Key messages

• Chinese foreign economic and development policy is undergoing a major shift.

• China’s approach to its international relations is partly converging on the Western one.

• These developments are as a result of blowback against China’s previous approach and domestic developments.

The role and impact of China in global development

China is now the world’s largest economy based on purchasing power parity, or put more simply, what Chinese money can buy in China. Consequently, China has major impacts on the global economy and development. While the US economy is still about 50 per cent larger than China’s when measured in dollars (Frankel, 2020), the gap between the two is closing fast thanks to generally much faster growth rates in the latter.¹ China produces and consumes more than half of the world’s steel, and more cement was poured there from 2011 to 2013 than was used in the entire 20th century in the US (Swanson, 2015).

China’s economic rise created a strong imperative to source supplies of raw materials from elsewhere; often the Global South.² Chinese demand was the main driver of the global commodity super-cycle from 2003 to 2014, with some suggesting this ‘transformed development strategies in the Global South’ (Jepson, 2020). However, the commodity price bust, exacerbated by the initial impacts of COVID-19 on prices, casts doubt on this theory (Carmody, 2020), as does the fact that it did not induce structural transformation in Africa or South America (Carmody et al, 2020). Nonetheless, the Chinese economy and the government’s geoeconomic strategy have had major impacts along a number of politico-economic axes.

Donorship and/or dependency on China?

As Jones and Hameiri (2020) note, China’s growth model following the Mao era (1949–76) was produced by debt-fuelled infrastructure investment and the formation of export-oriented manufacturing clusters. These clusters generated surpluses which repaid the initial debt and allowed the cycle to repeat. However, throughout the 2000s, and particularly from the early 2010s, following China’s massive stimulus that was induced by the North Atlantic Financial Crisis, the model began to suffer from a major slump in profitability (Zhang, 2017; Taylor and Zajontz, 2020).

To resolve the crisis, the BRI (which began in 2013 but builds on strategies developed under previous initiatives like ‘Develop the West’ – see Summers [2016]) was established as a broad policy ‘umbrella’ through which Chinese businesses, especially the country’s SOEs, could find new markets overseas, consequently reproducing and expanding Chinese-based capital and power. Broadly, Chinese firm transnationalisation under the BRI umbrella works on two levels; at the macro level, the state attempts to create capital allocation mechanisms which serve its overarching geopolitical/geoeconomic objectives. At this level, the BRI is joined by sub-initiatives like the $60 billion China-Pakistan Economic Corridor (CPEC), and the $60 billion package of loans, grants and export credits announced following the 2015 and 2018 fora on China-Africa Cooperation (FOCAC), though commitments were reduced at the 2021 iteration of the event (Thomas, 2021). These frameworks provide loose guidance and opportunities for businesses but do not direct their day-to-day operations. Meanwhile, the main drivers at the project level are the disaggregated interests of SOEs, both central and provincial, that use access to state-backed funding to pursue their own broad interests, although rarely in complete contradiction to those of the CCP (Doshi, 2021).

These policies and supporting systems produced huge outflows of capital and led to the construction of a considerable number of debt-financed development projects throughout the Global South in recent years. Yet as Flint and Zhu (2019: 95) explain, the political engagement underpinning the expansion of Chinese capital means that the BRI, even if understood largely as a project of economic integration (as in the Chinese scholarship), cannot be separated from geopolitical consequences. Indeed, geopolitics is a constitutive element within the BRI given that the initiative is one that influences politics across multiple scales. BRI is thus a project that ‘has the potential to be transformative and [simultaneously] create possibilities for global cooperation and conflict’ (Flint and Zhu, 2019: 95). It should not come as any surprise that the BRI’s contradictions and missteps are therefore instrumentalised against China by competitors in the Global North (see later on).

