OTTAWA, Ontario (April 22, 2022): As countries on every continent grapple with inflation, broken supply chains and soaring energy prices, a new MLI document says even the Chinese juggernaut’s economy will face a slowdown that could threaten Beijing’s plans to become the world’s leading superpower.
In “Economic Headwinds and Risk of Slower GrowthLead researcher Stephen Nagy provides an updated look at China’s economic outlook as it deals with its own domestic issues while adapting to a changing global geopolitical landscape.
Nagy uses China’s Belt and Road Initiative (BRI) as a barometer to gauge the impact of economic and political challenges on the regime’s mission to replace the United States as the world’s dominant political and military power.
Beijing argues that its BRI – Chinese President Xi Jinping’s flagship policy program – is designed to help developing countries fund the construction of railways, power plants, airports and other major infrastructure. Critics call it a strategic debt trap that has left many developing and cash-strapped countries saddled with huge debts they have no hope of repaying, while allowing China to further exploit natural resources and establish military outposts around the world.
According to these critics, the BRI is a tool of economic influence over weaker partner countries that helps advance China’s crusade for global supremacy, allowing it to supplant traditional international financial institutions while creating tensions between members of Western alliances.
Nagy argues that a series of converging factors, including pressures that undermine Beijing’s ability to maintain funding levels for the trillion-dollar program, limit the BRI and its effectiveness in helping China achieve its international agenda. .
“Structural issues, geopolitical tensions, the COVID-19 pandemic and now the Ukrainian-Russian conflict will all contribute to downward pressure on the Chinese economy,” Nagy writes. “This will limit the resources that can be deployed in the BRI as a geoeconomic instrument to achieve China’s strategic national goals.”
Plus, BRI is no longer the only game in town. As nations become more wary of the political strings attached to China’s economic development offers, new international aid programs backed by countries like the United States, Japan, Australia and India mean that countries now have more alternatives than simply agreeing to join China’s BRI.
Nagy concludes that the economic headwinds facing China will affect the trajectory and influence of the BRI in the years to come.
“Going forward, China will be less able to use the BRI as a tool to reshape the Indo-Pacific region into an architecture better suited to its geopolitical preferences.”
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Stephen R. Nagy is Senior Associate Professor at Tokyo International Christian University and Senior Fellow at the Macdonald-Laurier Institute.
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