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China and the West: An overview of growing competition in the Global South and the impact of China’s rise

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By Thomas L. Oomen, Junior Researcher at Asia Centre focused on EU-Asia relations and China in international affairs

Abstract

After centuries of Western hegemons, the world now sees a true contender arising: the People’s Republic of China. Over the past two decades, the US sees China more and more as a rival, while the EU sees it not only as a rival but also as a partner and competitor. Alternatively, China’s critique of the West is growing as it tries to establish itself as the leader of the Global South, a grouping of countries best characterized as the power periphery of the world. Broadly speaking, the Global South covers Latin America and the Caribbean, Africa, and large parts of Asia. In general, the Sino-Western relationship in the Global South is increasingly one of overt competition. The key underpinning to these differences is geopolitics. Economically, there is mainly firm-level competition as Chinese firms threaten established Western businesses interests in the Global South. In terms of cooperation with China, European countries more willing to do so than the US, but actions have fallen behind on intentions. The US is more hostile to China, caused by its fear of replacement as the world’s hegemon. For the US, China’s economic rise in LAC is most troubling, while European states are more concerned about economic developments in Africa. Militarily, there is increased competition, with the US opposing China more rigorously than the European states. This militaristic competition is most prominent in Asia, where China and the US have competing security architectures. Lastly, policymakers and politicians should continue to work on the different modalities through which cooperation can happen to avoid a Thucydides Trap.

Introduction

After centuries, the West’s firm grasp over the Global South is weakening because of China’s rise. The Global South has multiple definitions, some refer to it as the new name for the Third World, the countries from the Non-Aligned Movement or those countries negatively impacted by globalisation (Mahler, 2017). In its essence, however, it revolves around the grouping of the power periphery of the world, which includes almost every country in the world except for the West and Russia (Mahler, 2017). China’s rise and its growing influence amongst these countries have caused Western states to become worried (Piccone, 2016). The European Union (EU) has labelled China as a cooperation partner, economic competitor, and systemic rival while the US sees Beijing mainly as a strategic competitor (European Commission, 2019; White House, 2020). According to some researchers, this approach puts “Washington at risk of adopting an approach that is confrontational without being competitive; Beijing, meanwhile, has managed to be increasingly competitive without being confrontational” (Campbell & Ratner, 2018, pp. 6). Indeed, while China sees in the US’ strategic posture a threat to its economic development, which is its “cornerstone for stability, order, and prosperity” (Tsang & Men, 2016, pp. 339), China also recognises that as the rising hegemon its interests are better served with delaying any confrontation, if one were to happen, if possible.

China’s increased engagement with the Global South fundamentally reshapes international relations between the West and the developing world. These effects vary across different themes and regions. For conciseness, this essay draws on empirical evidence from Latin America and the Caribbean (LAC), Africa and Southeast Asia (SEA). To allow for correct generalization, this essay focuses on the West as constituted by the EU and the US, although many of these statements will also be true for Japan, South Korea, Australia, and New Zealand. The structure of this analysis is as follows. First, along with China’s rise, its own interests and those of the West have shifted to become more adverse, which is the main driver for increased competition in the Global South. Second, the West faces increased financial and economic competition, which lowers its influence over the Global South, while also giving increased agency to these countries, because they can pick and choose between the West and China. Third, territorial conflicts have become increasingly tense, especially in China’s neighbouring seas as China and the West both defend their respective interests, which on the key issue of what belongs to whom differs. Finally, the conclusion recaps and provides research and policy suggestions.

