The viability of China's development partnership model has come into question due to its prominent Belt and Road Initiative (BRI). Image by - CT design team.

Does "market imperialism" influence China's development model?

The viability of China's development partnership model has come into question due to its prominent Belt and Road Initiative (BRI).

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The viability of China's development partnership model has come into question due to its prominent Belt and Road Initiative (BRI).

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The past few years have brought unprecedented challenges that are putting global development at a critical juncture. The combined impacts of the US-China trade war, COVID-19 pandemic, uneven economic recovery, supply chain disruptions from the Ukraine crisis, and climate change have created a 'polycrisis' that has deeply wounded the world.

While global development cooperation was envisaged as a critical pillar of the UN's Agenda 2030, such partnerships are now being shaped by geopolitical tensions and uncertainty. Since announcing the Belt and Road Initiative (BRI) in 2014, China has emerged as a major driver of global development, shifting paradigms through its expanding role. Exhibiting alignment with Agenda 2030 and internationalism, Beijing has strategically utilized its development cooperation model as a foreign policy tool to secure its interests.

By lifting nearly 700 million people out of poverty since reforms began in the late 1970s, China transformed into a vital development provider for the Global South. Its ballooning development cooperation in scope and reach has disrupted existing development paradigms. In the 2000s, China gained international prominence by hosting the inaugural Forum on China-Africa Cooperation, leveraging its growing presence in Africa. Beijing's vast infrastructure program BRI has unsettled traditional western-led aid models, giving it a unique position in global development architecture.

The BRI's Underlying Motivations

However, China's framework has also attracted scrutiny for several reasons. The motivations behind China's development partnership symbolized by BRI stemmed from a 'consumption-led growth' approach. This entails boosting domestic investment, production and consumption to drive economic growth. China explicitly acknowledged the goal of promoting 'consumption-led growth' through higher domestic purchasing power in its 14th Five-Year Plan.

After the 2008 global recession impacted major economies like the EU, Beijing realized its export-driven growth model was vulnerable to vagaries of international trade and finance. With unreliable external demand, China needed a reliable domestic growth engine as an economic buffer. This involved policies to substantially increase wages and domestic costs over the past decade, which would make exports less competitive globally.

China's shift also aims to advance economic development, governance, emergency response and eco-environmental protection. There are references to creating a 'global community of shared future' under South-South cooperation to jointly pursue common development.

Exploiting Factor and Product Markets: Is BRI 'Market Imperialism'?

In a sense, BRI represents China's exploration to capture Africa and South Asia's 'factor' markets of cheap labor and natural resources, and product markets in the EU, Middle East and US. Thus China's footprint is visible across underdeveloped and developing regions in Africa, South Asia, Southeast Asia and Europe with abundant inexpensive labor and accessible natural capital.

With its vast scale and strategic intent, BRI has become 'a magnet of controversy and criticism.' Projects seeming to secure Chinese access to resources and markets have been called ‘debt trap diplomacy.’ Under BRI, China's development cooperation exhibits eagerness to internationalize while burdening vulnerable economies with heavy debts – Sri Lanka's Hambantota Port and debt distress in 22 African states are oft-cited examples.

Although China's new Global Development Initiative (GDI) and Global Security Initiative (GSI) may indicate a shift towards a 'new development paradigm,' BRI still reflects ‘market imperialist designs’ to capture factor and product markets. GDI and GSI appear to be strategic moves to boost China's global governance profile. The China-Pakistan Economic Corridor (CPEC) furthers Beijing’s strategic development model and shores up its 'all-weather' ally. But Pakistan's debt crisis has raised doubts about CPEC's economic viability, resulting in unproductive debt. Will this lead to another Chinese 'land grab'? Concerns abound.

Key Drivers Behind China's Changing Development Cooperation Approach

Several factors drove modifications in China's international development cooperation strategy:

  1. Mitigating Excess Industrial Capacity: After decades of breakneck industrialization, China faces severe overcapacity across sectors like steel, cement and construction. BRI provides overseas infrastructure projects to absorb this surplus production.
  2. Facilitating Renminbi Internationalization: BRI partners conduct trade and investment in RMB, boosting the currency's global usage and ambitions to rival the US dollar. RMB internationalization also enables yuan-denominated financing for BRI.
  3. Accessing Resources: BRI facilitates Chinese access to vital resources like oil, gas, minerals and agricultural commodities through equity stakes in overseas projects. This secures critical raw material supplies.
  4. Opening Markets for Chinese Firms: BRI creates commercial opportunities for Chinese state-owned and private enterprises in construction, engineering, logistics, finance etc. in largely untapped emerging market regions.
  5. Reducing Regional Disparities: BRI links China's underdeveloped western regions with neighboring countries through transport corridors, energy pipelines and industrial capacity cooperation. This helps spread prosperity westwards.
  6. Strategic Considerations: BRI straddles critical sea lanes in the Indo-Pacific, expanding China's regional influence. Overseas ports and facilities could potentially service military interests.

Adaptations in China's Development Cooperation Under BRI

China has adapted its approach in response to BRI criticisms:

  • Greater project transparency and compliance with international standards
  • Attempts at debt sustainability by offering debt relief and renegotiations
  • Encouraging third-party participation in BRI through multilateral platforms like BRICS
  • Adopting greener technologies and consulting local communities
  • Tighter restriction on opaque project financing by Chinese policy banks
  • Shift from extensive infrastructure construction towards more livelihood projects
  • Localization of workforce and materials rather than relying on Chinese labor and machinery

However, fundamental questions remain about China's development model. Its preferred use of Chinese firms and financing rather than building local capacity has raised skepticism. BRI's bilateral approach avoiding multilateral inputs and norms also persists. With China now the world's largest official creditor, concerns linger whether its debt relief and restructuring terms sufficiently reduce risks for vulnerable developing nations.

Nonetheless, by pioneering a South-South cooperation model that stands apart from traditional western aid architecture, China has prompted more choice in development partnerships. If BRI can address its flaws while keeping its momentum, it may yet positively shape developing countries' progress. But fulfilling its lofty win-win promises requires China to recalibrate its strategy.

World NewsChinaPeoples Republic of ChinaBeijing ChinaBelt and Road InitiativeBRIUS-China Trade WarGlobal Development InitiativeGDIGlobal Security InitiativeGSIChina-Pakistan Economic CorridorCPECBRICSG20 Summit 2023

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