijing seeks to harness the Belt and Road to alleviate its geostrategic vulnerabilities. Depicted by the Chinese state media through curved lines across Eurasia, with the United States and the Western Hemisphere nowhere in sight, the Belt and Road map sets up six economic corridors across Central Asia, Southeast Asia, the Middle East, Africa, and Europe. These are largely envisioned to redirect the flow of critical resources 92     How

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and trade into and out of China across land corridors, lowering China’s dependency on sea lanes, which are prone to disruption by the United States and its allies in the event of a military conflict. But there are challenges facing China’s aims in the Belt and Road. China’s model will only gain legitimacy if the initiative produces tangible economic development for foreign countries. China will need to play the protagonist in making the development dreams of the East African diplomat I met in Beijing come true. China’s lofty economic and geostrategic aims are also in jeopardy of being missed. By land and sea, the Belt and Road is cutting through countries where entrenched business and political interests, changing politics, conflict, and varying economic capacities to shoulder new debt can upset Chinese ventures. Will the economic discontent and pushback be a common response? How can China’s industries capitalize on the initiative if they are under increasing pressure to share the resources it offers? Success ultimately hinges on Beijing’s ability to mitigate and manage what are very local risks in countries and regions around the world, all the while still producing the desired economic benefits for China’s economy. *** Before China began officially providing hundreds of billions of dollars through the Belt and Road, over a decade earlier it had already launched an African regional initiative, the Forum on China Africa Cooperation. Beginning in 2000, the triennial forum, alternating between Beijing and an African capital, brings together China’s leadership with presidents and prime ministers from across the African continent and provides a high-​level venue for Chinese and African business executives, media, and academics to mix and mingle. It is the main showcase event for China to make its head-​ grabbing announcements of tens of billions of dollars in finance, aid, and investment commitments that underpin its role as Africa’s most important economic partner.11 It has been over a decade since China surpassed the United States to become Africa’s largest trading partner in 2009. From a low base of $10 billion at the turn of the century, China’s two-​way trade with Africa stood at $208 billion in 2019.12 Following in American and European footsteps, China has mainly bought oil and minerals to feed its home economy’s demand for natural resources. But where the United States and Europe all too often place the continent as a whole in a box of poverty and humanitarian crisis, China sees economic opportunity in Africa’s young population and growing markets. Western corporations have a heavy footprint on the continent’s extractive The Chinese Way 

 

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and construction industries, but through its broad business engagement, and selling of consumer goods, electronics, and machinery, China has taken first-​ mover advantage on the continent with a young population, and from Ghana in the west to Ethiopia in the east, some of the fastest growing markets in the world.13 In recent years, China has also emerged as Africa’s fifth largest investor behind France, the Netherlands, the United Kingdom, and the United States.14 Chinese companies, state-​owned and private, big and small, are engaging in sectors from extractives to manufacturing. China has also stepped out as a leading financer in Africa. In a precursor to the global Belt and Road, similar to its strong position in Latin America, China provided $147 billion in loans to Africa from 2000 to 2018.15 China’s state-​owned banks and construction companies have played a large role by respectively financing and building roads, railways, and other large-​scale infrastructure projects long neglected in Western engagement. If China’s state-​led, infrastructure-​heavy approach in Africa sparks industrialization and widespread development, then Beijing will do much to legitimize its economic and political model in the world. “With open arms, we welcome African countries aboard the express train of China’s development,” Xi said at the FOCAC 2018 speech, where China’s long-​standing Africa engagement was discursively intertwined with the Belt and Road. “No one could hold back the Chinese people or the African people as we march toward rejuvenation.”16 Infrastructure is one of the largest impediments to Africa’s economic development. The sheer lack of roads, railways, and ports as well as reliable power sources severely limits the health and education of Africans and constrains Africa’s ability to attract investment and take part in global trade.17 Only 46  percent of Africans have access to electricity and there are only 2 kilometers of paved road per 100 square kilometers.18 The African Development Bank estimates that the continent has an annual infrastructure-​financing gap of up to $108 billion.19 But the poor state of Africa’s infrastructure and its large financing needs create the misunderstanding that any infrastructure project will do in any African country, at any time, no matter its size, cost, and design. According to the African Development Bank, African countries need to take particular care in the choices they make on infrastructure.20 As relatively smaller economies with limited financing capacity, they need to maximize the value for their money. Finance needs to go to not just any project, but to the most productive projects. “Want to prosper, first build roads.” This Chinese proverb has been well repeated by African and international business managers, politicians, and 94     How

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academics. But China may not always be the best partner for Africa’s infrastructure development. The speed and cost of Chinese construction projects are attractive, and the lack of transparency enticing to some African leaders, opening room for personal graft and political corruption, but China does not have a strong track record of developing high-​performing infrastructure at home. After analyzing nearly a hundred large Chinese road and railway projects, researchers at the University of Oxford found that less than one-​third of China’s infrastructure projects were economically productive, and the underperforming majority held damaging macroeconomic consequences. Overinvesting in unproductive infrastructure, regardless of the builder, leads to a growing debt and economic fragility.21 Not all Chinese projects and construction companies in Africa are built alike. But whereas companies from Western and from other East Asian countries maintain high quality levels across projects, there is a higher degree of volatility between China’s projects.22 “It is important to manage any major project carefully,” argues Andrew Alli, chief executive of Africa Finance Corporation, “but more so when dealing with a Chinese firm as things that may be taken for granted in other parts of the world can be negotiable when dealing with a Chinese firm.”23 Quality, environmental, and social standards are all points that warrant particular attention when dealing with Chinese construction companies. In both Kenya and Ethiopia, some of the largest borrowers of Chinese finance in Africa, new showcase railway lines in the Belt and Road Initiative have struggled in their initial years. In Kenya, China financed and built an over-​470-​kilometer standard-​gauge railway (SGR) to connect the port city of Mombasa with the capital, Nairobi. The railway was finished in June 2017 with much fanfare, replacing a functional but aging colonial British line. But it was grossly overpriced at $3.2 billion, financed through a loan from the Export-​Import Bank of China (EXIM). Its cost per kilometer is three times higher than the industry standard.24 This choice by the Kenyan government was made despite the price of refurbishing the old railway line being roughly a quarter of the cost and arguably the best option from a cost-​benefit perspective.25 Graft likely played a role in the costly decision. Kenyan officials have since been arrested on corruption charges involving the sale of public land for the project.26 While celebrated as a passenger line, the SGR has so far failed in its main purpose of transporting Kenyan manufactured goods for export. China’s railway and construction companies are so far regarded as the clear winners from the railway project. From January 2018 to April 2019, 90 percent of the cargo ferried inland on the railway has been Chinese imports to Kenya, The Chinese Way 

 

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which already had a deep trade deficit with China even before the railway line’s completion.27 The Kenyan government was poorly prepared to ensure the new railway line produced new economic activities for Kenyan companies and traders. Trains leave Mombasa with Chinese goods on board but return from Nairobi virtually empty. The Kenyan government has even forced importers to use the loss-​making railway connection instead of trucking their wares from Mombasa to Nairobi.28 Freight earnings improved in 2019, but revenues were still under operating costs for the rail line, and well below the repayment costs for the Chinese loan.29 The second phase of the railway, extending the line inland to Naivasha, went ahead for another $1.5 billion. In 2020, a Kenyan appellate court ruled the contract signed between Kenya and the China Road and Bridge Corporation, responsible for the construction of the railway, was illegal because it failed to comply with domestic procurement laws. How the ruling will impact the already running project is uncertain, but it cast another shadow over an already flagging project.30 This was hardly the “express train to development” President Xi Jinping had promised. The railway may still yet improve its performance over time, but its first years of operation have been dismal. Recognizing that the railway is struggling to provide a wide economic boost, Beijing even postponed offering further loans to Kenya and Uganda, which are essential to regionalize the rail connection with inland countries in East Africa.31 “Kudos to China for building the railway so quickly,” one Kenyan observer told me. “But we ended up paying a high price for second-​hand infrastructure and can’t even be sure it can be utilized to pay back the loan.” To add insult to injury, on top of the railway’s poor performance, Kenyan journalist Paul Wafula found that local workers experienced “racism and blatant discrimination” from their Chinese managers.32 Julie Masiga, another Kenyan journalist, argued that Kenya had seen firsthand that through its operation of the railway China had an “empire building gene” just as “any other coloniser.”33 Chinese managers at the China Road and Bridge Corporation were also charged after attempting to bribe Kenya authorities investigating a ticketing scam.34 The opacity of the terms of the loan with China to finance, build, and operate the railway line also brought on allegations that Kenya is obliged to waive away its sovereign rights over the Mombasa port should it fail to pay for the struggling railway.35 These revelations came from an apparent leaked audit report to the Kenyan press, but were denied by both the Kenyan and Chinese governments, and countered by closer analysis.36 A similar clause, however, appeared in an audit of a Chinese-​financed gas pipeline in Tanzania, which stipulated that Tanzania must transfer equity rights in the project to China should it fail to repay the loan.37 Such collateralization or sovereign 96     How

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guarantee is not necessarily uncommon in international finance, but it conflicts with China’s message of “win-​win” development. Ethiopia also took a large loan from the China EXIM Bank for the construction of a 750-​kilometer railway line from its inland capital, Addis Ababa, to neighboring Djibouti on the Red Sea coast. The electrified line is faster than diesel-​powered Kenya’s Standard Gauge Railway, but it ran well over cost, reaching $4.5 billion in total. The planning for the project was “downright inadequate,” according to Wang Wen, of the Chinese insurance corporation Sinosure, with power troubles delaying operation early on.38 Ethiopia’s intention is to link the railway line to its new industrial manufacturing zones, but as in Kenya, to date it has mainly been Chinese goods coming into the country rather than Ethiopian ones heading out.39 Elsewhere in Africa, Chinese railway and housing projects in oil-​rich Angola, its largest borrower on the continent, have also suffered from poor quality and operation.40 Tanzania’s president John Magufuli suspended and looked to renegotiate the construction of a Chinese-​backed $10 billion port at Bagamoyo because of “exploitative” financial terms to guarantee a lease of ninety-​nine years to China, which he said only “mad people” would accept.41 Instead of engaging Chinese banks and construction companies for its railway ambitions, Tanzania is working with Turkey and Western Europe to finance and build a new standard-​gauge railway that will leave it less indebted compared to Kenya, Ethiopia, and others in the East Africa region.42 These examples of struggling Chinese infrastructure projects only represent a handful of many in Africa. China has relations with all of Africa’s fifty-​four countries except the tiny nation of Eswatini, which still recognized Taiwan as of early 2020. Many of the problems China’s projects suffer from in Africa are also typical for the construction industry worldwide. Prime ministers and presidents seek out large, visible projects to build public attention, with re-​election often in mind. Prudent refurbishments of rail lines may produce more value for the money, but fail to generate the media buzz of a multibillion-​dollar megaproject. There is also the economic incentive that comes with such expensive projects, leading to the misappropriation of funds and corruption.43 But after long gestation periods, China’s projects in Africa can develop positive spin-​offs. New roads and railways can allow for more efficient transportation of people and goods, power projects keep factories running, and urban housing improves health and education standards. China overcame similar challenges itself. In 1991, for example, the World Bank rejected providing funding for Shanghai to build a subway, citing it as an extravagance compared to other options.44 Shanghai and other Chinese cities proved their critics wrong.45 The Chinese Way 

 

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But simply holding one’s breath and waiting for productive economic activity to arrive to make use of infrastructure is far from the answer. There were a lot of moving parts in China’s development. Its dramatic growth in the 1980s and 1990s came from a combination of infrastructure investments, low-​cost labor, heavy reliance on manufacturing investments and exports, and accessible free markets overseas. African countries will now need to ensure they make the most of China’s engagement. Manufacturing investment to drive forward exports can generate the necessary jobs and tax revenues to spur on growth and development on the continent. But whether or not Africa will attract enough foreign and domestic investors to manufacturing is the big question. Some experts claim that in the next few decades Africa can repeat China’s miracle story of economic growth and industrialization. Irene Yuan Sun argues that the influx of Chinese entrepreneurs attracted by the continent’s growing markets and low wages will be instrumental in Africa taking over China’s title as “factory of the world.”46 Growing wages in China, it is argued, will lead Chinese manufacturers to offshore their investment activities and millions of jobs to low-​income countries.47 Some jobs have already arrived to Africa. The $250 million Hawassa Industrial Park outside of Addis Ababa in Ethiopia is often touted as proof. Hawassa has attracted leading international clothing makers with a capacity to create 60,000 jobs.48 China has built more industrial zones in Ethiopia, and others have been established in Nigeria, South Africa, Rwanda, and elsewhere, with the aim of capitalizing on Africa’s low-​cost, youthful labor. But repeating the Chinese miracle is an unlikely scenario for most African countries. Ethiopia may have a chance, given its government’s policy determination and large population size and economic potential. But for most African countries, the prospects of capturing a large amount of new investment and labor in apparel, footwear, and household goods, from China and elsewhere, are slimmer than is often promoted. One study found that a majority of Chinese manufacturers are in fact staying at home and taking advantage of the growing cost-​effectiveness of automation.49 From footwear to toys and furniture, China has demonstrated a longer retention of its low-​cost manufacturing compared to previous East Asian economies that moved up the global value chain.50 China may be producing more high-​value products, but even in low-​cost goods, it is in no rush to lose its title as “factory of the world.” Instead, China has emerged as a trade competitor to both developed and developing countries alike. Those Chinese manufacturers that do venture abroad do not necessarily head to Africa. They regularly choose South and Southeast Asia first, where Vietnam, Cambodia, and Bangladesh, among others, offer competitive wages 98     How

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and young populations.51 As one company manager at Ethiopia’s Hawassa Industrial Park told me, the special economic zones set up in partnership with China and African governments often make it easier for Chinese and other investors to fly in and out overnight when other destinations become more enticing. Neither is China making life easy for African manufacturers. Chinese companies have taken advantage of preferential market access provided to African countries by the European Union and the United States.52 But China continues to prevent access to its market for African countries through certification and other non-​tariff barriers. Despite representing less than 5 percent of China’s total global trade (much of this made up of African oil and minerals) and persistent calls from African leaders to open its markets, Beijing still has dragged its feet on reform.53 If Latin America’s experience with trade access to China is any lesson for Africa, convincing Beijing to open its markets for value-​added agricultural goods, and to introduce competition for Chinese companies at home, will be a long and hard fight. If Africa fails to compete with other developing regions to attract new manufacturing investment, its transport and power infrastructure projects will languish, making repayment of debt a critical drain on many economies. From big countries such as Ethiopia and Kenya, to smaller ones like Djibouti and the Republic of Congo, high domestic and international debt levels may soon become unserviceable and bring on new financial crises.54 On average, sub-​Saharan Africa debt has risen sharply in recent years, representing a dangerous level of 53 percent of GDP among countries that previously received relief from World Bank and IMF debt forgiveness programs.55 China has not created this problem. African leaders willfully took on new debt, many no doubt to spur on development for their population, and others, as elsewhere in the world, prioritizing foremost their own personal wealth and political interests. Domestic debt and external debt from multilateral and private lenders is significant. But China contributes to Africa’s debt problem. In 2020, new data released from the World Bank showed that for Africa’s low income countries China made-​up 22% of total public external debt as of 2018, and 29% of debt servicing in 2020. Although a large portion goes to Angola alone, Beijing is Africa’s largest bilateral creditor. For seven of the twenty-​two African countries in or at high risk of external debt distress, including Angola Djibouti, Kenya, and Ethiopia, China made-​up over 25% of total external debt.56 The economic downturn of the COVID-​19 pandemic pushed Beijing and other G20 countries to pledge some debt restructuring and relief to African and other low-​income countries, but China’s lack of transparency along with poor coordination with large Western and multilateral lenders presents a The Chinese Way 

 

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collective action problem for debt reduction.57 Even before the pandemic some heavily indebted countries in Africa and other emerging markets, which once received forgiveness from international creditors, faced new debt crises. If those Chinese infrastructure projects financed by new debt continue to fail to produce economic activities the recovery will be long and arduous. China’s former president Jiang Zemin was acutely aware of the debt challenge facing Africa. At the inaugural FOCAC summit in 2000, he urged developed countries to “effectively reduce or exempt the debts owed by developing countries.”58 His successors Hu Jintao and Xi Jinping, however, added to Africa’s debt burden. Beijing has only recently started to take debt restructuring and relief more seriously and has become more cautious in providing new large loans, such as for the third phase of Kenya’s Standard Gauge Railway.59 But China’s new Debt Sustainability Framework launched at the second Belt and Road Forum in 2019 is not mandatory for China’s policy banks, and still reflects China’s argument that debt in the short run can spur on growth in the long run.60 It may rather be that domestic pressure in China on Beijing to spend more on fighting poverty and inequality at home limits its engagement overseas.61 For Africa, China’s rethink and restraint toward finance converges its approach closer to the demands of Western donors. Chinese officials and state media often frame criticism of China in Africa as motivated by some desire in the West to hold back African progress. But influential African voices, such as Nigeria’s former finance minister Ngozi Okonjo-​Iweala, have cautioned against following China’s state-​led growth model, weary of how this engagement can breed further corruption on the continent.62 There is no doubt that China is big in Africa, and that African countries require infrastructure to reach a new stage of economic development. But financial and commercial engagements must be well targeted and grow incrementally. The choices African countries make on how they use their limited space to take on debt are essential for their future development. The African Development Bank calls for “smart infrastructure” and reforming Africa’s weak legal and regulatory institutions, infrastructure planning and project preparation, and corruption.63 On China, African governments need to move past the idea that there is a lack of choice for international trade, infrastructure finance, and manufacturing investment. After all, trade and investment from India, Turkey, Russia, Indonesia, and other countries is growing on the continent.64 There are various sources of credit available that are typically chosen according to their distributional benefits for domestic interest groups.65 These international trade and investment partners, and choice of creditors, give African countries leverage in negotiating with China and others. 100     How

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In infrastructure, China is a major player, but it is not single-​handedly building Africa. In 2018, China funded one of every five, and built one of every three, construction projects.66 But on average between 2012 and 2016, African governments and Western donors each provided more infrastructure finance than China.67 China’s activities are in fact crowding out African construction companies from their home markets because Beijing’s low-​cost lines of credit allow Chinese construction firms to undercut the competition.68 Chinese firms do the same for domestic African companies engaged in manufacturing and retail. China is not the agent of change in Africa’s development. African firms are essential to drive African industrialization and development. African countries must be set on a path to lead the growth of manufacturing and other industries if economic development is to kick off at a large scale. If Chinese and other foreign companies remain in the dominant ownership position, Africa’s development results will be undermined. To ensure this is minimized, what is critical for African countries is to incentivize local investment rather than focus too heavily on attracting foreign investment. Researchers Cornelia Staritz and Lindsay Whitfield find that the Ethiopian government is pursuing foreign investment promotion but also import-​ substitution policies in textile and apparel industries to help local firms.69 African governments can do much more to encourage Chinese and other foreign firms to work more closely with local suppliers and partners to ensure technology transfer takes place through industrial policy, much as East Asian countries, including China, did with their foreign investors.70 Few if any other countries in the world have similar domestic economic and political conditions to repeat China’s miracle of exploiting a large, low-​ wage population to attract sizable foreign investment and drive high-​level and sustained economic growth through a mix of state-​led central planning and market reforms.71 But while China’s model may not work, Africa and other developing regions can carve out their own new development paths. In the future, although facing difficult pressures from its population boom, Africa may return to its position in the world, before it was scarred by slavery and imperialism, when its medieval kingdoms engaged in trade and sophisticated diplomacy with Western Europe.72 The late Kenya-​born Harvard University professor Calestous Juma saw an independent way forward for Africa. Juma argued that African countries should focus on leveraging capability nodes and corridors on the global stage. Nigeria’s largest city, Lagos, for example, would be sub-​Saharan Africa’s fourth largest economy if it were an independent country. Increasing the capability and autonomy of these nodes in the global economy may help to lift an entire The Chinese Way 

 

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country. Juma was also a strong advocate for regional integration and regional trade value chains as the first step for Africa to compete globally.73 Regional blocs, such as the East African Community, can negotiate better trade and financial deals with China and other foreign partners. The African Continental Free Trade Agreement that went into force in May 2019 represents a step in this direction. It has the potential to spur on intra-​African trade, but it should also be devised to serve as a tool to secure better trade access from foreign powers and technology transfers from investors. If this is neglected, African countries run the risk of Chinese and other foreign traders benefiting from the new agreement, and undercutting trade and commerce between African companies. In South America, trade and investment between Brazil and Argentina, for example, have been undermined by the entry of Chinese companies and their access to the regional trading block Mercosur.74 Where does this leave the legitimacy of China’s developmental model as one worthy of emulation? China will be an important part of Africa’s economic and political future. But its infrastructure finance deals on the continent can both elevate and undermine its geopolitical drive to enhance the legitimacy of its developmental model. Inflated promises of a flood of Chinese manufacturing investment will only fuel future resentment. There is admiration for China’s strong economic growth and development at home, and for the infrastructure finance it offers. Some countries in Africa and elsewhere already mirror aspects of China’s authoritarianism, but China will not serve as a model for most. Polling shows that the United States is still pointed to by most Africans as the best model for national development.75 With the exception of human rights issues, African governments still align their foreign policy positions, such as through voting in the United Nations, more closely with the United States than with China.76 What happens in China is equally important for how Africans view heavy infrastructure finance in guiding their economies in the future. China is, after all, facing its own problems with debt after years of stimulating its economy with infrastructure finance to drive economic growth.77 But a deeper American, European, Japanese, and Indian engagement in African development can only strengthen African viewpoints toward democracy and liberal markets. African countries can exploit this diversity of choice among foreign partners to maximize their participation in the international marketplace and advance their own development models. *** 102     How

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Africa alone will not decide the future of China’s Belt and Road. How countries across Asia engage the initiative is essential to its success or failure in achieving Beijing’s economic, political, and strategic aims. Across the Indian Ocean in Sri Lanka, a geopolitical storm looked to undermine the spread of China’s “project of the century.” A single port in a small country just south of India pushed many Asian countries to become more wary of deeply engaging with the Belt and Road. At over $1 billion, the value of Sri Lanka’s Hambantota port is minuscule compared to China’s plans to finance $1 trillion in Belt and Road projects. But its story still led to a domino effect of lost opportunities for China across Asia by serving as a touchstone case for the detrimental consequences of taking on high levels of Chinese finance, undermining the positive international publicity Beijing strived to gain for its initiative. As in Argentina, it was an election that brought new examination and critique to Chinese projects in Sri Lanka. Democratic institutions have done much to shine light on previously obscure dealings involving China. In 2015, Maithripala Sirisena became Sri Lanka’s new president. During the campaign, Sirisena accused his opponent, Mahinda Rajapaksa, of leading Sri Lanka astray in entering unsustainable loans for infrastructure ventures with China. Sri Lanka would “become a colony,” Sirisena argued, if the incumbent Rajapaksa remained in power to engage with China.78 Millions of dollars in payments were reportedly made from Chinese state-​owned construction companies to President Rajapaksa’s failed re-​election bid.79 Sri Lanka was already heavily indebted to international creditors when China arrived on the scene in 2009.80 The country had just emerged from a civil war and had been shunned by Western investors. Still jaded over India’s intervention in the conflict, Rajapaksa turned to China for support for a long line of projects. He found plenty of interest in Beijing, as Sri Lanka holds a strategic location along South Asia’s busy sea lanes. Yet as Chinese construction firms began to build the new port, roads, and even an airport named after the president, public protest grew. Hambantota port, located in the home district of Rajapaksa, opened for business in 2012. But it failed to attract many ships for docking, with Sri Lanka’s existing port in the capital Colombo taking on growing activity instead. In the following years, the failing port and near-​empty international airport in Hambantota helped push Sri Lanka into a debt crisis. When Sri Lanka could not make its payments and took even more Chinese loans as recourse, Beijing’s policy banks hiked interest rates to market levels and above.81

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Upon entering office, Sirisena called for a review of China’s projects in the country and moved to halt some of its ambitious plans. He looked to India, Japan, and the West for new international support. But similar to Mauricio Macri in Argentina, the Sri Lankan leader found the financial terms of canceling Chinese projects constraining, and other large economic partners hard to come by. So he turned back to Beijing to renegotiate the deals.82 Needing to release some fiscal pressure on his country, Sirisena negotiated an arrangement with Chinese state-​owned port builder China Merchant Port Holdings to sell the government’s majority equity stake in the terminal company, and approve a ninety-​ nine-​year lease to the Chinese company to operate the port.83 Just as the International Monetary Fund and other foreign creditors influence Sri Lanka’s domestic policy, China limited the country’s financial autonomy and policy independence. Chinese submarines and warships had already called on Sri Lanka’s Colombo port in 2014, and negotiations for the Chinese takeover of the Hambantota port initially left open whether it could be used for China’s military purposes.84 In New Delhi, there was growing concern that the Chinese navy wanted to establish a regular presence on India’s doorstep. But domestic opposition in Sri Lanka and regional pressure from India ended such possibilities.85 The economic failure of Chinese projects, changes in domestic leadership, and regional competition from India all considerably shortened China’s reach.86 Buying the Hambantota port from a heavily indebted Sri Lanka, at first glance, appeared to be another calculating move by China to establish its long-​term commercial and strategic interests in Asia. But it is also an example of Beijing’s transactional and short-​sighted approach to its foreign policy. With Hong Kong under British lease for ninety-​nine years, Beijing should have known better than most of the resentment generated from foreign powers controlling sovereign territory. By taking control of the strategic asset, Hambantota could sow the seeds for China to face political opposition in Sri Lanka for generations to come. Indian professor Brahma Chellaney coined the act as representing China’s new “debt trap diplomacy,” delivering a discursive blow to the Belt and Road.87 Instead of offering development and economic connectivity, Chellaney argued that Chinese finance is a means for Beijing to gain political leverage and strategic assets abroad. Sri Lanka’s Hambantota port is only one project out of some 1,700 projects in the Belt and Road, according to Chinese estimates. But there are other examples where governments have directly and indirectly sold assets to 104     How

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China due to their broader debt problems. In Tajikistan, for example, the government ceded control of over 1,000 square kilometers of land in a disputed border region in return for Beijing writing off some of its debt.88 These examples demonstrate that struggling projects do not necessarily fit into a “debt-​trap” scenario set up by Beijing, but are the result of a two-​way street of decision making. Sri Lanka’s long-​running economic crisis was hardly a China-​made problem. China represents roughly 14 percent of Sri Lanka’s external debt, but the largest share comes from international sovereign bonds.89 Although China provided 60 percent of Sri Lanka’s foreign borrowing from 2008 to 2012, it was the country’s choice to take on such new debt to finance questionable projects that undermined its economy further.90 As Matt Ferchen and Anarkalee Perera argue, President “Rajapaksa and his supporters made concerted, deliberate choices to use Chinese financing to advance their political aspirations” but “China shares responsibility for facilitating or abetting poor project selection and implementation.”91 This does not excuse China’s state-​owned enterprises from engaging with corrupt officials in a country already heavily burdened by debt. China is far from alone in such behavior. But it has now joined the club of outside powers exploiting their positions for commercial and strategic gain. As one foreign businessman in Beijing close to Belt and Road projects told me:  “The Chinese take every chance to maximize benefits and this causes amazing resentment.” Whether it was a deliberate move on Beijing’s part, or simply an assertive commercial bid by one of its state-​ owned enterprises, the reputational damage caused for the Belt and Road proved quite damaging to China, awakening concerns for the geostrategic underpinnings of the Belt and Road. Sri Lanka was a gift for American foreign policy. US vice president Mike Pence derided China’s Belt and Road in a 2018 speech at the Hudson Institute in Washington, DC, in which he raised Hambantota as a potential “forward military base for China’s growing blue-​water navy” and warned that China’s “debt diplomacy” was designed for benefits in financial dealings to “flow overwhelmingly to Beijing.”92 Under President Donald Trump, Washington’s hyperbole towards the Belt and Road often drowned out and diverted international attention away from more sincere concern and critique from those countries engaging China in the initiative. Long before the United States started its campaign against the Belt and Road, local media in Sri Lanka and elsewhere in Asia saw clear limits and dangers to engaging China. “The Sri Lankan people get little or no benefit from the large monies spent on the projects,” Halik Azeez wrote in Sri Lanka’s Sunday Leader newspaper in 2010. “The money lent from China is going back into the pockets of Chinese construction firms and workers, The Chinese Way 

 

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completely bypassing Sri Lankans and minimizing any trickle down and/​or multiplier effects which could have stimulated the local economy.”93 In China’s southern backyard in Southeast Asia, the experience of Malaysia echoed both that of Sri Lanka and far-​off Argentina. Under Prime Minister Najib Razak, from 2009 onward Malaysia’s economic and political relations edged closer to Beijing. China became Malaysia’s largest trading partner and a leading investor. By 2017, Malaysia was in line to be the second largest recipient of Chinese infrastructure finance in the Belt and Road after Pakistan, with Chinese construction companies planning to build $30 billion in railways, ports, industrial zones, and housing and commercial complexes.94 Najib’s father, Abdul Razak, who served as Malaysia’s second prime minister, was responsible for normalizing diplomatic relations with the People’s Republic of China in 1974. Under the United Malays National Organisation (UMNO), Razak established the political coalition Barisan Nasional, the National Front, that ruled Malaysia since independence. But his son’s embrace of China was instrumental in bringing the political winning streak of UNMO to an end. In the 2018 national elections, Najib lost to the opposition coalition Pakatan Harapan, led by the former UNMO leader and Malaysian prime minister from 1981 to 2003, Mahathir bin Mohamad Mahathir. At the age of ninety-​three, Mahathir returned to the political scene to deliver the shocking electoral upset and became the world’s oldest sitting leader. Najib was already an embattled prime minister before the national elections in 2018. For several years, he faced allegations of gross corruption revolving around a government development fund called 1 Malaysia Development Berhad, 1MDB.95 Goldman Sachs executives later faced criminal charges in Malaysia from the multibillion-​dollar scandal. But neither did China’s state-​owned enterprises keep their hands clean in Malaysia. Beijing saw Najib’s plight as a window of opportunity for China’s Belt and Road to engage deeper in Malaysia. In 2016, high-​level Chinese officials suggested that in return for winning lucrative railway and pipeline construction projects, China could push the United States and other countries to end their investigations of 1MDB and place surveillance on journalists at the Wall Street Journal in Hong Kong to locate the officials in the Malaysian government who informed the press.96 The Malaysian corruption watchdog, the Sarawak Report, had first broken the story that Prime Minister Najib planned with the Chinese state-​owned construction giant, China Communications Construction Company (CCCC), to provide some $7 billion to eliminate large debts accrued by 1MDB.97 This was to more than double the original price tag for a proposed railway line, the East Coast Railway Link, in order to cover 1MDB’s losses reportedly 106     How

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embezzled by Najib and others. In return, CCCC received direct award of the project, a high profit margin, and cheap land purchases and tax breaks. In another project, Malaysia agreed to pay up front for two pipelines contracted to the China Petroleum Pipeline Bureau at a cost of over $2 billion, despite little work actually taking place on the ground. During the election campaign, Mahathir narrowed in on the one-​sided deals and mounting debt Malaysia was taking on from China. “None of our people are employed as workers. None of our companies are used for designing and planning and supervising. We gain nothing,” he said. “If they want to come and set up factories here, using our workers, using our managers, they are welcome like everyone else.”98 Mahathir also disentangled the often-​misconstrued notion that Chinese finance amounted to foreign investment. “We have a proper definition of what constitutes foreign direct investment. It is all about bringing in capital, technology, employing our people and improving contributions to the economy.”99 Mahathir was particularly disparaging about Chinese plans to build an extensive residential complex called Forest City near the Johor Strait across from Singapore. The project aspired to attract $100 billion in investment to build four artificial islands and luxury apartments to house some 700,000 residents. The work of a private Chinese developer, Forest City was nonetheless flagged as a Belt and Road project and Mainland Chinese mostly targeted as future residents.100 From 2017, China’s crackdown on overseas investments, particularly in real estate, slowed the project’s further development,101 but Mahathir’s opposition stopped it in its tracks. He argued that because the vast majority of Malaysians could not afford to purchase a home within the complex that visas should be prohibited to foreigners planning to relocate there.102 Forest City and other large-​scale Chinese projects worked as a key tool for Mahathir to ride local Malay animosities toward China’s influence to an electoral win.103 When he came to power, Mahathir immediately suspended $22 billion worth of Chinese deals, including the East Coast Railway Link.104 The 688-​ kilometer ECRL was a showcase project of the Belt and Road, connecting Port Klang on the Strait of Malacca to Pengkalan Kubor in northeast peninsular Malaysia. It represents a main section of China’s plans to develop a Pan-​Asian high-​speed railway from Kunming in Yunnan province all the way down through Laos, Thailand, and Malaysia. Linking the western coast of Malaysia with mainland China, the railway line is one of several land bridges through South and Southeast Asia to remedy what Beijing sees as one of China’s largest geostrategic threats. For decades, the Strait of Malacca, the narrow 1.7-​mile-​wide strait between Malaysia and The Chinese Way 

 

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Indonesia—​where much of the world’s trade and the majority of oil and other vital resources bound for China crossed—​had been seen as a major vulnerability in a potential conflict with the United States. By bypassing the strait altogether, and sending resources over land, China sought to solve its so-​ called Malacca Problem. But Malaysia’s long-​serving prime minister had his own predicament. In 1970, Mahathir wrote a controversial book called The Malay Dilemma that called for the emancipation of the Malay majority in the face of the ethnic Chinese and Indian population’s domination of Malay business. In the following decades, Malaysia became one of the “Asian Tiger” economies, growing rapidly, lifting millions of poverty. But in 2018, when Mahathir returned to power, the country was still struggling to move past its middle-​ income status toward becoming a developed country. This was Malaysia’s dilemma for Mahathir. It was not supporting China to alleviate its geostrategic chokepoints, but ensuring China’s projects advanced Malaysia’s development. The economic rationale for building a railway that crossed the body of the peninsula before heading north up along Malaysia’s east coast to Thailand was missing for the country’s new leadership. Sending cargo from Port Klang in the east to Kuantan Port on the west coast may save roughly thirty hours compared to traversing the Malacca Strait. But loading and reloading still made it more costly for shippers.105 Mahathir pointed to the existing west coast railway line as a loss-​making enterprise that he did not wish to repeat on the sparsely populated and underdeveloped east coast.106 Mahathir cited Sri Lanka’s experience with Hambantota as an example to avoid. “Lots of people don’t like Chinese investments,” Mahathir said. “We are for Malaysians. We want to defend the rights of Malaysians. We don’t want to sell chunks of this country to foreign companies which will develop whole towns.”107 Mahathir had a long history of rebellious, outspoken politics and foreign policy. Barry Wain, the author of Malaysian Maverick, a book on Mahathir’s political life, shows that as the country’s first prime minister with no link to the traditional Malay aristocracy, Mahathir understood what exploitation foreign powers brought to their engagements with Malaysia. Born during British rule of Malaysia, the future prime minister was politicized from a young age from foreign occupation. As a teenager Mahathir witnessed arriving Japanese troops in his town flush out a British soldier from a local courthouse and bayonet him to death. From 1941 to 1945, Japan’s occupation of Malaysia, and Britain’s eventual return, exposed Mahathir to the helplessness of the Malaya population to foreign powers.108 After he rose to become prime minister for the first time in the early 1980s, Mahathir developed a reputation as an anti-​Western firebrand. While 108     How

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he maintained close defense and economic cooperation with the United States, he took every opportunity to scold Washington for trying to suppress economic growth in developing countries. After China’s support for Malaysian communist insurgents ended after 1989, Mahathir advocated a benign view of China in the region. “How many times in the past has China sent its armed forces across borders to invade and occupy?” Mahathir said in a 1995 speech juxtaposing China against former European colonial powers and US power.109 “How many military bases does China maintain overseas to perpetuate its hegemony?” Times had changed when Mahathir returned to power. China had become an essential trade and investment partner for Malaysia. Mahathir has even eagerly professed his openness to work with Chinese tech giant Huawei despite cyber espionage concerns,110 and continued to speak in disdain for the trade policies of the United States and European Union. This was after all the same man who announced a “Buy British Last” policy when he first came into office in the early 1980s, and rallied ASEAN countries to leverage their economic weight as a collective against outside, bigger powers. But theatrics aside, Mahathir was now playing a balancing act with the Chinese and digging his country out of the hole his predecessor had created. “We will be friendly with China,” he said, “but we do not want to be indebted to China.”111 Mahathir was concerned that Xi Jinping and other new Chinese leaders were more willing to use force and influence across Southeast Asia and South Asia without outright conquering countries.112 Mahathir saw Chinese finance as its means to exert control over foreign countries, and on a visit to Beijing, voiced concern of “a new version of colonialism” at a press conference with Chinese premier Li Keqiang. Mahathir argued that China, having experienced “unequal treaties” imposed on it by Western colonial powers, should sympathize with Malaysia’s position.113 Similar to other incoming world leaders having to deal with Belt and Road projects accepted by their predecessors, Mahathir looked for a way out by renegotiating with the Chinese. Keen to not upset Malaysia’s economic relations with China too deeply, and to avoid the exorbitant termination fees of some $5.3 billion for the East Coast Railway Link, Mahathir did not cancel China’s projects outright. Similar to incoming leaders in Argentina and Sri Lanka, he began a renegotiation process to significantly deleverage Malaysia’s position.114 After nine months of deliberations, with the second Belt and Road Forum approaching in April 2019, Malaysia and China renegotiated the railway deal. The overall price was reduced by one-​third from $15.9 billion to $10.7 billion. Although the line was shortened by 40 kilometers and a new alignment The Chinese Way 

 

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avoided unnecessary tunneling, the significant price decrease indicated, as the earlier Sarawak Report story already revealed, that the original terms were highly inflated.115 In the new deal, the Chinese construction company responsible for the project agreed to split the costs of management, maintenance, and operation (Malaysia was completely responsible in the original deal) and increase the share of civil works participation for Malaysian contractors from 30 percent to 40 percent.116 Before the renegotiation, Liu Qitao, president of the China Communications Construction Group, emphasized that the success of the Malaysia line would impact how other Belt and Road undertakings were viewed around the world.117 He was right. While the railway will move forward, it gave further demonstration to the possible corruption and poor financial practices engendered by China’s Belt and Road. Other projects in Malaysia, such as over $2 billion in oil pipelines, appeared to be shelved completely, with Malaysian authorities seizing hundreds of millions from the bank accounts of the Chinese state-​owned enterprise involved.118 Not only did renegotiation ease Malaysia’s fiscal burden, but it also offered increased opportunity for Malaysian industry. But this is not necessarily a victory for Malaysia. The railway is projected to not make any profit until the late 2020s, according to Malaysia’s top negotiator.119 Like China’s African infrastructure ventures, investing the finance elsewhere could have provided better value for the Malaysian economy. But facing a large termination fee, for Mahathir it was about making the best out of a difficult situation. Leaving office in early 2020 after his political coalition fell apart over a struggle on who would ultimately replace him as leader in the ruling party, Mahathir had nonetheless once again left his mark on Malaysia, and also helped change viewpoints on China’s Belt and Road. The pattern of China’s Belt and Road projects fueling local political corruption and financial instability grew across Asia. The Maldives holds similar characteristics as Sri Lanka in its strategic location near critical sea lanes in the Indian Ocean. In September 2018, President Abdulla Yameen was ousted in national elections after five years of rule. Mirroring China’s engagement with Malaysia, the new Maldivian government under Ibrahim Mohamed Solih accused the Yameen government of illegally profiting from the inflated construction contracts with China. With Yameen under criminal investigation, the new government looked to reform its borrowing practices with China and called on Beijing to amend the terms of the outstanding loans. It feared a potential repeat of China’s relations with Sri Lanka, and the loss of key assets from an unsustainable debt position. “We think it is wrong 110     How

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that China is taking us . . . to where we would find it difficult to pay back the money that they have given us,” said Mohamed Nasheed, a former president now heading the national parliament. “We do not want to be consumed by China.”120 Just like in Sri Lanka, India also demonstrated its regional influence as Prime Minister Narendra Modi moved quick to deepen ties with the new government, anxious over the inroads Beijing had made under the previous government.121 New Delhi did not need a cue from Washington or anywhere else to see the necessity to push back against China’s influence. India had not yet signed up to the Belt and Road as of 2019 and, unlike most other large countries, even boycotted Beijing’s annual forum for the initiative. “India’s development partnership is to empower people, not to weaken them and neither to increase their dependence on us or put an impossible burden of debt on the shoulders of future generations,” Modi said during a June 2019 visit to the Maldives.122 Modi offered $1.4 billion in financial assistance in the form of budgetary support, currency swap agreements, and concessional lines of credit.123 The Maldives looked to scrap an agreement with China to construct a sea observatory initiated by the previous government, and instead signed a joint defense cooperation pact with India.124 The new government was not disconnecting from China, which had become a key provider of finance, but realigning and balancing its outside relationships and dependencies. The shine was wearing off the Belt and Road. A  domino effect was taking place in 2018 with China’s “project of the century” across Asia. In August, Myanmar announced it was scaling back its plans for China to finance and build a $7.3 billion port at Kyauk Pyu to $1.3 billion, an amount “more plausible for Myanmar’s use,” a government economic advisor said.125 The port downsizing comes after successive protests since 2011 against a Chinese-​led project to build the $3.6 billion Myitsone hydropower dam. With much of the planned electricity to be sent to southern China, locals only foresaw the environmental damage, displacement, and negative impact the dam would have on fish stocks and livelihoods. The Chinese company involved, China Power International, commissioned an environmental assessment of the project, but then tried to hide it when the results suggested the dam should be stopped.126 While Myanmar was moving toward forming a civilian government at the time, the country’s military junta still held considerable sway, but nonetheless took the decision to halt the project. A multibillion-​dollar hydropower dam project has also been canceled in Nepal due to government concerns over the large ownership stake sought by China and how the lack of open contract bidding shut out domestic business from opportunities.127 The Chinese Way 

 

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There is even a fair degree of critique to the Belt and Road in Pakistan, Beijing’s close partner in South Asia, and the largest recipient of Chinese finance in the initiative. The China-​Pakistan Economic Cooperation (CPEC) is a cornerstone project of the Belt and Road, with plans amounting to some $60 billion in finance to build power plants, highways, and railways across the country to China’s Xinjiang region. But by 2018 Pakistan nonetheless downsized a large railway project connecting Karachi to Peshawar and suspended plans for a $2 billion coal-​based power plant as well as a $14 billion hydropower dam.128 “CPEC is like the backbone for Pakistan,” said Railways Minister Sheikh Rasheed, “but our eyes and ears are open.” By 2020, after a couple years of delay and renegotiation with China, some stalled projects began to gain traction again.129 Prime Minister Imran Khan promised that the CPEC corridor, China’s showcase of the Belt and Road, would succeed at “any cost and bring its fruit to every Pakistani.”130 A long-​standing deficit in power capacity had been largely overcome, but the critical challenge of the China-​financed infrastructure projects generating new trade and investment, and the South Asian country overcoming its debt problems, particularly after the economic hit of the COVID-​19 pandemic, still faced the massive undertaking. China’s expansion into the Middle East and Central Asia through its Silk Road economic belt may face less pushback than the maritime route due to political affinities between Beijing and regional regimes. In the Middle East, where unlike the United States over half of China’s oil imports originate, particularly from Persian Gulf energy producers, Beijing has flirted with the idea of playing the role of peace broker in conflicts pitting regional powers Saudi Arabia and Iran on opposite sides. But the Chinese remain largely on the fence, protecting and advancing interests with both sides, while relying on the US-​led security apparatus.131 “China has many friends in the Middle East, but no allies,” a senior Chinese expert in the region told me. Beijing may eventually be forced to ditch its balancing act if tensions flare to direct confrontation between Saudi Arabia and Iran. “On the Silk Road,” one businessman from the region told me, “countries like the Chinese, but not each other.” In neighboring Central Asia, the view on China is somewhere between “fearful and grateful.” Local resentment to China’s overbearing reach is prevalent, but protests against Chinese projects are at times indirect criticisms of the local government rather than necessarily anger against Beijing bubbling to the surface.132 As in Africa and elsewhere, it is the long-​term viability of these projects, particularly in helping the region break out of its dependence on oil and gas production, and generate new productive industries, 112     How

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that will ultimately direct local sentiments toward China. This will partly hinge on whether China can remake the ancient Silk Road by revitalizing the freight-​railway network to Europe. Beijing aimed to turn the Kazakh city of Khorgos, one of the farthest points on Earth from an ocean, into the world’s largest dry port. Cheaper than air and faster than sea travel, this is to be the new gateway for Chinese goods to make the 11,000-​kilometer journey to Western Europe’s large markets. But effectively changing freight cars from China’s standard gauge to the wider former Soviet track was proving a challenging task.133 Heavy subsidization of many routes by the Chinese government is what keeps the trains moving, but cargo space is underutilized and many containers return empty from Europe.134 Volumes are increasing, but in 2018, even with generous subsidies, the railway route carried only 2.6 percent of the total value of China’s trade with the European Union.135 Trains may be well placed to exploit specialty goods demanding shorter travel times, but the maritime route, while slower, takes the bulk of the volume because it costs half as much. What was going on with Xi Jinping’s “project of the century”? In the book High Speed Empire, Will Doig visits a number of Southeast Asian countries wrestling with the implications of China’s infrastructure plans. He views the Belt and Road not only as a regional infrastructure plan, but as a strategy for Beijing to increase its influence, connections, and control over its neighbors. Chinese-​built railway lines, casino cities, and ports become “localized transfers of government control from one country to another,” where “national sovereignty was relinquished in exchange for modernization.”136 But at the same time, Doig discovers that “the very qualities that have helped China gain entry—​dysfunction, corruption, poverty—​are also the qualities that can turn large-​scale, long-​term projects into mazes with no exit.”137 There are also other qualities at work in frustrating the Belt and Road across Asia. China’s assertive advance, making deals overwhelmingly in its interests, where the Chinese government and corporations interfere politically, at times, through uninhibited corruption, not only brought out democratic antibodies, but also memories of colonial exploitation that are all too familiar to many Asians. The Belt and Road may be a big, splashy global initiative, but the development of foreign infrastructure to advance strategic objectives for world powers was a centuries-​old game. Beijing was advancing tactics, such as tying finance to its national banks, contractors, and suppliers that European and American statesmen knew well during the nineteenth and twentieth centuries.138 This exploitative use of asymmetrical power is recognizable to populations across Asia, Africa, and Latin America. There is The Chinese Way 

 

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a tendency for China to avoid blowback to Belt and Road projects in authoritarian regimes and weak democracies, particularly smaller economies such as Laos and Cambodia. Generally speaking, however, pushback continues on account of over-​assertive Chinese interests crowding out domestic competition and threatening fiscal stability. China’s state media blames a “smear campaign” orchestrated from the United States for the negative “debt trap diplomacy” press the Belt and Road receives.139 But animosity toward China’s Belt and Road across Asia was not sourced out of Washington, DC. Instead it has domestic roots in the experiences of working with Chinese corporations, policy banks, and government officials. This pushback does not spell the end of the Belt and Road. Yet in the wake of scrutiny from local media, non-​governmental organizations, the private sector, and political opposition, and buoyed by political change in democracies, a new level of attentiveness in dealing with Beijing has emerged. A wave of delaying, downgrading, and re-​engineering Chinese finance to better align with domestic development agendas has already taken place. Future leaders are likely to follow this trend. In Malaysia, one likely future political leader, Anwar Ibrahim, is unlikely to change course on China. The victim of years of political imprisonment in Malaysia, Anwar is one of the first Muslim leaders to speak out against China’s mass detention of its Uyghur Muslim minority in its Xinjiang region.140 In Sri Lanka, even former president Mahinda Rajapaksa, who brought the country closer into Beijing’s orbit, understands the China factor in domestic and regional politics. He told an Indian audience in September 2018 that Sri Lanka needed to try to change the ninety-​nine-​year lease for China over Hambantota.141 When his brother, and former defense minister, Gotabaya Rajapaksa won the 2019 presidential election, relations seem to have swung back in China’s favor. Potential closer engagement with the United States was put on hold in February 2020 with the cancelling of a infrastructure and transportation agreement with Washington. A tripatriate Colombo Port project between Sri Lankda, India, and Japan was also put under review and instead, in the wake of the COVID-​19 pandemic, the new Rajapaksa government took on a new $500 million concessionary loan from Beijing.142 Rather than Chinese dominance in Asia, these changes demonstrate how skillful politicians can gain much from playing their larger neighbors off one another. There is new recognition that balancing has become essential for small states when facing pressures from big powers around them. There is also growing regional learning between countries on how to manage and mitigate the negative side effects of China’s Belt and Road. In late 2018, the ISEAS–​Yusof Ishak Institute in Singapore, specializing in 114     How

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Southeast Asian affairs, surveyed the views of over 1,000 regional experts from the policy and research sectors, civil society, and government. They found that a strong majority of 70  percent viewed the Belt and Road experiences of Sri Lanka and Malaysia as evidence that governments “should be cautious to avoid getting into unsustainable financial deals with China.”143 In the following year’s survey nearly 63 percent of the respondents answered that they have no or little confidence in the new, “open, green, and clean” approach for the Belt and Road.144 At ninety-​three years old, Malaysia’s Mahathir did not stop at his own borders in pushing back against what he saw as China’s overreach. He brought his country’s message to Malaysia’s neighbors, warning Filipino president Rodrigo to “regulate or limit influences from China” in an early 2019 meeting.145 In Thailand, political opposition said that the country should “learn from Malaysia’s Mahathir Mohamad.”146 In Indonesia, the government in Jakarta is keen on capturing more finance from China, but nonetheless laid down conditions for Beijing that its engagements bring advanced technologies, are environmentally sustainable, maximize local labor, transfer technology and skills, and create added value for Indonesian industries.147 Domestic pushback and regional learning brought much of Asia to the stage where balancing and deleveraging from the Belt and Road became the new normal, undercutting the economic, strategic, and political gains Beijing looked to achieve through the initiative. *** At the second Belt and Road Forum in April 2019, China’s air of triumphalism over the initiative seemed missing. “Everything should be done in a transparent way, and we should have zero tolerance for corruption,” President Xi said in his speech. Xi pledged that financial sustainability of Belt and Road partners would receive a new focus. China was still in command of the initiative, pushing back against European efforts to bring in best business and investment practices on the environment and human rights, but the change in presentation of the Belt and Road was hard to miss.148 With several hundreds of billions of dollars in loans disbursed over the years, into thousands of projects, Beijing’s message of reform and recalibration nonetheless showed the influence of China’s experiences in Sri Lanka, Malaysia, and elsewhere on the overall agenda. Since the Belt and Road is enshrined in China’s constitution, and is the signature foreign policy of President Xi, Chinese officials and state media will do their utmost to paper over setbacks and promote a positive narrative The Chinese Way 

 

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of the initiative regardless of the facts on the ground. It is too early to tell if many of the initiative’s projects will amount to a success or failure. There is no accounting of the results, and neither will there likely ever be, given China’s transparency record. But the economic performance of its large infrastructure projects over the long run, whether they spin off new productive activities in host countries, and whether new debt can be shouldered in the meantime will shape future viewpoints. Political headwinds did not result in countries leaving the Belt and Road. China is still taking on new members and there may even soon come a time when most countries in the world sign up. One of the reasons the Belt and Road has such broad appeal is that there is very little to lose in joining the initiative. This is done through a memorandum of understanding with Beijing that tends to include plenty of flowery political language, potential areas of cooperation, but rarely, if ever, any binding commitments. While the number of countries signing up has steadily grown over the years, the value of total projects decreased from 2017 to 2018.149 What the first seven years of the initiative do demonstrate, however, is that the global ambitions Beijing established for the initiative are in jeopardy. Xi is not in control of his signature foreign policy, and he never was. China planned to achieve clear economic goals in launching the Belt and Road. Belgian professor Jonathan Holslag has documented these objectives through official Chinese policy documents and statements from within the government and Communist Party leadership. He argues that these demonstrate that the initiative aims for an expansion of China’s economic strategy from merely protecting its home market from foreign competition to one of offensive mercantilism in supporting the global expansion of its national champions and strategic industries.150 This builds on Beijing’s “Go Out” strategy at the turn of the century that leveraged state finance to jump-​start the international expansion of China’s national oil companies and even privately owned companies, such as the Chinese tech giant Huawei.151 China has followed through on this plan. Among the contractors involved in China-​funded transport infrastructure projects in thirty-​four Asian and European countries between 2006 and 2018, a staggering 89 percent were Chinese. Only 8 percent of Chinese-​funded projects went to local contractors, compared to 41 percent in loans from the World Bank and other multinational financial institutions.152 But as Holslag argues, the Belt and Road is not only about building highways, railways, and ports. China also wants to develop its manufacturing investments and control the global value chain in 116     How

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international trade that travels across the hard infrastructure built by its construction companies. By building factories abroad, Chinese manufacturers can circumvent import tariffs and anti-​dumping measures to access local markets.153 Through the expansion of Chinese companies overseas, the Belt and Road also offers China a leading place in establishing global standards in critical infrastructure, from railway gauges to advanced information and communication technology such as 5G networks and global navigation systems.154 There are, however, noticeable limits to how the Belt and Road can fulfill China’s wider economic and industrial goals. At the heart of this dilemma is China’s overcapacity problem in heavy industries at home. In the wake of the 2008 global financial crisis, China infused its economy with a massive $600 billion domestic stimulus through soft loans and subsidies to construction companies to build thousands of kilometers in highways and railways and office and housing complexes. In the process, China accumulated massive debts and developed large overcapacities in heavy industries. China accounts for half the global production in steel, coal, aluminum, glass, and cement.155 It used more cement between 2011 and 2013 than the United States did over the entire twentieth century and has more unused steel capacity than the total annual production of the next biggest suppliers, Japan, India, the United States, and Russia, combined.156 Since 2013, China set about an agenda to roll back this overcapacity, which over time depresses company profits, leads to ballooning corporate debt, and undermines investment into research and development. But at the same time, drastic cuts in heavy industries will slow down China’s economy and lead to layoffs and social instability, essentially upsetting the core of the Communist Party’s political legitimacy. The Belt and Road is presented as one avenue to solve this problem. In 2014, He Yafei, vice minister of the Overseas Chinese Affairs Office of the State Council, proposed China’s excess capacity could be exported to developing countries to fill their infrastructure needs and stimulate economic growth.157 China’s Ministry of Industry and Information Technology set the aim to “transfer excess capacity overseas” and proposed building 20,000 kilometers of new railways from Vietnam to Turkey to drive demand for 85 million tons of steel.158 Hydropower dams in Argentina, railways across Malaysia, and ports in Sri Lanka could keep Chinese construction companies busy and workers on the job. But the plan to offshore overcapacity through the Belt and Road is misguided. Large export volumes in some industries, such as cement and sheet glass, are simply uneconomical. And many of the economies of Central Asia are too small in size, and have limited debt ceilings, to take on such sizable The Chinese Way 

 

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economic activity.159 In steel alone, China needs to export an additional estimated $60 billion annually to absorb excess capacity.160 Since China’s total steel exports were $55 billion in 2018, this means that it will need to double exports in the future. But China’s steel exports have actually fallen since 2014, and the Belt and Road has made no discernible change in leading buyers. South Korea, Vietnam, the Philippines, and Thailand have traditionally been China’s largest destinations, taking one-​third of total exports, and remain so in the years after the Belt and Road’s launch.161 The potential of domestic reform in China to slash overcapacity far outweighs what is possible through moving heavy industries overseas. But such change is limited by incentives for local government officials to maintain economic growth and avoid large layoffs.162 At best, the Belt and Road can only marginally vent overcapacity. This is the case because in larger markets in Southeast Asia and South America, where there is more demand, countries such as Malaysia, Argentina, and others also want to expand their own companies in heavy industries. When China agrees to reform Chinese finance to offer contracting to local industries, it is actually undercutting its own goals of offshoring overcapacity. Chinese finance, investments, and industry standards will grow through the Belt and Road, but this will have a limited impact on China overcoming its economic problems at home. The picture is bleaker when considering Beijing’s geostrategic aims. The Belt and Road is seen from Beijing as a collective endeavor across state actors with the goal of coordinating corporations, ministries, and provincial governments to avoid overlap and competition in overseas activities.163 But when filtered through local politics and societies overseas, the very problem the Belt and Road should solve is actually enlarged. Rather than grand strategy from Beijing, China’s fragmented domestic politics has been internationalized through the overlapping and competing agendas of individual ministries, provincial governments, policy banks, and corporations.164 In collaborating with neighboring countries, for example, Chinese provincial governments have ignored dictates from Beijing and plowed ahead with multiple infrastructure projects that ultimately overburden foreign governments with debt. Alongside local officials, Chinese state-​owned enterprises engage in political corruption and environmental degradation that leads China into diplomatic crises. The military goals of the People’s Liberation Army (PLA) are a case in point. As the growing number of Chinese navy vessels crisscrossing the Indian Ocean toward its naval base in Djibouti indicates, the PLA Navy is

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pursuing its 2015 “far seas protection” strategy to protect China’s economic interests in the western Indian Ocean, Middle East, and East Africa.165 This will require a network of naval bases, with logistic facilities in countries such as the Maldives, Sri Lanka, Pakistan, the Seychelles, Kenya, and Tanzania.166 Chinese major general Wang Weixing has acknowledged that the Belt and Road is part of the PLA’s “go global” strategy. For Wang, Chinese finance to countries searching for development opportunities can act as an effective lever on improving relations and securing access to new bases.167 Giving credence to international and domestic concerns of the military link to the Belt and Road, Wang and other Chinese military leaders have also advanced the idea of “places without [military] bases,” meaning that the PLA should exploit Chinese-​operated ports and airports if the need arises in future conflicts.168 Strikingly, some of the most dependent economies on Chinese finance, Sri Lanka, Pakistan, the Maldives, and Djibouti, are those that represent key geostrategic positions for China’s trade flows. Yet if such economic cooperation leads to political scandal and economic instability caused by a lack of due diligence by Chinese policy banks and state-​owned enterprises, or indeed deliberate political meddling and corruption, then these deals can act as a counter to China’s military objectives by raising the attentiveness of Belt and Road partners toward strategic risks. This fragmentation of power in the Belt and Road shows that just as the Communist Party does not hold complete control over politics and economics at home, it struggles even more to influence events abroad. At the 2019 Belt and Road Forum, Xi said there was zero tolerance for corruption in the initiative. Beginning in 2013, Xi’s widespread anti-​corruption campaign in China sought to root out graft, leading to the detainment of Party leaders, executives, and low-​level officials alike. But Xi’s drive to root out corruption is limited by its dual purpose of targeting his political opponents. Of all the large economies in the world, China remains the most corrupt, according to Transparency International’s Corruption Perceptions Index.169 The anti-​graft message did not get out to too many Chinese actors engaging in the Belt and Road. China’s corruption is now following its activities overseas and can upset its geostrategic goals in the process. The lack of coordination and control is demonstrated through the paucity of convergence of Beijing’s regional corridor plans in the Belt and Road with the direction of economic activity. The China Pakistan Economic Corridor is the only one of the six industrial corridors in the Belt and Road that has received a corresponding high level of project activity. Otherwise, there is no significant relationship between the level

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of project activity and the countries participating in other corridors in Central Asia and Southeast Asia. As researcher Jonathan Hillman finds, the Belt and Road follows a scattered and opportunistic rationale rather than a unifying vision of main corridors of economic activity.170 It is not only detached from its targeted regional corridors, but the Belt and Road also transcends time and space. Chinese officials point to projects already in motion before the initiative was launched, and outside of its partners, as achievements.171 This includes Argentina’s Belgrano railway upgrade. This project predates the Belt and Road by almost a decade. Yet it is included as a project, even though Argentina, as of mid 2020, is not yet an official partner of the Belt and Road. Beijing also wants to use the Belt and Road to ensure the flow of oil, minerals, and food to China by circumventing critical sea chokepoints on the Indian and Pacific Oceans. Beijing’s solution for its Malacca Problem is to develop new land corridors in South Asia and Southeast Asia of oil and gas pipelines, railways, and highways, to send key resources overland to China before they even entered the narrow confines of the Indonesian archipelago. Rising pipeline volumes from Russia have lowered China’s seaborne dependency, representing 11.3 percent of total oil import volumes in 2018.172 The new pipeline route through Myanmar has a 400,000-​barrel-​ per-​day capacity. Other more ambitious pipeline plans from Pakistan have not yet advanced due to large cost, security, and technical challenges.173 In any case, there is still a large gap to fill as China imported 8.8 million barrels of oil in 2018 and, with noticeable increases from Saudi Arabia, over 10 million barrels the following year.174 New pipelines, even in combination with larger imports from Russia and Central Asia, are still far too limited to make up for seaborne oil from the Persian Gulf and elsewhere. In any case, these onshore options can be destroyed by air or sabotaged on the ground in the event of a military conflict. Diverting tankers around Indonesia to other passages than the Strait of Malacca is still a more feasible option for Beijing.175 It is a similar story with gas. China’s dependency on imports has actually risen in the past decade. Seaborne liquid natural gas from Qatar, Australia, and elsewhere takes up almost 60 percent of total gas imports.176 The best way for China to overcome its Malacca dilemma is not through supply-​side solutions, but decreasing oil demand through renewable energy at home and increasing international cooperation on freedom of navigation, which its acts in the South China Sea have directly undermined. If the Belt and Road is challenged in meeting its economic and geostrategic objectives, then geopolitics is all that is left. Similar to Western powers 120     How

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before it, China uses overseas finance to build political influence. In many respects, as China scholar Evan A.  Feigenbaum argues, while maintaining participation in the World Bank and other long-​standing institutions, China is engaging a “portfolio diversification” strategy by launching its own multinational financial institutions, such as the Asian Infrastructure Investment Bank (AIIB).177 But Beijing nonetheless challenges established global norms on financial sustainability and tied aid. China presents the AIIB as reflecting its commitment to supporting global development. The new multilateral bank does hold many of the same norms and regulations as existing multilateral financial institutions. But the real action is elsewhere. Some regard the AIIB as primarily designed by Beijing to “keep the barbarians busy.” This position is supported by the fact that the China-​backed multinational institution only stands for a sliver of China’s overseas finance. For example, the AIIB financed a total of $7.5 billion as of the end of 2018, whereas the China Development Bank alone disperses roughly $50 billion per year to the Belt and Road, with plans to finance an additional $250 billion more by the early 2020s, the equivalent of the annual gross domestic product of Greece or Finland. 178 The World Bank typically provides around $60 billion in loans every year.179 But total loans provided by China’s state policy banks, China Development Bank and the Export-​ Import Bank of China, are challenging the World Bank and other multilateral lenders across Latin America, Africa, and Central Asia. 180 The AIIB is not the new World Bank. The China Development Bank is more deserving of that title. Founded in 1998, the bank was originally led by Chen Yuan, the son of an important former Politburo member under Mao Zedong and advocate for state capitalism whereby market activity in China should be guided by the heavy hand of the state and managed by large state-​owned enterprises.181 China Development Bank went on to bankroll much of China’s construction boom, including large-​scale projects like the Three Gorges Dam, the largest in the world, and is now busy, alongside the Export-​Import Bank of China, trying to do the same globally. Not surprisingly, in diverging from established global norms, China is feeding financial instability with new finance to smaller economies with already high debt levels from Western and multilateral lenders. While China is far from the largest lender in many countries across Asia, Africa, and Latin America, it has grown into a noticeable presence in some countries on the edge of new debt crises. China makes up around 15 percent of debt

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stock in more than half of the twenty-​nine low-​income countries that the World Bank views as being in external debt distress.182 The Center for Global Development in Washington, DC, found that in a study of sixty-​ eight countries involved in the Belt and Road, twenty-​three are at risk of financial distress.183 The credit rating agency Moody’s put the median credit rating of Belt and Road countries at Ba2, which signified a non-​ investment, “junk” level of default risk.184 Out of the top ten recipients of China’s construction contracts, seven had an even higher level of default risk.185 Beijing tends to look past issues raised by other creditors in offering loans to high-​risk countries. The Asian Development Bank, for example, does not prohibit equity stakes larger than 25  percent. The OECD Guidelines discourage member countries from engaging in tied finance. But Chinese policy banks stipulate that much of their finance is tied to Chinese contractors.186 This may provide development opportunities to countries that otherwise have little access to global finance, but it also can lead to failed projects. Not surprisingly, China is involved in many risky projects through the Belt and Road. The RWR Advisory Group, a Washington-​based consultancy, found that since 2013, 32 percent of the total value of Belt and Road projects ran into performance delays and public or national security controversies.187 Without the support of state-​backed finance, Chinese companies respond to risky market conditions. When investing their own capital, only 12 percent of Chinese foreign investment went to Belt and Road countries in 2018.188 Questions have also been raised about the Belt and Road in China. In March 2019, Ye Dabo, a former diplomat, made a rare public dissent concerning the Belt and Road by questioning the Chinese premier Li Keqiang’s assertion that the initiative had made “important progress.”189 “We have achieved some results and some fast developments, but it also had problems,” Ye said. It was a mild criticism, but a rare one in Xi Jinping’s China, where tolerance toward dissent within the Party has fallen sharply.190 Chinese academics and analysts predicted that the Belt and Road would meet overseas resistance by entering complex sociopolitical environments where Chinese companies had little experience as well as face criticism from competing regional and international powers. As seen at the 2019 Belt and Road Forum, China’s leadership is recalibrating its approach, with Xi calling for the needs of local governments and populations to be considered and for deeper risk assessment and mitigation.191 But China’s current ability to adapt should be put into question. The breakdown of China’s responsive authoritarianism at home under President Xi limits its adaptability and pragmatism in policymaking abroad.192 122     How

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Reminiscing about one of the leading figures of China’s economic reform and growth, one businessman in Beijing told me that “if someone like Zhu Rongji does not show up, the Belt and Road will be a failure.” Reforming the Belt and Road requires China’s policy banks and state-​owned and private enterprises to change well-​ingrained domestic and overseas practices of behavior. This will not happen overnight. In over a decade of lending hundreds of billions of dollars to Africa and Latin America, the China Development Bank and China EXIM bank still lag well behind their international peers on governance standards such as competitive public tenders and environmental and social impact assessments.193 A new test of China’s Belt and Road came in early 2020, when the outbreak of the COVID-​19 pandemic led many projects to languish, at least temporarily, as the flow of Chinese labor to Pakistan, Malaysia, Myanmar, and elsewhere stopped as the virus spread in China and soon after abroad.194 As the broader economic consequences of the pandemic became clear, just as in Africa, countries in Asia reached out to Beijing for debt restructuring and relief.195 China’s Ministry of Foreign Affairs reported that 20 percent of Belt and Road projects were seriously affected by the pandemic.196 China’s economy may have been pulling itself out of recession, but many of the countries in the Belt and Road, already with weak credit ratings, may now face possible prolonged economic hardship. *** The Belt and Road is a juggling act of immense proportions. For Beijing to realize its geopolitical, economic, and geostrategic aims through the initiative, its projects must generate productive activities and drive forward the competitiveness of industries in partner countries, while at the same time drive the global expansion of Chinese corporations, offshore a fair deal of China’s domestic overcapacity, and carry out these activities across regional corridors in order to lower China’s geostrategic vulnerabilities. These objectives are easier to achieve if China is the only available provider for infrastructure and technology for developing countries, or is successful in projecting the idea that it is. In Africa, for example, Chinese telecommunications corporations, Huawei and ZTE, have built the majority of 4th generation mobile networks and the affordable smartphones sold by the Chinese tech company Transsion make it a leading player in the continent’s mobile phone industry.197 How India, Japan, Australia, and the United States respond to China’s provision of infrastructure finance through the Belt and Road is critical in dictating

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the length of its reach. Having options for international engagement offers a powerful counterweight against China. In South Asia, many countries looked to India for leadership. There is a reason why Sri Lanka, the Maldives, and Nepal, and others have edged toward Beijing in recent years. “Whether it’s sea ports or highways, I have always offered India first,” Sri Lanka’s former president Rajapaksa told the Indian press. “When they said no, only then I went to China and they readily gave it to me.”198 “Which other country came with an offer to put a bridge here?” said a senior figure in the administration of the former Maldivian president Abdulla Yameen. “Our big brother India, did they come? No.”199 The political inroads China made in the region, however, have shaken New Delhi into action and reinforced the pushback from regional governments against Beijing. Japan is another player that has not stood still. Before China’s Belt and Road, Tokyo was already a large financial player in Southeast Asia. While China is capturing much of the global spotlight, for decades Japan has been a far larger contributor of financial assistance and overseas investment to the region. From 2000 to 2017, Japan’s infrastructure projects totaled $230 billion, compared to China’s $155 billion.200 After the launch of the Belt and Road, with the maritime route beginning in Southeast Asia, China is gaining ground, but Tokyo is looking for new avenues of engagement. In 2015, Japan launched its Partnership for Quality Infrastructure (PQI) in an effort to offer an alternative to China’s Belt and Road. The PQI pledged some $200 billion in new infrastructure finance.201 As its name implies, in a dig at China, Japan’s initiative focuses on ensuring financial viability, economic efficacy, transparency, and high social and environmental standards. Japan also dominates top management at the Asian Development Bank (ADB), where Tokyo holds a matching leading voting share with the United States. The ADB contributed over $30 billion to infrastructure and social development at concessional rates in 2017.202 Japan is also partnering with India in South Asia in helping regional countries, such as Sri Lanka, develop their infrastructure to generate new economic activity.203 It is also increasing cooperation with the European Union as well. Australia is getting more active too. In early 2018, the Australian minister for international development, Concetta Fierravanti-​Wells, accused China of building “white elephants” and “roads to nowhere” in the South Pacific in order to gain financial leverage to build an overseas military base in the small island nation of Vanuatu.204 Similar to Japan in Southeast Asia, Australia looks to counter China’s Belt and Road Initiative by offering 124     How

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new development aid to South Pacific Islands.205 In 2018, Prime Minister Scott Morrison advanced a $2.2 billion infrastructure package for South Pacific countries, a region where Australia still outpaces China in providing assistance.206 Last but not least, the United States is also looking to counter China’s influence in Asia. In late 2018, the United States passed the Better Utilization of Investment Leading to Development (BUILD) Act, the first piece of soft-​power legislation passed in a decade. The BUILD Act aimed to facilitate private sector capital in low-​and low-​middle-​income countries around the world through American soft loans and equity, as opposed to China’s largely non-​concessional debt arrangements. While the pledge of $60 billion in loans is basically only a year’s offering of finance from the China Development Bank, the BUILD Act also established a new development agency, the US International Development Finance Corporation.207 In late 2019, as a means to attract private investment to developing and emerging markets, the United States launched the Blue Dot Network alongside Japan and Australia to certify infrastructure projects that are financially transparent and environmental and socially sustainable. But Washington will need to follow through on its promise to fund the new development agency as planned.208 Similar initiatives have fallen flat in the past. The World Bank, for example, has dragged its feet on modernizing and reforming its practices after a 2009 high-​level commission called for it to be less risk-​averse and shed unnecessary bureaucracy that made it slow in providing financing.209 China does not hold a monopoly on overseas finance and building connectivity in the world.210 And there is plenty of room for the Chinese, American, and Japanese infrastructure initiatives. Asia needs an estimated $1.7 trillion in new infrastructure each year until 2030 to maintain economic growth and adapt to climate change.211 New finance from Beijing, Tokyo, Washington, and others provides recipient countries diversified development opportunities and offers room to play lenders off one another, which in turn helps maximize domestic gains.212 Supporting the capacity of host countries to manage their debt, and promoting independent media and civil society as a check on government deals with outside lenders, is also vital for outside partners seeking to help advance long-​term development goals.213 But cooperation and division of labor are essential in global infrastructure and economic development. If development-​oriented finance is too heavily prioritized on the interests of foreign powers, such as China’s drive to offshore overcapacity in heavy industries, even if Asia’s infrastructure finance targets are met on

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paper, uneconomical and environmental polluting projects may undermine development. At first glance, China’s plans to outlay some $1 trillion in finance for the Belt and Road sounds impressive. The size and simplicity of the number grabs headlines and meshes well with the ambitions of politicians and businesspeople from Africa to Southeast Asia. Without transparency to its disbursement, whether China actually plows so much finance into the initiative is hard to tell. The problem for Beijing is that the world expects big development results. Yet to date, the Belt and Road often offers far clearer advantages for Chinese business than partner countries. Beijing knows what it wants. But it demonstrates a lack of attentiveness to how its projects can drive economic growth and development for partner countries. Without tangible, measurable outcomes that link Chinese finance to new productive activities that benefit the economies and companies across Belt and Road partners, the initiative will likely fail to leverage the legitimacy of China’s development model of political authoritarianism and state capitalism, and may end up doing the opposite. The Belt and Road is testing democracies around the world through the opacity that comes with the multibillion-​dollar financial arrangements between Chinese and local officials. But in many cases, it is showing the strength and endurance of democratic institutions in the face of local corruption and China’s political interference. At the moment, Beijing tends to focus on and repeat what it sees as success stories, such as Ethiopia in Africa, but the specific link to development results is still uncertain. Despite the lofty heights to which Xi Jinping has placed the initiative, his “project of the century,” the Belt and Road may yet undermine China’s foreign policy and the legitimacy of its economic and political model if it does not deliver for a broad scope of countries around the world. From China’s policy banks and provincial governments, to its state-​owned enterprises and military, the Belt and Road is being pulled in different directions by different Chinese actors. When independent media and civil society uncover illicit dealings between Chinese corporations and local officials, this lowers the ability of the initiative to achieve its geostrategic aims. Such scandal seen in Kenya, Sri Lanka, Malaysia, and elsewhere attracts attention and can sink Chinese strategic corridors or military aims to host new bases overseas. And even if these actors worked flawlessly together, there are inherent limitations for China to offshore its overcapacity in heavy industries. While the base and height of China’s Belt and Road may expand for years to come, without deep reform, cracks in its foundation will weaken its long-​term 126     How

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standing in the world. In Africa, Latin America, and Asia, countries are learning to negotiate with China and diversify foreign partners to advance their own strategic interests and produce their own developmental models. Instead of following the American or Chinese way, they are finding their own paths forward.

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Chapter 5

O

Few Illusions Left

n the Spree River in central Berlin, senior managers at the Federation of German Industries were coming to terms with a changing global political and economic landscape. Underneath a tall and expansive curved atrium, the Bundesverband der Deutschen Industrie (BDI) represents the interests of some 100,000 German companies. This includes well-​known German multinationals Volkswagen, Daimler, and Siemens, but also the multitude of small and medium-​sized companies that make up the Mittelstand, responsible for generating the majority of Germany’s output and employment, and making the country one of the world’s top manufacturers.1 As the largest advocacy voice for German industry in Europe’s largest economy, the commercial activities of BDI’s members represent one of the most important economic engines in the European Union (EU). Easter holidays were approaching when I  arrived at BDI headquarters in 2018. But rather than preparing to enjoy a long weekend, staff were kept busy by the tweets of US president Donald Trump. “Trade wars are good and easy to win,” Trump had written a few weeks earlier.2 Following through on his campaign promise to upend and renegotiate America’s trade relationships, Trump threatened to apply tariffs on goods from neighbors Canada and Mexico, but also across the Atlantic Ocean on the EU. This came on top of his regular chastising of European allies in the North Atlantic Treaty Organization, NATO, for their low defense spending. Trump opened a large rift in the transatlantic relationship between the United States and

 

its European allies. This presented an opportunity for China to build closer relations with the EU. President Xi Jinping’s speech at the 2017 World Economic Forum in Davos calling on world political and business leaders to defend globalization was well received in the EU. At the forefront of the EU’s relations with China, Germany’s chancellor Angela Merkel echoed Xi’s call to support international cooperation in the face of Trump’s nationalist “America First” foreign policy. On a visit to the German capital in July 2017, Xi told Merkel that China was ready to build “mutual trust” and that the two large economies should respectively act as stabilizing forces in the face of increasing volatility in Asia and Europe.3 When Xi called Emmanuel Macron to congratulate him on winning the French presidency that year, he urged France to work with China to “protect the global governance achievements contained within the Paris Agreement on climate change.”4 Closer cooperation between China and the EU is at first glance a natural step forward. The EU is, after all, China’s largest trade partner, and China the EU’s second largest after the United States. Over €1.7 billion in goods pass between the EU and China each day.5 European companies have long invested in China, and after 2010 investment activity from China began to gather pace in the EU. For China’s president Xi Jinping and premier Li Keqiang, this was essential to build upon China’s long-​running “going out” strategy in order to help its corporations upgrade the country’s position in the world economy and global value chains.6 The EU’s advanced economies are important investment destinations for China’s state-​owned and private corporations seeking new sources of technology and know-​how to help drive their competitiveness and China’s domestic modernization. In the span of a decade, China’s state-​owned enterprises and private corporations acquired a large number of European corporations across the continent. To name a few, the Silk Road Fund and the China National Chemical Corp., known as ChemChina, purchased Italy’s Pirelli, one of the world’s largest tire manufacturers, for over $7 billion in 2015; China tech giant Tencent bought a majority stake in Finland’s Supercell for $8.6 billion in 2016; and the China Investment Corporation bought the European logistics company Logicor for nearly $14 billion in 2017. Together, Europe’s big economies, Germany, France, Italy, and the United Kingdom, regularly account for much of Chinese investment in the region.7 In 2016, for example, China invested €11 billion in Germany, the biggest target for China in a record-​ setting year for its EU investments.8 The following two years, the United Kingdom was the largest recipient of Chinese investment among European economies. China still is a minor investor in the EU compared to the United 130     How

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States, Switzerland, and others, but the level of its acquisitions rose suddenly over the past decade. There are also geopolitical reasons for China to enhance EU relations through trade and investment. In 2012, President Barack Obama’s “Pivot to Asia” signaled to Chinese leadership that America planned to isolate China internationally.9 In spite of America’s relative economic decline, Obama’s assertive moves to push through major trade deals with Asia and Europe, the Trans-​Pacific Partnership and the Transatlantic Trade and Investment Partnership, respectively, had all the markings of a global strategy to maintain American global leadership and contain China’s rise. In response, Beijing looked to developing its relations with the EU to counter and displace the United States as the world’s sole superpower. China had already made inroads to deepening ties with the EU. In early 2015, China won broad support across the regional body for its new multilateral bank, the Asian Infrastructure Investment Bank (AIIB), despite American efforts under Obama to keep its close allies from joining. Beijing followed its success with the AIIB by actively promoting its Belt and Road Initiative to European partners to drive trade, infrastructure, and technology cooperation across the Eurasian landmass. The transatlantic relationship had anchored global markets and international affairs for the past century, but a new Eurasia relationship, with Western Europe and China linked together by the vast steppes of a supercontinent, was potentially under development. The arrival of Donald Trump to the White House seemed only to make that future all the more possible. But at BDI headquarters in Berlin, despite Trump’s combative tweets, and America’s tough stance toward its long-​standing allies in the EU, the mood was hardly pro-​China. Chinese foreign investments into the EU are only one concern among many. China’s ability to continue to leverage subsidies and regulation in its domestic market, and enhance the competitiveness of its state-​owned enterprises and private corporations as a result, represents a larger, long-​term challenge for the competitive positions of European, American, and East Asian industries and the relevance of international trade rules through the World Trade Organization. “Until around two years ago, China was looked at as a welcome opportunity in Germany,” a senior manager told me. “But now we’re asking ourselves how to advise our companies and the government.” Restrictions and controls placed by Beijing on foreign investors in the Chinese market had long frustrated German and European companies. These formal and informal barriers not only gave Chinese companies an unfair advantage in their home markets, but also conditioned foreign companies to set up joint ventures, and transfer their know-​how and Few Illusions Left 

 

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technology to Chinese partners, in return for market access. For decades, this trade-​off of technology for market access was an accepted reality for foreign companies entering China. But what changed in recent years is that China’s model of political authoritarianism and state capitalism is now also reaching out to the world. Increasingly competitive in China, Chinese multinationals, mainly state-​owned but also private corporations, have also busied themselves with buying foreign corporations and entering overseas markets. The signs had been there. In 2015, China’s aim of climbing the global competitiveness ladder and overtaking European, American, and other foreign competitors was made plainly clear by the release of an industrial policy called “Made in China 2025.” Standing in direct competition with Germany’s “Industry 4.0” to help German firms compete in advanced and high-​tech manufacturing industries, “Made in China 2025” seeks to innovate China’s manufacturing industry to produce higher-​value goods and services in the automotive, aviation, machinery, robotics, maritime and railway equipment, information technology, and other industries. China’s investment restrictions and controls at home, together with its targeted investment approach abroad, exposed the lack of reciprocity in its investment relationship with the EU. At BDI, a tit-​for-​tat approach, “wie du mir, so ich dir,” in dealing with China to win a level playing field for German and European companies was under consideration. The long-​ running assumption that Western engagement through trade and investment would lead China to integrate into an international system of liberal markets was being proven wrong. “Our open market is the absolute basis. It’s our strength,” said the senior manager at BDI. “But we need to make sure we defend it.” German and European corporations still look to reap high profits in China. But German policymakers, and more privately, German executives, are also voicing fears that their competitiveness under present conditions will erode over time. “We thought the Chinese would open up,” the BDI senior manager explained. “But instead they found their own way, and it doesn’t include us in the way we like.” Donald Trump was a geopolitical gift for Beijing to foster closer ties with the EU. But after decades of upbeat forecasts in trade and investment relations, the mood in Germany and the EU on engaging China became far more nuanced and critical. Beijing’s assertive industrial policy at home, combined with the advances of Chinese companies abroad, added a new degree of tension to the relationship. Up the Spree River from BDI in Berlin, Thorsten Benner, co-​founder and director of the Berlin-​based Global Public Policy Institute, presented the new relationship. “Germany had three assumptions on relations with China,” he told me. “First, with fits and starts, that China would 132     How

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open up its markets. Second, there were congenial economic relations with Germany. Third, we had privileged political relations with both cabinets meeting once a year. But the turning point was ‘Made in China 2025.’ We realized that China was an economic competitor. This opened our eyes to China’s geopolitical ambitions. Now there are very few illusions left.” *** The sharp tone at BDI was something new in Germany’s economic relationship with China. For decades, China’s vaulting economic growth appeared to be everything a German manufacturer could dream of. German companies, big and small, profited by richly supplying vehicles, machinery, and chemicals for China’s rapid infrastructure and industrial development. Trade between Germany and China grew over tenfold between 1999 and 2018. Germany had a diverse portfolio of trading partners—​its trade with the USA, France, and the Netherlands is at similar levels with China—​but in the wake of the global financial crisis in 2009, the Chinese market served as a growth vehicle for its export-​driven economy. China became Germany’s largest trading partner in 2016, representing 7 percent of its total trade in 2019.10 China also gained much from the relationship. The EU has long been China’s largest trading partner, and Germany is by far its largest trading partner within the regional body, typically representing between 25 and 30 percent of the total. The two countries complemented one another’s economic positions during the first decade and a half of the twenty-​first century. Germany supplied the machinery and equipment that China needed to help drive forward its economic development and improve living standards. In return, China provided German corporations with a growing marketplace to sell their products. After the end of the Cold War, the general absence of geopolitical thinking in Germany’s foreign policy put trade and investment in relations with China front and center. This had the tendency to make Germany prioritize China’s political sensitivities and limit any thinking on broader long-​ term competition.11 Berlin did voice some concern over unfair trade and investment practices on the part of the Chinese government and rampant intellectual property theft. But even as Chinese companies like Haier and Sany, specializing in appliances and industrial machinery, respectively, began to capture large market shares in China, the view from corporate headquarters in Germany, as they were throughout much of Europe and America, was that the Chinese market was growing fast enough to accommodate new Few Illusions Left 

 

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competition. The trade-​off of “technology-​for-​markets” was normalized into thinking on China. As in other Western capitals, Berlin argued that economic engagement would contribute to China’s liberalization and integration into the international community, that over time China would drop its foreign investment restrictions and controls as well as improve its enforcement of intellectual property rights.12 Germany’s relations with China stood out among its European peers. After coming into power in 2005, German chancellor Angela Merkel visited China each year, more frequently than the already regular visits of her two predecessors. A  long line of powerful corporate executives, from Siemens, Volkswagen, Deutsche Bank, and others, were often in tow. An annual government-​to-​government consultation was set up in 2011. This joint cabinet meeting, unique for China, marked the importance both sides attached to the bilateral relationship. For visiting Chinese officials, it was not the EU’s political center in Brussels that was viewed as the main European destination, but Berlin.13 The two sides have been so close, in fact, that over the past couple of decades, their relations have been a source of consternation between Germany and other EU member states. Berlin was viewed as opportunistically advancing its own interests over those of the regional body, essentially dividing rather than uniting efforts to advance common EU policy on China.14 While many European capitals skillfully outsourced critiques over China’s political values from the individual member state to the regional body, Germany’s importance as a trading partner did award it some leeway to address China’s human rights issues and authoritarian political system. “You need an open, pluralistic and free society to shape the future successfully,” Angela Merkel said in a 2014 speech at Tsinghua University in Beijing.15 Merkel and other German leaders grew up in communist East Germany and knew well the limitations and risks of one-​party rule. But despite the occasional outspokenness from the German side, economics was still in command of Germany’s relationship with China.16 In contrast to the BDI’s position toward China voiced to me in 2018, for over a decade, Berlin at times stood in opposition to implementing particular measures proposed by the European Commission, the executive body of the EU, to push back against China’s unfair competition practices. Germany did rhetorically support pushing China on market reciprocity in trade and investment relations, but at the same time, it continued to undermine the implementation of policies that advanced these positions. Karel De Gucht, the Belgian EU trade commissioner between 2010 and 2014, pushed China to open its public procurement regime, protect intellectual property rights, 134     How

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and end state subsidies and its trade dumping practices, which all undercut the competitiveness of European industry, but Germany often frustrated such aims.17 The collapse of Germany’s solar panel market in the face of Chinese competition is a case in point of German negligence and European disunity to take on China’s predatory pricing in European markets. In 2012, the European Commission applied minimum price trade measures against China for dumping low-​cost solar panel exports in European markets that ultimately contributed to the erosion of competitiveness among European manufacturers. Despite the fact that German companies were also in jeopardy, Berlin moved to water down harder punitive measures against China. The commission was making a “grave mistake,” according to then German economic minister Philipp Rösler.18 The resulting weak pushback from the EU helped secure Chinese dominance in the global solar industry. China now boasts seven of ten top companies, while Germany’s leading manufacturer, SolarWorld, went insolvent in 2017.19 The arrival of the Chinese telecommunications companies Huawei and ZTE is another striking example of the lack of political will and strategic foresight in Germany and the EU to stand against China’s unfair competition practices. Over the last two decades, Huawei has risen, and to a certain degree its Chinese peer ZTE, to join European companies Ericsson and Nokia, and South Korea’s Samsung, as leaders in the global telecom industry. Huawei has been a leading provider of third-​and fourth-​generation mobile networks worldwide and is positioned to play a key role in supplying fifth-​generation (5G) mobile networks in the coming years. 5G networks bring faster data speeds to mobile technology that will allow almost seamless machine-​ to-​ machine communication for artificial intelligence, driverless cars, and automated factories. This technology also raises the stakes for espionage and disruption in communication networks, making security concerns in adopting and operating 5G technologies from major telecom companies more pressing than in previous network generations. Huawei’s rise in providing 3G and 4G networks in the EU was impressive. It went from holding a market share of 2.5 percent in 2006 to 25 percent by 2014.20 How did Huawei grow so fast? The quality of Huawei’s technology and services has become highly competitive over time. The company also advanced from outright intellectual property theft of competing technology in North America and Europe.21 But Huawei’s main advantage is the preferential treatment it receives from the Chinese government. As an upstart private company run by a former People’s Liberation Army engineer, Ren Zhengfei, Huawei initially had to fiercely compete at home against state-​owned companies.22 But Few Illusions Left 

 

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as with other private companies in China, as Huawei grew and became more competitive, it won the Chinese government’s attention and favor, and was awarded benefits typically bestowed upon national champions. One early example of such support came during the visit of Zhu Rongji, one of modern China’s principal economic architects, to Huawei’s headquarters in Shenzhen in 1996. Serving as vice premier at the time, after hearing that the company needed support to compete against foreign companies in China, he ordered the heads of China’s four state-​owned banks, who had accompanied Zhu on the visit, to provide Huawei with credit to offer local customers.23 This approach was later internationalized to help Huawei compete with foreign telecom companies in the EU and elsewhere overseas. For Huawei, state support first and foremost includes a large, guaranteed domestic market share in China’s telecom industry, which as the world’s largest, allows the company to achieve economies of scale and provide complete mobile networks at low prices worldwide.24 This comes on top of hundreds of millions of dollars in government subsidies, tens of billions in below-​market interest rate loans, and other forms of state support that the company has regularly received over the years. The China Development Bank gave Huawei a credit line of $10 billion in late 2004 at below-​market rates. The following year, the British mobile phone company Vodafone chose Huawei as its first Chinese supplier of network equipment. By 2009, Huawei had a $30 billion credit line from the China Development Bank that the company could make available to its customers.25 Some estimates put the total state support to the Chinese telecom at $75 billion, while others estimate the line of credit available to Huawei’s customers for low-​ interest loans is $100 billion.26 Either way, these levels of assistance dwarf what was provided to European and American companies. Huawei’s counterpart, ZTE, was not forgotten. It was provided $25 billion in credit lines in 2009, even though its revenues were only $8 billion that year.27 This support elevated the competitiveness of Huawei and ZTE in European and other foreign markets. It allowed the Chinese telecoms to underprice their European competitors by some 18 percent in Europe and globally against their rivals by as much as 30 percent.28 This limited the market share that European telecom companies could gain in their home economies and overseas. In 2012, the damage of Chinese state aid to Huawei and ZTE began to show. An employee of the French telecom company Alcatel-​Lucent saw the generous loans Chinese telecoms received from China’s policy banks as the real threat. “We won’t die at the hands of Huawei; if we die, it will be at the hands of the China Development Bank.”29 The entry of Huawei into 136     How

