Big power rivalry: Who is winning the popularity wars?

Contracts generally stipulate the recipient country must work with Chinese firms, purchase Chinese equipment, or guarantee commodity sales to China as a repayment. Mike Pompeo, Donald Trump’s Secretary of State, called the practices ‘predatory economic activity’.

Whatever the flaws in the Chinese offer, the US was stung into action. B3W, still in its inception phase, is making a different pitch as much by necessity as by design. The biggest difference is an emphasis on ‘good governance’. Stricter standards will result in greater scrutiny, higher up-front costs, and longer timelines, making it less competitive if judged on price alone.

Unlike the BRI’s focus on industry – often carbon-polluting heavy industry – B3W focuses on softer outcomes such as improvements in climate, health security, digital technology, and equality. Today’s contest is between two systems and, with a global infrastructure gap estimated at up to $40 trillion, there are rich pickings for both.

The Americans insist this is not a zero-sum game. When visiting Colombia, Panama, and Ecuador, Deputy US National Security Adviser Daleep Singh insisted Washington was not asking the region to choose before adding: ‘We’re there to compete because we do think we have a better product’.

The BRI has been central to Beijing’s charm offensive on all continents. In Latin America, it counts Brazil and Chile among nations with which it is the leading trade partner, and it is close to achieving the same with Argentina.

Chris Sabatini, senior fellow for Latin America at Chatham House, puts some of China’s progress down to American complacency. ‘The US has been coasting since the 1990s,’ he says. When the Inter-American Development Bank and World Bank were slow to stump up cash, the Chinese stepped in. Sabatini cites several motives for China’s increasing involvement in the region. ‘They need raw materials and Latin America provides them cheaply. They want at least neutral enablers. They want help in turning multilateral institutions more in their favour.’

Changes in government can be a problem. When Cristina Kirchner was president of Argentina, China built a space centre, railways, and oil fields but in 2015 her successor Mauricio Macri put several projects on hold.

Unlike Russia, with its long-standing links to regimes in Cuba and Venezuela, the Chinese do not want to be seen to be agitating. ‘No-one cites China as a revolutionary model,’ Sabatini says. ‘They want to be seen as the quiet alternative.’

Case study: Peru China is extremely active in Peru due largely to its mineral resources. Deals have been struck to extract copper, gold, silver, and oil, but the Peruvians have become more adept at managing contracts, emphasizing labour rights, and environmental protection.  A sizable community of Chinese descent helped to sell the notion of China as a benign player in the region. But Peru also has close trade, military, and political ties with the US, and the Americans have been adept at allying themselves with civil society groups and against drugs cartels. For the moment, Peru appears to be managing both relationships carefully.

China has also been making significant inroads in the Middle East, exploiting disenchantment among many citizens, and offering opportunities to governments. It has signed five ‘comprehensive strategic partnerships’, with Iran, Saudi Arabia, the United Arab Emirates, Algeria, and Egypt.

Turkey and Qatar, Vakil says, are the only governments to have expressed even mild misgivings about the treatment of the Uighurs, fellow Muslims, in Xinjiang. Otherwise there has been scant coverage or silence.

Hopes among younger generations were raised by then US president Barack Obama’s ‘new beginnings’ speech at Cairo University in 2009 in which he presented a softer side to US foreign policy while calling for deep-seated reforms in the Middle East.

He gave tacit backing to the ‘Arab street’ during the uprisings that followed, only for America to later side with authoritarians such as Egypt’s Abdel Fattah Al-Sisi. Obama drew ‘red lines’ in Syria but then stood by as Bashar al-Assad, backed by the Russians, deployed chemical weapons on his own people.

Despite this, few states would look favourably at a withdrawal of the US from the region. China is seen not as a replacement, but as a country which can be used as a hedge, giving governments added leverage. There is little indication that China wants to be deeply embroiled in security issues in the Middle East or to choose sides in any of the deep-rooted conflicts.

China’s influence has even grown in America’s closest regional ally Israel with Chinese state companies investing in the country’s burgeoning tech sector. Perhaps the single most important project is the development of Haifa Port by Shanghai’s International Port Group which won the tender in 2015 and began work in 2018.

