He led China’s military to a series of investments in Africa and Latin America as well as a large-scale trade agreement, signing deals worth about $250 billion over the past two years, according to China’s Ministry of Defense. In China, foreign minister Wang Yi has repeatedly described President Xi Jinping’s signature Belt and Road Initiative as a “win-win” project. So far, China has invested about $2 trillion in infrastructure in more than 65 countries and the value of Chinese goods shipped overseas has surpassed $3 trillion annually.
But China’s corporate investments, which are often secretive, are another story.
According to a report by the Chinese watchdog group China Europe International Business Council, Chinese companies invested $331 billion in more than 170 countries in 2017, and it plans to spend even more in 2018. However, more than half of those investments were made in both Hong Kong and Macau, which each have an outsized influence in global markets.
China’s enormous foreign economic footprint, which dwarfs the amount invested by European companies, is facilitated by subsidies paid to Chinese enterprises by the Chinese government, together with state support for industry, and cheap or even zero tariffs provided by China. “China’s investment in the global economy is not benign,” said Dan Schlademan, co-director of policy advocacy group Frontier, a Washington, D.C., advocacy group focused on economic and diplomatic issues related to developing countries.
“By injecting itself into nations’ national agendas, China undermines local business and opportunities for industry and workers; it threatens local resources and livelihoods; and it can lead to large-scale tax-dodging, debt-stricken local governments and crime in host nations,” Schlademan said. “With this investment comes the potential for security concerns.”
In some cases, this approach was driven by Beijing’s desire to compete against the United States in the global economy.
In South America, China spent more than $30 billion in 2017 on development projects, much of it in Brazil, the world’s eighth-largest economy. Indeed, China has been building military infrastructure, dams and highways in Brazil, as part of its Belt and Road Initiative.