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European markets coincided with the start of seven years of losses for the French telecom, which was forced to sell divisions, some to Chinese firms, and push through large layoffs.30 In 2015, its Finnish competitor Nokia finally purchased it. Both Nokia and Sweden’s Ericsson consolidated smaller companies in the face of growing competition from Huawei in Europe. It is not necessarily exceptional for a multinational, particularly in a strategic industry, to receive such state backing to advance its competitive position.31 Intellectual property theft is also not a practice that has been undertaken by China alone. Japan, South Korea, Taiwan, and the United States have carried out such activities.32 But China’s levels of intellectual property theft from the United States alone are measured to be between $300 and $600 billion per year.33 As one expert said, “the United States stole books; China steals libraries”.34 What is striking of Huawei’s rise in the EU, however, is that despite all the state support it received from Beijing, European decision makers did little to stop the company’s growth in their markets. Germany and other EU member states were aware of the unfair advantages Chinese telecom companies received. “Huawei and ZTE are dumping their products on the European market,” EU trade commissioner Karel De Gucht said in 2013.35 Two years earlier, a confidential commission report shared with member states found that the Chinese telecoms benefited from massive credit lines from Chinese state-​owned banks.36 But the EU constrained its response to these illiberal practices by China. In a similar outcome to the solar panel dumping allegations levied at China, De Gucht, whom some Beijing officials dubbed the “mad Belgian” for his tough stance, had to take a step back from the specific dispute over Huawei and ZTE in 2014. EU member states, particularly Germany, the Scandinavian countries, and the United Kingdom, wanted to protect their broader trade relationship with China.37 Instead of showing a principled, united response against unfair Chinese competition practices favoring Huawei and ZTE in European markets, the EU committed to a “gentlemen’s agreement” with China to pursue market openness and reciprocity in the telecom industry.38 “We now have a rational discussion with the Chinese,” De Gucht said. “We are really discussing things. They are not just throwing away our arguments.”39 The discussion with the Chinese side, however, did not lead to meaningful change in the years to come. In fact, many European telecom operators welcomed the low prices despite the distortions Chinese telecoms brought to the market. Germany, for example, did not see the problem in benefiting from support provided by Beijing to allow its telecom companies to get a competitive edge against their European counterparts. Huawei built 45 percent of its 4G mobile network base stations.40 As the EU continued the negotiation Few Illusions Left 

 

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process over trade relations with China, Chinese companies in turn continued to enhance their competitiveness and gain market share over their European counterparts. Berlin had already turned its own solar industry into collateral damage.41 With the growth of Huawei and ZTE in European markets, telecom was added to the list of modern industries the EU appeared willing to cede to outside powers. Strikingly, not only did Huawei become a major player in the EU’s telecom industry, but it also became a leading provider of solar inverters worldwide. Why did Berlin go out of its way to avoid trade confrontation with China in key industries? Although thinking at BDI, the German industry association, would later change, for several decades in Germany, as in other European, American, and East Asian countries, multinationals and the business sector have been some of the largest advocates for pursuing trade and investment opportunities in China. For the thirty major companies of the German DAX blue-​chip stock index, China made up on average 15  percent of revenues in 2017 according to German’s leading business newspaper Handelsblatt.42 Germany’s automakers have been particularly enamored by the Chinese market. Volkswagen, BMV, and Daimler have been behind much of Europe’s investment in China and continue to invest billions in new production plants, with an eye to capturing a large stake in electric vehicles.43 Over 40 percent of EU investment in China in 2018 and 2019 came from the automotive industry, which is consistently the top investing sector.44 China is also an important market for Germany’s other industry leaders, such as semiconductor chipmaker Infineon, and Siemens and BASF, for selling engineering equipment and chemicals, respectively.45 China’s importance for many German and European businesses over the last couple decades normalized policy thinking in Berlin and other EU capitals to prioritize Beijing’s wishes, and short-​term positions in the broader economic relationship, over the liberal market values they often espoused. The EU did not completely neglect challenging China on its trade practices through the World Trade Organization’s dispute settlement mechanism, and applied tariffs on Chinese products from steel to electric bicycles. But Germany’s approach of “Wandel durch Handel,” or change through trade, that many EU member states essentially practiced, did not demonstrate the desired impact in leading China to become a market economy.46 Instead, China’s system of state capitalism began to challenge liberal markets in Germany and the EU. ***

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Germany is known as the “workbench of the world.” China is often referred to as the “factory of the world.” As Chinese companies develop and enhance their technology and expertise to produce high-​value goods, it only seems natural that the two manufacturing powerhouses will compete more intensely—​especially after German and other foreign companies spent decades helping to build the competitiveness of many of their present-​day Chinese counterparts through agreeing to several decades of Beijing’s terms in trading technology and expertise for market access. It was only a matter of time before Chinese companies themselves rose as multinationals and began entering foreign markets. It was in the wake of the global financial crisis in 2008 that Chinese corporations began a global shopping spree. By 2013, China’s global investment crossed the $100 billion mark for the first time. In 2016, it nearly reached $200 billion.47 Germany, the United Kingdom, Italy, and France are typically the largest target countries for Chinese investment in European markets. Investments were modest at first, focused on real estate in particular, but grew in size and sophistication over time. In 2016, some $35 billion was invested in the EU alone in a record-​setting year for Chinese investment in the regional body. That year and the next, China invested over four times more in the EU than the EU in China. Between 2000 and 2017, China’s cumulative investment surpassed flows heading the opposite direction in the same period.48 But it was not simply how much Chinese investment was flowing into the EU, but what Chinese companies were buying that drew the attention of government policymakers and corporate executives. The United States is by far a larger investor in the EU. But unlike American investment, Chinese companies neglect so-​called greenfield investments, job-​producing activities such as building new factories or new services, that in turn generate tax revenue.49 Although there are many Chinese greenfield investments in the EU, in terms of value, Chinese investment focuses on acquisitions of European companies. As such, when one unpacks Chinese investment there is a targeted trend toward specialized industries. In 2015 and 2016, nearly a third of Chinese investment went toward acquisitions in advanced manufacturing companies in the EU.50 A 2019 European Commission report found that compared to other new investors in the EU, China stood out in the number of acquisitions and the selective direction of its investments to aircraft manufacturing and specialized machinery.51 What elicits such strong European reactions to China’s still comparatively low foreign investments compared to the United States, Switzerland, and others, is the jarring lack of reciprocity for European investments into China. In virtually all industries, European companies continue to face far greater Few Illusions Left 

 

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restrictions in investing in China than Chinese companies do in the EU.52 Out of all the largest Chinese acquisitions in the EU from 2000 to 2017, three out of four deals could not have happened the other way around because of Chinese restrictions and controls.53 One British diplomat told me that meaningful change was a long way off. “What China is offering to Europe is its investment, period,” he said. “Europe gets the investment, that’s it, that’s its part of the win-​win. Reciprocity in Chinese markets is not included.” Berlin became particularly concerned after the spike in Chinese investment in 2015 and 2016. Debates grew in Germany that the purchases of critical technology by the Chinese would erode German competitiveness over time. The inflection point was the Chinese purchase of the German robotics maker Kuka. Bavaria-​based Kuka specializes in digitizing industrial processes and creating fully automated and networked factories, acting as a supplier of industrial robots for German carmakers Audi and BMW. At the 2016 Hannover Messe, the world’s largest industrial fair, German chancellor Angela Merkel and US president Barack Obama marveled at the company’s intelligent industrial assistant robots. Merkel described Kuka as the future of German industry. But that future did not last long. A month after the Hannover Messe, the Chinese appliance maker Midea made a €4.5 billion offer for Kuka. It was, after all, the highest bid ever made by a Chinese company in Germany.54 In response, propositions were voiced in Germany for German or other European companies to make a counter bid. Berlin did not want to lose Kuka’s technology to a non-​European competitor. But no EU counteroffer came forward. Midea’s bid was hard to beat, paying Kuka’s shareholders an astounding 60  percent premium.55 Conscious of the political tension its purchase had stirred, Midea promised to maintain the independence of Kuka’s board of directors and refrain from restructuring for seven and a half years.56 But the transfer of German technology and expertise to China was complete. The same month that the Kuka offer was announced, another Chinese company, China’s Fujian Grand Chip Investment Fund, made a €670 million bid to take over Aixtron, a German high-​tech company supplying the semiconductor industry. Before the deal was finalized, however, US intelligence officials informed the German government of the potential military application of Aixtron’s technology. The German Federal Ministry for Economic Affairs and Energy, with the power to block foreign investment on national security grounds, withdrew its previous acceptance of the deal. Because Aixtron had a US subsidiary, the American government’s Committee on Foreign Investment in the United States, tasked with reviewing foreign investment transactions, recommended that President Obama block the transaction. The pressure caused Fujian to back out.57 140     How

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This did not imply that Germany was on the same page as the United States on China. Just a few years before the Aixtron deal fell through due to US assistance, it was revealed that the National Security Agency had tapped the mobile phone of Merkel and other European leaders for years.58 This strained relations, but from the position of the Trump administration some years later, so did Berlin’s decision to not live up to its NATO commitment to devote 2 percent of its gross domestic product to defense spending.59 But as Berlin realized on its own, Chinese competition was on the rise, and its relations with China had become more complicated. Worries in Germany toward Chinese acquisitions only grew when in early 2018, Li Shufu, the chairman of the private Chinese carmaker Geely, bought a near 10  percent stake in German auto giant Daimler for $9 billion. To make the purchase, he used a combination of shell companies, derivatives, bank financing, and structured share options to keep his intentions to become the principal shareholder in the German auto giant under wraps until the last moment.60 Daimler and the auto industry represent the heart and soul of the German manufacturing industry, and Geely’s chairman becoming the largest single shareholder unnerved many in German business and government. “The way Mr. Li bought the shares, hiding until the last moment, made many people suspicious of his real intentions,” one German manager told me. “It was like a crime story.” In late 2019, another Chinese automaker, BAIC, which already owned 5  percent of Daimler, planned to increase its share to 10 percent.61 The rush of Chinese acquisitions was in line with official Chinese policy. Released in 2015, Beijing’s official “Made in China 2025” provides new state assistance to enhance the competitiveness of Chinese companies across advanced manufacturing sectors.62 Pursuit of such an industrial policy is not out of the ordinary for China and other large powers, but together with state controls and restrictions on foreign investors in China, intellectual property theft, and the growing competitiveness of Chinese companies, “Made in China 2025” threatens to further undermine the competitive position of both German and other European industries in China and overseas markets. Altogether, 64 percent of Chinese investments in Germany between 2014 and 2017 were in the ten key sectors of “Made in China 2025” and clearly focused in the three German states at the heart of its manufacturing strength: Baden-​ Württemberg, North Rhine–​Westphalia, and Bavaria.63 “Made in China 2025” is the means by which President Xi Jinping plans to see Chinese industries become self-​ sufficient through indigenous innovations, end China’s dependencies on outside technology, and lead in advanced industries. Chinese companies are already making Few Illusions Left 

 

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incremental technology advances in medium-​and high-​tech industries, such as air conditioners, rail locomotives, tankers, and organic chemicals.64 If “Made in China 2025” is successful, it will result in lower economic growth rates, lead to job losses, and decrease industrial output in other major manufacturers, particularly in Germany, Italy, the Czech Republic, Hungary, Japan, and South Korea.65 “One of the main assumptions we had on free thinking and innovation has proven not to be true,” a German official told me in Berlin. “China does not need to become more like us to innovate. They developed their own people, and brought in people from the outside, compartmentalizing areas where companies could do what they wanted and others where they couldn’t. China’s understanding is that it wants to go back to the top, to be the Middle Kingdom. That everyone else either has to be serving or subdued.” The political response in Germany over the loss of strategic ground to Chinese competitors came swiftly. After a record year of Chinese investments in Germany and the EU in 2016, the long-​standing consensus in German government on China as a benign economic partner changed.66 The minister of economic affairs and energy at the time, Sigmar Gabriel, led Germany’s pushback on the lack of market reciprocity for German companies in China and growing Chinese takeovers of cutting-​ edge German technology companies. Unlike many of his European colleagues, Gabriel was a straight talker and called Beijing to task. “Germany sacrifices its companies on the altar of free markets while, at the same time, our own companies have huge problems investing in China,” Gabriel said before embarking on what would be an acrimonious five-​day trip to China in late 2016.67 The new discourse on China in Germany was followed shortly by new government policy. A  year after the Kuka deal, the German government announced an increase of its powers to block foreign takeovers. It enacted a law that lowered the equity threshold at which it could stop foreign investments and expanded the scope of industries from media to defense and critical infrastructure.68 Policy then brought on action. In 2018, the German state-​owned investment bank KfW stepped in to acquire a share in a German power company to prevent China’s State Grid from making the purchase, and later, for the first time, Germany vetoed the takeover of an advanced engineering company by a Chinese rival.69 Some German companies are even openly speaking out against the threat of Chinese takeovers. “The Chinese go into a company, give guarantees about employment, and then everything is calm for a while,” said Joe Kaeser, CEO of Siemens. But “at some point,

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they set up a separate company that swallows the old one, and take away the research and development.”70 Chinese investments in the EU fell sharply to $12 billion in 2019, a fall of 30 percent from 2018, and less than one-​third the level of the peak investment year for China in the EU at €37 billion in 2016.71 The steady decline was largely on account of new controls by Beijing to limit capital flight from the country in an effort to stabilize the Chinese yuan.72 But the change in reception in Germany and the EU toward Chinese investments was nonetheless noticeable on the Chinese side. In an indirect acknowledgment of the tension the government policy made overseas, Chinese officials toned down promoting “Made in China 2025” in public.73 Xi Jinping and Li Keqiang both did not mention the industrial policy in major economic planning speeches in 2019.74 The rhetorical retreat away from “Made in China 2025,” however, does not represent a change in policy. China is not abandoning the plan to upgrade its industrial and economic base and break its foreign technology dependency. Acquisition remain part of the package, but in face of international scrutiny other methods are being pursued as well. Investment levels in the EU fell in 2018, but 58 percent were still made up of the core industries targeted in “Made in China 2025”—​and venture capitalism, legal licensing of intellectual property rights, and research and development cooperation are new avenues to enhance competitiveness for China.75 Going the other way, the costs of investing in China for European companies, and competition from Chinese companies, also has become too high to ignore. In 2018, China’s investment restrictiveness was still nearly four times greater than the average of advanced economies in the Organisation of Economic Co-​operation and Development, the fourth highest in the G20, and still several times higher than the world average.76 Beijing’s favorable formal and informal regulations for Chinese companies had left a mark on European multinationals. Siemens and the French power company Alstom, for example, had fostered the growth of their future competition in China through decades of technology transfers that supplied their core technology in return for lucrative, but ultimately time-​limited, market positions. Their Chinese joint venture partner later became part of the China state-​owned railway giant CRRC Corp, which today dominates the industry at home and has become an international competitor as well.77 One executive compared the challenges for German companies in China to the proverbial boiled frog syndrome, where heat in a pot is only turned up gradually so that the frog does not notice it is boiling until it is too late.78 Siemens and Alstom tried to merge their rail divisions in 2018. This was partly to take on the rising Chinese state-​owned conglomerates that they Few Illusions Left 

 

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helped create through years of joint ventures in China, but the marriage between the European companies was blocked by European competition commissioner Margrethe Vestager due to fears that the merger would have raised consumer prices and slowed innovation. Germany and France nonetheless have pledged to seek reforms to EU competition law to allow for such mergers in the future that might ward off the growing power of Chinese monopolies extending their reach overseas.79 “EU competition laws are ill suited to deal with the competition from China,” one European manager told me. His view was that the blurry lines between public and private companies, the high degree of vertical and horizontal integration, and the many ways the Chinese government can stack the cards in favor of its companies demanded closer scrutiny by Brussels of how the China model really works. Chinese cyber theft of corporate intelligence is a also problem for German and other European companies. Higher than American and South Korean firms, some 65 percent of German manufacturing and technology companies were hit by cyber attacks in 2016. Germany’s domestic intelligence agency estimated that German firms lost over €50 billion to espionage, sabotage, and data theft in both 2015 and 2016.80 China is consistently the largest source. The German Interior Ministry estimates that Chinese economic espionage costs the German economy between €20 billion and €50 billion per year.81 The engineering companies Siemens and Bosch are facing regular cyber theft and attacks from Chinese sources.82 Some argue that China will act on its intellectual property rights laws as Chinese technology becomes more competitive and Chinese companies themselves demand such protection.83 But since China remains behind other large economies in competitiveness, there is also the threat that China may continue to be a main source of cyber theft for the foreseeable future, and even formalize such practices to close the gap. Beijing’s official laws and regulations, including a new China Internet Security Law, expand the threat that foreign companies will have to give up their business secrets and data to the Chinese government on abstract security grounds.84 The market conditions in China made some German and European companies retarget new investments. For example, the German semiconductor chipmaker Infineon opened a €1.6 billion plant in Austria to avoid intellectual property theft in China.85 But China’s large consumer market, and some loosening of foreign ownership limits in recent years, continued to draw in European and other foreign investors.86 Since 2004, foreign investment from the EU into China hardly slipped below $10 billion per year, and rose above $15 billion in 2011 and 2012. From 2016 to 2018, investment fell to under $8 billion per year, with the German automotive industry 144     How

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representing a strong push in an otherwise stagnating trend.87 But it rose again in 2019, hitting $12 billion, and showed some promise in the first half of 2020, again on the back of German automotive investments.88 Over the last few years, the economic relationship between the EU and China still generated high trade levels and large corporate revenues, but considerable friction and discord is also developing between the two sides. Germany and the EU continue to weigh their options in managing economic relations with China. If Chinese investments in the EU were treated in a similar way as European investments in China, then there would be few opportunities for Chinese investors in the regional body. If China continued to offer its corporations subsidies and formal and informal regulatory benefits that challenge international trade norms, then European and other foreign industries will ultimately suffer. “The instruments we have as free societies and open markets are not made for dealing with China,” a German official told me. “It’s not going to go smoothly if we completely rely on public debate and the forces of the market. There is another half of the toolbox that we haven’t used. We need to toughen up and learn how to be punitive.” *** Europe had been here before. Some fifty years before fears over Chinese takeovers, warnings of another outside power, replete with finance, technology, and business acumen, had been signaled. This was not the security and political ideology challenge presented by the Soviet Union during the Cold War. Rather, it was economic competition with the United States. French journalist and politician Jean-​Jacques Servan-​Schreiber warned the continent in his 1967 bestseller Le Défi américain (The American challenge). Servan-​Schreiber worried that the superior technology, innovation, and management skills possessed by American corporations would hollow out and take over European industry. Mirroring European angst and discord over China’s advancements in automation, artificial intelligence, big data, and 5G networks decades later, Servan-​Schreiber feared that America was on a path to capture “key industries of the future,” such as computing and aerospace, and would relegate European competitors to “client states.” “Fifteen years from now,” he projected, “the world’s greatest industrial power, after the US and Russia, may well be not Europe but American industry in Europe.”89 He warned that if Europe did not soon move toward integration, it would instead move toward disintegration. Servan-​Schreiber called on the European Economic Community, a predecessor to the EU, to strengthen its cooperation to compete. He argued that Few Illusions Left 

 

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purely protectionist measures would not suffice alone. Europe needed to fight with “creative imagination and organizational talent.” He called for Europeans to create “large industrial units capable of competing with the American giants,” develop “advanced technology that will ensure an independent future for Europe,” invoke “minimum federal power to protect and promote European industry,” and tighten bonds between government, the university, and business and invest in education and research and development.90 American industry never came to dominate Europe. In 2010, American multinational corporations made up less than 4 percent of the EU’s GDP and employed a little over 2  percent of total employment.91 Defiantly, Servan-​ Schreiber insisted he was right, that Europeans had responded to his warning. “They did what I told them,” he later said. “They listened to me.”92 His confidence may not been misplaced. Since the late 1960s, European integration through the customs market, single common market, and a common currency and standards has kept much of Europe at peace after two devastating wars and boosted, albeit not evenly, the competitiveness of European industry and living standards.93 The collaborative effort between European aviation firms and governments to compete with America’s Boeing demonstrated the strength of the European model of industrial policy.94 Fifty years after Servan-​ Schreiber’s call to action, there is a growing sense that the EU has fallen behind once again and must rediscover the political will to collectively support its companies and collaborate to build European competitiveness. The EU, led by its largest members, has recognized this is the reality of geo-​economic competition in the twenty-​first century. In January 2019, BDI released a detailed policy paper on how Germany and the EU could compete with China. The German industry association argued that liberal economists had been proven wrong:  the disadvantages of China’s model, a tendency to create overcapacities and rely on inefficient state-​owned enterprises, did not prevent China from pushing forward its economic and political goals. “A competition is emerging between our system of a liberal, open, and social market economy and China’s state-​dominated economy,” the policy paper stated. “Germany and the EU cannot rest on the supposed certainty that our model of an open society and a liberal and social market economy will bring long-​term macroeconomic advantages over the Chinese system.”95 In this new “Systemwettbewerb,” contest of systems, as BDI called it, China is both a partner and a competitor for Germany and the EU. At first this appeared to be a contradiction. How could one be both a partner and competitor? But the position voices a demand for new transparent and enforceable rules and norms between China and foreign traders and investors. 146     How

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Until China reforms unequal treatment of foreign companies in its economy, BDI suggested that Germany and the EU push back through new state aid legislation and anti-​subsidies instruments to end China’s market distortions in the EU, while at the same time invest in an EU industrial policy that focuses on innovation, social partnership, infrastructure, and free trade.96 The message in Germany resonated with others in the EU. France has long been protective of its domestic industries from foreign takeover. “The time of European naïveté is ended,” French president Emmanuel Macron said. “For many years we had an uncoordinated approach and China took advantage of our divisions.”97 Tough language abounded. “We accept long-​term investments but not looting,” French finance minister Bruno Le Maire said on a 2018 trip to Beijing.98 With an eye on Chinese and American takeovers, France increased the scope to which it could block foreign investments.99 On top of Germany, France, and Italy, five other EU member states updated their foreign investment screening regimes between 2016 and 2018, with a number of others considering similar policy changes in the near future.100 There are, however, still countries slowing and watering down the development of EU-​wide investment screening rules. In February 2017, Germany, France, and Italy presented the European Commission with a common position on investment screening that would give the executive body the power to block takeovers in strategic sectors from non-​EU investors.101 But a group of member states from southern Europe and also Nordic countries pushed back against giving Brussels such powers. “I understand that is something that tries to please France and Germany,” said Kai Mykkänen, Finland’s trade minister on investment screening, “but at the same time it might provoke China, India, and the US.”102 Finland and others viewed investment screening as undermining opportunities for foreign investments, particularly from China, to flow into Europe.103 The European Commission retooled the policy as a result, discarding a proposal to allow Brussels to block investments. In a time span of eighteen months, a new EU-​wide investment screening framework was passed. It required members to share information on potential corporate takeovers from outside the EU and for the European Commission to issue opinions on these transactions. These new measures are non-​binding, and still a far cry from the powers of the Committee on Foreign Investment in the United States. But the new European framework places a spotlight on future deals for the regional body and encourages member states to further enhance their national investment screening policies.104 In late 2018, a joint statement by eighteen member states, both proponents and some detractors of investment screening, called on the EU to push forward a common industrial policy in the face of Few Illusions Left 

 

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“increasing competition from other major economic blocs.”105 Even the five Nordic countries, including Finland, began to tighten investment screening rules.106 Growing critique in the EU over China’s economic practices led to the March 2019 release of a new strategic outlook on EU-​China relations prepared by the European Commission. The strategic outlook echoed many of the ideas BDI’s policy paper had forwarded a few months earlier from Berlin. It argued that the EU should now view China as both a partner, but also an “economic competitor in pursuit of technological leadership” and “a systemic rival promoting alternative models of governance.”107 The list of economic grievances toward China was long. It included China’s selective market opening to protect its companies from competition, Beijing’s heavy subsidies to both state-​owned and private sector companies, and the closure of China’s procurement market.108 As a consequence of the strategic outlook, European officials are redesigning public procurement guidelines to ensure that Chinese and other foreign companies that receive state subsidies and other support cannot win EU public tenders through abnormal pricing. Controversy has grown on this issue as Chinese construction companies became involved in EU public tenders. For example, the Peljesac Bridge in Croatia, while financed with EU funds, was built by a Chinese state-​owned company, which was accused of receiving state aid by the rival contract bidders and not following local labor laws.109 New transparency on public procurement may limit China’s future access to the tens of billions of dollars in projects on offer through the EU’s annual cohesion funds to less wealthy members. These new defensive positions on China represent a remarkable change of position in the EU. Just three years earlier, the European Commission had recommended that China be granted market economy status. The EU parliament still needed to approve the commission’s recommendation, but rather than counter Beijing’s industrial subsidies and lack of market reciprocity, this decision would have constrained the EU’s ability to impose anti-​dumping measures against Chinese goods.110 Just the consideration was significant and underlined just how quickly thinking on China changed with the new strategic outlook. When the coronavirus spread to Europe in early 2020, and stock values of leading German and other European corporations prepared to take a hit as economies shuttered around the continent, Berlin and other EU capitals moved quick to caution foreign investors that the government would step in to block corporate takeovers of beleaguered companies and tightened foreign investment screening procedures.111 The European Commission also issued guidelines for EU-​wide investment screening during the crisis to preserve 148     How

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European companies.112 But the Chinese investment did not immediately arrive. China was also going through its own economic downturn and the EU’s reaction to potential new and large Chinese investments had swayed some to stay away. “The money is not there,” one European manager told me. “Chinese companies are becoming more picky in how they spread scarce resources and are more receptive of the political risks.” The EU aspired to finalize a long negotiated investment agreement with China in 2020. But a summit planned that September in Leipzig, Germany, between Xi Jinping and the leaders of all twenty-​seven EU member states was cancelled, ostensibly because of the COVID-​19 pandemic. The EU pressed on in hopes of realizing a comprehensive deal. But even before the summit’s postponement, EU trade commissioner Phil Hogan remarked that negotiations with Beijing throughout the previous year had resulted in “little concrete progress on improving market access” for European companies.113 A major test for the EU’s new critical perspective toward China is the role Chinese telecom leader Huawei will ultimately play in building Europe’s 5G mobile communications networks. The new generation of mobile networks are set to revolutionize telecommunications in the years to come, speeding up data flows to allow connected devices, the internet of things, to rapidly interact and offer unprecedented societal, business, and strategic opportunities. Trust is essential for 5G. It is next to impossible to inspect the frequent software updates provided by telecom companies such as Huawei and Europe’s Ericsson and Nokia. There is disagreement among EU member states on the security risks attached in engaging Chinese telecom companies. Since China remains a leading source of intellectual property theft and—​similar to the United States and others—​wields the capabilities to eavesdrop and launch disruptive cyber attacks, some see allowing Chinese telecom companies into such critical infrastructure as a major security risk. Huawei’s own software engineering practices have been criticized by the British government, which worked closely with the company on 4G networks.114 A determined American campaign for its allies in Europe and elsewhere to deny Chinese telecoms access, or else potentially lose intelligence sharing privileges with Washington, has had mixed results.115 While the United States and other countries point to the fact that China’s 2017 National Intelligence Law requires companies to support state intelligence work when called upon by Beijing, the at times threatening approach of the Trump administration has undermined its efforts. One European executive at a telecom operator told me that Huawei “pressed hard” to win contracts, with repeated invites to visit China, but offered substandard security compared to its competitors. Few Illusions Left 

 

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The price Huawei offered European operators to build 5G networks did not seem to be an issue, and this worried the executive that they were not merely engaging in a business deal with the Chinese telecom. Pressure from the Americans to keep the Chinese company out, on the other hand, was often more diplomatic in presentation, but “equally aggressive.” For most European economies, the rip and replace cost of switching to another 5G network provider than Huawei or ZTE is not overwhelmingly significant.116 But at the same time, for many European operators, such as Deutsche Telekom in Germany, EU regulations have kept opportunities for market consolidation limited, and thus returns on capital relatively low. As a result, similar to their large engagement with Chinese telecoms in building 4G networks, European operators have been eager to capitalize on the savings engaging Huawei and ZTE offer for 5G.117 Government regulation neglective of geopolitical changes outside Europe’s borders made the strategic industry vulnerable to foreign control and influence. In October 2019, the European Commission passed on assessments of member states and recommended avoiding working with state-​ backed actors outside the EU.118 The following May, the United States pushed harder for European and other countries to reject Huawei when it imposed export controls cutting off Chinese telecom companies from global supply chains that include components, such as semiconductors, manufactured with American hardware and software. At the time, the United Kingdom and France were set to allow access to Huawei in their 5G networks, but under tougher security requirements that limit its involvement to non-​core parts of their 5G networks.119 These decisions have been based on the understanding that the core of 5G networks, managing government and essential services, can be separated from its periphery by security measures. But some security experts, particularly in Australia, which has kept Huawei and ZTE out of its 5G networks, dismiss the core-​periphery distinction. They argue that if 5G networks are to operate at their full speed and low latency, then sensitive functions must be distributed throughout the network.120 Yet the new American sanctions, coupled with China’s imposition of new security laws on Hong Kong, and general worsening ties with Europe in the wake of the COVID-​19 pandemic, pushed both the United Kingdom and France to announce a new government policy to effectively stop buying and remove existing Huawei equipment from their 5G networks by 2027 and 2028, respectively.121 Whether these decisions might be rolled back if American policy changes remains a possibility in the future. But European relations with China would need to improve as well, and domestic political opposition to working with the Chinese telecom subside. 150     How

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After the European Commission’s assessment to avoid state-​ backed providers, Germany appeared to leave room for Huawei and ZTE to participate in its 5G networks.122 With the German economy facing headwinds in recent years, there are concerns again that German leadership may look to placate China on the Huawei issue in hopes of bolstering its broader trade position.123 Journalist Noel Barkin questioned whether “Germany is willing to look beyond the narrow, short-​term interests of some of its biggest companies, think more strategically, and ultimately pay a price for European unity.”124 Chancellor Merkel stood against excluding any particular company from its 5G networks, but political opposition, including within her own party, pushed for a strategy that would bar those unable to demonstrate that they can avoid being subject to foreign state influence.125 In an effort to direct Berlin’s 5G network decision in late 2019, China’s ambassador to Germany, Wu Ken, cautioned that China might take retaliatory measures against the German automobile industry should Huawei be excluded.126 China’s leading diplomats were issuing similar, often implicit, warnings around Europe and Asia to protect Huawei’s position.127 Just as the United States is weaponizing interdependence by trying to bar Chinese telecom companies from high-​tech global supply chains,128 China is also getting into the act by threatening to restrict foreign access to its large market. For such threats to be effective in Europe, however, Germany and European governments would have to look past the fact that China continues to favor its own telecom companies to build its networks. In early 2020, China Mobile selected Huawei and ZTE to build nearly 90  percent of its 5G network base stations. Ericsson received the remaining share and Nokia was left out altogether.129 European governments would also need to ignore the fact that their telecom companies are more than capable of building the continent’s 5G networks. Chinese diplomats in Europe have also made claims that by rejecting Huawei’s participation in 5G networks, European countries were ‘rejecting the future’, and would lag behind capturing the economic gains of the new technology.130 This assessment, however, ignored the capabilities of European and other international telecom companies. Huawei boasts high research and development expenditures and a large quantity of patent declarations, but when considering patent quality, the essentiality of patents, or the value of technology, its European competitors, Ericsson and Nokia, and South Korea’s Samsung, compete with, and in different areas, surpass, the Chinese telecom.131 As a result, the geopolitics of US-​China strategic competition over 5G networks may ultimately benefit European providers. Germany had still not taken a stance on Huawei by mid-​2020, but its decision will Few Illusions Left 

 

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be consequential for the direction of the entire regional body on such strategic issues in the future. The propensity of European political and corporate leaders to realize their own technological competitiveness in face of Chinese and American geopolitical pressure will play a large role in defining Europe’s global role in the twenty-​first century. *** A defensive position within its own borders may not be enough for the EU to advance its interests in a world where big powers are exploiting their economic size and technology capabilities to advance their own competitive and geopolitical interests. As Jean-​Jacques Servan-​Schreiber argued decades ago, today the EU will need to go on the offensive as well to ensure its economic competitiveness and strategic autonomy. Steps have already been taken in this direction. In late 2018, the EU released a strategy aimed at driving new energy, transport, digital, and social connectivity between Europe and Asia. The 2019 EU-​China strategic outlook calls for the EU “to stay at the forefront of global research and innovation” to ensure long-​term competitiveness.132 Putting these initiatives into action is essential in helping European industries compete globally, but so is advancing the international trade rules and norms of multilateralism that the EU stands for. Reform of the WTO is at the top of the EU’s list in dealing with China. In agreeing to join the WTO in late 2001, China took on much higher requirements for economic reforms compared to other developing countries. But in the proceeding years, China also manipulated its exchange rate and greatly circumvented WTO rules through a variety of industrial policies that undercut the economic positions of developing and developed countries alike. As Paul Blustein argues in Schism, under President George W. Bush, the United States failed to push back against growing signs of China’s mercantilist policies. Similar to Germany and the EU, the United States consistently pulled its punches on opposing China’s behavior partly to ensure American companies could continue to earn large profits in the Chinese market.133 After digging itself out of the 2008 financial crisis under President Obama, the United States finally began to show the political will for a stronger approach to China, but this came via President Donald Trump’s misguided transactional and bilateral foreign policy. The Trump administration tended to alienate close allies rather than bring them together to push forward reforms in international trade rules at the WTO. For about a decade and a half after China’s entry into the WTO, the EU, the United States, Japan, and others expected that China would transform into a liberal market economy. By the end of 2016, as per the terms of its WTO accession, Beijing also expected that it would be recognized as a 152     How

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market economy by other large economies, and that this status would bolster its trade position even further. But the EU, the United States, and Japan, among many others, did not follow through due to China’s heavy and regular use of state support to its companies and exports. Beijing even brought a WTO case on the issue, but then, before the ruling was made, dropped out in May 2019 when it became clear it would lose the bulk of the case.134 But how the EU and the United States respond to WTO rulings, for example after a long-​running dispute on the illegal use of subsidies for their respective airplane manufacturers, will also influence the trading body’s legitimacy and set precedent for broader disputes with China.135 The WTO has failed to keep pace with changes in the global economy, including the rise of China’s brand of state capitalism. Instead of China reforming its economy strongly in the direction of large, advanced economies in Western Europe and North America, due to its size and influence, it is China that has over the past decade began to challenge the multilateral trade body’s relevance. Beijing is often compliant with WTO rulings against it, but by continuing to support state-​owned enterprises and private companies through industrial subsidies, technology transfers, and an assortment of other measures, China has still not met many of its WTO accession commitments and allowed the market to play the leading role in its economy.136 After nearly twenty years as a member of the WTO, aside from some improvements to reform and open its economy, China is regressing in its commitments.137 State-​owned enterprises are receiving a disproportionate level of finance compared to more efficient private sector firms. Tariffs have dropped, but non-​tariff barriers, such as sanitary standards and government procurement, have taken their place. Industrial subsidies financed over 20  percent of China’s manufacturing capacity growth since it entered the WTO in 2001.138 But subsidies are only one part of a vast machine of Chinese state support to its national and even private companies. In solar, steel, glass, paper, auto parts, and other industries, Chinese companies routinely underprice their international competitors thanks to free or low-​cost loans and artificially cheap raw materials, components, energy, and land they receive from China’s central and provincial governments. China also advances heavy vertical integration, managed monopolies, and closed ecosystems to achieve economies of scale that create massive barriers of entry for foreign firms. The state is not everywhere in China. Many state-​owned enterprises were sold off in the 1990s and onward. But the Chinese government and Communist Party still control many critical industries. Strikingly, much of the uniqueness of China’s economic structure developed not before but after its entry into the WTO.139 In 2003, China moved to further consolidate power and control over its Few Illusions Left 

 

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large and long lineup of state-​owned enterprises by establishing the state-​owned Assets and Supervision and Administration Commission of the State Council, SASAC for short, and the National Development and Reform Commission (NDRC). Rather than privatize its national industries, under President Hu Jintao the Communist Party ensured political control over China’s economy.140 SASAC, for example, manages a portfolio of companies including China Mobile, Sinochem, Dongfeng Motors, Baosteel, and others, where it can transfer ownership, resources, and generate synergies across at a much greater level than Japan’s Ministry of Information Trade and Industry, for instance, once did. “In a little over a decade,” Richard McGregor writes in his authoritative book on the workings of the Communist Party, “the Party had pulled off what few had predicted was possible, the construction of a profitable state sector, with independent commercial aspirations, but still ultimately under its control.”141 Rather than SASAC or the NDRC pulling the strings, it is the nomenklatura system of the Central Organization Department of the Communist Party that appoints and promotes executives of China’s state-​owned enterprises. “The fiction that the Party is not involved in such decisions is carefully nurtured, by ensuring that public announcements of new appointments are made by formal government bodies,” writes McGregor.142 “We don’t have the adequate description of how the Chinese economy works,” an experienced European manager in China told me. “The symbiotic public-​private relationship in China is outside our perspective in the West. The EU needs to look beyond state subsidies and at the non-​monetary means China uses.” Chinese tech companies like WeChat, Baidu, and Alipay might not have taken off and become multibillion-​dollar corporations if not for government regulation granting them special privileges or shielding them from outside competition. As Harvard law professor Mark Wu argues, China’s “Party-​state oversees a more complex set of formal mechanisms for controlling important economic activity than its counterparts in any other major economy in the world.” Private companies do not operate outside the state system, but rather Chinese leaders have “an impressive array of formal and informal mechanisms to entwine private enterprises into its web.”143 Recognizing that China’s WTO accession did not lead it to become a full-​ fledged market economy, the EU and others seek to establish new rules that modernize and fill governance gaps in the trading body as one of the main vehicles to promote change in China’s economic practices. One prickly issue is China’s status in the WTO. Despite boasting a fleet of competitive global corporations and, by purchasing power measures, the largest economy in the world, China still maintains the self-​designated position that it is a developing country.144 This is under protest by the United States, the EU, and 154     How

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other advanced economies, but is a sensitive issue for China, which accepted harsher terms to enter the WTO in 2001 compared to other developing countries.145 From Beijing’s perspective, it is still denied market economy status by other large members, and its current GDP, education, and health levels per capita are still well below those in advanced economies. In this process, it is important to recognize that the use of industrial subsidies and other state support by China to favor its domestic industries to compete in the world economy, while outsized and diverse compared to others before it, is the historical norm rather than exception. The United States, Germany, Japan, South Korea, and others once followed state-​led economic planning and doled out industrial subsidies throughout the nineteenth and twentieth centuries and in part continue to do so in some industries today.146 Despite this historical analogy, however, there also comes a point when major economies work together to reduce levels of tensions brought on by trade friction and make an effort to compromise and flatten uneven competitive playing fields of state support to industry. China’s leaders fear that pressure from the United States and others will be a repeat of that placed on Japan and the resulting 1985 Plaza Accord. Similar to the focus on China today, many in the United States and Western Europe once feared Japan’s economic dominance from its surging trade and economic growth and pointed at Tokyo’s currency manipulation, state-​sponsored industrial policy, and intellectual property theft as unfair practices while ignoring America’s poor economic management.147 The resulting agreement, which led to a devaluation of the US dollar to make American exports more competitive, played a role in the decades of economic low growth that then hit Japan. But the decline was also a prime example of the long-​term consequences of the industrial inefficiencies of Japan’s protectionism, the falling productivity and asset bubble it produced, and a consequence of its aging demographics.148 Focusing on the ill intentions of outside powers may also take Beijing’s eye off similar, very domestic challenges that deserve acute attention. It is, however, difficult for Beijing to point to a Western plot behind pressures on trade. The United States, EU, and Japan are the main voices urging China to reform its trade practices and industrial policies, but China, as a non-​market economy, is by far the largest target of global anti-​dumping measures. Many emerging market economies, such as India, Turkey, Argentina, Brazil, Mexico, and South Africa, are taking action against China. This is the case, even though some have designated China as a market economy, which technically makes it harder to launch anti-​dumping investigations,149 and despite the fact that many fear Beijing will seek retribution outside WTO rules and regulations.150 Few Illusions Left 

 

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Since China is only the first of several countries, such as India, Brazil, and Indonesia, transforming into major players in the global marketplace, but still with relatively lower per capita income levels, how to manage the rise of new large economies remains pertinent beyond the world’s current focus on Beijing’s trade practices. This aim, however, may continue to be hard to achieve on account of changing American foreign policy. Rather than find common ground with other countries critical of China’s influence on international trade and investment, the United States under President Trump has undermined the functioning of the WTO by not appointing new judges to its dispute settlement body as well as shown general disdain for the international trade system by not joining new trade deals such as the Trans-​Pacific Partnership and engaging in a trade war with China. The EU, China, and others have common complaints toward US trade behavior under President Trump, and have worked together to keep the trade body functioning in face of American abandonment. But many of the WTO’s large members nonetheless are also pushing forward to design rules to account for the rise of China’s brand of state capitalism. The EU, Canada, Japan, South Korea, Chile, Brazil, Mexico, Australia, and others call for new reforms, with an eye toward China’s regulated technology transfers, industrial subsidies, and the WTO’s limited ability to monitor and enforce its rules.151 There may be good reason for China’s leadership to implement considerable reforms to the Chinese economy in the near future. This could both ease the concerns of foreign trading partners and investors as well as speed up China’s path to modernization, a major aim of President Xi and Chinese leadership. At present, Beijing’s “Made in China 2025” policy may elevate China’s competitiveness in some key industries, but it will also result in new and large market distortions to the global economy that could ultimately further enflame trade tensions, undermine efficiency, undercut consumer value, and slow innovation in China and the world.152 After attaining its current stage of development and productivity, according to a report co-​ authored by the World Bank and China’s Development Research Center of the State Council, implementing comprehensive economic reform offers China the fastest route to attaining high-​income levels and modernization. A path of limited market reform, and even regression of these commitments, will significantly lower China’s economic potential and the pace of its growth.153 A controlling and restrictive economy may have been necessary in China to allow infant domestic industries space to grow, but today these measures can limit the flow of foreign trade, investment, and technology development necessary to maintain fast-​paced modernization. 156     How

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China may speed up its reform, but this will very likely not be at the pace that outsiders demand unless there is a strong, collective call from its large trading and investment partners. Chinese leadership has grown confident that their own economic model offers the best avenue for development and, crucially, ensures their political control of the country through the Communist Party’s firm hand over markets and major industries. Rather than according to international rules and norms, foreign investors may only be offered a level playing field when China’s own industries hold an advantageous position and commanding market shares at home to drive forward their global expansion. The growth of China’s solar and telecommunications industries in the past two decades, and its drive to lead across advanced manufacturing, such as in electric vehicles, through “Made in China 2025”, should put policymakers and executives in European, American, and East Asian economies on edge. *** Decades of economic engagement with China’s state capitalism have brought Germany and the EU to this point. German and other European corporations profited richly from the Chinese market. But the encroaching competitiveness of China’s state-​owned enterprises and private corporations, leveraging privileged market positions back home while investing in open European markets, presents an imposing challenge. The election of Donald Trump in the United States was an opportunity for Beijing to collaborate more closely with Europe’s advanced economies. But China’s approach to control its economy and overseas investment antagonized Germany and other large European countries. With economic complementarity a thing of the past, an ample amount of competition and tension has entered in the relationship. In a matter of a few years, new barriers came up against Chinese investment in critical industries in the EU, limiting China’s access to advance its modernization at home through overseas acquisitions. In face of an economic slowdown and powerful corporate interests, there are few guarantees that Germany and the EU will not again violate their own economic values, long-​term competitiveness, and general welfare in return for a short-​term deal with Beijing. But new laws and policies, such as investment screening, demonstrate that critical viewpoints of China, and a clearer understanding of the limits Europe’s economic engagement sparking reform of the Chinese economic and political, have gained new traction among European leaders. New challenges are breaking old illusions.

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Chapter 6

S

What Is Best for Europe?

ara Berthou did not expect to get caught up in one of Denmark’s biggest modern-​day political scandals. In June 2012, Chinese president Hu Jintao was visiting Copenhagen when Berthou joined a group of some one hundred protestors in the city center calling for Tibet’s independence and an end to China’s human rights abuses in the region. With Tibetan flags fluttering through the air, the protestors gathered at Højbro Plads, High Bridge Square, not far from Christiansborg Palace, home to the Danish parliament, prime minister’s office, and supreme court. From here they had vantage point of the street on which Hu’s motorcade was scheduled to pass. The pro-​Tibet demonstration was new ground for Berthou. “I had always been part of the activist society in Copenhagen, but I never really engaged in the Tibetan cause,” she told me. “I was practicing Buddhism, was an active meditator for a number of years, and I wanted to just show some support.” But Danish authorities had done their best to shield Hu’s motorcade from the demonstration. Police cars and buses deliberately stopped in front of Højbro Plads to block the line of sight of the soon-​to-​be passing Chinese president. In response, Berthou and others hurried toward Christiansborg Palace, hoping there was still a chance to be seen before Hu passed by. But they received a rude awakening as they got close to the Danish parliament. Two police officers quickly approached Berthou and others, telling them to go away, and that the Tibet flag they had unfurled was illegal that day. One officer even pushed Berthou’s companion in a show of force. In a video of the encounter that later circulated widely in Denmark, the police are

 

seen aggressively ripping a Tibetan flag out of Berthou’s hands. She recalled to me later her immediate shock that her rights to freedom of speech were so easily trampled on in her own country. She did not hold a grudge against China in particular. But she knew that the China factor loomed large behind the actions of the police. “For me, it was more the general problem of the police violating our freedom of speech in the interest of trade,” she said. “It was really unbelievable.” It was the first ever visit of a Chinese head of state to Denmark. The Danish queen greeted Hu upon his arrival, and cultural events were planned, but business was the main item on the agenda during the visit. With several billion dollars of deals about to be signed, Danish authorities were not taking any chances in upsetting their Chinese guests. Just as Berthou was stopped from displaying her Tibetan flag in front of Hu’s motorcade, police detained other Danish protestors in different parts of the city. “It was a big event to market the business relations between Denmark and China,” Berthou said. “Economic interests trumped everything else.” For decades, many European governments openly lectured Beijing on its human rights practices and autocratic political rule at home. European countries challenged Beijing’s “One China” principle by meeting the Tibetan spiritual leader, the Dalai Lama, and engaging and supporting Taiwan, which Beijing sees as a breakaway province and claims as part of its territory. Many hoped that China would one day become a liberal democracy and such pressure might guide it toward this development. But over the past decade, individual European governments have been more cautious in breaching Beijing’s political red lines. Be it over Beijing’s widespread human rights violations against its Uyghur population in the Xinjiang region, or China’s new security law suppressing political rights in Hong Kong, some European governments are often hesitant to challenge Beijing’s behavior, and in other cases even blocked their citizens from voicing criticism. Denmark’s Tibet scandal was far from an isolated example. In 2014, Spain’s government amended its laws to limit the judiciary’s powers over human rights abuses committed overseas after Beijing threatened that a pending case against former Chinese leaders could damage economic ties.1 When Chinese president Xi Jinping visited the World Economic Forum in Davos, Switzerland, in 2017, Swiss police limited demonstrations to only two hours and then arrested dozens of Swiss protestors on security grounds.2 Tensions and contradictions between European business interests and political values exist across a large number of domestic issues and in relations with foreign countries, with the reach of Russia’s oligarchs in 160     How

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the United Kingdom standing out. But China has recently emerged as a powerful external force challenging democratic values and rule of law in Europe. Human rights and advocacy groups working on Tibet and Xinjiang are still prevalent. But self-​censorship and pre-​emptive obedience from European governments, businesses, media, and academics have grown alongside hopes to attain greater trade and commercial ties with China.3 Rather than China taking on European political values of freedom of speech, China’s political values began to find their way across European borders. China is also challenging common foreign and security policy in the European Union (EU). The EU is a formidable economic power, the largest trading bloc in the world, but if it cannot advance common positions and policies, its outside influence can be severely handicapped. Similar to Germany’s opposition to stronger trade measures against China, smaller member states have also frustrated EU policies on China’s territorial claims in the South China Sea and investment screening out of fear of upsetting broader economic relations. Liberal free traders in the EU Nordic region were initially reluctant to back investment screening positions for the regional body so as to not limit opportunities from China.4 From positions of economic weakness, Greece, Hungary, and Portugal have also blocked or watered down the EU’s security, human rights, and economic positions. Beijing’s formation of a formal group with Central and Eastern European countries, the so-​called 17+1, is similarly seen by EU leaders in Brussels as a “divide and rule” tactic limiting the regional body’s leverage in negotiation and economic and political relations with China. In light of Beijing’s influence over the foreign and security policy decisions of some European countries, new questions over Europe’s purported economic dependency to China are being asked. The challenges China poses for the EU have stirred new debates on how Europe’s open societies and open markets should rethink China and respond to its rise and the threat to European values and regional unity. Even if Germany and other large member states change their strategic approach to China, bringing together the EU’s collective power involves getting smaller members to also see the value in a common China policy. From Denmark to Portugal, European countries are weighing what they get out of the relationship. “China is already very important to the global economy and highly competitive across a number of sectors,” a Portuguese official told me. “What is best for Europe? To fight off China, or have it as a partner?” *** What Is Best for Europe? 

 

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Denmark is a small, wealthy country of 5.8 million people with the thirty-​ seventh largest economy in the world. But what it lacks in size, similar to other Scandinavian countries, it makes up for in the quality of its social welfare system, absence of corruption, and strong democratic values as one of the leading countries for individual political rights and civil liberties in the world.5 Similar to other countries in the West, at the turn of the century, Denmark, was critical of China’s poor human rights record but promoted the idea that economic and political engagement would help spread democratic and liberal values in China. As the Chinese economy grew, however, there was an amplified call from some government officials, businesspeople, and academics to take on a more pragmatic approach, hold back from human rights criticism and normative stances, and instead fully prioritize business and trade opportunities.6 Some even blended the normative with business priorities by arguing that investing in China would work to pass Denmark’s values of strong workers’ rights and environmental sustainability.7 Over time, Danish leaders largely shelved the idea of publicly criticizing China’s politics and human rights, dropping this “megaphone diplomacy,” and replacing it with private persuasion out of the public eye.8 “What is going to change things in China,” said Denmark’s prime minister Helle Thorning-​Schmidt in 2012, “is that we are open to the Chinese and they are open to us.”9 But as Danish commentators busily debated how to best engage China on democracy and human rights, China demonstrated its economic influence on Danish values in front of Denmark’s house of government. The influence was coming the other way: China encroaching on Denmark’s politics. After then Danish prime minister Lars Løkke Rasmussen met the Tibetan spiritual leader the Dalai Lama in 2009, China threatened to boycott the Copenhagen Climate Change Conference, COP 15, and imposed a targeted informal freeze on Danish exports. China only relented after Copenhagen wrote a verbal note recommitting itself to the “One China” policy and opposing Tibetan independence. But the issue did not go away. After Hu Jintao’s 2012 visit to Copenhagen, Tibet protestors launched a court case against the police for unlawful detention. The proceedings led to the release of an internal police recording that demonstrated direct orders were radioed to officers on the ground to move the protestors and confiscate their Tibetan flags. The media uproar in the years to follow forced the Danish government to respond. In 2015, a parliamentary Legal Affairs Committee found that the actions of the police were motivated by the preoccupations of the high-​level Chinese delegation to “not lose face by being confronted by protestors.”10 A government investigation, the Tibet Commission, later confirmed that the police had violated the protestors’ constitutional rights to peaceful 162     How

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assembly and freedom of speech.11 It found that the police had reacted to an overall charged atmosphere to shield the visiting Chinese leader that came out of meetings between the Chinese diplomats and the Danish Ministry of Foreign Affairs before Hu’s visit.12 The police later were ordered to pay compensation to over 100 citizens who were prevented from demonstrating.13 The investigation of the Tibet Commission was also relaunched and deepened after email archives of police communication and government ministries were uncovered and individual police officers came forward to reveal that the practice of isolating peaceful protestors during high-​level Chinese delegations had long been employed.14 To the public, it appeared that Danish authorities had sold out the country’s democratic values for the economic rewards of engaging China. During President Hu’s 2012 visit, some $2.5 billion in deals were signed between China and Denmark.15 Trade had more than doubled in the preceding years, albeit from a low base, and Danish industry associations and banks, recognizing China as one of Denmark’s “most important” trading partners, promoted further economic engagement.16 Denmark only had to look north to its Scandinavian neighbor in Norway to see how China reacts when its political red lines are crossed. In 2010, China punished Norway after the Nobel Peace Prize was awarded to Liu Xiaobo, a Chinese intellectual and human rights activist. While not a member of the EU, the political and economic fallout Norway faced from China is often cited as an example of the power of China’s economic weapon in diplomacy.17 Liu Xiaobo participated in the 1989 Tiananmen Square pro-​ democracy protests, and two decades later, after organizing a petition calling for an end to one-​party rule in China, he was imprisoned for “inciting subversion of state power.” In July 2017, he became the second laureate ever to die in prison. The last was Carl von Ossietzky, a journalist and political critic of Nazi Germany, who in 1936 was detained, and later died, in a concentration camp. At the Nobel Peace Center on Oslo’s harbor front, in a darkened room filled with custom displays for each Nobel laureate, Liu’s picture is only a few steps away from Von Ossietzky’s. When moving between the laureates, proximity sensors in the room activate piano notes and light from a sparkling field of glowing blades. “Even though I might be faced with nothing but a series of tragedies,” Liu wrote in 1988, “I will still struggle, still show my opposition.” It was neither the first time the Norwegian Nobel Committee selected a politically charged winner for the peace prize, nor the first choice to upset China. The Dalai Lama, the exiled Tibetan spiritual leader, who is viewed as a separatist by Beijing, received the Nobel Peace Prize in 1989. But it was the first time a laureate choice angered Beijing since China had become the What Is Best for Europe? 

 

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second largest economy in the world. The Norwegian government is not directly involved in choosing laureates, but it is not surprising that Beijing had the impression that the decision was not out of the Norwegian government’s control. Members of the Norwegian Nobel Committee, charged with selecting laureates, are appointed by the Norwegian parliament and typically are made up of former Norwegian parliamentarians and cabinet members. In response to the 2010 choice of Liu Xiaobo, the Chinese government let Oslo know its displeasure for what it saw as a violation of its political and legal affairs. For the next six years, China froze official bilateral diplomatic cooperation with Norway and applied trade restrictions against one of Norway’s main exports, fresh salmon. After several years and a change of Norway’s government, renewed efforts were made to settle the dispute. In 2014, in an apparent signal of her government’s seriousness to settle the diplomatic controversy with China, Prime Minister Erna Solberg decided not to meet with the Dalai Lama during his visit to Norway.18 Two years later, Oslo and Beijing signed a joint declaration that stated that Norway “attaches high importance to China’s core interests and major concerns.” Its interpretation left some room for constructive ambiguity, but the Norwegian prime minister’s wavering commitment to freedom of expression and human rights, and decision not to meet the Dalai Lama, was nonetheless heavily criticized in the Norwegian press.19 Some Norwegian commentators, however, implored the country to face reality and understand Beijing’s point of view that awarding the peace prize to a Chinese dissident offered support to subversive movements that threatened China’s stability. Leiv Lunde, a Norwegian academic and politician, argued that Norway needed to reassess its national interests and rethink the notion that it was ever a peace-​loving nation and guardian of morality. “We need to adjust our own self-​image in order for the outside world to understand who we are and our interests.”20 Now that the diplomatic freeze was over, the Norwegian government and business associations were eager to restart full trade relations with China. Its salmon industry sought to supply 65% of Chinese consumption by increasing exports from 12,000 tons in 2018 to 156,000 tons by 2025.21 As China’s economy grew, European leaders became more open to overstepping their democratic values at home to ensure high-​level Chinese political leaders avoided seeing protests. Norwegian authorities cracked down on protests during Chinese president Jiang Zemin’s 1996 visit to Oslo. Demonstrators wearing pro-​Tibet yellow t-​shirts were forcefully detained. These were not only those speaking out against China’s human rights practices, but any political criticism of China whatsoever. Police also removed 164     How

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banners and detained Greenpeace activists calling on China to change its nuclear policies, and sign the Nuclear Test Ban Treaty.22 A  tuba player in the King’s Guard band, Sten Tetlie, was even sentenced to eighteen days in the stockade for refusing to play in the band when it performed for Jiang.23 British authorities also disrupted protests during a state visit by Jiang in 1999, when former Chinese premier Wen Jiabao came to London in 2009, and during Chinese president Xi Jinping’s visit in 2015.24 Neither was Norway finished with bending its democratic values during high-​ level official visits from China. When high-​ ranking Communist Party leader Li Zhanshu came to Oslo in May 2019, after the diplomatic freeze thawed with Beijing, two elected Norwegian parliamentarians were denied access to the parliament, where Li was visiting, because they were wearing yellow t-​shirts with the inscription of “Freedom” in Chinese and Norwegian.25 Prime Minister Solberg was again called to task for not standing up for Norwegian values. “Norway has emerged as a country that can be silenced,” wrote Harald Stanghelle, editor of the country’s leading newspaper, Aftenposten. “This is a dangerous development. It is high time we ask the question of ourselves if this is really the way we want to have it.”26 It did not appear that Scandinavia was living up to its democratic values, often putting its business interests first instead. But how important are trade and investment with China that it made Danish authorities violate their own constitution in 2012? How much did Norway’s silencing of demonstrators throughout the years encourage growth in its economic relations with China? For Denmark, building new trade and investment opportunities in China’s large economy was one of the main reasons Copenhagen signed a Comprehensive Strategic Partnership with Beijing in 2008. Trade and investment provided a safe space where Denmark’s relations with China could grow without the disturbance of politics and values. Yet despite how impressive $2.5 billion in new business deals signed with China during President Hu’s 2012 visit look on paper, these China-specific figures are less significant when compared to Denmark’s broader trade and investment relations. From a low base at the turn of the century, China rose to become Denmark’s sixth largest trading partner in goods and services by 2019. But this position overemphasizes the 4.9 percent share China makes up in Denmark’s total trade.27 With the exception of a spike in Danish pork exports experienced in 2019 and 2020, due to the swine flu wiping out a third of China’s pig population, there has been a relative lack of growth in trade levels since 2015. Similarly, the 30,000 to 50,000 jobs that are estimated to come from trade with China is a small fraction of the 730,000 jobs derived from total Danish trade.28 Instead, the economic relationship that matters most to Denmark is What Is Best for Europe? 

 

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that with the EU, where over half of Danish trade heads, particularly to and from Germany and Sweden.29 And China was not even the fastest growing trading partner for Denmark in recent years. As Danish exports to China stagnated between 2015 and 2018, the United States took on that title. China made up 4% of total new trade growth for Denmark from 2015 to 2019, while the 27 member states of the EU made up 44% and the United States over 15%.30 The United Kingdom, Sweden, and the Netherlands, much smaller economics than China, even produced more new trade for Denmark. When it comes to investment, Chinese companies put very little into Denmark, while the United States accounts for 30 percent of total inward investment.31 Investment activity to China is far more robust. But again, what stands out for Denmark is the importance of the EU. Over the past decade, Denmark’s annual foreign investment to the EU was over eighteen times higher than to China and Hong Kong, and two and a half times higher in the United States.32 Traditional foreign investment statistics do not capture pass-​through investments that head from Denmark to China through third countries, such as the Netherlands, so Danish investments in the Chinese market are likely higher than what can be easily tallied.33 But similar to its EU counterparts, Denmark’s foreign investment stock in China and Hong Kong has fallen in recent years, dropping from a 2016 high by over 15 percent by 2018.34 Denmark may not have a strong economic dependency on China, but China remains a significant investment destination and revenue generator for large Danish companies. Similar to Volkswagen in Germany, some Danish companies call China their “second home market” to underline the role they see China playing from sales in the Chinese market, and argue for China’s strategic role as a production center for their Asian and global value chains, as well as rising importance to research and development.35 Take Denmark’s largest corporation, Maersk, for example. China only made up 5 percent of its total revenues in 2019, but is widely recognized to account for several times more for the global shipper as official figures do not capture turnover of non registered Danish vessels heading to and from China. Still, the importance of EU markets is clearly higher for Danish businesses. For the pharmaceutical company Novo Nordisk, beer giant Carlsberg, and engineering company Danfoss, some of Denmark’s largest corporate players in the Chinese market, China averaged 13 percent of official sales revenues, while the EU made up 45 percent in 2019. Europe’s importance is brought down by the fact that Novo Nordisk made 54 percent of its sales revenues in North America, with the United States representing by far its most important market.36 166     How

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While the Chinese market cannot be neglected by Danish firms, new complications have also entered the relationship in recent years. Similar to its counterpart in Germany, after talking up China’s market potential for years, the Confederation of Danish Industry also began to recognize that China, particularly its “Made in China 2025” industrial policy, represents a new challenge to Danish competitiveness.37 In 2019, a Danish expert panel of business managers, officials, and academics presented a more nuanced picture of challenges facing Danish companies in face of widespread state control in Chinese markets.38 These policy changes echoed the 2019 European Union Strategic Outlook on China that “the balance on challenges and opportunities has shifted.”39 Preferential treatment of their Chinese competitors by Beijing has already put strong pressure on Danish shipper Maersk and wind turbine maker Vestas, the world’s largest companies in their respective industries.40 “Only via a strong EU can we impact these things and strengthen our business globally,” said Maersk CEO Søren Skou on pushing back against China’s use of subsidies and state support to its companies.41 If “Made in China 2025” is successful, as Chinese companies improve their market shares in across advanced industries, Denmark’s economy is particularly exposed to lower economic growth rates, job losses, and decreased industrial output compared to most EU member states.42 These perceptions are in line with the EU’s Chamber of Commerce, which has warned that European investors are likely to be harmed by China’s application of a social credit rating system for foreign companies, where sanctions can be imposed across three hundred specific rules.43 A 2019 poll found that only 14 percent of Danish voters feel the country’s economic interests are well protected from aggressive Chinese competitive practices.44After several decades of trade and investment with China, it is hard to see whether this commerce is producing tangible benefits for Denmark’s economy and welfare that can be weighed against the political implications and threat to economic competitiveness such engagement also generates. China’s trade and investment with Norway also does not present a story of economic dependence. China’s pressure over its six-​year freeze on diplomatic ties hardly did serious damage to the Norwegian economy, and its reopening to China is not a straightforward boon for the country. Despite China’s political aggrievement that its sovereignty had been violated, Beijing did not apply comprehensive sanctions on Norway in 2010. Similar to Denmark, Norway, and other European countries, China was not above violating its own political values for economic gain. In early 2011, for example, China National Bluestar, a subsidiary of the state-​owned Chinese chemical giant What Is Best for Europe? 

 

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ChemChina, made a $2 billion purchase of a Norwegian high-​grade silicon producer, Elkem. This represented one of China’s largest deals in Europe at the time,45 and signaled that Beijing was not willing to block strategic acquisitions in Norway.46 Beijing also accepted Norway as a founding member of its Asian Infrastructure Investment Bank in 2015, eager to take on new members for its multinational development bank. There were some economic consequences. One estimate found that Norway lost up to $1.3 billion in potential exports, albeit this is a minuscule amount compared to Norway’s annual $200 billion trade levels, much of which is made up of oil exports.47 Norway’s trade with China actually grew robustly throughout much of the six-​year diplomatic freeze. In fact, it reached new highs in 2015. “The Chinese boycott over Liu’s prize,” wrote Jichang Lulu, “left the bulk of bilateral trade intact, and indeed Norwegian exports to China increased faster than to the rest of the world during the six-​year freeze.”48 Norway is a key provider of shipping and offshore technology to China, and sour political relations did little to stop Chinese demand.49 Norwegian salmon even found its way into Chinese markets via third countries, such as Vietnam, offsetting losses from China’s restrictions.50 Marine Harvest and other Norwegian seafood companies and subcontractors certainly would have preferred an open Chinese marketplace, but salmon prices were so high from limited supply on global markets that sales in other markets were possible. After six years, what eventually led to a thaw in the diplomatic freeze between Norway and China was the political cooperation both sides wanted to pursue with the other. Norwegian officials became frustrated that they could not meet directly with the Chinese on climate change, UN reform, and other global issues that China as a major power is essential for advancing. On the other side, Beijing sought to play a larger role in the Arctic, both for geostrategic and for commercial reasons, and needed to foster closer cooperation with Nordic countries.51 Isolating Norway did not help achieve these objectives. “Norwegian salmon producers complained a little” about China’s trade restrictions, one close observer told me in Oslo, “but otherwise they were still driving Ferraris around town. There was no hurry, no sense of urgency, no one felt it was worth getting out of bed for to resolve.” Norwegian salmon producers and other companies were naturally happy to once again sell their goods and services to China. But even if its salmon producers dominate China’s markets as they wish, and sold 156,000 tons to China in 2025, this will still, at present prices, amount to incremental gains of only less than 1 percent of Norway’s overall trade due to the significance of its crude oil exports.52 China is an important growth market for Norway’s seafood 168     How

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industry, but still the 7th largest market in 2019 behind Poland, Denmark, and others.53 For Norway, China represented 6.8 percent of its trade in 2019, while Europe in total accounted for 74%.54 Beijing has been successful in bending multinational corporations to its political will. For listing Tibet, Hong Kong, Macau, and Taiwan as countries, the website and mobile app of the American hotel chain Marriott was shut down in early 2018. Beijing also pushed American and international airlines to clearly refer to each of these places as part of the People’s Republic of China.55 Marriott apologized and complied, as did the airlines. But for China, sovereign states, even small ones, are harder to crack. Ultimately, although Oslo eventually penned a joint declaration recognizing that it upset Beijing’s core interests, China did not get a quick and clear submission and Norway’s media and civil society maintains a critical eye towards how its leaders engage Beijing. Far from showing a small European country immediately bending its political values, China’s diplomatic spat with Norway demonstrates that a small European country, if it properly assesses its economic interests, could in fact afford the marginal loss of negative relations with Beijing. There is an awakening to the political, security, and economic challenges China poses for the European Union. In Denmark, a 2018 Foreign and Security Policy Strategy, for example, grouped China together with Russia and North Korea as a cyber security threat and viewed Chinese ambitions in the Arctic region as a potential geopolitical challenge.56 The elimination of presidential term limits in China in 2018, effectively allowing President Xi Jinping to rule for life, China’s mass detentions of Uyghurs in Xinjiang, the imposition of a new national security law in Hong Kong, and interference in European politics and society changed the public discourse and spurred on policy change. Denmark also moved to ensure Chinese companies were deterred from purchasing an abandoned navy base, which held a strategic military location during World War II and the Cold War, and entering a bid to refurbish airports in Greenland.57 In 2019, Denmark’s main telecom operator elected not to continue with China’s telecom giant Huawei to develop its 5G communications network, despite having worked with the Chinese company on its previous upgrade.58 The Faroe Islands, a constituent country in the Danish Kingdom, later was caught between American and Chinese pressure on its decision whether to choose Huawei for its 5G network partner. The Chinese ambassador even threatened to not advance with a new free trade deal if the Chinese telecom was excluded.59 Copenhagen’s decisions on Greenland and Huawei are often attributed to Denmark simply meeting the foreign policy demands of Washington. What Is Best for Europe? 

 

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Denmark is a close transatlantic ally of the United States, and a NATO member, participating in both the American-​led invasions of Afghanistan and Iraq. But it is not always on the same page with American foreign and defense policy. In 2015, Denmark and many other American partners decided to join the Beijing-​backed Asian Infrastructure Investment Bank despite a diplomatic campaign from the United States to shun the new multinational bank.60 Denmark has also been openly critical of the Trump administration’s decision to pull out of the Iran nuclear deal.61 It later rebuffed his misguided offer to buy Greenland and grew cautious of both Chinese and American influence on the island. Many American and Chinese commentators, and even some Danish experts, may have difficulty understanding that independent decision making does take place in Copenhagen. Rather than following American orders, Danes are rather experiencing China’s influence for themselves. Denmark’s political leadership may have elected to prioritize business interests abroad over Danish values at home in 2012, but when the Chinese embassy in Denmark, and China’s state media, complained that a Danish newspaper should apologize for a satirical drawing linking the Chinese flag with the coronavirus in early 2020, Prime Minister Mette Frederiksen simply responded that Denmark has freedom of expression, and the complaints from China died down soon after with no noteworthy economic consequences.62 Prime ministers and presidents in Denmark, Norway, and other European countries may waver in the future, but European democracies are more than just their political leaders. Regular citizens also provide pushback against China’s intrusive foreign policy and check the power of political and business leaders that advance special interests. In Denmark, after the political scandal and investigations rising from Hu Jintao’s 2012 visit, while there remained challenges, Tibet rights groups also noticed a change. The Danish police did not intervene on a peaceful protest during the visit of a Chinese parliamentary delegation in late 2018.63 A few months later, another protest took place in front of the Chinese embassy on the sixtieth anniversary of Tibetan National Uprising Day. In years past, Chinese embassy staff filled the street with parked cars to make sure there was little room to demonstrate. But this time around, the police reserved the entire street for the protestors. Denmark’s democratic and rule-​of-​law system protected its political values, but require the stimulus of citizens like Sara Berthou, rights groups, journalists, courts, and parliamentary committees, who decide to stand up for free speech or promote human rights. It was a slow and messy process, taking years to resolve, and there is no guarantee against relapse. But the political scandal of the Tibet protest made Denmark’s 170     How

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democracy stronger. The court cases brought forward by protestors provided a precedent for internal police recordings to be more readily accessible for other cases. “Our lawsuit changed the whole game,” Anders Højmark Andersen, chairman of the Support Committee for Tibet, told me. “The police are very kind to us now.” *** A negotiation process between economic interests and political values from engaging China is still underway in Scandinavia, but to Europe’s southwest on the Atlantic coast in Portugal, such a recalculation may prove harder to set into motion. Unlike Nordic free traders, who looked to maximize the value of their trade and investment with China, Portugal and countries to the south and east of Europe engage with China from a position of economic weakness, where any outside trade and investment is welcome with open arms. “Europe must realize that today it is not alone in the world,” said Portuguese prime minister António Costa in a March 2019 interview with the leading Portuguese daily newspaper Público. Costa rejected the idea that the EU needed to embroil itself in America’s trade war with China at the time or continue hostile ties with Russia and Turkey. “In the 21st century, Europe must be able to establish relations with all these new international actors.”64 Just months earlier, Costa received Chinese president Xi Jinping in Lisbon. They signed a cooperation pact on Beijing’s Belt and Road Initiative, promoting land and sea trade and infrastructure links from China to Asia, Africa, and Europe. Costa brushed off the idea that Portugal would get in line with Germany, France, and others in the EU in seeing China as an economic competitor and systematic rival. “We have a relationship with China of more than 500 years. And this has given us a relationship and trust experience that has never been broken, despite many regime changes, both in China and in Portugal.”65 It is at Sines, a small port city south of Lisbon, where China’s and Portugal’s modern ambitions meet their centuries-​old history together. Not too far away from a large container terminal, a bronze statue of the city’s most famous son, Vasco da Gama, faces the Atlantic Ocean. In the late fifteenth century, da Gama was the first European explorer to navigate a sea route to India. Later in 1513, Portuguese navigator Jorge Álvares became the first European to reach China by sea. These voyages were a further stop in the expansion of Portugal’s empire and the spread of its trade and commerce, but also violent conquest and exploitation, that brought great riches to the small European country. What Is Best for Europe? 

 

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At Macau in China, the Portuguese settled and administered a thriving trade base from the mid-​sixteenth century. This developed into a key node in Portugal’s trade routes in the Asia-​Pacific world and later, when colonial rule was established in the Americas, became intertwined in its slave trade, with African slaves brought to Macau and some Chinese slaves taken to Portugal and its other colonies.66 After more than four hundred years under Portuguese influence, Macau was finally handed back to China in 1999. Portuguese leaders continue to speak fondly of their shared history with China and the smooth retransfer of Macau’s sovereignty. But for the Chinese side, Portugal’s rule of Macau remains part of China’s century of humiliation when territory was annexed and ruled over by foreign powers. Not surprisingly, the focus of Jiang Zemin, China’s president at the time of the handover, was on preparing Macau for a “new era in its development” and a return to “the embrace of the motherland.”67 In modern times, it is China’s power and influence heading to European shores. Prime Minister Costa wants to attract Chinese interest to revive the Sines deep-​water port with a planned €600  million terminal expansion.68 He sees his country representing a critical trading gateway in Europe for China’s Belt and Road.69 It is easy to understand why a Portuguese politician, businessperson, or academic looks to China for their country’s revival. Since the turn of the century, Beijing, Shanghai, and other large Chinese cities have undergone rapid development and sleek and futuristic modernization. In contrast, Lisbon’s famed tiled facades fell into disrepair and the country’s interior emptied in the face of high unemployment and an aging population.70 China’s rise is seen as an opportunity for Portugal to revive its downtrodden economy. In the wake of the 2008 global financial crisis, Portugal became one of several EU member states, including Greece, Cyprus, and Ireland, unable to shoulder its high debt levels. In 2011, Lisbon requested a €78 billion rescue package from the so-​called Troika, a group composed of the European Commission, the European Central Bank, and the International Monetary Fund (IMF). The assistance came, but it had strings attached. In return for initiating the economic program, the Troika imposed austerity conditions with the aim of advancing market-​friendly reforms and attracting foreign investment to Portugal. This included a privatization program to sell off large government stakes in companies in the transport, energy, insurance, and other sectors.71 These conditions mirrored the structural adjustment programs of the IMF and World Bank in the wake of debt crises across the developing world in the 1980s and 1990s.72 Similar to the finance offered by China through its Belt and Road Initiative a half-​century later, some critics 172     How

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argued that the Washington-​based multilateral financial institutions placed borrowing countries in Asia, Africa, and Latin America in a “debt trap” from which they were unable to recover.73 During the three-​year economic assistance program, Portugal set about meeting conditions imposed by the Troika. It was at this point that China emerged. Guided by political ties developed with Portuguese politicians in the 1990s during Portugal’s administration of Macau,74 China stepped out of Portugal’s history and into its present day. The fire sale of state assets by Portugal and other struggling economies attracted Chinese state-​owned companies in a new wave of European acquisitions. The share of Chinese investments in southern European countries grew from 8 percent of its total EU investments in 2009–​2011 to 33 percent in 2012–​2014.75 In Portugal and elsewhere, the Troika’s conditions paradoxically initiated a process in which EU members offloaded state assets not to private or publicly shared corporations, but to national companies of a foreign state. In late 2011, China Three Gorges, a state-​owned power company, bought the Portuguese government’s more than 20  percent stake in Energias de Portugal for €2.7 billion. Holding assets around the world, EDP is Portugal’s largest company, and one of Europe’s energy giants. China Three Gorges beat out competing bids from both Germany’s E.ON, a publicly traded company, and Brazil’s state-​run Eletrobras. Soon after, China’s State Grid International bought a quarter stake in REN, the operator of Portugal’s electricity network, for close to $400 million.76 In the years to follow, China’s private sector also joined in. The Fosun Group, China’s largest private conglomerate, spent several billion dollars to become the largest shareholder in Portugal’s leading bank, Millennium BCP, and a major private health company, Luz Saúde; and took control of its largest insurance company, Fidelidade.77 Together, some $9 billion in deals made Portugal one of the largest recipients per capita of Chinese investment in Europe. These investments came on top of billions of dollars Portugal generated through its “Golden Visa Scheme.” Similar to arrangements in other European countries, this program grants permanent visas, and ultimately a Portuguese and thus an EU passport, to foreigners, the majority of whom were Chinese, investing at least €500,000 in real estate. China’s investments are regarded as the main reason behind Portugal’s opposition to EU proposals to advance new policies on foreign investment screening in 2017. “There are several countries that profited in the last months and years from Chinese direct investments,” said Matthias Machnig, German state secretary for economic affairs. “And now the Chinese exerted pressure on these countries.”78 Anders Fogh Rasmussen, the former Danish prime minister and NATO chief, saw such resistance as “an unholy alliance What Is Best for Europe? 

 

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of member states dependent on Beijing’s largesse and free-​trading northern states.” He argued that “putting greater safeguards on foreign investment is not an attempt to distort the marketplace, but to protect the rules-​ based open trade system from abuse.”79 Nonetheless, when the investment screening regulation was passed in 2018, Portugal voiced displeasure with the final, watered-​down version to allow for non-​binding transparency and information-​sharing between member states. Prime Minister Costa viewed investment screening as potentially opening the door to protectionism.80 “As a small, open economy we need to decrease trade barriers and pursue as many potential options as possible,” a Portuguese official told me in Lisbon. China’s influence in Portugal extends beyond shaping its foreign policy. On Portugal’s Azores islands in the mid-​Atlantic, the United States has been drawing down military personnel at its once thriving Cold War airfield base. But after visits from China’s Xi Jinping and Li Keqiang in 2016, it appeared Beijing is seeking to fill the power vacuum, with eyes on establishing a new military base.81 Chinese investments into Portuguese media also raise the question of Chinese influence over the public discourse as part of China’s global campaign for foreign journalists and media outlets, as President Xi Jinping urges, to “tell China’s story well.”82 Not only is there a limit of China experts in smaller European countries, but also in Portugal “it is hard to find written, spoken or televised opinion that adopts a critical tone towards China,” writes Portuguese academic Carlos Rodrigues.83 Albeit a significant outside influencer, China was joining a cast of countries, including Angola and Brazil, with pull in Portugal. As Oxford professor Ricardo Soares de Oliveira argues, foreign investment “is welcomed and increasingly fewer questions are asked about its provenance and the compromises it entails.”84 After the imposition of austerity reforms on Portugal, Greece, and others, there remains a palpable sense of resentment toward the EU’s larger members. Ana Gomes, a Portuguese Member of the European Parliament, summed up the mood. “The Troika has literally pushed Portugal into the Chinese arms. Now it is paying the price for its mistake.”85 Discontent with Germany is especially prevalent. The Portuguese side saw Berlin as the main force pushing through the Troika’s conditions, and then witnessed German companies trying to buy the Portuguese companies up for sale on the cheap. From the short-​term perspective, when trying to generate the largest sales possible, it was of little importance for Portugal whether China Three Gorges, State Grid, or other Chinese companies held an unfair advantage to European competitors due to Beijing’s state subsidies and other financial assistance. Sales to Chinese and other foreign investors acted as short-​term stabilizers for struggling Portuguese companies and its economy at large. But ultimately 174     How

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as acquisitions, they mostly represent a transfer of ownership rather than generate new productive activities that produce jobs and lead to technology and economic spillovers.86 This is a general trend for China’s investments in the EU, where only 5 percent from 2010 to 2019 can be classified as greenfield investments, directly generating new economic activity.87 While acquisitions can produce benefits for European economies, such as linkages to the Chinese market and access to new finance,88 productivity gains are typically greater from greenfield investments, such as new manufacturing and services, jobs, and tax revenues.89 Ownership and future strategic direction is also transferred to Chinese companies. This is clearly seen in the Portugal takeovers, where China Three Gorges, State Grid, and Fosun each seeks largely to exploit Portuguese companies as vehicles to access the 220 million Lusophone world of Portugal’s former colonies in South America and Africa.90 This puts into question the extent to which Portugal’s economy will benefit from Chinese ownership in the long run. Thanks to a combination of public spending cuts to meet the Troika’s demand, coupled with Portuguese-​initiated growth-​driven policies, Portugal exited the bailout program in 2014 and went on to post new growth.91 Yet while China Three Gorges explored buying a larger stake in Portugal’s energy giant EDP, particularly its Brazil assets, no other sizeable Chinese investments have materialized in the years after Portugal’s financial crisis. A  change in tone on China was noticed from Portugal’s leaders. In mid-​ 2019, Foreign Minister Augusto Santos Silva pointed to the need for China to open up its markets. Since 2014, Portugal’s exports to China had fallen, and moreover incoming Chinese investment in Portugal needed to go beyond acquisitions to encourage new business and development. He added that despite Portugal’s commitment to the Belt and Road, it would ensure that any deals would follow EU rules on financial transparency and sustainability. Also, he made clear that Portugal’s geopolitical and security alliance was with its European and NATO allies, not China.92 The Portuguese government may have been trying to have it both ways, to diversify its overseas partners, as it did with drawing in Brazilian and Angolan investment, but it was also recognizing the limits of China’s economic engagement. Portuguese citizens, even those supporting the ruling Social Democratic Party, are concerned. In a 2019 survey, when asked, “What should Europe focus on to become a stronger global actor?” they ranked, “Containing Chinese economic leverage” as the second highest priority for Europe, only after working on “Uniting European countries.”93 In the wake of the China rush that followed its financial crisis, the centrality of the EU to Portugal’s future is returning to the frame. Portugal, in What Is Best for Europe? 

 

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particular, remains highly dependent on European Union structural and cohesion funds to fund roughly 80 percent of its annual government budget, to which Germany, France, and Italy make up over half of the contributions.94 Even on its participation in the Belt and Road to develop a new port at Sines, Portugal needs EU support. A vital railway line to connect container transport from Sines to Spanish markets is reliant on EU financing.95 There are other EU members keen on engaging China but experiencing short-​term and limited economic results. Greece is often presented as a success story of China’s engagement in Europe. This is commonly attached to the operation, investment, and majority ownership of the Chinese national shipping giant COSCO in the Piraeus Port Authority outside of Athens. Since 2008, Piraeus has transformed into one of the fastest-​growing ports in the world and produced thousands of local jobs in a country struggling under years of economic hardship. Similar to Portugal, the sale of Piraeus and other Greek state assets to Chinese state-​owned companies was a consequence of austerity conditions imposed by European financial regulators after Greece’s multiple debt bailouts. EU officials have protested that Chinese investments in Greece handicap the regional body’s ability to speak with a common voice on foreign policy. In 2016, Greece, alongside Hungary, blocked an EU statement criticizing Chinese aggression in the South China Sea, and the following year, stopped it from condemning China’s human rights record, the first time in a decade that a statement was not released. In April 2019, Greek deputy prime minister Yannis Dragasakis worried that the EU’s new confrontational stance, designating China as a systematic rival, was a “self-​fulfilling prophecy” that could upset Greek interests.96 Former finance minister Yanis Varoufakis called on European leaders to “stop demonising China.”97 For Varoufakis, “China was the obvious solution” to Greece’s investment problems.98 Much like Portugal and other European countries, Greek and Chinese officials talk up how two ancient civilizations are reuniting in modern times. Varoufakis even likens Greece’s treatment by the EU to the foreign intervention and military conquest that European colonialists brought to China.99 Greece also covets its role as the new gateway for China in Europe. But similar to Portugal, a sense of bitterness in Greece toward the austerity measures of the Troika clouds reflection on the economic benefits gained from engaging China. Piraeus alone is not going to lift Greece out of its economic doldrums. The hundreds of millions spent on revamping the port was done with Chinese machinery and materials, providing few linkages with local suppliers.100 Many of the jobs generated by China’s COSCO are on short-​term contracts with low wages, gutting the strength of Greece’s 176     How

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unions. China’s investments beyond the well-​known port are still limited. Greece hopes that China’s Fosun group will help invest in an $8 billion plan to transform its abandoned Hellinikon airport into a major coastal resort, potentially spurring on tens of thousands of jobs.101 But bureaucratic problems have stalled the ambitious project.102 Beijing’s Belt and Road is also not just betting on only one European horse. Greece, Portugal, the Czech Republic, Poland, and others are all presented as China’s “gateways” to Europe. This focus on civilizational history and the future gateways distracts the present-​day evaluation of how economic relations with China benefit European economies and societies as a whole. For China, Greece as with other European countries remains a gateway to the region, not a destination. Piraeus represents a “dragon head” investment to open up further economic activity in Southeast and Central Europe,103 but the target is largely bringing Chinese goods to affluent markets in Germany and France, not widespread trade and investment with Greece. German, French, and other European companies did not ignore the fire sale of Greek assets after its financial meltdown.104 But unlike China, before and after the crisis, Greece’s EU neighbors play a far more significant role when it comes to trade and investment into the country. Official figures from the Bank of Greece measuring foreign investment from 2000 to 2018 still do not place China as one of country’s top-​ten investors.105 The vast majority come from the EU—​Germany and France in particular. The Troika’s conditions were harsh and misguided, fueling resentment and anger toward the EU in Greece, and drawing Athens closer to China. But China alone is not the solution to Greece’s economic woes. The EU has been late in realizing how much political support Beijing has won with such small investments in southern Europe. A similar process took place in Central and Eastern Europe. In 2012, Beijing established a cooperation initiative with Central and Eastern European Countries, China-​CEEC, or as it became commonly known, the 16+1 format. This was initially made up of eleven EU member states and five non-​EU member Balkan countries, until Greece joined in 2019, making it a 17+1 group. China viewed the engagement as an opportunity to increase its trade and investment in Europe by leveraging the high skills and low wages of Central and Eastern Europe as a gateway to the wealthier EU member states.106 Germany, France, and the EU’s leadership in Brussels, however, view the cooperation and its summits as a “divide and rule” tactic by Beijing.107 Members of 17+1 viewed the bloc as an avenue to attract new trade and investment with China, but also in some cases, to extract leverage on the EU and avoid pressure from Brussels over undemocratic policies. “Central What Is Best for Europe? 

 

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Europe needs capital to build new roads and pipelines,” said Hungary’s prime minister Viktor Orbán. “If the EU is unable to provide enough capital, we will just collect it in China.”108 Yet after experiencing economic cooperation with China, the picture does not look as rosy for Central and Eastern European countries as originally hoped. China has not yet delivered on the promise of the initiative. As of 2018, Eastern Europe only accounts for 1.5 percent of Chinese investment in Europe.109 And what did enter the region is noticeably skewed to the forum’s larger members: Poland, Hungary, and the Czech Republic.110 But even in those countries the experience is lackluster. “We don’t need loans,” one Eastern European commentator said. “We need investment in productive sectors, and greenfield investment, not acquisitions.”111 For Poland and Czech Republic, considerations on limiting or banning Huawei equipment within new 5G network systems represented a calculation based on security ties with the United States, but also a reflection of disappointment for the limited trade and investment opportunities made available from China under the 17+1 format.112 In February 2020, it was revealed that the Chinese embassy in Prague even threatened to retaliate against Czech companies should a senior lawmaker visit Taiwan.113 Not only was China’s economic engagement limited, but Beijing was also seeking to undermine trade and investment that did take place to advance its geopolitical interests. Even for those countries accepting Chinese loans, there are emerging risks. Montenegro took on a €1.3 billion loan from China to build a 165-​ kilometer highway from Serbia’s capital, Belgrade, to its Adriatic port of Bar. But the disproportionately high debt levels taken on for its construction, some 80  percent of the country’s gross domestic product, not to mention questions hanging over its ultimate economic viability, won the road the name the “highway to nowhere.”114 Even China’s own state policy banks were not confident in the country’s ability to repay the loan, and similar to China’s other Belt and Road projects, Montenegro agreed to put up land as collateral should it be unable to pay its loans.115 Projects like the highway in Montenegro did not attract EU and other multilateral finance, but it is the EU that still provides the majority of trade and direct investment to the non-​EU member Balkan states. The EU made up close to 73 percent of trade to and from the Western Balkans between 2007 and 2015.116 Chinese trade and investment, on the other hand, hardly register. Yet in the face of China’s infrastructure initiatives, the EU and its largest members realize that more needed to be done to demonstrate the value of their engagement. “Germany’s most important foreign policy priorities are 178     How

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to keep the European Union together and to be more active in its periphery from the Balkans to Africa,” a German official told me. China’s power continues to frustrate the EU’s unity, but its influence has also demonstrated clear limits to date. This offers the chance for the regional body to mend its divisions and target new support to potential future members. “Not everything China touches turns to gold,” said the German official. “China’s model is based on money and the promise that other countries will experience similar economic success which it had achieved. Once the promise doesn’t come true, then the model will have to back-​pedal.” *** Across European and Western liberal market democracies, China’s rise exposes friction between economic interests to access a large market and political values in promoting and defending free speech and human rights. Yet while there has been ample criticism of European governments for neglecting their political values to advance economic relations with China, the economic importance of China to the EU is rarely scrutinized. As seen in Denmark, Norway, Portugal, and elsewhere, many European political leaders assume that China is of vital importance to the well-​being of their economies, and for decades, growth of trade and investment has been heartily promoted. China has risen to become the second largest trading partner for the EU behind the United States. Over €1.7 billion is traded between the EU and China every day, and major European industries are eager to win a larger stake in a Chinese market. Even at lower rates, China is still a global growth engine, accounting for over a quarter of global economic growth from 2013 to 2018.117 Some of China’s advanced manufacturing and high-​ tech sectors are expanding at higher rates than traditional industries and its evolving and enlarging consumer market make it impossible to ignore for foreign companies.118 But the question that many European officials and executives often fail to consider is this: Just how much of China’s future economic growth can foreign companies actually access on a level playing field with their Chinese competitors? Despite decades of promises from Chinese officials that China’s economy will open up, it is still heavily controlled and restrictive, particularly for outside investors. Overall, plans for economic reform have stalled, or backslide, rather than progressed in recent years. Chinese state-​owned enterprises and private corporations continue to receive formal and informal benefits from the government, while foreign companies still face joint What Is Best for Europe? 

