The double-edged sword of Chinese investment abroad – by Jacob Dreyer
During the 19th Party Congress last week, Xi Jinping announced a new era of Chinese power. “Our country is approaching the center of the world stage,” he said in his opening remarks on Wednesday 18th, “and making continuous contributions to humankind.” Even those of us who feel qualms about this coming to pass can understand the material reasons why peoples all around the world, from European dockworkers to Zambian miners, are daring to hope for a benign Chinese hegemony. From the Hinkley Point power plant to the new Foxconn plant in Wisconsin, from high-speed rail in Ethiopia to a new hospital in Minsk, Chinese investment around the world holds out the possibility for improved health, electricity networks, transportation and stable employment for people all around the world.
These days it’s not necessary to mention why many have lost faith in the previous hegemony. Donald Trump withdrew from UNESCO the other day, and he plans to withdraw from NAFTA, on top of whatever fifteen other new outrages have emerged by the time we go to press. You can almost hear the plea from other countries around the world: Save us, China. But how can we be sure that it’s not a trap? That what works for China will work for the rest of the world – or indeed that it will work at all? In that spirit, it’s interesting to explore why some Chinese projects abroad work – and others don’t – as China crafts a unique form of globalization in her own image.
Athens has been a focal point of recent Western political crisis. From the economic problems of the Eurozone to the refugee crisis, the metaphorical home of Western civilization seems to be in trouble. Strange, then, that the most important recent development might be at the end of the metro line in the port of Piraeus, recently acquired by China’s state-owned company COSCO. This massive investment has not received much news. Our era is one in which a tweet can give millions of people anxiety attacks, while billion-dollar Chinese acquisitions of Brazil’s electricity infrastructure, German financial technologies or Swiss biochemical giants are buried in the back pages. Piraeus is a synecdoche for this wider phenomenon. Will the investment be a fatal mistake for European sovereignty, or a brilliant solution to otherwise insoluble globalization malaise, and a reprieve from populism and the refugee crisis?
This summer, I escaped Shanghai’s hot-house climate for Athens, where I met John Zervos, an economist and socialite who runs the Athens Centre and has been at the center of the capital’s cultural life for many years. Over dinner with him and a friend of his who works for the US armed forces, we discussed China’s acquisition of the Piraeus port. China’s One Belt, One Road project stretches deep into the heart of Europe, and Piraeus was said to be its “dragon head.” Even as refugees swept onto the beach in Lesbos, Chinese cargo ships docked just a few kilometers away. But it’s an open question whether the COSCO purchase is a blessing – an injection of capital and jobs into an economy badly in need of them – or a Trojan horse, further undermining European domestic manufacturing by flooding markets with competitively priced Chinese imports.
The security implications of such a large Chinese zone were also not lost on our dinner companion. The US hosts a large naval base on Crete, and the fraught Great Power politics of the US-China “Thucydides trap” are very much in display in this country. But that is par for the course: US diplomacy by military bases, Chinese diplomacy by investment from state-owned companies – and, of course, from mass tourism, which was in evidence right from the airport when I arrived. Meanwhile, recent stories in the US media about EB-5 visas and Chinese money in US real estate show growing suspicion over Chinese investment.
Two new forthcoming books, from my list as the politics and economics editor in East Asia for Palgrave Macmillan, will tackle these questions. China Buys the World by Andrew Collier, former North America head of Bank of China, explains the structure and motivations of Chinese outbound capital, exploring case studies such as Chemchina’s acquisition of Syngenta, HNA’s shadowy finance empire, and Dalian Wanda’s buying spree. And China’s Private Army by Alessandro Arduino, an Italian who directs a joint program at the Shanghai Academy of Social Sciences, covers why China uses contractors and the role of international mercenaries, while the People’s Liberation Army’s new military base in Djibouti made headlines (although few of the stories observed that China is the seventh nation to have a military base there, including Japan).
Meanwhile, a new book by Ching Kwan Lee, a sociologist based at UCLA, frames the issues in a more comprehensive light. Published by the University of Chicago Press this autumn, The Specter of Global China explores various facets of Chinese outbound investment. In college, we only had to deal with the specters of Marx … but perhaps Global China is, in fact, a Marxist specter? In Lee’s examination of politics, labor, and Chinese finance in Africa, specifically in the mining sector in Zambia, where she did extensive fieldwork, we get the most definitive snapshot yet of how China as a global power feels: an emotional and human history to match statistics, financial data, troop deployments and railway construction plans.
Properly speaking, a specter is a ghost of that which has happened and returned. But parsing the phrase “Chinese globalization,” or, as the researchers at the Chinese Academy of Social Sciences would have it, “Globalization 2.0 with Chinese Characteristics,” is difficult. What are the precedents? The Anglo-American hegemony, rumors of whose death may be being exaggerated greatly? The Chinese imperial system, one which the academic Wang Hui at Tsinghua University has been exploring over the course of his career? Or Comintern, or the European colonial project of the 19th century? In Lee’s work, these different models swirl against each other. Here, Chinese engineers discover themselves in the heart of darkness. There, a Kantian “dream of perpetual peace,” or a bank named after the Tang Dynasty capital “Chang’an.” China was complicated enough before it started becoming the world.
As Piraeus, so Hinkley Point, the Chicago Mercantile Exchange, Syngenta, and all sorts of concessions in Pakistan and Indonesia. While Rome is burning, Carthage is investing in public works. But can Xi Jinping really solve the riddle of modernity? Scientific Socialism, Peaceful Rise, Moderately Prosperous Society, the Chinese Dream – what a long, strange trip it has been. As Xi rightly observes, “It will take more than drum beating and gong clanging to get there.” Does China have what it takes, and what is the “there” he is talking about – what does it look like, how does it feel, and will we all be happy with it? Let’s hope that the “we” of this self-proclaimed Chinese world order is expansive enough that everybody can feel agency in it. The news today is too nasty to want to watch history repeat itself. ∎
The image accompanying this post is an early photography of the Port of Piraeus in the late 19th century
