The China boom has changed far more than China itself: its impact has been felt right across the global system, from the wealthiest states to the poorest.
But for China’s neighbors, there has been a particular implication—an opportunity for relatively poor economies to develop themselves, to a greater or lesser extent, in China’s own image.
The megaproject is the pièce de résistance of the Chinese development model: huge dams, high-speed rail networks, highways, mines, ports—anything so long as it’s big enough to resonate with vision and prowess. China has given other countries in the region, especially those in developing South and Southeast Asia, the chance to have their own impressive Chinese-style infrastructure or to tap once-unreachable resources by providing the money, the expertise, and in many cases the labor needed to deliver projects way beyond the capacity of the recipient countries.Enjoying this article? Click here to subscribe for full access. Just $5 a month.
Chinese companies, usually deep-pocketed state-owned enterprises (SOEs), have naturally been involved in hundreds of regional projects that don’t merit the “mega” tag. But the really big projects—the ones that no other investor had the ambition or the capital to undertake—have mattered the most. These have tended to go ahead in places where China has a strategic interest: locations that offer access to critical resources, where new infrastructure can help spur development of China’s own western interior, or where China can develop an extraterritorial west coast via projects in Myanmar and Pakistan, for example. It’s the familiar “win-win” approach, at least in theory: China achieves its regional objectives, while its partners acquire infrastructure and revenue which they would not otherwise have been able to obtain.
And these near-abroad investments differ significantly from China’s investment model in developed economies. While China has certainly invested heavily in Europe and the U.S., its activity there has been corporate in nature: acquiring companies, or stakes in companies, that offer value. In contrast, there are often multiple facets to China’s regional ventures, which may include:
- Boosting energy security
- Securing access to raw materials
- Generating profits
- “Diplomacy projects” that boost China’s prestige or buy influence with the local regime (but which may well entail a financial loss)
- Funding projects as a way of generating business for Chinese companies
- Opening up future markets for Chinese goods
- Boosting bilateral trade in general
- Helping to develop China’s western interior by improving links with contiguous states
- Long-term strategic advantages, possibly including military access to key facilities
However, China’s newfound status as developing Asia’s paymaster, architect and master-builder may already be set to change. The country is at a crossroads as it abandons its old export-led economic model in the hope of achieving a more “balanced” economy. There are many ifs and buts. Though the broad strokes of the government’s new-look “Likonomics” have already been widely discussed, little official detail about Beijing’s new blueprint will emerge until the Third Plenum of the CCP’s Central Committee, which is due in November.
These deliberations could have important implications for China’s regional partners. Will the new economic model seek to expand, curtail or in some way evolve Beijing’s regional investment activities? Or, if the rebalancing of the Chinese economy becomes a crisis rather than a well-managed transition, as some are predicting, will Chinese SOEs even have the cash and the confidence to sustain their ambitious regional interests?