 

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venture requirements and equity limits across a range of industries.119 China’s new foreign investment law in 2020 may improve market access in some industries, and higher levels of cross-​border acquisitions into China have been experienced of late, but there is still no a steady trajectory of reform.120 Even in the face of upfront restrictions and controls in China for the past several decades, Chinese officials have very consistently talked up the potential of the market to foreign investors. “For every story of restricted market access in China, there’s another story about how companies have done spectacularly well,” a European manager told me. “China excels at opening and closing the window of opportunity in individual sectors, and even subsectors, depending on its specific needs and priorities at any given time,” the manager said. Some industries like the financial sector have become more open, because China needs to tap into global financial markets, but others have been closed off, such as tech and telecommunications, because Beijing wants to control its digital sphere. But for years, rather than adjust to this reality, many European countries often blindly pursue access to China’s massive consumer market, accepting regulated technology transfers and other demands from the Chinese side that later came to undermine their competitiveness. An exaggeration of Europe’s economic dependence on the Chinese market has facilitated China’s rise as a economic competitor. Revenues for European companies in China are impressive, but European governments have fallen out of touch with the core of their economic competitiveness and welfare. Rather than China, the United States, or any other country, the most important trading partner for all individual EU member states is in fact the EU. In 2019, 63 percent of total trade on average for each member was with its EU partners.121 Geographical proximity, business and cultural familiarity, and a single market and customs union fuel this centrality. That year, despite being the EU’s number-​two trading partner, China represented an average of 5.8 percent in the total trade of the then twenty-​eight countries in the regional body (before the UK’s withdrawal), with Germany at the higher end with 7.1 percent of its total trade with China.122 The EU may trade €1.7 billion worth in goods with China every day, but EU member states trade over €30 billion a day in total with internal and external partners. In 2019, European analysts began to recognize that trade and business figures with China were less impressive than often touted.123 But some European officials, executives, and academics continue to argue that the numbers do not tell the whole picture. They often insist that when considering the importance of the Chinese economy for the EU that there are intangibles, such as China’s domestic market potential and its role in global 180     How

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supply chains, that cannot be easily measured. Yet here too China’s significance is misunderstood. Even for Germany, which makes up over a quarter of the EU’s trade with China, it is trade with its European neighbors that matters most. China has become Germany’s largest trading partner over the past couple of decades, but its weight still does not overwhelm that of Germany’s other main partners—​the United States, the Netherlands, and France. In 2019, Germany’s trade with China was only 0.7  percent larger than its bilateral trade with the United States and the Netherlands respectively, and 1.4  percent larger than that with France.124 Italy, the United Kingdom, and Poland are also large trading partners. In 2018, Germany’s combined trade with the Visegrád states, representing the political alliance between Poland, the Czech Republic, Hungary, and Slovakia, was 50 percent larger than that with China.125 Germany’s trade with its Central and Eastern European neighbors is interlinked with that to China through global supply chains. But this should not distract from the resilience of regional supply chains of “Factory Europe” in producing vehicles, machinery, and equipment that fuel German exports not only to the United States and China, but particularly for European consumers.126 Major German automakers, for example, produce many of their cars for China in China, and many of their cars for the EU, their largest market, in the EU, where along with Germany, Central and Eastern Europe is a key production center.127 German economist Jürgen Matthes argues that China’s role in Germany’s trade growth, and importance for specific industries, is more limited than commonly perceived. He shows how China made up 27 percentage points of Germany’s overall export growth of 290  percent between 1991 and 2018. This is a noteworthy contribution, but still only about one-​tenth of Germany’s export growth.128 If one looks just at the period between 2015 to 2019, and includes both exports and imports, the results are more impressive: China makes up 15% of trade growth for Germany, but this is still only at par with growth from Italy and Poland combined.129 When considering the significance of global value chains, the foreign value added in trade, such as imported goods incorporated into a country’s exports, Matthes finds that China made up close to 3 percent of the 33 percent growth in Germany's value added exports between 2005 and 2015, the period for which the most recent figures are available. For the value added in imports that travel from China through supply chains to Germany, it is a similar story: Germany’s European neighbors are far more important as suppliers for the German economy as a whole despite the high sales from China reported by some large German multinationals.130 And outside Europe, it is the What Is Best for Europe? 

 

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United States, not China, that played the largest role for Germany in global supply chains according to the most recent data from the Organisation for Economic Co-​operation and Development.131 Yet despite all this readily available evidence, in a late 2019 poll, nearly two-​thirds of Germans responded that Germany is too dependent on China economically.132 This false sense of dependency is a product of China’s rise as Germany’s largest trading partner in 2016 coupled with the inauguration of Donald Trump in the United States the following year and his ensuing trade threats against Germany and the EU, but also from years of German business leaders talking up the importance of China’s market to Germany and Europe.133 In private, some European diplomats and managers do speak of a “China hype” being built up over the past decade, that “China took up all the air” from other economic possibilities in Asia. But even international press, such as the Financial Times and The Economist, often cite China as ‘easily Germany’s largest trade partner’ when Germany actually maintains a very diversified international trade portfolio.134 Economic sociology on orientations of the future, or economies of anticipation, can be helpful in explaining the China hype in Europe.135 Imaginations of the future, whether they come true or not, can serve as a powerful guide in policy and investment decision making. They can also crowd out critique of present-​day realities in trading relationships and future challenges. And just as there are positive intangibles that elevate China’s economic importance for large corporations, such as its role as a production center for Asia, there are also those that undermine European competitiveness. After several decades, the technology-​for-​markets trade-​off that Beijing organized with German, European and other foreign multinationals has paid off in helping to nurture Chinese multinationals to compete firstly at home with foreign companies, but also overseas in their home and third markets. In the 1990s and early 2000s, foreign companies gained much from the arranged marriages Beijing placed them in with Chinese partners, which had knowledge and contacts of local markets that the multinationals initially lacked. In return they often got away with passing on only second-​and third-​rate technology to their Chinese counterparts. There were long-​term risks from the technology-​for-​markets trade-​off, but they were initially eager to exploit China’s low-​cost labor, before wages and other costs rose, as a center for regional and global production, and later, to profit from selling their products directly to China’s growing consumer market. But the long-​term of Chinese competition arrived sooner than many in Europe imagined. EU trade integration with China has coincided with a drop in EU regional integration and a fall in the EU’s share in global 182     How

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manufacturing exports from 44 percent in 2001 to 35 percent in 2018. This trend demonstrates that integration is asymmetric in China’s favor:  China is exporting higher-​value intermediate products to the EU, but importing fewer intermediate goods in return.136 The higher trade volumes with China that so many EU member states have been chasing for decades, in combination with negligence on domestic innovation and industrial competitiveness, are counterproductive to their economic competitiveness and welfare. Where there is high dependency on China in global supply chains, there can also be trouble. The COVID-​19 pandemic demonstrated that concentrated supply chains can be risky business during crises. When many of China’s industries ground to a halt in the early months of 2020, China’s one-​third share in intermediary products required for global value chains, particularly for consumer electronics, but to a lesser degree for automobile and pharmaceuticals, suddenly appeared to be a vulnerability for foreign countries and multinational corporations.137 “We have to decrease our dependence on a couple of large powers, in particular China, for the supply of certain products,” said French finance minister Bruno Le Maire.138 Mexico, Turkey, and Eastern Europe stood out as alternatives in building resilient supply chains for the future. Despite the challenges they face in China, German and European companies are not exiting the country en masse. Some, in fact, are doubling down on their positions. Volkswagen, for example, finalized its new electric vehicle plant near Shanghai in 2019 and BMW has a new plant near Shenyang. Representing the EU’s larget investors in China, German executives from the automobile industry have paid particular attention to not crossing Beijing’s political red lines on human rights and freedom of speech. In early 2018, for example, Mercedes-​Benz quickly removed and apologized for a post on its Instagram account that quoted the Dalai Lama, after an uproar from nationalistic Chinese consumers, who see the spiritual leader as a separatist.139 The following year, Volkswagen CEO Herbert Diess denied that he knew anything about reports of large detention camps holding Uyghur Muslims in the Xinjiang region.140 Such behavior is not isolated to China’s European investors. American executives have also bowed to Chinese pressure on freedom of speech. At Beijing’s request, Apple removed apps in China that helped users circumvent Internet censorship.141 This behavior demonstrates that as gatekeeper of the Chinese market, Beijing still wields considerable influence over some of the largest corporations on the planet. Volkswagen often stands out among German and European companies for its confidence in the Chinese market. “The future of Volkswagen will be decided and determined here in China,” said CEO Herbert Diess in early 2019.142 “As What Is Best for Europe? 

 

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a brand, we want to be number one in terms of electric mobility in China and beyond.”143 Volkswagen has a long and successful history in China. In 2001, it reported an over 50 percent market share, dominating the Chinese automobile industry, and winning large government contracts.144 This early success came not only from taking a first-​mover advantage over its European and American competitors, but out of luck. In the mid-​1980s and early 1990s, Volkswagen’s Chinese joint venture partners, the Shanghai Automotive Industry Corporation (SAIC) and First Automobile Works (FAW), had the backing of the then Chinese Communist Party chief in Shanghai, Jiang Zemin.145 The company’s fortunes rose with the future Chinese president, but at the turn of the century, the German automaker’s luck started to run out. In 2004, its annual market share in China had dropped to below 20 percent, and the company has not been able to rise above this level as international competition, and later Chinese domestic automakers, moved in.146 China’s automobile market, and its economy as a whole, has grown tremendously since the early 2000s, and Volkswagen’s record is still impressive. Together with its Chinese joint venture partners, Volkswagen reported a 18.5 percent market share in China for 2018, a slight increase from previous years, but a comparable level to where it was in back in 2005.147 For the next largest German company, Daimler, China went from representing 9.8 percent of its total company revenues in 2015 to 11 percent in 2019.148 For Siemens, this figure rose by only 0.5 percent in the same period.149 China was important, but not necessarily the booming growth market is used to be for Germany’s leading corporations. “No one complains because everyone is making good money,” a European manager told me. “But most foreign companies are not growing as fast as their Chinese competitors. Market shares are stagnating, and some are falling.” When Volkswagen’s market share in China began to fall in the early 2000s, one executive commented that “you cannot eat market share.”150 But what about sales revenues for Germany’s auto industry in China? Volkswagen’s bullish views on China demonstrate a common trend among some companies in Europe and elsewhere in exaggerating the significance of the Chinese market compared to their home and other foreign markets. In 2017, Volkswagen sold over 37 percent of its cars in China, and BMW and Daimler close to one quarter.151 These are widely quoted figures, reported in the New York Times and Financial Times, but are measurements in units, the number of vehicles sold in China, not actual sales revenues of Euros and cents.152 As analyzed by the German business newspaper Handelsblatt, China made up on average 15 percent of revenues for top German companies in 2017. This is a significant amount, but not necessarily one that stands to grow 184     How

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remarkably in the future.153 Although Volkswagen does not offer total sales revenue figures for its China operations in its annual reports, it does report “operating results” for China, where it maintains equity stakes in its joint ventures, but this figure fell by some 15 percent between 2015 to 2019.154 One study found Volkswagen’s profit per car was about 30 percent lower than its industry peer Toyota.155 For the next four largest German corporations after Volkswagen—​Daimler, BMV, Siemens, and Bosch—​the importance of China and Asian markets in terms of sales revenues is comparable to the United States and North America. The two regions made up roughly a quarter of total sales each in 2019. European markets, in contrast, made up on average 47 percent of their sales revenues that year.156 But what about growth? China and Asia often boast higher growth rates compared to Europe for German companies, but this is largely because they rose from a low base over the past two decades. Measured in the change in sales revenues, however, Europe stands out above China. In Europe, the four German Fortune 500 companies generated an additional €15.9 billion from 2010 to 2019, while Asia and North America increased by €13.8 and €11.7 billion respectively.157 This is only a small sampling of German companies, but it does represent some of those most invested into China. And the numbers indicate that it is not necessarily China that is overwhelmingly essential for growth, but Europe that is central. What is likely to undercut revenue growth for European and other foreign multinationals in China in the future is the rise of Chinese competitors. Under President Xi Jinping, China has accelerated its drive to improve competitiveness and achieve self-​sufficiency in key industries through its “Made in China 2025” industrial policy. Just as foreign multinationals need to be in China to be truly global, Chinese multinationals are also going global. The rise of China’s telecommunications giant Huawei demonstrates just how quickly Chinese companies can enhance their competitiveness in advanced industries, particularly by leveraging guaranteed domestic market shares, and become global competitors. China has long sought after a national champion in the automobile industry, and it may soon enough get one in the domestic automaker Zhejiang Geely Holding Group, or Geely for short. Just as Huawei won the praise of Chinese leadership and support of its state banks when Zhu Rongji visited its Shenzhen headquarters in the late 1990s, Geely’s founder, Li Shufu, is said to maintain a close personal relationship with Chinese president Xi Jinping.158 Xi was governor and party secretary in Zhejiang province from 2002 to 2007 and early on backed Geely’s efforts to grow. “We must give preferential policies to domestic automobile makers,” Xi said on a visit to What Is Best for Europe? 

 

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the car company’s headquarters in Linhai.159 “If we do not support enterprises like Geely, who else should we support?” Geely went on to receive large loans from local municipalities to kickstart its rise and ramp up its sales by winning key government contracts.160 After Geely acquired Volvo Cars in 2010, the China Development Bank granted billions in loans to the Swedish automaker to help solidify its international position.161 Chinese competition to German and other foreign automakers is on the rise. In China, the market share of the ten largest Chinese automobile manufacturers, such as Geely, SAIC, and Changan, rose from 34 percent in 2010 to 43 percent in 2017.162 Thanks to a decade of nurturing government subsidies and regulations, Chinese electric vehicle makers, BYD and BAIC, are positioning themselves to compete with Tesla and other global brands in the future. Geely stands out because it is in the early stages of leveraging its advantageous competitive position at home with a growing number of overseas acquisitions, including the technology and brand name of Volvo Cars, to become a global player and possibly one day rival German and other leading automakers.163 China is a top ten supplier for Germany’s automobile, chemical, and machinery and equipment industries, but increasingly, Germany is also in direct competition with China in these industries, which are vital to its economic competitiveness and welfare. With questions hovering around how much of China’s economic growth German and European multinationals can ultimately compete for on a level playing field, new thinking developed in Berlin on how to deal with China as an economic competitor. As German researcher Cora Jungbluth argues, German companies need to invest in research and development to improve their innovation, and Germany and the EU must work harder to ensure a transparent and reciprocal conditions in global competition.164 There is now apprehension among Europeans toward China that economic engagement is not working out as many expected. In many member states, negative views toward China have grown in recent years.165 Europeans want their leaders to do more to defend their economic competitiveness and welfare. In 2019, the European Council on Foreign Relations found that less than 20 percent of voters in the EU felt their country’s economic interests were well protected vis-​à-​vis China’s aggressive competitive practices.166 As demonstrated by the EU’s 2019 Strategic Outlook and positions from business associations around the regional body, critical perspectives went from the minority to the mainstream among European decision makers in government and industry. A  process has begun among European officials and corporate executives to balance their engagement in China and think about their future competitiveness over short-​term gains. “We’re telling our 186     How

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business leaders not to think about the next quarter, but the many quarters in the long run,” a German official told me. “We can help by pushing for better trade agreements in India and Southeast Asia, but they’ll need to adapt and innovate as well.” Similar to the United States and other advanced economies, new questions are also being raised about the economic benefits European economies and societies receive from engaging China with trade and investment. Outward foreign investment from multinational corporations is typically viewed as contributing positively to economic growth, productivity, know-​how, and highly skilled labor in their home economies.167 Yet foreign investment has also been shown to lead to the crowding out of production, through the erosion of manufacturing and other industries, and a fall in low-​skilled jobs in the home economies of multinationals.168 Some studies show that the character of the host economy where that foreign investment is headed, particularly if it is a controlling one such as China, can determine whether beneficial links with home economies are established.169 Multinational corporations have benefited from exploiting China as a large, new production site, but wage inequality in their home economies has risen as a result of a lack of government policy preparing its labor force for such drastic changes in world trade.170 All the while, many Western corporations continue to evade paying taxes in their home markets.171 Corporate executives and political leaders may find themselves under heightened pressure to demonstrate how foreign investments in China contribute to their home economies and the welfare of their populations. Volkswagen, for example, invests much of its profits from China back into their Chinese operations, making it difficult to pinpoint the importance of their overseas investments to its home economy.172 The China operations of Volkswagen and other German companies play a role in annual dividend payouts to shareholders, and the company’s overall well-​being, but is this at a level that warrants such a strong pull on German foreign policy? At the same time, while China is a major investment destination for Germany’s automakers and other key industrial players, for many other German and European companies, China is far less relevant. In June 2020, at a hearing on China at the Bundestag, the German federal parliament, Stefan Mair, a member of the Executive Board of the Federation of German Industries, BDI, commented that only 2% of jobs in Germany depend on trade with China.173 The same is true for the United States. Boeing, Apple, Nike and other big name American multinationals, generate considerable revenues and profits in China, but a Morgan Stanley report found that American companies on average generate only 5% of their total revenues What Is Best for Europe? 

 

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from China.174 Some Western corporations may generate a sizeable amount of their revenues in China, but Western economies are not overly dependent. What then to do about the corporate levers China does have over European foreign and security policy decisions and Beijing’s growing threats to pull them? Some large European corporations, particularly in the automotive industry, with powerful voices in EU capitals, have noticeable dependencies and believe their stakes in China will only grow in the future. Beijing has already threatened German carmakers over Germany’s decision on whether Huawei can participate in building its 5G telecommunications networks, business ties with the Czech Republic over the decision of a Czech lawmaker to visit Taiwan, and commercial links with Sweden during a long-​running dispute over the imprisonment of Swedish citizen Gui Minhai in China.175 China can do harm to key European industries. Yet to back down from their political values and strategic aims, European leaders would have to neglect the fact that China also benefits from its trade and investment relationship with Europe. Trade is a two-​way street. Just as China is the destination for close to 14% of the EU’s exports, 17% of China’s exports head to the EU.176 Retaliating against European economies can hurt China’s own economy by blocking foreign investments and upsetting jobs and technology transfers. European leaders have more negotiating power with China than they may believe. *** Can the EU get its act together and consistently harness the unified power of its member states to advance its economic, political, and strategic interests in the face of China’s rise? Can European leaders completely shake away decades of internal paralysis and drive forward common strategies on new technologies, such as 5G networks and artificial intelligence, and help revive multilateralism by standing up for the international rule of law over China’s maritime claims in the South China Sea and World Trade Organization reform? Some European scholars have recognized the threat of the EU’s lack of coordination on China for decades, but a strong, collective response was never mustered. “Neither Germany, nor Britain or France, for that matter, are in a position to make any impression on the [People’s Republic of China] as long as they act unilaterally, let alone against each other,” wrote German researcher Kay Möller in 1996. Germany’s “political concessions to China on human rights, Taiwan, WTO membership, EU market access and so on,” Möller argued, “are certainly not being matched by Beijing’s own 188     How

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policies” and “German traders and investors have not been accorded privileged treatment when compared with others.”177 A year earlier, the European Commission released “A Long-​Term Policy for China-​Europe Relations” to reconcile its political difference and economic interests with China through so-​called constructive engagement.178 But in retrospect, on both politics and economics, the policy fell flat. Over a decade later, John Fox and François Godemont wrote in 2009 for the European Council on Foreign Relations that “Europe’s approach to China is stuck in the past.” They pointed to China’s controlled economic and industrial policies as a threat to European welfare and called on the EU to no longer treat China as the emerging power it used to be, but “the global force it has become.”179 But it has taken a long time for European decision-​makers to push China for significant reform. In late 2018, one German official related to me that after going through old papers in his office he found that his government’s objectives on China, such as securing market access and intellectual property rights for German industry, had not changed in over a decade. “The talking points are the same,” he said, “but the policy doesn’t really move, and China becomes a bigger competitor.” What has held the EU back in advancing its long-​term strategic interests on China? One hurdle facing an EU collective response on China is overcoming ideological, political, and economic support toward Beijing within Europe. Years of economic stagnation and political discord following the global financial crisis beginning in 2007 coupled with China’s modern rise brought new scrutiny toward the utility of liberal market democracies in the West to generate prosperity for their citizens. Just as there are Chinese thinkers and decision makers who may see virtue in Western governance, there are those in Europe and the West who see value in authoritarian politics and state-​led capitalism.180 It is not uncommon for European business executives to return from a trip to China and opine on how China’s political and economic system simply got things done without the fuss of democracy. “I didn’t find it difficult to see that China was rising and the West was declining,” said the British academic and author of When China Rules the World, Martin Jacques.181 “Our model is in crisis,” Jaques said of the West. China’s “has been delivering the goods.”182 Romanticism shapes European thinking on China. In Germany, researcher Didi Kirsten Tatlow argues that the generation of China specialists holding high-​level posts in government, business, and academia is impaired by “power blindness” toward Beijing’s present-​day foreign policy intentions. An intellectual upbringing and experience with China as a distant, benign power drove these “late Orientalists” to reject the idea that Beijing is a global power capable of shaping democratic norms throughout the world.183 This What Is Best for Europe? 

 

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resembles the development of thinking on China in Australia. Historian Agnieszka Sobocinska writes that, beginning in the 1950s, “a cultural fascination for all things Chinese” coupled with “post-​colonial guilt” dulled critical faculties of the Australian political elite toward the Chinese Communist Party, which consequently prepared the Australian public for greater cooperation with China without full understanding of the risks involved.184 China’s rise also satisfies those in Europe with deep-​seated anti-​American viewpoints. This entrenched position among some European thinkers, argued the late French journalist and philosopher Jean-​François Revel, comes from an attraction to communism during the Cold War, an aggrievement of Europe’s loss of status in the world, and a failure to recognize the injustices of Europe’s colonial past and role in some of America’s most destructive foreign policies.185 Such sentiments in Europe come to shape impressions on China. America’s faults at home and abroad, for example, often are deployed in debates on China to negate any critique of Beijing’s domestic politics and impact on the world. One former European diplomat added a gender dimension to explain those robustly positive views on China heard in Europe. “They look at China’s leadership and they see their childhood,” she said. “Patriarchy is a world they understand. It appeals to them.” But China’s influence in Europe goes beyond ideological differences. Across the EU, countries have also began to recognize the overt and covert influence of China in their domestic and regional politics. China has well-​ established official avenues for policy promotion and soft power projection through Chinese state-​owned media and government-​backed promotional institutes and departments, such as the Confucius Institute and the United Front Work Department of the Chinese Communist Party. It also has extensive lobbying efforts in the EU in Brussels and European Parliament in Strasbourg. These do not discriminate between political parties and regional geographical boundaries, and are active in pushing against calls for anti-​ dumping trade measures, investment screening, and security restrictions on Chinese providers, particularly Huawei, for European 5G networks.186 China has also developed a diverse roster of salaried enablers among former high-​level European political leaders well placed in elite networks to support Beijing’s positions. The list of former European leaders recruited by Chinese interests include two-​term Italian prime minister, and former European Commission president, Romano Prodi, who is on the board of Beijing’s Boao Forum for Asia, and former French prime minister and foreign minister Dominique de Villepin, who offers consultancy services to Chinese companies.187 Britain’s former prime minister David Cameron was also hired to head the UK-​China Fund, a fund-​raising venture for projects in support 190     How

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of China’s Belt and Road Initiative.188 Just as politicians and executives in Europe and the United States hope to one day sit on the board of powerful multinationals and industry associations, they also see such opportunities in their future career trajectories with China today. Mike Rake, the former President of the Confederation of  British  Industry and former Chairman of BT group, for example, joined the board of Huawei UK in 2019 just as political heat over the company’s possible involvement in British 5G networks began to rise.189 Yet China’s Euromen do not necessarily have overwhelming sway on European policy thinking and decision-​making. Their influence can be significant, but there has also been a groundswell of critique towards China from within European democracies that is reminiscent of past shifts in global power. In From the Ruins of Empire, Pankaj Mishra writes how prominent Asian scholars, from Egyptian Abd al-​Rahman al-​Jabarti to China’s Liang Qichao, responded after economic life was upended across much of Asia by the arrival of European colonizers. They agonized over the oppression and moral destruction Europeans brought to Asia, marveled at the advances Europe had achieved in technology, studied the virtues and flaws of Western democracies, and reflected on their own societies, trapped in a permanent crisis, as insufficient and in need of reform to meet the challenge of the West.190 The consequences are not nearly as severe today with China’s growing presence in Europe, and how its global rise impacts European economies and politics. But this change has nonetheless initiated a re-​examination of how European liberal markets and open societies should be shaped to respond to the power surge of the state capitalism and political authoritarianism of China. In recent years, a cohort of European thinkers, journalists, and politicians are recognizing China’s influence in Europe and proposing ways to challenge it through new policy reforms, research, and public awareness to bring on stronger EU collective action. Groundbreaking policy reports on China’s political, economic, and societal influence in Europe came out in 2017 and 2018 from leading European think tanks that exposed Europe’s vulnerability to Chinese influence and suggested ways forward to curtail it. China’s “soft power diplomacy relies on repetitive and positive messages,” write François Godemont and Abigaël Vasselier in a report for the European Council on Foreign Relations. “There is a gold rush by some European figures, while many companies, media groups, and universities seek to protect their access to the Chinese market.”191 Godemont and Vasselier call for investment screening, common strategies among European neighbors, and leveraging Europe’s like-​minded Asian partners to mitigate and manage China’s influence. In their article What Is Best for Europe? 

 

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“Authoritarian Advance,” a group of European scholars working at a pair of German think tanks warn that “Europe’s gates are wide open whereas China seeks to tightly restrict the access of foreign ideas, actors, and capital.”192 They urge the EU to leverage its collective weight; invest in high-​caliber, independent China expertise; and provide investment alternatives in the EU’s periphery. Beyond its supporters among high-​level former European political leaders and influencers, “bankers, accountants, politicians, PR consultants and lawyers have become essential service providers for China and other authoritarian states in Europe,” write Thorsten Benner, co-​founder of the Global Public Policy Institute, and Oxford University professor Ricardo Soares de Oliveira.193 They call for better transparency to leverage public knowledge through disclosure of financial ties held in Europe with authoritarian states and companies. These ideas in the EU to uncover and push back against Chinese party-​state political activities and economic pressure reverberate in other Western liberal market democracies including Canada, Australia, and New Zealand.194 In mid-​2019, Mark Leonard, the head of the European Council on Foreign Relations, and Carl Bildt, a former Swedish prime minister and foreign minister, warned that “as the international situation descends into a miasma of geopolitical competition, Europeans are in danger of becoming hapless playthings in a tussle for preeminence between China, Russia, and the United States.” The EU in theory should be able to compete with such big powers. Collectively, the EU has the biggest single market in the world, second in defense spending only to the United States, the world’s highest development spending, and its largest diplomatic corps.195 But all of this is rather useless in relations with the outside world if this size cannot be harnessed into action. Leonard and Bildt suggest that achieving solidarity requires that the EU act as “the first line of defense for many countries’ core interests” and that “the EU can best establish mutual trust through the practical experience of common action.”196 Calls to introduce qualified majority voting in EU foreign policy rather than continue with unanimity, which allows single members to upset common policy, were likely to not find much traction since such a reform requires an unanimous vote. EU member states can also take common positions in their foreign policies without the entire collective involved. These core groups, Leonard and Bildt suggest, can “work through divisive issues and attempt to develop options and common positions that rise above the common denominator.”197 For example, the United Kingdom, France, and Germany, the so-​called E3, released a statement in 2019 calling for the safeguarding of 192     How

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freedom of navigation in the South China Sea, a sensitive issue for some EU member states in that it criticizes China’s militarization of the region. The British, French, and other European navies have sailed vessels in the South China Sea to protect freedom of navigation.198 The EU’s largest economies, Germany and France, must also further demonstrate that they are willing to stand up for liberal market values by pushing back against China’s subsidies and support to state-​owned and private Chinese corporations active in Europe. They must also work to build closer integration across Europe, but particularly its eastern and southern peripheries. A European Union Strategy for connecting Europe and Asia with transport, energy, and digital infrastructure, unveiled in 2018, is broadly seen as a response to China’s Belt and Road Initiative, but without financial commitments from public and private institutions it will not transform into action.199 Part of the problem is a promotional one. The EU makes up the majority of trade and investment for Portugal, Hungary, Greece, and others that have sided with China on foreign policy issues in the past. In 2017, close to 80 percent of public spending in Portugal and Croatia came from EU regional support.200 For fifteen Southern and Eastern EU members, such as Poland, Hungary, and Greece, cohesion funds make up on average half or more of their annual national budgets. “The European Union needs to better communicate its investments in Eastern Europe,” a European official told me. “It still towers above China.” Smaller EU member states, however, also need to recognize economic engagement with China for what it is, not just what they want it to be. Many behave as though there is a trade and investment bonanza from China soon to arrive if they closely guard against crossing Beijing’s political red lines. As seen from Denmark and Norway, even after two decades of engagement, China’s presence with regard to trade and investment has been underwhelming. Yet in its pursuit of its “Made in 2025” agenda, it has become an increasingly formidable competitor to many European manufacturers, including ones in smaller nations such as Hungary and the Czech Republic.201 Whether it is acquisitions of advanced technology from corporations in Germany, or gaining access to emerging markets through buying Portuguese firms, China’s state-owned enterprises and private corporations have strategic objectives in its overseas investments. Even large member states need to come to terms with this fact and shape their China policy accordingly. For example, when Chinese president Xi Jinping visited Europe in the spring of 2019 he won a diplomatic victory in signing a memorandum of understanding with Italy on his signature foreign policy, the Belt and Road Initiative. Although it included no binding commitments for What Is Best for Europe? 

 

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either side, Italy became the first G7 country to sign up.202 But just after Xi’s visit to Italy, the Chinese president traveled to France, where, despite President Macron’s public criticism of the Belt and Road, China signed €40 billion in business deals. Even if the €30 billion in sales of three hundred Airbus planes to China are not taken into account, France still attracted four times more in deals than the €2.5 billion Italy did after recognizing the Belt and Road.203 It is the most vocal European critics of China’s Belt and Road—​Germany and France—​ that draw in sizeable Chinese trade and investment, because of the attributes and competitiveness of their economies. If European countries are interested in growing economic ties with China, enhancing the competitiveness of their own domestic industries to invest and export goods and services abroad is a better guarantee than pledges of fidelity. The COVID-​19 pandemic also served as a wake-​up call for European democracies to China’s global ambitions. When the pandemic spread to Europe in early 2020, hitting Belgium, Italy, Spain, Sweden, and the United Kingdom the hardest, Beijing was quick to respond by providing medical supplies across the continent. This fueled the positions of Euroskeptics in Southern and Eastern Europe,204 but because China’s assistance came with allegations from Chinese diplomats and state media that the American military first spread the virus, and even suggesting Italy might be the origin, not the city of Wuhan in Hubei province, Beijing struggled to win over new friends in Europe. EU foreign minister Josep Borrell even warned that a “battle of narratives” was underway, with China and Russia attempting to discredit the regional body’s own assistance to stricken European countries.205 Beijing’s response to the pandemic hitting Europe offered a stark lesson for European leaders. When France’s president Emmanuel Macron sent medical equipment and surgical masks from his country’s limited strategic stock to help China overcome the epidemic in early 2020, he believed, as leaders from a host of countries did, that support to the Chinese in their hour of need would warm relations with Beijing. European leaders even agreed to demands from the Chinese government to keep news of their aid quiet, so that the Chinese leadership did not lose face. Yet the ultimate outcome was that when Europe faced the pandemic, Beijing both ridiculed its response and did everything in its power to amplify news of its own assistance to European countries.206 Reports of cyber attacks originating from China on European hospitals and coronavirus research centers also emerged.207 China’s image took another blow when the Netherlands and Spain, among others, reported that hundreds of thousands of face masks and testing kits purchased from China were defective.208 This indicated a major failure by Chinese 194     How

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authorities to enforce Chinese companies profiting from exporting medical supplies overseas without official license.209 Together, Beijing’s disinformation and disorganization undermined the goodwill of its medical support. A  new challenge for the EU in maintaining unity and resisting outside influence in its members states is set to come as the global economic downturn from the COVID-​19 pandemic sets. But China’s reputation among Europeans, already under strain before, went into free fall because of Beijing’s aggressive response to the coronavirus crisis. A 2020 poll found that over 60 percent of French and Danish citizens claim their views of China have worsened, as have around half of Swedes, Germans, Spaniards, and Portuguese.210 European impressions of the United States were also severely damaged from the crisis, pointing to the urgency for European countries to come to grips with the geopolitical challenges before them. *** There is still a ways to go for the EU in finding the collective willpower to push back against China’s unwanted influences. But Beijing’s behavior has pushed this process forward. Its infringements on European democratic values and competitive economic pressures have changed the public discourse on China in Germany and France, and in smaller member states like Denmark and Portugal. Economic engagement with China has not met European expectations. In fact, China has developed into a serious economic competitor. French president Macron showed the political will to deal with Beijing as a collective when he invited German chancellor Merkel and then European Commission president Jean-​Claude Juncker to join him during President Xi Jinping’s visit to Paris in 2019. The spirit of this initiative will now need to be maintained across the regional body’s member states if it is to be truly effective. Unity can grow from the actions of smaller groups of member states demonstrating that submission to China’s economic and political demands does little to maximize the national interests of any European country. Decoupling from China is not an option for the EU, but neither is returning to a blind foreign policy in which China is somehow deemed absent of strategic intentions that might upset European interests. Strategies to defend Europe’s long-​term economic interests and political values, despite short-​term sacrifices, must be implemented. Just as Sara Berthou and other Danish protestors discovered after standing up for their rights, Europe’s interests and values can be protected from the ground up, and Europe can be stronger for it.

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Chapter 7

I

Behave Accordingly

f there are two visions of Japan’s future with China, Kiyoyuki Seguchi’s is the optimistic one. A research director at the Canon Institute for Global Studies, after a lengthy career at the Bank of Japan, which included holding the post of chief representative in China, Seguchi knows the ins and outs of Japan’s economic relations with its large neighbor. We met at his Tokyo office in the Shin Marunouchi Building, a commercial tower rising high above the city’s elegant, red-​brick central train station below. From his vantage point, even after a decade of tumultuous political and security relations, Seguchi still sees economic integration through trade and investment bringing regional peace and stability to East Asia. “Economic relations between Japan and China cannot improve political relations in the short term,” Seguchi told me, “but in the long run, there will be many good chances. It will work.” Seguchi is not naïve to the challenges facing Japan and China. But his prediction of a future rapprochement differs sharply from the troubled road ahead that many in Japan’s political establishment and diplomatic service envision. Many Chinese would also disagree with his perspective. China maintains long-​standing grievances dating back to Japan’s wartime aggression and occupation from the late 1930s till the end of World War II. This history is tied to present-​day territorial disputes and military tensions over control of a small grouping of uninhabited islands in the East China Sea, known as Senkaku in Japan and Diaoyu in China. For the past decade, Beijing has increased pressure over its territorial claims, with the number of

 

Chinese commercial, coast guard, and navy vessels and military aircraft traveling on and above the waters around the islands growing significantly. On nearly a daily basis, the Japanese air force must scramble to intercept Chinese military aircraft. Beijing even weaponized its trade with Japan, supporting consumer boycotts of Japanese products and export bans, to push Japan away from historical claims to the islands. China and Japan may be the second and third largest economies in the world, but even though a sense of normalcy has settled over their territorial disputes in recent years, an accidental collision at air or sea still threatens to spark war. Will China and Japan’s economic relationship save Asia from a disastrous war? If not war, what impact might political and security tensions have on what is arguably the most important relationship in Asia? Pinned on the wall in Seguchi’s office are two green turtle figurines, one larger than the other. A  revered animal in Japan and Asia, the turtle represents the connection between heaven and earth, symbolizing good luck and longevity. It is not hard to imagine those on Seguchi’s wall as Japan and China chasing one another over the centuries for economic supremacy in East Asia. In 2005, China’s economy was only half the size of the Japanese. But after passing Japan to become the world’s second largest economy in 2010, in nominal measures of gross domestic product, China was close to three times the size of the Japanese economy by 2018. If the large turtle trails the small one in any way, it is on the higher life quality Japanese enjoy compared to Chinese. In terms of income per capita, education, and health standards, Japan is still well ahead of China. And for Seguchi, these qualitative advantages for Japan stretch into the business world, underpinning the peaceful and prosperous future he sees for East Asia. For decades the two economies of China and Japan fed off one another. When China began to open to the world in the late 1970s, Japan was one of its closest partners. A trade-​off of Japanese machinery for Chinese crude oil benefited both sides. After China rose as a leading world manufacturer in the decades to come, taking on the role of the “factory of the world,” the exchange evolved into one of Japanese semiconductor chips, cars, and vehicle parts, for finished products, such as computers, electronics, and appliances, made in China. In 2018, China was Japan’s largest trading partner, and Japan China’s second after the United States. Seguchi argues that these economic complementarities will continue into the future. China may have surpassed the size of Japan’s economy and become Japan’s largest export market, but it is still dependent on importing high-​quality Japanese imports to power forward its export-​driven economy. His perspective matches with that of liberal proponents of economic 198     How

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interdependence, who argue that rather than succumbing to historical grievances and descending into war, the economic relationship between Japan and China is similar to that of the United States and Soviet Union during the Cold War. But instead of Washington and Moscow stepping back from nuclear war due to the destructive consequences for both sides, Japan and China’s “mutual assured destruction” is of an economic variety.1 Political leaders in Tokyo and Beijing avoid military conflict because they understand the ruinous consequences such a confrontation would hold for their economies. Beginning in 2008, Japanese corporations started to invest in Southeast Asia’s budding economies to hedge against worsening economic conditions, from rising wages and costs and political risk in China. This was dubbed Japan’s “China plus-​one” strategy, which aims to lower dependencies on China by engaging other Asian markets. But Seguchi does not think it will lead to Japanese companies abandoning their deep stakes in the Chinese market. He sees growing levels of Japanese investment in China, from around mid-​2017, as sign of economic turnaround. Japan’s formidable automobile industry, including the likes of Toyota and Nissan, but also Japanese food, electronics, appliance, and robotics manufacturers are still making large investments in China.2 “Japanese companies recognize huge business chances in the Chinese domestic market because the number of middle-​class people is increasing very rapidly,” Seguchi told me. He demonstrates his point by placing a plastic bottle of iced green tea behind the table between us. “In 2010, the number of Chinese living in cities with income of over $10,000 a year was only 100 million,” he said, raising the narrow top of the bottle above the table to show the limited consumer base for Japanese products at the time. “By the early 2020s, it could be as much as 800 million,” he explained, while lifting the bottle up until its wider base, which represented the expanding middle class, became visible above the table. His estimates on China’s rising middle class may be overly optimistic; a McKinsey report found that by 2022 China’s middle class will number roughly 550 million.3 But even at this size, Seguchi’s essential point holds. On the surface, Chinese economic growth has slowed after four decades of average booming annual rates of 10 percent, an unprecedented pace in modern history. If China’s economy is measured in purchasing power terms, it had already become the largest in the world, passing the United States, at some point in late 2013. But even with reported weaker annual growth levels below 7 percent, it is a much larger Chinese economy—​a $14 trillion economy—​ that is still growing at considerable speed. China’s GDP per capita rose to B e h av e A c c o r d i n g ly  

 

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around $9,600 in 2018, a near twofold increase since 2010.4 Even though India has surpassed China as the fastest growing major economy in recent years, the size of China’s growth is still eight times bigger than India’s.5 For Japanese and other foreign companies, these conditions make the Chinese market impossible to ignore. For much of the past four decades, Japanese investment in China was targeted toward setting up a manufacturing base to produce exports for global markets. But today it is geared to access growing Chinese consumer markets.6 For Seguchi, the pessimism among many foreign companies over unfair competitive practices and weak enforcement of intellectual property rights in China is unconvincing. He explains that such challenges are simply part of doing business in the country, an inherent quality of the Chinese market that every investor accepts when entering it. He argues that Southeast Asia is simply not yet ready to offer the same sizeable consumer markets and established and smooth-​running logistic networks, predicting that Japanese investment in China will grow until around the mid-​to late 2020s, when the Chinese economy slows to 3 to 5 percent annual growth levels. China’s state-​led drive for domestic companies to increase their competitiveness in high-​tech industries could challenge Japan. Thanks to the enormity of its domestic market and command and spending of its government, China is seen as the future leader in new and emerging industries from big data and AI to robotics and e-​commerce, moving from a long history as a copycat of foreign technology to becoming an innovator in its own right.7 Japan is not as vulnerable as Germany and South Korea to Beijing’s “Made in China 2025” industrial policy to develop self-​sufficiency in high-​ tech industry supply chains, but if the ambitious plan is successful, Japanese industry is still in dire trouble. In robotics, for example, China seeks for domestic companies to supply 70 percent of its market by 2025, a result that would displace much of Japan’s exports, which made up 62 percent of China’s intake in 2017.8 But Seguchi does not foresee the Chinese ousting Japanese companies in the robotics, automobile, and semiconductor industries anytime soon. “Japan is still innovating faster than China in traditional industries,” he said. “It’s easier for China to cooperate with Japan than innovate by itself.” In 2019, the Global Competitiveness Index from the World Economic Forum ranked Japan as sixth and China twenty-​eighth.9 Similar to their German counterparts, which ranked first in the world for innovation capability, Seguchi believes that Japanese companies have a “Meister spirit” that makes them stand out among the competition. While Chinese companies are driven by fast and high profits, according to Seguchi, Japanese engineers and 200     How

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developers prioritize constant, incremental progression of quality and efficiency in their products. “For forty years, China has had an open-​door policy and has not succeeded in innovating, he said. “It has always depended on foreign companies for advanced technologies.” Seguchi’s argument is not necessarily that China cannot innovate, but that China will not become a leader in advanced technologies on its own. This might change in the future as China has made strong strides forward in its technology, innovations, and competitiveness over the past decade. But at present, research and data largely back up Seguchi’s point. China’s innovation and competitiveness is uneven across industries and burdened by low efficiencies. It is rather a “fat tech dragon,” pumping out the most patents per year in the world, for example, but often ones of poor quality with limited knowledge generation.10 In late 2018, a McKinsey report found that while China has increased its research and development capacity considerably, particularly in consumer electronics, construction equipment, and some digital industries, it is still not a major technology supplier and exporter of R&D.11 Despite improving its technological competitiveness through massive R&D spending that trails only the United States, China’s intellectual property imports were six times larger than its exports in 2017. Around half of China’s research and development purchases from 2011 to 2016 came from the United States, Japan, and Germany. This level of dependency has not changed in twenty years. Seguchi’s position on economic interdependence between Japan and China staying strong in the future is supported by other trends. Japanese companies still see opportunity in China. Official investment and trade promoters at Keidanren, Japan’s business federation, and the Japan External Trade Organization are shifting their gaze from eastern to western China, where growth levels remain high. Growing numbers of Chinese tourists are visiting Japan each year to splash their cash at Tokyo’s glitzy Ginza shopping district, with many large department stores offering special language assistance for the busloads of Chinese shoppers arriving from the mainland. Many Chinese are also arriving in Japan for the fresh air and nature, enjoying Tokyo’s well-​manicured parks during Japan’s famed cherry blossom season, and visiting Kyoto’s revered temples and shrines. Even on provincial countrysides, after decades of decline, Japanese owners of hot spring inns, ryokans, are experiencing some revival thanks to Chinese tourists. There is also room for strategic cooperation beyond commerce and tourism. Chinese leaders look to learn from how Japan overcame many of the environmental dilemmas China faces today, and how Japan is coping with an elderly population, as demographics became a pressing issue in China. These economic and social ties have the potential to help bridge political divides B e h av e A c c o r d i n g ly  

 

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in East Asia. “No one can stop this phenomenon,” Seguchi argued, “and this economic interdependence will be an important driver of Japan-​China rapprochement in the future.”12 *** It is still uncertain if Seguchi’s predictions of political rapprochement will come to pass. But there is a basis to argue that economic integration has to date done much to keep historical animosities between Japan and China from setting off a military conflict. For China, the Yasukuni shrine in central Tokyo is a symbol for its historical grievances with Japan’s wartime aggression. On a visit to the expansive grounds of the Shinto shrine, at first sight, it was hard to see why Yasukuni was at the center of a controversy in East Asian affairs. Walking up a long and wide promenade to the main shrine building, passing towering iron-​cast Torii gates and hundreds of cherry and ginkgo, there is nothing out of the ordinary at the offering site. Similar to other shrines in the city and around Japan, visitors carry out the ceremonial ritual of two bows, two claps, one bow. It is only the tall bronze statue of Omura Masujiro, a prominent nineteenth-​century Japanese military leader, that hints at why the shrine draws such ire from Japan’s neighbors in China and Korea. A visit to the adjacent Yushukan War Memorial Museum reveals the rest. Even for a novice of military history, the war museum is off-​putting. In the lobby, a plaque under a Mitsubishi Type 0 Carrier-​Based Fighter plane, widely known as Zero Fighters, commemorates the fighting ability of Japanese pilots against the Chinese Nationalist air force in a September 1940 battle over Chongqing. “A squadron of Zeros shot down nearly every one of the enemy planes,” it reads. “Since there were no Japanese losses, this was an unprecedented victory.” But left unmentioned in the description is what the Japanese fighter planes were making way for in the western Chinese city. Beginning in the late 1930s, during the Second Sino-​Japanese War, and throughout much of World War II, tens of thousands of Chinese citizens were killed in Chongqing in a deliberate terror campaign waged by Japanese bombers over mainly residential areas. The Zero Fighter display is only the beginning. Throughout the museum there is little mention of the death and destruction Japan brought to China, Korea, and much of Southeast Asia throughout the first half of the twentieth century. Quite the opposite, in fact—​the museum pays tribute to Japan’s rapid modernization during the Meiji Restoration in the late nineteenth century and offers a chronology of Imperial Japan’s military conquests as an Asian colonial power until its defeat at the end of World War II. This 202     How

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nearly uncompromising historical revisionism portrays the development and exercise of Japan’s military power, all the while omitting the widespread atrocities committed by Japanese forces during the invasion and occupation of many of its neighbors. The Yushukan war museum offers a far–​right wing perspective of Japan’s wartime past—​an ostentatious display of the war machine that once was, and the children’s military toys and memorabilia sold at the gift shop extend its legacy. This contrasts sharply with Japan’s war-​renouncing constitution and the pacifist ethos to which many Japanese are committed, as well as the multiple apologies over the decades from Japanese prime ministers and high-​ level officials to China, Korea, and others. But the war museum is a reminder that some in Japan have not made amends with the country’s past.13 The Yasukuni shrine was first established to honor Japan’s wartime dead in the late 1800s, and since then some 2.5 million souls entered its ranks. But in the late 1970s, the souls of fourteen Class-​A war criminals, responsible for mass atrocities on civilian populations in China and Korea during World War II, joined the honored dead, and in the early 1980s the war museum was established. Japan lost much in World War II. The firebombing of Tokyo by the US Air Force killed over 100,000 people, higher than immediate losses suffered from atomic bombs dropped on Hiroshima and Nagasaki. But it was Yasukuni’s reverence to individuals tried as war criminals that made the shrine ignite such animosities with Japan’s neighbors. Japan is not alone in distorting history. China’s Communist Party is also keen to rewrite the past. It was, after all, the National Revolutionary Army of Kuomintang, the Chinese Nationalist Party, in what was then the Republic of China, that was largely responsible for overcoming Japanese occupation. But the Communist Party takes the credit, and often exploits Japan’s wartime past as a handy “history card” to play in political disputes with Tokyo, rallying up anti-​Japanese sentiment as a political tool to divert attention away from domestic political and economic problems.14 Chinese state media, television, and film regularly air anti-​Japanese propaganda, although on occasion in the past such nationalist vitriol has had to be checked to ensure it does not spill over into critique of the Communist Party and force Beijing into an unplanned military confrontation. It is a dangerous balance, but one that, over time, China appears more willing to test given its steady rise as an economic and military power. After normalizing relations with Japan in 1972, China was still a poor nation and very much needed Japanese trade, investment, and financial assistance. When anti-​Japanese protests took place in 1985 against growing B e h av e A c c o r d i n g ly  

 

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Japanese economic engagement in China, the Chinese paramount leader Deng Xiaoping called demonstrators “ignorant and naïve.”15 But as Japan’s economy stagnated in the 1990s, and China’s economy continued to surge forward, the relationship became one of equals into the twenty-​first century, and historical grievances rose to the surface and edged toward armed confrontation. It took time for Japan’s high-​level officials and business executives to adjust to their country’s new relationship with China. “It’s a huge change,” a senior Japanese diplomat told me. “It was quite difficult for the Japanese side to imagine the current China. Before we thought matters of history would become smaller, that time would solve these problems. But we were not necessarily right. History is still alive and complicated.” The first major incident came in the spring of 2005, a year after China became Japan’s largest trading partner. The official approval of a controversial history textbook in Japan, which, albeit used in only 1 percent of Japanese schools, glossed over Japanese wartime aggression, brought anti-​ Japanese protests to Chinese cities. Some of the demonstrators became violent, vandalizing Japanese diplomatic missions and retail storefronts and yelling “Japanese pigs get out” and “Kill the Japanese,” as local authorities looked on and at times even rallied protests through text message announcements.16 Political relations between Beijing and Tokyo went cold, with annual visits to the Yasukuni shrine by Prime Minister Junichiro Koizumi to pay tribute to Japan’s wartime dead from 2001 to 2006 throwing fuel on the fire. Later, historical grievances inflamed competing claims over the Senkaku/​ Diaoyu islands in the East China Sea. Japan had administrated the islands since the early 1970s. But Beijing argued they were unrightfully taken under Japan’s Meiji government in the late nineteenth century. The two sides agreed to shelve the issue for decades, and Chinese incursions into the waters surrounding the islands were rare. In November 2004, when a Chinese submarine traversed close to the islands, the Japanese ships sent to intercept it marked only the second time since World War II that Japan had launched a maritime policing operation.17 In the following years, Chinese commercial and military incursions slowly began to ramp up in the energy-​and fish-​rich waters around the disputed islands. The Japanese coast guard and air force went from responding only a few dozen times a year to reacting two or three times per day to foreign aircraft and vessels, the majority Chinese, within its territorial waters and airspace.18 Even as the numbers have slowed in recent years, the Chinese military aircraft and vessels deployed, such as heavy bombers and nuclear submarines, are more sophisticated and powerful.19 204     How

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A number of incidents have tested the influence of economic interdependence between Japan and China to hold off military conflict over the past decade. In September 2010, tension flared up when a Chinese fishing boat captain was detained after ramming Japanese coast guard vessels near the islands. Beijing responded by freezing diplomatic ties, banning tourist groups, and canceling foreign exchanges.20 After two weeks, a Japanese court released the Chinese fishing boat captain, citing the case’s detrimental impact on relations with China. Some Japanese foreign policy experts argued that the conciliatory approach was a consequence of the Democratic Party of Japan (DPJ) holding government in 2010. It was the first time in Japan’s postwar history that the long-​ruling Liberal Democratic Party (LDP) had found itself in the opposition, and DPJ wanted to demonstrate a different approach to dealing with China. In any case, the response was widely seen as a capitulation from Tokyo, a bending of its own judicial system in the face of Chinese aggression, and a sign that Tokyo was unprepared to counter China’s aggression around the territorial issue. During the fishing boat captain’s detainment, Beijing demonstrated more than in the past that it was willing to exploit its growing trade with Japan in political disputes. For a two-​month period during the autumn of 2010, shipments of rare earths from China to Japan were disrupted.21 This was a cause for alarm in Japan because it was heavily reliant on China’s rare earths exports for its automobile and high-​tech industries. Often called “invisible” natural resources, rare earths are key ingredients in the manufacturing of a variety of high-​tech products, such as smartphones, LED screens, and even advanced weapons systems. China is far from the only country in the world to have rare earths. Australia, Russia, India, and the United States, among others, hold reserves. But thanks to the low costs and weak environmental laws, China enjoys a near global monopoly on the production of rare earths. Deng Xiaoping said in 1992 that as “there is oil in the Middle East; there are rare earths in China.”22 Nearly two decades later, that industry dominance was harnessed as a new economic weapon to bend Japan’s political will over the islands dispute. The disruption came not long after China had already imposed new export quotas on rare earths. Beijing remains keen to maintain the valuable resources for the development of Chinese industries such as new energy vehicles and renewable energy equipment. But at the time, the quotas had an amplifying effect on the stoppage of shipments to Japan and the rise in international prices. Reportedly propagated by local government officials and port workers in response to China’s feud with Japan, and not necessarily a top-​ down instruction from Beijing,23 the disruption demonstrated how Chinese B e h av e A c c o r d i n g ly  

 

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officials and companies outside of Beijing’s core leadership can shape China’s foreign policy. Nonetheless, it also revealed China’s dominance in the industry to the world, and, fearful of future restrictions, sped up a process that was already in motion to wean dependency. Deng was correct in spotting early on China’s comparative advantage in rare earths as comparable to Saudi Arabia’s in oil. But the market and policy responses to China’s restrictions on rare earths exports also reflected those spurred by the 1973 Arab oil embargo, when oil-​importing countries developed new sources of production and manufacturers new industrial products, like fuel-​efficient cars, to lower dependence. Nearly a decade after the 2010 export disruption, I  met with a small group of managers and analysts at Sumitomo Corporation, one of Japan’s large trading houses, to ask about any lasting damage. “It is not a big problem any longer” was the general message across the table. Already in 2006 and 2007, Japanese carmakers and other manufacturers recognized that rare earths prices were on the rise and they needed to develop alternative production practices, substitute technologies, and recycling techniques through so-​called urban mining of scrap metals.24 According to Japan’s national oil and mining company, JOGMEC, total rare earths imports dropped nearly in half between 2006 and 2009, the year before China’s export disruption. The ban simply provided further reason to continue with market and policy responses. And similar to strategic oil reserves, JOGMEC kept a stockpile of forty-​two days of rare earths, and the private sector eighteen days, to fill the gap in the face of supply disruptions.25 Dependence on China as a rare earths importer went from 87 percent of total rare earths imports in 2006 to 59 percent in 2018.26 After China’s two-​month disruption, the Japanese government passed a supplementary budget to allocate $1.2 billion to developing alternatives to Chinese rare earths.27 The market also responded to rising prices due to Chinese quotas, with new plants opening in Vietnam, India, and elsewhere. The Australian mining firm Lynas opened a plant in Kuantan, Malaysia, and by 2017 it accounted for 12 percent of world output.28 Feasibility tests were also underway on the viability of mining massive rare earths deposits from the Pacific seabed.29 The importance of the rules-​based trading system also had a role in limiting China’s use of rare earths as an economic weapon.30 In its first case filed against China at the World Trade Organization, Japan joined the United States and the European Union, and won the ruling and appeal to remove China’s export quotas on rare earths.31 China still makes up four-​fifths of rare earths production. Its underlying dominance over the industry and keenness to employ its rare earths to develop its high-​tech industry make future flare-​ups a possibility.32 But 206     How

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Beijing learned that exploiting its advantageous market position could upset the wider Chinese economy. When rare earths exports resumed in full to Japan in November 2010, this was partly because Japanese factories based in China were running critically low on high-​tech parts from Japanese exporters lacking rare earths.33 Even after a short period, it was clear that the disruption also threatened Chinese jobs. Economic interdependence had showed its importance. But the 2010 rare earths ban was not the only modern example of China applying economic pressure on Japan. In 2012, another round of Chinese boycotts on Japanese products flared up after the Japanese government elected to purchase the Senkakus to prevent a right-​wing populist group from building structures on the islands. As in the past, a similar pattern of upset diplomatic ties and large-​scale protests across China’s large cities ensued. Japanese cars, shops, and factories were vandalized and destroyed, and boycotts, spreading rapidly through Chinese social media, rose to a new level.34 And unlike previous protests, China was now Japan’s most important export market, representing 45 percent of Japan’s export growth from 1995 to 2011.35 Japan’s Toyota cars, Suntory foods, and Sony electronics were all placed on boycott lists, resulting in billions of dollars in lost sales. Yet despite the drama built up around Chinese boycotts against Japan, China’s economic weapon is less effective than commonly portrayed. Economic integration serves as an antibody to Chinese political aggression. For example, Japan’s automobile exports to China fell by 32 percent in the twelve months following the 2012 boycott, representing a loss of $2 billion. But since China’s economy was slowing down and competition in the automobile industry was intensifying, it was difficult to attribute how much of the loss was due to the boycott alone.36 Japan’s total exports of over $140 billion in 2012 also made losses from car sales insignificant overall. China’s consumer boycotts on Japan tend to subside in the short run, and many Japanese corporations simply assume that protests are part of the nature of doing business in China. Another reason the damage from Chinese boycotts did not cut too deeply was that the Chinese government took steps to ensure economic relations could eventually move ahead. China is the world’s largest exporter, but it is still dependent on imports for a large share of its finished goods. In the early 2010s, when China’s global exports grew by 1 percent, imports from Japan tended to do the same.37 As American analyst Richard Katz argues, economic interdependence calmed political tensions between China and Japan. China’s goals of economic modernization still demand working closely with foreign companies, and Japanese investors are China’s largest source of foreign investment. B e h av e A c c o r d i n g ly  

 

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Even the Chinese state media argued the case for anti-​Japanese protests to not go too far. “In a globalized era, the world’s economy has become integrated,” a 2012 opinion piece in the Communist Party mouthpiece, the Global Times, wrote. “Reducing imports from Japan may only hurt China’s own economy.”38 In September 2014, then minister of commerce Gao Hucheng told a Japanese business delegation that he wanted to avoid politics hurting economic relations any further.39 Beijing may be more willing than in the past to exert economic coercion for foreign policy goals, but it still remains sensitive to upsetting its home economy from such actions. Chinese boycotts and export restrictions to advance security and political interests are nothing new. After the damage wrought by colonization, China restricted access to its market as a form of nonviolent coercion against powerful Western powers.40 “If it persists over a year, and reaches all parts of China,” C. F. Remer and William B. Palmer concluded in a 1934 study, then a Chinese boycott could be effective in reducing trade.41 But even in the twentieth century, such boycotts were double-​edged swords, cutting both the targeted and Chinese economies, and principally used by Chinese leadership for the psychological effect of rallying publicity and national fervor. Today China is no longer weak and it brandishes its economic boycott as a weapon to force policy changes on its neighbors. Yet the interconnectedness of the global economy, and the reluctance on China’s part to deepen and prolong the restrictions, shelter targeted economies like Japan. Economic interdependence served well in ensuring Japan and China did not go to war in the 2010s. Just as they did in the twentieth century, Chinese boycotts also continue to serve as tools for Beijing to drive nationalism at home. But because of the economic importance of China in the twenty-​first century, Beijing’s economic coercion also produces a psychological response in targeted countries, and subsequent policy reaction. Today, Chinese consumers do not even need to take to the streets of Beijing or Shanghai to vent their frustrations over the actions of Japan and other foreign powers. Through social media and e-​commerce, they can demonstrate their boycott power from the comfort of home. Since disputes over history and territory are still unresolved between Japan and China, if the two economies drift apart because of a combination of China’s self-​sufficiency drive in high-​tech industries, and Japan’s efforts to wean dependence on the Chinese market, then conflict might very well ignite as common interests wane. *** 208     How

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Re-​occurring political and security flare-​ups between Japan and China demonstrate that their violent history is still alive in the present and threatens the future. This gives way to less rosy predictions of the future. Yoshiji Nogami maintains such a pessimistic view. He is adamant that Japan’s long-​running troubles with China were far from over. Leaning back in a large, plush felt green chair, the former high-​ranking Japanese diplomat clears his throat and explains why. “China’s basic narrative of Japan is simple. Japan is no longer the second largest economic power in the world, and Japan’s defense capability is limited compared to China. So, China says to Japan: ‘swallow these facts and behave accordingly.’ That’s their narrative.” For Nogami, it is not economic interdependence, but the combined deterrence of American and Japanese armed forces under Tokyo’s long-​standing security alliance with Washington that keeps China from forcefully taking the disputed East China Sea islands, and Japan from a future of living under Beijing’s thumb. Nogami wears a shaggy gray beard, an uncharacteristic look for a former vice minister of foreign affairs. His time as a senior diplomat was similarly disordered. To put an end to a fiery dispute between Nogami and his then boss, Foreign Minister Makiko Tanaka, Japan’s prime minister Junichiro Koizumi dismissed the pair in 2002.42 Nogami’s links to the old guard of Japan’s LDP helped make sure he landed on his diplomatic feet again. He was named Japanese ambassador to the United Kingdom in 2004 and, after his retirement, was appointed president of a prestigious Japanese foreign policy think tank, the Japan Institute for International Studies. But despite the controversy that marked the end of his career, Nogami’s viewpoint on China is largely in line with many political decision makers in Japan and around the region. As China’s economic and military power rises, so does its assertiveness across East and Southeast Asia. China is the largest trading partner and a leading provider of finance in Asia, but for Japan and many of its Asian neighbors, it remains an aggressor, seeking to become a regional hegemon. Beijing’s territorial claims and militarization of strategic waterways spike fears that war across the Taiwan Strait, and on the East China and South China Seas, is on the near horizon. In 2018, months after China removed constitutional limits on the presidency, Xi Jinping told his Southern Theatre Command, responsible for Taiwan and the South China Sea, “to concentrate preparations for fighting a war.”43 The same year, He Lei, an outgoing Chinese general known for his hawkish views, lamented on the fact that he never got the chance to fight a war.44 China’s military experience was limited, but it appeared it was eager to demonstrate its growing capabilities. With these signals coming from its military leadership, it is hard for China’s neighbors to live at ease. B e h av e A c c o r d i n g ly  

 

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Nogami thinks that even after four decades of fast-​paced economic growth, China is still careful and calculated about its relationship with the United States due to its sheer economic and military power. But when it comes to the rest of the world, including major economies like Japan, China is eager to throw its newfound weight around. He points out the example of the 2010 Shangri-​La Dialogue in Singapore, a high-​level diplomatic summit, where China’s then foreign minister, Yang Jiechi, warned Southeast Asian delegates pushing back against China’s territorial advancements in the South China Sea.45 “China is a big country,” Yang told his peers, “and other countries are small countries, and that’s just a fact.” This was only the start of China’s modern tough-​ talking, muscular approach to its Asian neighbors—​an approach that, while not born under the leadership of Xi Jinping, accelerated forward, discarding his predecessor’s notion of China’s “peaceful rise.” “Hu Jintao was only half tao guang yang hui,” Nogami said, referring to the mantra for China to “hide its strengths and bide its time” that former Chinese paramount leader Deng Xiaoping implored the Communist Party to follow in relations with the outside world. “But as Xi came to power,” Nogami continued, “ ‘tao guang yang hui’ disappeared.” Under Xi, China became known to advance “Wolf Warrior” diplomacy, named after the popular action movie, and practiced across Asia, Europe, and North America. Where Hu was reserved, and still believed in the virtues of collective leadership within the Communist Party for governing the country, Xi was outspoken, headstrong, and ambitious. Xi advanced a wide-​reaching anti-​ corruption program after coming to power in the Communist Party in late 2012, arresting both low-​level officials and his high-​powered political rivals, who he called “flies” and “tigers,” some of whom, such as Bo Xilai and Zhou Yongkang, were political opponents of the new Chinese president. At the end of his first five-​year term as president in 2018, Xi abolished presidential term limits in the constitution to ensure his long-​term rule. His Chinese dream envisions “the great rejuvenation of the Chinese nation,” a trajectory that aimed by 2049, the centennial of its founding, for the People’s Republic of China to be a fully modern, developed country that has reclaimed its lost territories, including Taiwan and the East China Sea islands. Xi is by far not the first Chinese leader to dream of rejuvenation of China as a leading power in the world. His mantra is also one of leaders past. But in taking the reins of the Communist Party at a time when China is on its way to become the largest economy in the world, a formidable military power, and technological competitor to advanced economies, Xi is the first Chinese leader in the last century with the means to do so. Xi is so confident in China’s 210     How

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ability to rise to the commanding heights of the global economy and international affairs that, in 2015, he set China on the goal of self-​reliance in high-​ tech industries by launching its “Made in China 2025” industrial policy, setting targets that aimed for Chinese corporations to lower dependencies on foreign technologies and take a leading position in advanced industries. Three years later, it became even more crucial for China to achieve national economic independence when US president Donald Trump launched a trade war against it. Xi urged Chinese industry leaders to develop self-​ reliance, and doubled down on the national imperative to wean China off its foreign technology dependency and disable the United States’ ability to inflict significant economic damage.46 Visiting the manufacturing heartland of Guangdong province in late 2018, where Deng Xiaoping had gone on his famous southern tour forty years earlier as a precursor to China’s gradual market reform and opening up, Xi said that China must “seek innovation by relying on ourselves.” This involved cutting imports of key components and technologies, such as those from Japan, and developing “independent innovation capabilities.”47 China is one of the world’s largest recipients of foreign investment, receiving $131 billion in 2018 and $136 billion in 2019,48 but Chinese leadership may see this as a weakness if investment entails a dependency on outsiders that threatens China’s strategic autonomy. The Chinese government was so determined to advance its high-​tech industries that when the coronavirus spread out of Wuhan and Hubei province in early 2020, closing large parts of the country’s economy for months, the Wuhan-​based memory chip producer Yangtze Memory Technologies kept its operations running in the middle of the epidemic.49 Xi’s call to Chinese industry to become self-​sufficient is one that may eventually take China’s economy fully off the path of reform and opening to the outside world. China has already made some progress with this aim of becoming less integrated with the outside world, including close Asian partners like Japan, through vertical integration of its industries.50 Its domestic economy already contributes more to its growth than foreign trade, and strong domestic consumption could wean its reliance on foreign markets further. If, one day, outside investors become negligible rather than necessary, this will place Xi in the position to fully bend its foreign economic relations to China’s geopolitical advantage. Nogami argues that pursuing this aim is a grave mistake. Xi’s self-​ reliance strategy coupled with China’s assertive stance to its neighbors will upset the long-​run potential of the Chinese economy. “On the one hand, the Chinese are using these hierarchal narratives, but on the other, they need foreign direct investment. Not only for the money it brings into China, but also B e h av e A c c o r d i n g ly  

 

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for technology, management, and market development.” It is a dangerous concept, “self-​reliance,” and one in China that harks back to Mao Zedong and the economic collapse of the 1960s.51 From this perspective, Nogami did not understand why democracies in Europe at times bent their political values in pursuit of trade and investment with China. “The problem I see in many European capitals is that they believe that in order to reap the benefit of this potential economic gain with China that they have to be nice to the Chinese,” he told me. “That’s wrong. If China sees that sort of sentiment in Europe, they will take advantage of it. Japan does business with China, but we do not concede our basic principles because of potential economic gain. Because the economic relationship is also needed by the Chinese side, we can continue this.” Nogami’s opinion is similar to the ex-​Japanese banker Seguchi that China cannot innovate alone. If Xi wants to fulfill his dream for China, and see it modernize by 2049, the Chinese economy needs to fully move from the manufacturing-​ intensive to a service-​ oriented and knowledge-​ based economy. But research shows that promoting isolation is not the answer. In fact, as the work of China expert Scott Kennedy argues, China’s most successful industries are those most open to competition and most deeply integrated into global supply chains, whereas others that fail to innovate efficiently, such as the automobile, aviation, and semiconductor industries, have heavy state intervention.52 As Evan A.  Feigenbaum shows in China’s Techno-​Warriors, similar to planned innovation, nationalism in technology is “intrinsically self-​limiting.” Such a move by Xi would take China off a long-​followed and successful path of purchasing or coproducing technology with foreigners.53 Fudan University dean Zhang Jun also points to reforming institutional barriers impeding expansion of the private sector for China to become a leading innovator.54 The question is whether China’s leaders believe that allowing such economic reforms will not also have political consequences for their rule. For Japan, unlike his business-​ focused colleague Seguchi, Nogami thinks that high levels of Japanese investment in China will not necessarily continue. He sees Japan’s “China plus-​one” strategy, to diversify its trade and investment beyond China and toward Southeast Asia, as a permanent mindset. Since 2012, Japanese investment to China fell, mostly as a consequence of rising wages and costs that make China a more expensive investment destination. But the downward trend is reinforced by the tense political climate over territorial issues in the East China Sea. Nogami argues that Japanese companies will maintain large production capacities in China, but that emerging markets among the countries of the Association of 212     How

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Southeast Asian Nations (ASEAN), like Vietnam, Indonesia, and Myanmar, offer less-​expensive investment destinations to launch new manufacturing investments. “Japanese foreign investment to ASEAN countries in aggregate is by far larger than to China,” Nogami said. “China realizes this, and they want Japan to come back, but I don’t think Japanese companies will return.” Seeing Japan’s economic relationship with China struggling to reach new heights, Nogami is certain that political and security divides between the East Asian neighbors will continue to grow. Here Japan’s security alliance with the United States is crucial in tempering China’s aggression. Nogami argues that China’s militarization of the South China Sea came about gradually as old European colonial powers and later the United States left a power vacuum in the region. And when the Democratic Party of Japan took power for the first time under Prime Minister Yukio Hatoyama in 2009, and some in the party sought to move American military bases from Okinawa, creating friction between Tokyo and Washington, “lo and behold China became very aggressive in the East China Sea,” he said. “When there is a vacuum,” Nogami told me, “China comes in.” China’s actions in the South China Sea over the past decade provide Tokyo with a clear image of the potential future of the East China Sea with China’s navy overwhelming the Japanese and capable of closing strategic sea lanes essential for Japan to access oil, food, and other essential imports from the world economy. For Nogami, economic interdependence is not a fail-​safe solution to dealing with China. Economic relations between Japan and China, as with China and the United States, often produce negative externalities when the two sides view trade and investment positions as a sign of competitive weakness.55 War can also be the consequence of China’s leadership striving to find ways to maintain domestic legitimacy and control in the face of economic decline at home, or if China succeeds in developing its own technological capabilities to wean off its dependence on foreign suppliers like Japan to achieve technological independence. At that point, military conflict to reclaim lost territories can be taken from a position of power. Nogami believes that it is only the combined military capability of the United States and Japan that forestalls further Chinese advances in the East China Sea. “If China believes firmly that its military capability exceeds the joint capability of the United States and Japan,” he told me, “if they believe there is a vacuum between the US and Japan in terms of security cooperation, then they may start more explicitly the threat of the use of force.” It is far-​fetched to believe that Japan alone can deter China if Beijing decides, for instance, to take the disputed islands in the East China Sea by force. China’s military modernization has grown by leaps and bounds over the past two B e h av e A c c o r d i n g ly  

 

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decades. China’s military spending increased by 665 percent from 1997 to 2017, over triple of Japan’s defense budget.56 Particularly, China has formidable anti-​access/​anti-​denial capabilities, weapon systems designed to limit the operational freedom of an adversary, including modern submarines, anti-​ satellite systems, and an expansive arsenal of ballistic and cruise missiles trained on hundreds of targets in Japan that can handicap America’s ability to counterattack. Japan and the United States may still have the edge together, but China is narrowing the gap. “There are many problems in the Sino-​Japanese relationship, but the most fundamental problem is China’s hierarchal worldview,” Nogami told me. “The Chinese are still living in the Westphalian world. They live in the modern world, whereas Japan and most European countries are postmodern. We talk about the universal application of rule of law. This is a postmodern concept. But China doesn’t accept that,” Nogami said. “China wants to set up a Sino-​centric hierarchical order in Asia, and the presence of the United States and Japan are a nuisance.” *** The problem for Yoshiji Nogami is that, under President Trump, the United States has done much to tear down the postmodern world. If Japan’s security pact with Washington is its bulwark against an assertive China, Trump’s rise to power threatened to crack its strength. It was the spring of 2017 when I left Nogami’s office in Tokyo’s Chiyoda ward. The last white petals from cherry blossom trees were falling to the wide boulevards below. The season for hanami of festive picnic gatherings with family and friends was coming to an end. But unlike years passed, at the time, Japan’s foreign policy and security establishment was still getting accustomed to the new reality of “America First.” It was in Tokyo’s Chiyoda ward where Japanese political leadership established a close bond to the United States after Japan’s defeat and occupation following World War II. Chiyoda was home to the Japanese parliament building, the National Diet, as well as government ministries and the sprawling grounds of the Imperial Palace. Drawing large and violent protests in 1960, it was at the Diet that Japan’s lawmakers ratified the Treaty of Mutual Cooperation and Security with the United States. First signed at the end of American occupation, the revised treaty stipulated that the United States would defend Japan against any attack and granted the right for the United States to maintain military bases on the Japanese archipelago.

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Public unrest from the treaty stemmed from the deep pacifist identity Japan developed in the aftermath of its wartime aggression and loss. Article 9 of Japan’s constitution, largely drafted by the United States as an occupying power, both renounced war as a means to settle international disputes and the maintenance of an armed forces and other war potential. Its Self-​Defense Forces (SDF) went on to become one of the most powerful militaries in the world, although still heavily reliant on US military support. The SDF is very capable of projecting offensive force in East Asia if it elected to, and China and the Korean peninsula continue to see the Japanese military as a threat. But for decades the postwar pacifist identity established in Japan has tightly constrained its military behavior. Even minor involvements with overseas UN peacekeeping missions were politically sensitive. The American-​Japanese alliance survived early waves of domestic resistance in Japan. As number one and two in the global economy, for decades the relationship pushed world trade and investment to new heights, surviving Japan’s challenge to US economic supremacy in the 1980s, and its economic stagnation during the 1990s. It has been an essential relationship in advancing America’s global ideals of liberal markets and democracies around the world. Yet in a matter of months, a new American president threatened to push it off a cliff. At the foreign ministry, not far from Nogami’s office, a poster of Prime Minister Shinzo Abe shaking hands with the newly elected US president hung in the lobby. Its presence seemingly told visitors not to worry, that the security pact with Washington was holding firm, even after the tumultuous election season in the United States. There was already some apprehension in Japan about America’s declining role in Asia before the arrival of Trump to the scene. Even with former president Barack Obama’s “Pivot to Asia” after trying to exit disastrous and wasteful wars in Iraq and Afghanistan, Tokyo still found America’s attention to the region was insufficient. During the 2016 US presidential campaign, however, matters became worse. Trump publicly criticized Japan’s trade practices on the campaign trail. Reflecting his long-​ harbored sentiments from the 1980s, Trump claimed that Japan had “systematically sucked the blood out of America,” and went a step further by suggesting that Tokyo begin to pay for the US stationing of some 50,000 American military personnel in the country.57 This neglected that Japan pays the majority of costs connected with hosting US armed forces already,58 but nonetheless Trump’s rhetoric shocked Japan’s political elite. On his very first day in the White House, President Trump withdrew the United States from one of the most advanced free trade agreements B e h av e A c c o r d i n g ly  

 

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ever put forward, the Trans-​Pacific Partnership (TPP), which Japan had also signed on. The TPP originally involved twelve members, including Mexico, Singapore, and Australia, which with American participation represented roughly 40  percent of the global economy and one-​third of global trade. And beyond quantity, the TPP stood out for the quality of the agreement in the extensive reduction on tariffs in goods and services, protecting intellectual property rights, setting e-​commerce rules, and labor and environmental standards. It was a means for the United States and its partners to steer forward new global rules on trade, particularly against initiatives backed by China. But Trump would not have it. Instead, he wanted the United States to make bilateral deals. It was very similar to China’s own approach, where America’s massive size would allow it to take advantage of the weaker partner in the deal. Not only did Trump’s aversion to the multilateral trade deal sink one of the better options to help the United States direct China’s trade machine to a more market-​orientated direction, with Trump choosing a one-​ on-​one trade war instead. But his divisive approach to foreign relations also threatened to upend the powerful security alliance and trade ties forged between Japan and the United States. In late 2016, Japan’s prime minister Abe was the first world leader to meet with the US president-​elect at Trump Tower high above Central Park in New York City. In February 2017, Abe again visited Trump, this time at the White House. After an awkward, nineteen-​second-​long handshake in the Oval Office, the visit continued at Trump residence at Mar-​a-​Lago in Florida, the president’s so-​called Southern White House, where the two leaders played golf and dined among the resort’s guests.59 Abe got what he wanted when dinner was interrupted by a North Korean missile launch test and Trump publicly said that “the United States of America stands behind Japan, its great ally, 100%,” honoring the long-​standing security pact.60 The Japanese prime minister’s fast-​footed diplomacy seemed to be doing the trick for Japan. Publicly it appeared that a rapport had been developed between the two leaders. Some European leaders even called Abe for advice on how to deal with the bombastic real estate scion turned president. Abe reportedly offered two pieces of advice: excessive flattery and a short, simple, and repeated list of talking points.61 But the US president continued to frustrate Japan’s security and economic interests. With North Korea’s missile and nuclear programs making considerable advances in 2017 and 2018, demonstrating the capability to strike the US mainland, Trump began direct negotiations with North Korean leader

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Kim Jong-​un in the face of a long-​standing principle that the Americans would act alongside the South Koreans and Japanese. Japan was still facing sharp rhetoric from North Korea. Kim had threatened to wipe out major cities and American army bases “in nuclear flames.”62 Being left on the sidelines of the North Korean crisis, coupled with a lingering trade dispute, only fed anxiety in Tokyo that Trump’s position might have a lasting effect on American foreign policy. The alienation of Japan by the United States under Trump was seen as a motivating factor in Prime Minister Abe’s efforts to ease tensions and search for new economic opportunities with China. Beijing, locked in a trade war with the United States at the time, was also looking to hedge against increasing hostilities with Washington by warming ties with its East Asian neighbor. When Xi Jinping first became head of the Communist Party in 2012, his focus was on solidifying his political power base, and Japan served as a useful foreign adversary to score domestic political points. The coldness of the relationship was exhibited when Xi met Abe at the 2014 Asian Pacific Economic Cooperation summit in Beijing, where the two leaders shared a stone-​faced handshake. But after Xi advanced his anti-​corruption campaign in China, sidelining many of his political opponents, and Abe and his ruling LDP continued to have electoral success, both leaders could take some risk by going against public opinion in their respective countries, and engage more freely with one another. After years of icy diplomatic ties, Japan and China capitalized on a couple of prominent anniversaries in the relationship: the forty-​fifth anniversary of the normalization of diplomatic relations in 2017 and the fortieth anniversary of the Japan-​China Treaty of Peace and Friendship in 2018. Japan announced its interest in joining the China-​backed Asian Infrastructure Investment Bank (AIIB), this after initially following the lead of the United States and rejecting admission at the AIIB’s founding. Tokyo even considered encouraging Japanese companies to get involved in China’s Belt and Road Initiative, but still insisted only engaging under certain conditions, where projects were financially sound and transparent and environmentally friendly.63 Abe sent the general secretary of the Liberal Democratic Party, Toshihiro Nikai, to the 2017 Belt and Road Forum in Beijing to demonstrate his seriousness to the Chinese. In October 2018, Abe’s arrival in Beijing was the first state visit between Japanese and Chinese leaders in seven years. “From competition to cooperation, the Japan-​China relationship is shifting to a new phase now,” Abe said after receiving a cannon salute on Tiananmen Square. “We are neighbors;

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we’re partners who will cooperate with each other, rather than be a threat to each other.”64 With five hundred Japanese business leaders accompanying the Japanese prime minister, the focus clearly was on trade and investment. In return, Xi told Abe that China and Japan relations were back on a “normal track” and buoyed by an economic interdependence. But returning to the normal track is hardly reassuring or problem free. Since the 1980s, the Japan-​China relationship tends to follow a cyclical pattern of warm and cool ties, with the troughs only deepening as grievances over past wars are left unsettled and territorial disputes unresolved.65 Nor was it Abe’s first attempt to improve ties with China. During his first tenure as prime minister, Abe traveled to China in October 2006, a visit that observers at the time hailed as a new warming of relations. But within a few years, tensions sparked again due to territorial disputes in the East China Sea. And weeks after Abe and Xi toasted each other in Beijing twelve years later, China continued incursions into and above waters around disputed islands in the East China Sea.66 The Japanese and Chinese leaders were putting economics ahead of politics as a means to balance mutual pressure from Donald Trump on trade. But politics between the East Asian neighbors could still ignite into war. So much was evident after I met with a high-​level Chinese defense official on his country’s relations with Japan. He accused the Japanese of “always wanting to build up a situation in which war was just at the edge,” noting that threats from China and North Korea were excuses for Japan’s right-​wing leaders to rebuild the country’s military. For many Chinese military leaders, despite the country’s long coastline, China is a landlocked country. Its blue-​ water access to the Pacific Ocean is cut off by natural island chains controlled by a Japanese and American military alliance in East Asia. China’s perspective mirrors how Japan, the United States, and others view its actions: that militarization linking the South and East China Seas could cut off mainland China from the world. “They can’t expect us to keep our navy in a cage,” the Chinese defense official told me. But Chinese aggression did not lead Japan to soften up its approach. Since becoming prime minister for the second time in December 2012, Abe sought to amend Article 9 in Japan’s war-​renouncing constitution by 2020.67 Japan’s troubles with the North Korean threat, but particularly, China’s persistent military pressure, gave him little reason to look back. In November 2013, China announced an Air Defense Identification Zone over much of the East China Sea, including the Senkaku/​Diaoyu islands, in what Japan considered its exclusive economic zone. The two sides continued discussions to implement an emergency hotline to communicate with one another to stop a 218     How

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crisis in the East China Sea from escalating into war, but China also developed platforms and structures on its side of the disputed water boundary as well as pushed ahead with energy development in contested areas.68 In 2015, Abe took advantage of the LDP’s parliamentary majority to pass bills reinterpreting Article 9 of Japan’s constitution to allow the SDF to participate in “collective self-​defense,” essentially opening the way for Japanese forces to come to the aid of allies under attack. China’s aggressive actions provide the Japanese prime minister with political rationale to advance long-​ resisted amendments to Japan’s pacifist constitution,69 unshackling what is still one of the world’s largest militaries. Despite the 2018 détente, China and Japan still see each other as adversaries. China’s defense white papers continue to point at American regional alliances and Japanese threats to China’s territorial sovereignty as its two main security threats.70 And Tokyo’s 2019 National Defense Program Guidelines argued that China engaged in “unilateral, coercive attempts to alter the status quo based on its own assertions that are incompatible with existing international order.”71 Chinese President Xi Jinping planned to visit Japan in 2020, the year Tokyo was scheduled to host the Summer Olympic Games, but these events were both scuttled by the COVID-​19 pandemic. At first, the exchange of medical assistance between the two countries offered hope that relations would improve, but in little time China was pressuring Japan with further incursions around disputed East China Sea islands and new policies were launched in Japan focused on bringing Japanese investments in China back home or to third countries.72 Due to the history and present day tensions between Japan and China, it would take years, if not decades, of stable relations to begin to construct the social, political, and military exchanges and mutual understandings to repair the relationship. China’s military incursions in the South and East China Seas, Beijing’s repeated use of its trade weapon to coerce neighbors to walk the line on political demands, and America’s trade war with China as well as disputes with close allies demonstrated that the multilateralism and a rules-​based system that Japan and other Asian countries long relied on was under stress. A no-​rules Asia was emerging in its place—​one where multilateral cooperation and international law are cast aside in favor of the transactional foreign policy of Trump’s “America First” and China’s hierarchical order of tianxia, where unsurprisingly, Beijing deems Chinese interests as second to none. Japan is marshaling a military and economic response to its new international climate. With each passing year, Japan’s SDF gradually enhances B e h av e A c c o r d i n g ly  

 

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its military capabilities. Albeit still a fraction of China’s defense spending, Tokyo has gradually raised its defense budget over the past decade, bolstered and upgraded its missile defense systems, and increased southwestern troop placements on the East China Sea. In 2019, Japan went a step further in deciding to move forward with plans to modify its existing Izumo-​class flattop helicopter carriers to carry new F-​35B fighter jets as well as develop anti-​surface warheads to be fitted on hypersonic missiles to target enemy warships, such as aircraft carriers.73 Japan highlighted new threats from cyber, electromagnetic, and space warfare, particularly emanating from China.74 Japan also plans to start using its own quasi-​zenith satellite system, an alternative to global positioning system (GPS) satellites, fearful that China could destroy or disrupt the American system in a conflict.75 Its military is building its own strategic autonomy. In reaction to the escalating threats from China and North Korea, Japan’s security experts began to reconsider the nation’s anti-​nuclear principle and the idea of developing a nuclear weapons program. Abe is not the only proponent of Japan improving its military capabilities. Under both his LDP predecessor Junichiro Koizumi, as well as the political opposition, former DPJ prime minister Yoshihiko Noda, who sought to amend ties with China, Japan eased defense restrictions. Resigning from the prime minister post for health reasons in 2020, Abe’s immediate successor, Yoshihide Suga, is unlikely to derail this security agenda. Future leadership might even have a harder line. Shinjiro Koizumi, the son of the former prime minister, who is one of the favored candidates to take over LDP leadership in the future,76 is also a frequent visitor to the Yasukuni shrine, and likely to rattle relations with China. Japan also did not stand still when it came to economics. Instead of willfully moving into China’s orbit in the face of America’s changing foreign policy, Japan worked hard to bolster its economic position against China’s assertive rise. Abe had first tried to reach out to Trump to save the TPP trade agreement. It was the United States, after all, that had pushed Abe hard under President Obama for Japan to enter the trade agreement in the first place. The Japanese prime minister expended plenty of political capital to overcome protests from Japan’s powerful farm lobby to sell the deal at home. And despite initially first seeing the TPP as “meaningless” without the United States, the world’s largest economy participating,77 after the shock wore off, Abe set about reviving the trade pact with the remaining eleven members, successfully rebooting the ambitious trade deal in March 2018.

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The new deal, called the Comprehensive and Progressive Trans-​Pacific Partnership (CPTPP), is not the same without the United States. But it still represents 13 percent of world GDP and 15 percent of trade and, in many ways, remains the global standard of free trade agreements, promising to shape future deals the members go on to sign. Its issue coverage is not as wide and deep as the original TPP. But Japan, Australia, and other members were successful in convincing more critical members, including Canada, to stay on board. They agreed to freeze the provisions sought earlier by the United States, such as on intellectual property rights, to keep the light on for Washington to return in the future. Just as with security reform, the China factor is significant in Japan’s interest in revamping the trade deal. For President Obama, the TPP was more than just about trade, it was a move to ensure “the United States—​ and not countries like China—​is the one writing this century’s rules for the world’s economy.”78 His secretary of defense, Ash Carter, saw the TPP as important as “another aircraft carrier.”79 Abe had a similar logic. He was successful in ratifying the trade deal in Japan’s parliament as both a means to restructure the Japanese economy by injecting new foreign competition, but also to balance against China’s influence as a free trade agenda setter in Asia.80 If the trade deal failed, then others supported by China would move forward. China backs the Regional Comprehensive Economic Partnership (RCEP). This trade deal, made up of a large group of Asian countries, including Japan and ten ASEAN member states, is due to be signed by the end of 2020, but it is less ambitious in terms of coverage and levels of deregulation, particularly lacking strong provisions on state-​owned enterprises. Nonetheless, if RCEP would have gone ahead without any revamping of the TPP, it would have allowed Beijing to play a much larger role in setting standards for trade in Asia.81 But Japan succeeded in keeping a smaller version of the TPP alive, while RCEP struggled in the face of India’s decision in November 2019 to not to join in. The rejuvenated TPP, CPTPP, maintains a high quality of standards for advancing liberal trade and investment. And Tokyo was not simply satisfied. Japan is also proactively recruiting potential new members, such as Thailand, Indonesia, the Philippines, and Taiwan. These will help it and the other current members diversify supply chains away from China, particularly after the risk of exposure to one single market seen in the coronavirus crisis in 2020.82

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Following in the footsteps of Chinese leaders overseas, Japan looks to play the role of global balancer against China’s power projections. Tokyo leverages its already deep and broad economic presence in Southeast Asia but is also cutting out new geopolitical trails in pursuit of Beijing. It sealed a free trade deal with the EU in 2018, which together made up 37  percent of world trade.83 In April 2019, just weeks after Xi Jinping visited and won Italy’s endorsement of his Belt and Road Initiative, Prime Minister Abe stopped in Rome to advance Japan’s infrastructure interests.84 He then went to Bratislava and met with the Visegrád Four, a Central European political group made up of Slovakia, the Czech Republic, Poland, and Hungary.85 This was not long after Chinese premier Li Keqiang presided over China’s regional forum with Central and Eastern European countries in Croatia. From Southeast Asia to Europe, albeit with an often muted and modest approach, Japan is back on the global scene, fearful of a future of China’s dominance. *** The events of the past decade give merit to the visions of Kiyoyuki Seguchi, the ex-​banker, and Yoshiji Nogami, the former senior diplomat. Economic interdependence has helped keep the peace between Japan and China to date. It forces Beijing to pull back from hard trade restrictions and consumer boycotts against Japan. But at the same time, regional economic integration does not stop China from continuing its military incursions in the East China Sea and its militarization of the South China Sea. Nor does it lead Japan to ease its own security buildup and economic diplomacy as a bulwark against China. As China ramps up its military activity in the East China Sea, the Japanese coast guard and military are only drawn out further. Over the past decade, rather than cowing to China’s demands, Beijing’s actions only advance the aims of Japanese political leaders seeking to normalize and grow its military.86 But despite all its efforts, whether in trying to deter China’s military assertiveness in the East China Sea, or maintaining a competitive edge on investment and trade, Japanese leaders know they are in dire trouble if they act alone. With the United States wavering on security and economic fronts, Japan seeks new partnerships for support. Beijing’s economic coercion serves to energize Japan’s revival in Asia rallying neighbors to forge ahead with new economic and security cooperation. This was not a Japan swearing allegiance to American global dominance. Tokyo may hope that in some way it is keeping the light on for America’s potential return home to multilateralism. But Japan’s actions are a response 222     How

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to China’s threats to the shared values and interests it holds with many of its Asian neighbors and international counterparts. This was Tokyo doing its part to uphold a world system on which the United States had turned its back under President Trump, an effort to keep the rules-​based order alive while the United States coped with its feverish sweats of nationalism at home.

