Financial Times

Anshul Barnwal | Dartmouth College

China has been pouring money into infrastructure into developing countries. Unlike investments of the 1900s, which often saw countries only supporting those with similar ideologies (anti-communist countries linked up with other anti-communist countries, and communist countries did the same), Beijing’s new investment systems have persuaded countries of all types - liberal and illiberal alike - to join institutions like the Sino-centric Asian Infrastructure Investment Bank, or the BRICS bank for developing countries. These institutions have offered alternatives to Americentric ones such as the World Bank and International Monetary Fund, and as a result, the United States has met these developments with apprehension and hostility.

While indubitably beneficial in terms of free trade and globalization, those US-led institutions have had numerous debilitating effects in recent years. Developing countries seeking to obtain loans from the IMF or World Bank have been given money contingent on implementing “structural adjustment policies” that essentially force the government to reshape a country’s economy to the benefit of corporations or Western institutions. Countries have been forced to cut healthcare spending by as much as 50% and education by 25%, which has terrible effects on people that rely on those services to survive on advance-- in Africa, an estimated 500 thousand additional children died due to forced restructuring. Additionally, even though the IMF has said they have changed these policies, all of their efforts were revealed to have been the same amount of restructuring under a different name.

With all of these clear harms posed by American policies, it makes sense that countries have looked elsewhere despite Washington’s best efforts to dissuade them. Perhaps China-led institutions can offer better policies and services than American ones, and thus force the latter to improve their policies. In other words, competition could bring out the best in both institutions. Even though America may not like the clear subversion of an Americentric, borderline hegemonic world order and may fear Sino-centric institutions, it could prove to be a boon for developing countries. China has shown that they realize that modernizing economies leads to more productivity. The status quo of hiding resources and limiting countries has been destructive for less affluent economies and the United States hasn’t exactly helped. China would obviously prefer to have the role that the US previously had in being the unipolar power in a Chinese hegemonic world order, but the next best thing is to capitalize on the status quo’s shortcomings and benefit from investments in countries.

China’s attack on US hegemony is not restricted to financial endeavors. Expansion into the South and East China Seas has put the world on notice that China cares little for the rules set by US-led organizations and is willing to bend them to take what it wants. All of this has been exacerbated by the Trump administration. By threatening free trade and thus destabilizing markets, China has the perfect opportunity to find new partners for trade and step into the void left by a retreating America. This is also true of other global projects and challenges: anti-climate change initiatives, for instance, may now be led by China as Trump withdrew from the Paris Accords and essentially refused to treat climate change as a severe threat. The more the United States retreats from the rest of the world, the more power and global sway China accrues as it fills that gap.

While Americentric institutions have in many instances been deleterious for developing countries, China’s track record is not significantly better. In Africa, the Chinese virtually colonized huge regions on the continent by trapping governments in debt and forcing inequitable trade agreements, and additionally fueled a proxy war with the United States in Sudan that killed thousands and displaced 1.5 million. Chinese rhetoric seems to suggest that they have realized in theory that the mobilization of labor and modernization of an economy is more profitable, but whether that is true in practice has yet to be seen.