At the project level, examples such as Kenya’s Standard Gauge Railway (SGR), Pakistan’s Gwadar Port, Kazakhstan’s Khorgos Gateway and the myriad hydroelectric dams being built by Chinese businesses throughout South and Southeast Asia, simultaneously serve the interests of host country elites (varied though these may be), spatially fix Chinese capital, tie recipient countries to Sino-centric production systems and standards and expand the influence of the Chinese state. Yet developments within China have begun to have major effects on the availability of BRI capital. The US-China trade war, for instance, significantly increased uncertainty across China’s financial sector. As BRI-linked lending draws on China’s foreign currency reserves, threats to these decelerate outward flows (Kenderdine, 2020). Aside from this uncertainty, the ongoing shift towards domestic consumption and investment, as opposed to export-oriented growth (though not fully displacing the latter), has accelerated in the last few years, partly as a result of COVID-19 and rising geopolitical tensions. In May 2020, China’s politburo unveiled its dual circulation strategy (Tang, 2020) which places significant emphasis on growing China’s domestic market. Related initiatives like ‘common prosperity’ – which aims to decrease inequality via fiscal transfers and incentivised (or forced) corporate donations – have also emerged, and created further uncertainty in the financial system vis-à-vis future FDI within the country (Pettis, 2021). Yet China finds itself unable to fully abandon its former model or the BRI (enshrined in the constitution since 2017) as the country struggles with overcapacity in heavy industries (Carmody, 2021). BRI must thus continue, even in a diminished or transformed capacity, as it has become the ‘brand’ for Chinese overseas lending and service provision.

Besides these domestic developments, there have been external factors which in recent years have engendered significant changes in China’s engagement with the Global South. Unsustainable levels of debt in some BRI countries have revealed long-term spatio-temporal contradictions inherent to the BRI and have resulted in (geo)political controversies that have also fed into a reorientation in Beijing’s development approach. It is this issue that we turn to next.

The debt backlash

Through the BRI, the Chinese state has sought to construct and consolidate an image of China as a pragmatic development partner. However, this image has tarnished in recent years. For instance, as per a recent Afrobarometer poll of 30 African countries, 57 per cent of respondents who are aware of Chinese loans to their country expressed concerns regarding debt levels. Likewise, while perceptions of China’s economic engagements on the continent remain positive, 17 out of 30 countries polled viewed the country more negatively in November 2021 (when the poll was conducted) than they did in 2014 (Sanny and Selormey, 2021). One reason for this has been the narrative around China’s alleged ‘debt trap diplomacy’ (Chellany, 2017) which has been politically instrumentalised all the way to the White House (see Bolton, 2018). Others reject the concept of a politicised and deliberate ‘debt trap’, yet enthusiastic assessments that merely suggest that ‘Chinese unconditional financing has provided increased policy space to developing countries’ (Singh, 2021: 241) fall short of sufficiently problematising the structural function of debt within global capitalism (see Zajontz, 2022a) and can thus provide an incomplete view of the issue.

It is this asymmetric relationship and resultant power differentials – not the politicised discourses about China’s ‘debt trap’, as flawed as they may be – that have made it increasingly difficult for China to sustain official narratives that suggest the horizontality or equality of relations between China and other developing world regions, notwithstanding the often more long-term or ‘patient capital’ disbursed by Chinese policy banks (Kaplan, 2021).

Waning debt sustainability in several key BRI participant states, the questionable economic viability of some large-scale infrastructure projects and frequent corruption allegations have seriously undermined the legitimacy of Global China. Likewise, the COVID-19-induced global economic contraction also laid bare that Chinese-owned debt has crucial politico-economic repercussions for both borrowers and lenders.

One oft-invoked example of unsustainable borrowing under the BRI is the case of Sri Lanka, and, in particular, the Hambantota port, which has failed to create projected revenues but instead incurred $300m in losses (Sum, 2019: 545). Yet project specifics are at times misrepresented in mainstream analyses (see Brautigam, 2020). Indeed, the Sri Lankan government has also extensively borrowed from non-Chinese sources, and officials have insisted that the government had signed the loan for the port without pressure from Beijing. As Jones and Hameiri point out, ‘China’s engagement was shaped by profit-seeking SOEs. Colombo’s application for Chinese funding was strongly encouraged by China Harbour Engineering Group (CHEG)’, which facilitated a $307 million commercial buyer’s credit from China Exim Bank for the first project phase (Jones and Hameiri, 2020: 14; see Brautigam, 2020). Importantly, the privatisation of Hambantota port was not the result of a debt-for-equity swap, as is often falsely reported. After a change in government, Sri Lanka rather leased the port for 99 years to China Merchants Port Holdings by means of a majority stake (70 per cent) in a joint venture with Sri Lanka’s port authority for an upfront payment of $1.12bn. The deal aimed at raising foreign exchange in order to service its debt which had grown to $46.6bn – or 57 per cent of its gross domestic product (GDP) – by the end of 2016 (Brautigam, 2020). However, partly as a result of COVID-19 and the country’s inability to service its debts, Sri Lanka experienced an economic crisis in 2022 (Ishak, 2022).