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Chapter 8

W

A Distant Part of Asia

hen Japan’s prime minister Shinzo Abe crossed Asia to visit India in August 2007, he had the continent’s future on his mind. At the time, Japan was still number one in Asia. China’s economy was still a few years away from catching up, and its military activities in the East and South China Seas were still far away from present-​day incursions. But standing before a joint session of India’s parliament in New Delhi, Abe—​Japan’s first prime minister born after World War II—​sought to plant the seeds that might one day come to deter China from seeking regional hegemony. Abe began his speech by quoting the Indian spiritual leader Swami Vivekananda: “The different streams, having their sources in different places, all mingle their water in the sea.” And he asked the audience of Indian parliamentarians, governing the largest democracy in the world, where they now stood in history and geography, urging them to recognize their importance in a broader Asia: “The Pacific and the Indian Oceans are now bringing about a dynamic coupling as seas of freedom and of prosperity.” China’s influence in Asia went unmentioned in the speech. But Japan was clear-​eyed about Asia’s possible future under a Chinese hegemony. While the United States, Germany, and much of Western Europe fixated on finding economic opportunity in the Chinese market, Japan launched its “China plus-​one” strategy in 2008 to hedge its bets with China and take advantage of budding economies across Southeast and South Asia. Japanese decision makers, before others, were forced by their security predicaments to see that Asia was bigger than China. They did not abandon economic engagement,

 

but realized early on that overemphasizing the importance of China to the global economy was a strategic mistake. From this view, recognizing that China holds distinctly different political values and norms, Tokyo decided to look to emerging economies and large democracies around Asia to strike a better balance between its immediate economic interests in China and its possible dangerous future. India is central in Abe’s multipolar Asia. In his 2006 book, Towards a Beautiful Country, Abe envisioned that relations with India could one day overtake the importance of its ties with China and the United States, and that a prosperous, stable future for Japan was closely tied to India. Two hundred Japanese business executives joined the prime minister on his 2007 trip to New Delhi to kick-​start Japan’s trade with India.1 But rather than business, history, or cultural ties, it is mutual security and strategic interests that drive Japan to look to India as a new ally. The vast majority of energy and commercial goods bound for East Asia pass through the Indian Ocean, before reaching the Strait of Malacca, the South China Sea, and the Pacific. And as China’s power grows, or domestic economic instability pushes China’s leadership to lash out at foreign scapegoats to fuel nationalism at home, Tokyo wants to ensure it has friends across the region. As the respective wealthiest and the largest democracies, and the second and third largest economies in Asia, Japan and India are edging toward a new partnership on the basis of shared democratic values, economic prospects, but also security fears toward China. It is a relationship still on the edge of mental maps of decision makers in Western capitals, but as the United States retreated from multilateralism under President Donald Trump, threatening to tear down the pillars of its long-​standing transatlantic relationships, new power centers are taking shape across Asia. Tokyo and New Delhi are in the early days of building a new partnership from the Pacific to Indian Oceans. India was once at the center of the global economy. Charted by the British historical Angus Maddison, bolstered by their large populations, China and India represented over half of the global economy for the better part of two millennia.2 Asia’s modern-​day rise represents a return to history that Japan initiated in the 1980s when its booming growth started to pull the center of the global economy back east from the United States and Western Europe.3 And between 2000 and 2010, China was the main driver behind the fastest rate of change in the global economic balance in history.4 But the trajectory of the world’s economy center is not moving due east. It is also heading in a southerly direction. India may likely be the world’s next new engine of growth. After a century of Western dominance, the global economy is rediscovering its historical core. 228     How

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As China’s economic story has been central to the global economy for the past two decades, so may India’s for coming decades. By 2050, the global consultancy PriceWaterhouseCoopers predicts that, measuring in purchasing power, China will make up 20  percent of the global economy. But while China’s share of the global economy is peaking today, India’s economy is still projected to grow significantly over the coming three decades. It represented 7 percent of the global economy in 2016 and is expected to make up 15 percent by 2050, surpassing the United States on the way to become the second largest world economy.5 These types of extrapolations do not necessarily predict the future. Things will happen in the coming decades that can slow down or speed up India’s growth. The economic shutdown caused by the COVID-​19 pandemic in 2020 will leave a dent in India’s long-​term growth. But India’s potential remains strong. India already boasts the highest economic growth rate among major economies in recent years, its population will grow larger than China’s by 2024, and it is projected to have a higher middle-​class growth rate than China by 2030.6 According to one estimate, every industry in India will experience an annual average sale increase of 10 percent over the next decade.7 And along with India, other emerging economies in Asia, mainly Indonesia, Vietnam, and Bangladesh, are projected to represent the main drivers of global growth. Despite China’s growing influence on the world stage, the full political and strategic consequences of a vibrant Asian economy are yet to be seen. The world is in the early years not of a Chinese century, but of an Asian century.8 *** Abe may have seen this future when he traveled to New Delhi in 2007. But after his visit the bottom fell out on his political career at home. Weeks after giving his speech to the Indian parliament, Abe resigned in the wake of a huge election loss for his Liberal Democratic Party. Five years, and five Japanese prime ministers later, there was little traction to Japan’s India relations. It was only after Abe’s return to political leadership in December 2012, when he rebooted his outreach to India, that institutionalizing the relationship beyond personalities became clear. Abe’s close relationship with India’s incoming prime minister Narendra Modi helped to re-​energize ties. Both Abe and Modi had a pro-​business, conservative character to their politics. Both also courted controversy for some of their views at home and are often seen as strongmen in their respective political environments.9 But the two

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leaders also made moves to ensure bonds between their countries remained after their political careers ended. A long history of non-​alignment in global politics make India hesitant to advance what ostentatiously appears as an anti-​China alliance with Japan. New Delhi has long preferred to balance its relations with China, Russia, the United States, and others. China is India’s largest trading partner, and there is ample economic opportunity in the Chinese market for Indian goods. Or as one Indian Asia expert told me, “India wants China’s money too.” But despite its multi-​alignment approach, Beijing’s behavior managed to spook India out of balance. India is not content to live in a China-​dominated Asia. It intends to be a leading player in global governance and has the potential to do so. Sideling India is critical if China should expand its power and influence across Asia, argue Indian scholars Samir Saran and Akhil Deo. “China understands that if India can succeed in lifting millions of its people out of poverty, and emerges as a new engine of global economic growth, it will provide an alternative development model to the developing world -​one that is completely different from Beijing’s preferences and equally attractive.”10 For New Delhi, Beijing has grown to become a source of insecurity and strategic risk in recent years. Not unlike Japan, India has long-​running territorial issues with China across its 3,500-​kilometer shared border along the Himalayas. Already the cause of a short war in 1962, India’s border dispute gives rise to dueling claims of history, intermittent political flare-​ups, and military showdowns. In June 2017, a standoff between Chinese and Indian troops in Doklam at the tri-​juncture border between India, China, and Bhutan almost ignited a new war. A pair of summits between Chinese president Xi Jinping and Indian prime minister Narendra Modi eased tensions in the following two years. But in June 2020, borders clashes between Chinese and Indian soldiers in the remote Galwan Valley of the disputed Himalayan territory of Ladakh resulted in the first causalities on both sides in decades. The fighting destroyed the recent progress that had been made in improving the relationship and threatens to intensify into a broader geopolitical competition across Asia.11 Feeding direct tensions with India, China is also the all-​weather friend of New Delhi’s all-​weather enemy, Pakistan. From New Delhi’s viewpoint, by providing Islamabad with significant economic and military assistance over decades, including helping develop its nuclear weapons program, Beijing is empowering India’s main regional adversary. If this is not enough to unease India, China’s deepening ties and military reach in South Asia, in Sri Lanka, Nepal, and the Maldives, for example, bring to life the strategic threat of a “string of pearls,” where China’s potential military facilities and 230     How

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interests in the Indian Ocean contain India’s outreach in its neighborhood.12 This sparked India’s early rejection of participating in China’s Belt and Road Initiative. “Where we are concerned, this is a national Chinese initiative,” said then Indian foreign secretary Subrahmanyam Jaishankar in 2015.13 “The Chinese devised it, created a blueprint. It wasn't an international initiative they discussed with the whole world, with countries that are interested or affected by it ... it is not incumbent on others to buy it.” New partners can help India’s position against China. In a groundbreaking book, Poised for Partnership, Rohan Mukherjee and Anthony Yazaki argue that a modern-​day strategic embrace between Japan and India is underway.14 For Japan and India, establishing deeper business ties has long been an aspiration, but remains grossly underwhelming. Despite their economic complementarities, and the political push for new commercial activities, India makes up only 1 percent of Japan’s total trade in 2019, and Japan only 2 percent of India’s total.15 Strikingly, business was more significant to relations in the 1980s, when Japanese trade made up over 9 percent on average per annum for India.16 There has been a gradual uptick in Japanese investment flowing into India of late. At $3.2 billion in 2019, Japan is one of India’s largest foreign investors, representing 6.5 percent of India’s total that year.17 Long-​term growth is possible for Japanese firms, particularly as India grows as a destination for manufacturing investments. Infrastructure is another key area of economic cooperation. Japanese finance supported the initial development of New Delhi’s modern metro system and is also behind India’s first shinkansen bullet train planned to connect Mumbai to Ahmedabad. It will, however, take time for Japan and India to fully embrace economically. Plenty of regulatory challenges continue to frustrate Japan Inc. “Japanese businesses understand China,” Michito Tsuruoka, a professor at Keio University told me. “India is a new place and requires a new set of expertise.” And this rings true for broader political and social connections as well. “For Japan, Asia is Northeast Asia. It’s Chinese characters, chopsticks, and Confucius,” Tsuruoka said. “India is a distant part of Asia. In fact, many Japanese don’t even see India as part of Asia.” There are also cultural differences to overcome. As an Indian commentator with close knowledge of the budding relationship told me, “The first time officials from both sides met, you couldn’t keep the Indians from talking and you couldn’t make the Japanese talk.” But unlike China, India is the world’s largest democracy, broadly supportive of maintaining a rules-​based world order. India also maintains a civil society, media, and human rights outlook, that while curtailed under A Distant Part of Asia 

 

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Prime Minister Modi, demonstrates political values and norms that hold more parallels with Japan and other democracies than with China. Together, economic potential and political parallels are conducive to fostering long-​ term ties between Japan and India, but mutual security issues arguably are most instrumental in energizing the modern relationship to hedge against an aggressive China.18 The difficulty of establishing new security partnerships among democracies in Asia is clear in the story of the Quadrilateral Security Dialogue. In 2007, Tokyo was instrumental in bringing India into what would come to be the Quad with the United States and Australia. While the Quad simply establishes joint governmental meetings on security between its members, some see it as “Asian NATO” in the works.19 But because Australia and India, and even the United States, worried about upsetting their broader economic relations with Beijing, the Quad gained little traction in its initial years. It was not until ten years later, with anxieties toward China’s security intentions only rising, particularly with its militarization of the South China Sea, that the Quad was re-​established. Beijing was dismissive. “Like the sea foam in the Pacific or Indian Ocean,” Chinese foreign minister Wang Yi said, the Quad “may get some attention, but soon will dissipate.”20 Similar to its crackdown on gatherings of Chinese to protest pollution or corruption in China, even the smallest assembly of foreign officials in Asia without their involvement piqued Beijing’s attention. These suspicions, however, are well founded where the Quad is concerned. While the Quad will have a long gestation period, particularly out of reservations that it will alienate non-​ members in Southeast Asia,21 it represents the initial steps of what China fears most: coalition building among like-​minded democracies in Asia.22 Rather than entirely a Washington-​directed plot, the Quad and new security partnerships in China’s neighborhood are more organically Asian than Beijing cares to admit. Japan, India, and others are drawn together by a common fear of China’s regional ambitions. On a September 2014 visit to Tokyo, Prime Minister Modi made a thinly-​veiled critique of China’s actions in the South China Sea by warning against “an eighteenth-​century expansionist mind-​set” that allows for “encroaching on another country, intruding in others’ waters, invading other countries and capturing territory”.23 On top of cooperation in the Quad, India invited Japan to join the trilateral Malabar naval exercise with the United States in 2014.24 In late 2018, India and Japan moved forward with negotiations for a new defense cooperation involving not only joint military dialogue and exercises, but also sharing navy bases overseas, providing logistics, repair, and refueling.25 The military pact was finalized in 2020. There are still challenges to 232     How

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overcome. It is hard to imagine India providing military support if China moved to forcefully take East China Sea islands administered by Japan. “Some Indian scholars believe Japan needs India more than India needs Japan,” said Shutaro Sano, a professor at the National Defense Academy of Japan. Yet after initially holding back on defense and foreign ministerial dialogues, New Delhi went on to sign a 2+2 agreement with the United States in 2018, and the same arrangement with Japan the following year. Similarly, although the United States in recent years has been waging a diplomatic campaign to pressure allies and partners from engaging Chinese telecommunication companies, Huawei and ZTE, for their 5G networks, many saw the risks without American pressure. Australia banned Huawei and ZTE from developing its 5G networks before the United States began its international campaign against the Chinese telecom companies. In 2018, former prime minister Malcolm Turnbull reportedly raised the alarm with the Trump administration about the security risk of engaging the Chinese companies.26 In 2020, Vietnam elected to have its domestic telecom company, Viettel, roll out its own 5G services in collaboration with South Korean and European providers.27 Cyber security threats from China were reason enough to pursue such an approach. In mid 2020, Singapore elected to go ahead with Europe’s Nokia and Ericsson as the lead developers for its 5G networks, prioritizing security as a “paramount consideration”.28 In India, after the 2020 Galwan Valley clashes, New Delhi moved to block a long list of Chinese apps, including the popular Chinese video-​sharing platform TikTok, cut Chinese companies from participating in public procurement bids, and restrict Huawei’s role in its future 5G networks.29 A month after the fighting, Indian conglomerate, Reliance Industries, announced its new Jio network will advance homegrown 5G network solutions.30 If these moves hold in the future, China will have done much to cut itself off from access to hundreds of millions of new Internet users and considerable commercial activity in one of the world’s fastest growing economies. This came after India already changed its policies to guard against opportunistic foreign takeovers of its companies from Chinese buyers during the COVID-​19 pandemic. No American pressure campaign was needed for New Delhi to take such actions. China’s rapid military buildup and territorial expansion have spiked security anxieties in Asia. Beijing has the world’s second largest defense budget after the United States. It maintains the largest conventional missile force, the largest navy and coast guard, and its capabilities in artificial intelligence, hypersonic technology, and offensive cyber capabilities are only growing. At sea, its military power is stunning. From 2014 to 2018, China built more A Distant Part of Asia 

 

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submarines, warships, amphibious vessels, and auxiliaries than the navies of Germany, India, Spain, and the United Kingdom combined.31 “In the past four-​five years, they have commissioned 80 new ships and submarines,” Indian admiral Sunil Lanba said.32 “No navy has grown at this pace for more than a hundred years, not counting the two world wars.” But it is not the buildup of China’s military alone that worries its neighbors. More so, it is Beijing’s stated intentions to use its newfound power, if necessary by force, to retake Taiwan and other unresolved sovereignty claims in its near seas. Since late 2013, China has equipped its artificial islands on the South China Sea with radar and other surveillance systems, anti-​aircraft and anti-​ship missile systems, and established new major fighter-​bomber bases.33 Even if these manmade structures are open targets in a conflict, they both enhance China’s defensive position by providing a buffer from its mainland, and extend its military power projection. And just as Japan does not want to see the East China Sea develop into a new Chinese military zone, so does India not want its near waters in the Indian Ocean to be dominated by the Chinese navy. For American geostrategist Robert D. Kaplan, the Indian Ocean, covering seven time zones and close to half the world’s latitudes from the Gulf of Aden to the Bay of Bengal, is at the center of geopolitical competition in the twenty-​first century. Half of the world’s container traffic and close to three-​quarters of petroleum products cross west across its waters, and the only way to counter China’s rising naval power is through coalitions capable of reacting speedily to hostilities across the region.34 At India’s Raisina Dialogue in 2019, French admiral Christophe Prazuck laid out the geostrategic challenges further.35 “The ocean is not the empty thing you see from the shore,” Prazuck told the audience of high-​level officials and policy experts in New Delhi. “It is an area with specific geometries: Dots, SLOCs, and Stocks.” Dots were the chokepoints, the Strait of Hormuz and Malacca Strait, that required only minimal force to interrupt commercial shipping. SLOCs were sea lines of communication, connecting the Dots, which most commercial ships travelled on, and as Prazuck commented, could be as “crowded as old Delhi in the afternoon.” Stocks are areas of accumulated resources, be it of fish, oil and gas, or rare earths under the seabed. Ensuring that these geometries of the sea remain free-​flowing is essential for not only the United States and Europe, but particularly for neighborhood middle powers India and Japan. China too is dependent on commerce moving freely across the Indian and Pacific Oceans. But a lack of trust between China, the United States, and others feeds a naval buildup on all sides that threatens to disrupt the seas. In the complex game of controlling and mitigating security risks across the Indian and Pacific Oceans, India has an “ace card.”36 Its Andaman 234     How

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and Nicobar archipelago in the Indian Ocean, including 572 islands, and stretching some 470 miles from north to south, provides New Delhi with the potential to control critical sea lanes, the SLOCs, heading to the Strait of Malacca, a critical Dot, and on to the Pacific Ocean. Since the islands lie far closer to Myanmar, Indonesia, and Thailand than to mainland India, New Delhi has long ignored them. But after witnessing China’s growing military activities in the Indian Ocean, Prime Minister Modi committed $1.5 billion to revamp infrastructure on the islands in 2015. Indian vice admiral Arun Singh worried that similar to disputes in the South China Sea, where China’s nine-​dash-​line sea border marking claimed the exclusive economic zones of a number of Southeast Asian countries, Beijing would again use its own version of history to expand its territory past the Pacific. At “some future date of its choosing,” Singh said, “the Chinese government is quite capable of producing a ‘new, just found 700-​year old document that would purport to show Admiral Zheng He had visited the Andaman and Nicobar Islands in support of China’s claims to these islands.”37 Even a decade ago, Chinese military analysts saw the Andaman and Nicobar islands as a “metal chain” for the Indian navy to block access to the Malacca Strait.38 Others dubbed the Andaman and Nicobar Islands “India’s aircraft carrier” because the positioning of the islands allowed for tracking naval movements in which 80 percent of China’s oil imports flowed and for extending India’s power projection. The only tri-​service command of the Indian Armed Forces, involving the army, navy, and air force, the Andaman and Nicobar Command is to be revamped with new airstrips to carry out long-​range surveillance. Military logistic agreements signed with the United States, France, South Korea, Singapore, Australia, and Japan, mark a striking change in New Delhi, which did not previously collaborate so closely with foreign militaries.39 India’s budding security cooperation with Japan is not particularly disturbed by Tokyo’s colonial past in Asia. Under its Greater East Asia Co-​ Prosperity Sphere, Imperial Japan harshly occupied the Andaman and Nicobar Islands during World War II.40 In 1943, General Tojo, the prime minister of Japan, ostentatiously transferred the islands to the provisional Government of Free India, under Indian nationalist Subhas Chandra Bose, who worked with Nazi Germany and Imperial Japan in his push for India’s independence from British rule at the time.41 But after its defeat by the Indian army at India’s far eastern border in Imphal and Kohima, Japan’s short occupation of the islands, and its dramatic and devastating march across Asia, ended.42 Yet just as Japan’s Meiji Restoration and modernization in the late nineteenth century served as a guiding light for its Asian neighbors to develop and break A Distant Part of Asia 

 

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free of colonial bonds,43 modern Japan, while still tormented by its wartime past, is striving to uphold the rules-​based order that had brought prosperity to the region. Even in countries that underwent long and harsh occupation under Imperial Japan, more pressing challenges toward China were prioritized. When the Japanese submarine Kuroshio visited Vietnam in September 2018, and Japanese soldiers stormed a beach during joint military training in the Philippines the following month, it marked the first time armored vehicles of the Self Defense Forces engaged in military exercises in Southeast Asia since their uninvited forceful presence during World War II.44 Japan also began to leverage its official development assistance for security purposes. Tokyo has long done so from an economic rationale, offering infrastructure to recipient countries in Southeast Asia to boost Japanese manufacturing investments.45 But Tokyo is now beginning to blend its economic and security aims. In Vietnam, for instance, Japanese support for port infrastructure leverages logistics and economic development prospects, but also raises Hanoi’s ability to check Chinese activities in the South China Sea. China too is increasing its military cooperation with some of its smaller neighbors, particularly Cambodia. But ties between the region’s middle powers, Japan and India, are deepening and drawing in others, including Australia and Vietnam. These partnerships may contract and expand in the future, but an apparatus is under construction to marshal a collective response to China. Alone, Japan, India, and their Asian neighbors cannot push back against China. But if they act together, particularly with renewed cooperation with the United States, they hold the geopolitical influence and military power to deter China’s assertive ambitions. Instead of China employing its economic relations in Asia to build closer political bonds with its large neighbors, Beijing’s behavior has driven other countries, even those with little economic cooperation such as Japan and India, to engage in closer political and security cooperation and reconceptualize Asia. The Indo-​Pacific idea, and its development into a strategy, is not of American origin. In 2007, the Indian strategist Gurpreet S. Khurana gave new life to the dated geographical concept to highlight the threat China posed to sea lines of communication across Asia’s oceans.46 Japan’s Shinzo Abe picked up on the idea in his New Delhi speech that year, becoming an early advocate of the new Indo-​Pacific super-​region. He reintroduced his government’s vision of the Indo-​Pacific in August 2016 at Japan’s high-​level Tokyo International Conference on African Development in Kenya’s capital, Nairobi. Repacking a decade-​old strategy from his first tenure as prime 236     How

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minister, in the new foreign policy, the “Free and Open Indo-​Pacific,” Abe argued that Japan bore “the responsibility of fostering the confluence of the Pacific and Indian Oceans and of Asia and Africa into a place that values freedom, the rule of law, and the market economy, free from force or coercion, and making it prosperous.”47 The United States backed Japan’s strategy in its 2017 National Security Strategy. Senior American officials had adopted the Indo-​Pacific concept years earlier, and Australia had applied similar terminology in its official defense policy already in 2013.48 Yet Japan’s behavior is not without contradictions. Important domestic constituencies still gloss over the wrongdoings committed in the country’s wartime past. This promotion of negligence of Japan’s historical aggression does little to help Tokyo win present-​day partnerships. Japan refuses to acknowledge that there is an official dispute with China over the Senkaku/​ Diaoyu islands, yet at the same time, it wants South Korea to go to the International Court of Justice to settle territorial disputes over the Takeshima islands, known as Dokdo in Korea. This long and festering dispute between Japan and South Korea has frayed economic ties in recent years. All the while, China continues to engineer its economy to undermine the competitive position of Japanese and South Korean multinationals alike. For example, Chinese government incentives and regulatory demands have pushed foreign carmakers in China to use Chinese-​made batteries (rather than those from Japan’s Panasonic or South Korea’s LG Chem). The Chinese have done this in order to position themselves as the dominant electronic vehicle manufacturer in the decades ahead.49 And while minor in comparison to China’s militarization of the South China Sea, Japan is building its own artificial islands around the Okinotori rocks in the Pacific Ocean. This claim to an exclusive economic zone 1,000 miles from Tokyo undermines its credibility in calling out Beijing’s violations of international law.50 There is also plenty of apprehension toward how far Japan is willing to push back against China. A Southeast Asia expert told me that there is some dissatisfaction with Tokyo in Southeast Asian diplomatic circles. Publicly, the sentiment is that Japan remains too guarded about its concerns with China’s rise. “The Japanese need to speak up,” he said. “You can’t have an hour-​long speech by a Japanese diplomat that’s all about China, but they don’t mention China once. If they are afraid of upsetting China, we definitely need to be too.” Many Southeast Asian countries are against China’s vision of a hierarchical world. Realization of this vision will subject them not only to China’s national interests, but also potentially to those of any larger state. Consequently, they want the middle powers to take a stand. A 2020 poll of A Distant Part of Asia 

 

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Southeast Asian respondents from research, business, the public sector, and civil society found that over 60 percent want their countries to take part in the Quad.51 Japan and the European Union stand out among respondents as partners to hedge against the US-​China strategic rivalry. India also is standoffish to Japan at times. The Indo-​Pacific strategy dovetailed well with New Delhi’s “Act East” policy and renewed attention in its immediate neighborhood in South Asia. But India’s history of non-​ alignment during the Cold War is still deeply rooted in its foreign policy mentality. In a June 2018 speech at the Shangri-​La Dialogue in Singapore, Prime Minister Modi said that “India does not see the Indo-​Pacific Region as a strategy or as a club of limited members. Nor as a grouping that seeks to dominate.”52 After all, India was part of the China-​backed Shanghai Cooperation Organisation. A  joint initiative with Japan, the Africa-​Asia Growth Corridor, to build infrastructure and trade links across the two continents has struggled to get off the ground.53 Neither is India afraid to go its own way until it feels its interests in Asia are met, as New Delhi’s rejection of the Asian-​centered RCEP trade deal demonstrated in late 2019.54 Yet despite not always maintaining the same positions as its neighbors, China’s assertiveness, particularly in South Asia, has served to foster closer strategic partnerships between New Delhi and the United States, Japan, Australia, and others. India agrees that the Indo-​Pacific needs to be free, open, and, particularly from New Delhi’s perspective, inclusive, without marginalizing Southeast Asian countries, or even China for that matter, in a regional order in the Indo-​Pacific.55 Unlike China’s hierarchical view, in which the Belt and Road Initiative is driven forward primarily by Beijing’s geopolitical, economic, and strategic interests, the Indo-​Pacific reflects the positions of Indonesia, Singapore, India, and the United States, among others, and provides a new, collective lens to view and reshape the rules of the road for world order.56 *** There are also motivations among Asia’s other middle powers and small states to be wary of China’s aspirations for regional hegemony. Japan is far from the only country in the region to face China’s economic coercion and military incursions. After the Philippines went forward with an international tribunal case over competing claims in the South China Sea, China drastically slowed its imports on Philippine bananas and pineapples from 2014 to 2016.57 In late 2016, following a visit by the Dalai Lama to Mongolia, Beijing, which views the spiritual leader from Tibet as a separatist, imposed new fees on 238     How

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commodity imports crossing the border.58 Yet while China’s forceful behavior against its smaller neighbors may score semantic victories, whether China’s economic coercion is effective in achieving broader geostrategic goals is less clear. South Korea offers a telling example of Beijing acting as its own worst enemy. In 2017, Beijing pushed for economic boycotts against South Korea after Seoul decided to allow the US military to deploy an anti-​missile Terminal High-​Altitude Area Defense (THAAD) system within its border. There are already some 30,000 US troops stationed at multiple bases in South Korea, and as the missile threat from North Korea rose over the years Seoul looked to improve its defense to counter North Korea’s growing capabilities. It finally decided to buy the THAAD in mid-​2016, installing it on the grounds of a golf course, the Lotte Skyhill Seongju Club, in March 2017. China warned South Korea not to move forward with deploying the missile defense system. Beijing’s concern was that the THAAD system would allow Washington to monitor military activity on the Chinese mainland with the powerful X-​band radars that accompanied it. And for Seoul, there is plenty of risk involved in defying Beijing. China is South Korea’s largest trading partner. It sold more goods to China, especially semiconductors and cars, than any other country. Seoul, however, watched for years as Beijing has done little to stop North Korea in developing its missile and nuclear capabilities, and elected to put security ahead of any potential diplomatic and economic loss to come. After the THAAD system arrived in South Korea, it did not take long for the Chinese government to launch boycotts, cut tourism, and end exchanges in response. The Lotte Corporation, the Korean conglomerate that provided the land for the THAAD system, was arguably the hardest hit. Lotte was forced to close all its 100-​odd supermarkets in China after Chinese authorities suddenly levied a slew of fire code violations at it. Chinese tour groups were stopped from visiting popular Korean destinations like Jeju Island and Busan, emptying much of their foot traffic, and dropping overall Chinese tourism in half.59 Similar to their Japanese counterparts, the Korean carmakers Hyundai and Kia complained that sales in China sank because of “anti-​Korea sentiment.” All together, it was a loss of an estimated $7.5 billion for South Korea, according to the Hyundai Research Institute, equivalent to 0.5 percent of the country’s gross domestic product.60 It is striking, however, that South Korea continued to hold on to the THAAD defense missile system despite Beijing’s economic onslaught. Following the impeachment and dismissal of South Korean president Park Geun-​hye, who had originally agreed to host the missile defense system, A Distant Part of Asia 

 

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Moon Jae-​in won the 2017 presidential election. Moon and his Democratic Party have a more conciliatory approach to China than did his predecessor, and he set about mending relations with Beijing, reconciling ties by late 2017. Beijing claims that South Korea agreed to “three nos”: no to an additional THAAD system, no to a broader US-​backed missile defense initiative, and no to a trilateral security alliance with Washington and Tokyo. But the deal was more a statement of the new South Korean government’s policy than a capitulation to Chinese pressure.61 After all, two THAAD batteries are already in place, and a three-​way alliance with the United States and Japan was not an aim of Moon’s Democratic Party anyway. South Korea’s political left, from which Moon hails, is particularly unwilling to move closer to Tokyo on account of historical grievances from decades of Japanese occupation and ongoing territorial disputes. Beijing remained frustrated with South Korea, and a year after the agreement, its travel ban on Chinese tourism in South Korea was still not fully lifted.62 China eased some pressure, but did not lift it completely. Even with ideal political and economic conditions for exerting influence, China did not get what it wanted. South Korea is dependent on external trade for half its economic growth, and a quarter of its exports went to China at the time. South Korea’s economy was suffering at the time of the Chinese boycott, and since 2010 it has hardly managed a quarter of growth above 1 percent. That made it even more susceptible to China’s pressure. Yet even after South Korea elected a government more open to rapprochement with Beijing and that also needed to inject life into a long-​ailing economy, Seoul still decided to defy the wishes of its closest trading partner. Similar to the 2012 boycott against Japan, industries that were interconnected through regional supply chains across East Asia limited the extent to which China could pressure South Korea economically. China is sensitive to damaging its own economy. Three-​quarters of South Korea’s exports to China are intermediary products, such as semiconductor chips, sent to China for final assembly, such as for smartphones. Limiting these products over a long period would have also hurt China.63 Some South Korean firms lost out on billions in sales, but total trade between South Korea and China actually rose during the first half of 2017 because of China’s demand for Korean semiconductors in particular. Unlike visible consumer goods, these high-​ tech components, indispensable for Chinese manufacturers, continue to flow despite Beijing’s ire. And similar to the Japanese, South Korean companies worry more about long-​term structural changes in China’s economy than boycotts. It is China’s slowdown and economic rebalancing, and rise of Chinese manufacturers 240     How

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moving up the value chain in direct competition with Koreans, that are dragging down the Korean economy.64 Some of the losses faced by individual Korean companies during the boycott were on account of a general fall in market share as Chinese corporations, such as Huawei and Haier, became direct competitors to Samsung, LG, and other Korean firms. The Chinese boycott against South Korea in 2017 serves as another example of the psychological orientation, and ineffectiveness of China’s economic weapon to date. It also resulted in Lotte and other Korean firms beginning to look into ways to reorganize business structures and diversify investments, similar thinking to Japan’s “China plus-​one” strategy, which was intended to wean Tokyo from dependence on the Chinese market.65 While South Koreans generally have had positive views toward China, since 2016, China’s favorability has deteriorated significantly as Beijing revealed its intentions for the region.66 In March 2017, Japan, Korea’s former occupier, had higher favorability ratings among South Koreans than China.67 The Chinese market will remain essential to South Korea in the future, but Beijing’s economic coercion had ignited new thinking on the necessity for Seoul to diversify its economic partners. Australia is another example where China’s economic and political coercion has a tendency to lead to self-​inflicting geostrategic wounds. Already in 2007, China became Australia’s largest trading partner, with a third of its exports, primarily in iron ore and coal, heading to China. The close economic and commercial ties won Beijing supporters among former high-​level Australian officials and within the business community. In 2015, Canberra rebuffed the Obama administration’s attempts to persuade Australia not to join the China-​backed Asian Infrastructure Investment Bank. It also went ahead in green-​lighting the project of a Chinese firm, Landbridge, to develop, and take out a ninety-​nine-​year lease, at the port in Darwin, not too far from a US marine base in Australia’s Northern Territory.68 But at the same time, China’s growing economic reach in Australia, and the country’s traditional close security relations with the United States, sparked domestic concern over Chinese influence. In a moment of candor in 2015, Australian prime minister Tony Abbott told visiting German chancellor Angela Merkel that what drives Australia’s China policy was a combination of “fear and greed.”69 After two decades of expanding economic ties and social engagements, Australia’s relationship with China changed remarkably in the wake of reports of Beijing’s efforts to influence Australian politics and society, primarily through its commercial and economic ties. In 2016, the Australian A Distant Part of Asia 

 

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government stepped in to block large investments from Chinese state-​owned and private corporations in its power industry over security concerns, and later against Chinese telecommunications companies Huawei and ZTE from developing its 5G networks.70 It was also discovered that large political donations to both Australia’s main political parties reportedly came from Chinese businessmen with close connections to the Communist Party, and who sought to use political financing to shape Australia’s foreign policy. In late 2017, Sam Dastyari, a rising political star of the Labor Party, announced his resignation from the Senate in the face of allegations that he was peddling Beijing’s position on the South China Sea in return for financial support.71 In response to the growing influence of Beijing in its politics, media, academia, and within the large Chinese diaspora in Australia, Canberra decided to overhaul its espionage and foreign interference laws.72 Beijing was not happy as Australia debated the new bills in 2018. “If Australia sincerely hopes that the relations between the two countries will return to the right track . . . they must break away from traditional thinking, take off their colored glasses, and look at China’s development from a positive angle,” advised China’s foreign minister Wang Yi.73 Australian-​made wines suddenly faced new customs rules in China. Similar to other countries heavily dependent on economic ties with China, however, Australia chose its security and domestic rule of law over capitulating to Beijing’s will. The new foreign interference laws passed. When the coronavirus pandemic broke out in 2020, and Canberra pushed for an international inquiry into its origins, Beijing imposed sanctions and tariffs on Australian beef producers barley exports respectively, and warned away Chinese students –​an important draw for Australian universities –​from studying in the country. Australia has significant exposure to trade with China. But as of mid 2020, the value of exports blocked by Beijing, officially due to labeling, certification, and health issues, remain quite limited. At 3 to 4 billion Australian dollars annually, they represent the equivalent of roughly 2 percent of Australia’s total exports in China in 2019.74 The targeted farmers and businesses felt the weight of China’s economic coercion, but not the Australian economy as a whole. Australia’s largest exports to China, iron ore, liquid natural gas, and coal, remain largely unphazed to date. The natural resources are vital for China’s infrastructure stimulus and economic development.75 Coals bans at Chinese ports are designed to protect domestic miners, and other Australian exports grew despite frayed political relations.76 And rather than invoke any policy change, the sanctions demonstrated to Australians, as with South Koreans years earlier, of the need to diversify their exports away from strong dependencies on the Chinese 242     How

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market. Not to decouple, but to diversify out of the fear that one day Beijing might decide to tighten such measures more comprehensively, either because its own industries no longer will be greatly affected, or because political proclivities come to take over its thinking. China’s militarization of the South China Sea and reports that Beijing was seeking to build a military base in the South Pacific also provoked a Australia to strengthen defense ties to Asian democracies. Japan’s president Shinzo Abe visited Darwin in November 2018 to participate in commemorating the 250 Australians killed in a February 1942 raid by nearly 200 Japanese bombers in World War II. Similar to its partners in Southeast Asia, Japan’s new military partnership with Australia is turning a page on its past.77 Australia also looks to India as a new and growing economic and defense partner. “Our culture might be different,” said Prime Minister Scott Morrison, “but we believe in similar things—​we believe in the supremacy of the ballot box in our national life. And we believe in the rights of nations to live free and not under the controlling hand of others.”78 There is a similar fear toward China’s rise among its smaller neighbors in Southeast Asia. This comes with greater restraint and a reluctance to side too closely with the United States and regional powers. But under the surface, noticeable changes are underway in wake of China’s military expansion. The regional Association of Southeast Asian Nations (ASEAN) remains largely neutral in growing competition between the United States and China. Singapore’s president Lee Hsien Loong worries that his country and its Southeast Asian neighbors might one day need to choose between the United States and China as geostrategic competition deepens.79 Similar to its relations toward the European Union, Beijing tactically provides substantial economic assistance to Cambodia as a means to frustrate common regional policy through ASEAN on the South China Sea. But some ASEAN members are nonetheless finding their interests, as small states heavily reliant on international law and norms, are in jeopardy while China continues to expand its territorial reach. They are working bilaterally, outside ASEAN, in an effort to balance against Chinese incursions.80 The raw expression of China’s military power threatens to squander the neighborly goodwill it generates through economic relations, particularly through its Belt and Road Initiative. The emerging economies of the Philippines, Vietnam, and Indonesia, which make up three-​fourths of the region’s young population and represent roughly $1.3 trillion in gross domestic product, are all, in diverse ways, cautiously reacting to China’s militarization of the South China Sea.81 Territorial disputes with China make each country pivotal in determining the success or failure of Beijing’s regional power play. In the early 2000s, A Distant Part of Asia 

 

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China’s outreach to Southeast Asia began with a charm offensive. With the United States preoccupied with waging conflicts in Iraq and Afghanistan, Beijing advanced cultural, diplomatic, and investment and aid links with its neighbors in order to improve ties and, as it would later do on a global front, present its top-​down, state-​led development model as one worthy of emulation.82 At the time, the majority of the ten members of ASEAN viewed China as a constructive, regional power. But in the succeeding decade, Beijing increased its military pressure in the region. It homed in on territorial claims in the South China Sea, marked by its U-​shaped nine-​dash-​line that stakes out the vast majority of the region’s waters as China’s historical territory. Beijing argues that its claims date back to “ancient times.” Beginning in late 2013, China began to build up artificial islands out of sand banks and submerged reefs in the disputed waters. Its official military spending in 2018 was still well behind that of the United States, but nonetheless represented half of the total of Asia and Oceania combined.83 With little pushback from the United States and its allies in the region, China went on to build ports, runways, and facilities on its man-​made islands, and installed radars and weaponry to cement its control over the strategic and resource-​rich waters lying some 1,000 miles from its southern coast. Other Southeast Asian countries also have competing claims to these islands and islets, and maintain military outposts in the South China Sea, but China’s dominance became nearly undisputable within a five-​ year period. Its military sees these waters as a “strategic space,” providing a buffer to protect commerce heading into China’s core economic heartland, and to deny the United States and its allies the possibility of upsetting its potential future invasion of Taiwan.84 Among the large Southeast Asian countries, the Philippines edged closer to Beijing under President Rodrigo Duterte. After coming to power in mid-​2016, Duterte did not move ahead in enforcing a Permanent Court of Arbitration ruling in favor of his country’s rights over the Scarborough Shoal in the South China Sea. Instead, the outspoken Philippine president declared a separation between the United States and his country, and casually joked that the Philippines was now a province of China, seeking new trade, investment, and finance opportunities from Beijing in return.85 But it is difficult to imagine the Philippines’ pro-​ China stance surviving Duterte’s presidency. A long-​standing defense treaty partner with Washington, the Philippines has long conducted joint defense and security activities with US forces on counter-​terrorism, maritime security, and humanitarian aid.86 Despite President Duterte’s harsh rhetoric towards the United States, and calls to suspend the defense pact, the security cooperation has thus 244     How

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far endured. Many in the Philippines regard engaging China with considerable caution. When President Xi Jinping visited Manila in November 2018, television stations capturing his arrival also ran China’s sinking favorability ratings among Filipinos in the news ticker. The United States and Japan are still the most trusted foreign countries, while 64 percent of Filipinos said they distrust China.87 The yawning gap between China’s trade and investment promises and the reality of its economic engagement in the Philippines may yet even bring Duterte’s stance closer in line with most Filipinos.88 Unlike in the Philippines, some governments in Southeast Asia are less out of step with public opinion. Long a subject to China’s imperial occupation, Vietnam remains uninterested in, and is actively resisting, a return of history. Anti-​Chinese sentiment fumed in 2014 after China sent an oil rig into South China Sea waters claimed by Hanoi. While China is Vietnam’s largest trading partner, Beijing’s incursions in the South China Sea set about a diversification strategy to become less dependent on trade with China, pushing Vietnam to join the TPP, and later to urge Japan to carry the torch when the United States dropped out.89 Hanoi also is fostering a closer defense relationship with India, and represented the most likely ASEAN candidate to back the activities of larger regional powers Japan and India in the South China Sea.90 Indonesia has tried to walk a fine line in its relations with China. The archipelagic nation, its long expanse of some 17,000 islands stretching over 3,000 miles, is at the intersection of the Pacific and Indian Oceans. With a population climbing toward 300 million and a growing economy, Indonesia is an indispensable player in regional politics and security. Jakarta has called on major powers in Southeast Asia to live by ASEAN’s pacifist norms and seek out balancing initiatives among China, the United States, and Japan to advance regional cooperation. But over time, Chinese activities within Indonesia’s exclusive economic zone are backing Jakarta into a defensive corner. Both China and Japan are financing Indonesia’s expanding high-​speed railway network and other large infrastructure projects.91 But while its infrastructure finance is welcomed by Indonesia, China’s expansionist agenda is not.92 The persistent infringements of China in Indonesia’s territorial waters in the South China Sea, which lie within China’s “nine-​dash line,” spurred Jakarta to slowly ramp up its defense spending over the years and push forward a harsh program of expelling and destroying illegal fishing vessels.93 In 2018, Indonesia opened a military base at Natuna Besar Island, the southern point of the South China Sea, to deter security threats. Indonesia is not party to any territorial disputes with China, unlike the Philippines, Vietnam, A Distant Part of Asia 

 

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Brunei, and Malaysia, but Jakarta has nonetheless been pulled into the fray because of China’s deep reach into the South China Sea. There are, however, other pairings underway across Eurasia that work more in China’s favor. Since Russia’s annexing of Crimea upset its ties with the United States and Western Europe in 2014, Moscow has established closer economic, military, and political ties with Beijing. Xi Jinping’s first foreign visit as Chinese president was to Moscow. Xi and Russian president Vladimir Putin have developed a close relationship over the years. Russia may be uneasy about China’s enlarging commercial and security presence in Central Asia, its traditional sphere of influence, but Beijing offers access to finance at a time when Russia is facing Western sanctions. China has also become a large buyer of Russian arms. Russia’s isolation by the West, along with the shared desire of Moscow and Beijing to promote the decline of American and Western global power, has fostered a strategic relationship.94 The most vivid demonstration of deepening ties between China and Russia came in 2018, when at Vostok in eastern Siberia, the People’s Liberation Army took part in the largest-​ever war games alongside some 300,000 Russians and formal military allies. This is a relationship in which Russia plays the junior partner. Similar to African and Middle Eastern resource-​rich countries, it is mainly oil and gas that flow from Russia into China. Over time, China’s priority of developing its far west and its growing reach in Russia’s neighborhood, including Chinese military patrolling borders between Tajikistan and Afghanistan, has the potential to eventually undermine relations. Even if Moscow is warming to Beijing, local Russian populations in Siberia and the Russian Far East still fear Chinese economic incursion and dominance.95 Moscow’s outreach to India provides it with a long-​term balancing option in its relations with China. Russia was instrumental in India’s inclusion in the Shanghai Cooperation Organisation, a China-​led regional security organization, against Beijing’s wishes.96 Russian-​Chinese joint military exercises in the South China Sea, East China Sea, and in the Mediterranean and Baltic Seas have caught widespread attention. Consequently, China-​Russia ties can also serve to harden the internal security ties within the European Union, and those between the European Union and the United States, as possible common threats from Russia and China materialize. *** For many of its Asian neighbors, China aspires to renew its historical role as regional hegemon. Decades of economic integration in the Asia-​Pacific have 246     How

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not yet produced collective or cooperative security arrangements and tamed nationalism from threatening pan-​Asian integration.97 Consistent attempts of economic coercion to shape the foreign and defense policy decision-​making of its neighbors, the militarization of strategic waterways, and persistent assertive political rhetoric from Beijing heighten fears that war across the Taiwan Strait, and over the East China and South China Seas, is on the near horizon. Even though it benefited immensely from the rules-​based order, China has already demonstrated a willingness to exploit its power position to advance its own set of geopolitical ambitions. Looking back at the past two decades, from Jiang Zemin to Xi Jinping, China’s modern leadership sought to exploit deepening economic interactions with neighbors as a means to influence their foreign and defense policy. Today, there is little sign that China is willing to roll back its militarization of the South China Sea, military incursions in the East China Sea, and particularly, step back from using possible military force to reunify with Taiwan by 2049. Pushback against China’s buildup of artificial islands and military outposts in the South China Sea may have come too late, and been too little. The international response to its mass detention of its Uyghur population in Xinjiang, as with responses to many other large-​scale human rights abuses elsewhere in the world, has thus far been fairly toothless. Yet despite this encouragement to do as it will, Beijing still has not moved to take Taiwan by force. China may be waiting to reach a higher level military strength compared to its rivals and develop further economic clout in global markets, from where it feels secure that any period of isolation from an invasion of Taiwan will be short. Even after the Tiananmen Square massacres in 1989, Chinese leadership was able to wait out short-​lived economic isolation and engage with the outside world again by the early 1990s.98 If Beijing’s economic coercion is left unchecked in the years ahead, it will likely only further its military activities and expansion in the East and South China Seas. If there is repeated capitulation from others, no collective response, then China’s leaders will only be emboldened to push harder, and more often, to advance their geopolitical ambitions. This will be particularly true if China’s economy slowly soldiers on by posting modest, but still impressive, growth rates for a large market, proving its critics wrong by heading down a path toward modernization on the back of competitive high-​ tech industries. Then Beijing will feel free to continue to test the limits of its economic coercion and shake off its past reluctance to pull back from more severe sanctions. If the Chinese eocnomy slows remarkablely in the coming years, however, China’s war aggression could be made out of a position of economic weakness A Distant Part of Asia 

 

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rather than strength. In the face of stagnation and being unable to fully transform into a knowledge-​based, service-​oriented, modern economy, and losing some of its advantages as an exporter due to rising wages and costs, China could fall into the so-​called middle-​income trap. Yet because its military capabilities already make war a possibility more than ever, its leaders could turn to nationalism as a means to win domestic legitimacy without economic growth and stability.99 But waging war in any future scenario is risky business for China. Its list of close partners is short, and the number of countries troubled by its behavior at home and abroad growing. If America’s 1979 Taiwan Relations Act propel it to help defend the island from mainland invasion, the consequences of conflict would very likely shatter stability and future prosperity in Asia, a result that rather than elevating China to new commanding heights could potentially halt its global ascent. A military defeat, or even the global economic fallout of a hard victory, may tarnish the image of the Communist Party and leave Xi Jinping’s dream of China’s great rejuvenation unrealized. The status quo of Beijing’s economic aggression and creeping militarization in Asia is also a risk. If China does not reverse course, its neighbors will only redouble efforts to diversify trade and investment to wean off dependence on the Chinese economy. Such a slow economic decoupling, particularly in high-​tech industries, could widen to such an extent that one day a spiral of events sparks war with fewer economic restraints holding either side back. There is another choice: one where China, the United States, Japan, India, and Southeast Asian countries decide to work toward de-​escalation. It requires others accept that China will play a large role in Asian and global governance, but also that China’s neighbors, and their partners around the world, diligently focus on coalition building and coordinated action to promote and deepen trade agreements and maintain and build new security partnerships that demonstrate a clear deterrence to Beijing’s economic coercion and military aggression. It will be a tricky balance to maintain, with many moving parts, and with changing and competing strategic interests to manage, but these dynamics are already showing some traction in Asia. As the Latin adage counsels, “If you want peace, prepare for war.” To date, far from bringing its neighbors to heel through economic coercion and military aggression, China has been instrumental in sparking a common agenda among regional partners. “As China’s influence increases, so do other powers’ efforts to channel or constrain that influence,” write Andrew J. Nathan and Andrew Scobell in China’s Search for Security. “Rising power brings not only new scope for action but new checks.”100 Just as China is pushing its agenda in Asia, economic interdependence is not enough for 248     How

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China’s neighbors to back down from their own territorial, political, and strategic interests. A cohort of democracies, and even some non-​democracies, see their future better represented in a rules-​based system of trade and law that protects middle powers and small states alike from the whims of superpowers. “All the Asian nations, except China, would like to have a harmonious region in which countries are treated equally and have equal rights and say,” Akio Takahara, a professor at the University of Tokyo, told me. “That is not the kind of Asia that China envisions today. And that’s a problem. They want a special status and position.” Be it territorial disputes in the East and South China Seas, or economic coercion towards South Korea and Australia, Beijing’s willingness to try to police its political red lines has only grown over time. But while China’s consumer boycotts and sanctions can wreak havoc on the growth prospects of international companies and industries, targeted economies in Asia, Europe, and elsewhere fare far better than is commonly perceived. This is because China is still wary of upsetting its own development by cutting trade and investment. Economic growth and stability are still the utmost priority for the Communist Party. A healthy economy represents its claim to political legitimacy, and Beijing cannot yet afford to sever these regional commercial ties. China’s sanction bite rarely digs too deep out of a fear of upsetting its own economic prospects. In the coming years, China’s economic weapons will only prove effective if targeted countries capitulate to its demands and their neighbors refuse to act to support regional partners. Only the collective inaction, spawned by special interests and infighting at the domestic and regional level, will bring a future when China can control and even shut down trade and commerce to selective countries across the South and East China Seas. Strength in numbers is the new norm for Asian neighbors seeking to halt China’s drive toward regional hegemony.

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Conclusion: Big or Small

T

he world cannot afford for China to lose. Arguments can be made on whether or not China’s leaders will realize their global ambitions, but the direction of Chinese politics and economy will largely dictate whether global challenges, from fighting climate change to global pandemics, can be overcome. China represents one-​fifth of humanity, the world’s second largest economy, and the largest emitter of carbon emissions. Everyone loses if China falls into economic and political instability. Not only will this threaten to take China and its people off the path to modernization, but China’s leaders may lash out for foreign scapegoats in the face of failure at home. Finding new ways to deal with this empowered country, and the sharp sense of entitlement it carries with its rise, represents one of the biggest challenge in world affairs today. Overreaction to China’s assertive foreign policy must be avoided. Shared interests and avenues for cooperation with China do exist and should be pursued whenever and wherever possible. The world must work to ensure that US-​China strategic competition and China’s hostile relations with its neighbors on the East and South China Seas do not foment into conflict. Attempts to broadly decouple from China are ill-​advised as they may provoke unnecessary confrontation. But naïveté toward China is not the answer. Under its current direction, China is a threat to the foreign and security interests, political values, and economic competitiveness and welfare of many countries around the world. Neglecting this reality will only embolden and empower Beijing to carry on with its disruptive and distorting actions. This

 

cannot go unchecked. Pushback is necessary. Not to contain China, or to attempt to force change upon its political or economic system, but to deter it from upsetting the interests and values of others and advance multilateralism to establish common rules and norms in world affairs. This is no easy task. Most countries, multinational corporations, and other organizations can do little in managing any opposing interests and values they have with China on their own. Whether it is the economic weight of its trade, investment, and finance; its rising military power; or broadening diplomatic activities, with the exception of the United States, China can outmatch others one-​on-​one. But middle powers, such as India, Japan, Germany, and France, and small states cannot accept this outcome as some preordained future of living under the thumb of either a belligerent China or United States. They are bound to experience deep economic and political trouble in a no-​rules world where superpowers act without restraint. Winston Peters, New Zealand’s deputy prime minister and foreign affairs minister, points to the necessity to hold firm to one’s interests and values in the face of such outside pressure. “Whatever the size of your country, there is no excuse for politicians and leaders not having their eyes wide open for who and what they’re dealing with,” Peters told me. “The only answer is that there is a rules-​based regime that we all have to conform to, big or small.” Are China’s leaders ready to live in a world where the big must respect the small? Are countries around the world comfortable with Beijing rewriting the rules of the game on international trade, law, and rights? Over the past decade, the pushback against China’s assertive reach suggests the world is not willing to allow Beijing to hold a commanding position anytime soon. This reaction is not aimed at halting China’s ascent as a superpower, but to defend against Beijing’s unwanted interventions. Many countries continue to have political differences and security tensions with China, but where engagement once came with straightforward economic benefits, there is now also rising awareness that trade, investment, and technology cooperation can produce strategic vulnerabilities. These can be political in nature. China weaponizes its economic relations to ensure that foreign populations adhere to its political red lines on territorial issues such as Tibet, Taiwan, Xinjiang, Hong Kong, and the South China Sea, or refrain from criticizing the Communist Party or China’s economic development. Beijing aspires to reshape the global system by pushing liberal ideals and American and Western influence to the sidelines—​particularly but not exclusively in the developing world—​and that those countries that do fall within its sphere of influence show deference to its interests.1 There are also vulnerabilities to defense—​for example, China’s attempt to exploit 252     How

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its trade with South Korea to stop it from hosting American anti-​missile systems. And in technology, as China’s telecommunications companies, Huawei and ZTE, can act as vehicles for cyber espionage as per China’s 2017 national security law—​acts the United States and other major powers have carried out—​or even to disrupt critical transportation and power infrastructure and systems. Trade, investment, and finance can also lead to asymmetrical economic relations with China. Some of these may not be unusual in the history of foreign relations, such as China’s use of subsidies to advance domestic industries, or stipulating in overseas loans that contracts are tied to Chinese companies and exports. But they nonetheless go against established global norms, often to a large degree. For developed countries heavily invested in China, the restrictions and controls Beijing places on its economy provide its industries with an edge that over time comes to undermine the industrial competitiveness of foreign investors, distort global markets, and in turn agitate foreign relations. For developing countries, the finance China offers contributes to existing debt problems and the resulting infrastructure may not necessarily lead to new economic activities that domestic industries and companies overwhelmingly gain from. There are still many benefits from engaging China, but countries around the world are now waking up to the combination of strategic vulnerabilities that the relationship also produces. It is a collective and sustained pushback to China’s assertive reach that will keep its leaders from achieving those global ambitions that undermine the economic interests and political values of others. China may still achieve much with its current strong-​arm approach. Its economy may soldier on closer to modernization over time. Its technological competitiveness may still rise. Its military power grow more formidable. But without reform and compromise and cooperation with others, China’s potential remains limited. China will fall short in its aspirations to become a global peacemaker in overseas conflicts to protect its people and investments. Its Belt and Road will flounder in achieving its geopolitical, economic, and geostrategic aims. Hostile foreign relations around Beijing’s economic practices at home and abroad will limit how China can leverage trade and investment with the outside world to speed up its economic modernization. Its aim of attaining a dominant military position in Asia will only encourage others to deter and challenge its force. This is how China loses. Not because it lacks global power, or that others should work in concert against all its ambitions, but because the actions and visions of its leaders elicit cautious reception and pushback across the world that undermines its potential as a global superpower. Conclusion: Big or Small 

 

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In China Goes Global, David Shambaugh argues that China does not wield as much influence in the world as is commonly perceived. Shambaugh recognizes China has a more assertive foreign policy, a broad global footprint, and impressive economic power, but that it does not have a deep enough presence to exert considerable influence to shape global events.2 He suggests that “it is not so much an aggressive or threatening China with which the world should be concerned, but rather an insecure, confused, frustrated, angry, dissatisfied, selfish, truculent, and lonely power.”3 This is where China falls short of other rising powers before it. Its behavior and values attract few genuine allies to help it overcome the growing resistance it encounters. Russia is one prominent partnership to watch, but still limited in scope. China has not secured the consent it needs from other major countries in the world to drive forward its global agenda and displace the United States as the perennial global superpower. India, Japan, France, Germany, the United Kingdom, and others have values and identities that clash with those embraced by China.4 China may strive to stand alone in the world, but the experiences of other rising powers before it demonstrate that having strong friends and allies in the world can multiple its power and influence. Yet evidence of the struggles of China’s leaders to reach their global ambitions should not promote complacency. Xi Jinping’s tightening of political control at home and China’s rising assertiveness in foreign affairs, coupled with the faltering global leadership by the United States under President Donald Trump, have raised the relative power of China on the world stage. China can influence individual countries, multinational corporations, international organizations, non-​governmental organizations, and universities. Room to advance its interests will only expand without collective and sustained pushback that encourages it to compromise and cooperate with others. Many countries around the world recognize the challenges of China’s rise to their own interests and values. But there remain sharp divides between thinkers and decision makers on how to respond. For some, China’s authoritarian politics at home, coupled with its economic and military power, presents a threat to democracies worldwide.5 Others have more sanguine views. They caution against anti-​China hysteria and warn that pushback may alienate moderate voices in China’s leadership that seek cooperation.6 They see fears of the “China threat” as overblown. China is different, not dangerous. It is on the defensive from American foreign policy, not seeking to overturn the international rules-​based order. They think that instead of confronting China, the world must do more to understand China. In order to deal with China effectively, they urge others to learn how China’s leaders think and what China wants. Despite the deepening of authoritarian politics in recent 254     How

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years, and calls for economic and technological self-​sufficiency from China’s leadership, if one looks back since the founding of the People’s Republic of China in 1949, social and economic liberties have increased in China, and international trade and investment boomed. Engagement works, they argue, and confrontation holds destructive consequences for everyone. Both viewpoints on China hold merit. A large and powerful authoritarian state is growing in global influence. But given China’s importance to the global economy and international affairs, any harsh containment policies may generate unnecessary hostilities. There may be times when constructive engagement still holds merit, but others when defensive approaches and collective pushback are necessary. Part of the problem in deciding what to do is the preoccupation among experts and officials on understanding China’s wants to the extent that they lose sight of the national interests and values of their home countries. China watchers have become entrenched in unhelpful positions of hawks and doves. These are often taken out of a genuine desire to offer balance to skewed political views and public opinion on China, but they can lead to unconstructive dialogue on how to design policies on dealing with China. Not all of China’s critics are alarmists. Not all who sympathize with China’s positions and seek engagement are gullible. A China strategy should avoid the extremes of overreaction and naïveté, and work toward calming rising tensions, building a fair and equitable global economy, and focusing on overcoming global challenges that impact us all. But such engagement with China also requires a receptive partner in Beijing. China’s leaders relish how the global financial crisis, Brexit, and the election of Donald Trump demonstrate the weaknesses of liberal democracies. They have successfully governed over a country where hundreds of millions of people have come out of poverty in a matter of decades. They now command the second largest economy and second most powerful military in the world. Why not push for more? Why not attempt to extend the influence they enjoy at home well beyond China’s borders? Denying or underestimating that China’s leaders somehow lack the agency for global ambition is a ruinous mistake. The living idea of democracy in the European Union (EU), Canada, Japan, India, Indonesia and elsewhere, despite struggles and setbacks, presents an opposing ideology to China’s own. If geopolitical tensions continue to rise, particularly from strategic competition between the United States and China or the fallout of the COVID-​ 19 pandemic, the possibility of combating climate change in what little time is left, the planet’s most demanding challenge, are bleak. Xi Jinping may aspire for China to be the world’s perennial superpower by the centennial of the founding of the People’s Republic of China in 2049. But even if China Conclusion: Big or Small 

 

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is successful in achieving this dream, what kind of world will it rule over? It could very well be one where the impact of carbon emissions on global warming results in extreme weather, wildfires, droughts, and humanitarian disasters and mass migration from flooded coastlines and food shortages.7 While some American leaders dangerously mock the science of human-​ caused climate change, Beijing is no climate leader. China has pledged to become carbon neutral by 2060, but it is also busy shifting its pollution from the eastern seaboard to its western provinces and overseas through the massive fossil fuel infrastructure projects that dominate the Belt and Road and lock partner countries into carbon-​intensive development paths.8 China is a world leader in renewable energies, but is also playing a leading role in expanding coal-​fired power plants worldwide and undermining global efforts to reduce emissions and avoid climate change.9 There is no better time to find common ground with China on such global challenges. But just as the world is coming to terms with what China wants, if China’s leaders do not learn to deal with the world for what it is, and treat the interests and values of foreign countries with the same respect they befit their own, then trouble lies ahead. *** There are lessons that countries around the world can take from China’s actions during the beginning of the twenty-​first century. Lesson one is to find friends across China’s diversity. China is not a monolith. Among the many Chinese officials, executives, and academics engaging the world, there are those who do not share the same visions as China’s leadership. Instead, they are more in tune with aspirations of most countries in establishing common rules in the global economy and respecting one another’s political values. They may not be change agents to all of China’s policies. Room for maneuver has been severely squeezed under Xi Jinping. But they can still push and pull to move China’s domestic and foreign policy in less confrontational directions and onto a smoother path to ensuring that China can leverage its interactions with the outside world to overcome its economic burdens and demographic realities—​and become a fully developed, modern country. Prominent intellectuals and officials in China have already encouraged President Xi to return to consensus leadership in the Communist Party and re-​energize China’s economic reform and opening. In July 2018, for example, Xu Zhangrun, a legal scholar at the prestigious Tsinghua University, wrote a powerful critique of Xi’s leadership. Xu warned of the dangers of totalitarianism in China, the personality cult that Xi was building up, and called on Chinese leadership to bring back constitutional term limits to 256     How

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the presidency post.10 Xu argues that Chinese fear the return of “politics in command” and the abandonment of economic development as the basis of national policy. Demoted and banned from teaching and writing in 2019, then briefly detained in 2020 after criticizing the Chinese government’s response to the coronavirus outbreak, Xu worries that China is shutting itself off from the world again. He writes that “people across the nation, including the entire bureaucratic elite, feel increasing uncertainty about the direction of the country and a deep sense of personal insecurity.” Months after Xu’s 2018 critique, two leading Chinese economists, Zhang Weiying and Sheng Hong, implored Chinese leadership to end promotion of the “China model” abroad. They argue that Beijing’s selling of the idea places too great an emphasis on the role of state-​owned enterprises and central planning, and underemphasizes how the private sector, entrepreneurship, trade, and foreign investment have all been essential ingredients in China’s rapid development.11 “The most fundamental problems that privately run enterprises really face aren’t that it’s difficult or expensive to secure financing,” argues Xiang Songzuo, another leading Chinese economist, but “fears of policy uncertainty and the government’s untrustworthiness.”12 On China’s foreign policy, Xi has faced veiled criticism from Deng Pufang, the son of former Chinese paramount leader Deng Xiaopeng. In October 2018, Deng called on China to “neither be overbearing or belittle ourselves” and seek a “cooperative and win-​win international environment.”13 His message harked back to his father’s counsel for Chinese leaders to hide their strengths and bide their time and suggests that Xi is acting too aggressively on the international stage. Leading Chinese foreign policy scholar Wang Jisi offered a similar reflection on China’s fraying relations with the United States.14 “We should criticize and have reason to criticize the United States,” Wang said, “but we should realize that China’s own actions have changed Sino-​US relations and US perceptions of China.”15 Reversing China’s hardening political rule and assertive foreign policy will be difficult to achieve. Pankaj Mishra shows in From the Ruins of Empire that the idea of promoting a strong state in China to control the economy and engage external competition existed even before the founding of the Communist Party. Sun Yat-​sen, the first leader of the Kuomintang, the Nationalist Party of China that fled to Taiwan in 1949 after its defeat in the Chinese civil war, likened the Chinese people to a sheet of loose sand. Sun argued that too much personal freedom bred internal disorder and left China prone to outside invasion. “If we are to resist foreign oppression in the future,” he wrote, “we must overcome individual freedom and join together as a firm unit, just as one adds water and cement to loose gravel to produce Conclusion: Big or Small 

 

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something as solid as a rock.”16 After so many decades in power, with a long line of economic successes, a retreat from authoritarian capitalism by the Communist Party is doubtful. Xi Jinping and others in China’s leadership will regard criticisms and complaints from Chinese academics and officials, and even from those outside China, as loose sand in need of being hardened into the mix. How will the Communist Party engage its critics overseas? At the second Belt and Road Forum in 2019, Xi did call for a more flexible position on China’s side in the face of internal and external criticism to his signature foreign policy. Xi promised that China would increase imports from developing countries, further reduce investment barriers, and advance sustainable and environmentally friendly projects in the Belt and Road that were consultative with local communities and void of corruption. This was a different tone, but Chinese experts viewed it as a tactical move, not a strategic change.17 As Elizabeth Economy writes in The Third Revolution, “One of the great paradoxes of China today is Xi Jinping’s effort to position himself as a champion of globalization, while at the same time restricting the free flow of capital, information, and goods between China and the rest of the world.”18 China’s predatory economic agenda, headstrong diplomacy, and military expansion will not go away from one year to the next. Xi’s foreign policy is a continuation rather than a deviation of that of past leaders. Any change will take time and require persistent and concerted pressure and persuasion. There is tighter political control in China under Xi Jinping. But despite the efforts of Xi to present a top-​down, centrally controlled picture of his leadership, power is still spread out and fragmented across multiple actors in China, particularly when it comes to foreign policy. The Communist Party, government and military officials, China’s policy banks, and state-​owned and private enterprises all influence China’s foreign relations and, at times, steer it in opposing and even conflicting directions.19 Whether it is with overseas Chinese managers engaging in corporate responsibility projects or top diplomats wanting to advance China’s role in conflict resolution, there are also opportunities to engage Chinese actors with interests and agendas that match those of others. They offer avenues to advance common goals and develop mutual trust between China and the world. They should not be neglected. Lesson two is to diversify trading and investment partners. Having friends among China’s diverse overseas actors is important, but so is hedging against the powerful influence of the Communist Party. The global ambitions of China’s leadership may go unfulfilled, but China remains keen to leverage its economy as a tool to extract economic and political concessions from 258     How

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others. The United States, Western Europe, and other advanced democracies have typically been those responsible for targeting other countries, such as Iran, North Korea, and Sudan, with trade restrictions and economic sanctions engineered to influence domestic and foreign policies. China is now experimenting and expanding with its own brand of sanctioning, and many Western countries are learning what it is like to be on the receiving end of economic coercion. Often masked by informal restrictions and non-​tariff trade barriers, China is willing to apply economic coercion on industries and international companies for what it deems as violations of a growing list of redlines. For decades, China’s core interests were seen to include the political centrality of the Communist Party and national unity around Tibet, Taiwan, Hong Kong, Xinjiang, and Inner Mongolia. Today they have expanded to China’s economic development and territory claims and strategic interests in the South and East China Seas.20 The Belt and Road will very likely be treated with the same sensitivities, along with China’s national interests and value positions in multilateral institutions, such as the United Nations and World Trade Organization (WTO). A long line of countries have faced Chinese economic coercion to influence their decision-​making of their foreign and security policy. Such targeting by China is hard to predict. An economic asset in China today can become a liability tomorrow. America’s National Basketball Association found this out in 2019 when the Chinese government canceled promotional events after the general manager of the Houston Rockets posted a supportive social media message about the Hong Kong protests. In early 2018, Canada was seeking a free trade deal with Beijing. By the end of the year, its relations with China were upended by the American extradition case for Huawei’s executive Meng Wanzhou. After Canadian authorities acted on the warrant, arresting Meng in Vancouver, instead of new trade and investment opportunities, Beijing responded by detaining two Canadians in China and imposing trade restrictions on several Canadian exports.21 To date, Chinese economic sanctions have inflicted more damage to individual companies and industries than entire economies, and often failed to invoke the foreign and security policy changes Beijing seeks. This is partly because Chinese leaders still worry about the impact of such hostilities on China’s own economic development. Given the influence of large corporations and industry associations in most countries through political lobbying, Beijing will continue to employ economic coercion to target foreign companies and economies. Over time, if gone unchecked by collective pushback from others, China’s power and confidence to weaponize its trade, Conclusion: Big or Small 

 

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investment, and finance will grow, particularly if it is successful in lowering its dependency on critical foreign technologies. China can apply formal and informal means to try to influence the foreign and security policy of countries around the world through leverage over their leading corporations and industries. If one seeks to have an economic relationship with China, then learning how to mitigate and manage this economic pressure is necessary. The Communist Party’s grand bargain for the world is that in return for access to the Chinese market and society, foreign countries, international companies, non-​governmental organizations, and higher education institutions are expected to bend, and even violate, their interests and values when the Party demands. Over the past three decades, many have willfully accepted these terms. China is a strategic investment for international companies, offering a large growth market, a regional and global production center, and a venue for research and development opportunities. But over time, noticeable disadvantages of engaging China are beginning to appear. Instead of a bright future in Chinese markets, many international companies and foreign organizations have jeopardized their long-​term strategic interests, economic competitiveness, and political values for short-​term gains. Future expectations of market access can wind up being curtailed as government regulation changes and local competition begins to capture larger market shares. And after chasing new growth in China for decades, the local partners are now challenging multinational corporations in their home and third markets. China is a global growth engine and a big market, but it is also a heavily controlled and restrictive business environment for foreign investors. Present-​day access to an industry may tighten up over time as Chinese industrial interests change. Just as regulated joint ventures and technology transfers may end in some industries, they may open in others. International companies should not be expected to always remain one competitive step ahead of their Chinese competition in the face of new political and social controls on an already uneven playing field in many Chinese industries. Until China begins to significantly reduce restrictions and controls on foreign investments and opens its market to comparable levels as other leading economies, corporate dependence on China will remain a severe risk to the economic competitiveness, welfare, and foreign policy decision-​making of countries around the world. Diversifying trade and investment does not entail decoupling from China. But governments and companies should allocate more resources toward understanding where they do have dependencies with China and encourage a diversification of trade and investment across other markets, particularly emerging ones in Asia and elsewhere, in order to decrease the strategic 260     How

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vulnerabilities that can come from engaging China too closely. This will also lay the ground for capitalizing on future growth in India, Indonesia, the Philippines, Vietnam, Mexico, Brazil, and Nigeria, which as China’s share of the global economy tops out, are predicted to be the fastest-​growing markets for decades to come.22 While not without their economic challenges and political differences, these countries also generally share similar perspectives of an international rules-​based order as Germany, France, Japan, South Korea, and other middle powers and small states. There are also plenty of opportunities in developed economies. Protecting and promoting commerce in these markets is vital. The draw of China’s consumer market can be great, but so can the risks, and while the COVID-​ 19 pandemic may dampen economic prospects in some advanced economies in the short-​run, opportunities for foreign companies are still rich in the United States, Western Europe, and East Asia. China is far from the only growth engine in the global economy. Foreign countries and multinational corporations should be weary of over-​prioritizing its importance by failing to understand the limits of their access to growth in China and the potential loss of competitiveness over time from formal and informal regulation that favors Chinese companies. Lesson three is to beware of the bilateral. With the exception of the United States, in terms of economic and military strength, all other countries are far smaller and less powerful on their own compared to China. Dealing with it alone is a fool’s errand. One-​on-​one agreements only serve to maximize Beijing’s relative strength. Collective engagement on economic, security, and political issues is necessary. The European Union, ASEAN, and the African Union are some of the regional bodies that can leverage the interests of individual members with China. Organization among so many parties may be difficult, but as the costs of facing China alone rise, the urgency to develop such arrangements grows too. “Such is the weight of China now,” journalist Isabel Hilton writes, “that should it fail on its own terms, the economic and other consequences could be grim. But should it succeed on these terms, there will be consequences for democratic freedoms that most of the West has barely begun to contemplate.”23 The middle powers need to take the lead. They must work together, and rally small states, to progressively deepen cooperation with one another and build a formable deterrence against China’s influence. They should design alliances and partnerships to bring life back into multilateral institutions and the international rules-​based order. Whether it is in the halls of the WTO in Geneva or on the waves of the South China Sea, they must be prepared to reciprocate China’s unwanted economic and military pressure. Conclusion: Big or Small 

 

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The work begins at home. Democracies must focus on revitalizing their political values and reversing economic and social inequality, but also prepare for outside interference that seeks to upset rule of law, elections, and free speech. There should be a common pact among political parties that establishes common redlines and prescribes how to deal with outside intervention so that China and others cannot exploit political divisions. Countries must also protect the sub-​national. Beijing will exploit opportunities sought by politicians at the provincial, state, and territorial levels to advance their interests and upset national unity on China policy. Public education is necessary to understand and disentangle where trade and investment with China are beneficial and where malign influences can arise. This will offset any negative political consequences for politicians in power who decide to confront Beijing and face economic coercion as a result. Governments will also need to advance policies that ensure that special interests from big business do not undercut national interests. These are not always one and the same. Without doing so, a vicious cycle of short-​term gains eroding long-​term competitiveness will continue. There will be considerable headwind in making such decisions, but traditional critics of a harder line on China among the business community are softening their stance as Chinese competitors continue to grow in sophistication and global reach. In many countries, public opinion has become more supportive of governments taking a stronger stance in confronting China. Pew Research Center polls conducted in 2019 showed that in North America, much of Western Europe, and in the Asia-​Pacific region, negative views prevail, and in some cases have reached historic highs.24 China’s neighbors in Asia—​Japan, South Korea, the Philippines, and India—​are particularly cautious about its investments and growing military power.25 How the COVID-​19 pandemic shapes these sentiments and global order moving forward is still uncertain. Negative views towards China grew following the outbreak of the coronavirus. China’s economic recovery from the pandemic may outpace others, but it may also suffer long-​term loses if other countries seek to disconnect or diversify critical supply chains away from their dependencies in the Chinese market. Beijing’s so-​called masked diplomacy during the pandemic yielded mixed results. In return for receiving medical assistance, Chinese officials pushed countries to publicly recognize its support, praise China’s model for epidemic prevention and control, and presumptively, avoid criticizing China as the source of the coronavirus.26 Some leaders responded accordingly. Other countries, however, particularly among regional powers, such as the EU and India, found it too difficult to neglect the Chinese government’s role in suppressing information of the outbreak 262     How

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early on and the disinformation campaigns China then launched criticizing their own pandemic responses.27 African governments also reacted negatively to the discriminatory treatment their citizens faced in Chinese cities during the pandemic. Yet in the absence of American and European support to the developing world, China’s vaccine diplomacy may help Beijing regain lost status. In a post-​ COVID-​ 19 world, the political ground for designing and implementing new government policies to protect strategic autonomy and industrial competitiveness from dependencies in China is fertile. Medical and industrial vulnerabilities have been laid bare by the pandemic. At the same time, growing inequality across much of North America and Western Europe is creating a backlash against free-​market capitalism that long steered foreign policy decision-​making on China in many Western capitals. The challenge will be to feed this energy into rebuilding multilateral institutions to govern the global economy and ensure global peace and stability, and avoiding the unilateral and transactional foreign policy promoted by the United States in recent years. Strengthening free trade deals that underpin the international rules-​based order, such as the reborn Trans-​Pacific Partnership (TPP), the Japan–​EU free trade deal, the Regional Comprehensive Economic Partnership in Asia, and the pan-​Africa free trade deal, demonstrate that, with fits and starts, much of the world remains proactive in advancing multilateralism and respecting national sovereignty and international rules.28 Regional powers, such as the EU and India, will need to overcome domestic special interests and find compromise with international partners. Reforming the WTO to monitor, negotiate, and more speedily arbitrate trade disputes should be a high priority. Sometimes this multilateralism will include China. Beijing has worked with others to keep the WTO dispute settlement system running despite Washington’s negligence of the organization under President Trump. But China may not be so open to reforms in the world trade body that many members seek to account for its economic system of state capitalism. Beijing is also against moves by France and Britain to send warships into the contested waters in the South China Sea, backing the United States, Japan, South Korea, Australia, and Canada in a show of respect for rule of international law.29 But such coordinated lobbying and action among a core group of middle powers is necessary to advance free trade and action on cyber security and arms control, and against assassinations and hostage taking by foreign states.30 Germany’s and France’s Alliance of Multilateralists; Britain’s call to expand the G7 into the Democratic 10, and include India, South Korea, Conclusion: Big or Small 

 

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and Australia; among other initiatives, offer opportunities to foster and build cooperation. Former secretary general for the North Atlantic Treaty Organization, Anders Fogh Rasmussen, convenes the annual Copenhagen Democracy Summit as a platform for knowledge sharing and collaboration. The Inter-​Parliamentary Alliance on China, comprising of lawmakers from North America, Europe, Asia, and Africa, was established in 2020 to work towards reform on how democratic countries approach China. Such modern partnerships should be acutely aware of the historical precedent of intervention and subjugation of China by Western powers and Japan. They will need to ensure their advocacy and action work as a deterrence to China’s assertive reach into their own political and economic systems rather than take strongly offensive actions. It is nonetheless critical to act in concert and synchronize trade and investment policies, technology standards, and even foreign interference measures. Beijing cannot claim that these partnerships amount to a Western alliance against China as India, Vietnam, Indonesia, and other Asian nations lend their own weight to particular economic and security agendas. A decade ago, Canada and Australia may have thought it far-​fetched to consider developing a deterrent against China’s economic coercion—​in other words, to willfully jeopardize their trading positions in order to defend each other from Chinese interference. But after both have experienced the sting of Chinese trade restrictions, they might reconsider, and others, such as Japan and South Korea, may join in. If not, China can easily block goods from one economy as political punishment and simply source the same exports elsewhere. In pushing for China to end these practices, it is important to recognize that Beijing still worries about undermining its own economic growth through such acts. As long as China’s domestic economy needs foreign trade and investment, there is room for negotiation. Small states cannot afford to sit on the sidelines. They must lend their collective weight to multilateralism or else face the consequences of a world where big powers can act with immunity to international rules and norms. “Small states must rely heavily on the quality of their strategic thinking to counter their vulnerability to international influences,” wrote Irish historian John Joseph Lee.31 “Without superior strategic thinking, they will be buffeted rudderless, like a cork on a wave.” These are not reforms that only advanced and emerging economies should consider. As pushback against China’s Belt and Road demonstrates, there is a ceiling in all countries on how much outside control and interference they can accept. In Africa, Latin America, and developing Asia, leveraging regional pacts to manage trade, investment, and finance from China and other 264     How

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foreign powers should be pushed forward. It is not about choosing sides in strategic competition between the United States and China. In most cases, countries will balance and hedge in pursuit of economic interests and political and security positions. Developing countries will need to continue to wrestle with the amount of ownership and control they are willing to grant China and other foreign powers over the domestic industries that are essential for driving future economic development. Some may think that such collective pushback should be placed on the United States. The Trump administration, after all, has feigned national security concerns as the justification for placing trade tariffs on key allies. If Washington persists and deepens its violations of international rules and norms in the future, collective responses against it can be advanced. But there also is potential for the United States to reverse its belligerent moves against the EU, Japan, and others and recalibrate its foreign policy to take part in collectively encouraging China to reform its economic, political, and security practices in the world. While America’s international image has suffered terribly under Trump, a 2018 Pew Research poll found that most countries still prefer American global leadership to that of China.32 If there is a shift in American foreign policy, it will take time for the United States to repair its alliances and partnerships, and domestic politics may continue to hold back its full embrace of multilateralism. But with or without the United States on side, pushback on China and work to rebuild multilateralism must continue. *** What comes next? The future will not be shaped by the United States and China alone. Some may think the presidency of Donald Trump represents the twilight of the American Century, but it does not herald the first rays of light of a world where China holds a dominating center position in the global economy and international affairs. One global hegemon will not simply replace another. As with much of modern history, diversity will persist. China is not rising on the barren landscape of postwar Europe and Asia as the United States did following World War II. The exercise and projection of lasting global power will not come from economic power and military force alone, but from negotiation, compromise, and concerted action between countries. This will not be a world where countries must choose sides between the United States and China in some new version of the Cold War. Although it may come under stress in strategic industries, economic interconnection will widely prevail despite geopolitical division. Middle powers and small states will focus on deepening trade and security cooperation with one another Conclusion: Big or Small 

 

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rather than the simplistic idea of fully aligning their interests with either the United States or China. Countries recognize their own economic interests and political values. They will not simply follow the dictates of Washington or Beijing, but instead blend, package, and resist these pressures in pursuit of their own ambitions. A plethora of options exists that allows others to both balance economic and political relations between Washington and Beijing and work on repairing and reforming multilateralism. The world is becoming a diplomat’s paradise, one where alliances and partnerships without strong hierarchies will be most influential in shaping the global agenda across diverse economies, polities, and cultures. There is a collective understanding among many historians and foreign affairs commentators that we are now entering a new Asian Century.33 After all, Asia is home to some 4.5 billion people, 60 percent of the world’s population, twenty-​one of the thirty largest cities, and half the world’s middle class. For the first time since the nineteenth century, Asian economies are larger than the rest of the world combined.34 But the Asian Century is often misdiagnosed as one that exposes new tensions and divides between Asia and the West. This is a consequence of positioning China and the United States as the guiding lights of these geographical groups. China is often portrayed at the center of Asia remade, and Asia’s strongest projection of global power. Pankaj Mishra writes on modern China that “Western Europe and America have no option but to pay court to it; the small commodity-​producing countries of Africa and Latin America form the new periphery to China’s metropole; its formerly hostile neighbors—​Japan, South Korea, Vietnam, Mongolia—​now cower in its shadow, seek favorable trade deals.”35 But China is not the only returning power seen to be displacing the West. “Others see a more diverse picture emerging from history. “As new connections forge and old links are renewed,” Peter Frankopan writes in The New Silk Roads, “the west is in danger of becoming less and less relevant.”36 He sees a Eurasian supercontinent returning to the center of international affairs. Arguing that the West risks becoming isolated, decisions made in Beijing, Moscow, Tehran, Riyadh, and New Delhi are the ones that will once again matter most. These viewpoints may not be all too illuminating to most in emerging economies and developing countries. The Vietnamese have not forgotten China’s historical or present-​day aggression, Russia continues to loom over its former satellite states in Central Asia, and countries on the Horn of Africa have long known the influence of their richer neighbors on the Gulf. But the Asian Century narrative is still jarring to the worldviews of many decision makers in Western capitals. Business executives, political leaders, and 266     How

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academics in Washington, London, and Brussels have had to extend their mental maps of the world out of Western-​centric boundaries and toward economic developments and political happenings in Asia. Challenging the views of Americans and Europeans of their centrality in international affairs is important work. “One task of the intellectual,” argued the late literature professor Edward Said, “is the effort to break down the stereotypes and reductive categories that are so limiting to human thought and communication.”37 Yet paradoxically, in breaking down Western stereotypes, proponents of the Asian Century have erected new ones that divide East from West and limit our understanding on Asia’s relations with the world. Asia is a big and diverse place. New connections are being forged and old links re-​established. But deep political and economic differences and strategic mistrust often go unspoken or understated in the Asian Century narrative. Gideon Rachman argues in Easternization that Asia is rising, and the United States is in decline. But he also points out how Asia’s differences and divisions can upset its future stability and prosperity, and that of the world at large. “In the twenty-​first century,” Rachman writes, “rivalries among nations of the Asia-​Pacific region will shape global politics, just as the struggles between European nations shaped world affairs for over five hundred years from 1500 onward.”38 Historical animosities are still fresh between Japan and South Korea and India and Pakistan, and most notably, between China and many of its neighbors. But there is also growing confidence in relations between many countries in Asia and fears of China’s rise are driving new cooperation. Japan and India stand out as major powers finding common ground to build new political, economic, and security ties. Tokyo and New Delhi both have a cautious eye trained on China’s hegemonic aspirations over Asia’s waterways and borderlands. Other countries in the Indo-​Pacific, such as Vietnam, Singapore, Indonesia, and Australia, look to each other, but also Japan and India as regional powers, to balance against overdependence on economic relations with China and deter its military aggression. Just as Asia’s intellectuals looked beyond a subservient future under European colonial rule, Africans, Latin Americans, and Southeast and South Asians are not content with acting as the periphery to China’s metropole. They are not particularly inclined to choosing sides between foreign powers, but instead can diversify their options and opportunities with the outside world and develop their own pathways for economic development and modernization. The Asian Century narrative underestimates the common economic interests and political values between Asian and Western countries. We Conclusion: Big or Small 

 

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should resist notions that the West and Asia are splitting and competing along American and Chinese lines. There is plenty of nuance in the economic and political viewpoints in each of these vast regions. But the artificial Asia-​ versus-​the-​West construct distracts from recognition of shared interests and values. From maintaining and deepening the international trading system to upholding the international law of the sea and fighting climate change, countries around the world hold common aspirations. The world does not require American or Chinese leadership to give it order. Amitav Acharya argues that the end of American domination will not produce disorder, but rather see economic interdependence and interconnectedness, the durability of international and regional institutions, and common global challenges, result in the maintenance of global order within and across regions.39 The international rules-​based order is not the sole property of the United States and will not necessarily decline with the relative fall of American power. South and Southeast Asian countries were part of efforts to build the international rules-​based order, including passing new legal conventions on maritime governance under the United Nations.40 Despite present-​day challenges in some countries, Latin America has long championed human rights.41 Such norms and ideals are not of the Global North’s design alone. For many countries around the world, American foreign policy, even before President Trump, has long been a cause for alarm. But the unjust and violent acts of one global superpower should not blind countries to acts of oppression and control by another. Rohan Mukherjee argues that while critics of the liberal international rules-​based order point out that it was never fully liberal, international, rules-​based, or orderly, they also conflate liberal order with American foreign policy, which are not one and the same.42 Since entering World War I in 1917, the United States ascended from a rising power to a post–​Cold War superpower. But it is only a minority of people in the world who will mourn the ultimate passing of the American Century. Rather than commiserate over the relative decline of the United States as the world’s sole superpower, many may celebrate its untimely demise. Argentinians, Congolese, and Iranians, among others, have not forgotten how the United States, the self-​proclaimed beacon of freedom, supported the installation of military juntas and dictators during the Cold War at their democratic expense. Across Africa, Latin America, and Asia, the International Monetary Fund and World Bank, as vehicles of American-​led economic order, are widely seen to have indebted rather than freed markets. After the 2001 terrorist attacks on New York City and Washington, DC, America’s forceful ousting of oppressive regimes was welcomed by many in Afghanistan and Iraq. But the chaos, torture, death, and unaddressed crimes 268     How

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of American occupation and its War on Terror remain hard to forgive. Even in Western Europe, among America’s long-​standing allies, the roots of anti-​Americanism are strong. America’s liberation of Europe from fascism and communist oppression gave way to generations of protests against its invasions of Vietnam and Iraq. Some are so eager to vilify America’s hegemonic bravado and ridicule its unhinged capitalism and cultural ignorance that they look past China’s unconscionable human rights abuses at home in Xinjiang, its support of oppressive regimes in Sudan and elsewhere, and destabilizing military expansion in the South China Sea. Yet two problems can exist at once. The United States and China can both undermine global peace and security. If the United States turns towards building multilateralism once again, it must reckon with a plural world in which its leaders will need to play a new role. The sooner it adapts, the brighter its future. The most pressing danger for the United States is not necessarily China’s military power, which America’s own formidable strength and the nature of the nuclear deterrent render manageable. It is rather the gradual erosion of American influence and abandonment of its alliances that threaten its future in the world. An end to American self-​harm is necessary. Its re-​engagement into the revamped Trans-​Pacific Partnership, the Paris climate agreement, and a new emphasis on global trade and development, would all support a revitalization of multilateralism. The presidency of Donald Trump has frustrated and surprised Beijing through trade wars and strategic competition, but China’s leaders have thus far failed spectacularly in capitalizing on America’s nationalist foreign policy. The qualities of China’s own foreign policy have repelled rather than attracted others. But the rest of the world cannot wait for the United States. It may even have to contend with Washington’s continual disruption of international rules. Yet failing to face up to the challenges from China’s rise will lend considerable weight to legitimizing political authoritarian behavior elsewhere. A possible future world of hardened authoritarianism will not be of China’s making alone. In the Middle East, Central Asia, Africa, and other regions, political authoritarianism has long been prevalent.43 The United States, Western Europe, Japan, and others have empowered some of these regimes, and even took part, in their kleptocratic practices. Without reform to these approaches, China’s influence and the use of its oppressive technology practices in combining state surveillance, big data, and artificial intelligence will only spread. A world where authoritarian regimes are seen as a legitimate alternative to democracy is one where Beijing sees the best opportunity to advance its Conclusion: Big or Small 

 

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national interests and value positions. China has a strategic partner in Russia to build an authoritarian internationale. A common agenda between Beijing and Moscow is daunting for democracies worldwide and should be regarded with acute concern. But this and China’s other authoritarian relationships are not devoid of tension. Beijing’s influence in Russia and other autocracies is often contested by domestic actors. At the same time, many of the countries that China has closer relations with—​Pakistan and North Korea, or Cambodia and Laos—​have deep-​rooted political dysfunction along with unstable and weak economies. The world has reached the terminus of unfettered and unchallenged American power, but many countries want to uphold the aspiration of an international rules-​based order. This future may appear complex and messy at times. But there are interests and values that can bring a diverse group of countries together. It is not necessarily geography that unites as much as similarities in viewpoints toward developing a free and fair playing field for international trade and a rules-​based order that prevents big powers from pursuing economic exploitation, political interference, military intervention, and territorial expansion. Challenges remain. Division and nationalism in the EU may continue to hamstring its foreign policy ambitions. Japan’s inward-​looking electorate may yet pull in Tokyo’s outreach to India and the rest of Asia. Regional cooperation in Africa requires visionary and risk-​taking leadership. But whether in the Americas, Europe, Asia, or Africa, to sell change at home, leaders need to better communicate the severity of outside economic and security challenges their countries face, and in turn, build new trade and security partnerships to shoulder the weight of new global responsibilities. External threats to global order can serve to deepen bonds between old European allies, shape new partnerships in Asia, and keep multilateralism afloat on rough waters. For too long the world has relied on a particular version of the future in its relations with China—​a future when China is a liberal market, and a future when China is a democracy. But the first two decades of the twenty-​first century have demonstrated that outsiders are not in control of China’s future. China’s leaders have shown their character. But the rest of the world has the power to push back, bring together big and small, and work with China to abandon its harsher dispositions and build a peaceful and prosperous future.

