I don’t know that a 203-minute speech is really anybody’s idea of a good time — it’s certainly not mine. Thankfully, for those of us who (unlike more than 2,000 audience members and hordes of Chinese schoolchildren) didn’t have to sit through Xi Jinping’s address to the 19th National Congress of the Communist Party of China, the takeaway is simple: Xi is in charge, and his vision of what China is and will become will hold sway at least until 2022, when the next Congress will be held.
Beyond solidifying his power, Xi also solidified his legacy, getting written into the CPC constitution the pre-eminence of “Xi Jinping Thought,” which has echoes of Mao and “Deng Xiaoping Theory,” which was added to the party constitution in 1997. But what exactly is “Xi Jinping Thought”? In the broad strokes, it means a more outward-looking and globally involved China, something Xi has extolled for a while. Yet his confirmation and rhetoric in Beijing this week suggests that China’s commitment to globalization is part-and-parcel of its ambitions to become a true global superpower.
In a world where the geopolitical map is shifting, as western powers like the U.S. and England seem to be withdrawing from internationalism, that’s important — and could redefine the global economy for decades to come.
Part of Xi’s vision, not surprisingly, involves a stronger and more globally engaged military, which he has vowed to fully modernize by 2050. But the other part of global engagement is economic expansionism, and the timing, at least, couldn’t be better. China clearly sees a strategic opportunity to fill the vacuum on the global stage created by U.S. President Donald Trump.
With the withdrawal of the U.S. from the Trans Pacific Partnership, China was given an opening to strengthen its trade position in Asia; with the withdrawal of the U.S. from the Paris Climate Accord, China was given an opening to seize the moral high ground on climate change and sustainable energy development; with the potential withdrawal of the U.S. from NAFTA, China may be given an opening to strengthen trade with Mexico (a low-cost manufacturer) and perhaps even Canada, which has lots of stuff that China still needs.
We might also expect to see more foreign investment and lending from China throughout the world. In 2013, Xi announced a multi-year, multi-trillion-dollar plan — the so-called One Belt, One Road initiative — to build infrastructure throughout Eurasia to build connections between China, Africa and Europe. The China Development Bank has already earmarked nearly a trillion dollars for hundreds of projects. Along with state-owned enterprises, China is eyeing ports, repaving roads and building rail lines throughout the region.
Under Xi, China has also become a major lender to developing countries elsewhere, including in Latin America. That has not always gone well. Case in point: Venezuela, to which China has loaned more than US$60 billion, and which accounted for more than half of all China’s lending to Latin America between 2007 and 2015. Now, of course, Venezuela is in turmoil. Inflation is running in the four digits, and the country is in real peril of defaulting on US$3.7 billion in debt repayments due over the next couple months. Chinese-funded infrastructure projects, like the Tinaco-Anaco high-speed railway announced in 2009, remain unfinished; locals call the Tinaco-Anaco a “red elephant.” And it’s increasingly unlikely that Venezuela will ever pay back China, which officially cut off more lending to the country late last year.
Yet Venezuela is only the most glaring example of a wider problem with Chinese largesse: it has a track record of putting money into risky countries with poor economic governance — you know, things like courts and securities regulators and laws and all that. Obviously, some of that risk tolerance can be put down to its predilection for politically sympathetic regimes, like Hugo Chavez’s Venezuela. But it’s been a general issue, a sign of China being “indifferent to governance environments to the extent that it is making major investments in weak-governance environments where other investors fear to tread,” as David Dollar of the Brookings Institution put it in a recent paper.
That might change. To some analysts, China’s withdrawal from the Venezuela debt crisis suggests that it is learning from its mistakes, and will take a more risk-averse approach to foreign lending and direct investment in future. Yet as China expands its economic presence in other countries, it could very well run into another problem: the locals might not like it very much. In Sri Lanka, for instance, protests erupted earlier this year over a Chinese-backed industrial zone; farmers fear they will lose their homes, and opposition politicians claim Sri Lanka is ceding sovereignty to China through the development.
Can Xi expect more of the same? Maybe not, if he can successfully back up his rhetoric about trade liberalism and better governance — he has repeatedly touted the virtues of “the rule of law” in international relations — with action. One step would be more reciprocity when it comes to foreign direct investment; China remains one of the world’s most closed economies to outside capital.
Even then, however, China can expect its planned path to global pre-eminence to be a rocky one. As the U.S. can attest, from Vietnam to Iraq, heavy is the head that wears the superpower crown.