Fears of debt-for-equity swaps as a result of defaults on Chinese loans might also be exaggerated, considering that Chinese lenders, thus far, have proven ready to reschedule debt repayments, even if only on an ad hoc basis and usually following lengthy bilateral negotiations (Gardner et al, 2020; Kratz et al, 2020). In some debt renogotiations China has actually increased the value of its portfolio (Gardner et al, 2020). Nonetheless, the case of Hambantota port and the takeover of the Laotian electrical grid by a Chinese company are examples of how growing indebtedness to China (and other creditors) reduces policy space and, by extension, the degree of ‘agency’ of low- and middle-income countries.

While lending amounts and practices may be obscure (Gelpern et al, 2021), China has reduced the potential impacts of defaults through collateralisation, credit insurance and third-party repayment guarantees. Eighty-three per cent of Chinese state-owned collateralised lending goes to countries in the bottom quartile of fiduciary risk (Malik et al, 2021). However, calling in this collateral would be a last resort given the potential for further popular backlash against China – a further example of how geopolitical concerns sit at the core of the BRI.

The precise ways, however, in which China impacts development are locally mediated, negotiated and constituted (Hart, 2002). For example, there is evidence that, in some countries, political elites have acted irresponsibly by signing finance agreements with Chinese lenders without due diligence and long-term debt management plans (see Carmody et al, 2022). In Zambia, for instance, ‘easy money’ from Chinese policy banks for road and other infrastructure projects, alongside reckless borrowing on private capital markets, has resulted in unsustainable levels of external debt. The country’s overambitious, debt-financed ‘development-through-infrastructure’ agenda was rendered possible by the extensive disbursement of Chinese loans, some of which were for overpriced projects negotiated in ‘not so public’ procurement processes. Zambia’s debt-to-GDP ratio surpassed 100 per cent in 2020, up from 18.9 per cent a decade earlier (Zajontz, 2022b). In November 2020, the Treasury started to default on Eurobond repayments (Williams, 2020). A recent report confirms what Zambian observers suspected for years, namely that the Zambian state and its parastatals owe Chinese lenders almost double the amount that had been declared by the previous government (Brautigam and Wang, 2021). The new Zambian administration, voted into power in August 2021, now faces the challenging task of renegotiating the country’s debt with a diverse set of lenders and preparing the country for an International Monetary Fund bailout package.

The Chinese government has long realised that the debt it owns bears both significant economic and political risks (McMahon, 2018). The Chinese economy appears robust for the moment, notwithstanding the failure of the massive property company Evergrande in 2021 and its effects on the country’s real estate market. While it also seems to have recovered quickly from the COVID-19 shock to the global economy, a domino effect of debt defaults in major BRI participant countries would not leave the Chinese economy unscathed. Even prior to the pandemic, the Chinese government had started to distance itself from the high-risk lending practices of its policy banks. Internally, red flags regarding the viability of ongoing BRI projects led to a relative restructuring of the public finance architecture. As Kenderdine (2020) explains, China does not have a ‘functioning country risk model with which to gauge the operations of policy bank lending … leav[ing] policy banks open to the possibilities of huge default losses’. Likewise, Carmody (2021) notes that more stringent regulations regarding outward investments and loans had already been in place since 2017. These regulations arose from a combination of internal and external factors. In November 2017, for instance, the China Banking Regulatory Commission issued its first-ever regulations to improve the risk management of its policy banks (Hurley et al, 2019: 157).

Overall, China’s overseas lending has slowed down significantly in recent years, with some reports suggesting that new loan financing from China Exim Bank and China Development Bank fell from $75bn in 2016 to just $4bn in 2019 (Wheatley and Kynge, 2020). In the African context, for example, new lending fell by 93 per cent from 2016 to 2020 (see Figure 1). To keep up demand for Chinese enterprises abroad, not least in the context of the BRI, there has been a gradual shift in Chinese development finance discernible – from public debt finance towards private project finance (Zajontz, 2022b). This allows for the continuation of the ‘moving out’ of Chinese surplus capital and material without the risk of sovereign borrowers not being able to repay the loans.