A pragmatic relationship built on geopolitical interests at its core

Firstly, Sino-Western relations have been pragmatic and depended on great power competition, with China’s recent rise leading to a new power balance which creates political opposition. To understand the current dynamic of the Sino-Western relationship, it is important to look at its post-WWI trajectory. Tracing back Sino-Western volatile relationship over the past century, one sees a pattern of rapprochement and distancing. During WWII, China and the West were both allied powers fighting against the Axis (e.g., Japan). Then after the end of WWII, China experienced a civil war from 1945-1949 which was won by the communists and Sino-Western relations cooled down significantly. However, Stalin’s death, amongst other factors, resulted in ideological differences and geopolitical struggles that produced the Sino-Soviet split at the end of the 1950s (Li, 2012, Lui, 2017). This did not repair Sino-Western relations immediately, however. Instead, China entered a decade of autarky from 1960 to 1971 in which it both opposed the US and the Soviet Union (Lui, 2017), who in return saw China as an “uncontainable threat” (Yu, 2018, pp. 43). Nonetheless, following that period, Beijing reapproached with the US through the famous ping pong diplomacy in June 1971 and the US embargo on China was lifted. A few months after that, the People’s Republic of China overtook the Republic of China at the UN, signalling China’s formal entry into the US-led world order. Currently, a small struggle between China and the West was already visible with the Global South as its stage, since PRC and the US were both holding different attitudes towards the PRC entering the UN. Quite importantly, it was only with the help of the Global South, that the PRC got into the UN and that the Republic of China (ROC) was kicked out. If it were up to the US, both the PRC and ROC would become UN members (Bush & Rigger, 2019). This was the beginning of a new chapter in Sino-Western relationships as the West was willing to accommodate China more, to some extent, but China’s previously latent influence over the Global South was beginning to emerge.

Then, after Deng Xiaoping made multiple economic reforms starting from 1979, China experienced double-digit economic growth for most years for almost three decades (Morrison, 2013). By 1999, China clearly illustrated the extent of its strategic patience when it did not pursue hefty retributions despite the US bombing of the Chinese embassy in Belgrade. This posture paid off for China by 2001, China was officially admitted to the World Trade Organisation (WTO), which contributed greatly to its sustained economic growth since then (Ferdinand, 2016). The ascension to the Western-led WTO brought China and the West closer together on the surface, but also laid the foundation for China’s growing influence over the Global South, which has contributed to the deterioration of their relationship today. Outside of geopolitical dynamics, leadership styles have also shaped Sino-Western relations considerably. Some analyst remark, for instance, that Hu Jintao, China’s President from 2003 to 2013, did not challenge US hegemony because of his risk-averse personality, alongside reasons as the 1989 Tiananmen Square incident, and the primacy of domestic concerns and opportunities (Ferdinand, 2016). Thus, throughout China’s rise in the past century up until recently, China has shown strategic patience and the West has shown a willing attitude to accommodate China and most competition was still covert at the time.

The 2010s mark a progressive breaking point, which surfaces a trend of competition longer in the making. The change of leadership in both the West and in China during this time resulted in more confrontational competition. In 2013, Xi Jinping took China into a more international and therefore, from a Western perspective, confrontational direction. Besides continuously increasing the military budget to keep it at 2% of the GDP (China Power Team, 2020), President Xi also launched the Belt and Road Initiative (BRI) in 2013 aimed at invigorating world trade with China through funding infrastructural and other projects abroad at strategic locations in the Global South (Chatzky & McBride, 2020). According to some estimates, the BRI’s costs are projected to be more than 1 trillion by 2027 (Goldman Sachs, 2018). The West is also increasingly worried about China’s rapid technological advancement, as it also means the West is losing its competitive edge and China’s military is growing stronger alongside it. In 2019, for instance, China has surpassed the EU in the percentage of its GDP it spends on R&D (Zenglein & Holtzmann, 2019) and China wants to be a world leader in AI by 2030 (Xinhua, 2017). To downplay the idea of the ‘China threat’, however, Beijing reduced communication about the Made in China 2025 program, in which it aims to become world leading in several technologies after it started to become controversial in the West. Li Keqiang’s report on the work of the government, for example, does not mention Made in China 2025 once (Li, 2019). Nonetheless, China’s ambitions and growth in the Global South are anything but subsiding. While Western countries are ordering more than two times the number of vaccines than they need (European Commission, 2021), China has been sharing vaccines and medical equipment to fill the shortage in the Global South (Japan Times, 2021). By leveraging the Covid-19 crisis, China increases its political clout amongst these countries. Thus, all of this illustrates that China’s influence over the Global South is growing fast and that while China is seeking to avoid a zero-sum perception around its ascendency, Sino-Western competition is increasing and more overt.

