China’s Strategic Statecraft

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The rise of nationalism is driving countries to be more internally focused.  The fallout of the United Kingdom’s Brexit vote has had impacts far beyond Europe. The USA has repositioned itself onnumerous global trade initiatives. These are just a few examples of how countries around the world are deciding notto collaborate and align.

China, however, is using this opportunity to drive its nationalistic agenda differently by exerting influence and investments to build new alliances and a strong base of soft power that will expand its global leadership and secure its future in many ways. A key illustration of this can be found in its long-term Belt & Road Initiative.  This is an extensive strategy to partner with foreign countries to build new global infrastructure and alliances.  Below are some high-level examples of these projects. This article will explore China’s approach to statecraft through the following aspects:

  • Reach:What level of effort is China putting into statecraft?
  • Relevance: Why is a global strategy important to China?
  • Relationship: What unique opportunities is China able to create?
  • Return on Investments: What is the power of redefining ROI?
  • Government: How is your government aligning its national investments around its goals?
  • Insights: Key take aways

 

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Reach

Increasing its global reach and influence i at the center of China’s overall strategy.  This is being realized in many ways. First, near-term and long-term economic benefits to China and their partner countries can be quantified.  In several cases, the scale of these projects has direct and visible impacts to the GDP of the target country.  These projects immediately elevate the level of relationship and political good will.

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Second, new trade opportunities are established that create ongoing benefits and political precedence for continued collaboration in the future.  Many of the infrastructure projects revolve around new ports, railroad, roadways, pipelines and transportation networks which support the goal of integrating China’s infrastructure into multiple trade routes that bring critical supplies to China.  The multiple “all weather” routes manage the instability that can remove a trade route during a period of regional conflict.  Countries that are solely dependent on a few critical supply routes could fall into great peril if they are threatened.  China has removed this risk by defining and implementing a comprehensive strategy and specifically integrating China’s infrastructure across Asia, Europe, Africa and the Middle East.

Relevance

It is important to note the scale of investment China is making and the speed at which they are delivering the infrastructure improvements.  The vast number of multi-billion-dollar projects exceeds that of any other nation.  Most other world superpowers are not investing in anywhere near this number of projects in their own countries, much less, in foreign countries.

These projects are also creating strategic assets for China and the countries in which they are investing. These strategic assets are also linked in terms of trade routes and transportation networks.  One example is called the “String of Pearls.”  It is the “Belt” part of the strategy that is creating state-of-the-art seaports that will provide multiple ways to route trade across the seaways.  It also creates an integrated series of military bases and support infrastructure for China to extend its control across vast regions.

Each of these projects create enormous and immediate economic opportunities for Chinese companies. Today four of the top ten construction companies in the world are Chinese and this ratio is expected to increase in the next ten years.  The number of new industries and jobs this creates for all of the countries involved is transformational for these regions.

To provide some perspective, these projects are the size of a city and the related infrastructure uses the latest smart technologies and construction methods.  China is building hundreds of smart cities within its own country and is also developing smart projects in countries around the world.  These invaluable learnings will give China the ability to drive their companies to be global leaders in the next-generation industries and solutions.   Other countries are implementing token smart city pilots which require much less build out and infrastructures.  Given the scale and industry growth surrounding these emerging industries, it will be challenging to compete.

China will also have access to a wide-spectrum of data from these projects.  This includes trade, workforce, construction, economic, political and regional strategic situations that will be unrivaled.  Other superpowers that fail to build the global infrastructure and smart systems of the developing nations will be left out (play lessore roles, have less control???) of the new “World Order.”  The one core part of the strategy, that is kept intentionally quiet, by the Chinese strategists, is that this global infrastructure centers on controlling the access to and trade of global natural resources.  It is guaranteeing that China will have access as these resources become more limited and contested in the future.  Industries and societies cannot survive without natural resources and China is aggressively securing them now.

Relationship

China is adopting a very different foreign policy investment strategy in comparison to other superpowers.  The West uses economics frequently to place sanctions on other countries.  It also will not invest in high risk areas of the globe or in countries it judges to have social or moral deficiencies.  These sanctions tend to create a lot of resentment by the countries and their governments start creating propaganda stating that all the problems in the country are because of the actions of the West.