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N O TES

Introduction 1. Xi Jinping, Speech at the World Economic Forum, Davos, January 17, 2017, https://​www.weforum.org/​agenda/​2017/​01/​ full-​text-​of-​xi-​jinping-​keynote-​at-​the-​world-​economic-​forum. 2. Noah Barkin and Elizabeth Piper, “In Davos, Xi Makes Case for Chinese Leadership Role,” Reuters, January 17, 2017, https://​www.reuters.com/​article/​us-​davos-​meeting-​china/​ in-​davos-​xi-​makes-​case-​for-​chinese-​leadership-​role-​idUSKBN15118V. 3. Kerry Brown, China’s World: What Does China Want? (I. B. Tauris, 2017), 209–​10. 4. The World Bank, “The World Bank in China: Overview,” https://​www. worldbank.org/​en/​country/​china/​overview. 5. James Mann, The China Fantasy: How Our Leaders Explain Away Chinese Repression (Viking Penguin, 2007). 6. Teresa de Sousa, “O euro foi o maior bónus que a Europa ofereceu à Alemanha,” March 29, 2019, https://​www.publico.pt/​2019/​03/​24/​politica/​ entrevista/​ue-​temas-​1866469. 7. Fareed Zakaria, The Post-​American World (W. W. Norton, 2008); Amitav Acharya, The End of American World Order (Polity, 2014); Joseph S. Nye Jr., Is the American Century Over? (Polity, 2015). 8. Richard Haas, A World in Disarray: American Foreign Policy and the Crisis of the Old Order (Penguin Press, 2017); Robert Kagan, The Jungle Grows Back: America and Our Imperiled World (Knopf, 2018); Ivo H. Daalder and James M. Lindsay, The Empty Throne: America’s Abdication of Global Leadership (Public Affairs, 2018).

 

9. Martin Jacques, When China Rules the World: The End of the Western World and the Birth of a New Global Order (Penguin Press, 2009). 10. Ian Bremmer, “How China’s Economy Is Poised to Win the Future,” Time, November 2, 2017, https://​time.com/​5006971/​how-​chinas-​economy-​is-​ poised-​to-​win-​the-​future/​; Kishore Mahbuhani, “Has the West Lost It? A Provocation” (Allen Lane, 2018). 11. Wang Jisi, “China’s Search for a Grand Strategy,” Foreign Affairs 90, no. 2 (March/​April 2011): 68–​79, https://​www.foreignaffairs.com/​articles/​china/​ 2011-​02-​20/​chinas-​search-​grand-​strategy; Yan Xuetong, “The Age of Uneasy Peace: Chinese Power in a Divided World,” Foreign Affairs 98, no. 1 (January/​February 2019): 40–​46, https://​www.foreignaffairs.com/​articles/​ china/​2018-​12-​11/​age-​uneasy-​peace. 12. Thomas J. Christensen, The China Challenge: Shaping the Choices of a Rising Power (W. W. Norton, 2015); Michael Pillsbury, The Hundred-​Year Marathon: China’s Secret Strategy to Replace America as the Global Superpower (St. Martin’s Press, 2015); Graham Allison, Destined for War: Can America and China Escape Thucydides’s Trap? (Houghton Mifflin Harcourt, 2017). 13. Richard McGregor, Xi Jinping: The Backlash (Penguin eBooks, 2019); Rory Medcalf, Indo-​Pacific Empire: China, America, and the Contest for the World’s Pivotal Region (Manchester University Press, 2020) 14. “China 2030: Building a Modern, Harmonious, and Creative Society,” The World Bank and Development Research Center of the State Council, the People’s Republic of China, 2013, 3, https://​www.worldbank.org/​content/​ dam/​Worldbank/​document/​China-​2030-​complete.pdf. 15. Sonali Jain-​Chandra, “Chart of the Week: Inequality in China,” IMFBlog, September 20, 2018, https://​blogs.imf.org/​2018/​09/​20/​ chart-​of-​the-​week-​inequality-​in-​china/​?utm_​medium=email&utm_​ source=govdelivery. 16. “Corruption Perceptions Index 2018,” Transparency International, https://​ www.transparency.org/​research/​cpi/​overview. 17. Damien Ma, “Can China Avoid the Middle Income Trap?” Foreign Policy, March 12, 2016, https://​foreignpolicy.com/​2016/​03/​12/​can-​china-​avoid-​the-​ middle-​income-​trap-​five-​year-​plan-​economy-​two-​sessions/​. 18. Yukon Huang, Cracking the China Conundrum: Why Conventional Economic Wisdom Is Wrong (Oxford University Press, 2017). 19. Tom Orlik, China: The Bubble That Never Bursts (Oxford University Press, 2020). 20. George Magnus, Red Flags: Why Xi’s China Is in Jeopardy (Yale University Press, 2018). 21. Carl Minzer, End of an Era: How China’s Authoritarian Revival Is Undermining Its Rise (Oxford University Press, 2018). 22. Howard W. French, Everything under the Heavens: How the Past Helps Shape China’s Push for Global Power (Knopf, 2017), 282.

272    Notes

 

23. Xi Jinping, “Secure a Decisive Victory in Building a Moderately Prosperous Society in All Respects and Strive for the Great Success of Socialism with Chinese Characteristics for a New Era,” The 19th National Congress of the Communist Party of China, Beijing, October 18, 2017, 25 http://​www. xinhuanet.com/​english/​download/​Xi_​Jinping’s_​report_​at_​19th_​CPC_​ National_​Congress.pdf. 24. William A. Callahan, “China 2035: From the China Dream to the World Dream,” Global Affairs 2, no. 3 (2016): 247–​58, https://​doi.org/​10.1080/​ 23340460.2016.1210240. 25. French, Everything under the Heavens, 180. 26. Rush Doshi, “Hu’s to Blame for China’s Foreign Assertiveness?,” Brookings, January 22, 2019, https://​www.brookings.edu/​articles/​hus-​to-​blame-​for-​ chinas-​foreign-​assertiveness/​. 27. “Xi Urges Breaking New Ground in Major Country Diplomacy with Chinese Characteristics,” Xinhua, June 24, 2018; 28. Liza Tobin, “Xi’s Vision for Transforming Global Governance: A Strategic Challenge for Washington and Its Allies,” Texas National Security Review 2, no. 1 (November 2018): 154–​66, https://​tnsr.org/​2018/​11/​xis-​vision-​ for-​transforming-​global-​governance-​a-​strategic-​challenge-​for-​washington-​ and-​its-​allies/​; Nadège Rolland, China’s World Vision for a New World Order, The National Bureau of Asian Research, NBR Special Report #83, January 2020, https://​www.nbr.org/​wp-​content/​uploads/​pdfs/​publications/​sr83_​ chinasvision_​jan2020.pdf. 29. Xi Jinping, “Work Together to Build the Silk Road Economic Belt and the 21st-​Century Maritime Silk Road,” The Belt and Road Forum for International Cooperation, Beijing, May 14, 2017, http://​www.xinhuanet. com/​english/​2017-​05/​14/​c_​136282982.htm. 30. “Xi Demonstrates China’s Role as Responsible Country in New Year Address,” Xinhua, January 1, 2018, http://​www.xinhuanet.com/​english/​ 2018-​01/​01/​c_​136865307.htm. 31. Tanner Green, “Xi Jinping in Translation: China’s Guiding Ideology,” Palladium: Governance Futurism, May 31, 2019, https://​palladiummag. com/​2019/​05/​31/​xi-​jinping-​in-​translation-​chinas-​guiding-​ideology/​ Samir Saran and Akhil Deo, Pax Sinica: Implications for the Indian Dawn (Rupa Publications India, 2019). 32. Nadège Rolland, “Examining China’s ‘Community of Common Destiny,’” Power 3.0, January 23, 2018, https://​www.power3point0.org/​2018/​01/​ 23/​examining-​chinas-​community-​of-​destiny/​; Isabel Hilton, “When China Rules the World,” Prospect Magazine, May 14, 2018, https://​ www.prospectmagazine.co.uk/​magazine/​when-​china-​rules-​the-​world; Didi Kirsten Tatlow, “China’s Cosmological Communism: A Challenge to Liberal Democracies,” Merics, Perspectives, July 18, 2018, https://​

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www.merics.org/​sites/​default/​files/​2018-​07/​180718_​MERICS_​China_​ Monitor_​46_​CosmologicalCommunism.pdf. 33. Xi Jinping, “Secure a Decisive Victory in Building a Moderately Prosperous Society in All Respects and Strive for the Great Success of Socialism with Chinese Characteristics for a New Era.” 34. Feng Zhang, “Chinese Exceptionalism in the Intellectual World of China’s Foreign Policy,” in China across the Divide: The Domestic and Global Politics and Society, ed. Rosemary Foot, 43–​71 (Oxford University Press, 2013). 35. Diego Torres, “China’s Soft Power Offensive,” Politico, December 26, 2017, https://​www.politico.eu/​article/​china-​soft-​power-​offensive-​confucius-​ institute-​education/​. 36. Gao Yu, Peng Yanfeng, Yang Rui, Feng Yuding, Ma Danmeng, Flynn Murphy, Han Wei, and Timmy Shen, “In Depth: How Early Signs of a SARS-​Like Virus Were Spotted, Spread, and Throttled,” Caixin, February 29, 2019, https://​www.caixinglobal.com/​2020-​02-​29/​in-​ depth-​how-​early-​signs-​of-​a-​sars-​like-​virus-​were-​spotted-​spread-​and-​ throttled-​101521745.html; Jeremy Page, Wenxin Fan, and Natasha Khan, “How It All Started: China’s Early Coronavirus Missteps,” Wall Street Journal, March 6, 2020, https://​www.wsj.com/​articles/​ how-​it-​all-​started-​chinas-​early-​coronavirus-​missteps-​11583508932. 37. Ben Westcott and Steven Jiang, “Chinese Diplomat Promotes Conspiracy Theory That US Military Brought Coronavirus to Wuhan,” CNN, March 14, 2020, https://​edition.cnn.com/​2020/​03/​13/​asia/​ china-​coronavirus-​us-​lijian-​zhao-​intl-​hnk/​index.html; Lily Kuo, “China Sends Doctors and Masks Overseas as Domestic Coronavirus Infections Drop,” The Guardian, March 19, 2020, https://​www. theguardian.com/​world/​2020/​mar/​19/​china-​positions-​itself-​as-​a-​ leader-​in-​tackling-​the-​coronavirus; Ken Moritsugu, “China, on Virus PR Offensive, Sends Masks and Experts Abroad,” Associated Press, March 21, 2020, https://​abcnews.go.com/​Health/​wireStory/​ china-​virus-​pr-​offensive-​sends-​masks-​experts-​abroad-​69723923. 38. “‘Be Ready to Win Wars,’ China’s Xi Orders Reshaped PLA,” Xinhua, August 1, 2017, http://​www.xinhuanet.com/​english/​2017-​08/​01/​c_​ 136491455.htm.

Chapter 1 1. Denis Dumo, “Scores Killed in South Sudan Fighting, Gunfire Erupts in Capital,” Reuters, July 10, 2016, https://​af.reuters.com/​article/​topNews/​ idAFKCN0ZQ0IK. 2. Megan Specia, “383,000: Estimated Death Toll in South Sudan’s War,” New York Times, September 26, 2018, https://​www.nytimes.com/​2018/​09/​26/​ world/​africa/​south-​sudan-​civil-​war-​deaths.html.

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3. Charles Clover, “Chinese Private Security Companies Go Global,” Financial Times, February 26, 2017, https://​www.ft.com/​content/​ 2a1ce1c8-​fa7c-​11e6-​9516-​2d969e0d3b65. 4. “More Than 70 Chinese Arrive at Khartoum from South Sudan,” (Video file), CCTV News, July 14, 2016, https://​www.youtube.com/​ watch?v=Eq449vUsKxI. 5. “Fighting Intensifies in Chad; Chinese Moved to Safety,” China Daily, February 4, 2008, http://​www.chinadaily.com.cn/​china/​2008-​02/​04/​content_​ 6439801.htm. 6. Leslie Hook, “Chinese Groups Chastened by Conflict Zones,” Financial Times, April 10, 2013, https://​www.ft.com/​content/​3312c30e-​a02d-​11e2-​88b6-​ 00144feabdc0; Jonas Parello-​Plesner and Mathieu Duchâtel, “International Rescue: Beijing’s Mass Evacuation from Libya,” International Institute for Strategic Studies, Adelphi Papers 54, no. 451 (2015), https://​doi.org/​10.1080/​ 19445571.2014.1047141. 7. Wang Yi, “Speech by Foreign Minister Wang Yi at the Opening of Symposium on International Developments and China’s Diplomacy in 2017,” Mission of the People’s Republic of China to the European Union, December 10, 2017, https://​www.mfa.gov.cn/​ce/​cebe/​eng/​mhs/​t1518130. htm. 8. Harry Verhoeven, “Is Beijing’s Non-​Interference Policy History?: How Africa Is Changing China,” Washington Quarterly 37, no. 2 (2014), https://​doi.org/​ 10.1080/​0163660X.2014.926209. 9. “President Kiir Demands South Sudan Officials Return Stolen Money,” Sudan Tribune, June 2, 2012, http://​www.sudantribune.com/​spip.php?article42785. 10. Luke Patey, “Learning in Africa: China’s Overseas Oil Investments in Sudan and South Sudan,” Journal of Contemporary China 26, no. 107 (2017): 760–​62, https://​doi.org/​10.1080/​10670564.2017.1305489. 11. Human Rights Watch, Sudan, Oil, and Human Rights (Human Rights Watch, 2003). 12. Peter S. Goodman, “China Invests Heavily in Sudan’s Oil Industry,” Washington Post, December 23, 2004, http://​www.washingtonpost.com/​wp-​ dyn/​articles/​A21143-​2004Dec22.html. 13. Howard W. French, “China in Africa: All Trade, with No Political Baggage,” New York Times, August 8, 2004, https://​www.nytimes.com/​2004/​08/​08/​ world/​china-​in-​africa-​all-​trade-​with-​no-​political-​baggage.html. 14. Ian Taylor, “China’s Environmental Footprint in Africa,” China Dialogue, February 2, 2007, https://​www.chinadialogue.net/​article/​741-​China-​s-​ environmental-​footprint-​in-​Africa; Claire Ngozo, “China Puts Its Mark on Malawi,” The Guardian, May 7, 2011, https://​www.theguardian.com/​global-​ development/​2011/​may/​07/​china-​puts-​mark-​malawi-​presence. 15. Leben Nelson Moro, “Chinese Oil Companies and Local Communities in Unity State, South Sudan,” in Oil, Security and Community Engagement: A Notes 

 

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Collection of Essays on China’s Growing Role in South Sudan (Saferworld, 2013), https://​www.files.ethz.ch/​isn/​169575/​oil-​security-​and-​community-​ engagement-​english-​web.pdf. 16. Li Xiangyang, Liu Hongbo, and Li Bing, “Kua Guo Ying Jiu: wei le jiu wei gu rou tong bao—​xie zai zhong guo shi you zai su dan yu hai zhe gu hui he huo jiu ren yuan hui guo zhi ji” [Rescue work in another country for nine Chinese compatriots], Zhong guo shi you xin wen zhong xin, CNPC News Center, November 6, 2008; Han Shuju, Wang Hongtao, Zhang Jun, He Hongxu, “Zhong guo shi you tian ran qu ji tuan gong si hai wai xiang mu fang kong an quan guan li tan suo yu shi jian” [The exploration and practice of anti-​terrorism and safety management of CNPC overseas projects], Zhong guo an quan sheng chan ke xue ji shu Journal of Safety Science and Technology (2009); Coco Liu, “Chinese Seek Anti-​Terrorism Training for Work Abroad,” Global Post, August 10, 2010, https://​www.pri.org/​stories/​2010-​08-​10/​ chinese-​seek-​anti-​terrorism-​training-​work-​abroad. 17. “Garang: Oil Firms Are Targets,” BBC News, June 17, 2001, http://​news. bbc.co.uk/​2/​hi/​africa/​1393481.stm. 18. Elke Grawert and Christine Andrä, “Brief 48: Oil Investment and Conflict in Upper Nile State, South Sudan,” Bonn International Center for Conversion (2013), 53; Denis Dumo, “South Sudan Accuses Oil Group of Pollution, Threatens Shutdown,” Reuters, February 28, 2018, https://​uk.reuters.com/​ article/​us-​southsudan-​oil/​south-​sudan-​accuses-​oil-​group-​of-​pollution-​ threatens-​shutdown-​idUKKCN1GC2ZP. 19. Elizabeth C. Economy and Michael Levi, By All Means Necessary: How China’s Resource Quest Is Changing the World (Oxford University Press, 2014), 99–​116. 20. May Tan-​Mullins and Peter S. Hofman, “The Shaping of Chinese Corporate Responsibility,” Journal of Current Chinese Affairs 43, no. 4 (2015), https://​ journals.sub.uni-​hamburg.de/​giga/​jcca/​article/​view/​797/​798. 21. Adina Matisoff, “Crude Beginnings: An Assessment of China National Petroleum Corporation’s Environmental and Social Performance Abroad,” Friends of the Earth, Investor Brief (2012). 22. Rebecca Ray, Kevin P. Gallagher, Andres Lopez, and Cynthia Sanborn, “China in Latin America: Lessons for South-​South Cooperation and Sustainable Development,” in Boston University, Global Economic Governance Initiative (2015), https://​www.bu.edu/​pardeeschool/​files/​2014/​12/​Working-​ Group-​Final-​Report.pdf. 23. Sam Mednick, “South Sudan Ignores Reports on Oil Pollution, Birth Defects,” Associated Press, February 13, 2020, https://​apnews.com/​f2f06cfa70 126ad179445720d7c60b8a 24. Michael Martina, “South Sudan Marks New Foreign Policy Chapter for China: Official,” Reuters, February 11, 2014, https://​www.reuters.com/​article/​ us-​china-​southsudan-​idUSBREA1A0HO20140211.

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25. Peter Fabricius, “Beijing’s Peacemaking Efforts in South Sudan,” Institute for Security Studies, ISS Weekly, November 6, 2014, https://​issafrica.org/​amp/​iss-​ today/​beijings-​peacemaking-​efforts-​in-​south-​sudan. 26. Zhou Wa, “South Sudan ‘Needs Peaceful Solution,’” China Daily, January 17, 2014, http://​africa.chinadaily.com.cn/​weekly/​2014-​01/​17/​content_​ 17241519.htm. 27. Drazen Jorgic, “China Takes More Assertive Line in South Sudan Diplomacy,” Reuters, June 5, 2014, https://​uk.reuters.com/​article/​uk-​ southsudan-​china-​insight/​china-​takes-​more-​assertive-​line-​in-​south-​sudan-​ diplomacy-​idUKKBN0EG01Z20140605. 28. Daniel Large, “China and the Contradictions of ‘Non-​Interference’ in Sudan,” Review of African Political Economy 115 (2008), https://​doi. org/​10.1080/​03056240802011568; Daniel Large, “China’s Sudan Engagement: Changing Northern and Southern Political Trajectories in Peace and War,” China Quarterly 199 (October 2009), https://​doi.org/​ 10.1080/​03056240802011568. 29. Elizabeth C. Economy and Adam Segal, “China’s Olympic Nightmare,” Foreign Affairs 87, no. 4 (2008), https://​www.jstor.org/​stable/​ 20032715?seq=1#page_​scan_​tab_​contents. 30. Opheera McDoom, “China’s Hu Visits Sudan, Presses on Darfur,” Reuters, February 2, 2017, https://​www.reuters.com/​article/​us-​africa-​china/​ chinas-​hu-​visits-​sudan-​presses-​on-​darfur-​idUSL0213742620070202. 31. Jonathan Holsalg, “China’s Diplomatic Manoeuvring on the Question of Darfur,” Journal of Contemporary China 17, no. 54 (2008): 83, https://​doi.org/​ 10.1080/​10670560701693088. 32. Alan Boswell, “South Sudan and Sudan at Loggerheads over Oil Talks,” McClatchy, November 22, 2011, https://​www.mcclatchydc.com/​news/​nation-​ world/​world/​article24719401.html. 33. Alex de Waal, “South Sudan’s Doomsday Machine,” New York Times, January 24, 2012, https://​www.nytimes.com/​2012/​01/​25/​opinion/​south-​sudans-​ doomsday-​machine.html. 34. “China Urges Sudan & South Sudan to Break Oil Deadlock,” Sudan Tribune, December 12, 2011, https://​sudantribune.com/​spip.php?article40969. 35. “China’s New Courtship in South Sudan,” International Crisis Group, Africa Report 186 (2012): 30, https://​www.crisisgroup.org/​africa/​horn-​africa/​south-​ sudan/​china-​s-​new-​courtship-​south-​sudan. 36. CNPC, “Annual Report 2013” (Beijing, 2014), 6. 37. Alex de Waal, “When Kleptocracy Becomes Insolvent: Brute Causes of the Civil War in South Sudan,” African Affairs 113, no. 452 (2014), https://​doi. org/​10.1093/​afraf/​adu028. 38. “China’s Foreign Policy Experiment in South Sudan,” International Crisis Group, Asia Report 288 (July 10, 2017): 17,

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https://​www.crisisgroup.org/​africa/​horn-​africa/​south-​sudan/​ 288-​china-​s-​foreign-​policy-​experiment-​south-​sudan. 39. U.S. Energy Information Administration, “Country Analysis Brief: Sudan and South Sudan,” March 5, 2018, https://​www.eia.gov/​beta/​international/​ analysis_​includes/​countries_​long/​Sudan_​and_​South_​Sudan/​sudan.pdf. 40. Fabricius, “Beijing’s Peacemaking Efforts in South Sudan.” 41. “China’s Mediation in South Sudan Problem Not for Own Interests,” Xinhua, January 12, 2015, http://​www.chinadaily.com.cn/​china/​2015-​01/​12/​content_​ 19300304.htm; Wang Yi, “China Is an Active Promoter, Steadfast Defender, and Sincere Participant of Peace in South Sudan,” Ministry of Foreign Affairs of the People’s Republic of China, Beijing, January 13, 2015, https://​www. fmprc.gov.cn/​mfa_​eng/​zxxx_​662805/​t1228073.shtml. 42. John Young, “A Fractious Rebellion: Inside the SPLM-​IO,” Small Arms Survey, Human Security Baseline Assessment for Sudan and South Sudan (2015), 39, http://​www.smallarmssurveysudan.org/​fileadmin/​docs/​working-​papers/​ HSBA-​WP39-​SPLM-​IO.pdf; “China’s Foreign Policy Experiment in South Sudan,” International Crisis Group,  12–​13. 43. “The Conflict in Upper Nile State: Describing Events through 8 March 2016,” Small Arms Survey, Human Security Baseline Assessment for Sudan and South Sudan, 2016, http://​www.smallarmssurveysudan.org/​fileadmin/​docs/​ facts-​figures/​HSBA-​Conflict-​Upper-​Nile-​March-​2016.pdf. 44. Daniel Large, “China and South Sudan’s Civil War, 2013–​2015,” African Studies Quarterly 16, no. 3–​4 (December 2016), http://​sites.clas.ufl.edu/​africa-​ asq/​files/​v16a4.Large_​.HDed_​.pdf. 45. Young, “A Fractious Rebellion,” 39; “China’s Foreign Policy Experiment in South Sudan,” International Crisis Group,  12–​13. 46. Young, “A Fractious Rebellion,” 28–​29. 47. “Dispatch from the Field: Weapons and Ammunition Airdropped to SPLA-​ IO Forces in South Sudan,” Conflict Armament Research (June 2015). 48. Andrew Heavens, “Darfur Rebels Vow More Attacks on Sudan Oil Fields,” Reuters, October 25, 2007, https://​www.reuters.com/​article/​ us-​sudan-​oil-​kidnap/​darfur-​rebels-​vow-​more-​attacks-​on-​sudan-​oil-​fields-​ idUSL2552449420071025. 49. Pieter D. Wezeman, Aude Fleurant, Alexandra Kuimova, Nan Tian, and Siemon T. Wezeman, “Trends in International Arms Transfers, 2017,” Stockholm International Peace Research Institute, SIPRI Fact Sheet (March 2018), https://​www.sipri.org/​sites/​default/​files/​2018-​03/​fssipri_​at2017_​ 0.pdf. 50. Jorgic, “China Takes More Assertive Line in South Sudan Diplomacy.” 51. Ilya Gridneff, “China Sells South Sudan Arms as Its Government Talks Peace,” Bloomberg, July 9, 2014, https://​www.bloomberg.com/​news/​articles/​2014-​07-​08/​ norinco-​sells-​south-​sudan-​arms-​as-​chinese-​government-​talks-​peace.

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52. Alice Su, “China’s Business and Politics in South Sudan,” Foreign Affairs, June 6, 2016, https://​www.foreignaffairs.com/​articles/​south-​sudan/​2016-​06-​ 06/​chinas-​business-​and-​politics-​south-​sudan. 53. Norinco letter, “Delivery of First Batch of Engineering Equipment Contract No. MODVA/​001/​2013,” Ref. No. JPMC-​N-​131227-​013, December 27, 2013. 54. “Weapon Supplies into South Sudan’s Civil War: Regional Re-​Transfers and International Intermediaries,” Conflict Armament Research (November 2018). 55. Robbie Gramer, “How European and Chinese Arms Diverted to South Sudan Fueled Its Civil War,” Foreign Policy, November 29, 2018, https://​ foreignpolicy.com/​2018/​11/​29/​how-​eu-​and-​chinese-​arms-​diverted-​to-​south-​ sudan-​fueled-​its-​civil-​war-​small-​arms-​warfare-​east-​africa-​conflict-​china-​ weapons-​exports-​humanitarian-​crisis-​juba-​peace-​deal-​salva-​kiir/​. 56. Zach Vertin, “A Poisoned Well: Lessons in Mediation from South Sudan’s Peace Process,” International Peace Institute (April 2018), 21, https://​www. ipinst.org/​wp-​content/​uploads/​2018/​04/​1804_​Poisoned-​Well.pdf. 57. Obert Hodzi, “Strategy of ‘Parallels’: China in the South Sudan Armed Conflict,” Asia Centre, Note Observatoire Chine (January 2017), 6. 58. Alan Boswell, “South Sudan Needs Bold Alternatives, Not This Dumpster Fire of Failed Interventions,” The New Humanitarian, November 15, 2017, https://​www.thenewhumanitarian.org/​opinion/​2017/​11/​15/​ south-​sudan-​needs-​bold-​alternatives-​not-​dumpster-​fire-​failed-​interventions. 59. Fabricius, “Beijing’s Peacemaking Efforts in South Sudan.” 60. Shi Jiangtao, “How Washington Dealt a Blow to the Years-​Old Diplomatic Push for a US-​China Alliance in Africa,” South China Morning Post, December 30, 2014, https://​www.scmp.com/​news/​china/​diplomacy/​article/​2179925/​ how-​washington-​dealt-​blow-​years-​old-​diplomatic-​push-​us-​china. 61. Mohamed Ibn Chambas, Princeton N. Lyman, and Jianhua Zhong, “Where Beijing, Washington, and African Governments Can Work Together,” Foreign Affairs, March 3, 2017, https://​www.foreignaffairs.com/​articles/​africa/​2017-​03-​03/​ where-​beijing-​washington-​and-​african-​governments-​can-​work-​together. 62. Helene Cooper, “Trump Team’s Queries about Africa Point to Skepticism about Aid,” New York Times, January 13, 2017, https://​www.nytimes.com/​ 2017/​01/​13/​world/​africa/​africa-​donald-​trump.html. 63. Abdi Latif Dahir, “The Trump Administration’s Africa Policy Is All about Countering China’s Influence,” Quartz, December 14, 2018, https://​qz.com/​ africa/​1495859/​bolton-​unveils-​trump-​africa-​strategy-​to-​counter-​china-​russia/​. 64. “Clinton Warns against ‘New Colonialism’ in Africa,” Reuters, June 11, 2011, https://​www.reuters.com/​article/​us-​clinton-​africa/​clinton-​warns-​against-​new-​ colonialism-​in-​africa-​idUSTRE75A0RI20110611. 65. Matthew G. Minot-​Scheuermann, “Chinese Anti-​Piracy and the Global Maritime Commons,” The Diplomat, February 25, 2016, https://​thediplomat. Notes 

 

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com/​2016/​02/​chinas-​anti-​piracy-​mission-​and-​the-​global-​maritime-​ commons/​; Yun Sun, “US-​China Cooperation on African Security,” Brookings Institution, Africa in Focus, November 1, 2016, https://​www.brookings.edu/​ blog/​africa-​in-​focus/​2016/​11/​01/​us-​china-​cooperation-​on-​african-​security/​. 66. Jérôme Henry, “China’s Military Deployments in the Gulf of Aden: Anti-​ Piracy and Beyond,” Center for Asian Studies, Ifri (November 2016), https://​ www.ifri.org/​sites/​default/​files/​atoms/​files/​chinas_​military_​deployments_​in_​ the_​gulf_​of_​aden_​anti-​piracy_​and_​beyond_​0.pdf. 67. Zhang Tao, “Chinese Combat Troops Face Gunfire, Diseases in UN Deployment in South Sudan,” China Military, September 8, 2016, http://​ english.chinamil.com.cn/​view/​2016-​09/​08/​content_​7247500.htm. 68. Lauren Spink and Matt Wells, “Under Fire: The July 2016 Violence in Juba and UN Response,” Center for Civilians in Conflict (November 2016), https://​civiliansinconflict.org/​wp-​content/​uploads/​2017/​09/​civic-​juba-​ violence-​report-​october-​2016.pdf; United Nations Mission in South Sudan, “Executive Summary of the Independent Special Investigation into the Violence Which Occurred in Juba in 2016 and UNMISS Response,” November 2016, https://​www.un.org/​News/​dh/​infocus/​sudan/​Public_​ Executive_​Summary_​on_​the_​Special_​Investigation_​Report_​1_​Nov_​2016. pdf. 69. “One UN Peacekeeper from China Killed, Six Injured in South Sudan Mission,” CCTV, July 11, 2016 (Video file), https://​www.youtube.com/​ watch?v=iL5VQuNUkQM. 70. Jeremy Page and Matina Stevis, “China Discovers the Price of Global Power: Soldiers Returning in Caskets,” Wall Street Journal, November 15, 2016, https://​www.wsj.com/​articles/​china-​discovers-​the-​price-​of-​global-​ power-​soldiers-​returning-​in-​caskets-​1479250248. 71. Spink and Wells, “Under Fire,” 45. 72. Jason Patinkin, “South Sudan Troops Raped, Beat Foreigners as UN Force Ignored Calls for Help,” Associated Press, August 15, 2016, https://​www. nbcnews.com/​news/​world/​south-​sudan-​troops-​raped-​beat-​foreigners-​u-​n-​ force-​ignored-​n630876; United Nations Mission in South Sudan, “Executive Summary,” 2. 73. Ulf Laessing, “In Darfur, the Limits of Peacekeeping,” Reuters, October 8, 2013, https://​www.reuters.com/​article/​us-​sudan-​darfur-​peacekeeping/​in-​ darfur-​the-​limits-​of-​peacekeeping-​idUSBRE99707W20131008; Colum Lynch, “‘They Just Stood Watching,’” Foreign Policy, April 7, 2014, http://​ foreignpolicy.com/​2014/​04/​07/​they-​just-​stood-​watching-​2/​. 74. Colum Lynch, “A Mission That Was Set Up to Fail,” Foreign Policy, April 8, 2014, https://​foreignpolicy.com/​2014/​04/​08/​a-​mission-​that-​was-​set-​up-​to-​ fail/​. 75. Daniel M. Hartnett, “China’s First Deployment of Combat Forces to a UN Peacekeeping Mission—​South Sudan,” US-​China Economic and Security

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Review Commission, March 13, 2012, https://​www.uscc.gov/​sites/​default/​files/​ Research/​MEMO-​PLA-​PKO_​final.pdf. 76. Hartnett, “China’s First Deployment of Combat Forces to a UN Peacekeeping Mission—​South Sudan.” 77. Courtney J. Fung, “China’s Troop Contributions to UN Peacekeeping,” United States Institute of Peace (July 2016), https://​www.usip.org/​publications/​ 2016/​07/​chinas-​troop-​contributions-​un-​peacekeeping. 78. United Nations, “Monthly Summary of Military and Police Contribution to United Nations Operations” (December 2018), https://​peacekeeping.un.org/​ sites/​default/​files/​msrs_​december_​2018_​0.pdf. 79. Mathieu Duchâtel, Richard Gowan, and Manuel Lafont Rapnouil, “Into Africa: China’s Global Security Shift,” European Council on Foreign Relations (June 2016), 8, https://​www.ecfr.eu/​publications/​summary/​into_​africa_​ chinas_​global_​security_​shift. 80. Colum Lynch, “UN Peacekeepers to Protect China’s Oil Interests in South Sudan,” Foreign Policy, June 16, 2014, https://​foreignpolicy.com/​2014/​06/​16/​ u-​n-​peacekeepers-​to-​protect-​chinas-​oil-​interests-​in-​south-​sudan/​. 81. Zhou Hang, “China’s Expanding Role in South Sudanese Civil War,” The Jamestown Foundation, China Brief, 14, no. 19 (October 10, 2014), https://​ jamestown.org/​program/​testing-​the-​limits-​chinas-​expanding-​role-​in-​the-​ south-​sudanese-​civil-​war/​. 82. “3 Chinese Workers Evacuated to Safety in S. Sudan,” China Daily USA, December 22, 2013, http://​usa.chinadaily.com.cn/​china/​2013-​12/​22/​ content_​17189710.htm. 83. Bates Gill and Chin-​Hao Huang, “The People’s Republic of China,” in Providing Peacekeepers: The Politics, Challenges, and Future of United Nations Peacekeeping Contributions, ed. Alex J. Bellamy and Paul D. Williams (Oxford University Press, 2013), 149–​50. 84. Frans Paul van der Putten, “China’s Evolving Role in Peacekeeping and African Security: The Deployment of Chinese Troops for UN Force Protection in Mali,” Clingendael (September 2015), 12, https://​www.clingendael.org/​publication/​ chinas-​evolving-​role-​peacekeeping-​and-​african-​security. 85. Richard Gowan, “Peacekeeping at the Precipice: Is Everything Going Wrong for the UN?,” International Forum for the Challenges of Peace Operations (2014), http://​www.challengesforum.org/​Global/​Forum%20 Documents/​2014%20Beijing%20Annual%20Forum/​Gowan_​ Peacekeeping%20at%20the%20Precipice%20-​%20Background%20 paper%20Bejing%2030Sept2014.pdf. 86. Murali Krishnan, “Indian Peacekeeper Deaths Pose Tactical Questions,” DW, April 16, 2013, https://​www.dw.com/​en/​indian-​peacekeeper-​deaths-​pose-​ tactical-​questions/​a-​16747593; Jason Patinkin, “UN Moves to Protect South Sudan Civilians after Years of Criticism,” Reuters, August 28, 2017, https://​ Notes 

 

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www.reuters.com/​article/​us-​southsudan-​un/​u-​n-​moves-​to-​protect-​south-​ sudan-​civilians-​after-​years-​of-​criticism-​idUSKCN1B80KA. 87. Page and Stevis, “China Discovers the Price of Global Power.” 88. Page and Stevis, “China Discovers the Price of Global Power.” 89. Doug Bock Clark and Corey Pattison, “China Is Playing Peacemaker in Myanmar, but with an Ulterior Motive,” Foreign Policy, April 18, 2017, https://​foreignpolicy.com/​2017/​04/​18/​china-​is-​playing-​peacemaker-​in-​ myanmar-​but-​with-​an-​ulterior-​motive-​myitsone-​dam-​energy/​. 90. “China’s Role in Myanmar’s Internal Conflicts,” United States Institute of Peace, USIP Senior Study Group Final Report (2018), https://​www.usip.org/​sites/​ default/​files/​2018-​09/​ssg-​report-​chinas-​role-​in-​myanmars-​internal-​conflicts. pdf. 91. Yun Sun, “Myanmar in US-​China Relations,” Great Powers and the Changing Myanmar Issue Brief 3 (June 2014), https://​www.stimson.org/​sites/​default/​ files/​file-​attachments/​Myanmar_​Issue_​Brief_​3.pdf.

Chapter 2 1. Amy Qin and Audrey Carlsen, “How China Is Rewriting Its Own Script,” New York Times, November 18, 2018, https://​www.nytimes.com/​interactive/​ 2018/​11/​18/​world/​asia/​china-​movies.html. 2. Evan Osnos, “Making China Great Again,” New Yorker, January 1, 2018, https://​www.newyorker.com/​magazine/​2018/​01/​08/​ making-​china-​great-​again. 3. Robert B. Zoellick, “Whither China? From Membership to Responsibility,” National Committee on US-​China Relations, September 21, 2005, https://​www. ncuscr.org/​sites/​default/​files/​migration/​Zoellick_​remarks_​notes06_​winter_​ spring.pdf. 4. Thomas L. Friedman, “Obama on the World,” New York Times, August 8, 2014, https://​www.nytimes.com/​2014/​08/​09/​opinion/​president-​obama-​ thomas-​l-​friedman-​iraq-​and-​world-​affairs.html. 5. Xi Jinping, “Secure a Decisive Victory in Building a Moderately Prosperous Society in All Respects and Strive for the Great Success of Socialism with Chinese Characteristics for a New Era,” The 19th National Congress of the Communist Party of China, Beijing, October 18, 2017, 54, http://​www. xinhuanet.com/​english/​download/​Xi_​Jinping’s_​report_​at_​19th_​CPC_​ National_​Congress.pdf. 6. “Full Text of President Xi’s Speech at Opening of Belt and Road Forum,” Xinhua, May 14, 2017, http://​www.xinhuanet.com//​english/​2017-​05/​14/​c_​ 136282982.htm. 7. Chris Alden and Daniel Large, “On Becoming a Norms Maker: Chinese Foreign Policy, Norms Evolution, and the Challenges of Security in Africa,” China Quarterly 221 (March 2015), https://​doi.org/​

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10.1017/​S0305741015000028; Wang Xuejun, “Developmental Peace: Understanding China’s Africa Policy in Peace and Security,” in China and Africa: Building Peace and Security Cooperation on the Continent, ed. Chris Alden, Abiodun Alao, Zhang Chun, and Laura Barber (Palgrave Macmillan, 2017). 8. “Pakistan: The Worsening Conflict in Balochistan,” International Crisis Group, Asia Report 119, September 14, 2006, https://​d2071andvip0wj.cloudfront. net/​119-​pakistan-​the-​worsening-​conflict-​in-​balochistan.pdf. 9. Jonas Parello-​Plesner and Mathieu Duchâtel, “China’s ‘AfPak’ Hinterland,” International Institute for Strategic Studies, Adelphi Papers 54, no. 451 (2015): 76–​77, https://​doi.org/​10.1080/​19445571.2014.1046764. 10. “China-​Pakistan Economic Corridor: Opportunities and Risks,” International Crisis Group, June 29, 2018, 7, https://​www.crisisgroup.org/​asia/​south-​asia/​ pakistan/​297-​china-​pakistan-​economic-​corridor-​opportunities-​and-​risks. 11. Murtaza Solangi, “Why Are Separatist Militants Violently Targeting Chinese in Pakistan?,” South China Morning Post, November 24, 2018, https://​www.scmp.com/​week-​asia/​geopolitics/​article/​2174837/​ why-​are-​separatist-​militants-​violently-​targeting-​chinese. 12. Syed Raza Hassan, “Attacks Have Killed 44 Pakistanis Working on China Corridor since 2014,” Reuters, September 8, 2016, https://​www.reuters.com/​ article/​us-​pakistan-​china-​idUSKCN11E1EP. 13. “Baloch Militants No Longer a Threat to CPEC, Says Chinese Envoy,” Dawn, February 3, 2018, https://​www.dawn.com/​news/​1387023. 14. Syed Raza Hassan, “Senior Chinese Shipping Executive Shot Dead in Pakistan,” Reuters, February 5, 2018, https://​www.reuters.com/​article/​us-​ pakistan-​china-​shooting/​senior-​chinese-​shipping-​executive-​shot-​dead-​in-​ pakistan-​idUSKBN1FP1UK. 15. Mohammad Zafar, “Six Injured in Suicide Attack on Bus Carrying Chinese Engineers in Dalbandin,” The Express Tribune, August 11, 2018, https://​ tribune.com.pk/​story/​1778389/​1-​least-​six-​injured-​balochistan-​suicide-​ attack/​. 16. Ismail Dilawar and Faseeh Mangi, “Militants Assault China Consulate in Pakistan’s Biggest City,” Bloomberg, November 23, 2018, https://​www.bloomberg.com/​news/​articles/​2018-​11-​23/​ chinese-​consulate-​in-​pakistan-​s-​karachi-​attacked-​by-​gunmen. 17. Salman Masood, “Gunmen Attack Pakistan Hotel Used by Chinese and Vow Further Violence,” New York Times, May 11, 2019, https://​www.nytimes.com/​ 2019/​05/​11/​world/​asia/​pakistan-​hotel-​attack-​gwadar.html. 18. Baqir Sajjad Syed, “BLA Out to Bleed Pakistan Economy, Chinese Interests”, The Dawn, June 30, 2020, https://​www.dawn.com/​news/​1566053 19. “China-​Pakistan Economic Corridor,” 22. 20. Sheridan Presso, “One of China’s Most Ambitious Projects Becomes a Corridor to Nowhere,” Bloomberg, March 2, 2020, Notes 

 

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https://​www.bloomberg.com/​news/​features/​2020-​03-​02/​ a-​china-​belt-​and-​road-​project-​becomes-​a-​corridor-​to-​nowhere. 21. Jacob Mardell and Thomas S. Eder, “The BRI in Pakistan: Too Big to Fail,” Mercator Institute for China Studies, September 20, 2018, https://​www.merics. org/​en/​blog/​bri-​pakistan-​too-​big-​fail. 22. Farhan Bokhari and Kiran Stacey, “China Woos Pakistan Militants to Secure Belt and Road Projects,” Financial Times, February 19, 2018, https://​www. ft.com/​content/​063ce350-​1099-​11e8-​8cb6-​b9ccc4c4dbbb. 23. Adnan Aamir, “China’s Belt and Road Plans Dismay Pakistan’s Poorest Province,” Financial Times, June 14, 2018, https://​www.ft.com/​content/​ c4b78fe0-​5399-​11e8-​84f4-​43d65af59d43. 24. “China-​Pakistan Economic Corridor,” 17. 25. Andrew Small, The China-​Pakistan Axis: Asia New Geopolitics (Hurst, 2015), 161–​63. 26. Small, The China-​Pakistan Axis, 129. 27. Edward Wong, “Riots in Western China amid Ethnic Tension,” New York Times, July 5, 2019, https://​www.nytimes.com/​2009/​07/​06/​world/​asia/​ 06china.html. 28. Sudha Ramachandran, “Is China Bringing Peace to Afghanistan?” The Diplomat, June 20, 2018, https://​thediplomat.com/​2018/​06/​is-​china-​ bringing-​peace-​to-​afghanistan/​; Angela Stanzel, “Fear and Loathing on the New Silk Road: Chinese Security in Afghanistan and Beyond,” European Council on Foreign Relations, Policy Brief (July 2018), 16, https://​www.ecfr. eu/​publications/​summary/​new_​silk_​road_​chinese_​security_​in_​afghanistan_​ beyond. 29. Rupakjyoti Borah, “Will US Reward China for ‘Sacrificing’ Pakistan Terrorist Masood Azhar?,” South China Morning Post, May 8, 2019, https://​www.scmp.com/​week-​asia/​opinion/​article/​3009415/​ will-​us-​reward-​china-​sacrificing-​pakistani-​terrorist-​masood-​azhar. 30. David Rank, “Leveraging US-​China Cooperation to Build a Regional Consensus on Afghanistan,” United States Institute of Peace, Special Report 420 (February 2018), 7. 31. Charles Clover, “Mystery Deepens over Chinese Forces in Afghanistan,” Financial Times, February 26, 2017, https://​www.ft.com/​content/​ 0c8a5a2a-​f9b7-​11e6-​9516-​2d969e0d3b65. 32. Gerry Shih, “In Central Asia’s Forbidding Highlands, a Quiet Newcomer: Chinese Troops,” Washington Post, February 18, 2019, https://​www.washingtonpost.com/​world/​asia_​pacific/​in-​central-​asias-​ forbidding-​highlands-​a-​quiet-​newcomer-​chinese-​troops/​2019/​02/​18/​ 784a8d0-​1e62-​11e9-​a759-​2b8541bbbe20_​story.html?tid=ss_​mail&utm_​ term=.466a76ab7ffd. 33. Craig Nelson and Thomas Grove, “Russia, China Vie for Influence in Central Asia as US Plans Afghan Exit,” Wall Street Journal, June 18, 2019, https://​

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www.wsj.com/​articles/​russia-​china-​vie-​for-​influence-​in-​central-​asia-​as-​u-​s-​ plans-​afghan-​exit-​11560850203. 34. Howard W. French, Everything under the Heavens: How the Past Helps Shape China’s Push for Global Power (Knopf, 2017), 99–​102. 35. Bill Hayton, The South China Sea: The Struggle for Power in Asia (Yale University Press, 2014), 83. 36. Harry Verhoeven, “Is Beijing’s Non-​Interference Policy History?: How Africa Is Changing China,” Washington Quarterly 37, no. 2 (2014), https://​doi.org/​ 10.1080/​0163660X.2014.926209. 37. “Security Council—​Veto List,” Dag Hammarskjöld Library, http://​research. un.org/​en/​docs/​sc/​quick. 38. Courtney J. Fung, “Separating Intervention from Regime Change: China’s Diplomatic Innovations at the UN Security Council Regarding the Syria Crisis,” China Quarterly 235 (September 2018): 693–​712, https://​doi.org/​ 10.1017/​S0305741018000851. 39. Xue Lei, “China’s Role in Sudan and South Sudan Peacekeeping Operations,” Global Review (winter 2012): 14. 40. Robbie Gramer and Colum Lynch, “Haley Tried to Block Appointment of Chinese Diplomat to Key UN Post. He Got the Job Anyway,” Foreign Policy, February 14, 2019, https://​foreignpolicy.com/​2019/​02/​14/​united-​nations-​ china-​xia-​huang-​influence-​africa-​great-​lakes-​diplomacy-​nikki-​haley-​united-​ states-​international-​organizations/​. 41. Courtney J. Fung and Shing-​Hon Lam, “China Already Leads 4 of the 15 UN Specialized Agencies—​and Is Aiming for a 5th,” Washington Post, March 3, 2020, https://​www.washingtonpost.com/​politics/​2020/​03/​03/​china-​ already-​leads-​4-​15-​un-​specialized-​agencies-​is-​aiming-​5th/​. 42. Colum Lynch, “China Eyes Ending Western Grip on Top UN Jobs with Greater Control over Blue Helmets,” Foreign Policy, October 2, 2016, https://​ foreignpolicy.com/​2016/​10/​02/​china-​eyes-​ending-​western-​grip-​on-​top-​ u-​n-​jobs-​with-​greater-​control-​over-​blue-​helmets/​; Ted Piccone, “China’s Long Game on Human Rights at the United Nations,” Brookings Institution (September 2018), https://​www.brookings.edu/​research/​chinas-​long-​game-​ on-​human-​rights-​at-​the-​united-​nations/​. 43. Tiewa Lu and Haibin Zhang, “Debates in China about the Responsibility to Protect as a Developing International Norm: A General Assessment,” Conflict, Security, and Development 14, no. 4 (2014), https://​doi.org/​10.1080/​ 14678802.2014.930590. 44. Ricardo Soares de Oliveira and Harry Verhoeven, “Taming Intervention: Sovereignty, Statehood, and Political Order in Africa,” Survival 60, no. 2 (March 2018), https://​doi.org/​10.1080/​00396338.2018.1448558. 45. Lise Morjé Howard and Alexandra Stark, “Why Civil Wars Are Lasting Longer,” Foreign Affairs, February 27, 2017, https://​www.foreignaffairs.com/​ articles/​syria/​2018-​02-​27/​why-​civil-​wars-​are-​lasting-​longer. Notes 

 

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46. Henry Foy, Nastassia Astrasheuskaya, and David Pilling, “Russia: Vladimir Putin’s Pivot to Africa,” Financial Times, January 22, 2019, https://​www. ft.com/​content/​a5648efa-​1a4e-​11e9-​9e64-​d150b3105d21. 47. Lily Kuo and Echo Huang, “China Reacts to the Death of Two Peacekeepers in South Sudan with Grief and Rage,” Quartz, July 11, 2016, https://​qz.com/​ africa/​728566/​china-​reacts-​to-​the-​death-​of-​two-​peacekeepers-​in-​south-​ sudan-​with-​grief-​and-​rage/​. 48. Andrew Higgins, “Abduction of Chinese Workers in Sudan Stirs Criticism of Beijing,” Washington Post, February 1, 2012, https://​www.washingtonpost. com/​world/​asia_​pacific/​abduction-​of-​chinese-​workers-​in-​sudan-​stirs-​ criticism-​of-​beijing/​2012/​02/​01/​gIQADcxJiQ_​story.html?utm_​term=. fa7eaf1ac959. 49. Tom Hancock, “Censorship Casts Shadow over China’s Top Film Festival,” Financial Times, June 19, 2019. 50. “Local, Global Security Firms in Race along China’s ‘Silk Road,’” Reuters, April 24, 2017, https://​www.reuters.com/​article/​ us-​china-​silkroad-​security-​analysis-​idUSKBN17P10Y. 51. “China’s Foreign Policy Experiment in South Sudan,” International Crisis Group, Asia Report 288 (July 11, 2017): 4, https://​www.crisisgroup.org/​africa/​ horn-​africa/​south-​sudan/​288-​china-​s-​foreign-​policy-​experiment-​south-​sudan. 52. French, Everything under the Heavens,  22–​23. 53. Chris Alden, Abiodun Alao, Zhang Chun, and Laura Barber, eds., China and Africa: Building Peace and Security Cooperation on the Continent (Palgrave Macmillan, 2017). 54. Daniel Houpt, “Assessing China’s Response Options to Kidnappings Abroad,” The Jamestown Foundation, China Brief 12, no. 10 (2012), https://​ jamestown.org/​program/​assessing-​chinas-​response-​options-​to-​kidnappings-​ abroad/​. 55. “Local, Global Security Firms in Race along China’s ‘Silk Road.’ ” 56. Helena Legarda and Meia Nouwens, “Guardians of the Belt and Road,” Mercator Institute for China Studies, China Monitor, August 16, 2018, https://​ www.merics.org/​en/​china-​monitor/​guardians-​of-​belt-​and-​road. 57. “US Security and Chinese Capital,” Africa Confidential 56, no. 3 (February 6, 2015). 58. Ben Bland and Nicolle Liu, “China Seeks Global Role for Elite Counter-​ Terrorism Forces,” Financial Times, September 30, 2018, https://​www.ft.com/​ content/​fad58218-​c46d-​11e8-​8670-​c5353379f7c2. 59. 韩树举, 王洪涛, 张军, 贺红旭 《中国石油天然气集团公司海外项目防恐安全管理探 索与实践》, 《中国安全生产科学技术》, 2009 年增刊 [Han Shuju, Wang Hongtao, Zhang Jun, and He Hongxu, “The Exploration and Practice of Anti-​ terrorism and Safety Management of CNPC Overseas Projects,” Journal of Safety Science and Technology (2009)].

286    Notes

 

60. Con Coughlin, “China Deal Threatens Only American Military Base in Africa,” The Telegraph, July 21, 2015, https://​www.telegraph.co.uk/​news/​ worldnews/​africaandindianocean/​djibouti/​11752759/​China-​deal-​threatens-​ only-​American-​military-​base-​in-​Africa.html. 61. David Vine, Base Nation: How US Military Bases Abroad Harm America and the World (Metropolitan Books, 2015), 22–​23. 62. Dan Bland, Dennis Wong, and Darren Long, “Why Djibouti Is Home to China’s First Foreign Military Base,” South China Morning Post, August 29, 2018, https://​multimedia.scmp.com/​news/​china/​article/​2161807/​china-​ djibouti-​base/​index.html. 63. Vine, Base Nation, 290 64. Department of Defense, “Base Structure Report, FY 2018 Baseline,” Office of the Deputy Assistant Secretary of Defense, Washington, DC, 2018, 7. 65. Erica Downs, Jeffery Becker, and Patrick deGatengno, “China’s Military Support Facility in Djibouti: The Economic and Security Dimensions of China’s First Overseas Base,” CNA (July 2017), 1, https://​www.cna.org/​cna_​ files/​pdf/​DIM-​2017-​U-​015308-​Final3.pdf. 66. “Defense Ministry’s Regular Press Conference on Feb. 25,” Ministry of National Defense, The People’s Republic of China, February 25, 2016, http://​eng.mod.gov.cn/​Press/​2016-​02/​25/​content_​4644801.htm. 67. Downs, “China’s Military Support Facility in Djibouti,” 29. 68. Wang Weixing, “ ‘One Belt, One Road’ under Global Vision: Risks and Challenges” [全球视野 下的’一带一路’: 风险与挑战], Frontiers [学术前沿], no. 5 (2015), http://​gb.oversea.cnki.net/​kcms/​detail/​ detailall.aspx?filename=rmxs201509003&dbcode=CJFQ&dbname=C JFD2015. 69. “China Island Tracker,” Asia Maritime Transparency Initiative, https://​amti. csis.org/​island-​tracker/​china/​#Other%20Features. 70. Zhao Lei and Zhou Jin, “Live-​Fire Exercises Conducted by PLA Base in Djibouti,” China Daily, November 25, 2017, http://​www.chinadaily.com.cn/​ china/​2017-​11/​25/​content_​34966883.htm. 71. Vinayak Bhat, “China’s Mega Fortress in Djibouti Could Be Model for Its Bases in Pakistan,” The Print, September 27, 2017, https://​theprint.in/​ defence/​china-​mega-​fortress-​djibouti-​pakistan/​11031/​. 72. “China Denies US Accusation of Lasers Pointed at Planes in Djibouti,” Reuters, May 3, 2018, https://​www.reuters.com/​article/​us-​usa-​china-​djibouti/​ china-​denies-​u-​s-​accusation-​of-​lasers-​pointed-​at-​planes-​in-​djibouti-​ idUSKBN1I429M. 73. Emanuele Scimia, “Anti-​Piracy Mission Helps Develop Its Blue-​Water Navy,” Asia Times, January 8, 2018, https://​www.asiatimes.com/​2018/​01/​ opinion/​anti-​piracy-​mission-​helps-​china-​develop-​blue-​water-​navy/​. 74. “Chinese Subs in Djibouti to Fight ‘Pirates’ Worrying: Navy,” Times of India, January 10, 2019, https://​timesofindia.indiatimes.com/​india/​ Notes 

 

287

 

with-​80-​news-​ships-​in-​last-​5-​years-​chinese-​navy-​is-​here-​to-​stay-​admiral-​ lanba/​articleshow/​67458929.cms. 75. Zhao Lei, “Additional Overseas PLA Bases ‘Possible,’” China Daily, January 10, 2019, https://​www.chinadaily.com.cn/​a/​201901/​10/​ WS5c368814a3106c65c34e390b.html. 76. “China Denies Reports to Set Up 18 Naval Bases in Indian Ocean,” The Economic Times, November 27, 2014, https://​economictimes. indiatimes.com/​news/​politics-​and-​nation/​china-​denies-​reports-​to-​set-​ up-​18-​naval-​bases-​in-​indian-​ocean/​articleshow/​45297247.cms?utm_​ source=contentofinterest&utm_​medium=text&utm_​campaign=cppst; Jeremy Page, Gordon Lubold, and Rob Taylor, “Deal for Naval Outpost in Cambodia Furthers China’s Quest for Military Network,” Wall Street Journal, July 22, 2019, https://​www.wsj.com/​articles/​secret-​deal-​for-​chinese-​naval-​ outpost-​in-​cambodia-​raises-​u-​s-​fears-​of-​beijings-​ambitions-​11563732482. 77. Mathieu Duchâtel, “Naval Bases: From Djibouti to a Global Network?,” China Trends, Institut Montaigne, June 2019, https://​www.institutmontaigne. org/​documents/​china-​trends/​China-​trends-​2-​print-​web.pdf. 78. Andrew Erickson, “Make China Great Again: Xi’s Truly Grand Strategy,” War on the Rocks, Commentary, October 30, 2019, https://​warontherocks. com/​2019/​10/​make-​china-​great-​again-​xis-​truly-​grand-​strategy/​. 79. Mathieu Duchâtel, “Terror Overseas: Understanding China’s Evolving Counter-​Terror Strategy,” European Council on Foreign Relations, Policy Brief (October 2016), 7, https://​www.ecfr.eu/​publications/​summary/​terror_​ overseas_​understanding_​chinas_​evolving_​counter_​terror_​strategy7160. 80. Vine, Base Nation, 11. 81. Joel Wuthnow, “Chinese Perspectives on the Belt and Road Initiative: Strategic Rationales, Risks, and Implications,” Institute for National Strategic Studies, China Strategic Perspectives 12 (National Defense University Press, 2012), 23, https://​inss.ndu.edu/​Portals/​68/​ Documents/​stratperspective/​china/​ChinaPerspectives-​12.pdf. 82. Marc Julienne, “From Passiveness to Proactivity: China’s Evolving Role in Peacekeeping Operations,” in “The United Nations of China: A Vision of the World Order,” European Council on Foreign Relations (April 2018), https://​ www.ecfr.eu/​publications/​summary/​the_​united_​nations_​of_​china_​a_​vision_​ of_​the_​world_​order#. 83. “Tiananmen Square Terror Attack,” South China Morning Post, https://​www. scmp.com/​topics/​tiananmen-​square-​terror-​attack. 84. Andrew Small, The China-​Pakistan Axis: Asia’s New Geopolitics (Hurst, 2015), 177–​78. 85. Stephanie Nebehay, “UN Says It Has Credible Reports That China Holds Million Uighurs in Secret Camps,” Reuters, August 10, 2018, https://​www. reuters.com/​article/​us-​china-​rights-​un/​u-​n-​says-​it-​has-​credible-​reports-​that-​ china-​holds-​million-​uighurs-​in-​secret-​camps-​idUSKBN1KV1SU.

288    Notes

 

86. Megha Rajagopalan, “This Is What a 21st-​Century Police State Really Looks Like,” BuzzFeed, October 17, 2017, https://​www.buzzfeednews.com/​article/​ meghara/​the-​police-​state-​of-​the-​future-​is-​already-​here; Xiao Qiang, “The Road to Digital Unfreedom: President Xi’s Surveillance State,” Journal of Democracy 30, no. 1 (2019), https://​www.journalofdemocracy.org/​articles/​the-​ road-​to-​digital-​unfreedom-​president-​xis-​surveillance-​state/​. 87. “China Says ‘Preventive’ Work in Xinjiang Detention Camps Should Be Applauded,” The Guardian, February 24, 2019, https://​www. theguardian.com/​world/​2019/​feb/​24/​china-​says-​preventive-​work-​in-​ xinjiang-​detention-​camps-​should-​be-​applauded; Tom Miles, “Follow Our Model for ‘Happy’ Xinjiang, China Tells West,” Reuters, July 11, 2019, https://​www.reuters.com/​article/​us-​china-​xinjiang-​rights/​ follow-​our-​model-​for-​happy-​xinjiang-​china-​tells-​west-​idUSKCN1U61F9. 88. Paul Mozur, Jonah M. Kessel, and Melissa Chan, “Made in China, Exported to the World: The Surveillance State,” New York Times, April 24, 2019, https://​ www.nytimes.com/​2019/​04/​24/​technology/​ecuador-​surveillance-​cameras-​ police-​government.html; Angus Berwick, “How ZTE Helps Venezuela Create China-​Style Social Control,” Reuters, November 14, 2018, https://​ www.reuters.com/​investigates/​special-​report/​venezuela-​zte/​; Daniel Benaim and Hollie Russon Gilman, “China’s Aggressive Surveillance Technology Will Spread beyond Its Borders,” Slate, August 9, 2018, https://​slate.com/​ technology/​2018/​08/​chinas-​export-​of-​cutting-​edge-​surveillance-​and-​facial-​ recognition-​technology-​will-​empower-​authoritarians-​worldwide.html. 89. Steven Feldstein, “The Global Expansion of AI Surveillance,” Carnegie Endowment for International Peace, Working Paper, September 2019, https://​carnegieendowment.org/​files/​WP-​Feldstein-​AISurveillance_​final1. pdf. 90. Stephanie Findlay and Farhan Bokhari, “Pakistan’s Imran Khan Fears More Military Hostilities with India,” Financial Times, March 26, 2019, https://​www.ft.com/​content/​508aa184-​4f8d-​11e9-​b401-​8d9ef1626294; “Saudi Crown Prince Defends China’s Right to Fight ‘Terrorism,’” Al Jazeera, February 23, 2019, https://​www.aljazeera.com/​news/​2019/​02/​ saudi-​crown-​prince-​defends-​china-​fight-​terrorism-​190223104647149. html. 91. “‘Shame for Humanity’: Turkey Urges China to Close Uighur Camps,” Al Jazeera, February 10, 2019, https://​www.aljazeera.com/​news/​2019/​02/​ humanity-​turkey-​urges-​china-​close-​uighur-​camps-​190209202215688.html; “Malaysia’s Anwar to Question China on Muslim Detentions,” Nikkei Asian Review, October 19, 2018, https://​asia.nikkei.com/​Editor-​s-​Picks/​Interview/​ Malaysia-​s-​Anwar-​to-​question-​China-​on-​Muslim-​detentions. 92. “‘Father of the Taliban’ Calls on China to Aid Afghan Peace Talks,” Bloomberg, October 2, 2018, https://​www.bloomberg.com/​news/​articles/​2018-​ 10-​01/​-​father-​of-​the-​taliban-​calls-​on-​china-​to-​aid-​afghan-​peace-​talks. Notes 

 

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9 3. Duchâtel, “Terror Overseas.” 94. Mathieu Duchâtel, “China’s Foreign Fighters Problem,” War on the Rocks, January 25, 2019, https://​warontherocks.com/​2019/​01/​chinas-​foreign-​ fighters-​problem/​.

Chapter 3 1. “Argentina’s Elections: A Big Surprise,” The Economist, October 31, 2015, https://​www.economist.com/​the-​americas/​2015/​10/​31/​a-​big-​surprise. 2. “Scioli se comprometió a intensificar la alianza estratégica con China,” Télam, March 25, 2015, http://​www.telam.com.ar/​notas/​201503/​99227-​daniel-​ scioli-​alianza-​estrategica-​china-​comercio.html. 3. He Yini, “China to Invest $900 Billion in Belt and Road Initiative,” The Telegraph, June 10, 2015, https://​www.telegraph.co.uk/​china-​watch/​business/​ china-​billion-​dollar-​belt-​road-​initiative/​. 4. “Michael Sata—​Obituary,” The Telegraph, October 29, 2014, https://​www. telegraph.co.uk/​news/​obituaries/​11195960/​Michael-​Sata-​obituary.html. 5. Heather Stewart and Ben Quinn, “Theresa May Seeks Close Ties with China Despite Hinkley Point Delay,” The Guardian, August 9, 2016, https://​www.theguardian.com/​uk-​news/​2016/​aug/​09/​ government-​says-​links-​with-​china-​are-​vital-​after-​hinkley-​point-​warning. 6. This following two sections are adapted from Luke Patey, “China Made Mauricio Macri a Deal He Couldn’t Refuse,” Foreign Policy, January 24, 2017, https://​foreignpolicy.com/​2017/​01/​24/​china-​made-​mauricio-​macri-​a-​deal-​he-​ couldnt-​refuse/​. 7. Margaret Myers and Kevin Gallagher, “Cautious Capital: Chinese Development Finance in LAC, 2018,” The Dialogue, China–​Latin America Report (February 2019), https://​www.thedialogue.org/​wp-​content/​uploads/​ 2019/​02/​Chinese-​Finance-​in-​LAC-​2018-​2.pdf. 8. Paul Blustein, And the Money Kept Rolling In (and Out): Wall Street, the IMF, and the Bankrupting of Argentina (Public Affairs, 2005), 99. 9. Julie Wernau and Carolyn Cui, “Argentina Returns to Global Debt Markets with $16.5 Billion Bond Sale,” Wall Street Journal, April 19, 2016, https://​ www.wsj.com/​articles/​argentina-​returns-​to-​global-​debt-​markets-​with-​16-​5-​ billion-​bond-​sale-​1461078033. 10. Julia Boorstin, “Sun Valley Conference: Argentine President Macri Explains Economic Turnaround,” CNBC, July 7, 2016, https://​www.cnbc.com/​2016/​ 07/​07/​sun-​valley-​conference-​argentine-​president-​macri-​explains-​economic-​ turnaround.html. 11. Benedict Mander, “Mauricio Macri Scraps Tax on Argentine Farm Exports,” Financial Times, December 14, 2015, https://​www.ft.com/​content/​ 3f7cf388-​a275-​11e5-​8d70-​42b68cfae6e4.

290    Notes

 

12. Fermín Koop, “Recession Delays Foreign Investment,” Buenos Aires Herald, July 31, 2015; “US Firms to Invest $2.3 Billion in Argentina over 18 Months: Chamber,” Reuters, March 23, 2016, https://​www.reuters.com/​ article/​us-​usa-​argentina-​investment-​idUSKCN0WP2QH. 13. Kevin Gallagher, The China Triangle: Latin America’s China Boom and the Fate of the Washington Consensus (Oxford University Press, 2016), 18. 14. Andrés López, Daniela Ramos, and Gabriela Starobinsky, “A Study of the Impact of China’s Global Expansion on Argentina: Soybean Value Chain Analysis,” Universidad Nacional Autónoma de México, Centro de Estudios China-​México 2 (2010), 8. 15. “China-​Argentina Trade Differences Increase and Are Openly Aired,” MercoPress, April 23, 2010. 16. Andrés López, Daniela Ramos, and Cecilia Simkievich, “A Study of the Impact of China’s Global Expansion on Argentina: Soybean Value Chain Analysis,” University of East Anglia, program on ”The Impact of China’s Global Economic Expansion on Latin America,” Working Paper no. 2, 2008, 18, http://​www.uea.ac.uk/​dev/​faculty/​Jenkins/​china-​latinamerica. 17. Gallagher, The China Triangle, 45. 18. Rebecca Ray and Kehan Wang, “China–​Latin America Economic Bulletin, 2019 Edition,” Global Development Policy Center (2019), https://​www.bu.edu/​ gdp/​files/​2019/​05/​GCI-​Bulletin-​Final-​2019.pdf. 19. Gallagher, The China Triangle, 97–​101; Rhys Jenkins, “Is Chinese Competition Causing Deindustrialization in Brazil?,” Latin American Perspectives 42, no. 6 (2015): 42–​63, https://​doi.org/​10.1177/​ 0094582X15593553. 20. “Brazil Said Unhappy with Blossoming Argentina-​China Ties,” BBC News, February 18, 2015. 21. Simmarpal Singh and Vibhav Agarwal, “India-​Argentina Relationship: Soybean Oil Link with the South American Nation,” Financial Express, February 18, 2019, https://​www.financialexpress.com/​economy/​india-​ argentina-​relationship-​soybean-​oil-​link-​with-​the-​south-​american-​nation/​ 1491241/​. 22. http://​www.scielo.org.mx/​pdf/​prode/​v46n183/​ 0301-​7036-​prode-​46-​183-​00033-​en.pdf. 23. “Global Insider: Argentina China Trade Relations,” World Politics Review, February 2, 2011, https://​www.worldpoliticsreview.com/​trend-​lines/​7752/​ global-​insider-​china-​argentina-​trade-​relations. 24. Ken Parks, “Argentina-​China Deals Reflect Asian Country’s Growing Influence; Infrastructure, Currency Swap Agreements Are among 20 Deals Signed,” Wall Street Journal, July 20, 2014, https://​www.wsj.com/​articles/​ argentina-​china-​deals-​reflect-​asian-​countrys-​growing-​influence-​1405719582.

Notes 

 

291

 

25. Jamil Anderlini and John-​Paul Rathbone, “China to Build Two Nuclear Plants in Argentina in $15bn Deal,” Financial Times, November 17, 2015, https://​www.ft.com/​content/​2d264e78-​8cf9-​11e5-​a549-​b89a1dfede9b. 26. Emma Graham-​Harrison, “China Splashes Billions on Argentine Rail, Subway,” Reuters, July 14, 2010, https://​www.reuters.com/​article/​ china-​argentina/​china-​splashes-​billions-​on-​argentine-​rail-​subway-​ idUSTOE66D02J20100714. 27. Juan Uriburu Quintana, “Trains and Hydropower Dams: Chinese Financing of Argentine Infrastructure Projects,” conference presentation for “Triangular Relations among Latin America, China and the US,” Chihlee University of Technology, March 23, 2016. 28. R. Evan Ellis, China on the Ground in Latin America: Challenges for the Chinese and Impacts on the Region (Palgrave Macmillan, 2014), 202. 29. Kevin P. Gallagher, Amos Irwin, and Katherine Koleski, “The New Banks in Town: Chinese Finance in Latin America,” Inter-​American Dialogue Report (2012), 17–​18, http://​ase.tufts.edu/​gdae/​Pubs/​rp/​GallagherChineseFinanceLa tinAmericaBrief.pdf. 30. Quintana, “Trains and Hydropower Dams.” 31. R. Evan Ellis, China in Latin America: The Whats and Wherefores (Lynne Rienner Publishers, 2009), 101, n336. 32. Juan Pablo de Santis, “Belgrano Cargas: El tren que une a Cristina, Macri, los chinos y Moyano,” La Nación, June 26, 2012, https://​www.lanacion.com. ar/​economia/​belgrano-​cargas-​el-​tren-​que-​une-​a-​cristina-​macri-​los-​chinos-​y-​ moyano-​nid1485396. 33. “Wen Jiabao, Segunda Figura del Sistema Politico China, Viene a la Argentina a fin de Mes,” Clarín, June 12, 2012, https://​www.clarin.com/​ politica/​primer-​ministro-​chino-​visita-​clave_​0_​H1tEFGX2v7l.html. 34. Guillermo Háskel, “Argentine Pundits Sound Alarm over Economic Accord with China,” Buenos Aires Herald, January 5, 2015. 35. Gallagher, The China Triangle, 81. 36. Matt Ferchen, “Does Money Loaned through China’s Development Finance Institutions Actually Help Countries Develop?” Scroll.in, January 11, 2018, https://​scroll.in/​article/​864434/​does-​money-​loaned-​through-​chinas-​ development-​finance-​institutions-​actually-​help-​countries-​develop. 37. “CFK Will Head to China in February for First Trip of 2015,” Buenos Aires Herald, January 10, 2015; Jonathan Watts, “Argentina Leader Leaves Controversial Legacy with Patagonia Dams Project,” The Guardian, December 1, 2015, https://​www.theguardian.com/​world/​2015/​dec/​01/​ argentina-​president-​cristina-​fernandez-​de-​kirchner-​patagonia-​hydroelectric-​ dam-​project. 38. Fundación Ambiente y Recursos Naturales, “Dams on Santa Cruz River: Impacts and Violated Rights,” 2016, http://​farn.org.ar/​wp-​content/​ uploads/​2016/​05/​Dams-​On-​Santa-​Cruz.pdf.

292    Notes

 

39. Taos Turner and Shane Romig, “International Firms Bid for Dam Projects in Argentina,” Wall Street Journal, September 1, 2013. 40. Gonzalo Sánchez, “Represas en Santa Cruz: Macri analiza parar su construcción,” Clarín, December 28, 2015, https://​www.clarin.com/​politica/​ represas_​hidroelectricas-​parar_​la_​construccion-​mauricio_​macri-​nestor_​ kirchner-​jorge_​cepernic_​0_​ryQn0dvQg.html. 41. “Macri Claims China Ready to Review Deals,” Buenos Aires Herald, April 2, 2016. 42. Fermín Koop, “Argentina Confirms Santa Cruz Dam Projects,” Diálogo Chino, April 15, 2016, https://​dialogochino.net/​5888-​argentina-​confirms-​ santa-​cruz-​projects/​. 43. Rubén Rabanal, “La Argentina acordó con China ante amenaza de cross default,” Ambito, April 4, 2016, https://​www.ambito.com/​ la-​argentina-​acordo-​china-​amenaza-​cross-​default-​n3933726. 44. Keith Barrow, “Argentina Receives More Wagons from China,” International Railway Journal, May 25, 2017, https://​www.railjournal.com/​regions/​central-​ south-​america/​argentina-​receives-​more-​wagons-​from-​china/​. 45. Fermín Koop, “Macri Pushes Ahead with Patagonian Dams Seen as Key to Relations with China,” Buenos Aires Times, September 20, 2017, https://​www. batimes.com.ar/​news/​argentina/​macri-​pushes-​ahead-​with-​patagonian-​dams-​ seen-​as-​key-​to-​relations-​with-​china.phtml. 46. Benedict Mander, “Anti-​Corruption Tide Reaches Argentina,” Financial Times, May 19, 2016, https://​www.ft.com/​content/​ e0de4f00-​1daf-​11e6-​b286-​cddde55ca122. 47. “China Has Ambitious Investment Program for Argentina,” Buenos Aires Herald, March 27, 2016. 48. Daniel Politi, “Bags of Cash in Argentina: Driver’s Notes Propel Corruption Inquiry,” New York Times, August 3, 2018, https://​www. nytimes.com/​2018/​08/​03/​world/​americas/​argentina-​corruption-​ investigation.html; Leandro Boyer, “Cuadernos: Detuvieron a Osvaldo Acosta, otro de los dueños de Electroingeniería,” La Voz, February 25, 2019, https://​www.lavoz.com.ar/​politica/​ cuadernos-​detuvieron-​osvaldo-​acosta-​otro-​de-​duenos-​de-​electroingenieria. 49. Diego Cabot, “China financiará las obras de las represas Kirchner y Cepernic en Santa Cruz,” La Nación, July 19, 2014, https://​www.lanacion.com.ar/​ politica/​china-​financiara-​las-​obras-​de-​las-​represas-​kirchner-​y-​cepernic-​en-​ santa-​cruz-​nid1711344. 50. Nicolas Misculin, “As Argentine Corruption Probe Grows, Macri Allies Feel the Heat,” Reuters, May 9, 2016, https://​www.reuters.com/​article/​us-​ argentina-​court/​as-​argentine-​corruption-​probe-​grows-​macri-​allies-​feel-​the-​ heat-​idUSKCN0Y01OA. 51. “China Constructing a Satellite Tracking Station in Argentine Patagonia,” Merco Press, September 12, 2014, https://​en.mercopress.com/​2014/​09/​12/​ Notes 

 

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china-​constructing-​a-​satellite-​tracking-​station-​in-​argentine-​patagonia; Victor Richard Lee, “China Builds Space-​Monitoring Base in Americas,” The Diplomat, May 24, 2016, https://​thediplomat.com/​2016/​05/​china-​builds-​ space-​monitoring-​base-​in-​the-​americas/​. 52. Monica Yanakiew, “Argentine Presidential Candidates Question Deals with China,” Diálogo Chino, May 27, 2015, https://​dialogochino.net/​2499-​ argentine-​presidential-​candidates-​question-​deals-​with-​china/​. 53. Lee, “China Builds Space-​Monitoring Base in Americas.” 54. Martin Dinatale, “China aceptó cambios en los contratos que acordó con Cristina Kirchner,” La Nación, May 20, 2016, https://​www. lanacion.com.ar/​politica/​china-​acepto-​cambios-​en-​los-​contratos-​ que-​acordo-​con-​cristina-​kirchner-​nid1900603; Cassandra Garrison, “China’s Military-​Run Space Station in Argentina Is a ‘Black Box,’” Reuters, January 31, 2019, https://​uk.reuters.com/​article/​ uk-​space-​argentina-​china-​insight-​idUKKCN1PP0HW. 55. Eliana Raszewski and Cassandra Garrison, “Argentina, China Sign Billion-​ Dollar Cargo Railway Renovation Deal,” Reuters, November 29, 2018, https://​www.reuters.com/​article/​us-​argentina-​china/​argentina-​china-​sign-​ billion-​dollar-​cargo-​railway-​renovation-​deal-​idUSKCN1NY2TR. 56. Lili Pike and Fermín Koop, “China Eyes Argentina in Global Nuclear Roll-​ Out,” China Dialogue, June 4, 2019, https://​www.chinadialogue.net/​article/​ show/​single/​en/​11293-​China-​eyes-​Argentina-​in-​global-​nuclear-​roll-​out; Fermín Koop, “Alberto Fernández Eyes China in Bid to Alleviate Argentina’s Debt Crisis,” Buenos Aires Times, February 22, 2020, https://​www.batimes. com.ar/​news/​economy/​alberto-​fernandez-​eyes-​china-​in-​bid-​to-​alleviate-​ argentinas-​debt-​crisis.phtml. 57. Fermín Koop, “With New Allies, Argentina Reassesses Its Relationship with China,” Diálogo Chino, December 3, 2018, https://​dialogochino.net/​12583-​ with-​new-​allies-​argentina-​reassesses-​its-​relationship-​with-​china/​. 58. Fermín Koop, “In Jujuy, China Is Building Latin America’s Largest Solar Plant: Cauchari,” Buenos Aires Times, March 2, 2019, https://​www.batimes. com.ar/​news/​argentina/​in-​jujuy-​china-​is-​building-​latin-​americas-​largest-​ solar-​plant-​cauchari.phtml. 59. Gonzalo S. Paz, “Argentina and Asia: China’s Reemergence, Argentina’s Recovery,” in Reaching across the Pacific: Latin America and Asia in the New Century, ed. Cynthia J. Arnson and Jorge Heine (Woodrow Wilson International Center for Scholars, 2014), 159–​61. 60. Margaret Myers, Kevin Gallagher, and Fei Yuan, “Chinese Finance to LAC in 2015: Doubling Down,” The Inter-​American Dialogue Report (February 2016), https://​www.thedialogue.org/​wp-​content/​uploads/​2016/​02/​Dialogue-​ LoansReport-​v4-​lowres.pdf.

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61. “Argentina’s Macri Calls Trump, Seeks to Rekindle Business Ties,” Reuters, November 15, 2016, https://​www.reuters.com/​article/​ usa-​trump-​argentina-​idUSL1N1DF1YV. 62. Jorgelina do Rosario, “With Argentine Economy in Decline, Macri Bets on Infrastructure,” Bloomberg, May 15, 2019, https://​www.bloomberg.com/​news/​articles/​2019-​05-​15/​ with-​argentine-​economy-​in-​decline-​macri-​bets-​on-​infrastructure. 63. “Meet the Candidates: Argentina,” Americas Quarterly, April 15, 2019, https://​www.americasquarterly.org/​content/​meet-​candidates-​argentina. 64. Margaret Myers and Kevin Gallagher, “Could China Be a White Knight Again for Latin America?,” Americas Quarterly, March 24, 2020, https://​www.americasquarterly.org/​content/​ could-​china-​be-​white-​knight-​again-​latin-​america. 65. Margaret Myers and Kevin Gallagher, “Scaling Back: Chinese Development Finance in LAC, 2019,” The Dialogue: Leadership for the Americas, China–​Latin America Report, March 2020, https://​www.thedialogue.org/​wp-​content/​ uploads/​2020/​03/​Chinese-​Finance-​to-​LAC-​2019.pdf. 66. Fermín Koop, “New Argentina President Looks Set to Deepen China Ties,” Diálogo Chino, October 31, 2019, https://​dialogochino.net/​31387-​new-​ argentina-​president-​looks-​set-​to-​deepen-​china-​ties/​. 67. Koop, “Alberto Fernández Eyes China.” 68. “Argentines’ Perceptions of the World Order, Foreign Policy and Global Issues,” Argentina Pulse #4, Poliarquía-​Wilson Center Survey, June 2019, https://​www.wilsoncenter.org/​article/​argentinapulse-​poll-​4-​argentines-​ perception-​the-​world-​order-​foreign-​policy-​and-​global-​issues. 69. Simon Romero, “China’s Ambitious Rail Projects Crash into Harsh Realities in Latin America,” New York Times, October 3, 2015, https://​www.nytimes. com/​2015/​10/​04/​world/​americas/​chinas-​ambitious-​rail-​projects-​crash-​into-​ harsh-​realities-​in-​latin-​america.html. 70. Gabriel Stargardter, “Mexico Wants China Involved in New Airport after Train Blunder,” Reuters, March 31, 2015, https://​www.reuters.com/​article/​ mexico-​china-​airport/​mexico-​wants-​china-​involved-​in-​new-​airport-​after-​ train-​blunder-​source-​idUSL2N0WT16L20150331. 71. “President Sata Seeks More Chinese Investment,” Times of Zambia, March 15, 2012, https://​allafrica.com/​stories/​201203150418.html. 72. James Kynge and Lucy Hornby, “Hinkley Decision Threatens UK ‘Golden Era’ with China,” Financial Times, July 31, 2016, https://​www.ft.com/​ content/​d087a126-​572d-​11e6-​9f70-​badea1b336d4; Jonathan Ford, “UK’s Reliance on China’s Nuclear Tech Poses Test for Policymakers,” Financial Times, February 14, 2019, https://​www.ft.com/​content/​ 7734e3be-​2f6f-​11e9-​8744-​e7016697f225.

Notes 

 

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Chapter 4 1. Xi Jinping, “Work Together to Build the Silk Road Economic Belt and the 21st-​Century Maritime Silk Road,” The Belt and Road Forum for International Cooperation, Beijing, May, 14 2017, http://​www.xinhuanet. com/​english/​2017-​05/​14/​c_​136282982.htm. 2. Wu Gang, “SOEs Lead Infrastructure Push in 1,700 ‘Belt and Road’ Projects,” Caixin, May 9, 2017, https://​www.caixinglobal.com/​2017-​05-​10/​ soes-​lead-​infrastructure-​push-​in-​1700-​belt-​and-​road-​projects-​101088332. html; Veasna Kong, Steven G. Cochrane, Brendan Meighan, and Matthew Walsh, “The Belt and Road Initiative—​Six Years On,” Moody’s Analytics, June 2019, https://​www.moodysanalytics.com/​-​/​media/​article/​2019/​belt-​and-​ road-​initiative.pdf. 3. Nadège Rolland, China’s Eurasian Century? Political and Strategic Implications of the Belt and Road Initiative (The National Bureau of Asian Research, 2017). 4. Rolland, China’s Eurasian Century?, 116–​17. 5. Deborah Brautigam, “Misdiagnosing the Chinese Infrastructure Push,” The American Interest, April 4, 2019. 6. Jessica Chen Weiss, “‘A World Safe for Autocracy’? China’s Rise and the Future of Global Politics,” Foreign Affairs, June 11, 2019. 7. Xi Jinping, “Secure a Decisive Victory in Building a Moderately Prosperous Society in All Respects and Strive for the Great Success of Socialism with Chinese Characteristics for a New Era,” The 19th National Congress of the Communist Party of China, Beijing, October 18, 2017, 9, http://​www. xinhuanet.com/​english/​download/​Xi_​Jinping’s_​report_​at_​19th_​CPC_​ National_​Congress.pdf. 8. “China Will Not ‘Export’ Chinese Model: Xi,” Xinhuanet, December 1, 2017, http://​www.xinhuanet.com/​english/​2017-​12/​01/​c_​136793833.htm. 9. Elizabeth C. Economy, “Yes, Virginia, China Is Exporting Its Model,” Council on Foreign Relations, Asia Unbound, December 1, 2019, https://​www.cfr.org/​ blog/​yes-​virginia-​china-​exporting-​its-​model. 10. Lily Kuo, “Beijing Is Cultivating the Next Generation of African Elites by Training Them in China,” Quartz Africa, December 14, 2017, https://​ qz.com/​africa/​1119447/​china-​is-​training-​africas-​next-​generation-​of-​ leaders/​; Louisa Lim and Julia Bergin, “Inside China’s Audacious Global Propaganda Campaign,” The Guardian, December 7, 2018, https://​www. theguardian.com/​news/​2018/​dec/​07/​china-​plan-​for-​global-​media-​dominance-​ propaganda-​xi-​jinping; He Huifeng, “China Is Training Foreign Officials to Spread Its Political Model, Including How to ‘Guide Public Opinion’ Online,” Business Insider, July 15, 2018, https://​www.businessinsider.com/​ china-​training-​asean-​officials-​2018-​7?r=US&IR=T. 11. Norimitsu Onishi, “China Pledges $60 Billion to Aid Africa’s Development,” New York Times, December 4, 2015, https://​www.nytimes.

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com/​2015/​12/​05/​world/​africa/​china-​pledges-​60-​billion-​to-​aid-​africas-​ development.html. 12. Jevans Nyabiage, “China’s Trade with Africa Grows 2.2 per cent in 2019 to US$208 Billion,” South China Morning Post, January 18, 2020, https://​www.scmp.com/​news/​china/​diplomacy/​article/​3046621/​ chinas-​trade-​africa-​grows-​22-​cent-​2019-​us208-​billion. 13. Tim McDonnell, “What’s the World’s Fastest-​Growing Economy? Ghana Contends for the Crown,” New York Times, March 10, 2018, https://​www. nytimes.com/​2018/​03/​10/​world/​africa/​ghana-​worlds-​fastest-​growing-​ economy.html. 14. “World Investment Report 2019: Special Economic Zones,” United Nations Conference on Trade and Development (2019), 34, https://​unctad.org/​en/​ PublicationsLibrary/​wir2019_​en.pdf. 15. “ Chinese Loans to Africa Database,” China Africa Research Initiative (July 2020), https://​chinaafricaloandata.org/​. 16. Xi Jinping, Speech at the opening ceremony of the 2018 Beijing Summit of the Forum on China-​Africa Cooperation, Beijing, September 3, 2018, http://​ www.xinhuanet.com/​english/​2018-​09/​03/​c_​137441987.htm. 17. Tao Zhang and Vladimir Klyuev, “Roads to Stronger Growth in Low-​Income Countries,” IMF Blog, January 12, 2017, https://​blogs.imf.org/​2017/​01/​12/​ roads-​to-​stronger-​growth-​in-​low-​income-​countries/​. 18. Ibid.,  76. 19. “African Economic Outlook 2018,” African Bank for Development (2018), 63, https://​www.afdb.org/​fileadmin/​uploads/​afdb/​Documents/​Publications/​ African_​Economic_​Outlook_​2018_​-​_​EN.pdf. 20. “African Economic Outlook 2018.” 21. Atif Ansar, Bent Flyvbjerg, Alexander Budzier, and Daniel Lunn, “Does Infrastructure Investment Lead to Economic Growth or Economic Fragility? Evidence from China,” Oxford Review of Economic Policy 32, no. 3 (autumn 2016), https://​doi.org/​10.1093/​oxrep/​grw022. 22. Jamie Farrell, “How Do Chinese Contractors Perform in Africa?: Evidence from World Bank Projects,” China-​Africa Research Initiative, Working Paper 3 (February 2016), 7, https://​static1.squarespace.com/​static/​ 5652847de4b033f56d2bdc29/​t/​573c970bf8baf3591b05253f/​ 1463588620386/​Working+Paper_​Jamie+Farrell.pdf. 23. Andrew Alli, “How to Separate the Myths and Realities of China’s Role in Tackling Africa’s Infrastructure Deficit,” Quartz, July 24, 2018, https://​ qz.com/​africa/​1334749/​how-​to-​separate-​the-​myths-​and-​realities-​of-​chinas-​ role-​in-​tackling-​africas-​infrastructure-​deficit/​. 24. Nancy Kacungira, “Will Kenya Get Value for Money from Its New Railway?” BBC News, June 8, 2017, https://​www.bbc.com/​news/​ world-​africa-​40171095.

