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Tags: china | diplomacy | debt

The Dark Side of China's Yuan Diplomacy

The Dark Side of China's Yuan Diplomacy
(Neil Denize/Dreamstime.com)

Lamont Colucci By Wednesday, 20 February 2019 05:27 PM EST Current | Bio | Archive

Early 20th century United States foreign policy has often been characterized by being an era of “dollar diplomacy.” Dollar diplomacy was originally used during the Theodore Roosevelt administration, and it was the primary instrument of foreign policy under President Taft. It was designed to both promote American economic interests abroad and naturally increase America’s diplomatic and strategic initiatives in those affected nations. The left-wing of politics has always condemned “dollar diplomacy” as proof that Marx was right about the motivations of America abroad, namely that corporate capitalism led to American diplomatic and military intervention. This is fascinating since many on the left worldwide apologize for China’s much more malevolent style of “Yuan diplomacy.”

Integral to China’s One-Belt-One Road system is a colossal effort to engage in predatory lending on a global scale. From 2000 to 2014, China lent 5,466 loans totaling $354.4 billion. China is engaged in this policy with four goals in mind: debt trapping, bullying, diplomatic leverage, and military advantage.

The first part of this is for China to create a debt trap. China realizes that many third world nations will be unable to repay the loans that they are given. This will lead to a choice of economic servitude, or those nations can handover to China more tangible concessions in exchange. These concessions are in the vein of ports and land.

The second strategy is bullying. Thanks to its economic footprint in Africa, and its regional military power in Asia, China, under the direction of the Chinese Communist Party, is robust in dictating the new trading rules under the implied shadow of retaliation and force. One of the most tangible benefits to this is the PRC’s demand that these loans require the use of Chinese companies, known as “tying.” The use of Chinese companies and personnel for construction also puts Chinese civilian, military, and intelligence professionals on the ground. China, therefore, creates diplomatic leverage over the “host” government, and even leverage with western nations who wish to engage in trade. This all leads to the most concerning issue, the advantage given to the Chinese military. The port in Djibouti in the Horn of Africa is the first overseas port for the Chinese Navy. It may follow the pathway of Sri Lanka. The case of Sri Lanka is instructive. China not only used economic leverage to force Sri Lanka to hand over the port of Hambantota, but it also funneled millions of dollars into the coffers of the former Sri Lankan president, Mr. Rajapaksa, and his campaign. Rajapaksa then turned around and drove Sri Lanka into even more debt to China before losing the election in 2015. He is now trying to make a political comeback. Since the Port of Hambantota is of dubious commercial value, most would argue that the possession of this port is purely for naval projection of power. The PRC also has a part of the main port in the capital, Colombo. Here the world has witnessed visits by Chinese submarines, regardless of objections by the new Sri Lankan government.

President Trump’s administration is making sincere efforts to broadcast China’s true intentions.

President Trump also supports the new BUILD act (Better Utilization of Investment Leading to Development) passed in February 2018, designed to directly counter China’s economic influence.

Secretary of State Pompeo stated, “The Act provides opportunities for American companies to compete overseas and create jobs here at home, a critical component of the President’s national economic strategy. BUILD strengthens the U.S. government’s development finance capacity, offering a better alternative to state-directed investments and advancing our foreign policy goals.” China is also targeting specific countries with this predatory strategy such as Kyrgyzstan, Tajikistan, Laos, the Maldives, Mongolia, Montenegro, and Pakistan. Many of these nations are trying to stand up to China, but they will need U.S. leadership to do so.

China’s imperialism offers the United States the perfect opportunity to reassert the order and norms that it has created since the Second World War. Dollar diplomacy may have its origins with President Theodore Roosevelt, but it should be remembered that although it served American economic interests, it was equally interested in building up the prosperity of those nations. This was especially the case in the western hemisphere and was an integral part of the Roosevelt Doctrine focused on intervention, expansion, civilizing, and stabilization. Roosevelt combined this belief by magnifying the mission of the United States to encourage and expand Western civilization and order. He was out for establishing lawfulness, so that order could lead to civilization thus enhancing the prospect of political democracy.

The American model was one where utilitarian economic realism was combined with democracy and stability so that all participants would benefit from a relationship that would increase political, civil, and economic dignity.

This should be contrasted to imperialism by China whose strategy is exactly which the Americans opposed at the start of the nation.

Dr. Lamont Colucci has experience as a diplomat with the U.S. Dept. of State and is today an Associate Professor of Politics and Government at Ripon College. He has published two books as the sole author entitled "Crusading Realism: The Bush Doctrine and American Core Values After 9/11," and a two-volume series entitled "The National Security Doctrines of the American Presidency: How they Shape our Present and Future." He was contributing author of two books entitled "The Day That Changed Everything: Looking at the Impact of 9/11 at the End of the Decade" and "Homeland Security and Intelligence." He is also Senior Fellow in National Security Affairs at the American Foreign Policy Council, Senior Advisor in National Security for Contingent Security, Advisor on National Security and Foreign Affairs, to the Conference of Defence Associations Institute and member of the National Task Force on National and Homeland Security. Find out more at lamontcolucci.com. To read more of his reports — Click Here Now.

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Early 20th century United States foreign policy has often been characterized by being an era of “dollar diplomacy.”
china, diplomacy, debt
Wednesday, 20 February 2019 05:27 PM
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