New Chinese loans to African countries

Citation: Global Political Economy 1, 2; 10.1332/UZHW7185

Source: Boston University Global Development Policy Center, 2022

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New Chinese loans to African countries

Citation: Global Political Economy 1, 2; 10.1332/UZHW7185

Source: Boston University Global Development Policy Center, 2022

• Download Figure
• Download figure as PowerPoint slide

New Chinese loans to African countries

Citation: Global Political Economy 1, 2; 10.1332/UZHW7185

Source: Boston University Global Development Policy Center, 2022

• Download Figure
• Download figure as PowerPoint slide

Politically, the Chinese government has also engaged in ‘damage control’, which is aimed at maintaining the narrative of ‘win-win cooperation’ (hézuò gòng yíng, 合作共赢) with the so-called developing world. Key among such political efforts concern the widening and ‘normalisation’ of Beijing’s global development agenda. It is obvious that the Chinese state has started to concentrate resources towards more ideational power projection in its engagement with the Global South, while simultaneously shifting material resources from loan financing towards targeted investment (for instance in the food processing industry), trade promotion and capacity building.

Developing hegemony by soft-powering development

In order to continue to shape global development in ways which enhance Sino-centric production and trade networks and thus are beneficial to the CCP, the Chinese state not only has to constantly address contradictions that arise from extractivist inter-post-colonial relations with other states that have suffered from Western imperialism. In the long run, it also needs to establish hegemony in the Gramscian sense internationally. This is not to say that China is likely to take on the US-led neoliberal order in what Gramsci called a ‘war of movement’ (Cox, 1996[1983]), as Russia has in Ukraine. Indeed, China has hitherto remained a ‘status quo power’ which has pragmatically engaged with – and profited from – existing norms and institutions in the global political economy (see Taylor, 2017; Taylor and Cheng, 2022). In fact, during Trump’s populist-protectionist reign in the US, and more recently in response to pandemic-induced disturbances to the free movement of capital and goods, Xi Jinping has vocally insisted on upholding global free trade and markets (Ng and Zhou, 2020). China’s increasingly dominant position in the global economy and the country’s disproportionate economic gains, will, however, require consent from subaltern countries and other world regions. As has been pointed out, Chinese leadership in the global realm depends on followership and ‘the inclination to follow often appears to be dependent on whether the leading power incorporates elements of the potential follower’s interests and positions into its own agenda’ (Breslin, 2021: 27).

Indeed, the official discourse of China’s leadership repeats in a mantra-like manner that ‘China will never pursue hegemony or expansion, nor will it seek to create spheres of influence, no matter how the international situation changes, and how China develops itself’ (State Council, 2019). Yet, the CCP under Xi’s leadership jettisoned the country’s self-prescribed taoguang yanghui (韬光养晦) philosophy of keeping a low profile in the post-Tiananmen era (see Breslin, 2021: 95–6). ‘Befitting’ its role as a global economic powerhouse, the Chinese state has also increasingly claimed political leadership in global affairs. In Xi’s own words, the country’s ‘major country diplomacy with Chinese characteristics aims to foster a new type of international relations and build a community with a shared future for mankind’ (quoted in Breslin, 2021: 106). China has started to actively shape both the material conditions and the norms and institutions of this ‘Community of Common Destiny for Humankind’ (renlei mingyun gongtongti,人类命运共同体).

Thereby, a ‘persistent emphasis on soft power’ (Repnikova, 2022: 1) has been discernible, with President Xi telling Chinese policymakers in 2014 that there was a need to increase China’s soft power (quoted in Ministry of Foreign Affairs of the People’s Republic of China 2014 quoted in Ho, 2020). In recent years, soft power instruments, some of which we will discuss later, have grown in importance in Chinese foreign policy, and in China’s relations with the Global South in particular.