Notes 

 

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25. Uwe Wissenbach and Yuan Wang, “African Politics Meets Chinese Engineers: The Chinese-​Built Standard Gauge Railway Project in Kenya and East Africa,” China-​Africa Research Initiative, Working Paper 13 (June 2017), 12, https://​static1.squarespace.com/​static/​5652847de4b033f56d2bdc29/​t/​ 594d739f3e00bed37482d4fe/​1498248096443/​SGR+v4.pdf; “Did Kenya Get a Loan to Build a Railway, or Vice Versa?,” The Economist, March 22, 2018, https://​www.economist.com/​middle-​east-​and-​africa/​2018/​03/​22/​ did-​kenya-​get-​a-​loan-​to-​build-​a-​railway-​or-​vice-​versa. 26. Humphrey Malalo, “Kenya Arrests Two Top Officials for Suspected Corruption over New $3 Billion Railway,” Reuters, August 11, 2018, https://​www.reuters.com/​article/​us-​kenya-​corruption-​railway/​kenya-​arrests-​ two-​top-​officials-​for-​suspected-​corruption-​over-​new-​3-​billion-​railway-​ idUSKBN1KW07L. 27. Edwin Okoth, “Chinese Firms True Winners of SGR Project,” Daily Nation, June 10, 2019, https://​www.nation.co.ke/​news/​Chinese-​firms-​true-​winners-​ of-​SGR-​project/​1056-​5151122-​9q8cdu/​index.html. 28. Kazungu Samuel, “Cargo Train Spells Doom for Over 500 Truck Drivers,” Daily Nation, July 24, 2018, https://​www.nation.co.ke/​news/​-​SGR-​renders-​ hundreds-​jobless/​1056-​4678000-​172la9z/​index.html. 29. Alin Olingo, “Kenya Earns Sh7.54bn from Ferrying Cargo on SGR,” Daily Nation, https://​www.nation.co.ke/​business/​Kenya-​earns-​Sh7-​54bn-​from-​ ferrying-​cargo-​on-​SGR/​996-​5489080-​120rct4/​index.html. 30. Jevans Nyabiage, “Contract for Kenya’s China-​Funded Railway Ruled ‘Illegal,’ ” South China Morning Post, June 23, 2020, https://​www.scmp.com/​news/​china/​diplomacy/​article/​3090225/​ contract-​kenyas-​china-​funded-​railway-​ruled-​illegal. 31. Aggrey Mutambo, “Why China Refused to Finance Railway It Initially Backed,” Daily Nation, April 27, 2019, https://​www.nation.co.ke/​news/​Why-​ China-​refused-​to-​finance-​railway-​it-​had-​initially-​backed/​1056-​5089900-​ xb6bxrz/​index.html; Kate Hairsine, “Kenya Struggles to Manage Debt for Railway to ‘Nowhere,’” DW, October 18, 2019, https://​www.dw.com/​en/​ kenya-​struggles-​to-​manage-​debt-​for-​railway-​to-​nowhere/​a-​50887431; Julius Barigaba, “SGR: Exim Bank Rejects Uganda Loan Request Again,” The East African, March 7, 2020, https://​www.theeastafrican.co.ke/​business/​SGR-​Exim-​ Bank-​rejects-​Uganda-​loan-​request-​again/​2560-​5482074-​weyf6nz/​index.html. 32. Paul Wafula, “Exclusive: Behind the SGR Walls,” Standard Digital, July 8, 2018, https://​www.standardmedia.co.ke/​article/​2001287119/​ exclusive-​behind-​the-​sgr-​walls. 33. Julie Masiga, “For a Pittance, Kenya Is Mortgaged to China,” Standard Digital, July 10, 2018, https://​www.standardmedia.co.ke/​article/​ 2001287385/​for-​a-​pittance-​kenya-​is-​mortgaged-​to-​china. 34. “Chinese Charged over Kenya ‘Railway Scam,’” BBC News, November 26, 2018.

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35. “Mombasa Port at Risk as Audit Finds It Was Used to Secure SGR Loan,” The East African, December 20, 2018. 36. Eric Olander, “China Was Never Going to Seize the Port of Mombasa If Kenya Defaulted on Its SGR Debts,” The China Africa Project, October 23, 2019, https://​chinaafricaproject.com/​analysis/​china-​was-​never-​going-​to-​take-​ the-​port-​of-​mombasa-​if-​kenya-​defaulted-​on-​its-​sgr-​debts/​. 37. Report of Public Authorities and Other Bodies, 2016/​17, 185, www.nao. go.tz/​?wpfb_​dl=253. 38. Eric Ng, “Botched Chinese Railway Project in Africa Is a Warning to Belt and Road Investors,” South China Morning Post, October 29, 2018, https://​www.scmp.com/​business/​banking-​finance/​article/​2170549/​ botched-​chinese-​railway-​project-​africa-​warning-​belt-​and. 39. Yunnan Chen, “Ethiopia and Kenya Are Struggling to Manage Debt for Their Chinese-​Built Railways,” Quartz, June 4, 2019, https://​qz.com/​ africa/​1634659/​ethiopia-​kenya-​struggle-​with-​chinese-​debt-​over-​sgr-​ railways/​. 40. David Benazeraf and Ana Alves, “ ‘Oil for Housing’: Chinese-​Built New Towns in Angola,” South African Institute of International Affairs, Policy Briefing 88, April 2014, https://​saiia.org.za/​research/​oil-​for-​housing-​chinese-​ built-​new-​towns-​in-​angola/​; Norimitsu Onishi, “Angola’s Corrupt Building Boom: ‘Like Opening a Window and Throwing Out Money,’” New York Times, June 24, 2017, https://​www.nytimes.com/​2017/​06/​24/​world/​africa/​ angola-​luanda-​jose-​eduardo-​dos-​santos.html; Paulo Guilherme Figueiredo and José Gama, “Lourenço’s Long Road,” The Africa Report, October 18, 2018, https://​www.theafricareport.com/​488/​angola-​lourencos-​long-​road/​. 41. Sophia Yan, “China’s Ambition Dealt Blow Ahead of G20 as Tanzania and Kenya Projects Grind to a Halt,” The Telegraph, June 27, 2019, https://​www. telegraph.co.uk/​news/​2019/​06/​27/​tanzania-​suspends-​10-​billion-​port-​project-​ new-​blow-​chinas-​belt/​. 42. Morris Kiruga, “Tanzania: The Race for Regional Rail Supremacy,” The Africa Report, March 9, 2020, https://​www.theafricareport.com/​24195/​ tanzania-​the-​race-​for-​regional-​rail-​supremacy/​. 43. Bent Flyvbjerg, “What You Should Know about Megaprojects, and Why: An Overview,” Project Management Journal 45, no. 2 (April 2014): 6–​7, https://​ doi.org/​10.1002/​pmj.21409. 44. Will Doig, High-​Speed Empire: Chinese Expansion and the Future of Southeast Asia (Columbia Global Reports, 2018), 12. 45. Wade Sheppard, Ghost Cities of China: The Story of Cities without People in the World’s Most Populated Country (Zed Books, 2015), 77. 46. Irene Yuan Sun, The Next Factory of the World: How Chinese Investment Is Reshaping Africa (Harvard Business Review Press, 2017), 23. 47. Helen Hai and Aaron Cohen, “China Is Africa’s Biggest Economic Partner, but What Role for the United States?,” Forbes, October 18, 2017, https://​ Notes 

 

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www.forbes.com/​sites/​realspin/​2017/​10/​18/​china-​is-​africas-​biggest-​ economic-​partner-​but-​what-​role-​for-​the-​united-​states/​. 48. “Can Ethiopia Be Africa’s Leading Manufacturing Hub?,” BBC News, August 24, 2017, https://​www.bbc.com/​news/​world-​africa-​41035141. 49. Jiajun Xu, Stephen Gelb, Jiewei Li, and Zuoxiang Zhao, “Adjusting to Rising Costs in Chinese Light Manufacturing,” Supporting Economic Transformation (December 2017), 1–​2, https://​set.odi.org/​wp-​content/​ uploads/​2017/​12/​SET_​Survey-​report_​Chinese-​manufacturing_​Final.pdf. 50. Tom Hancock, “China’s Relentless Export Machine Moves up the Value Chain,” Financial Times, September 23, 2018, https://​www.ft.com/​content/​ cdc53aee-​bc2e-​11e8-​94b2-​17176fbf93f5. 51. Xu, Gelb, and Zhao, “Adjusting to Rising Costs in Chinese Light Manufacturing,”  33–​34. 52. Sun, The Next Factory of the World,  53–​54. 53. Leslie Hook, “Zuma Warns on Africa’s Ties to China,” Financial Times, July 19, 2012, https://​www.ft.com/​content/​33686fc4-​d171-​11e1-​bbbc-​ 00144feabdc0; David Pilling and Adrienne Klasa, “Kenya President Urges Rebalance of China-​Africa Trade,” Financial Times, May 14, 2017, https://​ www.ft.com/​content/​947ea960-​38b2-​11e7-​821a-​6027b8a20f23; Hannah Ryder, “African Countries Want More ‘Win’ from the Win-​Win, but China Isn’t Quite Ready,” Quartz, September 7, 2018, https://​qz.com/​africa/​ 1382074/​what-​african-​countries-​really-​get-​from-​focac-​china-​summit/​. 54. Indermit Gill and Kenan Karakülah, “Sounding the Alarm on Africa’s Debt,” Brookings Institution, April 6, 2018, https://​www.brookings.edu/​blog/​future-​ development/​2018/​04/​06/​sounding-​the-​alarm-​on-​africas-​debt/​. 55. Kate Allen, “African Nations’ Debt Costs at Levels Last Seen before Write-​Offs,” Financial Times, May 23, 2018, https://​www.ft.com/​content/​ f1fd67ea-​5e75-​11e8-​9334-​2218e7146b04. 56. Deborah Brautigam, Yufan Huang, and Kevin Acker, “Risky Business: New Data on Chinese Loans and Africa’s Debt Problem,” China Africa Research Initiative, Briefing Paper No. 3, July 2020, https://​static1.squarespace. com/​static/​5652847de4b033f56d2bdc29/​t/​5efe4a22e6756c5da0a5917d/​ 1593723426976/​BP+3+-​+Brautigam%2C+Huang%2C+Acker+-​ +Chinese+Loans+African+Debt.pdf. 57. Yufan Huang and Deborah Brautigam, “Putting a Dollar Amount on China’s Loans to the Developing World,” The Diplomat, June 24, 2020, https://​ thediplomat.com/​2020/​06/​putting-​a-​dollar-​amount-​on-​chinas-​loans-​to-​the-​ developing-​world/​. 58. Jiang Zemin, “China and Africa Usher In the New Century Together,” Opening Ceremony of the Forum on China-​Africa Cooperation, Beijing, October 2000, http://​www.fmprc.gov.cn/​zflt/​eng/​zyzl/​zyjh/​t157712.htm. 59. “China’s Debt Relief along the Belt and Road—​What’s the Story?” Development Reimagined, April 25, 2019, https://​developmentreimagined.com/​

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2019/​04/​25/​chinas-​debt-​relief-​along-​the-​belt-​and-​road-​whats-​the-​story/​; Agatha Kratz, Allen Feng, and Logan Wright, “New Data on the ‘Debt Trap’ Question,” Rhodium Group, April 29, 2019, https://​rhg.com/​research/​new-​ data-​on-​the-​debt-​trap-​question/​; “Kenya Fails to Secure $3.6b from China for Third Phase of SGR Line to Kisumu,” The East African, April 27, 2019, https://​www.theeastafrican.co.ke/​business/​Kenya-​fails-​to-​secure-​loan-​from-​ China-​for-​third-​phase-​of-​SGR/​2560-​5090192-​2o0y9j/​index.html. 60. Johanna Malm, “China’s New Debt Sustainability Framework for the BRI,” China Africa Research Initiative Blog, China and Africa: The Real Story, August 27, 2019, http://​www.chinaafricarealstory.com/​2019/​08/​chinas-​new-​debt-​ sustainability.html. 61. Yun Sun, “Xi and the 6th Forum on China-​Africa Cooperation: Major Commitments, but with Questions,” Brookings, December 7, 2015, https://​www.brookings.edu/​blog/​africa-​in-​focus/​2015/​12/​07/​xi-​and-​the-​ 6th-​forum-​on-​china-​africa-​cooperation-​major-​commitments-​but-​with-​ questions/​. 62. Justina Crabtree, “China-​Style State-​Led Growth Won’t Work in Africa, Former Nigeria Finance Minister Warns,” CNBC, May 21, 2018, https://​ www.cnbc.com/​2018/​05/​21/​china-​state-​led-​growth-​wont-​work-​in-​africa-​ former-​nigeria-​finance-​minister.html. 63. “The 2018 Programme for Infrastructure Development in Africa Week Opens with Calls for Good Governance to Accelerate Africa’s Integration through Smart Infrastructure,” African Development Bank Group, November 27, 2018, https://​www.afdb.org/​en/​news-​and-​events/​ the-​2018-​programme-​for-​infrastructure-​development-​in-​africa-​week-​opens-​ with-​calls-​for-​good-​governance-​to-​accelerate-​africas-​integration-​through-​ smart-​infrastructure-​18737/​. 64. “Africa Is Attracting Ever More Interest from Powers Elsewhere,” The Economist, March 7, 2019, https://​www.economist.com/​briefing/​2019/​03/​07/​ africa-​is-​attracting-​ever-​more-​interest-​from-​powers-​elsewhere. 65. Jonas B. Bunte, Raise the Debt: How Developing Countries Choose Their Creditors (Oxford University Press, 2019). 66. “Africa Construction Trends Report,” Deloitte (2018), 12, https://​www2. deloitte.com/​cn/​en/​pages/​international-​business-​support/​articles/​2018-​africa-​ construction-​trends-​report.html. 67. “African Economic Outlook 2018,” 82. 68. David Dollar, “China’s Engagement with Africa 2016,” Brookings, July 13, 2016, 63–​65, https://​www.brookings.edu/​wp-​content/​uploads/​2016/​07/​ Chinas-​Engagement-​with-​Africa-​David-​Dollar-​July-​2016.pdf. 69. Cornelia Staritz and Lindsay Whitfield, “Made in Ethiopia: The Emergence and Evolution of the Ethiopian Apparel Export Sector,” Center of African Economies Working Paper 3 (2017), https://​rucforsk.ruc.dk/​ws/​portalfiles/​ portal/​61126066/​CAE_​WP3_​Made_​in_​Ethiopia.pdf. Notes 

 

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70. Shigehisa Kasahara, “The Asian Developmental State and the Flying Geese Paradigm,” United Nations Conference on Trade and Development Discussion Papers 213 (November 2013), https://​unctad.org/​en/​PublicationsLibrary/​ osgdp20133_​en.pdf. 71. Barry Naughton, “China’s Distinctive System: Can It Be a Model for Others?” Journal of Contemporary China 19, no. 65 (2010), https://​doi.org/​ 10.1080/​10670561003666079. 72. Howard W. French, “Africa’s Lost Kingdoms,” New York Review of Books, June 27, 2019, https://​www.nybooks.com/​articles/​2019/​06/​27/​medieval-​ africa-​lost-​kingdoms/​. 73. Calestous Juma, “Globalization as We Know It Has Failed. Africa Has an Alternative,” World Economic Forum, July 6, 2016, https://​www.weforum. org/​agenda/​2016/​07/​globalization-​as-​we-​know-​it-​has-​failed-​africa-​has-​an-​ alternative/​. 74. “Mercosur RIP?,” The Economist, July 14, 2012, https://​www.economist.com/​ the-​americas/​2012/​07/​14/​mercosur-​rip; Eduardo Daniel Oviedo, “Argentina Facing China: Modernization, Interests, and Economic Relations Model,” East Asia: An International Quarterly 30, no. 1 (2013): 30, https://​doi.org/​ 10.1007/​s12140-​012-​9184-​1. 75. Lily Kuo, “China’s Model of Economic Development Is Becoming More Popular in Africa Than America’s,” Quartz, October 28, 2016, https://​ qz.com/​africa/​820841/​chinas-​model-​of-​economic-​development-​is-​becoming-​ more-​popular-​in-​africa-​than-​americas/​. 76. Pádraig Carmody, Niheer Dasandi, and Slava Jankin Mikhaylow, “Power Plays and Balancing Acts: The Paradoxical Effects of Chinese Trade on African Foreign Policy Positions,” Political Studies 68, no. 1 (April 2019): 224–​46, https://​doi.org/​10.1177/​0032321719840962. 77. Yasheng Huang, “The End of China’s Growth Model,” Boston Globe, August 24, 2015, https://​www.bostonglobe.com/​opinion/​editorials/​2015/​ 08/​24/​the-​end-​china-​growth-​model/​TpZy6P05dfwdna51ByEUgM/​story. html. 78. Ellen Barry, “New President in Sri Lanka Puts China’s Plans in Check,” New York Times, January 9, 2015, https://​www.nytimes.com/​2015/​01/​10/​ world/​asia/​new-​president-​in-​sri-​lanka-​puts-​chinas-​plans-​in-​check.html. 79. Maria Abi-​Habib, “How China Got Sri Lanka to Cough Up a Port,” New York Times, June 25, 2018, https://​www.nytimes.com/​2018/​06/​25/​ world/​asia/​china-​sri-​lanka-​port.html; Sheridan Prasso, “A Chinese Company Reshaping the World Leaves a Troubled Trail,” Bloomberg, September 19, 2018, https://​www.bloomberg.com/​news/​features/​2018-​09-​19/​ a-​chinese-​company-​reshaping-​the-​world-​leaves-​a-​troubled-​trail. 80. Dinesh Weerakkody, “Sri Lanka’s Debt-​Ridden Independence,” Daily FT, February 1, 2019, http://​www.ft.lk/​dinesh-​weerakkody/​Sri-​Lanka-​s-​debt-​-​ ridden-​independence/​5-​672066.

302    Notes

 

8 1. Abi-​Habib, “How China Got Sri Lanka to Cough Up a Port.” 82. Shihar Aneez, “Short of Options, Sri Lanka Turns Back to Beijing’s Embrace,” Reuters, February 10, 2016, https://​www.reuters.com/​article/​ us-​sri-​lanka-​china-​idUSKCN0VJ2RX. 83. Shihar Aneez, “China’s ‘Silk Road’ Push Stirs Resentment and Protest in Sri Lanka,” Reuters, February 2, 2017, https://​www.reuters.com/​article/​us-​sri-​ lanka-​china-​insight/​chinas-​silk-​road-​push-​stirs-​resentment-​and-​protest-​in-​ sri-​lanka-​idUSKBN15G5UT. 84. Abi-​Habib, “How China Got Sri Lanka to Cough Up a Port”; “Chinese Firm Pays $584 Million in Sri Lanka Port Debt-​to-​Equity Deal,” Reuters, June 20, 2018, https://​www.reuters.com/​article/​us-​sri-​lanka-​china-​ports/​chinese-​firm-​ pays-​584-​million-​in-​sri-​lanka-​port-​debt-​to-​equity-​deal-​idUSKBN1JG2Z6. 85. Abi-​Habib, “How China Got Sri Lanka to Cough Up a Port.” 86. Darren J. Lim and Rohan Mukherjee, “What Money Can’t Buy: The Security Externalities of Chinese Economic Statecraft in Post-​War Sri Lanka,” Asian Security 15, no. 2 (2017): 15, https://​doi.org/​10.1080/​ 14799855.2017.1414045. 87. Brahma Chellaney, “China’s Creditor Imperialism,” Project Syndicate, December 20, 2017, https://​www.project-​syndicate.org/​commentary/​ china-​sri-​lanka-​hambantota-​port-​debt-​by-​brahma-​chellaney-​2017-​ 12?barrier=accesspaylog. 88. Roman Kozhevnikov, “Tajik Land Deal Extends China’s Reach in Central Asia,” Reuters, March 25, 2011, https://​www.reuters.com/​article/​us-​ tajikistan-​china-​land/​tajik-​land-​deal-​extends-​chinas-​reach-​in-​central-​asia-​ idUSTRE72O1RP20110325; Sarah Lain, “China’s Silk Road in Central Asia: Transformative or Exploitative?” Financial Times, April 27, 2016, https://​www.ft.com/​content/​55ca031d-​3fe3-​3555-​a878-​3bcfa9fd6a98. 89. Umesh Moramudali, “Is Sri Lanka Really a Victim of China’s ‘Debt Trap’?,” The Diplomat, May 14, 2019, https://​thediplomat.com/​2019/​05/​is-​sri-​lanka-​ really-​a-​victim-​of-​chinas-​debt-​trap/​; Suhansini Haidar and Meera Srivasan, “With India Yet to Respond on Debt Freeze Request, Sri Lanka Turns to China,” The Hindu, June 27, 2020, https://​www.thehindu.com/​news/​ international/​four-​months-​on-​sri-​lanka-​still-​waits-​for-​indian-​decision-​on-​ debt-​moratorium/​article31934947.ece. 90. Moramudali, “Is Sri Lanka Really a Victim of China’s ‘Debt Trap’?” 91. Matt Ferchen and Anarkalee Perera, “Why Unsustainable Chinese Infrastructure Deals Are a Two-​Way Street,” Carnegie Endowment for International Peace, July 23, 2019, https://​carnegietsinghua.org/​2019/​07/​23/​ why-​unsustainable-​chinese-​infrastructure-​deals-​are-​two-​way-​street-​pub-​ 79548. 92. Mike Pence, “Remarks on the Administration’s Policy towards China,” Hudson Institute, Washington, DC, October 4, 2018, https://​www.hudson.org/​events/​ Notes 

 

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1610-​vice-​president-​mike-​pence-​s-​remarks-​on-​the-​administration-​s-​policy-​ towards-​china102018. 93. Halik Azeez, “China Holds Sway at Hambantota,” The Sunday Leader, July 4, 2010, http://​www.thesundayleader.lk/​2010/​07/​04/​china-​holds-​sway-​at-​ hambantota/​. 94. Bhavan Jaipragas, “11 Projects That Show China’s Influence over Malaysia—​ and Could Influence Its Election,” South China Morning Post, August 5, 2017, https://​www.scmp.com/​week-​asia/​politics/​article/​2105440/​ 11-​projects-​show-​chinas-​influence-​over-​malaysia-​and-​could. 95. Tom Wright and Simon Clark, “Investigators Believe Money Flowed to Malaysian Leader Najib’s Accounts amid 1MDB Probe,” Wall Street Journal, July 2, 2015, https://​www.wsj.com/​articles/​SB10130211234592774869404 581083700187014570. 96. Tom Wright and Bradley Hope, “WSJ Investigation: China Offered to Bail Out Troubled Malaysian Fund in Return for Deals,” Wall Street Journal, January 7, 2019, https://​www.wsj.com/​articles/​how-​china-​flexes-​its-​political-​ muscle-​to-​expand-​power-​overseas-​11546890449. 97. “OUTRAGE!—​Najib’s Secret Deal with China to Pay Off 1MDB (and Jho Low’s) Debts!—​Shock Exclusive,” Sarawak Report, July 26, 2016, http://​ www.sarawakreport.org/​2016/​07/​outrage-​najibs-​secret-​deal-​with-​china-​to-​ pay-​off-​1mdb-​and-​jho-​lows-​debts-​shock-​exclusive/​. 98. “Malaysia’s Mahathir Warns Chinese Investors,” Bloomberg, April 9, 2018, https://​www.bloomberg.com/​news/​videos/​2018-​04-​09/​ malaysia-​s-​mahathir-​warns-​chinese-​investors-​video. 99. Raul Dancel, “Beware of China ‘Debt Trap’, Malaysia’s Mahathir Tells the Philippines,” The Straits Times, March 7, 2019, https://​www.straitstimes.com/​asia/​se-​asia/​ beware-​of-​china-​debt-​trap-​malaysias-​mahathir-​tells-​the-​philippines. 100. Shibani Mahtani, “A Would-​Be City in the Malaysian Jungle Is Caught in a Growing Rift between China and Its Neighbors,” Washington Post, September 10, 2018, https://​www.washingtonpost. com/​gdpr-​consent/​?destination=%2fworld%2fasia_​pacific%2fa-​ would-​be-​city-​in-​the-​malaysian-​jungle-​is-​caught-​in-​a-​growing-​ rift-​between-​china-​and-​its-​neighbors%2f2018%2f09%2f1 0%2fd705cb18-​b031-​11e8-​9a6a-​565d92a3585d_​story.html%3f&utm_​ term=.83fc88e61b0b. 101. Hong Liu and Guanie Lim, “The Political Economy of a Rising China in Southeast Asia: Malaysia’s Response to the Belt and Road Initiative,” Journal of Contemporary China 28, no. 116 (September 27, 2018): 227, https://​doi. org/​10.1080/​10670564.2018.1511393. 102. Hannah Beech, “‘We Cannot Afford This’: Malaysia Pushes Back against China’s Vision,” New York Times, August 20, 2018, https://​www.nytimes. com/​2018/​08/​20/​world/​asia/​china-​malaysia.html.

304    Notes

 

103. Amrita Malhi, “Race, Debt and Sovereignty—​The ‘China Factor’ in Malaysia’s GE14,” The Round Table: The Commonwealth Journal of International Affairs 107, no. 6 (November 2018), https://​doi.org/​10.1080/​ 00358533.2018.1545939. 104. Stefania Palma, “Malaysia Suspends $22bn China-​Backed Projects,” Financial Times, July 5, 2018, https://​www.ft.com/​content/​ 409942a4-​7f80-​11e8-​bc55-​50daf11b720d. 105. Nisid Hajari, “End of the Road?,” Bloomberg, November 1, 2018, https://​www.bloomberg.com/​opinion/​articles/​2018-​11-​01/​ china-​s-​belt-​and-​road-​ambitions-​could-​backfire. 106. “Malaysia May Resume East Coast Rail Link Project, but on Smaller Scale: Mahathir,” The Straits Times, January 2, 2019, https://​www. straitstimes.com/​asia/​se-​asia/​malaysia-​may-​resume-​east-​coast-​rail-​link-​ project-​but-​on-​smaller-​scale-​mahathir. 107. “Mahathir Vows to Review China Investments,” The Straits Times, April 10, 2018, https://​www.straitstimes.com/​asia/​se-​asia/​mahathir-​vows-​to-​review-​ china-​investments; Beech, “ ‘We Cannot Afford This.’ ” 108. Barry Wain, Malaysian Maverick: Mahathir Mohamad in Turbulent Times (Palgrave Macmillan, 2009), 8. 109. Karminder Singh Dhillon, Malaysian Foreign Policy in the Mahathir Era, 1981–​2003: Dilemmas of Development (NUS Press Singapore, 2009), 153–​54. 110. Alice Woodhouse, “Malaysia to Use Huawei Technology ‘as Much as Possible,’” Financial Times, May 30, 2019, https://​www.ft.com/​content/​ cebdc4a4-​829c-​11e9-​b592-​5fe435b57a3b. 111. Philip Wen and Rozanna Latiff, “Malaysia’s Mahathir to Visit China after Putting $20 Billion of Projects on Ice: Sources,” Reuters, July 5, 2018, https://​ www.reuters.com/​article/​us-​malaysia-​politics-​china/​malaysias-​mahathir-​to-​visit-​ china-​after-​putting-​20-​billion-​of-​projects-​on-​ice-​sources-​idUSKBN1JV1JP. 112. Jamil Anderlini, “Former Malaysian PM Mahathir Mohamed on the Rise of China,” Financial Times, May 26, 2017, https://​www. ft.com/​content/​b4affab0-​4076-​11e7-​82b6-​896b95f30f58; Bhavan Jaipragas, “I’d Side with Rich China over Fickle US: Malaysia’s Mahathir Mohamad,” South China Morning Post, March 8, 2019, https://​www.scmp.com/​week-​asia/​politics/​article/​2189074/​ id-​side-​rich-​china-​over-​fickle-​us-​malaysias-​mahathir. 113. Lucy Hornby, “Mahathir Mohamad Warns against ‘New Colonialism’ during China Visit,” Financial Times, August 20, 2018, https://​www.ft.com/​content/​ 7566599e-​a443-​11e8-​8ecf-​a7ae1beff35b. 114. Bhavan Jaipragas and Tashny Sukumaran, “What Malaysia’s Mahathir Really Plans for China-​Backed Projects (but Can’t Admit To in Public),” South China Morning Post, August 29, 2018, https://​www.scmp.com/​week-​asia/​politics/​article/​2161805/​ what-​malaysias-​mahathir-​really-​plans-​china-​backed-​projects-​cant. Notes 

 

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115. Chun Han Wong and Yantoultra Ngui, “China Chops Price for a Much-​ Criticized ‘Belt and Road’ Project in Malaysia,” Wall Street Journal, April 12, 2019, https://​www.wsj.com/​articles/​china-​chops-​price-​for-​a-​much-​criticized-​ belt-​and-​road-​project-​in-​malaysia-​11555073569; Beh Yuen Hui and Mazwin Nik Anis, “ECRL Is Up and Running Again,” The Star, April 13, 2019, https://​www.thestar.com.my/​news/​nation/​2019/​04/​13/​ecrl-​is-​up-​and-​ running-​again/​. 116. Royce Tan, “All Eyes on ECRL Civil Works,” The Star, June 13, 2019, https://​www.thestar.com.my/​business/​business-​news/​2019/​06/​13/​all-​eyes-​on-​ ecrl-​civil-​works/​#DuAAfLsB6qhLfLko.99. 117. Liu and Lim, “The Political Economy of a Rising China in Southeast Asia,” 223. 118. “Malaysia in Discussion with China Firms on Pipeline Compensation,” The Straits Times, May 25, 2019, https://​www.straitstimes.com/​asia/​se-​ asia/​malaysia-​in-​discussion-​with-​china-​firms-​on-​pipeline-​compensation; “Malaysia Seizes $240 Million from Chinese State Firm’s Bank Account: Paper,” Reuters, July 14, 2019, https://​www.reuters.com/​article/​ us-​malaysia-​politics-​china/​malaysia-​seizes-​240-​million-​from-​chinese-​state-​ firms-​bank-​account-​paper-​idUSKCN1U9060. 119. Bhavan Jaipragas, “Top Mahathir Adviser Daim Says Malaysia’s China-​ Backed ECRL Will Be Loss-​Making for Some Time, Reveals Surprising Offer from Fugitive Financier Jho Low,” South China Morning Post, May 9, 2019, https://​www.scmp.com/​week-​asia/​geopolitics/​article/​3009257/​ top-​mahathir-​adviser-​daim-​says-​malaysias-​china-​backed-​ecrl. 120. Simon Mundy and Kathrin Hille, “The Maldives Counts the Cost of Its Debt to China,” Financial Times, February 11, 2019, https://​www.ft.com/​content/​ c8da1c8a-​2a19-​11e9-​88a4-​c32129756dd8. 121. Elizabeth Roche, “India, Maldives Ink Pacts as PM Modi, Prez Solih Hold Talks,” Live Mint, June 8, 2019, https://​www.livemint.com/​politics/​ news/​india-​maldives-​ink-​six-​pacts-​as-​pm-​modi-​prez-​solih-​hold-​talks-​ 1560008820289.html. 122. “With an Eye on China, Modi & Solih Inaugurate Coastal Surveillance System in Maldives,” The Print, June 9, 2019, https://​theprint.in/​diplomacy/​ with-​an-​eye-​on-​china-​modi-​solih-​inaugurate-​coastal-​surveillance-​system-​in-​ maldives/​247698/​. 123. Sanjeev Miglani, “India’s Modi Gives $1.4 Billion Aid to Maldives amid Worry over Its China Debt,” Reuters, December 17, 2018, https://​www. reuters.com/​article/​us-​india-​maldives/​indias-​modi-​gives-​1-​4-​billion-​aid-​to-​ maldives-​amid-​worry-​over-​its-​china-​debt-​idUSKBN1OG0RO. 124. Sachin Parashar, “In Relief to India, Maldives May Scrap Ocean Deal with China,” Times of India, June 17, 2019, https://​timesofindia.indiatimes. com/​india/​in-​relief-​to-​india-​maldives-​may-​scrap-​ocean-​deal-​with-​china/​ articleshow/​69818016.cms.

306    Notes

 

125. Kanupriya Kapoor and Aye Min Thant, “Exclusive: Myanmar Scales Back Chinese-​Backed Port Project due to Debt Fears—​Official,” Reuters, August 2, 2018, https://​www.reuters.com/​article/​us-​myanmar-​china-​port-​exclusive/​ exclusive-​myanmar-​scales-​back-​chinese-​backed-​port-​project-​due-​to-​debt-​ fears-​official-​idUSKBN1KN106. 126. Thomas Fuller, “Myanmar Backs Down, Suspending Dam Project,” New York Times, September 30, 2011, https://​www.nytimes.com/​2011/​10/​01/​world/​ asia/​myanmar-​suspends-​construction-​of-​controversial-​dam.html; Mike Ives, “A Chinese-​Backed Dam Project Leaves Myanmar in a Bind,” New York Times, March 31, 2017, https://​www.nytimes.com/​2017/​03/​31/​world/​asia/​ myanmar-​china-​myitsone-​dam-​project.html. 127. “Why China Is Running into Political Potholes on Its ‘New Silk Road,’” South China Morning Post, January 11, 2018, https://​ www.scmp.com/​news/​china/​diplomacy-​defence/​article/​2127792/​ why-​china-​running-​political-​potholes-​its-​new-​silk-​road. 128. Saibal Dasgupta and Anjana Pasricha, “Pakistan, Nepal, Myanmar Back Away from Chinese Projects,” VOA News, December 4, 2017, https://​www. voanews.com/​a/​three-​countries-​withdraw-​from-​chinese-​projects/​4148094. html; Liu Zhen, “Pakistan Pulls Plug on Dam Deal over China’s ‘Too Strict’ Conditions in Latest Blow to Belt and Road Plans,” South China Morning Post, November 16, 2017, https://​www.scmp.com/​news/​china/​ diplomacy-​defence/​article/​2120261/​pakistan-​pulls-​plug-​dam-​deal-​over-​ chinas-​too-​strict; Mubasher Bukhari, “Pakistan Cuts Chinese ‘Silk Road’ Rail Project by $2 Billion Due to Debt Concerns,” Reuters, October 1, 2018, https://​www.reuters.com/​article/​us-​pakistan-​silkroad-​railways/​pakistan-​ cuts-​chinese-​silk-​road-​rail-​project-​by-​2-​billion-​due-​to-​debt-​concerns-​ idUSKCN1MB2V8; Haroon Janjua, “Cash-​Strapped Pakistan Asks China to Shelve US$2 Billion Coal Plant,” South China Morning Post, January 16, 2019, https://​www.scmp.com/​week-​asia/​geopolitics/​article/​2182326/​ cash-​strapped-​pakistan-​asks-​china-​shelve-​us2-​billion-​coal. 129. Faseeh Mangi, “Belt and Road Re-​Emerges in Pakistan with Flurry of China Deals,” Bloomberg, July 15, 2020, https://​www.bloomberg.com/​news/​articles/​ 2020-0​ 7-1​ 5/​belt-​and-​road-​re-​emerges-​in-​pakistan-​with-​flurry-​of-​china-​deals. 130. “CPEC to Be Completed at All Costs, Says Imran,” Dawn, July 4, 2020, https://​www.dawn.com/​news/​1566867/​ cpec-​to-​be-​completed-​at-​all-​costs-​says-​imran. 131. Zha Daojiong and Michal Meidan, “China and the Middle East in a New Energy Landscape,” Chatham House, Research Paper, October 2015, https://​www.chathamhouse.org/​sites/​default/​files/​publications/​research/​ 20151021ChinaMiddleEastEnergyDaojiongMeidan.pdf. 132. Raffaello Pantucci, “China’s Complicated Relationship with Central Asia,” East Asia Forum, October 30, 2019, https://​www.eastasiaforum.org/​2019/​10/​ 30/​chinas-​complicated-​relationship-​with-​central-​asia/​. Notes 

 

307

 

133. Emily Feng, “China-​Kazakhstan Border Woes Dent Silk Road Ambitions,” Financial Times, December 21, 2017, https://​www.ft.com/​content/​ 1606d70a-​9c31-​11e7-​8cd4-​932067fbf946. 134. Sidney Leng, “China’s Belt and Road Cargo to Europe under Scrutiny as Operator Admits to Moving Empty Containers,” South China Morning Post, August 20, 2019, https://​www.scmp.com/​economy/​china-​economy/​article/​ 3023574/​chinas-​belt-​and-​road-​cargo-​europe-​under-​scrutiny-​operator. 135. Andreea Brinza, “China’s Continent-​Spanning Trains Are Running Half-​ Empty,” Foreign Policy, June 5, 2017, https://​foreignpolicy.com/​2017/​06/​05/​ chinas-​continent-​spanning-​trains-​are-​running-​half-​empty-​one-​belt-​one-​road-​ bri/​; Jonathan E. Hillman, “The Rise of China-​Europe Railways,” Center for Strategic and International Studies, Report, March 6, 2018, https://​www.csis. org/​analysis/​rise-​china-​europe-​railways; Leng, “China’s Belt and Road Cargo to Europe under Scrutiny.” 136. Will Doig, High-​Speed Empire: Chinese Expansion and the Future of Southeast Asia (Columbia Global Reports, 2018), 53. 137. Doig, High-​Speed Empire,  91–​92. 138. Jonathan E. Hillman, “Influence and Infrastructure: The Strategic Stakes of Foreign Projects,” CSIS Reconnecting Asia Project (January 2019), https://​ csis-​prod.s3.amazonaws.com/​s3fs-​public/​publication/​190123_​Hillman_​ InfluenceandInfrastructure_​WEB_​v3.pdf. 139. Li Xiaoyang, “Washington’s Smear Campaign against China Is Failing,” Xinhua, April 17, 2019, http://​www.xinhuanet.com/​english/​2019-​04/​16/​c_​ 137982518.htm. 140. Daniel Ten Kate and Sophie Kamaruddin, “Anwar ‘Appalled’ by Suu Kyi, Criticizes China’s Muslim Camps,” Bloomberg, September 12, 2018, https://​www.bloomberg.com/​news/​articles/​2018-​09-​12/​ anwar-​is-​appalled-​by-​suu-​kyi-​criticizes-​china-​s-​muslim-​camps. 141. Priya Sahgal, “We Will Have to Change 99-​Year Lease to China of Hambantota: Rajapaksa,” Sunday Guardian, September 15, 2018, https://​www.sundayguardianlive.com/​news/​ will-​change-​99-​year-​lease-​china-​hambantota-​rajapaksa. 142. Haidar and Srivasan, “With India Yet to Respond on Debt Freeze Request, Sri Lanka Turns to China.” 143. Tang Siew Mun, Moe Thuzar, Hoang Thi Ha, Termsak Chalermpalanupap, Pham Thi Phuong Thao, and Anuthida Saelaow Qian, “The State of Southeast Asia: 2019 Survey Report,” ASEAN Studies Centre, ISEAS–​Yusof Ishak Institute, January 29, 2019, 18–​19, https://​www.iseas.edu.sg/​images/​ pdf/​TheStateofSEASurveyReport_​2019.pdf. 144. Tang Siew Mun, Hoang Thi Ha, Anuthida Saelaow Qian, Glenn Ong, and Pham Thi Phuong Thao, “The State of Southeast Asia: 2020 Survey Report,” ASEAN Studies Centre, ISEAS–​Yusof Ishak Institute, January 16, 2020, 36, https://​www.iseas.edu.sg/​images/​pdf/​TheStateofSEASurveyReport_​2020.pdf.

308    Notes

 

145. “Malaysia’s Mahathir Tells Philippines: ‘Be Very Careful’ with Chinese Loans,” Philstar, March 7, 2019, https://​ www.philstar.com/​business/​2019/​03/​07/​1899471/​ malaysias-​mahathir-​tells-​philippines-​be-​very-​careful-​chinese-​loans. 146. Bhavan Jaipragas and Meaghan Tobin, “‘Let’s Learn from Malaysia’s Mahathir Mohamad’: Is Thailand About to Ditch China for the US?,” South China Morning Post, March 16, 2019, https://​www.scmp.com/​week-​asia/​politics/​article/​ 3001940/​lets-​learn-​malaysias-​mahathir-​mohamad-​thailand-​about-​ditch-​china. 147. “Indonesia to Propose Projects Worth US$91 Billion for China’s Belt and Road,” The Straits Times, March 20, 2019, https://​www.straitstimes.com/​ asia/​se-​asia/​indonesia-​to-​propose-​projects-​worth-​us91-​bilion-​for-​chinas-​ belt-​and-​road. 148. Chun Han Wong and James T. Areddy, “China’s Xi Vows New Direction for ‘Belt and Road’ after Criticism,” Wall Street Journal, April 26, 2019, https://​ www.wsj.com/​articles/​chinas-​xi-​vows-​new-​direction-​for-​belt-​and-​road-​after-​ criticism-​11556249652. 149. “Belt and Road Quarterly: Q1 2019,” The Economist Intelligence Unit, February 27, 2019, http://​country.eiu.com/​article.aspx?articleid=537693037 &Country=China&topic=Politics. 150. Jonathan Holslag, “How China’s Silk Road Threatens European Trade,” The International Spectator 52, no. 1 (2017), http://​country.eiu.com/​article.aspx?art icleid=537693037&Country=China&topic=Politics. 151. Bo Kong, China’s International Petroleum Policy (Praeger, 2010), 67–​69; Henry Sanderson and Michael Forsythe, China’s Superbank: Debt, Oil and Influence—​ How China Development Bank Is Rewriting the Rules of Finance (Wiley, 2013), 159–​62. 152. James Kynge, “Chinese Contractors Grab Lion’s Share of Silk Road Projects,” Financial Times, January 24, 2018, https://​www.ft.com/​content/​ 76b1be0c-​0113-​11e8-​9650-​9c0ad2d7c5b5. 153. Holslag, “How China’s Silk Road Threatens European Trade,” 49. 154. Hillman, “Influence and Infrastructure,” 12. 155. Jörg Wuttke, “The Dark Side of China’s Economic Rise,” Global Policy 8, supp. 4 (June 2017), https://​doi.org/​10.1111/​1758-​5899.12439. 156. “Making Sense of Capacity Cuts in China,” The Economist, September 9, 2017, https://​www.economist.com/​leaders/​2017/​09/​09/​ making-​sense-​of-​capacity-​cuts-​in-​china. 157. He Yafei, “China’s Overcapacity Crisis Can Spur Growth through Overseas Expansion,” South China Morning Post, January 7, 2014, https://​www.scmp.com/​comment/​insight-​opinion/​article/​1399681/​ chinas-​overcapacity-​crisis-​can-​spur-​growth-​through-​overseas. 158. Holslag, “How China’s Silk Road Threatens European Trade,” 49. 159. David Dollar, “China’s Rise as a Regional and Global Power: The AIIB and the ‘One Belt, One Road,’” Brookings Report, July 15, 2015, https://​www. Notes 

 

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brookings.edu/​wp-​content/​uploads/​2016/​06/​China-​rise-​as-​regional-​and-​ global-​power.pdf. 160. Dollar, “China’s Rise as a Regional and Global Power.” 161. “Global Steel Trade Monitor,” U.S. Department of Commerce, International Trade Administration, February 2019, https://​www.trade.gov/​steel/​global-​ monitor.asp. 162. Wuttke, “The Dark Side of China’s Economic Rise.” 163. Holslag, “How China’s Silk Road Threatens European Trade,” 48–​49. 164. Tanner Greer, “One Belt, One Road, One Big Mistake,” Foreign Policy, December 6, 2018, https://​foreignpolicy.com/​2018/​12/​06/​bri-​china-​belt-​ road-​initiative-​blunder/​; Lee Jons and Jinghan Zeng, “Understanding China’s ‘Belt and Road Initiative’: Beyond ‘Grand Strategy’ to a State Transformation Analysis,” Third World Quarterly (February 2019), https://​doi.org/​10.1080/​ 01436597.2018.1559046. 165. Erica Downs, Jeffery Becker, and Patrick deGategno, “China’s Military Support Facility in Djibouti: The Economic and Security Dimensions of China’s First Overseas Base,” CNA (July 2017), 29–​30, https://​www.cna.org/​ cna_​files/​pdf/​DIM-​2017-​U-​015308-​Final3.pdf. 166. Jeffrey Becker, Erica Downs, Ben DeThomas, and Patrick deGategno, “China’s Presence in the Middle East and Western Indian Ocean: Beyond Belt and Road,” CNA (February 2019), https://​www.cna.org/​CNA_​files/​ PDF/​DRM-​2018-​U-​018309-​Final2.pdf. 167. Wang Weixing, “ ‘One Belt, One Road’ under Global Vision: Risks and Challenges” [全球视野 下的’一带一路’: 风险与挑战], Frontiers [学术前沿], no. 5 (2015), http://​gb.oversea.cnki.net/​kcms/​detail/​detailall. aspx?filename=rmxs201509003&dbcode=CJFQ&dbname=CJFD2015. 168. Joel Wuthnow, “Chinese Perspectives on the Belt and Road Initiative: Strategic Rationales, Risks, and Implications,” Institute for National Strategic Studies, China Strategic Perspectives 12 (National Defense University Press, 2012), https://​inss.ndu.edu/​Portals/​68/​Documents/​ stratperspective/​china/​ChinaPerspectives-​12.pdf, 22. 169. “Corruption Perceptions Index 2018,” Transparency International, https://​ www.transparency.org/​cpi2018. 170. Jonathan Hillman, “China’s Belt and Road Is Full of Holes,” CSIS Briefs (September 2018), https://​csis-​prod.s3.amazonaws.com/​s3fs-​ public/​publication/​180917_​ChinasBelt_​final.pdf?USSKPmJPFHq0v. lSyr2wZu9H9HSrlTUh. 171. Alexander Gabuev, “Belt and Road to Where?,” in “Regional Security Outlook 2018,” Council for Security Cooperation in the Asia-​Pacific (2018), 53, http://​www.cscap.org/​uploads/​docs/​CRSO/​CSCAP2018WEB.pdf. 172. Stephen O’Sullivan, “China: Growing Import Volumes of LNG Highlight China’s Rising Energy Import Dependency,” Oxford Energy Comment (June 2019), 3, https://​www.oxfordenergy.org/​wpcms/​

310    Notes

 

wp-​content/​uploads/​2019/​06/​China-​growing-​import-​volumes-​of-​LNG-​ highlight-​China%E2%80%99s-​rising-​energy-​import-​dependency. pdf?v=dd65ef9a5579. 173. Jeremy Garlick, “Deconstructing the China-​Pakistan Economic Corridor: Pipe Dreams versus Geopolitical Realities,” Journal of Contemporary China 27, no. 112 (February 2018), https://​doi.org/​10.1080/​ 10670564.2018.1433483. 174. Energy Information Agency, “China’s Crude Oil Imports Surpassed 10 Million Barrels per Day in 2019,” Today in Energy, March 23, 2020, https://​ www.eia.gov/​todayinenergy/​detail.php?id=43216#:~:text=China's%20 annual%20crude%20oil%20imports,the%20United%20States%20in%20 2017. 175. Andrew S. Erickson and Gabriel B. Collins, “China’s Oil Security Pipe Dream: The Reality, and Strategic Consequences, of Seaborne Imports,” Naval War College Review 63, no. 2 (spring 2010), http://​www. andrewerickson.com/​wp-​content/​uploads/​2010/​03/​China-​Pipeline-​Sealane_​ NWCR_​2010-​Spring.pdf. 176. O’Sullivan, “China: Growing Import Volumes of LNG Highlight China’s Rising Energy Import Dependency,” 7. 177. Evan A. Feigenbaum, “Reluctant Stakeholder: Why China’s Highly Strategic Brand of Revisionism Is More Challenging Than Washington Thinks,” Macro Polo, April 27, 2018, https://​macropolo.org/​analysis/​reluctant-​stakeholder-​ why-​chinas-​highly-​strategic-​brand-​of-​revisionism-​is-​more-​challenging-​than-​ washington-​thinks/​. 178. “Three Infographics That Sum Up AIIB’s Past 3 Years,” CGTN, December 25, 2018, https://​news.cgtn.com/​news/​3d3d414e34 6b444e31457a6333566d54/​share_​p.html; Nikki Sun, “China Development Bank Commits $250bn to Belt and Road,” Nikkei Asian Review, January 15, 2018, https://​asia.nikkei.com/​Economy/​ China-​Development-​Bank-​commits-​250bn-​to-​Belt-​and-​Road. 179. “World Bank Group Financing to Address Development Challenges Reached Nearly $60 Billion in the Fiscal Year of 2019,” The World Bank, Press Release, July 11, 2019, https://​www.worldbank.org/​en/​news/​press-​release/​ 2019/​07/​11/​world-​bank-​group-​financing-​development-​challenges-​60-​ billion-​fiscal-​year-​2019. 180. James Kynge, “China Becomes Global Leader in Development Finance,” Financial Times, May 17, 2016, https://​www.ft.com/​content/​ b995cc7a-​1c33-​11e6-​a7bc-​ee846770ec15. 181. Sanderson and Forsythe, China’s Superbank, 51. 182. Huang and Brautigam, “Putting a Dollar Amount on China’s Loans to the Developing World.” 183. John Hurly, Scott Morris, and Gailyn Portelance, “Examining the Debt Implications of the Belt and Road Initiative from a Policy Perspective,” CGD Notes 

 

311

 

Policy Paper 121 (March 2018), https://​www.cgdev.org/​sites/​default/​files/​ examining-​debt-​implications-​belt-​and-​road-​initiative-​policy-​perspective.pdf. 184. James Kynge, “China’s Belt and Road Projects Drive Overseas Debt Fears,” Financial Times, August 7, 2018, https://​www.ft.com/​content/​ e7a08b54-​9554-​11e8-​b747-​fb1e803ee64e. 185. “Belt and Road Relationships Will Become More Important to China,” Moody’s, January 24, 2019, https://​www.moodys.com/​research/​Moodys-​Belt-​ and-​Road-​relationships-​will-​become-​more-​important-​to-​-​PBC_​1158731. 186. Hillman, “Influence and Infrastructure,” 6–​9. 187. “China’s Belt and Road Initiative Is Falling Short,” Financial Times, July 29, 2018, https://​www.ft.com/​content/​ 47d63fec-​9185-​11e8-​b639-​7680cedcc421. 188. “China Reviews Its Commercial Development in 2018,” CGTN, February 12, 2019, https://​news.cgtn.com/​news/​3d3d774d354d6a4e32457a63335 66d54/​index.html. 189. Jun Mai and Sarah Zheng, “Why Is There More Dissent inside Beijing’s Legislative ‘Two Sessions’ This Year?,” South China Morning Post, March 13, 2019, https://​www.scmp.com/​news/​china/​politics/​article/​3001377/​ why-​there-​more-​dissent-​inside-​beijings-​legislative-​two-​sessions. 190. Zheping Huang, “A Country of Yes Men: No One Says No to Xi Jinping Anymore,” Quartz, March 19, 2018, https://​qz.com/​1232199/​a-​tally-​of-​ people-​who-​opposed-​xi-​jinping-​in-​chinas-​latest-​government-​reshuffle/​. 191. Nadège Rolland, “Reports of Belt and Road’s Death Are Greatly Exaggerated,” Foreign Affairs, January 29, 2019, https://​www.foreignaffairs.com/​articles/​china/​2019-​01-​29/​ reports-​belt-​and-​roads-​death-​are-​greatly-​exaggerated. 192. Greer, “One Belt, One Road, One Big Mistake.” 193. “China Development Bank’s Overseas Investments: An Assessment of Environmental and Social Policies and Practices,” Friends of the Earth (2012), 17–​18, https://​1bps6437gg8c169i0y1drtgz-​wpengine.netdna-​ssl. com/​wp-​content/​uploads/​wpallimport/​files/​archive/​China_​Development_​ Banks_​overseas_​investments_​-​_​An_​assessment_​of_​environmental_​ and_​social_​policies_​and_​practices.pdf; James Kynge, Lucy Hornby, and Don Weinland, “China Development Banks Expand Links with Foreign Lenders,” Financial Times, July 16, 2018, https://​www.ft.com/​content/​ e0a2dd52-​85b4-​11e8-​a29d-​73e3d454535d. 194. Kirk Lancaster, Michael Rubin, and Mira Rapp-​Hooper, “What the COVID-​ 19 Pandemic May Mean for China’s Belt and Road Initiative,” Council on Foreign Relations, Asia Unbound, March 17, 2020, https://​www.cfr.org/​blog/​ what-​covid-​19-​pandemic-​may-​mean-​chinas-​belt-​and-​road-​initiative; Adnan Aamir, “Pakistan Slashes Budget for Belt and Road Initiative Projects,” Nikkei Asian Review, May 11, 2020, https://​asia.nikkei.com/​Spotlight/​ Belt-​and-​Road/​Pakistan-​slashes-​budget-​for-​Belt-​and-​Road-​Initiative-​

312    Notes

 

projects#:~:text=Three%20infrastructure%20projects%20in%20the,to%20 be%20around%20%2450%20billion. 195. James Kynge and Sun Yu, “China Faces Wave of Calls for Debt Relief on ‘Belt and Road’ Rrojects,” Financial Times, April 20, 2020, https://​www. ft.com/​content/​5a3192be-​27c6-​4fe7-​87e7-​78d4158bd39b. 196. “China Says One-​Fifth of Belt and Road Projects ‘Seriously Affected’ by Pandemic,” Reuters, June 19, 2020, https://​www.reuters.com/​article/​us-​ health-​coronavirus-​china-​silkroad/​china-​says-​one-​fifth-​of-​belt-​and-​road-​ projects-​seriously-​affected-​by-​pandemic-​idUSKBN23Q0I1. 197. W. Gyude Moore, “African Countries Should Stay Loyal to China’s Troubled Huawei—​Regardless of Trump,” Quartz, May 27, 2019, https://​qz.com/​ africa/​1629078/​africa-​will-​stay-​loyal-​to-​chinas-​huawei-​regardless-​of-​trump/​. 198. Priya Sahgal, “We Will Have to Change 99-​Year Lease to China of Hambantota: Rajapaksa,” The Sunday Guardian, September 15, 2018, https://​www.sundayguardianlive.com/​news/​ will-​change-​99-​year-​lease-​china-​hambantota-​rajapaksa. 199. Simon Mundy and Kathrin Hille, “The Maldives Counts the Cost of Its Debt to China,” Financial Times, February 11, 2019, https://​www.ft.com/​content/​ c8da1c8a-​2a19-​11e9-​88a4-​c32129756dd8. 200. Siegfried Alegado, “Japan Still Beating China in Southeast Asia Infrastructure Race,” Bloomberg, February 14, 2018, https://​www.bloomberg.com/​news/​articles/​2019-​06-​23/​ china-​no-​match-​for-​japan-​in-​southeast-​asia-​infrastructure-​race. 201. “Expanded Partnership for Quality Infrastructure,” The G7 Ise-​Shima Summit, March 2014, https://​www.mofa.go.jp/​mofaj/​gaiko/​oda/​files/​ 000241007.pdf. 202. Chen Qin and Takehiro Masutomo, “Why Japan Dominates Leadership of Asian Development Bank,” CNBC, April 4, 2013, https://​www.cnbc. com/​id/​100614728; “How ADB Is Adapting to a Changing Asia,” Asian Development Bank, August 15, 2018, https://​www.adb.org/​news/​features/​ how-​adb-​adapting-​changing-​asia. 203. Jon Herskovitz and Iain Marlow, “China Faces New Competition as Japan, India Eye Sri Lanka Port,” Bloomberg, May 21, 2019, https://​www.bloomberg.com/​news/​articles/​2019-​05-​21/​ japan-​india-​in-​deal-​at-​belt-​and-​road-​colombo-​port-​nikkei. 204. Kirsty Needham, “China Lodges Diplomatic Complaint Following Australian Minister’s Comments,” Sydney Morning Herald, January 12, 2018, https://​www.smh.com.au/​world/​china-​lodges-​diplomatic-​complaint-​ following-​australian-​ministers-​comments-​20180111-​h0gj8m.html. 205. David Wroe, “Australia Will Compete with China to Save Pacific Sovereignty, Says Bishop,” Sydney Morning Herald, June 18, 2018, https://​ www.smh.com.au/​politics/​federal/​australia-​will-​compete-​with-​china-​to-​save-​ pacific-​sovereignty-​says-​bishop-​20180617-​p4zm1h.html. Notes 

 

313

 

206. John Lee, “Australia’s Plan to Challenge China in the South Pacific,” CNN, November 9, 2018, https://​edition.cnn.com/​2018/​11/​08/​australia/​australia-​ china-​south-​pacific-​analysis-​intl/​index.html. 207. Daniel F. Rund and Romina Bandura, “The BUILD Act Has Passed: What’s Next?” Center for Strategic and International Studies, October 12, 2018, https://​ www.csis.org/​analysis/​build-​act-​has-​passed-​whats-​next. 208. Todd Moss and Erin Collinson, “USDFC Monitor: Why Is the White House Scuttling Its Biggest Development Win? Four Hidden Daggers Pointed at the Heart of the New USDFC,” Center for Global Development, April 2, 2019, https://​www.cgdev.org/​blog/​why-​white-​house-​scuttling-​its-​biggest-​ development-​win-​four-​hidden-​daggers-​pointed-​heart-​new. 209. Dollar, “China’s Rise as a Regional and Global Power.” 210. Evan A. Feigenbaum, “China Didn’t Invent Asian Connectivity,” Macro Polo, June 26, 2017, https://​macropolo.org/​china-​didnt-​invent-​asian-​connectivity/​. 211. “Asia Infrastructure Needs Exceed $1.7 Trillion per Year, Double Previous Estimates,” Asian Development Bank, February 28, 2018, https://​www.adb.org/​news/​ asia-​infrastructure-​needs-​exceed-​17-​trillion-​year-​double-​previous-​estimates. 212. Lim and Mukherjee, “What Money Can’t Buy.” 213. Richard Fontaine and Daniel Kliman, “On China’s New Silk Road, Democracy Pays a Toll,” Foreign Policy, May 16, 2018, https://​foreignpolicy. com/​2018/​05/​16/​on-​chinas-​new-​silk-​road-​democracy-​pays-​a-​toll/​.

Chapter 5 1. Fabian Wehnert, “The Heart of the German Economy,” BDI, January 25, 2016, https://​english.bdi.eu/​topics/​germany/​the-​mittelstand/​#/​article/​news/​ the-​heart-​of-​the-​german-​economy/​. 2. Thomas Franck, “Trump Doubles Down: ‘Trade Wars Are Good, and Easy to Win,’” CNBC, March 2, 2018, https://​www.cnbc.com/​2018/​03/​02/​trump-​ trade-​wars-​are-​good-​and-​easy-​to-​win.html. 3. “Xi, Merkel Agree to Write Better Story of China-​Germany Cooperation,” Xinhua, July 6, 2017, http://​www.xinhuanet.com//​english/​2017-​07/​06/​c_​ 136421948.htm. 4. “China’s President Xi Says to Uphold Global Climate Deal,” Reuters, May 9, 2017, https://​www.reuters.com/​article/​us-​climatechange-​china/​ chinas-​president-​xi-​says-​to-​uphold-​global-​climate-​deal-​idUSKBN1851P2. 5. European Union, “EU China Relations Factsheet,” October 18, 2019, https://​ eeas.europa.eu/​topics/​external-​investment-​plan/​34728/​eu-​china-​relations-​ factsheet_​en. 6. “Chinese Enterprises Enter ‘Go Global’ Era 4.0,” Xinhua, April 11, 2016, http://​english.www.gov.cn/​news/​top_​news/​2016/​04/​11/​content_​ 281475325205328.htm.

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7. Thilo Hanemann, Mikko Huotari, and Agatha Kratz, “Chinese FDI in Europe: 2018 Trends and Impact of New Screening Policies,” Merics Papers on China (March 2019): 10–​11, https://​www.merics.org/​sites/​default/​files/​2019-​ 03/​190311_​MERICS-​Rhodium%20Group_​COFDI-​Update_​2019.pdf. 8. Thilo Hanemann and Mikko Huotari, “Record Flows and Growing Imbalances: Chinese Investment in Europe 2016,” Merics Papers on China 3 (January 2017): 6, https://​www.merics.org/​sites/​default/​files/​2018-​07/​ MPOC_​3_​COFDI_​2017_​web.pdf. 9. Philippe Le Corre and Alain Sepulchre, China’s Offensive in Europe (Brookings Institution Press, 2016), 7. 10. Eurostat, https://​ec.europa.eu/​eurostat/​data/​database, accessed June 25, 2020. 11. Hans Kundnani, “Germany as a Geo-​Economic Power,” Washington Quarterly 34, no. 3 (summer 2011), https://​doi.org/​10.1080/​0163660X.2011.587950. 12. Hans Kundnani and Jonas Parello-​Plesner, “China and Germany: Why the Emerging Special Relationship Matters for Europe,” European Council on Foreign Relations Policy Brief 55 (2012): 3, https://​www.ecfr.eu/​page/​-​/​ ECFR55_​CHINA_​GERMANY_​BRIEF_​AW.pdf. 13. Kundnani and Parello-​Plesner, “China and Germany,” 2. 14. Möller, “Germany and China.” 15. Benedict Rogers, “An Example for David Cameron to Follow on China,” Wall Street Journal, July 4, 2016, https://​www.wsj.com/​articles/​ an-​example-​for-​david-​cameron-​to-​follow-​on-​china-​1467659908. 16. Kay Möller, “Germany and China: A Continental Temptation,” China Quarterly 147 (1996): 714–​15, https://​doi.org/​10.1017/​ S0305741000051766. 17. Judy Dempsey, “China Focus Comes at a Cost for Germany,” New York Times, September 3, 2012, https://​www.nytimes.com/​2012/​09/​04/​world/​europe/​ 04iht-​letter04.html. 18. “German Minister Calls EU Move on China Solar ‘Grave Mistake,’” Reuters, May 19, 2016, https://​www.reuters.com/​article/​us-​eu-​china-​solar-​ germany/​german-​minister-​calls-​eu-​move-​on-​china-​solar-​grave-​mistake-​ idUSBRE94I06720130519. 19. Christoph Steitz, “SolarWorld Collapses as Europe’s Solar Industry Eclipsed by China,” Reuters, May 11, 2017, https://​www.reuters.com/​ article/​us-​sma-​solar-​results/​solarworld-​collapses-​as-​europes-​solar-​ industry-​eclipsed-​by-​china-​idUSKBN1870ZV; Philip Blenkinsop, “EU Ends Trade Controls on Chinese Solar Panels,” Reuters, August 31, 2018, https://​www.reuters.com/​article/​us-​eu-​china-​trade/​ eu-​ends-​trade-​controls-​on-​chinese-​solar-​panels-​idUSKCN1LG1QM. 20. Robin Emmott, “EU and China End Telecoms Row as EU Drops Threats against Huawei,” Reuters, October 20, 2014, https://​www.reuters.com/​article/​ us-​eu-​china-​telecommunications/​eu-​and-​china-​end-​telecoms-​row-​as-​eu-​ drops-​threats-​against-​huawei-​idUSKCN0I90TT20141020. Notes 

 

315

 

21. Chuin-​Wei Yap and Dan Strumpf, “Huawei’s Yearslong Rise Is Littered with Accusations of Theft and Dubious Ethics,” Wall Street Journal, May 25, 2019, https://​www.wsj.com/​articles/​huaweis-​yearslong-​rise-​is-​littered-​with-​ accusations-​of-​theft-​and-​dubious-​ethics-​11558756858. 22. Keith Johnson and Elias Groll, “The Improbable Rise of Huawei,” Foreign Policy, April 3, 2019, https://​foreignpolicy.com/​2019/​04/​03/​the-​improbable-​ rise-​of-​huawei-​5g-​global-​network-​china/​. 23. Richard McGregor, The Party: The Secret World of China’s Communist Rulers (Allen Lane, 2010), 204. 24. Xielin Liu and Peng Cheng, “Is China’s Indigenous Strategy Compatible with Globalization?” Policy Studies 61 (East-​West Center, 2011), https://​ www.eastwestcenter.org/​sites/​default/​files/​private/​ps061.pdf. 25. Henry Sanderson and Michael Forsythe, China’s Superbank: Debt, Oil and Influence—​How China Development Bank Is Rewriting the Rules of Finance (Wiley, 2013), 159–​61. 26. Ellen Nakashima, “US Pushes Hard for a Ban on Huawei in Europe, but the Firm’s 5G Prices Are Nearly Irresistible,” Washington Post, May 29, 2019, https://​www.washingtonpost.com/​gdpr-​consent/​?desti nation=%2Fworld%2Fnational-​security%2Ffor-​huawei-​the-​5g-​play-​ is-​in-​europe-​-​and-​the-​us-​is-​pushing-​hard-​for-​a-​ban-​there%2F2019 %2F05%2F28%2F582a8ff6-​78d4-​11e9-​b7ae-​390de4259661_​story. html%3Ftid%3Dss_​tw%26utm_​term%3D.cae68addffa7; Chun-​Wei Yap, “State Support Helped Fuel Huawei’s Global Rise,” Wall Street Journal, December 25, 2019, https://​www.wsj.com/​articles/​state-​support-​ helped-​fuel-​huaweis-​global-​rise-​11577280736#:~:text=Tens%20 of%20billions%20of%20dollars,rivals%20got%20from%20their%20 governments. 27. Matthew Dalton, “EU Finds China Gives Aid to Huawei, ZTE,” Wall Street Journal, February 3, 2011, https://​www.wsj.com/​articles/​SB1000142405274 8703960804576120012288591074. 28. “EU Drops China Subsidy Probe,” The Economist Intelligence Unit, October 20, 2014, http://​www.eiu.com/​industry/​article/​1432396927/​eu-​drops-​china-​ subsidy-​probe/​2014-​10-​20; Yap, “State Support Helped Fuel Huawei’s Global Rise.” 29. Sanderson and Forsythe, China’s Superbank, 162. 30. Steven Musil, “Alcatel-​Lucent Reportedly to Reduce Workforce by 10,000 Jobs,” CNET, October 7, 2013, https://​www.cnet.com/​news/​alcatel-​lucent-​ reportedly-​to-​reduce-​workforce-​by-​10000-​jobs/​. 31. Yap, “State Support Helped Fuel Huawei’s Global Rise.” 32. Yukon Huang and Jeremy Smith, “China’s Record on Intellectual Property Rights Is Getting Better and Better,” Foreign Policy, October 16, 2019, https://​foreignpolicy.com/​2019/​10/​16/​china-​intellectual-​property-​theft-​ progress/​.

316    Notes

 

33. “China Theft of Technology Is Biggest Law Enforcement Threat to US, FBI Says,” Reuters, February 6, 2020, https://​www.theguardian.com/​world/​2020/​ feb/​06/​china-​technology-​theft-​fbi-​biggest-​threat. 34. Mara Hvistendahl, The Spy and the Scientist: A True Story of China, the FBI, and Industrial Espionage (Riverhead Books, 2020), 34. 35. Daniel Bases, “EU Cites Chinese Telecoms Huawei and ZTE for Trade Violations,” Reuters, May 18, 2013, https://​uk.reuters.com/​article/​us-​trade-​ eu/​exclusive-​eu-​cites-​chinese-​telecoms-​huawei-​and-​zte-​for-​trade-​violations-​ idUSBRE94H03J20130518. 36. Dalton, “EU Finds China Gives Aid to Huawei, ZTE.” 37. “Karel De Gucht: Frustrated and Outflanked,” Financial Times, July 20, 2013, https://​www.ft.com/​content/​aa79490a-​f8f6-​11e2-​86e1-​00144feabdc0; Jeremy Fleming, “De Gucht Juggles Politics, Diplomacy in High-​Stakes China Gambit,” Euractiv, May 6, 2013, https://​www.euractiv.com/​section/​ digital/​news/​de-​gucht-​juggles-​politics-​diplomacy-​in-​high-​stakes-​china-​ gambit/​. 38. Emmott, “EU and China End Telecoms Row as EU Drops Threats against Huawei”; Matthew Dalton, “EU, China Complete Deal on Telecoms Equipment,” Wall Street Journal, October 14, 2020, https://​www.wsj.com/​ articles/​eu-​china-​reach-​deal-​on-​telecoms-​equipment-​1413797081. 39. Shawn Donnan and Christian Oliver, “EU Commissioner Attacks China’s Telecoms Subsidies,” Financial Times, March 27, 2014, https://​www.ft.com/​ content/​d6d0bcc6-​b5cb-​11e3-​b40e-​00144feabdc0. 40. Jo Harper, “Berlin’s Dilemma: My Way or the Huawei?,” DW, February 1, 2019, https://​www.dw.com/​en/​berlins-​dilemma-​my-​way-​or-​the-​huawei/​ a-​46925935. 41. Yu Chen, “EU-​China Solar Panels Trade Dispute: Settlement and Challenges to the EU,” EU-​Asia at a Glance (June 2015), http://​www.eias.org/​wp-​ content/​uploads/​2016/​02/​EU-​Asia-​at-​a-​glance-​EU-​China-​Solar-​Panels-​ Dispute-​Yu-​Chen.pdf. 42. Sommer, “No Yin Yang.” 43. Maggie Zhang, “Volkswagen Bets Big on China with Three New Plants Poised to Open This Summer,” South China Morning Post, May 28, 2018, https://​www.scmp.com/​business/​companies/​article/​2148178/​ volkswagen-​bets-​big-​china-​three-​new-​plants-​poised-​open-​summer. 44. Thilo Hanemann and Mikko Huotari, “EU-​China FDI: Working towards Reciprocity in Investment Relations,” Merics Papers on China, May 2018, 13; “CrossBorder Monitor (CBM): People’s Republic of China < > European Union Direct Investment,” Rhodium Group, January 16, 2019, https://​trade. ec.europa.eu/​doclib/​docs/​2019/​april/​tradoc_​157871.pdf; “CrossBorder Monitor (CBM): People’s Republic of China < > European Union Direct Investment,” Rhodium Group, January 20, 2020, https://​trade.ec.europa.eu/​ doclib/​docs/​2020/​march/​tradoc_​158660.pdf. Notes 

 

317

 

45. Chris Bryant, “China-​Germany ‘Special Relationship’ Tested by Trade Frictions,” Financial Times, May 26, 2013, https://​www.ft.com/​content/​ 6253a9d0-​c5df-​11e2-​99d1-​00144feab7de. 46. Kundnani and Parello-​Plesner, “China and Germany,” 3–​4. 47. Thilo Hanemann and Mikko Huotari, “Record Flows and Growing Imbalances: Chinese Investment in Europe 2016,” Merics Papers on China 3 (January 2017): 4, https://​www.merics.org/​sites/​default/​files/​2018-​07/​ MPOC_​3_​COFDI_​2017_​web.pdf. 48. Hanemann, Huotari, and Kratz, “Chinese FDI in Europe,” 17. 49. “In Focus: China’s Expansion in the EU,” European Political Strategy Center, Greenfield Investment Monitor, no. 1 (May 2017), https://​ec.europa.eu/​epsc/​ sites/​epsc/​files/​greenfield-​investment-​monitor-​1.pdf. 50. Hanemann and Huotari, “Record Flows and Growing Imbalances,” 5–​6. 51. European Commission, “Foreign Direct Investment in the EU,” Commission Staff Working Document, SWD (2019) 108 final, September 2019, 50, https://​trade.ec.europa.eu/​doclib/​docs/​2019/​march/​tradoc_​157724.pdf. 52. Hanemann and Huotari, “EU-​China FDI,” 13. 53. Hanemann and Huotari, “EU-​China FDI,” 20. 54. Guy Chazan, “German Angst over Chinese M&A,” Financial Times, August 9, 2016, https://​www.ft.com/​content/​ e0897e24-​598e-​11e6-​8d05-​4eaa66292c32. 55. Patrick McGee, “Till Reuter, Chief Executive, Kuka, on Big Ambitions in China,” Financial Times, June 18, 2017, https://​www.ft.com/​content/​ 1c4c41fa-​4a05-​11e7-​a3f4-​c742b9791d43. 56. Lucy Hornby, “Kuka Wins Concessions as Midea Moves to Soothe Concerns,” Financial Times, June 29, 2016, https://​www.ft.com/​content/​ 99e46166-​3db2-​11e6-​9f2c-​36b487ebd80a. 57. Maria Sheahan, “China’s Fujian Drops Aixtron Bid after Obama Blocks Deal,” Reuters, December 8, 2016, https://​www.reuters.com/​article/​us-​aixtron-​m-​a-​fujian/​ chinas-​fujian-​drops-​aixtron-​bid-​after-​obama-​blocks-​deal-​idUSKBN13X16H. 58. “Snowden NSA: Germany Drops Merkel Phone-​Tapping Probe,” BBC News, June 12, 2015, https://​www.bbc.com/​news/​world-​europe-​33106044. 59. Katrin Bennhold, “German Defense Spending Is Falling Even Shorter. The US Isn’t Happy,” New York Times, March 19, 2019, https://​www.nytimes. com/​2019/​03/​19/​world/​europe/​germany-​nato-​spending-​target.html. 60. Adam Jourdan and Norihiko Shirouzu, “How Geely’s Li Shufu Spent Months Stealthily Building a $9 Billion Stake in Daimler,” Reuters, March 1, 2018, https://​www.reuters.com/​article/​us-​daimler-​geely-​shell-​insight/​how-​geelys-​ li-​shufu-​spent-​months-​stealthily-​building-​a-​9-​billion-​stake-​in-​daimler-​ idUSKCN1GD5ST; Peter Campbell, Charles Clover, and Patrick McGee, “Is Chinese State behind Geely’s Daimler Swoop?” Financial Times, February 27, 2018, https://​www.ft.com/​content/​a9fcd724-​1bbc-​11e8-​aaca-​4574d7dabfb6.

318    Notes

 

61. Yilei Sun, Julie Zhu, and Edward Taylor, “China’s BAIC Raising Daimler Stake to Unseat Geely as Top Shareholder,” Reuters, December 15, 2019, https://​www.reuters.com/​article/​us-​daimler-​baic-​investment-​exclusive/​ exclusive-​chinas-​baic-​raising-​daimler-​stake-​to-​unseat-​geely-​as-​top-​ shareholder-​sources-​idUSKBN1YJ08H. 62. Jost Wübbeke, Mirjam Meissner, Max J. Zenglein, Jaqueline Ives, and Bjorn Conrad, “MADE IN CHINA 2025: The Making of a High-​Tech Superpower and Consequences for Industrial Countries,” Merics Papers on China 2 (December 2016): 6–​7, https://​www.merics.org/​sites/​default/​files/​2018-​07/​ MPOC_​No.2_​MadeinChina2025_​web.pdf. 63. Cora Jungbluth, “Is China Systematically Buying Up Key Technologies? Chinese M&A Transactions in Germany in the Context of ‘Made in China 2025,’ ” GED Study, Bertelsmann Stiftung, 2018, https://​www.bertelsmann-​ stiftung.de/​fileadmin/​files/​BSt/​Publikationen/​GrauePublikationen/​MT_​Is_​ China_​Systematically_​Buying_​Up_​Key_​Technologies.pdf. 64. Tom Hancock, “China’s Relentless Export Machine Moves Up the Value Chain,” Financial Times, September 23, 2018, https://​www.ft.com/​content/​ cdc53aee-​bc2e-​11e8-​94b2-​17176fbf93f5. 65. Wübbeke, Meissner, Zenglein, Ives, and Conrad, “MADE IN CHINA 2025,”  59–​60. 66. Angela Stanzel, “Germany’s Turnabout on Chinese Takeovers,” European Council on Foreign Relations Commentary, March 21, 2017, https://​www.ecfr.eu/​ article/​commentary_​germanys_​turnabout_​on_​chinese_​takeovers_​7251. 67. Clifford Coonan, “Cracks Start to Show in Germany-​China Trade Relations,” Irish Times, November 4, 2016, https://​www.irishtimes.com/​business/​ economy/​cracks-​start-​to-​show-​in-​germany-​china-​trade-​relations-​1.2853451. 68. Guy Chazan, “Germany Expands Powers to Block Takeovers,” Financial Times, July 12, 2017, https://​www.ft.com/​content/​ 5087c106-​66fc-​11e7-​9a66-​93fb352ba1fe. 69. Iain Rogers and Arne Delfs, “Germany Steps Up Efforts to Rebuff China’s Swoop for Assets,” Bloomberg, July 27, 2018, https://​www.bloomberg.com/​news/​articles/​2018-​07-​27/​ germany-​buys-​stake-​in-​electric-​grid-​operator-​to-​block-​chinese. 70. Hasan Chowdhury, “Siemens Boss Warns of Chinese Investor Tactics in Foreign Takeovers,” The Telegraph, December 21, 2018, https://​www. telegraph.co.uk/​technology/​2018/​12/​21/​siemens-​boss-​warns-​chinese-​ investor-​tactics-​foreign-​takeovers/​. 71. Agatha Kratz, Mikko Huotari, Thilo Hanemann, and Rebecca Arcesati, “Chinese FDI in Europe: 2019 Update,” Merics Papers on China (April 2020), 9, file://​/​Users/​lukepatey/​Downloads/​MERICS-​Rhodium-​Group_​ COFDI-​Update-​2020-​2.pdf,  9. 72. Gabriel Wildau, Don Weinland, and Tom Mitchell, “China to Clamp Down on Outbound M&A in War on Capital Flight,” Notes 

 

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Financial Times, November 29, 2016, https://​www.ft.com/​content/​ 2511fa56-​b5f8-​11e6-​ba85-​95d1533d9a62. 73. Tom Holland, “Beijing’s ‘Made in China 2025’ Plan Isn’t Dead, It’s out of Control,” South China Morning Post, April 8, 2019, https://​www.scmp.com/​week-​asia/​opinion/​article/​3004900/​ beijings-​made-​china-​2025-​plan-​isnt-​dead-​its-​out-​control. 74. Hanemann, Huotari, and Kratz, “Chinese FDI in Europe,” 18; Max J. Zenglein and Anna Holzmann, “Evolving Made in China 2025: China’s Industrial Policy in the Quest for Global Tech Leadership,” Merics Papers on China 8 (July 2019): 29–​30, https://​www.merics.org/​sites/​default/​files/​2019-​ 07/​MPOC_​8_​MadeinChina_​2025_​final_​3.pdf. 75. Zenglein and Holzmann, “Evolving Made in China 2025,” 50–​51. 76. Hanemann and Huotari, “EU-​China FDI,” 12; OECD Data, “FDI Restrictiveness,” https://​data.oecd.org/​fdi/​fdi-​restrictiveness.htm, accessed June 24, 2019. 77. David Fickling, “Alstom and Siemens Show How Not to Deal with China,” Bloomberg, February 6, 2019, https://​ www.bloomberg.com/​opinion/​articles/​2019-​02-​06/​ alstom-​and-​siemens-​show-​how-​not-​to-​deal-​with-​china-​and-​vestager. 78. Noah Barkin, “‘Boiled Frog Syndrome’: Germany’s China Problem,” Reuters, April 15, 2018, https://​ www.reuters.com/​article/​us-​germany-​china-​insight/​ boiled-​frog-​syndrome-​germanys-​china-​problem-​idUSKBN1HM03J. 79. Guy Chazan, “Germany Backs French Call for Right to Overturn EU Merger Decisions,” Financial Times, February 19, 2019, https://​www.ft.com/​content/​ 66c932d8-​344b-​11e9-​bb0c-​42459962a812. 80. William Wilkers, “Hit by Chinese Hackers Seeking Industrial Secrets, German Manufacturers Play Defense,” Wall Street Journal, September 23, 2017, https://​www.wsj.com/​articles/​hit-​by-​chinese-​hackers-​seeking-​ industrial-​secrets-​german-​manufacturers-​play-​defense-​1506164404. 81. Harper, “Berlin’s Dilemma?” 82. Harper, “Berlin’s Dilemma?” 83. Huang and Smith, “China’s Record on Intellectual Property Rights Is Getting Better and Better.” 84. Shan Li, “China Expands Its Cybersecurity Rulebook, Heightening Foreign Corporate Concerns,” Wall Street Journal, October 5, 2018, https://​www.wsj. com/​articles/​china-​expands-​its-​cybersecurity-​rulebook-​heightening-​foreign-​ corporate-​concerns-​1538741732. 85. Joachim Hofer, “Germany’s Infineon Forsakes China, to Spend Billions in Austria,” Handelsblatt, December 11, 2018, https://​www. handelsblatt.com/​today/​companies/​bucking-​the-​trend-​germanys-​ infineon-​forsakes-​china-​to-​spend-​billions-​in-​austria/​23625498. html?ticket=ST-​1328667-​ebDZFYLC0sq9uZ4ytlXz-​ap5.

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86. Thilo Hannemann and Daniel H. Rosen, “Who’s Buying Whom? COVID-​ 19 and China Cross-​Border M&A Trends,” Rhodium Group, Note, June 18, 2020, https://​rhg.com/​research/​whos-​buying-​whom/​. 87. Thilo Hanemann and Mikko Huotari, “EU-​China FDI: Working towards Reciprocity in Investment Relations,” Merics Papers on China (May 2018), 13; “CrossBorder Monitor (CBM): People’s Republic of China < > European Union Direct Investment.” 88. “CrossBorder Monitor (CBM): People’s Republic of China < > European Union Direct Investment,” Rhodium Group, January 20, 2020, https://​trade. ec.europa.eu/​doclib/​docs/​2020/​march/​tradoc_​158660.pdf. 89. Jean-​Jacques Servan-​Schreiber, The American Challenge (Penguin Books, 1967), 17. 90. Servan-​Schreiber, The American Challenge, 125. 91. Paul Krugman, “Foreword,” in Jean-​Jacques Servan-​Schreiber, The American Challenge (Versilio, 2014). 92. Douglas Martin, “J.-​J. Servan-​Schreiber, French Man of Ideas, Dies at 82,” New York Times, November 8, 2006, https://​www.nytimes.com/​2006/​11/​08/​ world/​europe/​08servan-​schreiber.html. 93. “Five Years of an Enlarged EU: Economic Achievements and Challenges,” The European Economy Series 1 (2009), http://​ec.europa.eu/​economy_​ finance/​publications/​pages/​publication14078_​en.pdf; Nauro F. Campos, Fabrizio Coricelli, and Luigi Moretti, “Economic Growth and Political Integration: Estimating the Benefits from Membership in the European Union Using the Synthetic Counterfactuals Method,” IZA Discussion Paper 8162 (2014), http://​ftp.iza.org/​dp8162.pdf. 94. Sarah Gordon, “Airbus—​The European Model,” Financial Times, May 23, 2014, https://​www.ft.com/​content/​ c9a9a77c-​db07-​11e3-​8273-​00144feabdc0. 95. Stefan Mair, Friedolin Strack, and Ferdinand Schaff, “Partner and Systemic Competitor—​How Do We Deal with China’s State-​Controlled Economy?,” BDI Policy Paper China (January 2018), 8, https://​english.bdi.eu/​media/​ publications/​#/​publication/​news/​china-​partner-​and-​systemic-​competitor. 96. Mair, Strack, and Schaff, “Partner and Systemic Competitor,” 13. 97. Michael Peel, Victor Mallet, and Miles Johnson, “Macron Hails ‘End of Europe Naïveté’ towards China,” Financial Times, March 22, 2019, https://​ www.ft.com/​content/​ec9671ae-​4cbb-​11e9-​bbc9-​6917dce3dc62. 98. “France Welcomes Chinese Investment, No ‘Looting’: Minister,” Reuters, January 9, 2018, https://​www.reuters.com/​article/​us-​china-​france-​trade-​ lemaire/​france-​welcomes-​chinese-​investment-​not-​looting-​minister-​ idUSKBN1EY13D. 99. Mathieu Rosemain, Gwénaëlle Barzic, and Michel Rose, “France to Bolster Anti-​Takeover Measures amid Foreign Investment Boom,” Reuters, July 19, 2018, https://​www.reuters.com/​article/​us-​france-​investment/​ Notes 

 

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france-​to-​bolster-​anti-​takeover-​measures-​amid-​foreign-​investment-​boom-​ idUSKBN1K922D. 100. Hanemann, Huotari, and Kratz, “Chinese FDI in Europe: 2018,” 16. 101. Francesco Guarascio, “EU Plans Measures to Block Foreign Takeovers of Strategic Firms,” Reuters, March 10, 2017, https://​www.reuters.com/​article/​ us-​eu-​trade/​eu-​plans-​measures-​to-​block-​foreign-​takeovers-​of-​strategic-​firms-​ idUSKBN16H1DZ. 102. Jim Brunsden, “EU Plan to Curb Chinese Takeovers Risks ‘Trade War,’” Financial Times, September 17, 2017, https://​www.ft.com/​content/​ c0b3bdf0-​9b94-​11e7-​9a86-​4d5a475ba4c5. 103. Arthur Beesley, Anne-​Sylvaine Chassany, Jim Brunsden, and Duncan Robinson, “EU Free-​Traders Water Down Macron’s Plan to Vet Foreign Takeovers,” Financial Times, June 23, 2017, https://​www.ft.com/​content/​ e72b6342-​582e-​11e7-​9fed-​c19e2700005f. 104. Hanemann, Huotari, and Kratz, “Chinese FDI in Europe,” 18–​19. 105. Jakob Hanke, “German Industry Seeks to Push Harder EU Line on China,” Politico, January 10, 2019, https://​www.politico.eu/​article/​china-​germany-​ competition-​european-​commission-​bdi-​german-​industry-​seeks-​to-​push-​ harder-​eu-​line-​on-​china/​. 106. Lisbeth Kirk, “Foreign Investments Spark Security Fears among Nordic Leaders,” EU Observer, October 31, 2018, https://​euobserver.com/​news/​ 143264. 107. European Commission, “Joint Communication to the European Parliament, the European Council, and the Council: EU-​China—​A Strategic Outlook,” Strasbourg, March 12, 2019, 1, https://​ec.europa.eu/​commission/​sites/​beta-​ political/​files/​communication-​eu-​china-​a-​strategic-​outlook.pdf. 108. European Commission, “Joint Communication to the European Parliament, the European Council, and the Council,” 5–​6. 109. Marc Santora and Barbara Surk, “For China, a Bridge over the Adriatic Is a Road into Europe,” New York Times, October 11, 2018, https://​www.nytimes. com/​2018/​10/​11/​world/​europe/​china-​croatia-​bridge-​adriatic-​sea.html; Valerie Hopkins, “Brussels Says EU Has ‘Underestimated’ China’s Reach in Balkans,” Financial Times, March 5, 2019, https://​www.ft.com/​content/​ 4ba18efa-​377b-​11e9-​b72b-​2c7f526ca5d0. 110. Shigeru Seno, “Will China Be Granted Market Economy Status?,” Nikkei Asian Review, February 2, 2016, https://​asia.nikkei.com/​Economy/​ Will-​China-​be-​granted-​market-​economy-​status. 111. Thomas Escritt and Christoph Steitz, “Germany Will Block Foreign Takeovers to Avoid Economy Sell-​Out,” March 20, 2020, https://​www. reuters.com/​article/​us-​health-​coronavirus-​germany-​fund/​germany-​will-​block-​ foreign-​takeovers-​to-​avoid-​economy-​sell-​out-​idUSKBN21717T. 112. European Commission, “Coronavirus: Commission Issues Guidelines to Protect Critical European Assets and Technology in Current Crisis,” Press

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Release, March 25, 2020, https://​ec.europa.eu/​commission/​presscorner/​detail/​ en/​ip_​20_​528. 113. “Answer Given by Mr Hogan on Behalf of the European Commission,” Parliamentary Questions, European Parliament, E-​001096/​2020, April 4, 2020, https://​www.europarl.europa.eu/​doceo/​document/​E-​9-​2020-​001096-​ ASW_​EN.pdf. 114. Yuan Yang, “What Are the Main Security Risks of Using Huawei for 5G?,” Financial Times, April 25, 2019, https://​www.ft.com/​content/​ 8b48f460-​50af-​11e9-​9c76-​bf4a0ce37d49. 115. Julian E. Barnes and Adam Satariano, “US Campaign to Ban Huawei Overseas Stumbles as Allies Resist,” New York Times, March 17, 2019, https://​www.nytimes.com/​2019/​03/​17/​us/​politics/​huawei-​ban.html. 116. Tarmo Virki, “Europe’s China Telecoms Gear Ban Would Cost Industry $3.5 Billion,” Reuters, September 20, 2019; https://​www.reuters.com/​article/​ us-​huawei-​tech-​europe-​report-​idUSKBN1W51FJ; Paul Kunert, “BT: UK. gov Ruling on Huawei Will Cost Us Half a Billion Pounds over Next 5 Years,” The Register, January 30, 2020, https://​www.theregister.co.uk/​2020/​ 01/​30/​bt_​uk_​huawei_​costs/​; Douglas Busvine, “Fearing Huawei Curbs, Deutsche Telekom Tells Nokia to Shape Up,” Reuters, February 7, 2020, https://​www.reuters.com/​article/​us-​deutsche-​telekom-​nokia-​europe-​exclusi/​ exclusive-​fearing-​huawei-​curbs-​deutsche-​telekom-​tells-​nokia-​to-​shape-​up-​ idUSKBN2010TU. 117. “The Geopolitics of 5G: America’s War on Huawei Nears Its Endgame,” The Economist, July 16, 2020, https://​www.economist.com/​briefing/​2020/​07/​16/​ americas-​war-​on-​huawei-​nears-​its-​endgame. 118. Stuart Lau, “EU Cybersecurity Report Says Members Can Ban Firms from 5G Networks—​but Declines to Name China or Huawei,” South China Morning Post, October 10, 2019, https://​ www.scmp.com/​news/​china/​diplomacy/​article/​3032232/​ eu-​cybersecurity-​report-​says-​members-​can-​ban-​firms-​5g-​networks. 119. Leo Kelion, “Huawei Set for Limited Role in UK 5G Networks,” BBC News, January 28, 2020, https://​www.bbc.com/​news/​technology-​51283059; Mathieu Rosemain and Gwénaëlle Barzic, “France to Allow Some Huawei Gear in Its 5G Network,” Reuters, March 12, 2020, https://​www.reuters. com/​article/​us-​france-​huawei-​5g-​exclusive/​exclusive-​france-​to-​allow-​some-​ huawei-​gear-​in-​its-​5g-​network-​sources-​idUSKBN20Z3JR. 120. Simon Gilding, “5G Choices: A Pivotal Moment in World Affairs,” The Strategist, Australian Strategic Policy Institute, January 29, 2020, https://​ www.aspistrategist.org.au/​5g-​choices-​a-​pivotal-​moment-​in-​world-​affairs/​. 121. Ellen Nakashima and William Booth, “Britain Bars Huawei from Its 5G Wireless Networks, Part of a Growing Shift away from the Chinese Tech Giant,” Washington Post, July 14, 2020, https://​www.washingtonpost.com/​national-​security/​ Notes 

 

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britain-​to-​bar-​huawei-​from-​its-​5g-​wireless-​networks-​part-​of-​a-​growing-​ shift-​away-​from-​the-​chinese-​tech-​giant/​2020/​07/​13/​44f6afee-​c448-​11ea-​ b037-​f9711f89ee46_​story.html; Mathieu Rosemain and Gwénaëlle Barzic, “Exclusive: French Limits on Huawei 5G Equipment Amount to De Facto Ban by 2028,” Reuters, July 22, 2020, https://​www.reuters.com/​article/​us-​ france-​huawei-​5g-​security-​exclusive/​exclusive-​french-​limits-​on-​huawei-​5g-​ equipment-​amount-​to-​de-​facto-​ban-​by-​2028-​idUSKCN24N26R. 122. Andreas Rinke and Douglas Busvine, “New German Rules Leave 5G Telecoms’ Door Open to Huawei,” Reuters, October 14, 2019, https://​www. reuters.com/​article/​us-​germany-​telecoms-​5g/​new-​german-​rules-​leave-​5g-​ telecoms-​door-​open-​to-​huawei-​idUSKBN1WT110. 123. Noel Barkin, “Is Germany Going Soft on China?,” Atlantic Council, New Atlanticist, https://​www.atlanticcouncil.org/​blogs/​new-​atlanticist/​is-​ germany-​going-​soft-​on-​china/​. 124. Noel Barkin, “The Future of Huawei in Europe,” A ChinaFile Conversation, ChinaFile, October 18, 2019, http://​www.chinafile.com/​conversation/​ future-​of-​huawei-​europe. 125. Guy Chazan, “Germany’s CDU Stops Short of Huawei Ban in 5G Rollout,” Financial Times, February 11, 2020, https://​www.ft.com/​content/​ e17ba42a-​4ce1-​11ea-​95a0-​43d18ec715f5. 126. Katrin Bennhold and Jack Ewing, “In Huawei Battle, China Threatens Germany ‘Where It Hurts’: Automakers,” New York Times, January 16, 2020, https://​www.nytimes.com/​2020/​01/​16/​world/​europe/​huawei-​germany-​china-​ 5g-​automakers.html. 127. Sanjeev Miglani and Neha Dasgupta, “China Warns India of ‘Reverse Sanctions’ If Huawei Is Blocked,” Reuters, August 6, 2019, https://​www. reuters.com/​article/​us-​huawei-​india-​exclusive/​exclusive-​china-​warns-​india-​of-​ reverse-​sanctions-​if-​huawei-​is-​blocked-​sources-​idUSKCN1UW1FF; Simon Kruse and Lene Winther, “Banned Recording Reveals China Ambassador Threatened Faroese Leader at Secret Meeting,” Berlingske, December 10, 2019. 128. Henry Farrell and Abraham L. Newman, “Weaponized Interdependence: How Global Economic Networks Shape State Coercion,” International Security 44, no. 1 (summer 2019): 42–​79. 129. Ryan McMorrow and Nian Liu, “China Mobile Picks Huawei and ZTE to Build Its 5G Network,” Financial Times, April 2, 2020, https://​www.ft.com/​ content/​78f172db-​7e02-​450a-​a1c7-​8e9c260c2034?desktop=true&segmentI d=7c8f09b9-​9b61-​4fbb-​9430-​9208a9e233c8. 130. “ ‘Rejecting Huawei Is Rejecting Opportunities and Growth,’ Says Chinese envoy,” China Daily, July 20, 2020, https://​www.chinadaily.com.cn/​a/​ 202007/​20/​WS5f152bd7a31083481725abb8.html. 131. Matthew Noble, Jane Mutimear, and Richard Vary, “Determining Which Companies Are Leading the 5G Race,” IAM, July/​August 2019, https://​

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www.twobirds.com/​~/​media/​pdfs/​news/​articles/​2019/​determining-​which-​ companies-​are-​leading-​the-​5g-​race.pdf?la=en&hash=8ABA5A7173EEE8FF A612E070C0EA4B4F53CC50DE. 132. European Commission, “Joint Communication to the European Parliament, the European Council, and the Council: EU-​China—​A Strategic Outlook,” Strasbourg, March 12, 2019, 9, https://​ec.europa.eu/​ commission/​sites/​beta-​political/​files/​communication-​eu-​china-​a-​strategic-​ outlook.pdf. 133. Paul Blustein, Schism: China, America, and the Fracturing of the Global Trading System (CIGI Press, 2019). 134. Tom Miles, “China Pulls WTO Suit over Claim to Be a Market Economy,” Reuters, June 17, 2019, https://​www.reuters.com/​article/​us-​usa-​china-​wto-​eu/​ china-p​ ulls-w ​ to-​suit-​over-​claim-​to-​be-​a-​market-​economy-​idUSKCN1TI10A. 135. Gordon, “Airbus”; Niraj Chokshi, “The United States of Subsidies: The Biggest Corporate Winners in Each State,” Washington Post, March 18, 2015, https://​www.washingtonpost.com/​blogs/​govbeat/​wp/​2015/​03/​17/​the-​united-​ states-​of-​subsidies-​the-​biggest-​corporate-​winners-​in-​each-​state/​?utm_​term=. c3b5a67a4c42. 136. Susan Ariel Aaronson, “Is China Killing the WTO?,” The International Economy (winter 2010), http://​www.international-​economy.com/​TIE_​W10_​ Aaronson.pdf. 137. Scott Kennedy and Daniel H. Rosen, “Market Metrics: A Fact-​Based Approach to the Chinese Economic Challenge,” Commentary, Center for Strategic and International Studies, October 10, 2019, https://​www.csis.org/​ analysis/​market-​metrics-​fact-​based-​approach-​chinese-​economic-​challenge. 138. Usha C. V. Haley and George T. Haley, “How Chinese Subsidies Changed the World,” Harvard Business Review, April 25, 2013, https://​hbr.org/​2013/​04/​ how-​chinese-​subsidies-​changed. 139. Mark Wu, “The ‘China Inc.’ Challenge to Global Trade Governance,” Harvard International Law Journal 57, no. 2 (spring 2016): 292–​94, https://​ harvardilj.org/​wp-​content/​uploads/​sites/​15/​HLI210_​crop.pdf. 140. Leslie Hook and Jamil Anderlini, “Hu Jintao Reasserts Party’s Tight Grip,” Financial Times, November 8, 2012, http://​www.ft.com/​intl/​cms/​s/​0/​ b89dbb68-​28ce-​11e2-​b92c-​00144feabdc0.html#axzz42ENR  RTec. 141. Richard McGregor, The Party: The Secret World of China’s Communist Rulers (Allen Lane, 2010), 64. 142. McGregor, The Party, 86. 143. Wu, “The ‘China Inc.’ Challenge to Global Trade Governance.” 144. Mair, Strack, and Schaff, “Partner and Systematic Competitor,” 17. 145. Henry Gao and Weihuan Zhou, “China’s Developing Country Status Brings Few Benefits in the WTO,” East Asia Forum, October 15, 2019, https://​www. eastasiaforum.org/​2019/​10/​15/​chinas-​developing-​country-​status-​brings-​it-​ few-​benefits-​in-​the-​wto/​. Notes 

 

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146. Pankaj Mishra, “The Rise of China and the Fall of the ‘Free Trade’ Myth,” New York Times Magazine, February 7, 2018, https://​www.nytimes.com/​2018/​ 02/​07/​magazine/​the-​rise-​of-​china-​and-​the-​fall-​of-​the-​free-​trade-​myth.html. 147. Stephen S. Roach, “Japan Then, China Now,” Project Syndicate, May 27, 2019, https://​www.project-​syndicate.org/​commentary/​for-​america-​china-​is-​the-​ new-​japan-​by-​stephen-​s-​roach-​2019-​05?barrier=accesspaylog. 148. Richard Katz, “What Japan Teaches Us Now,” The American Prospect, December 19, 2001, https://​prospect.org/​world/​japan-​teaches-​us-​now/​. 149. Alexander Sandkamp and Erdal Yalcin, “China’s Market Economy Status and European Anti-​Dumping Regulation,” CESifo Forum 1 (March 2016), https://​www.cesifo.org/​DocDL/​forum-​2016-​1-​sandkamp-​yalcin-​china-​march. pdf. 150. Chad P. Brown and Jennifer A. Hillman, “WTO’ing a Resolution to the China Subsidy Problem,” Journal of International Economic Law 22, no. 4 (December 2019): 557–​78, https://​doi.org/​10.1093/​jiel/​jgz035. 151. Philip Blenkinsop, “EU Lays Out WTO Reform Ideas to Keep US on Board,” Reuters, September 18, 2018, https://​www.reuters.com/​article/​ us-​trade-​wto-​eu/​eu-​lays-​out-​wto-​reform-​ideas-​to-​keep-​us-​on-​board-​ idUSKCN1LY1FV; David Ljunggren and David Lawder, “WTO Member Group Vows to Reform Rules on Subsidies, Dispute Settlement,” Reuters, October 25, 2018, https://​www.reuters.com/​article/​us-​usa-​trade-​wto-​canada/​ wto-​member-​group-​vows-​to-​reform-​rules-​on-​subsidies-​dispute-​settlement-​ idUSKCN1MZ2CL. 152. Hanemann and Huotari, “EU-​China FDI,” 20. 153. “Innovate China: New Drivers of Growth,” World Bank Group and the Development Research Center of the State Council, People’s Republic of China, 2019, 25–​26, http://​documents.worldbank.org/​curated/​en/​ 833871568732137448/​pdf/​Innovative-​China-​New-​Drivers-​of-​Growth. pdf.