Increased economic and financial competition

Financially, China’s rise challenges established Western interest in the GS. Before, the main source of development funding came from the West but has since become more diversified (Alden, Large & Mendez, 2020). Commonly, Western aid included some form of conditionality, either for political and or economic reform (Jing, Mendez & Zheng, 2020). After the Western-imposed Structural Adjustment Programs of the 1980s and 1990s turned out to be a failure, China, along with other Global South countries, capitalized on an opportunity to invest in increasingly large amounts in each other (Alden et al., 2020). Nonetheless, there is more Sino-Western convergence in the global finance regime than divergence. Indeed, there is also cooperation. Germany and the UK, for instance, have worked together with China in the field of development aid (Kragelund, 2015). Chin (2012) shows that Western institutions such as the World Bank not only socialize Chinese state-owned development banks but there is a two-way socialization process (Chin, 2012). This fastens the convergence of approaches and the possibility for cooperation. However, contrary to Western development finance, China’s aid and investment have no reform requirements on the other party (Jing et al., 2020). This gives the West less grip over Global South countries and it increases their autonomy. Unsurprisingly, this has been well received by African states but condemned by Western states (Alden et al., 2020). While China’s influence is rising in the African continent through this measure, its policy is starting to change. Recently, China’s development assistance shifted from primarily grants and interest-free loans to mostly concessional loans, which in turn has been poorly received by recipient countries (Zhang, 2020). Still, the increase in the variety of development finance offers has increased agency for GS states, which in terms of finance, is beneficial for them. Overall, China’s rise as a finance provider in the GS has been fast, at the cost of Western influence.

With regards to commercial competition, Western states have distinct responses. The EU has sought more economic cooperation with China in the Global South (Hooijmaaijers, 2018). For the EU, while some domestic actors might face Chinese competition such as French oil companies, many other European businesses benefit from Chinese commercial engagement in Africa (Hooijmaaijers, 2018). However, the EU-China-Africa trilateral cooperation policy initiative launched in 2008 by the European Commission has failed. The core reasons are not Sino-European geopolitical struggles, but a lack of willingness from African states for this trilateral cooperation (Hooijmaaijers, 2018). Indeed, neither do many African states want to see Sino-US cooperation and coordination towards Africa (Sun & Olin-Ammentorp, 2014). European attitudes towards cooperation with China remained positive. For example, the 2015 effort by France to partner up with China in Africa, was agreed upon by Beijing. However, not many businesses made use of this partnership because of bureaucracy and competing business interests (Bayes, 2020). While many Chinese companies now threaten French companies’, market share according to a top-level Western diplomat (Smith, 2019), there is also some limited, organic cooperation between European and Chinese companies. French companies, for example, recently became subcontracts for a Chinese-led project backed by one of Beijing’s major policy banks, the EXIM Bank (Mbodiam, 2017). Thus, while Chinese firms are gaining ground on Western ones in Africa, there is still willingness for bilateral European-Chinese cooperation on the state level, even if their cooperation has so far yet to bear any fruits.

America’s response is distinct from the EU’s response to China’s increased economic engagement with the Global South. The US approaches the situation with rivalry. From its perspective, rising Chinese trade forms a significant threat to American interests, especially in LAC, which the US sees as its backyard. Right now, China is already LAC’s biggest trading partner if Mexico is excluded from the calculation (Garrison, 2020). Therefore, Trump pushed LAC not to increase trade ties with China and analysts predict Biden to make the same move (Garrison, 2020). The significance of this competition is illustrated by recent events in the region. Colombia, a US ally, for example, was pushed away under Trump after threats of de-certifying it, which would stop most financial support and make the US automatically vote against its loan request at the World Bank (The Associated Press, 2017). Then, in 2019, Colombia’s president Duque visited Beijing in his first year in office and several big investments were announced shortly afterwards, each worth billions of US dollar (Stott, 2020). Unsurprisingly, Biden recently promised to increase US efforts in countering China’s influence in LAC (Garrison, 2020).

