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China is the net beneficiary of global disruption
THE election of Boris Johnson as prime minister of Britain signals the continuation of political and economic disruption brought about by the merger between global nationalism and populism. Although Donald Trump has come to epitomise this fusion, a plethora of other leaders around the world - such as Narendra Modi in India, Viktor Orban in Hungary, Recep Tayyip Erdogan in Turkey, and Vladimir Putin in Russia - have also come to power, and have stayed in power, because of it.
This is no historical aberration or temporary phenomenon. A torrent of disruptive policies have been unleashed at the national level, with more to come. What is at stake is not merely the future direction of national economies, but global supply chains, natural resource extraction, and trade and investment flows, with global implications. This raises the question - will the sustained rise of nationalism and populism enable the West to continue to lead the global economy by dislocating the very post-war order it created or will China assume that role in the next decade by helping to redefine it?
It is worth remembering that Beijing has been busy creating an alternative version of world order for the better part of a decade, since President Xi Jinping first came to power. It took the West a while to understand what Mr Xi was doing by lending tens of billions of dollars to developing countries around the world and commencing the Belt and Road Initiative. Now that it is clear that China is competing effectively with the West on the global stage, Western nations have responded by electing leaders who seem determined to ensure that Beijing will win.
In too many cases this has translated into inward-focused, isolationist foreign policies. The US and UK's ill-founded objective appears to be to hold on to their share of the global economic pie by essentially retreating into a nationalistic shell, relying on domestic demand and bilateral trade agreements to march forward. By contrast, China seeks to expand its global footprint by embracing the rest of the world (on its own terms, of course) to pick up the slack left behind by the likes of Washington and London.
So, what is likelier to yield a more favourable result in the long term? It is hard to imagine that the US and UK model will prevail in a world where developing and emerging economies seek the embrace of the largest economies and are willing to cede some sovereignty in the process. That is why Beijing's brand is gaining a lot of traction. It comes at a steep price for many of the world's poorest economies, which are, in essence, forking over natural resource and asset ownership rights in exchange for aid, knowing that they have no meaningful ability to ever pay back what is in some cases tens of billions of dollars. Beijing lends them the money knowing that it will never be repaid.
The benefit for China is that it gets the natural resources it seeks and the right to claim ownership over the strategic national assets (such as power plants and toll roads) it is funding. When the defaults inevitably occur, as many already have, it becomes a "win-win" arrangement for Beijing which can beat the "development" drum as it deepens its bilateral relationships around the world. In this way, Beijing is beating the West at its own game.
No one is forcing these countries to accept China's assistance, but the truth is, many of them have very few financing options, as they tend to be bad credit risks and few if any Western countries will lend them the money they need. At the same time, there are too few dollars available from international financial institutions to meet the trillions of dollars in infrastructure development costs needed by the developing world. So, China has arrived with its development model at the just the right time and with just the right resources to meet those needs.
For these reasons, it seems clear that, as many Western nations continue to retreat from the global stage in the mistaken belief that they will "reinvent" world order in the process, they are, rather, ceding what remaining influence they have in the developing world. That is not a recipe for greater influence in the future; it is a recipe of a diminished presence and ability to shape the direction of political and economic dialogue going forward.
Beijing understands this and will continue to devote the resources necessary to maximise its global footprint as the West proceeds to destroy the post-war order it created. China is in the process of becoming the world's leading economy and most influential nation and, at this stage, there is not a damn thing the West can do about it. The Western nations which have embraced nationalism and populism only have themselves to blame.
- The writer is CEO of Country Risk Solutions and author, most recently, of "China Vision".