Chapter 6 1. José Manuel Romero, “Supreme Court Upholds Dismissal of Tibet Genocide Investigation,” El País, April 22, 2015, https://​elpais.com/​elpais/​2015/​04/​ 22/​inenglish/​1429711400_​446213.html. 2. “Tibet Protestors Detained in Swiss Capital during Xi Jinping Visit,” Reuters, January 15, 2017, https://​www.reuters.com/​article/​us-​swiss-​ china/​tibet-​protesters-​detained-​in-​swiss-​capital-​during-​xi-​jinping-​visit-​ idUSKBN14Z0U6. 3. Political Values in Europe-​China Relations, ed. Tim Nicholas Rühlig, Björn Jerdín, Frans-​Paul van der Putten, John Seaman, Miguel Otero-​Iglesias, and Alice Ekman, ETNC Report (2018), 71, https://​www.ifri.org/​sites/​default/​ files/​atoms/​files/​full-​report-​web-​version_​updated_​2019.pdf.

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4. Jim Brunsden, “EU Plan to Curb Chinese Takeovers Risks ‘Trade War,’” Financial Times, September 17, 2017, https://​www.ft.com/​content/​ c0b3bdf0-​9b94-​11e7-​9a86-​4d5a475ba4c5. 5. “Democracy in Retreat: Freedom in the World 2019,” Freedom House (February 2019), 16, https://​freedomhouse.org/​sites/​default/​files/​Feb2019_​ FH_​FITW_​2019_​Report_​ForWeb-​compressed.pdf. 6. Vibeke Sperling, “Ritt B.: Det er handel med Kina, som må stå højst,” Politiken, October 21, 2011, https://​politiken.dk/​indland/​politik/​ art5030135/​Ritt-​B.-​Det-​er-​handel-​med-​Kina-​som-​m%C3%A5-​ st%C3%A5-​h%C3%B8jst. 7. Carsten Boyer Thøgersen, “Samhandel gavner menneskerettigheder,” Berlingske, June 14, 2012; Humphrey Lau, “Dansk Kina-​frygt skal erstattes med erobringsdrift,” Information, November 13, 2010, https://​www. information.dk/​debat/​2010/​11/​dansk-​kina-​frygt-​erstattes-​erobringsdrift. 8. Andreas Bøje Forsby, “Denmark’s Relationship with China: First Violinist in the Nordic Ensemble?,” in Dragon in the North: The Nordic Countries’ Relations with China, ed. Bjørnar Sverdrup-​Thygeson, NUPI Report 7 (2016): 16–​17, https://​nupi.brage.unit.no/​nupi-​xmlui/​bitstream/​handle/​11250/​2423957/​ NUPI%20Report-​7-​Sverdrup-​Thygeson%20%28002%29.pdf?sequence=8& isAllowed=y. 9. Jes Randrup Thorning, “Vi skal være åbne over for Kina,” Jyllands-​Posten, September 13, 2012, https://​jyllands-​posten.dk/​premium/​international/​ article4838649.ece/​. 10. Denmark Ministry of Justice, “Letter to the Legal Affairs Committee of the Danish Parliament,” October 2, 2015; Sebastian Gjerding and Anton Geist, “Politiet kritiseres for deres ageren under endnu et kinesisk statsbesøg,” Information, October 3, 2015, https://​www.information.dk/​ indland/​2015/​10/​politiet-​kritiseres-​ageren-​endnu-​kinesisk-​statsbesoeg; Jens Anton Bjørnager, “Hemmelig PET-​instruks: Kineserne måtte ikke tabe ansigt,” Berlingske, October 2, 2015, https://​www.berlingske.dk/​politik/​ hemmelig-​pet-​instruks-​kineserne-​maatte-​ikke-​tabe-​ansigt. 11. Sebastian Gjerding and Anton Geist, “Kan der placeres et politisk ansvar i Tibet-​sagen?,” Information, October 3, 2015, https://​www.information.dk/​ indland/​2015/​10/​kan-​placeres-​politisk-​ansvar-​tibet-​sagen. 12. Denmark, the Tibet Commission, “Tibetkommissionens Beretning Kapitel 1–​3,” 2017, 51, https://​tibetkommissionen.dk/​. 13. “Tibetsag: 101 har fået erstatning for politiets ulovlige indgreb,” DR, April 21, 2020, https://​www.dr.dk/​nyheder/​indland/​ tibetsag-​101-​har-​faet-​erstatning-​politiets-​ulovlige-​indgreb. 14. Jesper Tynell, “Politiledere står frem: Vi har i årevis snydt demonstranter ved Kina-​besøg,” DR, June 14, 2018, https://​www.dr.dk/​nyheder/​politik/​ politiledere-​staar-​frem-​vi-​har-​i-​aarevis-​snydt-​demonstranter-​ved-​kina-​besoeg; Emma Toft, “Politiklagemyndighed genåbner Tibetsag: Indlysende at vende Notes 

 

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hver en sten,” DR, June 15, 2020, https://​www.dr.dk/​nyheder/​indland/​ politiklagemyndighed-​genaabner-​tibetsag-​indlysende-​vende-​hver-​en-​sten. 15. Mikkel Randeris and Jens Anton Bjørnager, “Kina har fordoblet handel i Danmark siden Tibet-​sagen,” Berlingske, June 6, 2018, https://​www.berlingske.dk/​samfund/​ kina-​har-​fordoblet-​handel-​i-​danmark-​siden-​tibet-​sagen. 16. Peter Thagesen, “China Is One of the Most Important Trading Partners for Denmark,” Dansk Industri, May 4, 2017, https://​di.dk/​english/​news/​pages/​ china-​is-​one-​of-​the-​most-​important-​trading-​partners-​for-​denmark.aspx. 17. Christopher Bodeen, “Norway Snub Shows Sharp Edge of Chinese Diplomacy,” AP, October 29, 2013, https://​www.apnews.com/​9ba1a4b60 3f54a3ca24252336517def6; Ben Bland, Tom Hancock, and Bryan Harris, “China Wields Power with Boycott Diplomacy,” Financial Times, May 3, 2017, https://​www.ft.com/​content/​c7a2f668-​2f4b-​11e7-​9555-​23ef563ecf9a. 18. Nilas Johnsen, “Erna nekter å treffe Dalai Lama—​disse Høyre-​politikerne møter ham,” VG, May 8, 2014, https://​www.vg.no/​nyheter/​innenriks/​i/​ JzJ4b/​erna-​nekter-​aa-​treffe-​dalai-​lama-​disse-​hoeyre-​politikerne-​moeter-​ham. 19. Halvor Hegtun, “Den pinlige bakdøren,” Aftenposten, April 23, 2014, https://​ www.aftenposten.no/​verden/​i/​rLRv8/​Den-​pinlige-​bakdoren. 20. Leiv Lunde, “Klok utenrikspolitikk,” DN, May 14, 2014. 21. “Tror på norsk lakse-​boom i Kina,” E24, June 16, 2019, https://​e24.no/​ naeringsliv/​norges-​sjoematraad/​spaar-​trettendobling-​innen-​2025-​tror-​paa-​ norsk-​lakse-​boom-​i-​kina/​24638591. 22. Doug Mellgren, “Activists Claim Free Speech Crackdown during Chinese Visit,” AP, June 28, 1996, https://​apnews.com/​c220a9c547f4a06421d3c46fb 6af51e6. 23. “Soldier Jailed for Refusing to Play Tuba for China’s President,” AP, July 17, 1996, https://​apnews.com/​ee18a9784a06f3d7c57972d7b609a33f. 24. John Sweeney and Martin Bright, “How Democracy Took a Beating in the Mall,” The Guardian, October 24, 1999, https://​www.theguardian.com/​ uk/​1999/​oct/​24/​theobserver.uknews1; “UK Police Arrest Tibet Activists during Wen Visit,” Reuters, February 1, 2009, https://​www.reuters.com/​ article/​idINIndia-​37775920090201; Mark Townsend, “China Pressured London Police to Arrest Tiananmen Protestor, Says Watchdog,” The Guardian, June 30, 2019, https://​www.theguardian.com/​world/​2019/​jun/​30/​ political-​pressure-​before-​arrest-​of-​chinese-​dissident-​london. 25. Gard Oterholm and Tore Gjerstad, “Fryktet at kinesiske sikkerhetsvakter ville angripe stortingsrepresentant,” Dagens Næringsliv, June 8, 2019 https://​ www.dn.no/​politikk/​stortinget/​kina/​guri-​melby/​fryktet-​at-​kinesiske-​ sikkerhetsvakter-​ville-​angripe-​stortingsrepresentant/​2-​1-​611396. 26. Harald Stanghelle, “Kinas farlige takk til Norge,” Aftenposten, June 7, 2019, https://​www.aftenposten.no/​meninger/​kommentar/​i/​Jop4X8/​ Kinas-​farlige-​takk-​til-​Norge-​-​Harald-​Stanghelle.

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27. Danmarks Statistik, “International Trade,” https://​www.dst.dk/​en/​Statistik/​ emner/​udenrigsoekonomi/​udenrigshandel, accessed June 7, 2020. 28. Denmark Ministry of Foreign Affairs, “Udenrigsøkonomisk trendanalyse nr. XXIV: Kinas økonomi og samhandel med Danmark,” December 1, 2016, 1; Caroline Bo, Søren Buman, Casper Winther, and Peter Rømose Jensen, “How Big Are Danish Exports and Who Are Our Main Trading Partners?,” DSTAnalysis, March 5, 2018, 5, https://​www.dst.dk/​Site/​Dst/​Udgivelser/​nyt/​ GetAnalyse.aspx?cid=30239. 29. Danmarks Statistik, “International Trade,” https://​www.dst.dk/​en/​Statistik/​ emner/​udenrigsoekonomi/​udenrigshandel, accessed June 7, 2020. 30. Danmarks Statistik, “International Trade,” https://​www.dst.dk/​en/​Statistik/​ emner/​udenrigsoekonomi/​udenrigshandel, accessed June 7, 2020. 31. Danmarks Nationalbank, “Foreign Direct Investment Passes through Transit Countries,” Foreign Direct Investment, Stocks, 2018, October 14, 2019, https://​www.nationalbanken.dk/​en/​statistics/​find_​statistics/​Documents/​ Foreign%20direct%20investment,%20stocks/​STATISTICS_​Foreign%20 direct%20Investmenst_​stocks_​2018%5B3%5D.pdf. 32. Danmarks Nationalbank, “Direct Investments,” https://​nationalbanken. statistikbank.dk/​904, accessed March 25, 2019. 33. Danmarks Nationalbank, “Foreign Direct Investment Passes through Transit Countries.” 34. Danmarks Nationalbank, “Direct Investments.” 35. “Survey of Danish Companies in China: Challenges and Opportunities,” Royal Danish Embassy, Beijing, Danish Chamber of Commerce in China, Sino-​Danish Center for Education and Research, June 2020, https://​ kina.um.dk/​~/​media/​kina/​pd%20beijing/​survey%20of%20danish%20 companies%20in%20china%20june%202020.pdf?la=da. 36. Author’s calculations from Maersk, Novo Nordisk, Carlsberg, and Danfoss Annual Reports, https://​investor.maersk.com/​static-​files/​984a2b93-​0035-​ 40d3-​9cae-​77161c9a36e0; https://​www.novonordisk.com/​content/​dam/​ Denmark/​HQ/​investors/​irmaterial/​annual_​report/​2020/​Novo-​Nordisk-​ Annual-​Report-​2019.pdf; https://​www.carlsberggroup.com/​media/​35966/​ carlsberg-​as-​annual-​report-​2019.pdf; http://​files.danfoss.com/​download/​ CorporateCommunication/​Financial/​Annual-​Report-​2019.pdf. 37. Dansk Industri, “Danish Companies Facing Pressure from China,” DI Business, June 6, 2019, https://​www.danskindustri.dk/​di-​business/​arkiv/​news/​ 2019/​6/​danish-​companies-​facing-​pressure-​from-​china/​. 38. Denmark Ministry of Foreign Affairs, “Expert Panel on Global Growth Centres—​China: Recommendations,” March 2019, http://​dcc.hk/​wp-​ content/​uploads/​2019/​04/​Expert-​Panel-​on-​Global-​Growth-​Centres-​China. pdf. 39. European Commission, “Joint Communication to the European Parliament, the European Council, and the Council: EU-​China—​A Strategic Outlook,” Notes 

 

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Strasbourg, March 12, 2019, 1, https://​ec.europa.eu/​commission/​sites/​beta-​ political/​files/​communication-​eu-​china-​a-​strategic-​outlook.pdf. 40. Leonora Beck, “This Is How China’s Huge One Belt One Road Project Affects Maersk,” ShippingWatch, April 23, 2018, https://​shippingwatch. com/​secure/​carriers/​article10539750.ece; Jeremy Hodges, “Job Cuts at Wind Turbine Makers Show Competition,” Bloomberg, September 27, 2019, https://​www.bloomberg.com/​news/​articles/​2019-​09-​27/​ job-​cuts-​at-​wind-​turbine-​makers-​show-​competition-​intensifying. 41. Louise Vogdrup-​Schmidt, “Søren Skou: EU Is More Important Than Ever,” ShippingWatch, April 24, 2018, https://​shippingwatch.com/​secure/​carriers/​ article10629021.ece. 42. Jost Wübbeke, Mirjam Meissner, Max J. Zenglein, Jaqueline Ives, and Bjorn Conrad, “MADE IN CHINA 2025: The Making of a High-​Tech Superpower and Consequences for Industrial Countries,” Merics Papers on China 2 (December 2016), 6, https://​www.merics.org/​sites/​default/​files/​2018-​07/​ MPOC_​No.2_​MadeinChina2025_​web.pdf. 43. “China to Impose ‘Social Credit’ System on Foreign Companies,” Financial Times, August 28, 2019, https://​www.ft.com/​content/​ 726905b6-​c8dc-​11e9-​a1f4-​3669401ba76f. 44. Susi Dennison, “Give the People What They Want: Popular Demand for a Strong European Foreign Policy,” European Council on Foreign Relations, Policy Brief, September 2019, 11, https://​www.ecfr.eu/​page/​-​/​popular_​demand_​for_​ strong_​european_​foreign_​policy_​what_​people_​want.pdf. 45. Joachim Dagenborg and Victoria Klesty, “Orkla Sells Elkem to China’s BlueStar for $2 Billion,” Reuters, January 11, 2011, https://​www.reuters. com/​article/​us-​orkla/​orkla-​sells-​elkem-​to-​chinas-​bluestar-​for-​2-​billion-​ idUSTRE70A13Q20110111. 46. Hans Jørgen Gåsemyr and Bjørnar Sverdruo-​Thygeson, “Chinese Investments in Norway: A Typical Case despite Special Circumstances,” in Chinese Investment in Europe: A Country-​Level Approach, ed. John Seaman, Mikko Huotari, and Miguel Otero-​Igleslas (Ifri, 2017). 47. Ivar Kolstad, “Too Big to Fault? Effects of the 2010 Nobel Peace Prize on Norwegian Exports to China and Foreign Policy,” CMI Working Paper 3 (2016), https://​www.cmi.no/​publications/​file/​5805-​too-​big-​to-​fault.pdf. 48. Jichang Lulu, “Liu Xiaobo and Normalised Norway,” Asia Dialogue, July 17, 2017, https://​theasiadialogue.com/​2017/​07/​17/​normalised-​norway-​and-​liu-​ xiaobo/​. 49. Bjørnar Sverdrup-​Thygeson, “The Norway-​China Relationship: For Better, for Worse, for Richer, for Poorer,” in China and Nordic Diplomacy, ed. Bjørnar Sverdrup-​Thygeson, Wrenn Yennie Lindgren, and Marc Lanteigne (Routledge, 2018), 86–​87. 50. Xianwen China and Roberto Javier Garcia, “Economic Sanctions and Trade Diplomacy: Sanction-​Busting Strategies, Market Distortion and Efficacy of

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China’s Restrictions on Norwegian Salmon Imports,” China Information 30, no. 1 (2016), https://​doi.org/​10.1177/​0920203X15625061. 51. Bjørnar Sverdrup-​Thygeson and Marc Lanteigne, “China and Norway: Unpacking the Deal,” The Diplomat, December 25, 2016, https://​ thediplomat.com/​2016/​12/​china-​and-​norway-​unpacking-​the-​deal/​. 52. Statistics Norway, https://​www.ssb.no/​en; “Tror på norsk lakse-​boom i Kina,” E24, June 16, 2019, https://​e24.no/​naeringsliv/​norges-​ sjoematraad/​spaar-​trettendobling-​innen-​2025-​tror-​paa-​norsk-​lakse-​boom-​ i-​kina/​24638591. 53. Norwegian Seafood Council, “Norwegian Seafood Exports Top NOK 107 Billion in 2019,” https://​en.seafood.no/​news-​and-​media/​news-​ archive/​norwegian-​seafood-​exports-​top-​nok-​107-​billion-​in-​2019/​ #:~:text=Poland%20remains%20our%20largest%20market,4%20per%20 cent%20by%20value. 54. Statistics Norway, https://​www.ssb.no/​en, accessed June 26, 2020. 55. Sui-​Lee Wee, “Giving In to China, US Airlines Drop Taiwan (in Name at Least),” New York Times, July 25, 2018, https://​www.nytimes.com/​2018/​07/​ 25/​business/​taiwan-​american-​airlines-​china.html. 56. Danish Government, “Foreign and Security Policy Strategy,” 2019–​2020, November 2018. 57. Drew Hinshaw and Jeremy Page, “How the Pentagon Countered China’s Designs on Greenland,” Wall Street Journal, February 10, 2019, https://​www.wsj.com/​articles/​ how-​the-​pentagon-​countered-​chinas-​designs-​on-​greenland-​11549812296. 58. Lene Winther, “Fravalg af Huawei vækker opsigt på den kinesiske ambassade: ‘Handlingerne skal match ordene,’” Berlingske, March 28, 2019, https://​www.berlingske.dk/​globalt/​ fravalg-a​ f-h​ uawei-​vaekker-​opsigt-​paa-​den-​kinesiske-​ambassade-​handlingerne. 59. Simon Kruse and Lene Winther, “Banned Recording Reveals China Ambassador Threatened Faroese Leader at Secret Meeting,” Berlingske, December 10, 2019. 60. “Denmark Applies to Join China-​Backed AIIB Investment Bank,” Reuters, March 30, 2015, https://​www.reuters.com/​article/​us-​asia-​aiib-​ denmark/​denmark-​applies-​to-​join-​china-​backed-​aiib-​investment-​bank-​ idUSKBN0MP04P20150330. 61. Michael Barrett, “‘Catastrophic’: Denmark Reacts to US Break with Europe over Iran Deal,” The Local, May 8, 2018, https://​www.thelocal.dk/​20180509/​ denmark-​reacts-​to-​us-​violation-​of-​jcpoa-​iran-​deal-​trump. 62. “Coronavirus: Denmark in Cartoon Bust-​Up with China over Flag,” BBC News, January 29, 2020, https://​www.bbc.com/​news/​ world-​europe-​51295225.

Notes 

 

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63. Jesper Tynell, “Tibet-​flag holdt kinesere fanget på Christiansborg kort før jul,” DR Nyheder, March 12, 2019, https://​www.dr.dk/​nyheder/​ tibet-​flag-​holdt-​kinesere-​fanget-​paa-​christiansborg-​kort-​foer-​jul. 64. Teresa de Sousa, “O euro foi o maior bónus que a Europa ofereceu à Alemanha,” March 29, 2019, https://​www.publico.pt/​2019/​03/​24/​politica/​ entrevista/​ue-​temas-​1866469. 65. De Sousa, “O euro foi o maior bónus que a Europa ofereceu à Alemanha.” 66. Isabel Morais, “‘China Wahala’: The Tribulations of Nigerian ‘Bushfallers’ in a Chinese Territory,” Journal of Global Cultural Studies 5 (2009), https://​doi. org/​10.4000/​transtexts.281; James Badcock, “Slavery Memorial Highlights Portugal’s Racism Taboo,” BBC News, July 29, 2018, https://​www.bbc.com/​ news/​world-​europe-​44965631. 67. “Chinese Flag Flies over Macau after Portugal Cedes Last of Its Empire,” CNN, December 20, 1999, http://​edition.cnn.com/​ASIANOW/​east/​9912/​ 19/​macau.handover.03/​index.html. 68. “China-​Portugal Ties: Port of Sines Looks for Role in Belt and Road Initiative,” CGTN, December 4, 2018, https://​news.cgtn.com/​news/​ 3445444e7a494464776c6d636a4e6e62684a4856/​share_​p.html. 69. Sergio Goncalves and Catarina Demony, “China Hails ‘Mutual Respect’ as It Loops Portugal into Belt Initiative,” Reuters, December 5, 2018, https://​ www.reuters.com/​article/​us-​portugal-​china-​xi/​china-​hails-​mutual-​respect-​as-​ loops-​portugal-​into-​belt-​initiative-​idUSKBN1O41RK. 70. Andrei Khalip, “Bled by Emigration, Abandoned Portuguese Villages Lose Hope of Surviving,” Reuters, April 28, 2016, https://​ www.reuters.com/​article/​us-​portugal-​villages-​widerimage/​bled-​by-​ emigration-​abandoned-​portuguese-​villages-​lose-​hope-​of-​surviving-​ idUSKCN0XP1HC; Axel Bugge and Sergio Goncalves, “Portugal’s Economy—​An Express Train at Risk of Derailing,” Reuters, February 15, 2019, https://​www.reuters.com/​article/​us-​portugal-​economy-​analysis/​ portugals-​economy-​an-​express-​train-​at-​risk-​of-​derailing-​idUSKCN1Q41RR. 71. European Commission, “Portugal Memorandum of Understanding on Specific Economic Policy Conditionality,” May 17, 2011, 14–​15, http://​ ec.europa.eu/​economy_​finance/​eu_​borrower/​mou/​2011-​05-​18-​mou-​ portugal_​en.pdf. 72. Scott L. Greer, “(Why) Did We Forget about History? Lessons for the Eurozone from the Failed Conditionality Debates in the 80s,” OSE Paper Series 11 (May 2013), http://​www.ose.be/​files/​publication/​OSEPaperSeries/​ Greer_​2013_​OseResearchPaper11.pdf. 73. Cheryl Payer, The Debt Trap: The International Monetary Fund and the Third World (Penguin Books, 1974). 74. Philippe Le Corre, “China’s Rise as a Geoeconomic Influencer: Four European Case Studies,” IRIS, Asia Focus 93 (November 2018): 9, https://​www.iris-​ france.org/​wp-​content/​uploads/​2018/​11/​Asia-​Focus-​93.pdf.

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75. Baker McKenzie, “Reaching New Heights: An Update on Chinese Investments into Europe” (2015), 12, https://​www.bakermckenzie.com/​-​/​ media/​files/​insight/​publications/​2016/​03/​reaching-​new-​heights/​ar_​emea_​ reachingnewheights_​mar16.pdf?la=en. 76. Leslie Hook, “China’s State Grid to Take 25% Stake in REN,” Financial Times, February 2, 2012, https://​www.ft.com/​content/​ 41a0c572-​4dba-​11e1-​b96c-​00144feabdc0. 77. Luís Villalobos, “Fosun assumiu-​se como o maior investidor privado chinês em Portugal,” Público, December 4, 2018, https://​www.publico.pt/​2018/​ 12/​04/​economia/​noticia/​fidelidade-​bcp-​fosun-​assumiuse-​maior-​investidor-​ privado-​chines-​portugal-​1853293. 78. Laurens Cerulus and Jakob Hanke, “China Looks West: Enter the Dragon,” Politico, April 10, 2017, https://​www.politico.eu/​article/​china-​and-​the-​troika-​ portugal-​foreign-​investment-​screening-​takeovers-​europe/​. 79. Anders Fogh Rasmussen, “China’s Investment in Europe Offers Opportunities—​And Threats,” Financial Times, November 20, 2017, https://​ www.ft.com/​content/​9e7428cc-​c963-​11e7-​8536-​d321d0d897a3. 80. Peter Wise and Ben Hall, “Portugal PM Warns on EU Protectionism over China Investment Screening,” Financial Times, March 3, 2019, https://​www. ft.com/​content/​8bb21cf6-​3ab6-​11e9-​b72b-​2c7f526ca5d0. 81. Paul Ames, “China’s Atlantic Stopover Worries Washington,” Politico, September 29, 2016, https://​www.politico.eu/​article/​chinas-​atlantic-​ stopover-​terceira-​worries-​washington-​li-​keqiang-​united-​states/​ ; Graham Kates, “Defense Dept. Decision Gives China Chance for Foothold between US and Europe,” CBS News, September 20, 2017, https://​www.cbsnews.com/​news/​azores-​withdrawal-​gives-​ china-​foothold-​between-​us-​europe/​; “China Will Build String of Military Bases around World, Says Pentagon,” The Guardian, May 3, 2019, https://​www.theguardian.com/​world/​2019/​may/​03/​ china-​will-​build-​string-​of-​military-​bases-​around-​world-​says-​pentagon. 82. Le Corre, “China’s Rise as a Geoeconomic Influencer,” 12; Louisa Lim and Julia Bergin, “Inside China’s Audacious Global Propaganda Campaign,” The Guardian, December 7, 2018. 83. Carlos Rodrigues, “Portugal-​China Relations: Political Values Play Second Fiddle,” in Political Values in Europe-​China Relations, ed. Tim Nicholas Rühlig, Björn Jerdín, Frans-​Paul van der Putten, John Seaman, Miguel Otero-​Iglesias, and Alice Ekman, ETNC Report (2018), 71, https://​www.ifri. org/​sites/​default/​files/​atoms/​files/​full-​report-​web-​version_​updated_​2019.pdf. 84. Ricardo Soares de Oliveira, Magnificent and Beggar Land: Angola since the Civil War (Hurst, 2015), 193. 85. “Portugal: A China-​Friendly EU Nation Driven by Need,” Deutsche Welle, March 12, 2019, https://​www.dw.com/​en/​portugal-​a-​china-​friendly-​eu-​ nation-​driven-​by-​need/​a-​47872582. Notes 

 

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86. “In Focus: China’s Expansion in the EU,” European Political Strategy Center, Greenfield Investment Monitor, no. 1 (May 2017), https://​ec.europa.eu/​epsc/​ sites/​epsc/​files/​greenfield-​investment-​monitor-​1.pdf. 87. Agatha Kratz, Mikko Huotari, Thilo Hanemann, and Rebecca Arcesati, “Chinese FDI in Europe: 2019 Update,” Merics Papers on China (April 2020), 9, https://​merics.org/​en/​report/​chinese-​fdi-​europe-​2019-​update. 88. Thilo Hanemann and Mikko Huotari, “Preparing for a New Era of Chinese Capital: Chinese FDI in Europe and Germany,” Merics Papers on China (June 2015), 26–​28, https://​www.merics.org/​sites/​default/​files/​2017-​09/​COFDI_​ 2015_​EN.pdf. 89. Mesut Eren and Hong Zhuang, “Mergers and Acquisitions versus Greenfield Investment, Absorptive Capacity, and Economic Growth: Evidence from 12 New Member States of the European Union,” Eastern European Economics 53, no. 2 (2015), https://​doi.org/​10.1080/​ 00128775.2015.1033240; Philipp Harms and Pierre-​Guillaume Méon, “Good and Useless FDI: The Growth Effects of Greenfield Investment and Mergers and Acquisitions,” Review of International Economics 26, no. 1 (2017), https://​doi.org/​10.1111/​roie.12302. 90. Alison Roberts, “Chinese Enterprises Pump Billions into Portuguese Companies,” Financial Times, December 1, 2015, https://​www.ft.com/​ content/​49d8145c-​8489-​11e5-​8095-​ed1a37d1e096; Peggy Sito, “Fosun to Use Portuguese-​Speaking Markets as Test Beds for Integrated Businesses,” South China Morning Post, July 10, 2017, https://​www.scmp.com/​business/​ companies/​article/​2102046/​fosun-​use-​portuguese-​speaking-​markets-​test-​ beds-​integrated; Peter Wise and Leslie Hook, “EDP Sees Merit in China Three Gorges Bid but Rejects Offer Price,” Financial Times, June 10, 2018, https://​www.ft.com/​content/​24d5b8ce-​6ca0-​11e8-​92d3-​6c13e5c92914. 91. Paul Hockenos, “Portugal Has Emerged as Europe’s Booming Anti-​ Germany,” Foreign Policy, December 18, 2017, https://​foreignpolicy.com/​ 2017/​12/​18/​portugal-​has-​emerged-​as-​europes-​booming-​anti-​germany/​; Matthew C. Klein, “What’s Up with Portugal?,” Financial Times, April 4, 2018, https://​ftalphaville.ft.com/​2018/​04/​04/​2199417/​whats-​up-​with-​ portugal/​. 92. Augusto Santos Silva, “Nós, a Europa e a China,” Público, June 9, 2019, https://​www.publico.pt/​2019/​06/​09/​opiniao/​noticia/​europa-​china-​1875746. 93. Susi Dennison and Lívia Franco, “The Instinctive Multilateralist: Portugal and the Politics of Cooperation,” Policy Brief, European Council on Foreign Relations, 14–​15, https://​www.ecfr.eu/​publications/​summary/​instinctive_​ multilateralist_​portugal_​politics_​cooperation. 94. Ana Marques Gonçalves, “Dependence on European Funds Worries Portuguese Opposition,” Euractiv, October 17, 2018, https://​www.euractiv. com/​section/​economy-​jobs/​news/​hold-​dependence-​on-​european-​funds-​ worries-​portuguese-​opposition/​.

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95. David Briginshaw, “Portugal Launches Spanish Rail Link Project,” International Railway Journal, May 9, 2018, https://​www.railjournal.com/​ passenger/​main-​line/​portugal-​launches-​spanish-​rail-​link-​project/​. 96. Stuart Lau, “Greece Says EU’s China Concerns Must Not Harm Its Economic Interest,” South China Morning Post, April 16, 2019, https://​www.scmp.com/​news/​china/​diplomacy/​article/​3004724/​ greece-​says-​eus-​china-​concerns-​must-​not-​harm-​its-​economic. 97. Jorge Valero, “Stop Demonising China, Varoufakis Tells Europe,” Euractiv, March 27, 2019, https://​www.euractiv.com/​section/​economy-​jobs/​news/​stop-​ demonising-​china-​varoufakis-​tells-​europe/​. 98. Stuart Lau, “Greece’s Ancient Civilisation Was Once a Lure for China’s Leaders. Now It Could Prove Their Nemesis,” South China Morning Post, April 7, 2019, https://​www.scmp.com/​news/​china/​diplomacy/​article/​ 3005031/​greeces-​ancient-​civilisation-​was-​once-​lure-​chinas-​leaders-​now. 99. Yanis Varoufakis, “China Is the Real Deal,” Project Syndicate, October 27, 2017, https://​www.project-​syndicate.org/​videos/​china-​is-​the-​real-​deal. 100. Horowitz and Alderman, “Chastised by EU.” 101. Catherine Wong, “Why Greece Is Banking on China’s Modern-​Day Silk Road to Help Its Economic Recovery,” South China Morning Post, December 26, 2017, https://​www.scmp.com/​news/​china/​diplomacy-​defence/​article/​ 2125506/​why-​greece-​banking-​chinas-​modern-​day-​silk-​road-​help-​its. 102. “Hellenikon Casino License Deadline Pushed Back, More Delays Loom,” The National Herald, April 3, 2019, https://​www.thenationalherald.com/​ 237938/​hellenikon-​casino-​license-​deadline-​pushed-​back-​more-​delays-​loom/​ ; “Greece Postpones Athens Riviera Casino Bid Deadline by a Month,” Reuters, May 27, 2019, https://​www.reuters.com/​article/​us-​greece-​casino-​ deadline/​greece-​postpones-​athens-​riviera-​casino-​bid-​deadline-​by-​a-​month-​ idUSKCN1SX1H3. 103. Plamen Tonchev, “‘One Belt, One Road’ Projects in Greece: A Key Driver of Sino-​Greek Relations,” in “Europe and China’s New Silk Roads,” ed. Frans Paul van der Putten, John Seaman, Mikko Huptari, Alice Ekman, and Miguel Otero-​Iglesias, ETNC (2016), 30. 104. Sam Ball, “German Firm to Run Greek Airports as Sell-​Off Begins,” France 24, August 20, 2015, https://​www.france24.com/​en/​20150820-​germany-​ firm-​run-​greece-​airports-​sell-​off-​begins-​fraport-​privatisation-​bailout. 105. Plamen Tonchev, “China’s Growing Economic and Political Clout through Investment in Greece,” in “Chinese Investment in Europe: A Country-​Level Approach,” ed. John Seaman, Mikko Huotari, and Miguel Otero-​Iglesias, 70; Enterprise Greece, “Foreign Direct Investment,” https://​www.enterprisegreece.gov.gr/​en/​greece-​today/​why-​greece/​ foreign-​direct-​investment. 106. Marcin Kaczmarski and Jakub Jakóbowski, “China on Central-​Eastern Europe: ‘16+1’ as Seen from Beijing,” OSW Commentary 166 (April 15, Notes 

 

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2015), https://​www.osw.waw.pl/​en/​publikacje/​osw-​commentary/​2015-​04-​14/​ china-​central-​eastern-​europe-​161-​seen-​beijing. 107. “China Investment Must Not Undermine EU Joint Policy, Warns Merkel,” Reuters, February 27, 2018, https://​www.reuters.com/​article/​us-​china-​europe-​ merkel/​china-​investment-​must-​not-​undermine-​eu-​joint-​policy-​warns-​ merkel-​idUSKCN1GB1QM. 108. Thorsten Benner and Kristin Shi-​Kupfer, “Europe Needs to Step Up Vigilance on China’s Influence,” Financial Times, February 16, 2018, https://​ www.ft.com/​content/​a58b0a0c-​127b-​11e8-​940e-​08320fc2a277. 109. Thilo Hanemann, Mikko Huotari, and Agatha Kratz, “Chinese FDI in Europe: 2018 Trends and Impact of New Screening Policies,” Merics Papers on China (March 2019), 10, https://​www.merics.org/​sites/​default/​files/​ 2019-​03/​190311_​MERICS-​Rhodium%20Group_​COFDI-​Update_​2019. pdf. 110. Agatha Kratz, “The Best of Both Worlds? CEE’s Place in China-​Europe Economic Relations,” European Council on Foreign Relations, China Analysis 199 (December 2016), https://​www.ecfr.eu/​publications/​summary/​chinas_​ investment_​in_​influence_​the_​future_​of_​161_​cooperation7204#. 111. François Godemont and Abigael Vasselier, “China at the Gates: A New Power Audit of EU-​China Relations,” European Council on Foreign Relations (2017), 70–​72, https://​www.ecfr.eu/​page/​-​/​China_​Power_​Audit.pdf. 112. Alicja Bachulska and Richard Q. Turcsányi, “Behind the Huawei Backlash in Poland and the Czech Republic,” The Diplomat, February 6, 2019, https://​ thediplomat.com/​2019/​02/​behind-​the-​huawei-​backlash-​in-​poland-​and-​the-​ czech-​republic/​. 113. Raphael Satter and Nick Carey, “China Threatened to Harm Czech Companies over Taiwan Visit,” Reuters, February 19, 2020, https://​www. reuters.com/​article/​us-​china-​czech-​taiwan/​china-​threatened-​to-​harm-​czech-​ companies-​over-​taiwan-​visit-​letter-​idUSKBN20D0G3. 114. Noah Barkin and Aleksandar Vasovic, “Chinese ‘Highway to Nowhere’ Haunts Montenegro,” Reuters, July 16, 2018, https://​ www.reuters.com/​article/​us-​china-​silkroad-​europe-​montenegro-​insi/​ chinese-​highway-​to-​nowhere-​haunts-​montenegro-​idUSKBN1K60QX. 115. Valerie Hopkins and James Kynge, “Montenegro Fears China-​Backed Highway Will Put It on Road to Ruin,” Financial Times, April 10, 2019, https://​www.ft.com/​content/​d3d56d20-​5a8d-​11e9-​9dde-​7aedca0a081a. 116. European Commission, “EU-​Western Balkans: Economic Relations—​ Investing in People, Infrastructures and Reforms” (May 2018), https://​ ec.europa.eu/​commission/​sites/​beta-​political/​files/​economic-​relations_​en.pdf. 117. John Kemp, “China Has Replaced U.S. as Locomotive of Global Economy,” Reuters, November 5, 2019, https://​www.reuters.com/​article/​us-​economy-​ global-​kemp-​column/​china-​has-​replaced-​u-​s-​as-​locomotive-​of-​global-​ economy-​kemp-​idUSKBN1XF211.

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118. Aidan Yao, “Look beyond the Headline Numbers to See China’s Economic Transformation in Progress,” South China Morning Post, November 22, 2017, https://​www.scmp.com/​business/​global-​economy/​article/​2120840/​ look-​beyond-​headline-​numbers-​see-​chinas-​economic. 119. Daniel Rosen and Kevin Rudd, “China’s Economic Crossroads,” Project Syndicate, June 19, 2020, https://​www.project-​syndicate.org/​commentary/​ china-​2020-​economic-​reform-​agenda-​real-​or-​just-​rhetoric-​by-​kevin-​rudd-​ and-​daniel-​rosen-​2020-​06?barrier=accesspaylog. 120. Thilo Hannemann and Daniel H. Rosen, “Who’s Buying Whom? COVID-​ 19 and China Cross-​Border M&A Trends,” Rhodium Group, Note, June 18, 2020, https://​rhg.com/​research/​whos-​buying-​whom/​. 121. Eurostat, https://​ec.europa.eu/​eurostat/​home?, accessed June 25, 2020. 122. Eurostat, https://​ec.europa.eu/​eurostat/​home?, accessed June 25, 2020. 123. Lucrezia Poggetti and Max J. Zenglein, “Exposure to China: A Reality Check,” Berlin Policy Journal (March/​April 2020), https://​berlinpolicyjournal. com/​exposure-​to-​china-​a-​reality-​check/​. 124. Die Datenbank des Statistischen Bundesamtes, https://​www-​genesis.destatis. de/​genesis/​online, accessed June 22, 2020. 125. Zhu Yi, “How Dependent Is Germany on China?,” Currents in Context: Rebalancing EU-​China Relations, Echowall, June 10, 2020, https://​ www.echo-​wall.eu/​currents-​context/​how-​dependent-​germany-​china. 126. Roman Stöllinger (coordinator), Doris Hanzl-​Weiss, Sandra Leitner, and Robert Stehrer, “Global and Regional Value Chains: How Important, How Different?,” Vienna Institute for International Economic Studies, Research Report 427, April 2018, https://​wiiw.ac.at/​global-​and-​regional-​value-​chains-​ how-​important-​how-​different-​-​dlp-​4522.pdf, 26. 127. Konrad Popławski, “The Role of Central Europe in the German Economy: The Political Consequences,” Centre for Eastern Studies, June, 2016, http://​aei.pitt.edu/​76457/​1/​raport_​role-​ce-​in-​german-​economy_​net. pdf,  48–​49. 128. Jürgen Matthes, “Zur Abhängigkeit der deutschen Wirtschaft von China im Außenhandel—​Eine Faktensammlung,” Institut der Deutschen Wirtschaft, IW-​Report No. 43, December 2019, https://​www.iwkoeln.de/​studien/​iw-​ reports/​beitrag/​juergen-​matthes-​zur-​abhaengigkeit-​der-​deutschen-​wirtschaft-​ von-​china-​im-​aussenhandel-​eine-​faktensammlung.html. 129. Database of the Federal Statistical Office of Germany, https://​www-​genesis. destatis.de/​genesis/​online/​data?operation=sprachwechsel&language=en, accessed June 20, 2020. 130. Matthes, “Zur Abhängigkeit der deutschen Wirtschaft von China im Außenhandel—​Eine Faktensammlung,” 21. 131. Organisation for Economic Co-​operation and Development, “Trade in Value Added: Germany,” December 2018, https://​www.oecd.org/​industry/​ind/​ TIVA-​2018-​Germany.pdf. Notes 

 

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132. ZDF, “Politbarometer,” November 29, 2019, https://​www.zdf.de/​ nachrichten/​heute/​politbarometer-​kritik-​an-​klimapolitik-​100.html. 133. Zhu Yi, “How Dependent Is Germany on China?” 134. Guy Chazan, “Merkel Comes under Fire at Home for China Stance, ” Financial Times, July 7, 2020, https://​www.ft.com/​content/​bf1adef9-​a681-​ 48c0-​99b8-​f551e7a5b66d; “Angela Merkel’s Soft China Stance Is Challenged at Home, ” The Economist, July 16, 2020, https://​www.economist.com/​europe/​ 2020/​07/​16/​angela-​merkels-​soft-​china-​stance-​is-​challenged-​at-​home. 135. Bryant and Knight 2019, Jamie Cross, 2015. 136. Alicia Garcia Herrero and Trinh Nguyen, “Europe’s Value China Increasingly Dependent on China at the Expense of Its Own Regional Integration,” Research by Natixis, October 31, 2019. 137. Alicia García-​Herrero, “Companies Must Move Supply Chains Further from China,” Nikkei Asian Review, February 26, 2020, https://​asia.nikkei. com/​Opinion/​Companies-​must-​move-​supply-​chains-​further-​from-​China; “Companies That Got Out of China before Coronavirus Are Still Tangled in Its Supply Chains,” Wall Street Journal, March 8, 2020, https://​www.wsj. com/​articles/​companies-​that-​got-​out-​of-​china-​before-​coronavirus-​are-​still-​ tangled-​in-​its-​supply-​chains-​11583686996. 138. Laurens Cerulus, “Coronavirus Forces Europe to Confront China Dependency,” Politico, March 10, 2020, https://​www.politico.eu/​article/​ coronavirus-​emboldens-​europes-​supply-​chain-​security-​hawks/​. 139. Sui-​Lee Wee, “Mercedes-​Benz Quotes the Dalai Lama. China Notices. Apology Follows,” New York Times, February 6, 2018, https://​www.nytimes. com/​2018/​02/​06/​business/​mercedes-​daimler-​dalai-​lama-​china.html. 140. “VW Boss ‘Not Aware’ of China’s Detention Camps,” BBC News, April 16, 2019, https://​www.bbc.com/​news/​av/​business-​47944767/​ vw-​boss-​not-​aware-​of-​china-​s-​detention-​camps. 141. Paul Mozur, “Apple Removes Apps from China Store That Help Internet Users Evade Censorship,” New York Times, July 29, 2017, https://​www. nytimes.com/​2017/​07/​29/​technology/​china-​apple-​censorhip.html; Polina Marinova, “‘I Believe Strongly in Freedoms.’ Tim Cook Responds to Criticism over China’s Internet Censorship,” Fortune, December 6, 2017, http://​fortune.com/​2017/​12/​06/​apple-​tim-​cook-​china-​internet-​fortune-​ global-​forum/​. 142. Li Fusheng, “Future of Volkswagen Lies with China, Says Executive,” China Daily, January 14, 2019, http://​www.chinadaily.com.cn/​a/​201901/​14/​ WS5c3c024da3106c65c34e4456.html. 143. “Volkswagen’s New Chief Is Betting Carmaker’s Future on His Major Push into China’s Market, as Trouble Looms on the Home Turf,” South China Morning Post, April 15, 2019, https://​www.scmp.com/​business/​companies/​article/​3006145/​ volkswagens-​new-​chief-​betting-​carmakers-​future-​his-​major-​push.

338    Notes

 

144. Frank Sieren, The China Code: What’s Left for Us? (Palgrave Macmillan, 2006), 210. 145. Shunsuke Tabeta and Kosei Fukao, “VW’s Hot Streak in China Conceals Signs of Slipping Grip,” Nikkei Asian Review, August 24, 2018 https://​asia.nikkei.com/​Business/​Multinationals-​in-​Asia/​ VW-​s-​hot-​streak-​in-​China-​conceals-​signs-​of-​slipping-​grip. 146. Sieren, The China Code, 210. 147. “Powerhouse for the Mobility of Tomorrow,” Volkswagen News, February 2019, https://​www.volkswagenag.com/​en/​news/​stories/​2019/​02/​powerhouse-​ for-​the-​mobility-​of-​tomorrow.html. 148. Author’s calculations: Daimler, Annual Reports, https://​www.daimler.com/​ investors/​reports-​news/​annual-​reports/​. 149. Author’s calculations: Siemens, Annual Reports, https://​new.siemens.com/​ global/​en/​company/​investor-​relations.html. 150. Mark Norcliffe, “China’s Automotive Industry: Automobiles,” in Doing Business with China, ed. Jonathan Reuvid and Li Yong (GMB Publishing Ltd., 2006), 509. 151. Ulf Sommer, “No Yin Yang: A Great Wall against German Investment,” Handelsblatt, May 24, 2018, https://​www.handelsblatt.com/​today/​ companies/​no-​yin-​yang-​a-​great-​wall-​against-​german-​investment/​23582240. html?ticket=ST-​2543873-​EbQiiQofSDhvFo6iEnFs-​ap1. 152. Katrin Bennhold and Jack Ewing, “In Huawei Battle, China Threatens Germany ‘Where It Hurts’: Automakers,” New York Times, January 16, 2020, https://​www.nytimes.com/​2020/​01/​16/​world/​europe/​huawei-​germany-​china-​ 5g-​automakers.html; Patrick McGee, “Volkswagen Eyes the Prize of Electric Sales in China,” Financial Times, January 13, 2019, https://​www.ft.com/​ content/​07ca9880-​172c-​11e9-​b93e-​f4351a53f1c3. 153. Christoph Schmid, “End of a Golden Age,” Handelsblatt, February 5, 2017. 154. Author’s calculations: Volkswagen, Annual Reports, https://​www. volkswagenag.com/​en/​InvestorRelations/​news-​and-​publications/​Annual_​ Reports.html. 155. Tabeta and Fukao, “VW’s Hot Streak in China Conceals Signs of Slipping Grip.” 156. Author’s calculations from Daimler, BMW, Siemens, Bosch, Annual Reports, https://​www.bmwgroup.com/​en/​investor-​relations/​financial-​reports.html; https://​new.siemens.com/​global/​en/​company/​investor-​relations.html; https://​ www.bosch.com/​company/​annual-​report/​. 157. Author’s calculations from Daimler, BMW, Siemens, Bosch, Annual Reports. 158. Jamil Anderlini, “Chinese Tycoons Have to Play the Connections Game,” Financial Times, March 28, 2018, https://​www.ft.com/​content/​ 2e9c859c-​31b6-​11e8-​b5bf-​23cb17fd1498. 159. Willy Wo-​Lap Lam, Chinese Politics in the Era of Xi Jinping: Renaissance, Reform, or Retrogression? (Routledge, 2015), 166–​67. Notes 

 

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160. Tabeta and Fukao, “VW’s Hot Streak in China Conceals Signs of Slipping Grip.” 161. Anna Molin, “Geely Automobile Holdings Ltd.: Volvo Cars Signs Loan Deal with China Development Bank,” December 13, 2012, https://​www. marketscreener.com/​GEELY-​AUTOMOBILE-​HOLDINGS-​6165704/​news/​ Geely-​Automobile-​Holdings-​Ltd-​Volvo-​Cars-​Signs-​Loan-​Deal-​With-​China-​ Development-​Bank-​15592644/​; “Volvo Car Group Signs Second Loan Agreement with China Development Bank,” Volvo Cars, https://​www.media. volvocars.com/​global/​en-​gb/​media/​pressreleases/​135998/​volvo-​car-​group-​ signs-​second-​loan-​agreement-​with-​china-​development-​bank, November 25, 2013. 162. “Chinese and World Market Leaders of Auto Production in China,” Quest Trend Magazine, July 2, 2019, https://​www.quest-​trendmagazine.com/​ en/​automobile-​industry/​china/​carmakers-​in-​china.html; “Position of the Worldwide Ten Largest Carmakers in China in 2017,” Quest Trend Magazine, July 2, 2019, https://​www.quest-​trendmagazine.com/​en/​automobile-​ industry/​china/​car-​production-​in-​china.html. 163. Peter Campbell, Richard Milne, and Christian Shepherd, “Geely Sets Its Sights on Becoming China’s First Global Carmaker,” Financial Times, February 16, 2020, https://​www.ft.com/​content/​ 4e37334a-​4e45-​11ea-​95a0-​43d18ec715f5. 164. Cora Jungbluth, “China’s Economy Today: Effects on Germany,” Global Economic Dynamics, Global Value Chains: Part 4, November 23, 2018, https://​ged-​project.de/​allgemein-​en/​chinas-​economy-​today-​effects-​on-​ germany/​. 165. Laura Silver, Kat Devlin, and Christine Huang, “People around the Globe Are Divided in Their Opinions of China,” Pew Research Center, September 20, 2019, https://​www.pewresearch.org/​fact-​tank/​2019/​09/​30/​people-​around-​ the-​globe-​are-​divided-​in-​their-​opinions-​of-​china/​. 166. Susi Dennison, “Give the People What They Want: Popular Demand for a Strong European Foreign Policy,” European Council on Foreign Relations, Policy Brief, September 2019, 11, https://​www.ecfr.eu/​page/​-​/​popular_​demand_​for_​ strong_​european_​foreign_​policy_​what_​people_​want.pdf. 167. Ari Kokko, “The Home Country Effects of FDI in Developed Economies,” EJJS Working Paper No. 225, The European Institute of Japanese Studies, 2006, https://​ideas.repec.org/​s/​hhs/​eijswp.html; Jan Knoerich, “How Does Outward Foreign Direct Investment Contribute to Economic Development in Less Advanced Home Countries?,” Oxford Development Studies 45, no. 4 (2007): 443–​59, https://​doi.org/​10.1080/​13600818.2017.1283009. 168. Daron Acemoglu, David Autor, David Dorn, and Gordon H. Hanson, “Import Competition and the Great US Employment Sag of the 2000s,” Journal of Labor Economics 34, no. S1 (2016): 141–​98, https://​economics.mit. edu/​files/​11560.

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169. Peter Debaere, Hongshik Lee, and Joonhyung Lee, “It Matters Where You Go: Outward Foreign Direct Investment and the Multinational Employment Growth at Home,” Journal of Development Economies 91, no. 2 (2010): 301–​9, https://​doi.org/​10.1016/​j.jdeveco.2009.07.002. 170. Wolfgang Lechthaler and Mariya Mileva, “Trade with China, Inequality and Policy Reponses,” Intereconomics 50, no. 6 (November 2015): 344–​48, https://​ doi.org/​10.1007/​s10272-​015-​0558-​7. 171. Martin Wolf, “Why Rigged Capitalism Is Damaging Liberal Democracy,” Financial Times, September 18, 2019, https://​www.ft.com/​content/​ 5a8ab27e-​d470-​11e9-​8367-​807ebd53ab77. 172. Zhu Yi, “How Dependent Is Germany on China?” 173. “Verflechtungen und Abhängigkeiten Deutschlands und Chinas beleuchtet,” Deutscher Bundestag, June 29, 2020, https://​www.bundestag.de/​dokumente/​textarchiv/​2020/​ kw27-​pa-​auswaertiger-​china-​699494. 174. “Still Worth It: Despite Political Woes, America Inc Is Still Thriving in China,” The Economist, January 2, 2020, https://​www.economist.com/​business/​ 2020/​01/​02/​despite-​political-​woes-​america-​inc-​is-​still-​thriving-​in-​china. 175. Raphael Satter and Nick Carey, “China Threatened to Harm Czech Companies over Taiwan Visit: Letter,” Reuters, February 19, 2020, https://​ www.reuters.com/​article/​us-​china-​czech-​taiwan/​china-​threatened-​to-​harm-​ czech-​companies-​over-​taiwan-​visit-​letter-​idUSKBN20D0G3; “China Cancels Sweden Business Trips after Prize for Dissident,” al Jazeera, December 20, 2019, https://​www.aljazeera.com/​news/​2019/​12/​china-​cancels-​sweden-​ business-​trips-​prize-​dissident-​191220042410436.html. 176. European Commission, “Top Trading Partners 2019—​Trade Statistics,” Directorate General for Trade, March 19, 2020, https://​trade.ec.europa. eu/​doclib/​docs/​2006/​september/​tradoc_​122530.pdf; Max J. Zenglein, “Europe Should Realize It Has Leverage to Stand Up to China,” Nikkei Asian Review, July 10, 2020, https://​asia.nikkei.com/​Opinion/​ Europe-​should-​realize-​it-​has-​leverage-​to-​stand-​up-​to-​China. 177. Kay Möller, “Germany and China: A Continental Temptation,” China Quarterly 147 (1996): 724–​25, https://​doi.org/​10.1017/​ S0305741000051766. 178. Kay Möller, “Diplomatic Relations and Mutual Strategic Perceptions: China and the European Union,” China Quarterly 169 (March 2002): 22–​23, https://​ www.jstor.org/​stable/​4618703. 179. John Fox and Francois Godement, “A Power Audit of EU-​China Relations,” European Council on Foreign Relations Policy Report (April 2019), 1–​3, https://​ www.ecfr.eu/​page/​-​/​ECFR12_​-​_​A_​POWER_​AUDIT_​OF_​EU-​CHINA_​ RELATIONS.pdf. 180. Daniel Bell, The China Model: Political Meritocracy and the Limits of Democracy (Princeton, 2015). Notes 

 

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181. Andrew Moody, “Prescient Author Now Rules the Roost,” China Daily, November 10, 2017, http://​www.chinadaily.com.cn/​culture/​2017-​11/​10/​ content_​34636264.htm. 182. Martin Jacques, “A Point of View: Is China More Legitimate Than the West?” BBC News, November 2, 2012, https://​www.bbc.com/​news/​ magazine-​20178655. 183. Didi Kirsten Tatlow, “Cultural Relativism and Power Blindness: Some Critical Observations on the State of Germany’s China Debate,” Zentrum Liberale Moderne, November 22, 2018, https://​libmod.de/​en/​didi-​kirsten-​ tatlow-​on-​late-​orientalism-​in-​germany/​. 184. Agnieszka Sobocinska, “Australian Fellow-​Travellers to China: Devotion and Deceit in the People’s Republic,” Journal of Australian Studies 32, no. 3 (2008), https://​doi.org/​10.1080/​14443050802294075. 185. Jean-​François Revel, Anti-​Americanism (Encounter Books, 2003). 186. Peter Martin and Alan Crawford, “China’s Influence Digs Deep into Europe’s Political Landscape,” Bloomberg, April 4, 2019, https://​www.bloomberg.com/​news/​articles/​2019-​04-​03/​ china-​s-​influence-​digs-​deep-​into-​europe-​s-​political-​landscape. 187. Alan Crawford and Patricia Suzara, “Riding China’s Rise: The European Politicians in Beijing’s Orbit,” Bloomberg, July 4, 2018, https://​www.bloomberg.com/​news/​articles/​2018-​07-​03/​ riding-​china-​s-​rise-​the-​european-​politicians-​in-​beijing-​s-​orbit. 188. Jim Pickard, “David Cameron Falls Short of Target for $1bn China Fund,” Financial Times, April 30, 2019, https://​www.ft.com/​content/​ a73eb738-​675a-​11e9-​a79d-​04f350474d62. 189. Nic Fildes, “Former BT Chairman Mike Rake Joins Huawei UK Board,” Financial Times, April 14, 2020, https://​www.ft.com/​content/​ 40963d92-​4596-​438a-​bbef-​d291108bdb34. 190. Pankaj Mishra, From the Ruins of Empire: The Revolt against the West and the Remaking of Asia (Penguin, 2013), 20–​21 and 43-​44. 191. Godemont and Vasselier, “China at the Gates,” 7. 192. Thorsten Benner, Jan Gaspers, Mareike Ohlberg, Lucrezia Poggetti, and Kristen Shi-​Kupfer, “Authoritarian Advance: Responding to China’s Growing Political Influence in Europe,” Global Public Policy Institute and Mercator Institute for China Studies Report (February 2018), 7, https://​www. merics.org/​sites/​default/​files/​2018-​02/​GPPi_​MERICS_​Authoritarian_​ Advance_​2018_​1.pdf. 193. Thorsten Benner and Ricardo Soares de Oliveira, “Facing Up to Authoritarian Influence-​Peddling,” Financial Times, November 15, 2016, https://​www.ft.com/​content/​cb0d0469-​147f-​3d6e-​b13a-​cc810fc03125. 194. Anne-​Marie Brady, “Magic Weapons: China’s Political Influence Activities under Xi Jinping,” Wilson Center, September 18, 2017, https://​www.wilsoncenter.org/​article/​

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magic-​weapons-​chinas-​political-​influence-​activities-​under-​xi-​jinping; Clive Hamilton, Silent Invasion: China’s Influence in Australia (Hardie Grant Books, 2018); Jonathan Manthorpe, Claws of the Panda: Beijing’s Campaign of Influence and Intimidation in Canada (Cormorant Books, 2019). 195. Mark Leonard and Carl Bildt, “From Plaything to Player: How Europe Can Stand Up for Itself in the Next Five Years,” Policy Brief, European Council on Foreign Relations, July 2019, 1, https://​www.ecfr.eu/​publications/​ summary/​how_​europe_​can_​stand_​up_​for_​itself_​in_​the_​next_​five_​years_​eu_​ foreign_​policy. 196. Leonard and Bildt, “From Plaything to Player,” 6. 197. Leonard and Bildt, “From Plaything to Player,” 6. 198. Wendy Wu, “European Militaries ‘Will Do More to Counter Assertive China’ in Indo-​Pacific,” South China Morning Post, March 19, 2019, https://​www.scmp.com/​news/​china/​diplomacy/​article/​3002319/​ european-​militaries-​will-​do-​more-​counter-​assertive-​china-​indo. 199. Michael Peel, “Europe Unveils Its Answer to China’s Belt and Road Plan,” Financial Times, September 19, 2018, https://​www.ft.com/​content/​ bbcda96a-​bc1b-​11e8-​8274-​55b72926558f. 200. European Structural and Investment Funds, “% of Cohesion Policy Funding in Public Investment, 2015–​2017,” https://​cohesiondata. ec.europa.eu/​Other/​-​of-​cohesion-​policy-​funding-​in-​public-​investment-​p/​ 7bw6-​2dw3. 201. Wübbeke, Meissner, Zenglein, Ives, and Conrad, “MADE IN CHINA 2025,”  59–​60. 202. Rachel Sanderson and Davide Ghiglione, “How Italy’s Ruling Class Has Warmed to China Investments,” Financial Times, March 8, 2019, https://​ www.ft.com/​content/​4b170d34-​40f9-​11e9-​b896-​fe36ec32aece. 203. Lucrezia Poggetti, “Italy’s BRI Blunder,” Project Syndicate, March 21, 2019, https://​www.project-​syndicate.org/​commentary/​italy-​endorsement-​of-​china-​ bri-​big-​mistake-​by-​lucrezia-​poggetti-​2019-​03; “Italy Signs Deals Worth 2.5 Billion Euros with China,” Reuters, March 23, 2019, https://​www.reuters. com/​article/​us-​italy-​china-​deals-​factbox/​italy-​signs-​deals-​worth-​2-​5-​billion-​ euros-​with-​china-​idUSKCN1R40KN; Marine Pennetier and John Irish, “France Seals Multi-​Billion-​Dollar Deals with China, but Questions Belt and Road Project,” Reuters, March 25, 2019, https://​www.reuters.com/​article/​ us-​france-​china/​france-​seals-​multi-​billion-​dollar-​deals-​with-​china-​but-​ questions-​belt-​and-​road-​project-​idUSKCN1R61NF. 204. Bethany Allen-​Ebrahimian, “China’s Medical Diplomacy Is Empowering Euroskeptic Leaders,” Axios, April 1, 2020, https://​www.axios.com/​chinas-​ medical-​diplomacy-​is-​empowering-​euroskeptic-​leaders-​b5b7204d-​5db4-​ 4ea8-​84c9-​eda1db5b8be1.html. 205. Delegation of the European Union to China, “The Coronavirus Pandemic and the New World It Is Creating,” Statements by the HR/​VP, March 24, Notes 

 

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2020, https://​eeas.europa.eu/​delegations/​china/​76401/​eu-​hrvp-​josep-​borrell-​ coronavirus-​pandemic-​and-​new-​world-​it-​creating_​en. 206. Rym Momtaz, “Inside Macron’s Coronavirus War,” Politico, April 12, 2020, https://​www.politico.eu/​interactive/​inside-​emmanuel-​macron-​coronavirus-​ war/​. 207. Laurens Cerulus, “Von der Leyen Calls Out China for Hitting Hospitals with Cyberattacks,” June 22, 2020, https://​www.politico.eu/​article/​eu-​calls-​out-​ china-​for-​hitting-​hospitals-​with-​cyberattacks/​. 208. “Countries Reject Chinese-​Made Equipment,” BBC News, March 30, 2020, https://​www.bbc.com/​news/​world-​europe-​52092395. 209. Alexandra Stevenson and Tiffany May, “China Pushes to Churn Out Coronavirus Gear, but Struggles to Police It,” New York Times, March 27, 2020, https://​www.nytimes.com/​2020/​03/​27/​business/​china-​coronavirus-​ masks-​tests.html. 210. Ivan Krastev and Marc Leonard, “Europe’s Pandemic Politics: How the Virus Has Changed the Public’s Worldview,” European Council on Foreign Relations, Policy Brief, June 2020, https://​www.ecfr.eu/​publications/​ summary/​europes_​pandemic_​politics_​how_​the_​virus_​has_​changed_​the_​ publics_​worldview, 16.

Chapter 7 1. Richard Katz, “Mutual Assured Production: Why Trade Will Limit Conflict between China and Japan,” Foreign Affairs, July 2013, https://​www.foreignaffairs.com/​articles/​china/​2013-​06-​11/​ mutual-​assured-​production. 2. Akane Okutsu, “Japanese Manufacturers Turn Back to China,” Nikkei Asian Review, June 12, 2018, https://​asia.nikkei.com/​Business/​Business-​trends/​ Japanese-​manufacturers-​turn-​back-​to-​China. 3. Dominic Barton, Yougang Chen, and Amy Jin, “Mapping China’s Middle Class,” McKinsey Quarterly, June 2013, https://​www.mckinsey.com/​industries/​ retail/​our-​insights/​mapping-​chinas-​middle-​class. 4. “Report for Selected Countries and Subjects,” International Monetary Fund, April 2018, https://​www.imf.org/​external/​pubs/​ft/​weo/​2018/​01/​weodata/​ index.aspx. 5. Debabrata Das and Ashish Gupta, “India and China: The Great Divide,” Fortune India, March 3, 2018, https://​www.fortuneindia.com/​macro/​india-​ and-​china-​the-​great-​divide/​101641. 6. Kiyoyuki Seguchi, “Japanese Companies’ Investments in China Get into Full Swing for the First Time in 13 Years,” Canon Institute for Global Studies, August 22, 2018, https://​www.canon-​igs.org/​en/​column/​network/​ 20181009_​5278.html.

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7. Christina Larson, “From Imitation to Innovation: How China Became a Tech Superpower,” Wired, February 13, 2018, https://​www.wired.co.uk/​article/​ how-​china-​became-​tech-​superpower-​took-​over-​the-​west. 8. Wendy Wu, “China’s Economy ‘Set to Reach US$13.7 Trillion by End of the Year’,” South China Morning Post, December 22, 2018, https://​www.scmp.com/​news/​china/​article/​ 2179231/​ chinas-​economy-​set-​reach-​us137-​trillion-​end-​year. 9. Klaus Schwab, “The Global Competitiveness Report 2019,” Insight Report, The World Economic Forum, xiii, http://​www3.weforum.org/​docs/​WEF_​TheGl obalCompetitivenessReport2019.pdf. 10. Scott Kennedy, “The Fat Tech Dragon: Benchmarking China’s Innovation Drive,” Center for Strategic and International Studies, 2017; Scott Kennedy, ed., “China’s Uneven High-​Tech Drive: Implications for the United States,” Center for Strategic and International Studies, 2020, https://​ csis-​prod.s3.amazonaws.com/​s3fs-​public/​publication/​200302_​Kennedy_​ ChinaUnevenDrive_​v3.pdf?33r3oE.zYL35PXvcofD5frIVeK1lzS9G. 11. Jonathan Woetzel, Jeongmin Seong, Nick Leung, Joe Ngai, James Manyika, Anu Madgavkar, Susan Lund, and Andrey Mironenko, “China in the World: Inside a Changing Economic Relationship,” McKinsey Global Institute, December 2018, 6, https://​www.mckinsey.com/​featured-​insights/​ asia-​pacific/​china-​and-​the-​world-​inside-​a-​changing-​economic-​relationship. 12. Kiyoyuki Seguchi, “Resolved: Japan-​China Rapprochement Will Fail,” Center for Strategic and International Studies, Debating Japan 1, no. 2 (December 6, 2018), https://​csis-​prod.s3.amazonaws.com/​s3fs-​public/​ publication/​181205_​Debating_​Japan_​Vol.1_​Issue2_​0.pdf. 13. David Pilling, Bending Adversity: Japan and the Art of Survival (Allen Lane, 2014), 228. 14. Shogo Suzuki, “Will Japan’s Apologies Ever Be Enough?,” RSIS Commentary 200 (September 22, 2015), https://​www.files.ethz.ch/​isn/​194363/​CO15200. pdf. 15. June Teufel Dreyer, Middle Kingdom and Empire of Rising Sun: Sino-​Japanese Relations, Past and Present (Oxford University Press, 2016), 173–​76. 16. “Managing Unrest: Protests against Japan Cause Official Unease in China,” The Economist, April 21, 2005, https://​www.economist.com/​asia/​2005/​04/​21/​ managing-​unrest. 17. Jonathan Watts, “Violence Flares as the Chinese Rage at Japan,” The Guardian, April 17, 2005, https://​www.theguardian.com/​world/​2005/​apr/​17/​ china.japan. 18. Jesse Johnson, “Japan Scrambles Fighter Jets Less in First Half, but Sees Uptick in ‘Unusual’ Flights by China,” Japan Times, October 14, 2017, https://​www.japantimes.co.jp/​news/​2017/​10/​14/​national/​japan-​ scrambles-​fighters-​jets-​less-​first-​half-​sees-​uptick-​unusual-​flights-​china/​

Notes 

 

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#.XMgw1ugzaUk; Kosuke Takahashi, “Japan Scrambled Fighter Aircraft 904 Times in FY 2017,” IHS Jane Defence Weekly, April 13, 2018. 19. Ankit Panda, “Japan Identifies Chinese Submarine in East China Sea: A Type 093 SSN,” The Diplomat, January 16, 2018, https://​thediplomat.com/​2018/​ 01/​japan-​identifies-​chinese-​submarine-​in-​east-​china-​sea-​a-​type-​093-​ssn/​. 20. Mark MacKinnon, “The Chinese Fishing Boat Captain Who Humbled the Japanese,” The Globe and Mail, September 24, 2010, https://​www. theglobeandmail.com/​news/​world/​the-​chinese-​fishing-​boat-​captain-​who-​ humbled-​the-​japanese/​article4326930/​. 21. Keith Bradsher, “Amid Tension, China Blocks Crucial Exports to Japan,” New York Times, September 23, 2010, https://​www.nytimes.com/​2010/​09/​23/​ business/​global/​23rare.html. 22. Ming Hwa Ting and John Seaman, “Rare Earths: Future Elements of Conflict in Asia?,” Asian Studies Review 37, no. 2 (2013): 238, https://​doi.org/​ 10.1080/​10357823.2013.767313. 23. John Seamen, “Rare Earths and China: A Review of Changing Criticality in the New Economy,” Ifri, January 2019, 24–​ 25, https://​www.ifri.org/​en/​publications/​notes-​de-​lifri/​ rare-​earths-​and-​china-​review-​changing-​criticality-​new-​economy. 24. John Seaman, “Rare Earths and the East China Sea: Why Hasn’t China Embargoed Shipments to Japan?,” Ifris-​CIGS Op-​Ed Series, October 2012; “Toyota Unveils Motor Magnet with Less Scarce Metal,” Nikkei Asian Review, February 21, 2018, https://​asia.nikkei.com/​Editor-​s-​Picks/​Japan-​Update/​ Toyota-​unveils-​motor-​magnet-​with-​less-​scarce-​metal. 25. Japan Oil, Gas and Metals National Cooperation, “Annual Report 2017,” 27, http://​www.jogmec.go.jp/​content/​300357377.pdf. 26. Data retrieved by author from JOGMEC; Japan Ministry of Finance, “Trade Statistics of Japan,” http://​www.customs.go.jp/​toukei/​info/​index_​e.htm, accessed January 24, 2019. 27. Ting and Seaman, “Rare Earths.” 28. Alexandra Stevenson, “How Rare Earths (What?) Could Be Crucial in a US-​ China Trade War,” New York Times, July 11, 2018, https://​www.nytimes. com/​2018/​07/​11/​business/​china-​trade-​war-​rare-​earths-​lynas.html. 29. Yen Nee Lee, “A Massive, ‘Semi-​Infinite’ Trove of Rare-​Earth Metals Has Been Found in Japan,” CNBC, April 12, 2018, https://​www.cnbc.com/​2018/​ 04/​12/​japan-​rare-​earths-​huge-​deposit-​of-​metals-​found-​in-​pacific.html. 30. Shiro Armstrong, “Economics Still Trumps Politics between Japan and China,” Kokusai Mondai (International Affairs) 634 (2014), https://​www2.jiia. or.jp/​en/​pdf/​publication/​2014-​09_​003-​kokusaimondai.pdf. 31. Chris Lo, “The False Monopoly: China and the Rare Earths Trade,” Mining Technology, August 19, 2015, https://​www.mining-​technology.com/​features/​ featurethe-​false-​monopoly-​china-​and-​the-​rare-​earths-​trade-​4646712/​.

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32. Lucy Hornby, “China Axes Rare Earths Export Quotas,” Financial Times, January 5, 2015, https://​www.ft.com/​content/​f0ec86fe-​94b8-​11e4-​b32c-​ 00144feabdc0; Barbara Lewis and Ernest Scheyder, “China Cutting Rare Earth Output, Unnerving Global Manufacturers,” Reuters, October 24, 2018, https://​www.reuters.com/​article/​us-​china-​rareearths/​china-​cutting-​rare-​earth-​ output-​unnerving-​global-​manufacturers-​idUSKCN1MY2GZ. 33. Keith Bradsher, “China Restarts Rare Earth Shipments to Japan,” New York Times, November 19, 2010, https://​www.nytimes.com/​2010/​11/​20/​business/​ global/​20rare.html. 34. Michiyo Nakamoto and Kathrin Hille, “Fallout Feared from Islands Protest,” Financial Times, September 18, 2012, https://​www.ft.com/​content/​ ad156198-​0195-​11e2-​81ba-​00144feabdc0. 35. Katz, “Mutual Assured Production.” 36. Ben Bland, Tom Hancock, and Bryan Harris, “China Wields Power with Boycott Diplomacy,” Financial Times, May 3, 2017, https://​www.ft.com/​ content/​c7a2f668-​2f4b-​11e7-​9555-​23ef563ecf9a. 37. Katz, “Mutual Assured Production.” 38. Wei Zhimin, “What Would Be the Result of an Economic War between China and Japan?,” Global Times, 7 October 2012. 39. “China’s Trade Minister Concerned about Falling Japanese Investment: Business Delegates,” Reuters, September 23, 2014, https://​www. reuters.com/​article/​us-​china-​japan-​investment-​idUSKCN0HI17M20140923. 40. Dorothy J. Orchard, “China’s Use of the Boycott as a Political Weapon,” Annals of the American Academy of Political and Social Science 152 (1930): 252–​ 61, https://​doi.org/​10.1177/​000271623015200129. 41. C. F. Remer and William B. Palmer, A Study of Chinese Boycotts, with Special Reference to Their Economic Effectiveness (Johns Hopkins University, 1934), 247. 42. Yu Uchiyama, Koizumi and Japanese Politics: Reform Strategies and Leadership Style (Routledge/​University of Tokyo, 2010), 81–​83. 43. Kristin Huang, “‘Prepare for War,’ Xi Jinping Tells Military Region That Monitors South China Sea, Taiwan,” South China Morning Post, October 26, 2018, https://​www.scmp.com/​news/​china/​military/​article/​2170452/​ prepare-​war-​xi-​jinping-​tells-​military-​region-​monitors-​south. 44. Alex Lockie, “A Retiring Chinese General Revealed That China’s Greatest Military Weakness Is a US Strength,” Business Insider, June 7, 2018, https://​ www.businessinsider.com/​retiring-​chinese-​general-​reveals-​chinas-​greatest-​ military-​weakness-​2018-​6?r=US&IR=T. 45. John Pomfret, “US Takes a Tougher Tone with China,” Washington Post, July 30, 2010, http://​www.washingtonpost.com/​wp-​dyn/​content/​article/​2010/​07/​ 29/​AR201007290641 6.html. 46. Orange Wang and Zhou Xin, “Xi Jinping Says Trade War Pushes China to Rely on Itself and ‘That’s Not a Bad Thing,’” South China Morning Post,

Notes 

 

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September 26, 2018, https://​www.scmp.com/​economy/​china-​economy/​ article/​2165860/​xi-​jinping-​says-​trade-​war-​pushes-​china-​rely-​itself-​and-​thats. 47. He Huifeng, “Xi Jinping Urges China to Become More Self-​ Reliant during Tour of Southern Manufacturing Hub,” South China Morning Post, October 23, 2018, https://​www. scmp.com/​economy/​china-​economy/​article/​2169779/​ xi-​jinping-​urges-​china-​become-​more-​self-​reliant-​tour-​southern. 48. Han Wei, “Foreign Direct Investment in China Reaches a Record,” Caixin, January 15, 2019, https://​www.caixinglobal.com/​2019-​01-​15/​foreign-​ direct-​investment-​in-​china-​reaches-​a-​record-​101369942.html; “China Says Its Foreign Direct Investments Increased 5.8% in 2019,” Reuters, January 21, 2020, https://​www.reuters.com/​article/​us-​china-​economy-​fdi/​ chinas-​2019-​fdi-​up-​5-​8-​outbound-​investment-​slumps-​idUSKBN1ZK05I. 49. Cheng Ting-​Fang and Lauly Li, “How China’s Chip Industry Defied the Coronavirus Lockdown,” Nikkei Asian Review, March 18, 2020, https://​asia.nikkei.com/​Spotlight/​Cover-​Story/​ How-​China-​s-​chip-​industry-​defied-​the-​coronavirus-​lockdown. 50. Alicia Garcia Herrero and Trinh Nguyen, “China’s Vertical Integration Leads to Less Dependence on Asian Regional Value Chain,” Research by Natixis, October 21, 2019. 51. Anna Fifield, “As China Settles In for Trade War, Leader Xi Emphasizes ‘Self Reliance,’” Washington Post, November 2, 2018, https://​www. washingtonpost.com/​world/​asia_​pacific/​as-​china-​settles-​in-​for-​trade-​war-​ leader-​xi-​emphasizesself-​reliance/​2018/​11/​01/​2961b2b2-​d8de-​11e8-​9559-​ 712cbf726d1c_​story.html?utm_​term=.44a2c294375f. 52. Scott Kennedy, “Why the Arrest of Huawei’s CFO amid Trade War Tension Should Not Push China to Rely More on Home-​Grown Technology,” South China Morning Post, December 17, 2018, https://​ www.scmp.com/​comment/​insight-​opinion/​united-​states/​article/​2178008/​ why-​arrest-​huaweis-​cfo-​amid-​trade-​war-​tension. 53. Evan A. Feigenbaum, China’s Techno-​Warriors: National Security and Strategic Competition from the Nuclear to the Information Age (Stanford University Press, 2003), 200. 54. Zhang Jun, “How China Can Reach Its Centennial Goal,” Project Syndicate, October 14, 2019, https://​www.project-​syndicate.org/​commentary/​china-​ advanced-​economy-​2049-​unleash-​private-​sector-​by-​zhang-​jun-​2019-​10. 55. Jean-​Marc F. Blanchard, “The Political Economy of Sino-​Japanese Ties: The Limits and Risks of Economic Statecraft,” in The Political Economy of Regional Peacemaking, ed. Steven E. Lobell and Norrin M. Ripsman (University of Michigan Press, 2016). 56. Richard Samuels and Eric Heginbotham, “A New Military Strategy for Japan,” Foreign Affairs, July 16, 2018, https://​www.foreignaffairs.com/​ articles/​asia/​2018-​07-​16/​new-​military-​strategy-​japan.

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57. Patrick Gillespie, “Trump Praises Reagan on Trade—​But Saw It Differently in 1989,” CNN, October 19, 2016, https://​money.cnn.com/​2016/​10/​19/​ news/​economy/​trump-​reagan-​japan-​trade-​1989/​index.html. 58. Ayako Mie, “How Much Does Japan Pay to Host US Forces? Depends on Who You Ask,” The Japan Times, January 31, 2017, https://​www.japantimes. co.jp/​news/​2017/​01/​31/​national/​much-​japan-​pay-​host-​u-​s-​forces-​depends-​ ask/​#.XMhMpugzaUk. 59. Motoko Rich, “Relief in Japan after Shinzo Abe’s Visit with Trump,” New York Times, February 13, 2017, https://​www.nytimes.com/​2017/​02/​13/​ world/​asia/​trump-​japan-​shinzo-​abe.html. 60. Sheila Smith, “A Successful Meeting between Trump and Abe as America Is ‘Behind Japan, 100%,’” Forbes, February 13, 2017, https://​www.forbes.com/​ sites/​sheilaasmith/​2017/​02/​13/​behind-​japan-​100/​#50f80cc23f66. 61. Emily Tamkin and Dan De Luce, “Can a Weekend at Mar-​a-​Lago Rescue the Trump-​Abe Relationship?,” Foreign Policy, April 13, 2018, https://​ foreignpolicy.com/​2018/​04/​13/​can-​a-​weekend-​at-​mar-​a-​lago-​rescue-​the-​ trump-​abe-​relationship-​japan-​trade-​tariffs-​north-​korea-​nuclear-​abductees/​. 62. Nobuhiro Kubo, “Exclusive: Japan, US Discussing Offensive Military Capability for Tokyo—​Japan Officials,” Reuters, September 10, 2014, http://​ uk.reuters.com/​article/​uk-​japan-​usa-​military-​idUKKBN0H500L20140910. 63. Leika Kihara, “Japan’s Ruling Party Heavyweight Signals Readiness to Join AIIB: Nikkei,” Reuters, May 16, 2017, https://​www.reuters.com/​article/​ us-​china-​silkroad-​japan/​japans-​ruling-​party-​heavyweight-​signals-​readiness-​ to-​join-​aiib-​nikkei-​idUSKCN18B2S9; Shutaro Sano, “Japan’s Engagement in China’s Belt and Road Initiative,” Australian Outlook, Australian Institute of International Affairs, February 23, 2018, https://​www.internationalaffairs. org.au/​australianoutlook/​japan-​one-​belt-​one-​road/​. 64. Steven Lee Myers and Motoko Rich, “Shinzo Abe Says Japan Is China’s ‘Partner,’ and No Longer Its Aid Donor,” New York Times, October 26, 2018, https://​www.nytimes.com/​2018/​10/​26/​world/​asia/​shinzo-​abe-​china-​japan. html. 65. Shi Jiangtao, “China Japan Ties ‘Historic Turning Point’ after Shinzo Abe’s Visit, but Can the Goodwill Hold?,” South China Morning Post, October 28, 2018, https://​www.scmp.com/​news/​china/​diplomacy/​article/​2170469/​ china-​japan-​ties-​historic-​turning-​point-​after-​shinzo-​abes-​visit. 66. “Four Chinese Ships Briefly Intrude into Japan’s Waters near Senkaku Islands,” Japan Times, November 12, 2018, https://​www.japantimes.co.jp/​ news/​2018/​11/​12/​national/​four-​chinese-​ships-​briefly-​intrude-​waters-​near-​ senkaku-​islands/​#.XMhP6-​gzaUk. 67. Isabel Reynolds and Takashi Hirokawa, “Abe Divides Japan with Plan to Change Pacifist Constitution,” Bloomberg, May 16, 2017, https://​www.bloomberg.com/​news/​articles/​2017-​05-​16/​ abe-​divides-​japan-​with-​new-​push-​to-​change-​postwar-​constitution. Notes 

 

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68. “Japan Protests Chinese Development Work in East China Sea,” Japan Times, February 7, 2019, https://​www.japantimes.co.jp/​news/​2019/​02/​07/​national/​ politics-​diplomacy/​japan-​protests-​chinese-​development-​work-​east-​china-​sea-​ gas-​field/​#.XMhQiugzaUk. 69. Linda Sieg, “Japan Public Divided as Laws Easing Limits on Military Take Effect,” Reuters, March 29, 2016, http://​uk.reuters.com/​article/​ uk-​japan-​defence-​idUKKCN0WV057. 70. Jeffrey W. Hornung, “Resolved: Japan-​China Rapprochement Will Fail,” Center for Strategic and International Studies, Debating Japan 1, no. 2 (December 6, 2018), https://​csis-​prod.s3.amazonaws.com/​s3fs-​public/​ publication/​181205_​Debating_​Japan_​Vol.1_​Issue2_​0.pdf. 71. “National Defense Program Guidelines for FY 2019 and Beyond,” Japan Ministry of Defense, December 18, 2018, 5, http://​www.mod.go.jp/​j/​ approach/​agenda/​guideline/​2019/​pdf/​20181218_​e.pdf. 72. “Japan Accuses China of Pushing Territorial Claims during Pandemic,” Al Jazeera, July 14, 2020, https://​www.aljazeera.com/​news/​2020/​07/​japan-​ accuses-​china-​pushing-​territorial-​claims-​pandemic-​200714015837495.html. 73. Michael Auslin, “Japan’s New Realism,” Foreign Affairs 95, no. 2 (March/​April 2016), https://​www.foreignaffairs.com/​articles/​ japan/​japans-​new-​realism; Kosuke Takahashi, “Japan Developing New Anti-​Surface Warheads for Future Hypersonic Missiles,” Jane’s, March 12, 2020, https://​www.janes.com/​article/​94850/​ japan-​developing-​new-​anti-​surface-​warheads-​for-​future-​hypersonic-​missiles. 74. “National Defense Program Guidelines for FY 2019 and Beyond,” 5. 75. “SDF Plans to Use Quasi-​Zenith Satellites as Backup for GPS,” Daily Yomiuri, January 17, 2019, https://​www.questia.com/​newspaper/​1P4-​ 2167355499/​sdf-​plans-​to-​use-​quasi-​zenith-​satellites-​as-​backup. 76. Linda Sieg, “Japan Contemplates Post-​Abe World, but Rivals’ Positions Still Murky,” Reuters, April 19, 2018, https://​www.reuters.com/​article/​us-​japan-​ politics-​rivals/​japan-​contemplates-​post-​abe-​world-​but-​rivals-​positions-​still-​ murky-​idUSKBN1HQ0RW. 77. Kiyoshi Takenaka, “Japan PM Says TPP Trade Pact Meaningless without US,” Reuters, November 21, 2017, https://​www.reuters.com/​article/​ us-​japan-​tpp-​abe-​idUSKBN13G2IK. 78. Tanya Somanader, “President Obama: ‘Writing the Rules for 21st-​Century Trade,’” The White House, President Barack Obama (blog), February 18, 2015, https://​obamawhitehouse.archives.gov/​blog/​2015/​02/​18/​ president-​obama-​writing-​rules-​21st-​century-​trade. 79. David J. Lynch, “Asia-​Pacific Trade Deal as Important as a New Carrier to Carter,” Bloomberg, April 6, 2015, https://​www.bloomberg.com/​news/​articles/​ 2015-​04-​06/​asia-​pacific-​trade-​deal-​as-​important-​as-​a-​new-​carrier-​to-​carter. 80. Christina L. Davis, “Japan: Interest Group Politics, Foreign Policy Linkages, and the TPP,” in Contested Megaregulation: Global Economic Ordering after TPP,

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ed. Benedict Kingsbury, David Malone, Richard B. Stewart, and Atsushi Sunami (Oxford University Press, 2019). 81. Terada Takashi, “How and Why Japan Has Saved the TPP: From Trump Tower to Davos,” The Asan Forum, February 19, 2018, http://​www. theasanforum.org/​how-​and-​why-​japan-​has-​saved-​the-​tpp-​from-​trump-​tower-​ to-​davos/​. 82. Rintaro Tobita, “Japan Scouts More Asian Players for TPP to Cut China Dependence,” Nikkei Asian Review, March 21, 2020, https://​asia.nikkei.com/​ content/​2fc1ff8f5142f244dab947b834447ac3. 83. Rintaro Tobita, “Japan Cabinet Approves World’s Biggest Trade Pact with EU,” Nikkei Asian Review, November 6, 2018, https://​asia.nikkei.com/​Politics/​International-​Relations/​ Japan-​cabinet-​approves-​world-​s-​biggest-​trade-​pact-​with-​EU. 84. Dario Cristiani, “Italy’s Waltz with China: Business as Usual for Rome,” War on the Rocks, Commentary, June 19, 2019, https://​warontherocks.com/​2019/​ 06/​italys-​waltz-​with-​china-​business-​as-​usual-​for-​rome/​. 85. Shogo Kodama, “Japan Woos Eastern Europe as Belt and Road Moves West,” Nikkei Asian Review, April 18, 2019, https://​asia.nikkei.com/​Spotlight/​Belt-​and-​Road/​ Japan-​woos-​Eastern-​Europe-​as-​Belt-​and-​Road-​moves-​west. 86. Sun-​won Park, “The East China Sea Dispute: Short-​Term Victory and Long-​ Term Loss for China?,” Brookings Report, November 1, 2010, https://​www. brookings.edu/​research/​the-​east-​china-​sea-​dispute-​short-​term-​victory-​and-​ long-​term-​loss-​for-​china/​.

