Will economic policy win China friends in the Global South?

If China hopes to cultivate closer economic and political links in the Global South by capitalizing, perhaps, on a backlash against US protectionism and foreign aid cuts, the task may be harder than it seems. In theory, the detrimental economic effects of Trumpism on trade- and aid-reliant countries create a void that China is well placed to fill. But China’s export-focused macroeconomic strategy is also unpopular in developing countries, many of which are launching punitive trade measures against China.

This paper examines how China’s trade and financial links with fellow countries in the Global South have evolved in recent years, what this means for Beijing’s economic diplomacy, and which policy changes might establish more balanced trading relationships. To ease some of the pressures and imbalances that shifting trade and financial flows are creating in Beijing’s economic relationships, this paper argues, China needs to boost domestic demand and import more from the Global South. Above all, this means allowing the renminbi to strengthen.