The Silk Road is turning China’s diplomacy on its head

The Silk Road is turning China’s diplomacy on its head
26 Flares 26 Flares ×

While China has traditionally refused to become involved in countries’ domestic affairs, its Silk Road ambitions are reversing Beijing’s policy.

Since Deng Xiaoping’s 1992 tour of southern China, the Middle Kingdom has been on the rise. As China’s growth gained momentum in the early 2000s, then president Hu Jintao reaffirmed that the country would focus on developing itself internally as it did not have the resources for foreign ventures. China, he said, would go against the course of history and rise “peacefully”. Although heralded by watchers at the time as a marked shift in China’s foreign affairs, Hu was simply reaffirming Zhou Enlai’s policy of non-interference from the 1970s.

For China, American global interventionism was everything that was wrong with foreign policy. China’s ‘Peaceful Rise’ – Hu argued – would not challenge the world order, while letting countries decide for themselves which path to follow. It was a policy that held for over 30 years.

Come 2016, and China’s international investments have expanded like wildfire, straining Beijing’s commitments to non-intervention. Where M&A services used to exclusively cater to foreign firms seeking to invest in China, they now increasingly offer their services to Chinese firms expanding and investing overseas. However, where Chinese investment has flourished – either through private or state-owned investments – Beijing has found itself increasingly drawn into situations where it has felt the need to secure its resources.

With greater investment comes greater intervention

With the development of China’s Silk Road, Beijing has seen its investments increasingly exposed, rocked by global instability and rising anti-Chinese sentiment. Even governments that had previously approved Chinese projects,  are now changing track. For example, in 2014 China signed an agreement to build a massive port facility in Sri Lanka. However, when the opposition came to power in January 2015, after promising to cancel the Chinese-backed project over suspicions of corruption, the future of the port facility was thrown into doubt.

After almost a year of constant flip-flops over the fate of the port, the Sri Lankan government finally green-lit a revised agreement in March. Similarly, when a Chinese state owned enterprise won a contract in Indonesia to build a high-speed rail system, the government suspended the project and sought to re-evaluate a number of its propositions.

As a result, Beijing is becoming increasingly proactive about the way it manages its investments through a mix of both hard and soft power. In Australia for example, it has recently come to light that Chinese nationals and companies have been funding politicians’ electoral campaigns. The consequences of such moves are particularly worrying for the U.S which has relied on Australia as a key strategic ally in the South China Sea.

As a result, China’s renewed approach to foreign policy has shown that Beijing is actively using a variety of tools at its disposal to safeguard its investments and implement its vision of a Silk Road.

The epitome of this was China’s announcement earlier this year that it would open its first overseas military base in Djibouti – right opposite a U.S military base. What’s more, China’s military plans in Djibouti have been accompanied by increased public and private investment by Chinese companies. For example, a Chinese SOE has secured a $420 million contract to revamp Djibouti’s port while another has bought a $120 million stake in the facility. The money is important to keep Djibouti’s government in place, whose human rights abuses have led Washington to distance itself from the regime.

President Ismaïl Omar Guelleh has just won his fourth consecutive term in office following an intense crackdown on opposition parties. The country’s security forces broke up a peaceful rally in December, killing scores. Djibouti has been described by Foreign Policy as having a “dismal record on human rights, democratic governance, and the rule of law.”

Unfortunately, this is not a one-off for China – when it comes to investing overseas, Chinese companies have a dismal record of leveraging their clout to win contracts in some of the most repressive regimes in the world. For example, in Zimbabwe and Sudan, officials from a Chinese state owned enterprises allegedly bribed government officials millions of dollars in order to win lucrative contracts.

Before the Obama administration partially lifted sanctions on Cuba, China had already heavily invested in the tiny island nation – home electronics distributed by the government are from Huawei and several other Chinese companies. Then there was a Chinese businessman who expressed interest to build a second “Panama Canal” through Nicaragua despite findings that the environmental and social costs would be staggering and unfeasible.

However, the reality is that China’s increased overseas investments and presence has thrown its doctrine of non-interference out the window. In Afghanistan, Beijing has allegedly met with the Taliban and is working on facilitating a peace agreement between all the parties involved. This is unsurprising considering Afghanistan’s proximity to Pakistan and China’s huge investments (infrastructure or otherwise) in that country.

More importantly however, is that the Silk Road is not only leading to a proliferation of overseas Chinese investments, but represents a true projection of Chinese power, both soft and hard, far from its borders. The Silk Road is an affirmation of Beijing’s growing desire to intervene in international politics more actively and abandon, at least privately, its policy of non-interference.

Categories: Asia Pacific, Economics

About Author

Nicolas Jenny

Nicolas Jenny specialises in European and Asian political risk analysis. He has lived extensively throughout the region and speaks English, French and Mandarin. He holds a double master's from Sciences Po Paris and Fudan University and a BSc in politics from the University of Bristol.