Summary
China has been striving to get a grasp of their global dominance they no longer want to be the no.1 manufacturer anymore they want to become more than that. This week's post is about China's motivations behind One Belt,One Road Initiative.
China definitely would like to establish itself as an integral part of geopolitics and economics. Earlier, it has successfully, established itself as a global manufacturer and the largest exporter of the world. In addition, it has maintained one of the highest economic growth rates in the world for more than a quarter on a century.Yet, Yuan still lags a major global currency and the tag of major global power.
However, in recent years China is trying to grasp its place as a global power or simply refusing to play as an underdog. China’s de-dollarization plans are speeding up since the pandemic and few months ago in April Argentina announced it would pay for $1 billion worth of imports from China in Yuan and for $790 million worth of monthly imports thereafter. It also activated a currency swap agreement, making it possible for companies to borrow from China in Yuan. Hence, Yuan is gaining a bit popularity where supply of US dollar is dwindling.
The BRI by China is a reflection of China’s supremacy in the global arena in every way. By building ports, roads in its trading regions like South Asia, Southeast Asia, Europe, Middle East and Africa; China is definitely not doing an act of service. They do have some vested interest. In my opinion, it is to gain control of that region like a quid pro quo. For example, Pakistan is debt locked to China. I do agree with many other opposing governments that “China is laying a debt trap for borrowing governments”. What I feel is that the OBOR or BRI is a passive policy of China to slowly invade a country. And, the AIIB is another way of luring poor developing countries into agreeing unsustainable loans to pursue infrastructure projects, so when they face financial difficulties, China can seize their property.
One reply on “Week 4-Blogpost”
Shamma,
You have done a good job laying out both sides of China’s BRI. It has succeeded in injecting substantial amounts of new capital into countries that badly need it. But it comes with “strings,” given that much of the funding is in the form of loans that must be repaid. Many of the loans have been defaulted upon, leaving China owning ports, rail lines, etc. that were intended to be owned by the country in question. The BRI is obviously a great way for China to expand its connectivity with many other countries in Asia, Africa and Europe. The US and the EU are now beginning to offer similar opportunities to compete with China. –Professor Wallerstein