Confucius stated: ‘To learn something and rehearse it constantly, is this indeed not a pleasure?’. The message this week is that China is learning fast! Not only from its own mistakes and those of others, but also from the successful policies of other superpowers.
In the past, the Monroe-doctrine helped to ensure the influence of the US in Latin America. Today this doctrine might contribute in a similar way to the changing dynamics in the geopolitical realm, especially since superpowers (US and EU) do not have much interest in the CARICOM-region. This provides an opportunity for China to extend its influence in that region, especially in the CARICOM-region. Furthermore, Chinese influence could be strengthened through its participation in BRICS.
Currently there is no joint-approach of Latin America towards China. From an energy perspective the Caribbean might become of strategic relevance for China (oil reserves of Venezuela and refineries in the Caribbean), unless other superpowers engage more with the CARICOM-region [The Belt and Road Initiative Looks East].
The (burgeoning) influence of China in the geopolitical spectrum is interconnected with the trust of non-western countries in Western powers and systems. Recently it has come to the public’s attention that the US uses the data collected via SWIFT to its own competitive advantage. This puts pressure on bilateral relations with the US, which could be in favour of China. The financial markets provide a good indication to measure the declining trust in the US. The recent auction of 30-year US bonds is less than satisfactory. Also, Russia, India and China are investing heavily in gold in the broadest sense of the word.
China and Russia are focusing on the Euro as an alternative currency, which has a negative impact of the US dollar on the global trade. Also, the announcement of the FED to make interest rates rise, might put some pressure on the economic position of the US in the long term. It still needs to deal with the consequences of the Quantitative Easing policy of the US. In the long term, this could have ramifications for the trade war between the superpowers. Simultaneously it could strengthen the position of the Yuan as an international currency.
Already the Yuan is the seventh most traded currency in SWIFT in its young history. All in all, the trade war between the superpowers US and China is becoming a three-dimensional game of chess [What Currencies Will be Used Along the Belt and Road? And Who Will Monitor Them].
Critique is growing in relation to China attracting a huge amount of risk by accumulating debt. Yet recent developments in financial/economic policies of the EU and the US are equally worrisome. As Herodotus said: Great deeds are usually wrought at great risk.
A. Cikmazkara
This week's Silk Road Headlines
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To increase awareness of and facilitate the debate on China's Belt and Road Initiative, the Clingendael Institute publishes Silk Road Headlines, a weekly update on relevant news articles from open sources.
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