China flexes

Its global investing grows as the U.S. pulls back

China hosted a conference in Beijing this past weekend of 66 countries, including 29 heads of state, to proclaim its intention to provide financing and to carry out infrastructure projects across the world amounting to some $122 billion.

The overall project, called the “Belt and Road Forum,” comes on top of the establishment and growth of a Chinese-led international development bank, oriented toward Asia, called The Asian Infrastructure Investment Bank, with 52 members including Canada, and capitalization of $100 billion.

Part of this Chinese effort is supply-driven. China’s economy needs to keep growing. It produces more cement and steel than its domestic economy and current exports can absorb, and, thus, it has capacity that needs to be absorbed, and can be absorbed, by overseas projects. Evidence can be seen in Chinese activities in Asia, Africa, Latin America, and even in Europe, where China is building a new nuclear power plant in Somerset in Britain.

Part of it also comes from the desire of President Xi Jinping, through growing Chinese economic and thus political pre-eminence, to rise himself into being considered a great Chinese leader.

India and Japan stayed away from the BRF conference, for different reasons. Russian President Vladimir Putin and Pakistani Prime Minister Nawaz Sharif attended. The United States was represented at a low level, by a director of the National Security Council. The Trump administration is still forming a reaction to the challenge of trade policies with the Chinese, modifying the heated rhetoric of the campaign to the reality of governing.

China nearly damaged the image of the BRF conference by having invited the Democratic People’s Republic of Korea, which sent a representative. North Korea also fired another missile into the Sea of Japan while the parties were meeting in Beijing, raising again the question of whether it is useful for anyone to have contacts with the Kim Jong Un regime, even in a potential donor role.

President Barack Obama tried a “pivot to Asia,” which didn’t get very far. Mr. Trump jettisoned that effort by scrapping the 12-country Trans-Pacific Partnership trade deal effort, as he had promised, andwith bipartisan support. It was also with bipartisan support that the United States let international trade agreements diminish the nation’s manufacturing base over decades, a major contributor to the hollowing out of the middle class.

China is clearly taking advantage of shifting world economic and financial arrangements, including the effects of the coming British withdrawal from the European Union, by stepping forward to a larger world role through the BRF and the AIIB as well as by taking the lead on environmental issues. It does this while the United States steps back, relatively speaking, in those domains, hopefully strengthening its own economic situation at home to enable it to engage in global competition more effectively in the future.