Sino-US competition is also present in other parts of the Global South. Ellis (2016) rightfully noted that China’s rise has created strategic mistrust in the Global South in LAC and beyond. Significantly, the Transpacific Partnership was designed to exclude China (Garrett, 2019) and recently signed RCEP, which followed the US withdrawal from the TPP negotiations, includes many former TPP nations but excludes the US (RCEP, 2020). This shows that even US allies and others who were formerly willing to side with the US now increase ties with Beijing, despite the US’ pushback. Thus, there is an increasing economic competition in the Global South moving forward and it has also become increasingly overt.

Emerging overt hostility in military affairs

Unfortunately, the military relationship between the West and China in the Global South is becoming more competitive and openly hostile. In military affairs, the current situation in Southeast Asia is the most significant. In all forms of the security architecture in (South-) East Asia, competition has become dominant over cooperation in the last two decades.

First, recent military build-up in the South China Sea (SCS) confronts the US-led system of allies encircling China. For decades, the US has used this strategy to signal to China that the regional order was set, stable, and that an arms race with the US would be futile (Campbell & Ratner, 2018; Pollack, 2017). However, these Western actions are seen in Beijing as attempting “to prevent the emerging powers, in particular China, from achieving their goals and enhancing their stature” (Wang, 2012, pp. 11). Second, China is pursuing a leading role in creating a new security network under its leadership with the Shanghai Security Organisation (SCO), offering a counterweight to Western influence in the region, although this mainly competes with the West’s influence over Central Asia and not (South-) East Asia, which the West cares more about. In Southeast Asia where there is competition in the ASEAN led, which holds security dialogues with its ADMM+ and ARF. There, China, and the US each back different countries and hope to move the block closer to their military perspectives (Stromseth, 2019; White House, 2021). Third, in temporary dialogue coalitions, a form of Sino-Western cooperation, such as the former Six-Party Talks on North Korea, has been unused for more than a decade now. Fourth, China is gaining a more prominent role in international fora, thereby increasing its own stature and reducing the significance of the West. Examples include the Shangri-La Dialogue, the Asia-Pacific Roundtable, and the Chinese-led Xiangshan Forum. At the latter, in 2016, former Vice Foreign Minister of China Liu Zhenmin called for a bigger role of that forum and China’s SCO (Lui, 2016). Thus, this multi-layered analysis shows that China and the West are in competition for redefining the security architecture in the Asian part of the Global South.

Additionally, Sino-Western competition has also taken more direct forms, of which the South China Sea (SCS) is the most prime example. The US sees the SCS as “an arena of the U.S.-China strategic competition” (US Congressional Research Service, 2020, pp. 2). Beijing, however, despite continuing with the military build-up in the area, states the SCS “should not become (…) a wrestling ground for major-country competition” (Xinhua, 2020a, pp. 1). While arguably control over the SCS is more important to China than for instance the Senkaku/Diaoyu Islands in the East China Sea, China still acts with more assertiveness in the SCS because China has a bigger power advantage over the South-East Asian states than over Japan (Jakobson & Ryan, 2016). According to the CSIS (2021), China’s actions include maritime harassment of fisher boats of state’s that have competing claims over the SCS, although these other states perform similar actions as well. More controversial to the West and surrounding states of the SCS is that China has built ­­militarized artificial islands in areas where sovereignty is contested (CFR, 2021; Jakobson & Ryan, 2016). Therefore, despite the SEA nation’s growing economic dependence on China, Southeast Asian states are likely to continue drawing closer to the West for support in their territorial claims on the SCS.