The concept of soft power has been subject to sustained debate in academic and policy-making circles in China, with ruan shili (软实力) eventually emerging as the agreed translation (Breslin, 2021: 69). There is no consensus, however, on what Chinese soft power might entail, with different Chinese authors and leaders arguing for different aspects of Chinese culture, politics and developmental model as essential for Chinese soft power projection abroad (Repnikova, 2022: 3–6). Interestingly, Repnikova (2022) has discovered some common ground in most Chinese deliberations on soft power which are partly antithetical to the original formulation as ‘one country gets other countries to want what it wants’, contrasting it to hard power by which a country is ‘ordering others to do what it wants’ (Nye, 1990: 166). This common denominator in Chinese interpretations of soft power is that hard and soft power are commonly merged, whereby ‘material resources and motivations tend to intermingle with political and cultural ones, and the target audience includes both domestic and international publics’ (Repnikova, 2022: 1). In our view, Chinese soft and hard power discourse and practice in the global development realm is a concrete articulation of Gramsci’s reading of power as a ‘necessary combination of consent and coercion’ (Cox, 1996[1983]: 127), with the latter the metaphorical ‘iron fist’, preferably remaining covered by the metaphorical ‘velvet glove’ (Gramsci, 1971: xxxvi) in China’s quest for (global) hegemony.

Recent literature has drawn attention to the impact of China on global development through discourses and ‘relational productive power’ (Benabdallah, 2019), which shapes actors’ preferences and values in ways favourable to Chinese interests and development. For example, Benabdallah (2019), while not disputing the importance of material dimensions of power, argues that ideational aspects are also hugely important. She shows that whereas Chinese state loans to Africa have decreased in recent years, the scale of scholarships for African students has increased substantially, bespeaking a reorientation towards a greater emphasis on relational productive power, where actors partly co-produce each other in certain ways by shaping values, interests and actions. This is in line with Breslin’s (2021: 17) assessment: ‘By distinguishing between the projection (which the Chinese state can try to control) and the reception (which it can’t), we are reminded that while material power is something that is generated from within, ideational power depends on external perceptions and understandings.’

As part of this soft power push – which increasingly constructs China’s engagement with the Global South – the Chinese government has, for instance, put increasing emphasis on strengthening ‘people-to-people’ exchange, also understood as engagement beyond the elite level. In a 2021 White Paper titled ‘China and Africa in the New Era: A Partnership of Equals’, the Chinese government quotes a saying that suggest that ‘State-to-state relations thrive when there is friendship between the peoples’ (State Council Information Office, 2021a). This White Paper, as well as the Forum on China-Africa Cooperation Dakar Action Plan (2022–2024), is consequently filled with pledges to further intensify people-to-people exchange, ranging from cultural exchange, tourism, cooperation in the field of press and media as well as youth and women to sub-national engagements (see FOCAC, 2021). Strengthening cultural and educational exchanges have thus become main soft power instruments. Following two decades of efforts at internationalising China’s education system, taking inspiration particularly from Japan and Western countries, Repnikova (2022: 31) argues that more recently the official goal has shifted towards ‘establishing China as a major center of knowledge production and as an attractive international destination for education and training’. Educational and professional training offers are not least tailored for students, practitioners and officials from the so-called Global South. In 2020, the Chinese government, for instance, offered 12,000 scholarships specifically for African students, by far outnumbering scholarships from the UK government (1,100), Germany and France (about 600 each) and the EU (300) (Financial Times, 2020). Overall, the number of international students in China grew from 1,236 in 1978 to 492,200 in 2018. The number of African students in China grew from 2,186 in 2003 to 81,562 in 2018 (Repnikova, 2022: 31).

Equally, the global dissemination of Mandarin and Chinese culture has been integral to China’s broader ‘development mission’. As of June 2020, there were 541 Confucius Institutes (CI) and 1,170 Confucius Classrooms in 162 countries (Repnikova, 2022: 11). Africa’s first CI opened in Nairobi in 2005. By November 2020, Africa already hosted 61 such institutes and another 48 Confucius Classrooms (Data from personal electronic communication with key informant, November 2020). The global web of CIs allows for increased ‘people-to-people’ diplomacy, and for the construction of a ‘Chinese narrative’ regarding globalisation and development. As one CI representative put it, “[China] wants to be understood on its own terms” (Interview with key informant, October 2017).⁴

China’s own development trajectory has equally become a main source of China’s ‘soft power’ projection (Repnikova, 2022: 6). Aimed at fostering Chinese hegemony across the Global South, the Chinese state has positioned the country as ‘the champion of the developing world’ (Duggan, 2020b). Breslin (2021: 23–34) argues that under President Xi ‘[t]here is also now a greater appetite for arguing that there is something special about China’s development experience that make it something that others should learn from’. While the contours of the ‘China Model’ (zhongguo moshi, 中国模式) have remained debated, contested and evolving (Ferchen, 2013), the Chinese state has used multilateral fora, such as FOCAC and the BRI Forum, as well as bilateral party-to-party and official exchanges with states in the Global South, to promote the success of China’s combination of state-led flexible and experimental economic development, paired with tight political control of the society – a counter-hegemonic conception of state-economy-society relations.

