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10th June 2022

TABLE OF CONTENTS

China’s Southern Strategy ------------------------------------------------------------------------------------------------- 2

Left out of the Indo-Pacific deal, China pushes toward the world’s largest trade deal ------------- 7
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China’s Southern Strategy

Beijing Is Using the Global South to
Constrain America
By Nadège Rolland

For the past decade, Chinese President Xi Jinping has

endeavored to help China attain what it considers to be its
rightful position at the center of the world stage. To do this,
Xi—along with the rest of China’s leadership—is attempting to
consolidate the country’s economic, political, diplomatic, and
military power. It is also working to counter U.S. pressure in
the Indo-Pacific region. Xi’s desire to turn China into the
world’s most powerful state is, after all, coupled with an
inextricable corollary: the imperative of stopping what he
sees as efforts by the West to contain it.

But China’s grand strategy includes a third component: asserting its

dominant position over a different international system of states.
Chinese policymakers are attempting to create a sphere of influence
comprising not just their country’s immediately contiguous region but
also the entire emerging, non-Western, and largely nondemocratic
world—the “global South.” Securing dominance over this vast swath of
nations would provide a strong base for China’s power while restricting
the United States’ actions and influence. Ultimately, that could help
spell the end of U.S. global hegemony.

GO FORTH

The developing world has been a constant focus of Chinese diplomacy

since the early years of the People’s Republic. Between 1946 and 1974,
Mao Zedong perfected his vision of how the struggle against imperialist
powers should unfold by focusing on the global South. His “three worlds”
theory envisioned a united front bringing together countries from Africa,
Asia, and Latin America, constituting the Third World, in a common
fight against the First World—composed of the imperialist United States
and (after the Sino-Soviet split) the Soviet Union. Meanwhile, China
would cajole and neutralize the Second World, made up of middle
powers such as Australia, Canada, Japan, and the states in Western
Europe. Mao believed that a united front of developing countries led by
China could encircle and isolate the hegemonic powers, much as the
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Chinese Communist Party (CCP) in its early years of political struggle

had “surrounded the cities from the countryside,” in Mao’s words,
eventually enabling the communist revolution to triumph. Toward this
end, starting in the mid-1950s, Beijing provided technical and financial
assistance to revolutionary and anticolonial liberation movements in the
Third World.

China’s own domestic turmoil and limited economic means, however,

ultimately constricted its ability to consolidate an effective anti-
hegemonic coalition. And so when Deng Xiaoping took power after
Mao’s death, he abandoned his predecessor’s revolutionary fervor and
instead prioritized the construction of China’s national power. But
developing countries remained important to Beijing, if for different
ideological and geostrategic reasons. Instead, the global South helped
serve China’s national development objectives, including by enabling
the country’s continued access to energy and natural resources to feed
its growing economy. Deng’s successors remained interested in the
economic potential of the developing world as they encouraged Chinese
companies to “go out” and conquer new markets overseas. The 16th
Party Congress, in 2002, officially included developing countries as “the
foundation” for China’s diplomacy—behind relationships with great
powers and with China’s neighbors, but ahead of its work in multilateral
institutions.

But China still nurtured developing countries in order to achieve major

geopolitical objectives. By openly using economic aid and investment as
incentives, China got countries in the global South to break off relations
with Taiwan, helping diplomatically asphyxiate the island. Through a
mix of similar inducements and appeals to shared anti-Western
sentiment, Beijing leveraged the votes of developing countries in the
United Nations to avoid international condemnation of its persistent
human rights abuses.

Toward the end of the tenure of Hu Jintao, who held the top positions in
China until 2012, the CCP became more fully convinced that its country
was on a steep upward trajectory. After all, China had overtaken Japan
as the world’s second-largest economy. At the same time, Beijing saw
the Obama administration’s newly announced “pivot” to Asia as an
intensification of U.S. efforts to constrict China’s power. Feeling both
renewed optimism and deepening alarm, China’s leaders
unambiguously abandoned Deng’s low-profile foreign policy in favor of
a new, proactive global vision focused on making their country the
world’s dominant power.

As they sketched out how their country could achieve this aim, some
Chinese experts advocated for a balancing strategy that would “march
westward” across the Eurasian landmass in order to offset the United
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States’ growing concentration of diplomatic, economic, and military

efforts in maritime Asia. Others, however, insisted that the global South
could again play a crucial role in helping China against its hegemonic
rival, especially given that the lack of Western interest in those regions
would make the task easier. While crafting this second option under
now president Xi, CCP theorists unearthed the counterencirclement
concepts developed by Mao decades earlier. And today, as under Mao,
strategic elites in Beijing appear to believe that leading a united front in
the global South will help counterbalance what they perceive as Western
attempts to isolate China and prevent its rise.

One major difference with the 1960s, however, is China’s economic

clout. Thanks to Xi’s much-touted Belt and Road Initiative, China’s
presence is felt across the world, from Pacific Island states to Africa’s
Atlantic shores. Beijing has further supported these countries with loans,
investments, infrastructure, and enhanced cooperation in an ever-
expanding array of domains. As a result, China has both incentives and
potential leverage that it can use to assemble coalitions of developing
states aligned in its favor and against the West.

