Will China’s New Trade/Debt Diplomacy Strategy Reshape the World? 

International Economy 

By Daniel Twining 

China’s Belt and Road Initiative is impacting nations across Eurasia in ways that place pressure on transparent, accountable, democratic politics. China’s authoritarian political model and the role of the state in steering Chinese economic engagement abroad for grand strategic purposes underlines the risks to smaller countries from an influx of Chinese investment that pulls them into China’s orbit in ways that undermine political pluralism. No country rejects Chinese investment, but many have an interest in ensuring that it does not suborn their independence or empower authoritarian actors inside their societies at the expense of democrats.

China’s finance-powered foreign influence risks undermining democratic systems and processes, contributing to social divisions and political corruption, and risking state capture in an expanding, illiberal sphere of influence that is corrosive to democracy. China’s influence once Winter 2018 The International Economy 19 primarily targeted East and Southeast Asian countries with which it shares strong historical and cultural connections. But Chinese designs have now expanded to encompass countries well beyond China’s historical zone of influence, including in Europe, Africa, and Latin America. 

Chinese pressure on democratic institutions abroad does not just come from Chinese investment flows. As the National Endowment for Democracy argues in a recent study, China has expanded its “sharp power” toolkit to project its ambitions globally. Chinese influence operations are designed to create a more enabling environment for Chinese investment; silence critics of China’s authoritarian political model; employ overseas citizens of Chinese origin in a “united front” to advocate for the political interests of the Chinese Communist Party; and enable China’s continued geopolitical rise dividing democratic alliances and partners.

The Trump administration is attuned to the risks posed by what the recent National Defense Strategy calls Chinese efforts “to shape a world consistent with their authoritarian model.” Beijing’s Belt and Road investment scheme has imported corrupt and opaque deals to a host of countries. Influence operations in countries including New Zealand and Singapore have prompted domestic outrage. Beijing’s political support for autocratic leaders in Africa has elicited local charges of a “new colonialism.” China has moved to restrict free speech in countries with which it has close economic ties, including U.S. NATO allies. 

How countries are governed, and how that governance impacts their strength and their geopolitical alignments, matters—particularly in an era when rivals are sowing discord aiming to weaken nations friendly to America and edge them away from partnership with us. Strong democracies are far less likely to be coopted by China (or Russia) than are one-party states whose leaders may be tempted to privilege personal gain over the national interest. 

At the 2018 Munich Security Conference, National Security Advisor H.R. McMaster warned that authoritarian, revisionist powers were subverting the sovereignty of free nations and pledged U.S. assistance to help them defend themselves against foreign pressure. One way to help friendly nations make themselves resilient to the kinds of pressure China brings to bear through Belt and Road investments is to assist Belt and Road target countries in strengthening democratic political institutions. 

This could enhance transparency and accountability within their foreign investment regimes, ensure that smaller countries don’t find the will of their citizens overridden by a foreign power, and prevent unaccountable strongmen from selling elements of their country’s sovereignty to the highest bidder. It would also reduce political risk for China by ensuring that its growing overseas investments are protected by rule of law and democratic legitimation in target markets.

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