For one, China’s commitment to the area is not new. The SCS has been a military priority for decades, with China already resorting to military force in 1974 to overtake the western Paracel Islands from (then still South-) Vietnam (Lui, 2017). A possible reason for the recent escalation of the conflict is the attitude of the US, who after decades of not taking a position of sovereignty, decided to reconsider its position on this issue after in 2009 the US’ USNS Impeccable got into conflict with Chinese vessels (Chen, 2020). Then, shortly after Xi came to power, the US started with Freedom of Navigation Operational Patrols in the SCS, which involves military naval vessels passing through the disputed territories (Thayer, 2016). More recently, other Western states have joined the US in this form of open competition of military prowess (Thayer, 2016; Lau, 2019). In addition, the US now openly calls for China to respect the 2016 UNCLOS based tribunal result, which denied a large part of China’s claims to the SCS (Pompeo, 2020; Permanent Court of Arbitration, 2016). Note that the US itself has not signed UNCLOS because it does not want to be restricted by it. In return, the US’ actions have been condemned by China and it stated it will not change its position (Xinhua, 2020b). These open confrontations make it harder for either great power to back down, as doing so would result not only in a loss of face but could also be interpreted by the other side as a form of weakness and lack of resolve, which are of paramount importance in military competition. Under Xi, China has also opened its first military base abroad, in Djibouti (Cabestan, 2019), and has become increasingly active in African security issues because of Chinese migration to and business activity in Africa, additional to the fact that 60% of all issues before the UN security council are from Africa (Alden, 2014). The Djibouti base is seen as a significant milestone for Chinese military policy and analysts predict more bases are to follow, with Gwadar in Pakistan seen as a potential second base (Cabestan, 2019; Jacob, 2017). China’s continued military development, which reduces the power gap with the West, and Beijing’s different attitude towards international relations are signalling new dawn of increased global militaristic competition.

Beyond the areas where the West and China have competing interests, there is still some room for cooperation. For example, the two most significant international military treaties the US and China have both signed are the Nuclear Non-proliferation Treaty and the Chemical Weapons Convention. However, both took place in the 1990s when China was trying to get out of international isolation resulting from the Tiananmen incident (Gill & Medeiros, 2000). After the 2000s there were two other forms of cooperation in the Global South, but these were both on a multilateral scale as well. These were the six-party talks and the P5+1 negotiations about denuclearization with North Korea and the one with Iran respectively (Campbell & Ratner, 2018). Therefore, the Thucydides Trap can still be averted by making use of multilateral settings cantered multidirectional threats, because then interests are more diffuse and relative gains of cooperation matter less.

Conclusion

To conclude, the Sino-Western relationship in the Global South is mainly one of competition fragmented along thematic, geographical and actor based dividing lines. The key underpinning to these differences is geopolitics. Economically, there is mainly firm-level competition and while China is willing to work together on the state level, the West’s approach is fragmented. European countries are keen on cooperating with China but have failed behind on actions. For the US, China’s economic rise in Latin America and the Caribbean is the most troubling, while for European states this is true for China’s growing influence over Africa. For the Global South, China’s rise gives birth to the greater agency as it can now choose and play the big powers off on another. This militaristic competition is most prominent in Asia, where China and the West, mainly the US, have competing security architectures and where the SCS is an important area of contention. Both the US and the EU Member States have a violent history with many members of the Global South as illustrated by Operation Condor and widespread colonialism, respectively. For the West, the main challenge going forward will be to hold onto its strong relationship with the Global South, but also to reinvent it more to the needs of the latter, both for its own benefit as for the global community. For China, the main challenge will be to uphold its image of a peaceful rise as it will be faced ­­­­­with countries in the Global South that may become to be incapable to repay on its debt to China. Another challenge for Beijing will be to stay below the strategic threshold of geopolitical influence over the Global South as the West, especially the US, might see such actions as requiring a stronger response to stop China from doing so, which could result in a mutually harming interaction. In the end, politicians and policymakers from both sides should question if their current tough attitude towards one another brings any result other than continuing the trend towards increased competition.