How China became major global economic and geopolitical playerFriday February 17 2023
They say, when China sneezes, the world catches a cold. China has become a major influence on the global economy and certainly energy, a status it has achieved over the last two decades.
Whatever happens in China has a direct or indirect impact on global economies and markets.
The one main factor currently being analysed by the world is the impact of China’s recovery from its lengthy Covid quarantines.
This factor alone has driven oil prices upwards from the low $80s towards $90.
I have closely observed Chinese economic and political posturing over the last two decades, ever since 2003 when oil prices rose above the then-perceived ceiling of $30 to peak at above $140 in 2008.
The Chinese economy (manufacturing and exports) was overheating, forcing China to crisscross the world securing global supplies of energy and raw materials to feed its industries.
Developing and poorer nations mortgaged their natural resources (oil, gas, and minerals) to China in exchange for long-term infrastructure funding and development.
Global infrastructure soon became a lucrative new Chinese business line, which has since been perfected by China.
Today China exerts an unrivalled influence on global energy markets and infrastructure development, having achieved second position in the global economic ranking.
All this time, the West — the US and Europe — was preoccupied with the war on terrorism followed by its push for the globalisation of trade.
China fully embraced and maximised globalisation opportunities in a new world of free trade. Unwittingly, the West transferred their technologies, critical manufacturing, and jobs to China.
The West’s dilemma today is the Chinese stranglehold on global economic levers, industrial production, and critical supplies of ICT and green energy transition materials.
Having achieved global economic advantage, China is upping its geopolitical power, a game that Beijing is playing smartly.
In the oil-rich Middle East, China has gained an edge over the West. With its awkward war in Ukraine, Russia has surrendered its number two geopolitical status to China.
However, for China to succeed as an effective geopolitical player, it has to clean up its image which is perceived as generally selfish, always maximising Chinese benefits at the expense of the world.
Developing countries which deal with China from a point of disadvantage, view China from the lens of disabling debts.
Unlike with the West, social-economic development projects or bilateral aid by the Chinese hardly feature in poorer countries.
The West is usually viewed as a partner, with China seen as a cold negotiator of deals.