China’s ‘Soft Power’ Influence Expansion Now Engulfs Asia-Pacific & European Union (EU)

Brigadier (Retd.) Dr. Ahsan ur Rahman Khan

China’s Influence Span Established During Period 2013 – 2020

The fact is generally known that for last seven years, China has been succeeding in expanding the sphere of its soft powerinfluence in the world through its initiative known, in Chinese, as Belt and Road Initiative or BRI; and in English, One Belt One Road or OBOR. This initiative, which was commenced in 2013, entails Chinese investment for infrastructure development in different needy countries of the world and international organisations. However, what has generally not found much focused media attention is the real grasp of the fast expanding and deepening Chinese geopolitical influence in the international sphere, through the application of this economic/investment ‘soft power’ initiative.

The span of this expanding Chinese influence in the world can be gauged from the fact that by March last year, as many as 138 countries had become part of the BRI. These included (1):-

  • 38 countries in Sub-Saharan Africa.
  • 34 BRI countries in Europe & Central Asia (including 18 countries of the European Union (EU) that are part of the BRI).
  • 25 BRI countries in East Asia & Pacific.
  • 17 BRI countries in Middle East & North Africa.
  • 18 BRI countries in Latin America & Caribbean.
  • 6 countries in South East Asia.

Countries of the Belt and Road Initiative (BRI) 2020

Reason for Such Impressive Success of China

The reason for such massive Chinese success is that while US and Western countries attach many ‘strings’/conditions to their offer for providing investment assistance to needy countries, China does not attach any ‘strings’ to its offer. This fact has been aptly highlighted by the former Finance Minister of Greece Mr. Yanis Varoufakis while discussing Chinese investment assistance to African countries for developing infrastructure in those countries. In a Vlog he explained that China helps African countries improve their infrastructure with great humanity and no strings attached, a non-interventionist way the West has never managed to fathom. (2)

Significant Recent Further Successes of China

And, very recently in the preceding two months, China has scored two further significant successes in expanding its soft power influence in the international arena; both of which will also indirectly provide significant geopolitical advantage to China. One of these is the 15th November 2020 signing with Asia-Pacific countries the agreement known as Regional Comprehensive Economic Partnership (RCEP); and the other is the 30th December 2020 Comprehensive Agreement on Investment (CAI) reached between China and European Union (EU). (The CAI has been reached between European Commission President Ursula von der Leyen, European Council President Charles Michel, German Chancellor Angela Merkel, French President Emmanuel Macron and Chinese President Xi Jinping; and will be finally approved by European Parliament).

Regional Comprehensive Economic Partnership (RCEP)

(Map: Courtesy New Zealand Foreign Affairs & Trade article https://www.mfat.govt.nz/en/trade/free-trade-agreements/free-trade-agreements-concluded-but-not-in-force/regional-comprehensive-economic-partnership-rcep/rcep-overview).

The salient aspects of RCEP were highlighted on 17 November 2020 by News 18 (India’s leading TV18 and CNN partnership news media), as following (3):-

  • The Regional Comprehensive Economic Partnership (RCEP) was agreed upon by 15 member nations, including the 10 ASEAN countries on Sunday. A Chinaled initiative, the countries agreed to form the world’s largest free trade bloc that accounts for nearly a third of all economic activities and covers almost 30 per cent of the world population or 2.2 billion people.
  • Conceptualized in 2012, RCEP is touted as the largest regional trade agreement aimed at facilitating easier exchange of goods and services among its member nations. Its members include China, Australia, New Zealand, Japan, South Korea and ten ASEAN countries including Vietnam, Laos, Brunei, Cambodia, Myanmar, Thailand, Singapore, Indonesia Malaysia and the Philippines. India was also a part of the bloc until it pulled out last year.
  • It aims to cut down tariffs, facilitate trade in services and promote investment to enhance growth in the economies of the member nations. It was formed after former US president Barack Obama announced the Trans-Pacific Partnership (TPP), a multinational trade deal, which excluded China.

The implied significance of RCEP was also highlighted in an article, published on 30 November 2020, by Eduardo Pedrosa, Secretary-General of the Pacific Economic Cooperation Council (PECC) Singapore and Christopher Findlay, Honorary Professor of Economics at the Crawford School of Public Policy of Australian National University. They have asserted that (4):-

  • The Regional Comprehensive Economic Partnership (RCEP) trade deal signed on 15 November is important to both its members and globally. The agreement is significant in its membership and coverage and it goes further than the ASEAN+1 agreements it was built on in its coverage and its deeper commitments to liberalise trade.
  • The agreement is also significant in the context of the debate about globalisation. This group of economies demonstrate their commitment to continuing economic integration.
  • More specifically, the deal also fills a void in the regional trade system, providing an arrangement between Japan, South Korea and China in particular that did not exist before.

As for the geopolitical significance of RCEP, Dr. Alon Levkowitz, research associate at BeginSadat Center for Strategic Studies (BESA) Israel, has highlighted (5):-

  • “The question weighing on policymakers across Asia, Europe, and the US is whether the RCEP economic bloc will change the global economic balance of power”.
  • The RCEP sends a clear message that Beijing is the most important economic player in the region. China is a key trading partner of all the group’s members.
  • The RCEP challenges Washington’s economic position in the region. The incoming Biden administration will find it harder to gain the support of the Asian members of RCEP to support sanctions or other forms of pressure on China.

