Recently, it is customary to talk about China either well or not at all. “China is angry. If you make China an enemy, China will be your enemy, “- these words from a representative of the PRC government, spoken in Canberra in mid-November last year during the aggravation of the Sino-Australian crisis, were heard almost everywhere. It was these words that accompanied a list (rather, an ultimatum) of 14 points, transmitted through the local media to the Australian government, outlining the PRC’s claims against Canberra. Recall that relations between the two countries have deteriorated sharply after Australia initiated an investigation into the origin of the coronavirus in WHO. Since then, the sides have exchanged not only political barbs. Beijing imposed severe restrictions on trade with Australia, which put one of the most important regional economies in a difficult position (40% of Australia’s exports go to the PRC). Of course, Beijing placed all the blame for the deterioration in relations on Canberra, which indignantly rejected the ultimatum.
China is undoubtedly a great country, and there is hardly a single state that can ignore Beijing’s interests. In a challenging year of 2020, only China has been able to reverse negative trends, boost industrial production and boost domestic consumption among significant economies. The countries of Southeast and East Asia considered it good to cooperate with the PRC, effectively saving their own economies, although they did not miss the opportunity to step up efforts to contain China’s territorial and military ambitions in the region and take steps to diversify critical industries. In the context of the pandemic, 257 new billionaires have appeared in China (the total number has reached 878), whose fortunes have grown fabulously. In many capitals, they started talking about the fact that China is likely to catch up and surpass the United States in nominal GDP before 2025. The intrigue of interaction between the United States and China next year promises to be exciting. In this context, Japan’s assessments and experience in building relations with China are extremely interesting, given, on the one hand, their closest economic ties, and on the other, the presence of territorial claims on the part of Beijing and very serious concern over the situation in the South China Sea. China and Japan are in different geopolitical groups, both in the context of the ideological foundations of the state, and in relation to the United States.
A kind of prelude to the new political season was a poll conducted at the end of last year by the Japanese agency Nikkei among 35 reputable economists specializing in Asian markets. In their opinion, in 2021, the PRC economy will show a record growth of 8.2% in a decade, and not least because, in their opinion, the United States under President Biden will take a somewhat more constructive position towards Beijing than under Trump…. China ended last year with a modest 2% growth amid a 4.4% drop in global GDP. The greatest risk for the PRC next year is the possible bankruptcy of corporations whose investments abroad turned out to be a failure. At the same time, another survey conducted by the Kyodo agency among 96 Japanese technology companies showed that 44% of them intend to diversify their supply chains and / or withdraw production from China. Those who are going to continue operations in the PRC announced their intentions to limit the access of Chinese partners to their know-how.
China is the largest lender to the poorest and developing countries. The volume of Chinese investments around the world over the past decade has almost equaled the volume of financing with the World Bank. According to the Center for Global Development at Boston University, in 2008–2018. the volume of investments by the China Development Bank and the Export-Import Bank of China in sovereign bonds amounted to 462 billion dollars. The PRC accounts for 20% of the total sovereign debt of 73 governments of countries that are at the bottom of the world “table of ranks.” In 2018, out of 514 billion of their total debt, 104 billion fell on the PRC. Since then, the situation has changed only for the worse, and especially acute crisis phenomena manifested themselves in the covid 2020. 60% of Chinese investments through development assistance programs were directed to 10 countries – Venezuela, Pakistan, Russia, Brazil, Angola, Ecuador, Argentina, Indonesia, Iran and Turkmenistan. Argentina, Venezuela and Ecuador defaulted last year. It is impossible to deny the positive impact of China’s investment in the infrastructure of developing countries, but it is also impossible not to take into account the difficulties that have arisen in them with the return of debts to Chinese creditors. In this regard, some economists have already started talking about the need for the PRC to participate in the Paris Club of creditors.
At the same time, over the past two years, China has sharply cut investments under the Belt and Road project, facing a debt defaults crisis. In the context of the crisis, China declared a “double circulation” policy, in fact resorting to the tactics of stimulating domestic consumption as the main mechanism of growth. Last but not least, this “inward” appeal was also associated with extremely tense trade relations with the United States. Restrictions in foreign markets associated with sanctions and trade barriers forced China to somewhat reconsider its strategy of global expansion, focusing on the current tasks to overcome the crisis. The large-scale investments made at the initial stage of the Belt and Road in countries such as Venezuela, Belarus, Cambodia and others with authoritarian political regimes hostile to the United States. According to data cited by the Financial Times, in 2020 at least 18 borrowers were negotiating with China on a deferral of debt payments under the Belt and Road Project. In September alone, 12 countries asked Beijing to postpone payments on servicing $ 28 billion of Chinese loans.
Meanwhile, the United States continued its policy of pressure on China, imposing new sanctions against three and a half dozen of the largest Chinese public and private corporations, which, according to Washington, are associated with the military-industrial complex or the PRC army (and this is in addition to new sanctions in connection with Uyghur and Hong Kong policy). As a result, the world’s largest stock exchanges and indices announced the exclusion of these companies from their listings. In a public interview last December, the head of the US Chiefs of Staff, General Mark Milli, called China “the greatest security challenge for the United States,” although he refrained from mentioning China as an “enemy.” At the same time, he drew attention to the task set by Xi Jinping to equalize the military potential of the United States and China by 2027 – the centenary of the creation of the People’s Liberation Army of the PRC. The Pentagon reports (and the strategic reviews on China by the Japanese National Institute for Defense Research) express extreme concern about the growing military potential of China in almost all areas of the modern structure of the armed forces. Of course, such assessments cannot but affect the political and economic atmosphere around the PRC.