China’s economic investment in the global South will also help bolster
the country’s long-term economic growth and prosperity. Africa’s
urbanized middle class is expected to grow by up to 800 million
people over the next 15 years—a population that could be a massive
new source of demand for Chinese firms. The Chinese companies
building out information technology networks across the developing
world may be able to collect vast troves of digital data from their diverse
customer base, which they can use to help train AI algorithms—an
indispensable step toward fulfilling China’s ambition of becoming a
future world technological leader. Finally, as shown in a May
2022 report published by the National Bureau of Asian Research,
China’s investment in African infrastructure may be designed to help
turn the continent into an integrated low-cost manufacturing platform,
allowing African countries to play for China a role like the one China has
played for the West. In sum, Beijing evidently hopes that the countries
of the global South may help reduce China’s dependence on U.S. and
European markets while creating a viable economic subsystem
substantially decoupled from the West.

DEVELOPING POWER

In some of its endeavors in the developing world, China is already

finding success. Consider its efforts to use deeper engagement with the
global South to delegitimize what the CCP derides as the West’s “so-
called universal values.” Developing countries can vote in international
institutions in ways that bolster China’s preferences, and many have
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done so on human rights resolutions. Many emerging economies are

also participating in China-led platforms such as the South-South
Dialogue on Human Rights; endorsing Chinese concepts such as the
“community of shared future,” the party’s vision of a China-centric
world order; echoing China’s preferred narratives; and, in the process,
giving Beijing more power over international discourse. Chinese
policymakers have been helped, to some extent, by the West’s failings.
Some developing countries are disappointed with the U.S.-backed
liberal democratic model, which they believe has failed to deliver on its
promises. Encouraged by China’s relentless training programs designed
to share Beijing’s governing practices, more developing countries could
end up choosing to borrow elements of China’s statist, mercantilist, and
repressive authoritarian model. In this way, too, countries in the global
South may help consecrate China as the arbiter of international rights
and wrongs.

Beijing’s expanding influence in the developing world could also

enhance its ability to project military power, or, at a minimum, restrict
other countries’ military options and freedom of maneuver. China is still
cautious about flexing its military might, and it casts its overseas
military activities as merely the product of a legitimate need to protect
its expanding interests. But in 2017, it established a navy base in the
East African country of Djibouti, and it has been harboring plans to set
up at least one other foreign military outpost, in Cambodia. China is
likely to take further steps to promote its permanent presence near
other maritime chokepoints and along vital sea lanes.

None of this means that Beijing will succeed at becoming the dominant
economic, political, and military power in the developing world. China
may become wary that low-investment returns will drain its resources
and therefore pull back from large overseas initiatives. Indeed, its wave
of big Belt and Road projects has already receded in recent years and
may remain low as the country’s economic growth continues to slow.
Beijing will also want to avoid security quagmires that put its interests
at risk. But regardless of the difficulties that lie ahead, there is no doubt
that China now sees the developing world as a theater of growing
strategic significance.

The United States, however, does not seem to have gotten fully up to
speed in responding to Beijing’s vision for the global South. For the past
decade, successive U.S. administrations have been almost entirely
reactive to China’s attempts to increase its influence in developing
countries. Its overarching policy in the global South appears to be
calling out Beijing’s Belt and Road Initiative as an exercise in predatory
economics, attempting to cobble together Western infrastructure-
building coalitions that are “value-driven,” and sending high-level U.S.
officials to South Pacific islands only when these states are discussing
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security agreements with China. None of these appear to be the

elements of a considered strategy. Indeed, planners in Beijing likely
enjoy watching Washington’s frantic response whenever rumors of a
new Chinese naval base emerge. They might even consider maneuvers
designed to divert U.S. financial resources, diplomatic energy, and
military focus away from places of great importance.

Instead of casting its strategy for the global South entirely in terms of
competition against China, the United States should determine its own
priorities. U.S. resources are not infinite, and Washington does not need
to be equally engaged everywhere. It should pay greater heed to
countries that are near geographic chokepoints and that hold minerals
or natural resources essential to future economic and technological
progress. The United States should also pay particular attention to
places where democracy has started to take root. Accountability,
transparency, freedom, and pluralism are of intrinsic value to ordinary
people. They also bolster U.S. efforts to compete against China:
countries with independent media, nongovernment organizations, and
strong civil societies are more likely to detect the detrimental effects of
China’s investments and resist its attempts at corruption, co-optation,
and coercion.

The United States should still be prepared to invest substantial

resources in the developing world. As critics often point out, it is hard to
beat something with nothing. Washington should seek to share the
financial burdens of these investments with its key Asian and European
allies. But it may not need to spend huge sums to gain influence in
developing states. Beyond cash pledges, Beijing’s main card in the global
South is intangible: the promise of opportunity and respect. There is no
reason the United States cannot offer both to countries that have too
often felt ignored.

NADÈGE ROLLAND is a Senior Fellow for political and security affairs at the
National Bureau of Asian Research.

