China’s illusory global leadership

ATLANTA—Even as China’s economy slows and its government backslides on reform, President Xi Jinping is trying hard to portray his country as a global power ready to assume a broader international role. It is proving to be a tough sell.

Xi’s efforts to boost China’s international clout are not in doubt. His meetings with Asian leaders in Manila last November rounded out a year of high-profile travel, in which he has touted China—which has provided billions of dollars in foreign assistance and investments around the world in recent years—as a leading global benefactor. In the Middle East, Chinese firms are building a subway in Iran’s capital and a high-speed railway in Saudi Arabia. Last June, Egypt entered into an agreement with China for 15 projects worth about $10 billion.

In Latin America, Chinese officials have forecast $250 billion in new infrastructure deals.

Most far-reaching is China’s “one belt, one road” initiative, which aims to recreate the ancient maritime and overland Silk Roads, connecting China to the rest of Asia, the Middle East, and Europe. The $40-billion Silk Road Fund and the $50-billion Asian Infrastructure Investment Bank, launched last year, promise to finance much of the construction, with the AIIB being viewed by many as a challenge to the World Bank.

At last September’s United Nations meeting, after promising to add $10 billion by 2030 to what began as a $2-billion investment fund for the least developed countries, Xi reiterated China’s view that it is now on par with the United States in terms of providing international aid and investment. Indeed, by emphasizing that China would put “justice before interests,” Xi may even have attempted to claim the moral high ground.

Yet even China’s most favored beneficiaries remain dubious about its model and motives, largely because Chinese aid remains primarily a business proposition. According to a 2013 study by the Rand Corporation, more than 80 percent of Chinese aid and official financing underwrites raw material extraction and the construction of the roads, bridges, and ports needed to transport these resources to China.

The terms of Chinese aid also differ considerably from those of traditional donors. Assistance from the United States, Europe, and Japan comes primarily in the form of grants; by contrast, two-thirds of Chinese aid is issued in the form of loans to finance projects and material, with China’s export-import and development banks and its state-owned enterprises providing the lion’s share of the funds. More than half of these loans also are “tied,” meaning that they must be used for procurement from Chinese companies.

As reported in China’s 2014 white paper on foreign aid, concessional loans (financing at subsidized interest rates) nearly doubled from 2010 to 2012—a period when interest-free loans, which accounted for some 8 percent of total foreign aid, declined—and now represent 56 percent of China’s aid program. In short, while Xi’s September UN speech highlighted new loan write-offs and additional funds for education and healthcare for the world’s poorest countries, Chinese aid remains no bargain—and comes with plenty of strings.

For Xi, the question is whether this kind of aid can still yield the political returns he seeks.

According to a recent study by AidData, an American research project, development assistance does not always increase influence. Three hundred senior officials in 126 countries gave China’s representatives low marks in “agenda-setting influence.” And they put the quality of Chinese development advice near the bottom of the barrel, implicitly dismissing the lessons of China’s statist economic model.

China’s economic slowdown is likely to exacerbate negative perceptions of its assistance. In reviewing a decade of China’s performance as a donor, the Rand study concluded that Chinese aid deliveries lag behind pledges by a considerable margin. In Pakistan and Indonesia, for example, China has made good on less than 10 percent of its multibillion-dollar promises. Though delays are typical with project aid, in China’s case, slowing economic growth could cause them to be prolonged or worse. After all, the projects are focused primarily on obtaining resources for the Chinese market, making them subject to the country’s changing appetite for raw materials.

Likewise, China is nowhere to be found in today’s humanitarian crises, raising doubts about whether Xi is actually willing to shoulder the responsibilities that accompany the standing he claims for his country. In fact, China has long faced criticism for its meager provision of humanitarian aid.

Syria is the latest case in point. Last October and December, China announced an additional $16 million and $6 million, respectively, in humanitarian assistance for Syrian refugees, bringing its total to some $60 million. Meanwhile, the United States, after raising its total contribution for Syrian refugee assistance to $3.7 billion last March, has provided an additional pledge of $508 million. New pledges by the European Union and its member-states total $1.2 billion, bringing total European contributions to $4.5 billion.

Of course, foreign aid is only one tool for enhancing China’s international role and standing. But Xi made clear at the UN that it is a priority, declaring that China is ready to share its development experience with other countries, provide them with new opportunities, and “welcome them to board China’s express train of development.” Unfortunately for China, the nature of Xi’s foreign-aid strategy all but guarantees severe delays for any political returns. Project Syndicate

Kent Harrington, a former senior CIA analyst, was national intelligence officer for East Asia and chief of station in Asia, and served as the CIA’s director of public affairs.