The recent edition of the Bonn Power Shift Monitor is dedicated to the growing number of Chinese economic initiatives and China’s further establishment as an economic power.
China’s explosive growth during the last decades, just like its recent economic slowdown, has had substantial impact on the global economic system. In order to continue its impressive rise and counter the current slump, China is reaching out in all directions with various ambitious economic initiatives, partnerships and large-scale projects. After India’s and Pakistan’s admission into the SCO, Beijing appears to be aiming to establish closer ties to New Delhi within the increasingly weighty organization’s framework. China’s OBOR initiative as one of the largest development projects in history is simultaneously gaining momentum: After Xi’s visit to East Europe, Beijing launched a €10 billion investment fund to help finance various infrastructure and development projects in the region. By helping to modernize high speed transit and subsidizing the Russian railway system, China’s railway cooperation with Russia aims at promote connectivity across Eurasia – and possibly create a cluster of countries tied to the Chinese economy and capital. During Li’s recent visit to Kyrgyzstan and Kazakhstan, connectivity was the buzzword as well and closely linked to China’s main aim to boost Central Asian production capacity in order to increase trade promotion. While China’s Central Asia plans are based on a similar reasoning as for investments in Africa revolving around cheap labor, the potential for local market growth and lax environmental standards, the industrial expansion to Central Asia still shows significant shortcomings.
This and other remaining challenge aside, China’s foreign investment is growing rapidly; 2016 constituted a new record year for outbound investment in Europe. During the German-Chinese Economic Forum in June 2016 where Merkel and Li agreed to link their strategies for future economic development, a total of 96 contracts worth €14 billion were signed between Chinese and German companies. The Middle Kingdom is looking to shed its image as the cheap workbench of the West: With its “Made in China 2025” program as an answer to the West’s highly digitalized “Industry 4.0”, Beijing aims to bring its industry on an equal footing with Western industrial nations. Though this development is still in the early stages, China’s billion-Euro investments in development and innovation are beginning to bear fruit: Between 2013 and 2015, for instance, Chinese inventors registered more than 2,500 patents for Industry 4.0-enabling technologies with the quality of patents increasing. The US and Germany only registered 1065 and 441 patents, respectively, during the same period. Moving away from a highly centralized planned economy, China is projected to catch up with the leading industrial nations by 2049.
Beijing’s multifaceted and ambitious initiatives ranging from the AIIB and OBOR to a number of bilateral partnerships have the potential to significantly impact a whole range of economies in the Global South and the Global North. With its transforming profile, China is increasingly turning into a global player who is actively involved in shaping the world order, and might thus force the West to develop a new approach to cooperation and dialogue very soon.
Prof. Dr. Xuewu Gu
Center for Global Studies, University of Bonn