Haifa is Israel’s busiest port and the base of its main naval fleet, allegedly including nuclear-armed submarines. Israel’s former prime minister Benjamin Netanyahu ignored protestations by his otherwise close ally Donald Trump to abandon the China deal.

Yet the economic and strategic progress China has made must be offset by an important but unquantifiable American asset – soft power. In the Middle East, where up to two-thirds of populations are under 35 years old, American culture remains a great pull.

Case study: UAE The UAE provides an important bridgehead. Dubai and Abu Dhabi see themselves as the region’s Singapore, commercially agile city-states which are tightly run and attract strong international investment. But how to balance the needs of their closest strategic partner (the US) with their biggest customer (China)?  The leadership sees clear attractions in China’s development model and its vow of ‘non-interference’ in domestic affairs. At the same time, it worries about China’s increasing links with Iran and fears long-term US security disengagement from the Middle East. The Emiratis were forced to backtrack on plans to allow the Chinese to build a military facility in a new port project after coming under strong US pressure.

In Asia, perhaps more than any other region due its geographical location, leaders constantly triangulate, reluctant to choose one allegiance over the other. ‘America is still the country that people want to live in,’ suggests Gareth Price, senior research fellow at Chatham House’s Asia-Pacific programme ‘but if you chose America only, you’d be left alone against China.’

Much of Chinese financing is close to home, with Asia constituting over half of the total BRI investment. Countries are attracted to the Chinese market and are unwilling to throw their lot with the US – even if psychologically they would like to – because of its foreign policy inconsistencies. Price says: ‘Nobody believes the Americans anymore when they say there are in it for the long-term. No matter what Biden might say now, Trump has shown you can end up with a more insular and less reliable partner.’

A decade ago, conferences would debate a future role for India as counterweight to China, but now that question is posed much less. In 2014, the Modi government announced its ‘act east’, more assertive Asia policy, yet there is so far little evidence India has made much headway in either ‘hard’ or ‘soft’ power.

India also has a poor record on infrastructure. Its Friendship Highway with Myanmar and Thailand – once seen as a symbol of its increasing role in the region – is expected to be partially completed in 2023, two decades after it was announced. In contrast, from Vietnam to Pakistan, China is seen as the country that gets things done.

Case study: Thailand Thailand, the only country in Southeast Asia to have resisted colonisation, has for decades had close relations with the US. It was America’s forward station in the Vietnam War and in the war on terror. Recent events, however, have led to a recalibration.  The Thais resented the failure of the US to come to its aid during the Asian financial crisis and, more recently, it has been the Chinese who provided vaccines and other help during COVID-19. The business community has invested heavily in China and, with neighbouring Cambodia and Laos now firmly in the Chinese camp, Thailand’s future allegiances will be pivotal.

Case study: Angola At the end of its civil war two decades ago, Angola tightly embraced China. Some 44 per cent of the country’s overall debt is to that one nation as Angola used its vast oil reserves as security for loans for infrastructure development. Recently both have been edging away from each other. China buys more oil on the spot market, such as from Brazil and Iran, while Angola has made sure not to be over-reliant politically, military or economically on any big power.  Next year it will launch a new communications satellite with its erstwhile closest ally Russia. Current president João Lourenço has been mounting a charm offensive with the US and Europe, seeking to persuade Western governments that Angola is determined to diversify its investment partners. He is receiving a good hearing, suggesting Western rewards still count.

It has long been self-evident to argue three reinforcing trends are at work – China’s rise, US disengagement, and global democratic decline. The facts may not have changed, as Freedom House annual surveys have attested to for more than a decade, but it may be the twin crises of the past two years are altering the context. 

Pandemic control is closely entangled with the political legitimacy of the Chinese Communist Party (CCP). Comparisons of death tolls – 750,000 in the US versus less than 5,000 officially in China – play easily into the propaganda narrative of a chaotic West. And the almost complete shutting down of international links is having an effect in China.

But with Xi failing to attend both the G20 and COP26 summits and having last held a face-to-face meeting with a world leader in March 2020, many analysts point to potential longer-term isolationist tendencies. Biden tried to make capital from Xi’s absence in Glasgow, saying he had ‘walked away’ and undermined his own efforts to ‘assert a new role as a world leader’. 

