China Takes Advantage of Opportunities

Henry Srebrnik, [Charlottetown, PEI] Guardian

Though now in an economic downturn, China continues to flex its muscles on the world stage and is still increasing its economic reach across Africa, East Asia, South America, and the Middle East.

China has supplanted Japan and the United States as the leading trade partner of nearly all African and East Asian countries, and has become a crucial actor in South American and South Asian trade.

China’s demand for African commodities has fuelled the continent’s recent economic growth.

But the decline in African exports to China, down 38 per cent from 2014, reflects the recent slowdown in China’s economy.

So this past December, in a summit meeting in Johannesburg with most of Africa’s leaders, President Xi Jinping of China pledged $60 billion in development assistance to the continent and promised to support Africa “in achieving development and prosperity.”

Robert Mugabe, Zimbabwe’s president and the chairman of the African Union, praised China as a counterpoint to Western powers. Many delegates said China, unlike the West, treated Africans as equals.

China has invested heavily in Zimbabwe, despite European and World Bank sanctions. From 2000 to 2012, approximately 128 Chinese official development projects were identified in Zimbabwe. China is now Zimbabwe’s largest trading partner, and purchases 27.8 per cent of the country’s exports.

In fact, Zimbabwe has adopted the Chinese yuan as an official reserve currency. Zimbabwe’s finance minister Patrick Chinamasa maintains that use of the yuan “will be a function of trade between China and Zimbabwe and acceptability with customers in Zimbabwe.”

Some critics accuse China of “neo-colonialist” behavior as it acquires the raw materials that it needs to fuel its own economy.

Supporters, on the other hand, say that China’s initiatives to build and improve infrastructure such as roads, railways and telecom systems have been a boon to Africa’s manufacturing sector.

In January, Xi visited Saudi Arabia, Egypt and Iran. China has a big stake in the Middle East. It is the world’s largest oil importer and gets more than half of its crude from the region.

China views Iran as a vital link in its so-called Silk Route strategy, linking China and Europe, which would cross the Middle East.

“We are Iran’s biggest trading partner for six years in a row,” Xi wrote in an open letter to the Iranian people. “China has considerable strength in capital, technologies, equipment and other areas,” he said. “Iran has rich resources, ample labor force and huge market potential, and it is in the crucial stage of industrialization and modernization.”

In Tehran, the Chinese have been involved in the construction of a huge elevated expressway and the building of the Niayesh Tunnel, which will be one of the longest urban tunnels in the world. The city’s metro system was built with Chinese capital and Chinese engineers, and a Chinese-built steel mill recently went into operation.

Now that western sanctions have been lifted, Iran’s economy will undoubtedly expand. While Xi was in Tehran, both countries agreed to increase trade to $600 billion in the coming decade.

Iran’s supreme leader, Ayatollah Ali Khameini told him that “Iranians had never trusted the West.” That was why Iran was seeking more cooperation with “independent countries.”

China has also been leading the effort of global non-western countries to create a new system to govern the world economy. In 2013 it helped set up the New Development Bank, headquartered in Shanghai, to serve as a lending institution for infrastructure development projects. In 2014 China also founded the Asian Infrastructure Investment Bank.

China is now in a position to co-author the rules of international commerce. Power will have to be shared.