The growing importance of relational productive power also partly results from a reorientation towards more ‘malleable’ regions such as Europe and the ‘Middle East’ in Chinese foreign policy, as particularly evidenced through BRI, and from pragmatic reactions to concerns over debt sustainability, and the political backlash against this rather than bespeaking the importance of relationality per se. As concerns about alleged Chinese ‘debt trap diplomacy’ have mounted, Chinese state actors have adapted modalities of engagement and concentrated efforts on strengthening narratives about ‘mutually beneficial’ global development under benign Chinese leadership. Increased emphasis has also been placed on other actors and scales of engagement, giving rise to ‘omni-channel politics’.

In January 2021, China issued a new White Paper on International Development Cooperation, according to which ‘[p]romoting a global community of shared future is the mission of China’s international development cooperation’ (State Council Information Office, 2021b) – a Chinese hegemony linked to the historical idea of tianxia (天下, all under heaven). However, its major platform remains BRI. Nonetheless, for the first time, ‘China’s foreign aid has been partially framed in a non-Chinese framework’, citing the United Nations 2030 Agenda 16 times for example (United Nations Development Programme [UNDP], 2021). Thematically, Chinese development cooperation is undergoing a process of mainstreaming, as areas like poverty reduction, green development and gender feature very prominently in the White Paper and recent proceedings from Chinese-led multilateral fora, such as the BRI Forum and FOCAC. Importantly, following political backlash from the previous over-reliance on debt-financed (large-scale) infrastructure development, Chinese development cooperation has recently shifted its emphasis to trade facilitation and industrialisation in the Global South, which is expected to be spurred by targeted Chinese investment, know-how transfer and capacity building in partner countries (see FOCAC, 2021).

The Chinese government has, for instance, stepped up (declaratory) efforts to remedy negative repercussions that flow from trade imbalances tilted in China’s favour, which have been a reality for many of China’s trade partners in the Global South. At the most recent meeting of the Association of South East Asian Nations (ASEAN), President Xi announced an opening of the Chinese market by doubling agricultural imports from other member states to the tune of $150bn over the next five years (Global Times, 2021). Similarly, the Dakar Action Plan, the central proceeding of the most recent FOCAC gathering in Senegal, pledges to boost African agricultural exports to China and foresees the injection of $10bn into trade facilitating measures, such as a ‘pioneering zone for in-depth China-Africa trade and economic cooperation’ and the establishment of e-commerce hubs (FOCAC, 2021). While such measures were previously already part of the Chinese ‘aid canon’, the recent FOCAC action plan is certainly the most comprehensive yet, enhancing cooperation in sectors such as health, agriculture, poverty reduction, green development and peace and security (FOCAC, 2021). The reshuffling of priorities is an important departure and perhaps recognition that in order to achieve hegemony the consent of the governed, and not just the governors, is required.

The hoarding of vaccines by Western countries has also offered China a strategic, ideational opportunity in the Global South, which the government has started to exploit by diplomatically facilitating the roll-out of Chinese vaccines in low- and middle-income countries. As of May 2022, 46 African countries had received Chinese vaccines, with 25 of the 125 million doses distributed coming in the form of donations (Bridge Consulting, 2022). Moreover at the most recent FOCAC, President Xi Jinping promised to deliver 1 billion additional vaccines to the continent alongside other health diplomacy initiatives (Mcallister and Daly, 2021). For Beijing, the provision of a vaccine that is affordable and does not pose unsurmountable logistical challenges in developing world regions is not only a humanitarian question but also an opportunity to flex its ‘soft power muscle’, as it makes the failure of Western countries to do so at anything approaching sufficient scale blatantly apparent. This serves the materialist motives of the CCP to maintain its monopoly on power and a conducive international environment to facilitate this.