The mantra at the heart of the next phase of Xi’s leadership is ‘Common Prosperity’, his economic programme designed to bring greater cohesion – and control – to domestic economic policy. The internal agenda will be at the forefront, and investment in Belt and Road has fallen sharply since 2019 with existing projects still being completed, but Beijing appearing to have little appetite for the moment in re-engaging with the vigour of before. 

The latest CCP five-year-plan has only a half-sentence reference to the BRI, considerably shorter than the previous one. Does that denote job done? Or a focus on other priorities such as ‘Common Prosperity’? Might it be the case that one of the key benefits has already been secured with a rise in the number of states within the UN system lining up behind China, or at least not voting against it?

Leaders were invited to present ‘action plans’ in one year’s time to show progress on the three main themes – defending against authoritarianism, addressing and fighting corruption, and promoting respect for human rights. With more than a glance to his domestic audience and in a bid to show some American humility, Biden declared in his invitation: ‘No democracy is perfect, and no democracy is ever final.’

The US pledged funding to support independent media in places where they are under threat, alongside a series of projects to protect civil society groups and whistle-blowers. Pointing to what he described as 15 consecutive years of democratic decline, Biden told his audience of world leaders: ‘This is an urgent matter on all our parts, in my view, because the data we’re seeing is largely pointing in the wrong direction.’

Biden did not need to make explicit the two implicit goals of the initiative – to show that ‘Trumpism’ is not inevitable in America, and that for other countries there is still idealism, as well as self-interest, in forming a common front as democracies. But with the carrot comes the stick. Where it can, the US has stepped up the pressure on countries moving closer into China’s orbit – particularly its allies – whether that be curbing trade in sensitive technology or closing Confucius Institutes.

In some respects, European and other US partners have already become more wary, having seen the chilling effect that Chinese funding was having on their own academics and the potential strategic damage from Chinese takeovers of their own companies.

In security terms, the single most significant multilateral development is the revival of the Indo-Pacific Quad, aligning Australia, India, and Japan with the US. And Australia’s nuclear submarine deal with the US and UK as part of the AUKUS tripartite security pact has entrenched that position.

But it is only the latest in a series of hawkish announcements – in 2018 Australia was the first country to ban Huawei from its 5G system, a remarkable turnaround for a country which for many years provided China with natural resources and sympathetic diplomacy.

China’s response was to penalize Australia by blocking access to its markets for key Australian exports and restricting access to key imports from the People’s Republic – a move which has backfired and only strengthened the hand of those advocating closer security ties with the US.

But for a majority of countries, particularly less affluent ones, decisions on allegiance are largely pragmatic and based less on the relative attractiveness of either country or system. Which big power is helping me more? The rest, says Price, ‘are sitting on the fence. It’s all about issues rather than values.’

The challenge for the US is that, although its annual international development budget currently stands at $35 billion, this sum constitutes only 0.17 per cent of Gross National Income, leaving it 24th of 29 OECD countries in proportion of budget spending. Figures for Chinese overseas assistance are not strictly comparable but have been rising.

B3W remains still little more than an idea. The EU announced its own fledgling project, called Global Gateway, and the UK has its own scheme, British International Investment, aimed in part at countering Chinese influence. Ultimately, it is about performance rather than promises.

The COVAX multilateral vaccine-sharing project has woefully disappointed and the West has so far failed to stump up the money to help poorer nations cope with the climate emergency. These past two years have shown the big powers competing rather than cooperating in tackling the twin crises of COVID-19 and climate – pressuring rather than persuading allies to fall into line. 

For countries which do not fall clearly into either camp, there is less emphasis on hearts and minds and more on transactional arrangements as they are left to make pragmatic choices, to pick winners. ‘This is the Great Game, 2022,’ Vinjamuri says. ‘It used to be the case that you could take separate views about America and China. Now they are seen as two sides of the same coin.’

This is the last in a series of three reports on cooperation in an era of rivalry, drawing on expert analysis and recommendations from Chatham House. The first report examined COVID-19 and vaccine nationalism; the second looked at the climate emergency.