China sees this as a great opportunity to invest in countries and establish new global relationships.  The economic benefits secured from the projects for the Chinese companies are significant.  China is willing to take the overall investment risks to create long-term alliances and buildout the trade networks.  The priority for them is long-term strategic positioning and the resiliency of the global trade networks and relations.  Given the number of industries and jobs they create in those companies, the economic conditions tend to improve, and China is viewed as the global leader that is helping them improve their country and lives of the people.

Return on Investment

China has a higher priority than just direct return on investment.  For China, it is not only about the immediate economic benefits of building the infrastructure; but more about realizing the long-term vision of multiple trade routes, strategic alliances, deep access to global data, and experience at implanting cutting-edge technology all over the globe.  This higher-level strategy is evident in how they develop the investment deals.  In most cases, they are making a billion-dollar in investment in countries they know will not be able to pay them back; but instead, China is given control of the strategic assets!

Government

The government has some major hidden agenda aspects to this global statecraft.  While the immediate agenda is to drive the overall economy for China,  there are very long term considerations around long term strategic positioning and competitive advantage for the country.

First, the priority is to secure access to natural resources through a vast network of trade and transportation infrastructure.  This is the highest order positioning a country can attain in terms of strategic advantage and stability.  In times of both peace and war, having secured access to natural resources can be the defining factor for success.

Second, developing countries are willing to forgo their direct investment for terms that give China direct control of the strategic assets they are building in foreign countries. Having this level of control makes China a central player in that country’s economy and creates deep relationships with their governments.  Those relationships are mutually beneficial but also creates a dependence on maintaining good relationships with China.  This is a new soft-power dynamic of influence based on dependent economic-benefit vs. western-sanctioned-based economic punishments.

Third, both sides are incented to collaborate and work together for their mutual benefit.  Because of the scale and use of smart technologies in these projects, the Chinese government is able to rapidly develop and expand these emerging industries within its own country.   The rate of growth of these new industries will be vastly accelerated compared to other countries that are also competing in these technologies but on a smaller scale.

Lastly, China is also driving a very different world narrative.  They are helping countries build their infrastructure, economies and workforces.   This is quite different than strategies based on sanctions, dropping out of trade agreements, refusing to invest and generally becoming more isolationist in nature.   For the next generation of youth growing up in these countries, who do they see as shaping their worldview of building a future verses who is trying to keep their country down?

Insights

While most country’s administrations are focused on short-term programs and immediate results, China’s investmentsare focused on long-termstrategiesand global power.  The emerging countries represent the last of the new markets to be developed and also where many natural resources still exist that have not been accessed.   The countries that develop the infrastructure and industries in these countries will ultimately have access to the finite natural resources.   Building trade and transportation networks also assures resources can flow even in times of regional conflict.

By investing in strategies that are building the future of developing nations, China is positioning itself as the global leader and seen as the way to the future.  China has redefined its definitions for return on investment in a long-term context of economic, political and military control. They are building strategic assets around the globe so that they will have direct control of and use to extend their influence.  These trade and transportation networks are also the foundation of an expansive military strategy, providing them the ability to support military infrastructures and presence at these locations.  Having smart technologies imbedded in all this infrastructure will also give them unapparelled access to new types of data and global sources that they will exploit to great advantages in the decades to come.

Make no mistake, China is driving one of the most advanced nationalist strategies in the world today. They are using very proactive technique of investing outside of their country to create collaborative relationships and strategic alliances.  These initiatives will transform the global landscape in the next decade and will result in entirely new levels of influence and power dynamics.  The Chinese government has aligned and integrated its industry to drive this global economic, political and military strategy. They already have a significant lead and momentum behind the development of this infrastructure and relationships. Given the overall scale, it will be difficult for others keep pace much less have any chance of overtaking the development of these or similar strategic assets.  History is full of “New World Order” movements and we are witness to another one today.  These future building strategies and methods are worthy of study for countries and companies alike.

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Other Resources

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