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China's money diplomacy is very hard to resist

Hindustan Times logo Hindustan Times 25-09-2017 IAN BREMMER

NEW DELHI, Sept. 25 -- There are many ways a government can assert its interests on the international stage. Some use military muscle. Others use subversion or bluster. In Asia, Africa, Latin America, and even in Europe, China is using investment to get what it wants from governments in need.

The most obvious examples are in Asia. Pakistan's relations with the United States have deteriorated sharply in recent years, for many reasons, and President Donald Trump's warmer ties with Indian Prime Minister Narendra Modi have given Pakistan's government and military good reason to invest more deeply in strong relations with China. In turn, Beijing's investment in Pakistan has gathered momentum. An infrastructure development project, the US$55 billion China-Pakistan Economic Corridor, part of China's broader "Belt Road Initiative," is generating growth and creating much-needed jobs in Pakistan. In return, China is developing the Port of Gwadar, which will provide China a stronger presence in the Indian Ocean.

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Philippine President Rodrigo Duterte doesn't like criticism from the US and Europe, and Beijing has pledged to help him improve his country's underdeveloped infrastructure. So far, China hasn't delivered much, but the promise alone has persuaded the Philippine president not to push hard against China's expansive claims in the South China Sea. .

China's deep pockets have long bought influence in Africa, where President Xi Jinping has pledged billions more in investment in coming years. China is also amplifying its voice across Africa via StarTimes, a state-backed, though privately owned, Chinese media and telecoms firm that beams Chinese content-and a Chinese worldview-in 30 African countries .

As a member of the BRICS group since 2010, South Africa has given China a gateway into the Southern African Development Community, which provides access to natural resources that support China's growth and boost its political influence across the region. China is South Africa's largest trade partner, and the two signed commercial deals in 2015 worth US$6.5 billion. South Africa's government has rewarded China's willingness to invest by denying Tibet's Dalai Lama, who is persona non grata in China, entry into South Africa on three separate occasions since 2009, though South African officials deny this.

Kenya's President Uhuru Kenyatta was one of just two African leaders offered a seat at the Belt Road Forum in Beijing earlier this year, and Kenya can expect to be a major recipient of Chinese infrastructure investment as part of the maritime route of the Belt Road project. China has already built a high-speed rail connection between the Kenyan cities of Nairobi and Mombasa, and Kenya's government has expressed thanks with support for China's territorial claims in the South China Sea and for Beijing's bid to persuade the International Monetary Fund to add China's currency to its Special Drawing Rights Basket.

China has also spent considerable time and money building its influence in Latin America. China has become the largest export market for Brazil, Chile, Cuba, Peru, and Uruguay. But this is no longer simply a story of China buying commodities.

Beijing has even extended this strategy into Europe, where leaders still act as though the world is hoping to follow their lead. The most-recent Chinese investment is in cash-strapped Greece, a country fed up with imposed austerity and bitter criticism from the EU. Greece has won Chinese investment through the Belt Road project. In particular, a Chinese state-owned firm now operates the Greek commercial port at Piraeus, the busiest in the Mediterranean.

Earlier this year, Greece blocked an EU statement to the UN human rights council that criticised Xi Jinping's crackdown on domestic political dissent and joined Hungary to support China's South China Sea territorial claims at The Hague. There's a lesson here for the United States, the European Union, and any other international player that would condition badly needed investment on domestic political behaviour.

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