By Lukas FIala
Whenever the AidData team at William & Mary publishes one of their landmark reports, it’s time for us to sit down, read and think. And with the publication of their latest findings this week, they’ve given us a lot of food for thought.
For me, one of the report’s core findings might be an obvious one for those studying China’s investment behaviour in Europe and the U.S.: the extent to which the party-state has leveraged its financial might to pursue strategic assets in high-tech sectors across the Global North.
Increasing in the context of the Global Financial Crisis in the late-2000s and again during the early years of Xi’s industrial policy agenda in the mid-2010s, the findings of the report challenge a purely geographic reading of Chinese economic statecraft focused on the Global South. Seeing China’s economic footprint only through the Belt and Road Initiative (BRI) is limiting, especially when we think about the BRI as a causal factor as opposed to a framing device to enable all sorts of outbound financial activities.
This rings true especially when considering that state-owned enterprises and other Chinese firms may implement corporate strategies that include a two-track approach of partnering on high-tech investments in the Global North while benefitting from infrastructure and other development-oriented activities in the Global South. Understanding how such strategies unfold through new data helps us understand the bigger picture.
More broadly, the new dataset and report also raise a question about normative power and intent. Within the wider debates on Chinese economic statecraft, the authors seem closer to the side that sees a coherent strategy in Chinese economic engagements around the world.
As the report argues, over the past two decades, “an overarching principle has guided China’s overseas lending and grant-giving portfolio”, namely “the pursuit of commercial and geostrategic advantage.”
By trying to achieve asymmetric advantages over foreign competitors, China has in turn refashioned the normative architecture that governs cross-border aid and financial flows. This is evident especially in the declining percentage of China’s overseas lending and grant-giving that qualifies as official development assistance.
These findings raise an important question about the future of the Global Development Initiative and the extent to which China will remain a development partner and absorb the fallout left by the decline in US aid and development finance. This supports our concerns that multipolarity will not necessarily broaden the development options of all developing countries equally.
Finally, while it will take the scholarly community some time to digest these new findings, they are already contributing to yet another re-evaluation of China’s global economic role. It is hard to overstate the transformative impact of China’s economic rise. By normalizing a neo-mercantilist approach to trade and investment, technology transfers and economic statecraft, the sheer scale of China’s economic transformation has refashioned the very global economic system in which it occurred.
Lukas Fiala is the project head of China Foresight at LSEIDEAS.