This article appeared in Foreign Affairs Magazine

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Left out of the Indo-Pacific

deal, China pushes toward
the world’s largest trade
deal
 Amid the fanfare of U.S. President Joe Biden’s new Indo-Pacific strategy, China flew
under the radar focusing instead on growing trade under RCEP.

 Consistent with its support of multilateralism and globalization, China is likely to continue
promoting the adoption of RCEP which as this grants member states market access which IPEF
lacks.

 Beijing has laid out a blueprint for how Chinese businesses on how to expand trade and
find opportunities through RCEP and Chinese provinces were on board.

Amid the fanfare of U.S. President Joe Biden’s new Indo-Pacific strategy, China flew
under the radar and hosted a high-level discussion on RCEP, the world’s largest trade
pact.

It came days after the Biden administration launched the Indo-Pacific Economic
Framework, or IPEF — a partnership which involves 13 countries, excluding China, as
the U.S. seeks to expand its political and economic leadership in the Indo-Pacific region.

The Regional Comprehensive Economic Partnership (RCEP) meeting in the southern

island of Hainan underscored analysts’ expectations that instead of reacting to or
countering IPEF, China will likely forge ahead with agreed-upon trade pacts and
capitalize on ready-to-go tariffs and market accesses.

“China will not take immediate or very targeted measures to respond to the IPEF,” said Li
Xirui, a trade scholar at the S. Rajaratnam School of International Studies at Singapore’s
Nanyang Technological University.

At the second RCEP Media & Think Tank Forum, held in the Hainan capital of Haikou the
weekend after IPEF was announced, non-government trade experts across the region
gathered to discuss more ways to expand trade within the bloc.

RCEP includes China and the 10-member ASEAN bloc, together with Australia, Japan,
South Korea and New Zealand.

Led by the Hainan government, the meeting also marked another provincial effort to meet
Beijing’s wider strategy of implementing RCEP since its launch at the start of this year.

“Consistent with its support of multilateralism and globalization, China is likely to continue
promoting the adoption of RCEP as this grants member states huge market access,
which IPEF lacks,” Li told CNBC.
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She said China would likely respond to the U.S. on any of its future Asia-Pacific
economic forays by expanding its economic dominance in the region and growing its
trade under the RCEP.

Beijing would also focus on its applications to join other large-scale trade deals including
the second-largest global trade pact, the Comprehensive and Progressive Agreement for
Trans-Pacific Partnership (CPTPP) and the Digital Economy Partnership Agreement
(DEPA), Li added.

China’s strategy will be in line with how it, and other states and political observers, views
the IPEF — a non-trade deal and Biden’s geopolitical rather than economic tilt back into
Asia Pacific, Li added.

In late May, following the IPEF’s launch, former Malaysian Prime Minister Mahathir
Mohamad criticized the Indo-Pacific deal, and said it was a political move by the U.S. to
isolate China.

Malaysia is one of 13 nations that joined the IPEF which did not include China.

Trade specialist Heng Wang, who is at the Herbert Smith Freehills China International
Business and Economic Law (CIBEL) Centre at the University of New South Wales, also
took the view that China will continue to use market accesses it has under RCEP as they
will allow it to deepen its presence in the region.

“RCEP is the only mega regional trade agreement to which China is a party, and China
would likely highlight it,” Wang said.

The threat of a competing trade deal by the U.S. however remains a reality, said Henry
Gao, associate professor of law at Singapore Management University.

“In case anyone doubts the U.S. vision of the IPEF as the RCEP-killer, the White
House stated explicitly in the [IPEF] announcement, that: ‘Together, we represent 40% of
world GDP,’” Gao said.

“Why [use] this statement when the IPEF isn’t supposed to be about market access?”

Gao pointed out the symmetry of comments made by RCEP members, especially China,
who have been advertising the fact that the RCEP accounts for 30% of world GDP.”

China’s grand plans for RCEP

Meanwhile, China has already gained headways with implementing the RCEP since its
launch in January, according to Li.

It laid out a blueprint for Chinese businesses on how to expand trade and find
opportunities through RCEP.

Beijing laid out guidelines in six areas including trade and manufacturing, and promoted
the use of the Chinese yuan for trading settlement of trading transactions. Authorities
also asked businesses to pursue the use of its heavily publicized free-trade port in
Hainan which was implementing an independent customs system.
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Li, who has been watching China’s RCEP implementation, pointed out at least 10
provinces including Fujian and Zhejiang had laid out extensive plans to use the RCEP.

Yunnan, for example, wants to increase exports of agricultural products, while Guangxi is
looking to upgrade jointly operated industrial parts in Malaysia.

The Guangxi and Fujian governments also want to build more industrial facilities in
Vietnam, Malaysia and Indonesia.

Many provinces have pledged to provide a range of RCEP-related support services in the
protection of intellectual property rights and trade dispute resolution mechanisms, Li
said.

As for signing more trade deals to potentially counter the IPEF, China will not likely ink
other bilateral or trilateral pacts in the region such as concluding the outstanding China-
Japan-Korea free trade pact, Li said, citing China’s preference for “gradualism” or a slow-
reform approach to trade deals.

This article appeared in CNBC.