It is said that nature abhors a vacuum. In the same way, the authority left empty by the Biden administration has invited China to assert itself as possibly the most dominant superpower not only in the Middle East and cyberspace but also throughout the globe.
To speak plainly, this isn’t good for the United States. China rarely does one thing at a time and while they’re handshaking on camera, they are simultaneously moving multiple pieces on the global chessboard in efforts to usurp America’s position as the world’s most powerful nation, both economically and militarily.
There are three key areas in which we can see China’s global strategy playing out. First is the recently announced 25-year partnership with Iran. Second is the creation of a government-controlled cryptocurrency, “Cyber Yuan”; and third, China’s “Belt and Road Initiative.”
The latter of the three, the Belt and Road Initiative (BRI), is being referred to as the “New Silk Road.” In short, the BRI is the creation of a massive new trade route throughout Europe, Africa, Australia and the Pacific Islands, placing China at its center. This massive foreign investment by China involves new roads, new rail, new marine ports and new airports, but is seen by many as a debt trap for borrowing governments.
In the event a country defaults on its debt, China has agreements to either assume control of infrastructure or even landmass. This has already begun to happen in places like Laos where China assumed control of their power grid after the southeast Asian country was unable to repay their debt and as far as Africa where China required access to land leases as debt repayment (see China taking control of airports in Zambia and naval ports in Kenya).
These shrewd but strategic moves ensure China’s ability to exert total control over specific trade environments, along with their ability to shut out competitors including the United States.
This calculated deployment of investments allows China to exert diplomatic and financial control over a country without needing to exercise military strength.
In many of these smaller countries, the Chinese foreign investment by way of the BRI represents massive amounts of the total investments within a country. In Zimbabwe, for example, Chinese-based investments make up over 80% of all foreign investment. In Afghanistan, that number is 79%. In other countries such as Myanmar, it's 81% and North Korea its 93%.
China’s not avoiding the western hemisphere either. In Ecuador, Chinese investments make up 57% of the foreign total and in Venezuela, China is the nation’s largest creditor holding billions of their foreign debt.
In essence, China is establishing major economic footholds in countries as a buffer against the presence of U.S. military and economic expansion.
This leads us to the Middle East and China’s recently announced partnership with Iran. For more than 40 years now Iran and the United States have found themselves in an incredibly adversarial position and this move will only lead to the U.S. having a weaker position in which to hold Iran accountable.
China providing economic relief to a country that most of the world is worried about creating nuclear bombs and is constantly threatening the very existence of Israel is beyond troubling. The U.S. Government’s ability to slow Iran’s advancement in that regard by way of economic sanctions and military strikes if and when they abused enrichment facilities, slowing their available research capacity, has been largely put in jeopardy with this new deal, leaving the U.S. with limited alternative options.
If China makes a heavy push in Iran, in defiance of our sanctions, via the purchasing of Iranian oil, it will allow Iran to ignore western pressure against creating nuclear weapons. In a worst-case scenario, China’s investment could include heavy-water enrichment sites built and staffed by Chinese nationals, which would also mean that the U.S. would likely not have the ability to conduct military strikes against those facilities without potentially setting off a direct military conflict with the Chinese government.
While that particular scenario is worst-case and likely years away, nonetheless it shows how weakened our position is with the adversarial leadership within Iran.
Meanwhile, the threat of continued economic control by China is very real, and here now. The creation of the Chinese crypto “Cyber Yuan” may prove to be China’s key to an economic power grab. While the United States, by way of Treasury Secretary Janet Yellen, has been dithering over basic congressional inquiries into Bitcoin, China (who controls the majority of worlds existing cryptocurrency) has built their own version and launched it into their domestic market — and we should assume that they won’t stop there.
Currently, the Chinese Yuan makes up roughly 2% of global foreign currency reserves compared to the U.S. Dollar which makes up 61%. While the USD is still the king of global currency, Morgan Stanley estimates that China will continue to gain ground, replacing up to 10% of total reserves by 2030.
As the Belt & Road Initiative continues to accelerate financial investment in foreign markets, one could anticipate China insisting that those countries struggling to repay the debt adopt or at the very least, invest in the digital yuan. This will, in turn, will accelerate the total usage of the yuan, which can then be used for more investment and so on and so forth.
China, which is already known to manipulate its currency, may be looking to utilize its new investment network to accelerate the global usage of the yuan and if the world is using the yuan and China controls the yuan, global finance could soon be at the mercy of the Chinese Communist Party.
Regardless, China is clearly playing a game of chess — strategically making moves — while the rest of the world, the United States included, is playing checkers.
While the extent of the danger related to China’s moves is unknown, it’s clear that they are engaged in a game of brinksmanship. They push boundaries constantly and are setting the stage for confrontation and the only way to slow that down is to continue to be in their way.
Washington must recognize this and the need for fiscal responsibility. We must stop wasteful spending which only weakens the dollar by way of increasing our national debt and instead get back to making smart economic decisions including foreign investment in lieu of foreign aid.
If our elected leaders wait too long, the United States may find our global access restricted, our ability to conduct business diminished and the slowly tightening squeeze of an economic downturn as China takes our place as the world leader.
Seth Denson is a Business & Market Analyst, Author and Entrepreneur. He co-founded one of the nation's most successful consulting firms and authored the best-selling book, "The Cure: A Blueprint for Solving America's Healthcare Crisis," which takes a deep dive into the business structure of our U.S. health care system and how we can reform it while maintaining our free market. As a regular on-camera contributor, Seth has garnered a national presence discussing a range of topics including business and economics, politics, faith and fatherhood. Originally from West Texas but with international business experience, Seth's "no-bull" approach blends metropolitan thinking with good old-fashioned Texas straight talk. Read Seth Denson's Reports — More Here.
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