Recent attempts at ‘soft-powering’ Chinese development cooperation are thus aimed at rectifying governance failures in China’s hitherto development ‘aid’ regime, particularly those that have arisen from unsustainable loan financing in the context of many underperforming BRI projects, that caused damage to the ‘win-win cooperation’ narrative. In essence, the Chinese government is eager to ‘prove’ that the China Model actually works for other countries and world regions, too. Recent political emphasis on promoting targeted Chinese investments in the Global South, trade facilitation and capacity building across various sectors are to be understood to address persistent and, in fact, widening imbalances in the economic relationship between China and the Global South.

Conclusion

As described earlier, China’s impacts on global development are multifold. We have chosen to focus on Chinese loans to the Global South as one of the most salient and topical issues in this area as a way of explicating the reorientation of China’s approach to global development. As noted, it is not possible to undertake a comprehensive assessment of the impacts of China on global development in a short article, but we draw some conclusions from the earlier discussion.

The structural transformation of China’s economy since the late 1970s has been associated with poverty reduction at an aggregate level globally. However, this has also resulted in numerous channels of impact, and it has not been an unmitigated good in terms of its development impact. For example the displacement of manufacturers in other parts of the Global South associated with the rise of China has been implicated in poverty production and has been carbon intensive. Additionally, the BRI has had mixed environmental, social, political and economic impacts across different scales, generating extensive resistance in some regions as a result of its contradictions (Patey, 2020; Carmody and Wainwright, 2022).

One major contradiction has been unsustainable borrowing from Chinese (and other) financial institutions in several partner countries. Exacerbated by the global recession associated with COVID-19, China’s extensive development finance has become a major political and economic liability. Negative effects within the Global South have also been made highly visible given that the Chinese government claims that it operates on the basis of respect for the principle of sovereign equality and that its development aid has ‘no strings attached’. Overall then, we argue that a reconfiguration is currently occurring. The BRI is likely to continue, albeit in a scaled-down version, with improved economic risk control and a shift in its financial governance – from public debt funding to public-private partnerships and an enhanced emphasis on the people-to-people exchange axis.

Looking ahead, it also appears likely that development cooperation will become an increasingly important realm of geopolitical competition between China and the West. The Biden administration has clearly signalled that it is no longer ready to leave the field, especially the field of infrastructure development, to China. The Group of Seven (G7) Build Back Better World (B3W) initiative is a strategic response to the BRI and explicitly framed as a more sustainable and equitable global infrastructure initiative with a focus on climate, health, digitalisation and gender equality. The US and the other G7 members emphasise the B3W’s purported competitive advantages over the BRI, notably transparency, local project ownership, high standards and sustainable project finance (White House, 2021). Yet B3W’s slow roll-out, as well as the failure of the domestic ‘Build Back Better’ initiative have sown doubts as to whether tangible results will emerge. The European Union for its part has joined the surge in competitive developmentalisms (with different characteristics) vis-à-vis the Global South by promising sustainable infrastructure development under the umbrella of the Global Gateway, thereby explicitly emphasising its supposed ‘normative power’ in contradistinction to allegedly ‘bad governance’ practices in the context of the BRI (European Commission, 2021). The realisation on the part of Western governments – though late – of the strategic importance of aid to maintain Western influence in ongoing and upcoming processes of infrastructuring and greening the Global South further increases the pressure on Beijing to address governance deficits or failures and their political repercussions related to Global China’s ‘aid’ regime.

It is perhaps too early to assess the impacts of the recent Chinese soft power initiatives detailed in this article. Indeed, like many other policy initiatives in the post-reform era they are experimental and adaptive. Much will depend on whether they are perceived to serve the interest of recipient societies. The impact of China on global development is rapidly evolving and multi-directional, and this seems set to remain the case.

Author biographies

Pádraig Carmody is Professor in Geography at Trinity College Dublin and Senior Research Associate at the School of Tourism and Hospitality at the University of Johannesburg.

Tim Zajontz is Lecturer at the Chair for International Relations at the University of Freiburg and Research Fellow at the Centre for International and Comparative Politics at Stellenbosch University.

Ricardo Reboredo is Assistant Professor of International Relations at Metropolitan University Prague.

Conflict of interest

The authors declare that there is no conflict of interest.