Chinese Strategy In Foreign Aid Expansion: Encirclement & Defense

Dr. Charles Wolf Jr., is the distinguished chair in international economics at the RAND Corp., and is professor of policy analysis at the Pardee RAND Corp., graduate school.  He continues as a senior research fellow at Hoover, Stanford University.  Dr. Wolf was instrumental in the fielding of a two year research study published recently by RAND titled “China’s Foreign Aid & Government-Sponsored Investment Activities.”  Any read will detail to the reader the mind of a dominant Chinese minister of commerce responsible for administering such largess.

In today’s dollars, Chinese foreign aid is $189.3 billion and growing.

Beijing does NOT conceive of this as the west does, for it finances this aid through loans.  Beijing also see’s its foreign commitment abroad as a way of securing Chinese economic and political advances while developing the very nations that it seeks will serve Beijing’s domestic needs.  Beijing does not give aid away like the west.  Instead it consigns specific production and resource development for export to China alone!  Proceeds from these exports are deposited in two escrow accounts established by ‘The China Development Bank of China’ & ‘The Export-Import Bank of China’.  The loans are quite simple really, a 3% rate of interest over 15 years with a five year grace period.

The nations exporting the most for China are Latin America and Africa, third is the Middle East, last is Southeast Asia.

For South America, Venezuela, Brazil & Argentina lead.

In Africa, largest programs are in Nigeria, Ghana.

In Asia, largest is in Indonesia, Thailand and Malaysia.

What is sought are energy deposits like coal, oil, gas along with ferrous and non-ferrous metals.

By the way, this is how North Korea stay’s afloat.  More on that another time.

Exporters get developed infrastructure, developed export regimes, limited availability of its own natural resources, economic growth, new technology and an emergent class of sufficient manufacturers.  China gets an expanded supply line, payback in commodities, as well as diplomatic leverage against the U.S.

However, both parties are exposed to risks and hidden costs.  Let’s go over a few.

The export lead country experiences massive environmental damage, no rule of law, social blight, aggressive social-ethnic tensions as well as massive corruption.  At the least, these nation states remain prostrate to permanent port of call entry for Beijing’s Navy.

Unspoken in this report is how vulnerable China’s Navy is to protecting its own delivery commons in war.

The unintended and perverse social, political, environmental consequences have yet to play out.

Beijing, the colonizer does NOT care.

About William Holland

Systematic Theologian/International Relations
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