At the same time, the leading economies of the world show extraordinary flexibility in relation to the PRC. Reports of new sanctions are accompanied by news of increased investment in China by the richest pension funds and institutional investors in Europe and the United States. For example, the California Teachers’ Pension Fund with a volume of $ 254.7 billion reported that the share of Chinese companies in the fund’s investment portfolio rose to almost 3% (about the same, for comparison, the investments of this fund in the shares of Japanese corporations). American hedge fund Bridgewater Associates and Scottish Baillie Gifford have strong positions in Beijing. Tokyo’s grave concern over Chinese claims to the Senkaku Islands does not prevent Japanese corporations from investing in the construction of a huge plant in China to produce methane from hydrogen and CO2 emissions. Despite Washington’s displeasure, literally under the New Year tree, the EU agreed with China on the basic principles of a future investment agreement, which has been negotiated over the past seven years. If signed, this agreement will open up an opportunity for European companies to significantly increase their presence and compete even with state-owned corporations of the PRC in the domestic market of China.
China has changed a lot in 2020. The diplomacy of the “wolf warriors” became evident not only in relation to Hong Kong, Australia and Canada, but was also reflected in the laws passed on screening investments from the point of view of national security and export controls. From now on, all foreign investments in the defense sector, as well as intentions to acquire controlling stakes in energy, agriculture, information technology, financial services and mining, will be subject to study by the National Commission for Reform and Development of the PRC. Similar measures were taken earlier in the EU and the US with regard to Chinese investments, and, of course, could not remain unanswered. The Export Control Law, which came into force on December 1, 2020, is, according to Chinese government officials, simply by updating existing laws in the field of export control of nuclear, biological, chemical, missile and military technologies. The text of the law is still being carefully studied by lawyers, but, according to preliminary estimates, it contains provisions that actually make it possible to revoke any export license under the pretext of protecting the national interests of the PRC.
In response to the statement by the Foreign Ministers of the Five Eyes Intelligence Alliance (USA, Canada, Britain, Australia and New Zealand) regarding the PRC’s actions in Hong Kong, PRC Foreign Ministry Spokesman Zhao Lijian said: “It doesn’t matter if they have five eyes or ten eyes, but if they dare to encroach on China’s sovereignty, security or development interests, they must understand that their eyes will be gouged out and blinded. ” And in response to Japan’s demand to leave the Senkaku Islands alone, made during the visit of Chinese Foreign Minister Wang Yi to Tokyo, the answer was that these islands are Chinese. The recent meeting of the defense ministers of the two countries took place in approximately the same vein. Japan is watching with concern the possible adoption by the PRC Parliament of a law allowing the PRC Coast Guard to use weapons. if they “consider themselves attacked.” The problem is that it is the PRC coast guard ships that constantly violate the territorial waters of Japan, and if it comes to the use of weapons, this could cause an escalation, which Tokyo is trying to avoid. In general, illegal fishing by Chinese fishermen is a matter of concern far beyond the region – both in South America and Africa. According to Japanese experts, Beijing is well aware of the negative attitude towards such actions, but they believe that the time has come to restore justice to the ambitions of the PRC after the “century of humiliation.” In general, illegal fishing by Chinese fishermen is a matter of concern far beyond the region – both in South America and Africa. According to Japanese experts, Beijing is well aware of the negative attitude towards such actions, but they believe that the time has come to restore justice to the ambitions of the PRC after the “century of humiliation.” In general, illegal fishing by Chinese fishermen is a matter of concern far beyond the region – both in South America and Africa. According to Japanese experts, Beijing is well aware of the negative attitude towards such actions, but they believe that the time has come to restore justice to the ambitions of the PRC after the “century of humiliation.”
On the eve of the inauguration of the 46th US President Joe Biden, China and Russia did not miss the opportunity to show both the US and Japan their growing partnership in the military sphere. In December 2020, they conducted an Air Force exercise, during which six bombers flew more than ten hours over the Sea of Japan and East China. The first such flight took place in July. The aircraft did not violate Japanese airspace but flew over Okinawa and several other islands. Japanese experts note that the planes of China and Russia flew along the route that the Chinese Air Force is practicing for a possible attack on Taiwan. The Chinese The Global Times wrote about this that such flights will become regular in the future. Shoigu reported these exercises to Putin. And the Russian president, during a press conference on December 17, noted that “perhaps common interests, perhaps personal harmony, are the reason “that he has” good business and at the same time trusting and friendly relations “with Xi Jinping. Well, this became clear both from Moscow’s unexpected criticism of the Indo-Pacific alliance of the United States, India, Japan and Australia, which Beijing does not like very much, and in the context of China’s support for the Russian position during the last UN voting on the Crimean resolutions.
According to Chinese experts from Tsinghua University, the deterioration of relations between China and the West is 90% due to the fact that these countries “sided with the United States in the policy of containing China,” and only 10% are really problems in bilateral relations. In fact, Xi Jinping personally and repeatedly emphasized that China is not seeking world domination, but only seeking the common good. In 2021, China will set goals and targets for the next five years, and will also celebrate the 100th anniversary of the founding of the CCP. This means that both new achievements and new strategies should be expected from Beijing. And in 2027, the 100th anniversary of the PRC army will be celebrated.