Chapter 8 1. George Nishiyama, “Japan PM Visits India, Eyeing Trade and China,” Reuters, August 21, 2007, https://​www.reuters.com/​article/​ idINIndia-​29075320070821. 2. Angus Maddison et al., Contours of the World Economy 1–​2013 AD: Essays in Macro-​Economic History (Oxford University Press, 2007), https://​www.amazon. com/​gp/​product/​0199227209/​ref=dbs_​a_​def_​rwt_​bibl_​vppi_​i0. 3. Danny Quah, “The Global Economy’s Shifting Centre of Gravity,” Global Policy 1, no. 2 (2011), https://​doi.org/​10.1111/​j.1758-​5899.2010.00066.x. 4. Richard Dobbs, Jaana Remes, James Manyika, Charles Roxburgh, Sven Smit, and Fabian Schaer, “Urban World: Cities and the Rise of the Consuming Class,” McKinsey Global Institute, June 2012, https://​www.mckinsey.com/​~/​ media/​McKinsey/​Featured%20Insights/​Urbanization/​Urban%20world%20 Cities%20and%20the%20rise%20of%20the%20consuming%20class/​MGI_​ Urban_​world_​Rise_​of_​the_​consuming_​class_​Full_​report.ashx. 5. John Hawksworth, Rob Clarry, and Hannah Audino, “The Long View: How Will the Global Economic Order Change by 2050?,” PwC Insights, February Notes 

 

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2017, https://​www.pwc.com/​gx/​en/​world-​2050/​assets/​pwc-​the-​world-​in-​ 2050-​full-​report-​feb-​2017.pdf. 6. Homi Kharas, “The Unprecedented Expansion of the Global Middle Class,” Brookings Report, February 2017, https://​www.brookings.edu/​research/​the-​ unprecedented-​expansion-​of-​the-​global-​middle-​class-​2/​. 7. Peter Hartcher, “It’s Too Late to Catch the China Wave, but Another Big Opportunity Is Showing Promise,” Sydney Morning Herald, November 26, 2018, https://​www.smh.com.au/​world/​asia/​australians-​have-​seen-​this-​ pattern-​before-​20181126-​p50ibx.html. 8. Parag Khanna, The Future Is Asian: Commerce, Conflict, and Culture in the 21st Century (Simon & Schuster, 2019). 9. Jeff Kingston, “Under Abe, Are We Heading toward a Beautiful Japan or an Ugly Future?,” Japan Times, May 27, 2017, https://​www.japantimes. co.jp/​opinion/​2017/​05/​27/​commentary/​abe-​heading-​toward-​beautiful-​ japan-​ugly-​future/​#.W_​K5NyOZORs; Howard W. French, “Abe’s Avoidance of the Past,” New York Times, August 18, 2015, https://​ www.nytimes.com/​2015/​08/​19/​opinion/​howard-​french-​shinzo-​abes-​ avoidance-​of-​the-​past.html?mtrref=www.google.com&assetType=opinion; James Mann, “Why Narendra Modi Was Banned from the US,” Wall Street Journal, May 2, 2014, https://​www.wsj.com/​articles/​ why-​narendra-​modi-​was-​banned-​from-​the-​u-​s-​1399062010. 10. Samir Saran and Akhil Deo, Pax Sinica: Implications for The Indian Dawn (Rupa Publications, 2019), 137. 11. Tanvi Madan, “China Is Losing India,” Foreign Affairs, June 22, 2020, https://​www.foreignaffairs.com/​articles/​asia/​2020-​06-​22/​ china-​losing-​india. 12. Yuji Kuronuma, “Maldives Feels the Weight of China’s Regional Ambitions,” Nikkei Asian Review, January 28, 2018, https://​asia.nikkei.com/​ Economy/​Maldives-​feels-​the-​weight-​of-​China-​s-​regional-​ambitions. 13. Charu Sudan Kasturi, “India Wrinkle on China Silk,” The Telegraph (India), July 20, 2015, https://​www.telegraphindia.com/​india/​india-​wrinkle-​on-​ china-​silk/​cid/​1479577. 14. Rohan Mukherjee and Anthony Yazaki, “Introduction: The Historical Context,” in Poised for Partnership: Deepening India-​Japan Relations in the Asian Century, ed. Rohan Mukherjee and Anthony Yazaki (Oxford University Press, 2016), 18. 15. UN Comtrade Database, http://​comtrade.un.org, accessed July 20, 2020. 16. Mukherjee and Yazaki, “Introduction: The Historical Context,” 18. 17. Dipanjan Roy Chaudhury, “Japan’s Investments in India Getting Diverse,” The Economic Times, May 27, 2017, https://​economictimes.indiatimes. com/​news/​economy/​finance/​japans-​investments-​in-​india-​getting-​diverse/​ articleshow/​58863341.cms; Department for Promotion of Industry and Internal Trade, “Fact Sheet on Foreign Direct Investmnet,” Government

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of India, https://​dipp.gov.in/​sites/​default/​files/​FDI_​Factsheet_​March20_​ 28May_​2020.pdf. 18. Shutaro Sano, “Japan-​India Security Cooperation: Building a Solid Foundation amid Uncertainty,” Center for Strategic and International Studies, 2017, 9. 19. Tanvi Madan, “The Rise, Fall, and Rebirth of the ‘Quad,’” War on the Rocks, November 16, 2017, https://​warontherocks.com/​2017/​11/​rise-​fall-​rebirth-​ quad/​. 20. “Chinese ForMin Wang Yi Answered Questions on China’s Foreign Policy and External Relations,” Delfi, March 9, 2018, https://​en.delfi.lt/​lithuania/​ foreign-​affairs/​chinese-​formin-​wang-​yi-​answered-​questions-​on-​chinas-​ foreign-​policy-​and-​external-​relations.d?id=77385163. 21. Rohan Mukherjee, “A Democratic Quadrilateral in Asia?,” Where Geopolitics Meets Business, Vol. 2, Gateway House, February 14, 2017, https://​www. gatewayhouse.in/​a-​democratic-​quadrilateral-​in-​asia/​. 22. Michael J. Green and Daniel Twining, “Democracy and American Grand Strategy in Asia: The Realist Principles behind an Enduring Idealism,” Contemporary Southeast Asia 30, no. 1 (2008), 1–​28. 23. Mitsuru Obe and Niharika Mandhana, “India and Japan Pursue Closer Ties to Counter China,” Wall Street Journal, September 1, 2014, https://​www.wsj. com/​articles/​indias-​prime-​minister-​narendra-​modi-​wants-​closer-​ties-​with-​ japan-​to-​counter-​china-​1409555754. 24. Shrey Verma, “Big in Japan: Why Abe Is Rooting for a Modi Win,” Foreign Policy, February 20, 2014, https://​foreignpolicy.com/​2014/​02/​20/​big-​in-​ japan-​why-​abe-​is-​rooting-​for-​a-​modi-​win/​. 25. Sanjeev Miglani, “India, Japan Negotiating Military Logistics Pact in Tightening of Ties,” Livemint, October 22, 2018, https://​www.livemint.com/​ Politics/​ACqPUOVNiN8qs5NUlkDDyH/​India-​Japan-​negotiating-​military-​ logistics-​pact-​in-​tighteni.html. 26. Cassell Bryan-​Low and Colin Packham, “How Australia Led the US in Its Global War against Huawei,” Sydney Morning Herald, May 22, 2019, https://​ www.smh.com.au/​world/​asia/​how-​australia-​led-​the-​us-​in-​its-​global-​war-​ against-​huawei-​20190522-​p51pv8.html. 27. Le Hong Hiep, “Vietnam Races to Launch 5G Network, but Chinese Tech Giant Huawei Notably Left Out of Plan,” South China Morning Post, May 3, 2019, https://​www.scmp.com/​week-​asia/​opinion/​article/​3008714/​vietnam-​ races-​launch-​5g-​network-​chinese-​tech-​giant-​huawei-​notably; Bennet Murray, “Vietnam Doesn’t Trust Huawei an Inch,” Foreign Policy, May 9, 2019, https://​foreignpolicy.com/​2019/​05/​09/​vietnam-​doesnt-​trust-​huawei-​an-​inch/​. 28. Saheli Roy Choudhury, ”Huawei Loses Out to Nokia, Ericsson in Building Singapore’s Main 5G Networks,” June 25, 2020, CNBC, https://​www.cnbc. com/​2020/​06/​25/​huawei-​loses-​out-​to-​nokia-​ericsson-​in-​building-​singapores-​ main-​5g-​networks.html. Notes 

 

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29. Rahul Shrivastava, “Endgame for Huawei? India Likely to Exclude Chinese Firm from 5G Roll-​Out, Say Govt Sources,” India Today, July 23, 2020, https://​www.indiatoday.in/​business/​story/​huawei-​5g-​ban-​in-​india-​ likely-​govt-​sources-​1703692-​2020-​07-​23; Asit Ranjan Mishra, “India Restricts Chinese Companies from Participating in Public Procurement Bids,” LiveMint, July 24, 2020, https://​www.livemint.com/​politics/​policy/​ government-​restricts-​chinese-​companies-​from-​participating-​in-​public-​ procurement-​bids-​11595547926781.html. 30. “The Geopolitics of 5G: America’s War on Huawei Nears Its Endgame,” The Economist, July 16, 2020, https://​www.economist.com/​briefing/​2020/​07/​16/​ americas-​war-​on-​huawei-​nears-​its-​endgame. 31. “How Is China Modernizing Its Navy?,” China Power, Center for Strategic and International Studies, December 17, 2018, https://​chinapower.csis.org/​china-​ naval-​modernization/​. 32. Sandeep Unnithan, “Exclusive: We Can Match China in the Indian Ocean Region, Says Navy Chief Sunil Lanba,” India Today, November 17, 2018, https://​www.indiatoday.in/​magazine/​interview/​story/​20181126-​we-​can-​ match-​china-​in-​the-​indian-​ocean-​region-​admiral-​sunil-​lanba-​1388904-​ 2018-​11-​17. 33. Charles Edel and Siddharth Mohandas, “Not Quite China’s Century? An Early Appraisal,” The National Interest, November 20, 2018, https://​ nationalinterest.org/​feature/​not-​quite-​chinas-​century-​early-​appraisal-​36562. 34. Robert D. Kaplan, “Center Stage for the 21st Century: Power Plays in the Indian Ocean,” Foreign Affairs, March 1, 2009, https://​www.foreignaffairs. com/​articles/​east-​asia/​2009-​03-​01/​center-​stage-​21st-​century. 35. “Indo-​Pacific: Ancient Waters and Emerging Geometries” (Video file), ORF, Raisina 2019, January 9, 2019, https://​www.youtube.com/​ watch?v=C5oWaK-​HdYA. 36. Jeff M. Smith, “How India Is Playing Its Indian Ocean Ace Card,” The Diplomat, July 7, 2017, https://​thediplomat.com/​2017/​07/​how-​india-​is-​ playing-​its-​indian-​ocean-​ace-​card/​. 37. Smith, “How India Is Playing Its Indian Ocean Ace Card.” 38. Kaplan, “Center Stage for the 21st Century.” 39. Ellen Barry, “As India Collaborates with Japan on Islands, It Looks to Check China,” New York Times, March 11, 2016, https://​www.nytimes.com/​2016/​ 03/​12/​world/​asia/​india-​japan-​china-​andaman-​nicobar-​islands.html; Rajat Pandit, “After US, France, South Korea, Singapore & Australia, India Now Looking to Ink Military Logistics Pact with Japan,” June 4, 2020, Times of India, http://​timesofindia.indiatimes.com/​articleshow/​76201701.cms?utm_​ source=contentofinterest&utm_​medium=text&utm_​campaign=cppst. 40. Ajay Saini, “Japanese Occupation of Nicobar Islands: Slavery, Espionage and Executions,” Economic and Political Weekly 53, no. 22 (June 2, 2018), https://​www.epw.in/​journal/​2018/​22/​perspectives/​

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japanese-​occupation-​nicobar-​islands.html?0=ip_​login_​no_​cache%3D21bf2d 84f4f58c50755167e4c2dad0fe. 41. Karthik Venkatesh, “When the Japanese Invaded the Andaman and Nicobar Islands,” Madras Courier, October 25, 2018, https://​madrascourier.com/​ insight/​when-​the-​japanese-​invaded-​the-​andaman-​nicobar-​islands/​. 42. Mukherjee and Yazaki, “Introduction,” 271. 43. Pankaj Mishra, From the Ruins of Empire: The Revolt against the West and the Remaking of Asia (Penguin, 2013), 251–​53. 44. “Japan Military Joins Historic Philippine War Games,” The Straits Times, October 6, 2018, https://​www.straitstimes.com/​asia/​se-​asia/​japan-​military-​ joins-​historic-​philippine-​war-​games; Motoko Rich and Makiko Inoue, “With a Submarine, Japan Sends a Message in the South China Sea,” September 18, 2018, https://​www.nytimes.com/​2018/​09/​18/​world/​asia/​japan-​submarine-​ south-​china-​sea.html. 45. Françoise Nicolas, “Catching Up or Staying Ahead: Japanese Investment in the Mekong Region and the China Factor,” Ifri, May 2018, https://​www.ifri.org/​en/​publications/​notes-​de-​lifri/​asie-​visions/​ catching-​or-​staying-​ahead-​japanese-​investment-​mekong-​region. 46. Gurpreet Khurana, “The ‘Indo-​Pacific Idea’: Origins, Conceptualizations and the Way Ahead,” Journal of Indian Ocean Rim Studies (October–​December 2019), https://​www.academia.edu/​41319908/​THE_​INDO-​PACIFIC_​IDEA_​ ORIGINS_​CONCEPTUALIZATIONS_​AND_​THE_​WAY_​AHEAD. 47. Shinzo Abe, “Address by Prime Minister Shinzo Abe at the Opening Session of the Sixth Tokyo International Conference on African Development,” Ministry of Foreign Affairs Japan, August 27, 2016, https://​www.mofa.go.jp/​ afr/​af2/​page4e_​000496.html. 48. Rory Medcalf, “The Indo-​Pacific: What’s in a Name?,” The American Interest, October 10, 2013, https://​www.the-​american-​interest.com/​2013/​10/​10/​the-​ indo-​pacific-​whats-​in-​a-​name/​. 49. Trefor Moss, “The Key to Electric Cars Is Batteries. One Chinese Firm Dominates the Industry,” Wall Street Journal, November 3, 2019, https://​ www.wsj.com/​articles/​how-​china-​positioned-​itself-​to-​dominate-​the-​future-​ of-​electric-​cars-​11572804489. 50. James D. J. Brown, “Japan’s Values-​Free and Token Indo-​Pacific Strategy,” The Diplomat, March 30, 2018, https://​thediplomat.com/​2018/​03/​japans-​ values-​free-​and-​token-​indo-​pacific-​strategy/​. 51. Tang Siew Mun, Hoang Thi Ha, Anuthida Saelaow Qian, Glenn Ong, and Pham Thi Phuong Thao, “The State of Southeast Asia: 2020 Survey Report,” ASEAN Studies Centre, ISEAS–​Yusof Ishak Institute, January 16, 2020, 34, https://​www.iseas.edu.sg/​images/​pdf/​TheStateofSEASurveyReport_​2020.pdf. 52. Sutirtho Patranobis, “India’s ‘Vision’ for Indo-​Pacific Region Puts a Question Mark on ‘Quad,’” Hindustan Times, July 13, 2018, https://​www.hindustantimes.com/​world-​news/​ Notes 

 

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india-​s-​vision-​for-​indo-​pacific-​region-​puts-​a-​question-​mark-​on-​quad/​story-​ QXA7GJIhKNB7W4NAlkhoBJ.html. 53. David Tweed, Jason Koutsoukis, and Jason Scott, “US-​Backed ‘Quad’ Quietly Gains Steam as Way to Balance China,” Bloomberg, November 14, 2018, https://​www.bloomberg.com/​news/​articles/​2018-​11-​14/​ u-​s-​backed-​quad-​quietly-​gains-​steam-​as-​way-​to-​balance-​china. 54. “India Says Supports FTA Talks with EU after Refusing to Join China-​ Led Accord,” Reuters, November 5, 2019, https://​www.reuters.com/​article/​ us-​india-​trade/​india-​says-​supports-​fta-​talks-​with-​eu-​after-​refusing-​to-​join-​ china-​led-​accord-​idUSKBN1XF1QM. 55. Rohan Mukherjee, “Looking West, Acting East: India’s Indo-​Pacific Strategy,” Southeast Asian Affairs, ISEAS–​Yusof Ishak Institute, Vol. 2019,  43–​51. 56. Medcalf, “The Indo-​Pacific.” 57. Michael Peel and Grace Ramos, “Philippine Banana Bonanza Sparks Debate on Shift to China,” Financial Times, March 14, 2017, https://​www.ft.com/​ content/​3f6df338-​056b-​11e7-​ace0-​1ce02ef0def9. 58. “China Says Hopes Mongolia Learned Lesson after Dalai Lama Visit,” Reuters, January 24, 2017, https://​www.reuters.com/​article/​us-​china-​mongolia-​ dalailama-​idUSKBN158197; Sergey Radchenko, “How to Stand Up to China? Mongolia’s Got a Playbook,” The Independent, December 12, 2016, https://​www.independent.co.uk/​news/​world/​asia/​how-​to-​stand-​up-​to-​china-​ mongolias-​got-​a-​playbook-​a7469526.html. 59. Laura Zhou, “South Korea and China Relations Warming but Chilly Restrictions Remain,” South China Morning Post, October 18, 2018, https://​www.scmp.com/​news/​china/​diplomacy/​article/​2169183/​ south-​korea-​and-​china-​relations-​warming-​chilly-​restrictions. 60. Park Ju-​young, “S. Korea, China to Be Affected by THAAD Fallout: Think Tank,” Korea Herald, May 3, 2017, http://​www.koreaherald.com/​view. php?ud=20170503000172. 61. Jane Perlez, Mark Landler, and Choe Sang-​Hun, “China Blinks on South Korea, Making Nice after a Year of Hostilities,” New York Times, November 1, 2017, https://​www.nytimes.com/​2017/​11/​01/​world/​asia/​china-​south-​korea-​ thaad.html; “Korea’s Doghouse Blues,” Korea Times, November 20, 2017, http://​www.koreatimes.co.kr/​www/​news/​opinon/​2017/​11/​202_​239572.html. 62. Zhou, “South Korea and China Relations Warming but Chilly Restrictions Remain.” 63. Kyle Ferrier, “Just How Dependent Is South Korea on Trade with China?,” Korea Economic Institute of America, http://​keia.org/​ just-​how-​dependent-​south-​korea-​trade-​china. 64. Song Jung-​a, “South Korea Economy Pays Price for China Slowdown and Cheap Oil,” Financial Times, May 22, 2016, https://​www.ft.com/​content/​ 129efeac-​1745-​11e6-​b8d5-​4c1fcdbe169f.

356    Notes

 

65. Tom Hancock and Wang Xueqiao, “South Korean Consumer Groups Bear Brunt of China’s THAAD Ire,” Financial Times, August 20, 2017, https://​ www.ft.com/​content/​f3c78afe-​821d-​11e7-​94e2-​c5b903247afd. 66. Min-​gyu Lee and Yufan Hao, “China’s Unsuccessful Charm Offensive: How South Koreans Have Viewed the Rise of China over the Past Decade,” Journal of Contemporary China 27, no. 114 (2018): 867–​86, https://​doi.org/​10.1080/​ 10670564.2018.1488103. 67. Eleanor Ross, “China Overtakes Japan to Become One of South Korea’s Least Liked Countries,” Newsweek, March 23, 2017, https://​www.newsweek.com/​ china-​overtakes-​japan-​one-​south-​koreas-​least-​liked-​countries-​new-​poll-​572764. 68. Jane Perlez, “US Casts Wary Eye on Australian Port Leased by Chinese,” New York Times, March 20, 2016, https://​www.nytimes.com/​2016/​03/​21/​ world/​australia/​china-​darwin-​port-​landbridge.html. 69. John Garnaut, “‘Fear and Greed’ Drive Australia’s China Policy, Tony Abbott Tells Angela Merkel,” Sydney Morning Herald, April 16, 2015, https://​www. smh.com.au/​politics/​federal/​fear-​and-​greed-​drive-​australias-​china-​policy-​ tony-​abbott-​tells-​angela-​merkel-​20150416-​1mmdty.html. 70. Karishma Vaswani, “Australia Blocks Chinese Firm from Stake in Electricity Grid,” BBC News, August 1, 2016, https://​www.bbc.com/​news/​ business-​37043119. 71. Jacqueline Williams, “Australian Lawmaker Quits amid Questions over China Ties,” New York Times, December 12, 2017, https://​www.nytimes.com/​ 2017/​12/​12/​world/​australia/​sam-​dastyari-​resigns-​china.html. 72. Damien Cave and Jacqueline Williams, “Australian Politics Is Open to Foreign Cash, and China Has Much to Gain,” New York Times, June 6, 2017, https://​www.nytimes.com/​2017/​06/​06/​world/​australia/​china-​political-​ influence-​campaign-​finance.html. 73. Rob Taylor, “Sour Grapes: Why Australian Wine Can’t Get into China,” Wall Street Journal, May 27, 2018, https://​www.wsj.com/​articles/​australian-​ wine-​trade-​corked-​as-​china-​retaliates-​against-​meddling-​claims-​1527426000. 74. Salvatore Babones, “Australia’s Export Exposure to China’s Coronavirus Epidemic,” Centre for Independent Studies, Analysis Paper 7, February 2020, https://​www.cis.org.au/​app/​uploads/​2020/​02/​ap7.pdf?; Brad Thompsen, “China Draws a New, Red Line for Australian Farmers,” Financial Review, May 22, 2020, https://​www.afr.com/​companies/​agriculture/​ china-​draws-​a-​new-​red-​line-​for-​australian-​farmers-​20200521-​p54v1g. 75. Huileng Tan, “China May Punish Australia with Trade Curbs—​But It Can’t Stop Buying Iron Ore from Down Under,” cnbc.com, June 12, 2020, https://​ www.cnbc.com/​2020/​06/​12/​china-​may-​impose-​trade-​curbs-​on-​australia-​but-​ cant-​stop-​buying-​iron-​ore.html. 76. Jason Scott and James Mayger, “Australia’s China Ties Fray Even as Two-​Way Trade Booms,” Bloomberg, July 16, 2020, https://​www.bloomberg.com/​news/​ articles/​2020-​07-​16/​australia-​takes-​tougher-​stance-​on-​china-​as-​trade-​booms. Notes 

 

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7 7. Rich and Tarabay, “Facing Tensions Close to Home.” 78. Vicky Xiuzhong Xu, “India and Australia Move to Tighten Bonds to Counter China’s Rise,” New York Times, November 23, 2018, https://​www. nytimes.com/​2018/​11/​23/​world/​australia/​india-​leaders-​meet.html. 79. Michelle Jamrisko, Jason Koutsoukis, and Toluse Olorunnipa, “Singapore PM Says ASEAN May Need to Choose between US and China,” Bloomberg, November 15, 2018, https://​www.bloomberg.com/​news/​articles/​2018-​11-​15/​ singapore-​fears-​asean-​may-​need-​to-​choose-​between-​u-​s-​china. 80. Chris Horton, “Southeast Asia’s Dance with China,” New York Times, May 26, 2016, https://​www.nytimes.com/​2016/​05/​26/​international-​home/​southeast-​ asias-​dance-​with-​china.html. 81. Horton, “Southeast Asia’s Dance with China.” 82. Joshua Kurlantzick, Charm Offensive: How China’s Soft Power Is Transforming the World (Yale University Press, 2007). 83. “World Military Expenditure Grows to $1.8 Trillion in 2018,” SIPRI, April 29, 2019, https://​www.sipri.org/​media/​press-​release/​2019/​ world-​military-​expenditure-​grows-​18-​trillion-​2018. 84. Bill Hayton, “China and the South China Sea,” in The Critical Transition: China’s Priorities for 2021, ed. Kerry Brown, Chatham House, February 2017, 20–​24, https://​www.chathamhouse.org/​sites/​default/​files/​ publications/​research/​2017-​02-​02-​critical-​transition-​china-​priorities-​2021-​ brown.pdf. 85. “Philippines’ Duterte Plays Down China Military Facilities in Disputed Sea,” Reuters, February 19, 2018, https://​www.reuters.com/​article/​us-​philippines-​ china-​southchinasea/​philippines-​duterte-​plays-​down-​china-​military-​ facilities-​in-​disputed-​sea-​idUSKCN1G31KQ. 86. “US and Philippines to Step Up Joint Military Activities amid China Concerns over American Nuclear Bombers,” South China Morning Post, September 29, 2018, https://​www.scmp.com/​news/​asia/​southeast-​asia/​article/​ 2166280/​us-​and-​philippines-​step-​joint-​military-​activities. 87. Gaea Katreena Cabico, “US Still Most Trusted by Filipinos, China Least—​Poll,” Philstar, January 14, 2019, https://​ www.philstar.com/​headlines/​2019/​01/​14/​1885018/​ us-​still-​most-​trusted-​filipinos-​china-​least-​poll. 88. Raissa Robles, “China Promised Duterte US$9 Billion. He’s Had Only US$924 Million in Loans and Grants. Why?,” South China Morning Post, October 26, 2019, https://​www.scmp.com/​week-​asia/​politics/​article/​ 3034666/​china-​promised-​duterte-​us9-​billion-​infrastructure-​hes-​had-​only. 89. Horton, “Southeast Asia’s Dance with China.” 90. Derek Grossman, “The Quad Is Not Enough,” Foreign Policy, October 19, 2018, https://​foreignpolicy.com/​2018/​10/​19/​to-​balance-​china-​call-​vietnam-​ malaysia-​philippines/​.

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91. “Indonesia Seeks Ways to Speed Up China High-​Speed Rail Project,” The Straits Times, May 2, 2018, https://​www.straitstimes.com/​asia/​se-​asia/​ indonesia-​seeks-​ways-​to-​speed-​up-​china-​high-​speed-​rail-​project. 92. Richard Javad Heydarian, “Indonesia’s Tough Balancing Act in the Indo-​ Pacific,” China US Focus, November 26, 2018, https://​www.chinausfocus. com/​foreign-​policy/​indonesias-​tough-​balancing-​act-​in-​the-​indo-​ pacific?utm_​source=twitter&utm_​medium=social&utm_​campaign=&utm_​ content=reg&utm_​term=78v. 93. Joe Cochrane, “Indonesia, Long on Sidelines, Starts to Confront China’s Territorial Claims,” New York Times, September 10, 2017, https://​www. nytimes.com/​2017/​09/​10/​world/​asia/​indonesia-​south-​china-​sea-​military-​ buildup.html. 94. Alexander Gabuev, “Why Russia and China Are Strengthening Security Ties,” Foreign Affairs, September 24, 2018, https://​ www.foreignaffairs.com/​articles/​china/​2018-​09-​24/​ why-​russia-​and-​china-​are-​strengthening-​security-​ties. 95. Nectar Gan, “Best of Frenemies: Official Relations Are Good, but Russians Grow Wary of Chinese Investments,” South China Morning Post, March 24, 2019, https://​www.scmp.com/​news/​china/​diplomacy/​article/​3002975/​ best-​frenemies-​official-​relations-​are-​good-​russians-​grow-​wary. 96. Alexander Gabuev, “Bigger, Not Better: Russia Makes the SCO a Useless Club,” Carnegie Moscow Center, Commentary, June 23, 2017, https://​ carnegie.ru/​commentary/​71350. 97. Evan A. Feigenbaum and Robert A. Manning, “A Tale of Two Asias,” Foreign Policy, October 31, 2012, https://​foreignpolicy.com/​2012/​10/​31/​a-​tale-​of-​ two-​asias/​. 98. Jean-​Philippe Béja, ed., The Impact of China’s 1989 Tiananmen Massacre (Routledge, 2011). 99. June Teufel Dreyer, Middle Kingdom and Empire of Rising Sun: Sino-​Japanese Relations, Past and Present (Oxford University Press, 2016), 173–​76; Howard W. French, Everything under the Heavens: How the Past Helps Shape China’s Push for Global Power (Knopf, 2017), 277–​79. 100. Andrew J. Nathan and Andrew Scobell, China’s Search for Security (Columbia University Press, 2012), xiv.

Conclusion: Big or Small 1. Nadège Rolland, China’s World Vision for a New World Order, The National Bureau of Asian Research, NBR Special Report No. 83, January 2020, https://​www.nbr.org/​wp-​content/​uploads/​pdfs/​publications/​sr83_​ chinasvision_​jan2020.pdf. 2. David Shambaugh, China Goes Global: The Partial Power (Oxford University Press, 2013), 8.

Notes 

 

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3. Shambaugh, China Goes Global, 317. 4. Bentley Allan, Srdjan Vucetic, and Ted Hopf, “The Distribution of Identity and the Future of International Order: China’s Hegemonic Prospects,” International Organization 72, no. 4 (fall 2018): 839–​69, https://​doi.org/​ 10.1017/​S0020818318000267. 5. John Pomfret, “Why the United States Doesn’t Need to Return to a Gentler China Policy,” Washington Post, July 9, 2019, https://​www.washingtonpost. com/​opinions/​2019/​07/​09/​why-​united-​states-​doesnt-​need-​return-​gentler-​ china-​policy/​; Bill Gertz, “Countering Pro-​China Experts’ Letter,” Washington Times, July 10, 2019, https://​www.washingtontimes.com/​news/​2019/​jul/​10/​ donald-​trumps-​china-​policy-​defended/​. 6. “China Is Not an Enemy,” Washington Post, July 3, 2019, https://​www. washingtonpost.com/​gdpr-​consent/​?destination=%2fopinions%2fmakin g-​china-​a-​us-​enemy-​is-​counterproductive%2f2019%2f07%2f0 2%2f647d49d0-​9bfa-​11e9-​b27f-​ed2942f73d70_​story.html%3f. 7. Coral Davenport, “Major Climate Report Describes a Strong Risk of Crisis as Early as 2040,” New York Times, October 7, 2018, https://​www.nytimes.com/​ 2018/​10/​07/​climate/​ipcc-​climate-​report-​2040.html. 8. Elizabeth Economy, The Third Revolution: Xi Jinping and the New Chinese State (Oxford University Press, 2018), 185; Lihuan Zhou, Sean Gilbert, Ye Wang, Miquel Muñoz Cabré, and Kevin P. Gallagher, “Moving the Green Belt and Road Initiative: From Words to Actions,” World Resources Institute and the Global Development Policy Center, Boston University, Working Paper, October 2018, https://​wriorg.s3.amazonaws.com/​s3fs-​public/​moving-​green-​ belt-​and-​road-​initiative-​from-​words-​to-​actions.pdf. 9. Isabel Hilton, “How China’s Big Overseas Initiative Threatens Global Climate Progress,” Yale Environmental 360, January 3, 2019, https://​e360.yale.edu/​features/​how-​chinas-​big-​overseas-​initiativethreatens-​climate-​progress. 10. “Xu Zhangrun’s China: ‘Licking Carbuncles and Sucking Abscesses,’” China Change, August 1, 2018, https://​chinachange.org/​2018/​08/​01/​xu-​zhangruns-​ china-​licking-​carbuncles-​and-​sucking-​abscesses/​. 11. Nectar Gan, “Economist Zhang Weiying Slams ‘China Model’ That ‘Inevitably Leads to Confrontation with the West,’” South China Morning Post, October 26, 2018; Gabriel Wildau, Financial Times, October 30, 2018, https://​www.scmp.com/​news/​china/​politics/​article/​2170447/​ economist-​slams-​china-​model-​inevitably-​leads-​confrontation-​west. 12. Chun Han Wong, “Xi Jinping’s Strongman Rule Comes under Fire as China Celebrates Deng’s Reforms,” Wall Street Journal, December 18, 2018, https://​ www.wsj.com/​articles/​xi-​jinpings-​strongman-​rule-​comes-​under-​fire-​as-​china-​ celebrates-​dengs-​reforms-​11545047738. 13. Jun Mai, “Deng Xiaoping’s Son Urges China to ‘Know Its Place’ and Not Be ‘Overbearing,’” South China Morning Post, October 30,

360    Notes

 

2018, https://​www.scmp.com/​news/​china/​politics/​article/​2170762/​ deng-​xiaopings-​son-​uses-​unpublicised-​speech-​urge-​china-​know-​its. 14. Wang Jisi, “The View from China,” in “Did America Get China Wrong? The Engagement Debate,” Foreign Affairs, June 14, 2018, https://​www.foreignaffairs.com/​articles/​china/​2018-​06-​14/​ did-​america-​get-​china-​wrong. 15. Elizabeth C. Economy, “Smart Competition: Adapting US Strategy towards China at 40 Years,” Prepared statement, Committee on Foreign Affairs, United States House of Representatives, 1st Session, 116th Congress, May 8, 2019, 2, https://​www.cfr.org/​blog/​ smart-​competition-​adapting-​us-​strategy-​toward-​china-​40-​years. 16. Pankaj Mishra, From the Ruins of Empire: The Revolt against the West and the Remaking of Asia (Allen Lane, 2012), 289. 17. Jane Perlez, “China Retools Vast Global Building Push Criticized as Bloated and Predatory,” New York Times, April 25, 2019, https://​www. nytimes.com/​2019/​04/​25/​business/​china-​belt-​and-​road-​infrastructure. html. 18. Elizabeth Economy, The Third Revolution: Xi Jinping and the New Chinese State (Oxford University Press, 2018), x. 19. Linda Jakobsen and Dean Knox, “New Foreign Policy Actors in China,” SIPRI Policy Paper 26 (September 2010), https://​www.sipri.org/​sites/​default/​ files/​files/​PP/​SIPRIPP26.pdf. 20. Kevin Rudd, “How Xi Jinping Views the World,” Foreign Affairs, May 10, 2018, https://​www.foreignaffairs.com/​articles/​china/​2018-​05-​10/​ how-​xi-​jinping-​views-​world. 21. Layland Cecco, “Huawei Arrest May Dash Canada’s Hopes for ‘Essential’ Trade Deal with China,” The Guardian, December 18, 2018, https://​www.theguardian.com/​world/​2018/​dec/​18/​ canada-​china-​trade-​deal-​huawei. 22. John Hawksworth, Rob Clarry, and Hannah Audino, “The Long View: How Will the Global Economic Order Change by 2050?,” PwC Insights, February 2017, https://​www.pwc.com/​gx/​en/​world-​2050/​assets/​pwc-​the-​world-​in-​ 2050-​full-​report-​feb-​2017.pdf. 23. Isabel Hilton, “When China Rules the World,” Prospect Magazine, May 14, 2018, https://​www.prospectmagazine.co.uk/​magazine/​ when-​china-​rules-​the-​world. 24. Laura Silver, Kat Devlin, and Christine Huang, “People around the Globe Are Divided in Their Opinions of China,” Pew Research Center, September 20, 2019, https://​www.pewresearch.org/​fact-​tank/​2019/​09/​30/​people-​around-​ the-​globe-​are-​divided-​in-​their-​opinions-​of-​china/​. 25. Laura Silver, Kat Devlin, and Christine Huang, “Attitudes towards China,” Pew Research Center, December 5, 2019, https://​www.pewresearch.org/​global/​ 2019/​12/​05/​attitudes-​toward-​china-​2019/​. Notes 

 

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26. Steven Lee Myers, “China’s Aggressive Diplomacy Weakens Xi Jinping’s Global Standing,” New York Times, April 17, 2020, https://​www.nytimes. com/​2020/​04/​17/​world/​asia/​coronavirus-​china-​xi-​jinping.html. 27. Samir Saran, “#Covid19: Made in China Pandemic,” Expert Speak, Observer Research Foundation, March 20, 2020, https://​www.orfonline.org/​expert-​ speak/​covid19-​made-​in-​china-​pandemic-​63531/​. 28. “Japan and the EU Agree on a Sweeping Trade Pact,” Nikkei Asian Review, December 14, 2017, https://​asia.nikkei.com/​magazine/​20171214/​Politics-​ Economy/​Japan-​and-​the-​EU-​agree-​on-​a-​sweeping-​trade-​pact; Neil Munshi, Tom Wilson, and Heba Saleh, “High Hopes a Pan-​African Free Trade Deal Comes into Force,” Financial Times, May 30, 2019, https://​www.ft.com/​ content/​d5b0ebe4-​8137-​11e9-​9935-​ad75bb96c849. 29. Nick Miller, “Australian Navy to Accompany UK’s ‘Show of Strength’ in South China Sea,” Sydney Morning Herald, July 21, 2018, https://​www.smh. com.au/​world/​europe/​australian-​navy-​to-​accompany-​uk-​s-​show-​of-​strength-​ in-​south-​china-​sea-​20180721-​p4zsrx.html; “South Korean Warship Sails by Disputed South China Sea Islands,” Nikkei Asian Review, September 28, 2018, https://​asia.nikkei.com/​Politics/​International-​relations/​South-​ Korean-​warship-​sails-​by-​disputed-​South-​China-​Sea-​islands; Tim Kelly, “Canada Joins Efforts to Counter China with Asian Warship Drills,” Reuters, November 8, 2018, https://​www.reuters.com/​article/​us-​japan-​canada-​ defence/​canada-​joins-​effort-​to-​counter-​china-​with-​asian-​warship-​drills-​ idUSKCN1ND0DL. 30. Gideon Rachman, “Mid-​Sized Powers Must Unite to Preserve the World Order,” Financial Times, May 28, 2019, https://​www.ft.com/​content/​ 546ca388-​625d-​11e8-​90c2-​9563a0613e56; Roland Paris, “Can Middle Powers Save the Liberal World Order?,” Chatham House Briefing (June 2019), https://​www.chathamhouse.org/​sites/​default/​files/​publications/​research/​2019-​ 06-​18-​MiddlePowers.pdf. 31. John Joseph Lee, Ireland, 1912–​1985: Politics and Society (Cambridge University Press, 1990), 631. 32. Richard Wike, Bruce Stokes, Jacob Poushter, Laura Silver, Janell Fetterolf, and Kat Devlin, “Most Prefer That US, Not China, Be the World’s Leading Power,” Pew Research Center, October 1, 2018, https://​www.pewresearch.org/​ global/​2018/​10/​01/​most-​prefer-​that-​u-​s-​not-​china-​be-​the-​worlds-​leading-​ power/​. 33. Mishra, From the Ruins of Empire; Kishore Mahbubani, Has the West Lost It? (Penguin Random House, 2018); Peter Frankopan, The New Silk Roads: The Present and the Future of the World (Bloomsbury Publishing, 2018); Parag Khanna, The Future Is Asian: Global Order in the Twenty-​First Century (Weidenfeld & Nicolson, 2019).

362    Notes

 

34. Valentina Romei and John Reed, “The Asian Century Is Set to Begin,” Financial Times, March 26, 2019, https://​www.ft.com/​content/​ 520cb6f6-​2958-​11e9-​a5ab-​ff8ef2b976c7?sharetype=blocked. 35. Mishra, From the Ruins of Empire, 292–​93. 36. Frankopan, The New Silk Roads, 250. 37. Edward W. Said, Representations of the Intellectual: The 1993 Reith Lectures (Vintage Books, 1996), xi–​xii. 38. Gideon Rachman, Easternization: Asia’s Rise and America’s Decline: From Obama to Trump and Beyond (Other Press, 2016), 259. 39. Amitav Acharya, The End of American World Order (Polity, 2014). 40. Amitav Acharya, “‘Idea Shift’: How Ideas from the Rest Are Reshaping Global Order,” Third World Quarterly 37, no. 7 (2016), https://​doi.org/​ 10.1080/​01436597.2016.1154433. 41. Kathryn Sikkink, “Latin America’s Protagonist Role in Human Rights,” Sur International Journal on Human Rights 12, no. 22 (December 2015). 42. Rohan Mukherjee, “Two Cheers for the Liberal World Order: The International Order and Rising Powers in a Trumpian World,” H-​Diplo/​ISSF Policy Series; America and the World—​2017 and Beyond, February 22, 2019, https://​issforum.org/​ISSF/​PDF/​Policy-​Roundtable-​1-​5BO.pdf. 43. “Democracy in Retreat: Freedom in the World 2019,” Freedom House (February 2019), 3, https://​freedomhouse.org/​sites/​default/​files/​Feb2019_​ FH_​FITW_​2019_​Report_​ForWeb-​compressed.pdf.

Notes 

 

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INDEX

For the benefit of digital users, indexed terms that span two pages (e.g., 52–​53) may, on occasion, appear on only one of those pages. Abbott, Tony, 241 Abe, Shinzo in Australia, 243 in Europe, 222 relations with China, 217–​19, 220 relations with India, 227–​28, 229–​30,  236–​37 visits with Trump, 215, 216 work on trade agreements, 220, 221 Acharya, Amitav, 268 acquisitions and investments. See also foreign investment; greenfield investments; takeovers as Chinese “gateways” to Europe, 177 by Chinese in Australia, 241 by Chinese in EU countries, 84–​85, 130–​31, 139–​41, 157,  173–​77 European barriers against Chinese overseas, 157 “Act East” policy, 238 ADB. See Asian Development Bank (ADB) Afghanistan, Chinese in, 43–​44, 47–​49, 54, 246

Africa Chinese accused of poor business practices, 22 debt problem, 99–​100 infrastructure, 93–​98,  100–​1 portrayed as continent in need of outside assistance, 42, 93–​94 unlikely to repeat Chinese miracle,  98–​99 Africa Finance Corporation, 94–​95 Africa-​Asia Growth Corridor, 238 African Continental Free Trade Agreement,  101–​2 African Development Bank, 94, 100 AI. See artificial intelligence (AI) Air Defense Identification Zone,  218–​19 Aixtron,  140–​41 Alcatel-​Lucent,  136–​37 Alliance of Multilateralists, 263–​64 Alstom,  143–​44 Álvares, Jorge, 171 “America First” foreign policy, 4, 5, 51–​52, 129–​30, 214, 219

 

American Challenge, The (Servan-​Schreiber),  145–​46 Andaman and Nicobar archipelago,  234–​36 Angola, 97 anti-​dumping measures against China, 72, 75–​76, 116–​17, 148, 155 anti-​missile Terminal High-​Altitude Area Defense (THAAD) system,  239–​40 anti-​piracy efforts in Gulf of Aden,  30–​31 Anwar Ibrahim, 114 Apple and China’s Internet censorship, 183 Argentina. See also Kirchner, Cristina Fernández de; Macri, Mauricio Chinese investments, 66–​71, 77–​82 projects to upgrade railway network,  74–​77 soybean trade, 70–​73 space facilities renegotiated with Chinese, 81 as test case for challenging China, 14,  63–​65 arms sales to Africa and Middle East, 58 Chinese weapons used against Chinese, 28–​30, 36, 37 artificial intelligence (AI), 6, 59–​60, 233–​34,  269 Asia. See also Southeast Asia; specific countries China desire for hegemony over, 11 Japanese atrocities, 202–​3, 235–​36 new power centers, 227–​30, 248–​33,  267 scaled back Belt and Road plans across,  111–​12 security anxieties over China’s military buildup, 231–​39, 243–​47 Asian century, world entering, 229,  266–​68

366    Index

Asian Development Bank (ADB), 122, 124 Asian Infrastructure Investment Bank (AIIB), 64, 120–​21, 131, 167–​68, 169–​70, 217, 241 Association of Southeast Asian Nations (ASEAN). See Southeast Asia Australia, 124–​25, 189–​90, 206,  241–​43 authoritarianism and state capitalism. See also Communist Party; state capitalism AI surveillance systems, 59 attempts to legitimize development model, 91–​93, 122–​23, 126–​27, 254–​55,  269–​70 Chinese model reaching out to world, 5, 11–​12,  131–​32 conflict between China’s economic attraction and concerns about politics and security, 3, 134, 183 rollback of political and economic reforms under Xi, 8–​9 value seen in, 189 automotive industry China’s threats to retaliate against Germany, 151 commitment of Germany to China, 138, 144–​45,  183–​84 Japan competing with China, 200–​1,  237 rise of Chinese manufacturers, 141, 180 South Korean car sales in China, 239 aviation, European competition with Boeing, 146 Azores islands, 174 Badakhshan province, 49 BAIC (Chinese auto company), 141, 186 Balkan states, majority of trade and investment by EU, 178–​79

 

Balochistan,  44–​47 Base Nation (Vine), 56 al-​Bashir, Omar, 26, 53 Beijing DeWe Security Services, 18, 54 Belgrano railway network, 75–​76, 79–​80,  119–​20 Belt and Road Initiative. See also China-​Pakistan Economic Corridor (CPEC); geostrategic aims; infrastructure projects; overcapacity, offshoring; railways Asia, 37, 44, 111–​12 challenges for China, 14, 85, 106, 113–​16, 118–​21, 122–​23,  126–​27 economic goals, 90–​93, 116–​18 Europe, 171, 172–​73, 175–​76, 177, 178, 185–​86,  190–​91 international responses, 123–​27, 131–​32,  217 Latin America, 83 negative results, 109–​11, 114–​15, 121–​22,  178–​79 regional trade corridor plans, 6, 57, 64–​65,  119–​20 Xi’s foreign policy signature, 10, 11, 54–​55, 126–​27,  258 Better Utilization of Investment Leading to Development (BUILD) Act, 125 Blackwater, 54 Blue Dot Network, 125 Blustein, Paul, 152 BMW, 140, 183, 184 Borrell, Josep, 194 boycotts, 207–​8, 239–​41, 249 Brazil, 73, 101–​2 British East India Company, Chinese in Pakistan compared to, 60 BUILD Act. See Better Utilization of Investment Leading to Development (BUILD) Act

Bundesverband der Deutschen Industrie (BDI), 129–​30, 131–​33, 134–​35, 138, 146–​47, 148, 187–​88 Burma. See Myanmar Bush, George W., 152 “Buy British Last” policy, 109 BYD (Chinese auto company), 186 Cambodia, 236, 243 Cameron, David, 190–​91 capacity building, 125–​26 capital flight, 143 Carter, Ash, 221 Central and Eastern Europe, 161, 177–​ 79, 181, 222 Central Asia, view on China, 112–​13 Chad, Chinese evacuated from, 19 Chávez, Hugo, 84 Chen Yuan, 121 China aging population of, 7–​8, 172, 201–​2,  247–​48 economic importance to European countries, 165–​66, 179, 182,  184–​85 European supporters, 189 as “factory of the world,” 98, 139, 198 foreign relations, 6, 12, 13–​15, 50 hierarchical worldview, 5, 15, 214, 219 limits to overseas political influence, 85, 100–​2, 125–​26, 179–​82, 192–​95,  268–​69 political expectations for engagement,  89–​93 world dependence on success of, 251–​56,  270 China Communications Construction Company, 106–​7, 110 China Development Bank, 64, 75–​76, 78, 79, 121, 122–​23, 136–​37,  185–​86 Index 

 

367

 

China Export-​Import Bank (EXIM), 64, 95, 121 China Goes Global (Shambaugh), 254 China Harbor Engineering Company, 18, 45 “China hype,” 182 China Machinery Engineering Corporation,  75–​76 China Merchant Port Holdings, 104 China Ministry of Industry and Information Technology, 117 China Mobile, 151 China National Petroleum Corporation (CNPC) corporate responsibility, 24–​25 domination of Sudan oil industry,  21–​24 loss of income in South Sudan,  26–​27 security issues, 17, 18, 19, 29–​30 China North Industries Group Corporation (Norinco), 28–​30 China Petroleum Pipeline Bureau,  106–​7 China Power International, 111 China Railway Construction Corporation (CRRC), 75–​76,  143 China Road and Bridge Corporation,  95–​96 China Security and Protection Group, 54 China Three Gorges, 173, 174–​75 China–​CEEC (17 + 1 group), 161,  177–​78 China-​Pakistan Economic Corridor (CPEC), 44–​47, 106, 112,  119–​20 China’s Search for Security (Nathan and Scobell),  248–​49 “Chinese dream,” 9, 10, 210–​11, 212, 248,  255–​56 de-​escalation goal, 248

368    Index

“Chinese People’s Liberation Army of Today, The” (video), 41–​42, 61 Chongqing terror campaign, 202 civil war. See South Sudan; Sudan climate change threats, 125–​26, 130, 162, 168–​69,  255–​56 Clinton, Hillary, on China in Africa,  30–​31 CNPC. See China National Petroleum Corporation (CNPC) cohesion funds, 148, 175–​76, 193 collateralization, 96–​97, 178 colonialism, 30–​31, 109, 190 Communist Party. See also authoritarianism and state capitalism; non-​interference policy; state capitalism; Xi Jinping economic growth and stability as priority, 153–​54, 208, 249 hedging against its influence,  258–​59 international image, 11–​12 maintenance of legitimacy, 27, 52–​53, 117, 119 most powerful single actor in China’s foreign relations, 9–​12, 260 19th National Congress of, 9, 11–​12, 43,  91–​92 takes credit for Kuomintang’s defense of China, 203 virtues of collective/​consensus leadership, 210, 256–​57 competition. See also foreign investment; market access; non-​tariff barriers BDI paper on competing with China, 146–​47,  148 China as trade competitor for all countries, 98 China’s predatory pricing, 135 China’s unfair trade and investment practices, 133–​35, 137, 154

 

European outlook, 142–​43, 146–​47, 152, 186–​87,  193–​94 Japan’s unfair practices, 155 Comprehensive and Progressive Trans-​ Pacific Partnership (CPTPP), 221, 263 contractors, finance tied to Chinese, 78, 110, 116–​17, 122 Copenhagen Climate Change Conference (COP 15), 162 coronavirus (COVID-​19) China and, 12, 170, 179, 211,  262–​63 economic consequences, 83, 100, 112, 123, 148–​49, 150, 183, 229, 233, 261, 267–​68 China’s reputation, 195 corporate responsibility, 22–​25, 30–​31,  38 corruption in Argentina, 68–​69, 80–​81, 83 China’s state-​owned enterprises and, 104–​5, 106–​7,  118–​19 expensive projects and economic incentive for, 95, 97, 100,  110–​11 leads China into diplomatic crises,  118–​19 Xi’s anti–​Corruption campaign, 7, 115, 119, 210 COSCO, 176, 177 Costa, António, 4, 171, 172,  173–​74 counter-​terrorism, 48, 49, 51, 54,  59–​60 COVID-​19 pandemic. See coronavirus (COVID-​19) CPEC. See China-​Pakistan Economic Corridor (CPEC) CPTPP. See Comprehensive and Progressive Trans-​Pacific Partnership (CPTPP) Croatia, Peljesac Bridge, 148

CRRC. See China Railway Construction Corporation (CRRC) cyber security, 109, 144, 149, 169, 233. See also internet restrictions and security da Gama, Vasco, 171 Daimler, 138, 141, 184–​85 Dalai Lama, 160, 162, 163–​64, 183,  238–​39 Darfur, civil war in, 26, 28, 33, 42–​43, 51 De Gucht, Karel, 134–​35, 137 debt Africa, 97, 99–​100 Argentina, 69, 71, 72, 74 China facing own issues with, 7–​9, 102, 115–​16, 117 projects overburdening foreign governments with, 107, 109, 118, 121–​22,  172–​73 “debt trap diplomacy,” 104, 114 democratic institutions, endurance in face of China’s political interference, 126 Deng Xiaoping on anti-​Japanese protests, 203–​4 famous southern tour, 211 “hide and bide” foreign policy, 10, 91–​92, 210, 257 on rare earths, 205, 206 Denmark foreign policy stances, 168–​70, 187 Tibet scandal, 159–​60, 162–​63, 165–​66,  170–​71 Deutsche Bank, 134 developing countries China as lender of last resort, 123–​24 China holding on to status of,  154–​55 exploitative use of asymmetrical power,  113–​15 historical animosities and, 266–​67,  268–​69 Index 

 

369

 

development assistance. See also Belt and Road Initiative; foreign investment Africa,  93–​94 China challenges global norms, 77–​78, 89–​90, 93–​94,  120–​23 Chinese finance without transparency and oversight, 92 Latin America, 67 providers other than China, 123–​26 South Asia, 124 Diaoyu islands. See Senkaku/​Diaoyu islands Diess, Herbert, 183–​84 Dinka ethnic group, 17, 39 Djibouti, 54–​57,  118–​19 Doig, Will, 113 Dokdo islands. See Takeshima/​Dokdo islands, competing claims Duterte, Rodrigo, 65, 114–​15,  244–​45 East China Sea, territorial issues, 14, 53, 209, 212–​14, 218. See also Senkaku/​Diaoyu islands East Coast Railway Link (ECRL), 106–​7 East Turkmenistan Islamic Movement (ETIM), 48, 59 Easternization (Rachman), 267 economic development in China is good for Japanese business, 201 Chinese domestic miracle, 6–​9, 71, 98–​99, 101, 179 Chinese reforms for high-​income and modernization,  156–​57 economic/​industrial zones, 90, 97, 98–​99, 234–​35,  237 economy. See also market economy China’s largest in world measured in purchasing power, 199–​200 distribution among countries, 5–​6 India vs. China, 199–​200, 228–​29

370    Index

Economy, Elizabeth C., 258 ECRL. See East Coast Railway Link (ECRL) Electroingeniería, 74, 79, 80–​81 Energias de Portugal (EDP), 173, 175 energy. See also oil and gas industry and trade hydropower projects, 63–​64, 77–​80, 81–​82,  111 nuclear power plants, 63–​64, 65, 74, 81–​82,  84–​85 environment. See also climate change threats Chinese oil industry damages, 23–​25 concerns for Patagonia region, 78, 80 degradation leads China into diplomatic crises, 118 designing new policies, 22 Japanese approach, 201–​2 Ericsson telecom company, 135, 136–​37, 149, 151–​52, 233 Eswatini, 97 Ethiopia, 97, 98–​99, 101 ETIM. See East Turkmenistan Islamic Movement (ETIM) Europe Argentinian relations, 69–​71 caution with Beijing’s political redlines, 160 Chinese relations, 211–​12 European Commission (EC) 1995 report on China-​Europe relations, 181 changes in policies toward China, 148 European Economic Community, and integration,  145–​46 European Union (EU). See also acquisitions and investments; cohesion funds; investment screening rules; Strategic Outlook 2019 (EU)

 

awakening to challenges China poses, 169,  177–​79 Britain’s vote to leave, 1 challenges to maintaining unity, 161, 174, 176–​78, 186–​87, 192–​95,  270 China’s deepening ties with, 131 competition law, 143–​44 concerns over Germany’s dominance, 134 free trade agreement with Japan, 222 significance of Chinese market, 152–​53,  189 trading partners, 179–​80, 193 Everything under the Heavens (French), 50 exchange rates, manipulated by China, 156 Federation of German Industries. See Bundesverband der Deutschen Industrie (BDI) Feigenbaum, Evan A., 120–​21, 212 Fernández, Alberto, 83–​84 fifth-​generation (5G) mobile networks, 149–​52, 169, 178, 188, 190–​91, 233. See also Huawei finance. See development assistance; foreign investment; infrastructure projects Finland, 147 First Automobile Works (FAW),  183–​84 first-​mover advantage,  183–​84 5G. See fifth-​generation (5G) mobile networks FOCAC. See Forum on China Africa Cooperation (FOCAC) foreign investment. See also acquisitions and investments; competition; investment screening rules; trade also needed by China, 211–​13 China’s lack of reciprocity with EU, 132

China’s restrictions on, 151, 179–​48, 187, 191–​92, 259–​61,  263–​64 Chinese finance not investment, 107 crowding out of home country economies by, 89–​90, 101, 187 European, 144–​45, 177 Japanese, 199–​200, 201–​2, 231 pattern of Chinese investments,  75–​77 promotion in Ethiopia, 101 foreign policy. See also non-​interference policy; peacemaking/​peacekeeping alarm vs. naïveté regarding China, 251–​52,  254–​55 Australia’s toward China based on fear and greed, 241 China’s short-​sighted approach to Sri Lanka, 104 criticism by Deng Pufang, 257 Mahathir’s outspoken politics and,  108–​10 power fragmented across actors in China, 258 foreign relations. See China; India; United States (US) Forest City complex, 107 Forum on China Africa Cooperation (FOCAC), 93, 94, 100 Fosun Group, 173, 174–​75, 177 France, 130–​31, 147, 150, 193–​94 Frankopan, Peter, 266 Frederiksen, Mette, 170 freedom of speech and assembly, 159–​60, 162–​63, 170–​71, 179, 183. See also human rights French, Howard W., 50, 53 From the Ruins of Empire (Mishra), 191,  257–​58 Frontier Services Group, 54 Fujian Grand Chip Investment Fund, 140 Index 

 

371

 

al-​Gaddafi, Muammar,  50–​51 Garang, John, 23 Geely (Chinese auto company), 141,  185–​86 geostrategic aims. See also counter-​ terrorism; “go out” strategy; military power of Belt and Road Initiative, 12, 15, 56, 91, 92–​93, 118–​21, 126–​27 need for reform and cooperation, 253–​54,  255–​58 Germany. See also Bundesverband der Deutschen Industrie (BDI); Merkel, Angela competitiveness and trade relations with China, 131–​35, 137–​44 foreign policy priorities, 178–​79 foreign value added in trade with US,  181–​82 relationships with US and China, 4 as “workbench of the world,” 139 Gezhouba, environmental record, 78,  80–​81 Global Competitiveness Index,  200–​1 Global value chains “go out” strategy, 54–​55, 58, 116,  130–​31 Golden Visa Scheme, 173 Greece, 65, 176–​77 greenfield investments, 139, 174–​75,  178 Greenland,  169–​70 Greenpeace,  164–​65 Guantánamo Bay, Cuba, and other US overseas bases, 55–​56 Gwadar port, Pakistan, 44, 45–​47 Hambantota port, Sri Lanka, 103–​5,  108 Han Chinese, resettling in Xinjiang region, 48 Hatoyama, Yukio, 213

372    Index

Hawassa Industrial Park, 98–​99 High Speed Empire (Doig), 113 Hong Kong, 8, 104, 160, 169, 259 Hormuz, Strait of, 234 Hu Jintao, 10, 21, 26, 76, 100, 153–54, 159–60, 162, 170–71, 210 Huawei Africa growth, 123–​24 access to European telecom networks, 135–​38,  150–​51 China Development Bank credit line for, 136 Czech and Polish trade concerns, 178 leading supplier of AI systems,  59–​60 Mahatir willing to work with, 109 Meng Wanzhou’s extradition, 259 security concerns, 149–​51, 169, 190, 233 human rights, 134, 160, 176, 183. See also freedom of speech and assembly hydropower projects, 63–​64, 77–​80, 81–​82,  111 Hyundai Research Institute, 239 India border clashes 230 common ground with Japan, 267, 270 economy compared to China, 199–​200,  228–​29 foreign relations, 111, 221, 238, 243, 245, 246 issues with China, 57, 104, 124,  230–​31 moves toward partnership with Japan, 227–​28, 229–​30, 231–​33, 235–​36,  238 Indonesia, 114–​15, 243–​44,  245–​46 Indo-​Pacific idea,  236–​38 Industrial and Commercial Bank,  66–​67

 

industrial policy, 141, 143, 146–​48, 155. See also “Made in China 2025”; subsidies inequality, 7, 262–​63 Infineon,  144–​45 infrastructure projects. See also Belt and Road Initiative; debt; foreign investment; railways Africa, 94–​95,  100–​1 certification by Blue Dot Network, 125 China and Japan financing Indonesian,  245–​46 global standards, 116–​17 Latin America, 63–​64, 73–​74 loans benefit Chinese corporations and products, 89–​91, 92, 104–​5,  116–​17 Malaysia renegotiating with Chinese,  109–​10 intellectual property. See also cyber security legal licensing, 143 rights protection, 134–​35, 144 theft by Chinese companies, 133–​34, 135–​36, 137, 141, 144–​45, 149–​ 50, 155 theft by other countries, 137 Inter-​American Development Bank, 67, 83 international cooperation. See multilateralism; trade agreements International Monetary Fund (IMF), 121–​22, 172–​73. See also Troika internet restrictions and security, 8, 151, 190 intervention and stabilization, host state consent for, 51–​52 investment screening rules, 147–​48, 161, 173–​74, 190 Iran, US-​sponsored coup, 58–​59 Iraq, 39, 51–​52, 54

ISEAS–​Yusof Ishak Institute surveys,  114–​15 Islamic State, named China as target, 60 Jaishankar, Subrahmanyam, 230–​31 Jacques, Martin, 189 Japan. See also Meiji government economic dominance once feared, 155 free trade agreement with EU, 222 higher favorability rating among South Koreans than China, 241 and India finding common ground, 227–​28, 229–​30, 231–​32, 267, 270 more infrastructure investments than China, 124, 125 occupation of Malaysia, 108 security alliance with US, 209, 213–​17, 218,  222–​23 Japan, economic interdependence with China. See also Southeast Asia adversarial relationship, 14, 219–​22 animosities, historical, 197–​99, 202–​4 holding off military conflict, 202–​4, 205–​8, 218–​20,  222–​23 optimistic view, 197–​202 pacifist identity, 215 pessimistic view, 209–​14 search for new economic opportunities,  217–​19 Japan External Trade Organization, 201 Jiang Zemin, 10, 100, 172, 183–​84 JOGMEC, rare earths stockpile, 206 Juncker, Jean–​Claude, 195 just-​in-​time global supply chains, risk, 183 Kaeser, Joe, 142–​43 Keidanren, 201 Kenya, 95–​97, 100 Khan, Imran, 60, 112 Kiir, Salva, 17, 20–​21, 23 Index 

 

373

 

Kim Jong-​un,  216–​17 Kirchner, Cristina Fernández de elections, 63–​64,  83–​84 family associated with dam projects, 79 indicted on corruption allegations,  80–​81 infrastructure deals signed with China, 67, 68, 76–​77, 79, 81–​82 meetings with Xi, 70 relationships with US and Europe, 69 tensions with China under, 72,  73–​74 Kirchner, Néstor, 69, 76 Koizumi, Junichiro, 204, 209, 220 Koizumi, Shinjiro, 220 Kuka, 140 Kyrgyzstan, 60 Latin America. See also Argentina; Brazil; Venezuela championship of human rights, 268 China and, 72–​73, 75–​77, 83–​85,  98–​99 Chinese finance to countries with strained US relations, 82 lessons learned, from China’s actions beware of the bilateral, 261–​65 diversifying trading and investment partners,  258–​61 establishing common rules and respect, 256 voiced by critics of Xi’s policies,  256–​58 Li Keqiang, 109, 122, 130–​31, 222 liberal international order, and American foreign policy, 268 Libya, 19, 50–​52 Liu Guijin, 26, 38, 53 Liu Xiaobo, 163–​64 “Long-​Term Policy for China-​Europe Relations, A” (EC), 188–​89 Lotte Corporation, 239, 241

374    Index

Ma, Jack (Ma Yun), 1 Macau, 172, 173 Machar, Riak, 17 Macri, Mauricio attempts to change course with China, 68–​71, 74, 77–​80, 81–​82 election as president of Argentina, 63–​64,  67 implicated in scandals, 80–​81 relationship with Trump, 82–​83 Macron, Emmanuel, 130, 147,  194–​95 “Made in China 2025” China recognized as global competitor, 132–​33, 167 enhancing competitiveness, 12–​13, 132, 143, 210–​11 EU small states of limited strategic value, 193 market distorting results, 156 robotics could displace Japanese exports, 200 state assistance, 141–​42 Maduro, Nicolas, 84 Maersk,  166–​67 Magufuli, John, 97 Mahathir Mohamad, 106–​10, 114–​15 Malabar, trilateral naval exercise,  232–​33 Malacca, Strait of, 107–​8, 120, 228,  234–​35 Malaysia, 106–​10,  114–​15 Malaysian Maverick (Wain), 108 Maldives,  110–​11 Mali, 32, 34, 35, 52–​53, 58 Mao Zedong, 211–​12 Maritime Silk Road, 64 market access. See also foreign investment; reciprocity China’s restrictions on foreign investors, 131–​34, 149, 179–​80 to EU not matched by China’s policies, 189

 

new growth markets needed for German industry, 186–​87 technology-​for-​markets tradeoff, 14, 133–​34, 139,  182–​83 market economy emerging economies taking action against China, 155 illusion for China to transform into liberal, 152–​53, 154–​55, 157 questioned by some Europeans, 189 market share appliances and industrial machinery,  133–​34 automobile manufacturers, 183–​84,  185–​86 China’s corporations have commanding, 157 telecommunications industry,  136–​38 May, Theresa, 65, 84–​85 Meiji government, 202–​3, 204, 206,  235–​36 Meng Wanzhou, 259 Mercedes-​Benz,  183 Mercosur,  101–​2 Merkel, Angela, 130, 134, 140, 141, 151, 195 Middle East, Chinese relations in, 112 “middle-​income trap,” 7–​8,  247–​48 Midea, 140 military power. See also East China Sea; geostrategic aims; peacemaking/​ peacekeeping; People’s Liberation Army (PLA); South China Sea China’s growing capabilities, 36–​37, 43–​44, 209–​11, 213–​14,  233–​34 China’s military cooperation with smaller neighbors, 236 and economic threats to countries and institutions, 13 and foreign policy advanced by Hu Jintao, 10

long-​range weapons, 57–​58,  219–​20 non-​intervention policy, 41–​42, 43, 49–​54,  57–​58 overseas bases, 49, 56–​58, 169, 174 miracle, China’s domestic. See economic development Mishra, Pankaj, 191, 257–​58, 266 Modi, Narendra, 111, 229–​30, 231–​32, 234–​35,  238 Mombasa-​Nairobi railway, 95–​97, 100 Mongolia,  238–​39 Montenegro,  178–​79 Moon Jae-​in,  239–​40 Morrison, Scott, 124–​25, 243 Mukherjee, Rohan, 231, 268 multilateralism China’s inconsistencies in peace talks, 30–​31,  38–​39 collective pushback needed, 261–​64 holds key to new century, 265–​68 rules-​based system and, 219, 270 wavering commitment of US, 214–​17,  222–​23 multinational corporations Beijing’s ability to influence, 169 questions over benefits of investments in China for home economies, 187 Muslims. See also Uyghur Muslims Beijing feared support for separatist groups in Muslim-​majority countries, 48 response of political leaders to Uyghur crackdown, 60 Myanmar, 37–​38, 111 Nasheed, Mohamed, 110–​11 Nathan, Andrew J., 248–​49 National Defense Program Guidelines (Japan, 2019), 219 National Development and Reform Commission (NDRC), 153–​54 Index 

 

375

 

natural resources. See also energy; environment; oil and gas industry and trade China’s demand for, 31, 71, 93–​94 mining investments in Argentina,  66–​67 plans to send overland, 120 resource curse, 20–​21 smuggling between China and Myanmar,  37–​38 NDRC. See National Development and Reform Commission (NDRC) Nepal, 33, 111, 124 New Development Bank, 64 New Silk Roads, The (Frankopan), 266 Nieto, Pena, 84 Nigeria, 100, 101–​2 Nobel Peace Prize, 163–​64 Noda, Yoshihiko, 220 Nogami, Yoshiji, 209–​10, 211–​14, 222 Nokia telecom company, 135, 136–​37, 149, 151–​52, 233 non-​interference policy. See also military power; peacemaking/​peacekeeping deviation in South Sudan and other countries,  18–​20 interference needs to be backed up with capability, 52–​53 moving away from China’s, 23, 25–​30, 56–​58,  61 non-​tariff barriers, 72, 98–​99, 153. See also competition; market access Norinco. See China North Industries Group Corporation (Norinco) North Atlantic Treaty Organization (NATO), 43–​44, 50–​51, 141 North Korea, 216–​17, 239 Norway, 163–​65,  166–​68 Novo Nordisk, 166 nuclear power plants, 63–​64, 65, 81–​82,  84–​85 Nuer ethnic group, 17, 39

376    Index

Obama, Barack, 42–​43, 69–​70, 90–​91, 131, 152, 215. See also Trans-​Pacific Partnership (TPP) OECD Guidelines, 122 oil and gas industry and trade, 66–​ 67, 112, 120, 246, 258. See also pipelines; South Sudan; Sudan Okinawa, American military bases, 213 Okinotori Rocks, Japan’s artificial islands, 237 Okonjo-​Iweala, Ngozi, 100 Olympic Games, China’s non-​ interference policy shelved, 26 “One China” policy, 89–​90, 160, 162 1 Malaysia Development Berhad (1MDB),  106–​7 Orbán, Viktor, 177–​78 Ossietzky, Carl von, 163 overcapacity, offshoring, 12, 75–​76, 92, 117–​18, 123–​24,  125–​27 Overseas Chinese Affairs Office, 117 Pakatan Harapan, 106 Pakistan, 43–​48, 60, 230–​31. See also China-​Pakistan Economic Corridor (CPEC) Palermo Hollywood, 66, 67 Palogue, attack at oil fields, 27–​28 Parcels Islands, 56–​57 Park Geun-​hye,  239–​40 Partnership for Quality Infrastructure (PQI), 124 Patagonia, 78, 80 patriarchy, 190 peacemaking/​peacekeeping. See also non-​interference  policy Chinese overseas aspirations, 11, 19–​20,  112 commercial risks handicap China’s role in, 48 deaths of Chinese peacekeepers, 32,  52–​53

 

obstacles for Chinese in South Sudan, 29–​37, 39, 43 rhetoric used by US in Cuba, 55–​56 Pence, Mike, 105 People’s Armed Police (counter-​ terrorism force), 54 People’s Liberation Army (PLA). See also military power; peacemaking/​ peacekeeping Djibouti base opening on ninetieth anniversary of, 56–​57 films portraying, 41–​42, 43 “go out” strategy, 54–​55, 56, 58,  118–​19 reform, 35 veterans’ activities, 37–​38, 54 war games with Russians, 246 Peters, Winston, 252 Philippines, 65, 114–​15, 236, 238–​39,  243–​45 pipelines, 106–​7, 120 Piraeus, Greece, sale of port to China, 176, 177 “Pivot to Asia,” 90–​91, 131, 215 PLA. See People’s Liberation Army (PLA) Plaza Accord of 1985, 155 Poised for Partnership (Mukherjee and Yazaki), 231 political parties and jurisdictions, preventing Chinese from exploiting, 262 political redlines, 13, 160, 168, 193, 249, 252–​53, 258–​59. See also South China Sea; Taiwan; Tibet; Uyghur Muslims Portugal,  171–​76 PQI. See Partnership for Quality Infrastructure (PQI) pricing, 135, 148 Prince, Erik, 54 procurement policies, 148, 153 Prodi, Romano, 190–​91

product quality and efficiency, Japan vs. China,  200–​1 productivity challenges, 7–​9 protectionism. See also market access; state capitalism American and Chinese views, 2 at home vs. open access to others, 14 public opinion China’s guidance of, 92, 174, 190 state media’s positive narratives,  115–​16 stronger actions against China supported, 262 pushback across Asia, 124 against China’s assertive reach, 14–​ 15, 66–​67, 84–​85, 112, 113–​15 collective efforts required, 251–​54, 255, 258, 270 Denmark vs. China’s subsidies and state support, 167 EU countries vs. China’s unfair competition, 134–​37, 142, 146–​47, 152–​57, 193, 195 against giving EU more power, 147 in Latin America, 64, 65, 80, 83–​84, 85, 90, 93 regular citizens need to provide, 170 Putin, Vladimir, 246 Quadrilateral Security Dialog (Quad), 232–​33,  237–​38 Rachman, Gideon, 267 railways Africa,  95–​97 Asia, 106–​8, 109–​10, 112–​13,  245–​46 cost overruns of Chinese projects, 95–​96,  97 CRRC Corp, 75–​76, 143 Latin America, 74–​77, 79–​80, 81–​82, 84 national sovereignty and, 113

Index 

 

377

 

Raisina Dialogue, 234 Rajapaksa, Gotabaya, 114 Rajapaksa, Mahinda, 103, 104–​5, 114, 124 rare earths quotas, 205–​7 Rasmussen, Anders Fogh, 173–​74, 263 Rasmussen, Lars Løkke, 162 Razak, Najib, 106–​7 real estate Chinese investments in European, 139 foreign investment schemes, 173 reciprocity. See also market access missing from Chinese markets, 132, 134–​35, 139–​40, 142, 148,  180–​81 in telecom industry, 137 Regional Comprehensive Economic Partnership (RCEP), 221, 238 regional integration, 101–​2 Ren Zhengfei, 135–​36 renewable energy. See energy Revel, Jean-​François, 190 risk. See also corruption; pushback Chinese and domestic politics overseas, 21–​22, 43, 45–​46, 65, 76,  113–​14 Chinese diplomat on crime in Buenos Aires,  67–​68 global supply chains during crises, 183 increasing pressure to share resources, 93 of military intervention, 53–​54, 58–​59, 61,  118–​19 security incidents abroad from 2010 to 2015, 52–​53 robotics,  200–​1 Rolland, Nadège, 90–​91 rule of law, 77, 160–​61, 188–​89, 214, 242 rules-​based  order bringing life back to, 261 free trade underpins, 263 importance in removing export quotas, 206

378    Index

not sole property of US, 268 preventing big power exploitation, 246–​47, 248–​49, 252, 254–​55,  270 support by emerging markets, 231–​32, 235–​36,  260–​61 Russia, 52, 57, 160–​61, 194, 246,  269–​70 Saferworld, 22 Said, Edward, 267 sales revenues vs. unit numbers, 184–​85 Salman, Mohammed bin, Crown Prince of Saudi Arabia, 60 salmon, Norwegian exports to China , 163–​64,  168–​69 sanctions Chinese, 54, 167–​68, 242–​43, 247, 256,  258–​60 Chinese actions similar to, 13 in Chinese counter-​terrorism law, 54, 59 not always imposed, 30, 167–​68 Russia facing Western, 246 UN,  37–​38 Sarawak Report, 106–​7,  109–​10 SASAC. See State-​owned Assets and Supervision and Administration Commission (SASAC) Sata, Michael, 65, 84–​85 Schism (Blustein), 152 Schwab, Klaus, 2 Scioli, Daniel, 63, 64 Scobell, Andrew, 248–​49 SDF. See Self-​Defense Forces (SDF/​Japan) security. See risk Self-​Defense Forces (SDF/​Japan), 215, 218–​20,  236 self-​reliance, China strategy of, 141–​42, 182–​83, 200, 208, 210–​12,  254–​55 semiconductor industry, 200–​1, 239, 240

 

Senkaku/​Diaoyu islands, 197–​98, 204–​6, 207, 218–​19, 237 Servan-​Schreiber, Jean-​Jacques,  145–​47 SGR. See Standard Gauge Railway (SGR/​Kenya) Shambaugh, David, 254 Shanghai Automotive Industry Corporation (SAIC), 183–​84, 186 Shanghai Cooperation Organisation, 49, 238 Shangri-​La Dialogue, 210, 238 Shilluk ethnic group, 27–​28 Siemens, 134, 138, 142–​44, 151–​52 Sierra Leone, Britain’s 2000 intervention, 58 Silk Road Economic Belt, 64, 112–​13 Silk Road Fund, 64 Silva, Augusto Santos, 175 Sines port development, Portugal, 171, 172,  175–​76 Sinosure, 97 Sirisena, Maithripala, 103–​4 Skou, Søren, 167 social credit rating system, for foreign companies,  259–​60 solar industry, German market collapse, 135,  137–​38 Solberg, Erna, 164 Solih, Ibrahim Mohamed, 110–​11 South China Sea Australian politics and, 241–​42 China’s artificial islands and nine-​dash line, 234–​35, 244, 245–​46,  247 China’s militarization of, 222, 237, 243,  246–​47 Chinese aggression, 188–​89, 192–​93, 213, 243–​44, 247 competing claims, 238–​39, 243–​44,  245–​46 EU statement blocked by smaller members, 161, 176 South Korea, 233, 237, 239–​41

South Sudan China’s approach to peacemaking, 13–​14,  43 Chinese and CNPC seen as enemy, 22, 23 civil war, 17–​20, 25–​28, 39 crisis diplomacy challenges, 25–​31 disputes with Sudan, 20, 26–​27 as independent country, 20–​25 UN peacekeeping efforts, 31–​37,  53–​54 Southeast Asia ASEAN members working outside association, 243 China’s charm offensive, 243–​44 CPTPP vs. RCEP trade agreements, 221, 238 efforts to build rules-​based order, 268 emerging markets for Japan, 200,  212–​13 sentiments regarding Japan’s pushback to China, 237–​38 soybean trade, 70–​73 Spain, 179 Spratly Islands, 50, 56–​57 spyware, on memory sticks, 35 Sri Lanka, 103–​5, 108, 114–​15 Standard Bank of Argentina, 66–​67 Standard Gauge Railway (SGR/​Kenya), 95–​97,  100 state capitalism challenging liberal markets, 138 Chen Yuan an advocate for, 121 limits opportunities for other countries,  252–​53 promotion of “China model,” 257–​58 regular use of state support to companies and exports, 152–​54,  155–​56 State Grid International, 173, 174–​75 State-​owned Assets and Supervision and Administration Commission (SASAC),  153–​54 Index 

 

379

 

state-​owned enterprises. See state capitalism steel capacity, 117–​18 strategic aims. See geostrategic aims Strategic Outlook 2019 (EU), 152, 169, 181 subsidies, 153, 156 Sudan, 19, 20. See also Darfur, civil war in; South Sudan Sun, Irene Yuan, 98 supermarkets in Argentina as Chinese success, 66 closed by Chinese action against South Korea, 239 supply chains, 150, 151, 181–​82, 183, 200, 221, 240 Syria,  51–​52 Taiwan. See also “One China” policy; political redlines China’s plan to retake by 2049, 9, 57–​58, 210, 247 Nationalist Party’s 1949 flight to,  257–​58 potential invasion by China, 209, 234, 244, 247 retaliation threatened for visiting, 178 Taiwan Relations Act, 248 Tajikistan, 49, 104–​5, 246 takeovers China’s process described, 142–​43 Chinese, 140, 141, 142–​43, 147, 148 Chinese and American in France, 147 European fears of US takeovers during Cold War, 145–​46 Takeshima/​Dokdo islands, competing claims, 237 Taliban, 47, 48, 49, 60 Tanzania, 97 technology. See also market access

380    Index

transfers to state-​owned and private enterprises, 157 usefulness of AI systems limited in some African countries, 59–​60 telecommunications industry. See also Ericsson telecom company; Huawei; Nokia telecom company campaigns against Chinese telecoms, 153, 233 failure of Europe to stand against China’s practices, 135–​38 market share, 135–​38 reciprocity, 137 security concerns, 135, 149–​50, 178 THAAD. See anti-​missile Terminal High-​Altitude Area Defense (THAAD) system Thailand, 60, 114–​15, 117–​18 Third Revolution, The (Economy), 258 Thorning-​Schmidt, Helle, 162 Tiananmen Square, 10, 33–​34, 59, 163, 247 Tibet, 159–​60, 162–​63, 164–​66,  170–​71 TikTok, 233 Tokyo International Conference on African Development, 236–​37 tourism, Chinese in Japan, 201 TPP. See Trans-​Pacific Partnership (TPP) trade. See also competition; foreign investment; market access; World Trade Organization (WTO) Argentinian attempt to reduce dependency on China’s market,  70–​73 between Brazil and Argentina undermined by Chinese companies,  101–​2 China replaced US as Africa’s largest trading partner, 93–​94 of Japanese machinery for Chinese crude oil, 198

 

US largest trading partner for Germany in 2015, 182 trade agreements. See also Belt and Road Initiative; Trans-​Pacific Partnership (TPP) Germany needs better, 186 Japan and EU, 222 proposed successors to failed TPP, 221, 238 strengthening free trade deals, 263 Transatlantic Trade and Investment Partnership, 131 Trans-​Pacific Partnership (TPP), 82, 90–​91, 131, 215–​16, 220–​21, 245. See also Comprehensive and Progressive Trans-​Pacific Partnership (CPTPP) transparency of China’s loans to Argentina, 68, 77 China’s poor record, 24, 94–​95, 99, 115–​16,  126 EU regulations, 143, 182–​83, 186, 192 missing from Chinese loans, 92, 126 terms of Kenya railway line, 122–​23 Transparency International, 7, 119 transportation. See automotive industry; aviation; Belt and Road Initiative; railways Treaty of Mutual Cooperation and Security, Japan/​US (1960), 214–​15 Troika constituent organizations, 172–​73 imposition of austerity conditions, 172–​73, 174,  176–​77 Trump, Donald J. See also “America First” foreign policy China’s role in Africa and, 30–​31 Denmark’s criticism of policies,  169–​70 election and foreign policy moves, 1–​2, 4–​5, 82, 214–​17, 222–​23, 265

long term policy impacts of, 10 relationship with Macri, 82–​83 trade war against China, 72–​73, 152, 211, 219 undermining functioning of WTO, 156 Tsipras, Alexis, 65 Turkistan Islamic Movement. See East Turkmenistan Islamic Movement (ETIM) Turnbull, Malcolm, 233 UK–​China Fund,  190–​91 United Kingdom (UK). See also May, Theresa British East India Company, 80 “Buy British Last” policy of Mahathir, 109 construction of Argentina’s railways, 75 rule of Malaysia, 108 phasing out Huawei from 5G networks, 150 United Malays National Organisation (UMNO), 106 United Nations (UN) Beijing’s stance on intervention, 50–​52 foreign interventions turned into peacekeeping missions, 58 peacekeeping efforts in South Sudan, 31–​37,  52–​53 Security Council becoming paralyzed by geopolitical competition, 61 United States (US). See also “America First” foreign policy; Trump, Donald J. anti-​American viewpoints support China, 190 as best model for development, 102 China’s attempts to contrast actions with,  19–​20 China’s relations with, 30, 42–​43, 145, 152, 210, 257

Index 

 

381

 

United States (cont.) countering China’s influence in Asia, 125 end of American century, 5, 233, 265–​66,  268–​69 foreign relations, 43–​44, 52, 55–​56, 58–​59, 69–​71, 141, 265 security alliance with Japan, 209, 213–​17, 218,  222–​23 UNMO. See United Malays National Organisation (UMNO) Uyghur Muslims crackdown seen as model for international crisis management, 43–​44,  59–​60 ETIM attacks used to justify attacks on, 48 fear militants would join groups in Syria, 51 forced detention, 8, 114, 183, 247 values China challenging democratic, 169 Chinese violation of own political,  167–​68 Denmark seen as having strong democratic, 162–​63,  170–​71 European business interests vs. political, 160–​61,  164–​65 Vanuatu,  124–​25 Venezuela, 52, 67, 84 Vestager, Margrethe, 143–​44 Vestas, 171 Vietnam, 50, 233, 236, 243–​44, 245, 266–​67 Villepin, Dominique de, 190–​91 Vine, David, 56 Visegrád Four, 222 Vodafone, 136 Volkswagen, 134, 138, 183–​85, 187 vulnerabilities China’s strategic, 92–​93, 107–​8, 123–​24

382    Index

due to engagement with China, 3, 183, 191–​92, 252–​53, 259–​61,  264 Wain, Barry, 108 Wakhan corridor, 49 Wang Jisi, 257 Wang Yi, 19–​20, 27, 232, 242 weapons. See arms sales; military power Wen Jiabao, 76–​77, 164–​65 West, risk of becoming less relevant, 266 When China Rules the World (Jacques), 189 Wolf Warrior II, 41–​42, 43, 52–​54, 61 World Bank, 67, 77–​78, 83, 97, 120–​22, 125,  172–​73 World Economic Forum Macri at, 70–​71 Swiss police limited protests, 160 Xi Jinping at, 1–​2, 4, 130–​31, 160 World Trade Organization (WTO) China’s accession to, 157 China’s circumvention of, 152, 153–​54,  155–​56 dispute settlement mechanism, 138 Europe and US response to China through,  152–​54 Japan’s first case against China’s export quotas, 206 need for reform, 262–​63 Xi Jinping. See also Belt and Road Initiative; “Chinese dream”; “Made in China 2025”; World Economic Forum at 19th National Congress of Communist Party, 9, 11–​12, 43,  91–​92 anti–​Corruption campaign, 7, 115, 119, 210

 

criticism in China, 122, 256–​58 made president for life, 9, 169 meetings/​relationships with foreign leaders, 79–​80, 94, 246 rollback of political and economic reforms, 8, 254 visits abroad, 76–​77, 164–​65, 195,  244–​45 willingness to use economic and military power, 34, 41, 57–​58, 59, 100, 141–​42,  209–​12 Xinjiang region. See Han Chinese; Uyghur Muslims Xu Zhangrun, 256–​57 Yameen, Abdulla, 110–​11, 124 Yang Jiechi, 210 Yangtze Memory Technologies, 211

Yasukuni shrine, 202, 203, 204 Yazaki, Anthony, 231 Yemen, 19 Yushukan War Memorial Museum,  202–​3 Zambia, 65, 84–​85 Zero Fighter, 202–​3 Zhejiang Geely Holding Group. See Geely (Chinese auto company) Zheng He, 49–​50 Zheng Zhijie, 79 Zhong Jianhua, 18, 25–​26, 27, 29–​30, 31, 38 Zhu Rongji, 122–​23, 136, 185–​86 Zoellick, Robert, 42–​43 ZTE, 135, 136–​38, 150–​51, 233

Index 

 

383