China’s Global Influence: New Reports Detail Influence, Dependencies, and Fluctuating Investments

Posted by | Apr 29, 2022

A series of recent reports from think tanks in Europe, Taiwan, and the U.S. have highlighted the extent of China’s influence in other countries. Using a variety of metrics and case studies, the reports map malign influence, rhetoric regarding dependencies, foreign direct investment, loan commitments, and false debt-trap claims. Together, they paint a complex picture of China’s varied relationships with countries across the globe, and attest to the growing interest in understanding China’s role on the world stage.

On Monday, Taiwan-based Doublethink Lab launched the pilot version of its China Index, an initiative to investigate Chinese influence and disinformation campaigns and their impacts abroad. Justin Ong from The Straits Times reported on the initiative and its methodology:

The index is billed as the first to gauge the extent of Chinese influence using comparable data, collected from March to August 2021 and involving 99 indicators across nine domains: media, foreign policy, academia, domestic politics, economy, technology, society, military and law enforcement.

The indicators further fall into three categories: exposure – how vulnerable the country is; pressure – actions taken by China to change the behaviour of people in the country; and effect – the degree to which the country accommodates China, and the impact of these actions.

A committee convened by Doublethink Lab designed the indicators, each of which was then assessed on a four-point scale by at least two anonymous local experts – either academics, journalists, researchers or community leaders – who must provide corresponding evidence. [Source]

In the media domain, the China Index evaluates how PRC entities influence public debate and media coverage in each country. This includes the entities’ engagement with media organizations, promotion of content supporting Chinese state interests, and censorship of narratives, journalists, and critical voices. In the current pilot version, which includes 36 countries, the country subject to the most Chinese influence in the media domain is Taiwan, followed by Canada, Peru, Germany, and Australia. 

The initiative garnered supportive reactions online, and sparked a lively discussion of methodological issues involved in quantifying and presenting China’s influence abroad, particularly when using a comparative lens: 

Also on Monday, the European Think-tank Network on China (ETNC) released a lengthy report titled “Dependence in Europe’s Relations with China: Weighing Perceptions and Reality.” Bringing together independent analyses from 18 countries in addition to EU agencies, it examines how dependencies on China are reflected in European public and policy-level debates. Here are some of the key findings of the report:

A cross-cutting analysis of the chapters reveals that there is a broad diversity in the content and intensity of public debate and in the policy-level assessment and understanding of dependencies on China across Europe. In some countries, the issue is treated both as a significant concern in the public debate and a significant priority at the policymaking level. For others it is significant at one level but not the other, and in still other countries there is a limited, or even lacking discussion on this topic, both among the general public and in policymaking debates.

[…] A striking observation from our country-level analysis is that beyond the EU institutions, surprisingly few states have made concerted efforts to assess their dependencies with any degree of depth. 

In only a quarter of countries observed has there been a significant level of public debate coupled with concerted policy-level action to both understand and address issues around dependence

[…] Europe today is clearly in the midst of searching for a balance between openness and security—between yielding the benefits of interdependence and reducing the vulnerabilities of dependence. This is not a process that is solely about China, but it is nevertheless one that will fundamentally impact relations with it. [Source]

On Wednesday, MERICS and Rhodium Group released a report summarizing China’s investment footprint in Europe for the year 2021. Despite a minor increase from the previous year, Chinese investment in Europe remains at a low level. As the report states, “2021 was the second lowest year (above only 2020) for China’s investment in Europe since 2013.” The report offered a pessimistic projection for Chinese investment in 2022: “The Chinese government is expected to stick to strict capital controls, financial deleveraging and Covid-19 restrictions. The war in Ukraine and expanding screening regimes and scrutiny of Chinese investment in the EU and the UK will create additional headwinds.” 

On a related subject, this week the Boston University Global Development Policy Center updated its Chinese Loans to Africa (CLA) Database for the year 2021. The CLA Database tracks loan commitments from Chinese policy and commercial banks, government entities, companies, and other financiers to African governments and state-owned enterprises. The center’s researchers recorded only 11 new loan commitments worth $1.9 billion from Chinese lenders to African government borrowers in 2020, which is the lowest amount in over 15 years and down 77 percent from 2019, when Chinese lenders signed 32 loan agreements worth $8.2 billion. Part of the downturn is a result of the pandemic, and researchers predict that the number of loans will increase in the post-pandemic period. A recent policy brief by the center explored trends in Chinese loans to Africa during the pandemic and over the past two decades: 

In 2020, Chinese lenders and African borrowers signed 11 loan agreements for projects in the transport, power, information and communications technology (ICT) and banking sectors across Burkina Faso, Democratic Republic of Congo, Ghana, Lesotho, Madagascar, Mozambique, Rwanda and Uganda and the African Export–Import Bank, a regional bank. The Export-Import Bank of China (CHEXIM) financed eight of the 11 projects, while Bank of China, the Industrial and Commercial Bank of China and Dongfang Electric International Corporation provided the other three.

From 2000-2020, Chinese financiers signed 1,188 loan commitments worth $160 billion with 49 African governments, their state-owned enterprises and five regional multilateral organizations.

[…] A loan reduction in 2020 may not reflect a definite pullback of Chinese lending to the region, as the decline highlights how Chinese loan amounts tend to fluctuate during times of crisis and exposure to structural risk levels.

The decrease is also consistent with pullbacks of Chinese lending in other parts of the world in 2020. [Source]

Last week, the China Africa Research Initiative at Johns Hopkins University released a substantial report titled: “How Africa Borrows From China: And Why Mombasa Port is Not Collateral for Kenya’s Standard Gauge Railway.” The report provides a detailed analysis of Kenya’s Standard Gauge Railway project and thoroughly debunks claims that debt from the project would lead to the seizure of the port of Mombasa by the Export-Import Bank of China. Cobus van Staden at the China-Africa Project summarized highlights of the report: 

NO SEIZURE OF PORT: “This paper examined Kenya’s SGR project, focusing on the widespread conspiracy theory that the Kenyan government had used Mombasa Port as collateral for the China Eximbank loan. Although Kenya’s government has not released the actual loan documents, we believe that enough evidence exists to say, categorically, that Mombasa Port was not used as collateral and, further, that there is no question of the port ever being “seized” by China Eximbank should Kenya default on the SGR loans.”

SECRECY COMPOUNDED THE PROBLEM: “Transparency has been a significant failure in this case, with blame on both the Chinese lender and the Kenyan borrower side. As one Kenyan remarked: “No one outside of an elite circle within the State House has even the faintest idea as to why they’re so afraid to tell us the truth about this loan that we, the people, are obligated to pay!” This failure fueled the conspiracy theory.”

CHINESE LOANS DON’T FOLLOW AID RULES: “Why did China Eximbank, a policy bank, require waivers of sovereign immunity and the use of escrow accounts and TOPAs [Tenant Opportunity to Purchase Acts], features that are unusual in foreign aid and more commonly seen in straight commercial project finance? Part of the answer is that none of the loans in this deal were “official development assistance” (ODA), according to criteria developed by the OECD. The Chinese loans were commercial loans. The features they employ only seem unusual to those who have become used to seeing project finance as coming from donors like the World Bank, which is a preferred creditor with multiple ways to protect its loans from the risks inherent in frontier and emerging market countries.” [Source]

 

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