Among the news items and analyses from this week, an insightful Global Americans article focuses on the recent changes in China-Panama relations, just a year after the Central American country rejected its allegiance to Taiwan and established full diplomatic ties with Beijing [Chinese inroads in Panama: Transport hubs and BRI in the Americas]. Since June 2017, as many as 23 agreements have been signed, focusing on investment and infrastructure, and Panama has become the first country in the Americas to officially ‘sign up’ to the Belt and Road Initiative (BRI). While trade in goods between China and Panama is minimal, the latter’s successful shift towards Beijing lies in its ability to leverage its role as the ‘ultimate service economy’, and as a key regional transport and financial hub. By portraying itself as the ‘Hong Kong of the Americas’, Panama has skilfully played into China’s BRI-framed commercial and international development priorities. Panama’s allegiance switch could in part be considered an example of the ‘chequebook diplomacy’ used by Beijing and Taipei to gain recognition around the world. However, Panama being an advanced economy, this move also attests to China’s growing appeal as not just a cash-stuffed spender, but also as a global player with an ambitious connectivity and –more broadly- interdependence-enhancing agenda. This makes closer ties with China worthy even for countries with traditionally much stronger ties to Washington than Beijing.
Nevertheless, as already pointed out in several previous SRH issues, China’s BRI dynamism has not been exempt from scepticism and criticism, especially with regard to its financial sustainability. As illustrated by a timely NYT feature [China Taps the Brakes on Its Global Push for Influence], five years after the inception of the initiative Beijing seems to have started to introduce more caution into its previously ‘unrestrained’ BRI largesse. In the first five months of 2018, BRI-related contracts worth $36.2 billion were signed, down 6 percent from the year before. Extra caution might also be warranted in light of the currently very turbulent international trade environment: the US’ belligerent approach has –among other things- pushed up short-term interest rates, which is likely to make international borrowing more costly, particularly in emerging markets. Additionally, a more restrained approach could also help Beijing bolster its credentials of a ‘responsible’ actor, hence enhancing its overall profile as a (potential) global leader.
Francesco S. MONTESANO
This week's Silk Road Headlines
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