Comprehensive Agreement on Investment (CAI)

European Commission’s press release of 30 December 2020 made public the key elements of the highly significant Comprehensive Agreement on Investment (CAI) reached between China and EU. It also mentioned in detail the sectors in which China and EU will work together according to CAI. Some of the significant key elements of CAI are mentioned in the preamble of this lengthy press release. The noteworthy of these are (6):-

  • The cumulative EU foreign direct investment (FDI) flows from the EU to China over the last 20 years have reached more than €140 billion. For Chinese FDI into the EU the figure is almost €120 billion. EU FDI in China remains relatively modest with respect to the size and the potential of the Chinese economy.
  • As regards investment, the EU-China Comprehensive Agreement on Investment (CAI) will be the most ambitious agreement that China has ever concluded with a third country”.
  • “The CAI will ensure that EU investors achieve better accessto a fast growing 1. 4 billion consumer market, and that they compete on a better level playing field in China. This is important for the global competitiveness and the future growth of EU industry.
  • Roughly half of EU FDI is in the manufacturing sector (e.g. transport and telecommunication equipment, chemicals, health equipment etc.). China has not made such far-reaching market access commitments with any other partner.
  • “EU sensitivities, such as in the field of energy, agriculture, fisheries, audio-visual, public services, etc. are all preserved in CAI”.

On the same day (30 December 2020) CNN published a report about this China-EU agreement (CAI) deal. It has highlighted the possible ultimate opposition of this agreement from US and in certain quarters in Europe. Some of those are (italics added for highlighting) (7):-

  • Europe has finalized an investment agreement with China that is designed to rebalance trade with the world’s second largest economy, despite US concerns that the deal could be counterproductive.
  • Referring to European Commission, the report mentioned The Commission said the deal, which was a priority pushed by German Chancellor Angela Merkel, will also lay down “clear obligations on Chinese state-owned enterprises,” which are often heavily subsidized. The agreement also establishes rules against forced technology transfers. But moving ahead with the deal could also harm Brussels’ relationship with the incoming US administration, which had expressed a desire to work closely with the European Union on issues related to China.
  • In that context, this report also quoted Jake Sullivan, who has been tapped to be President-elect Joe Biden’s national security adviser, responded last week to a post on Twitter about the EU agreement, saying the administration “would welcome early consultations with our European partners on our common concerns about China’s economic practices. And that, The European Union said last year that it considers China to be a “strategic competitor” and a “systemic rival,” reflecting a recent hardening of attitudes toward the country. Biden has gone even further, describing Xi earlier this year as a “thug” who doesn’t have a “democratic … bone in his body.

Since this CAI deal is to be approved by European Parliament, the possibility of opposition from Europe and US for its final approval, as indicated by CNN report, does deserve consideration.

However, the article, published on 2 January 2021 by the Hong Kong-based newspaper South China Morning Post (8), clearly shows that despite possible opposition, from US and some elements in Europe, the CAI deal is most likely to be approved by European Parliament. In that context the article brought to fore, (italics added for highlighting):-

European Commission President Ursula von der Leyen, European Council President Charles Michel, German Chancellor Angela Merkel, French President Emmanuel Macron and Chinese President Xi Jinping approve an investment pact between China and the European Union on December 30. Photo: AFP

(European Commission President Ursula von der Leyen, European Council President Charles Michel, German Chancellor Angela Merkel, French President Emmanuel Macron and Chinese President Xi Jinping approve an investment pact between China and the European Union on December 30. Photo: AFP)

 

  • President Xi Jinping certainly had Washington in mind on Wednesday when he said that in the new year, China and Europe – as two major global forces, markets, and civilisations – should demonstrate a sense of responsibility and take active steps to contribute to world peace and progress. Xi confirmed the deal over video links with EU leaders including German Chancellor Angela Merkel, French President Emmanuel Macron, President of the European Council Charles Michel and President of the European Commission Ursula von der Leyen.
  • The fact that both sides appeared eager to hit the deadline before US President-elect Joe Biden assumes office later this month reflects their strategic thinking over future ties with the United States.
  • Moreover, the EU’s decision to brush aside Washington’s concerns sends an interesting signal that it is now more willing to stand up for its own interests and cope with China on its own terms, after four years of the unpredictable and impulsive presidency of Donald Trump.
  • The Chinese officials also particularly recognised Merkel’s important role in shepherding the deal to a successful conclusion while Germany holds the rotating six-month presidency of the European Council. The deal has long remained as a top priority for the chancellor, and will be seen as part of her legacy following her expected retirement later this year.
  • Negating the weightage of the possible political opposition in the European Parliament, the approval of which is required, the article highlights the fact, But as the European officials have said, the deal is the best the EU can get, and it is also “the most ambitious agreement” China has ever concluded with a third country.

Comments from European Media about CAI

The European Press Roundup eurotopics of 5 January 2021 has published the extracts of newspaper (one each) of UK, Poland, and Switzerland. These papers highlight the varying opinions in Europe about the CAI.

UK’s Financial Times conveyed rather harsh negative view of CAI, under the heading A huge geostrategic mistake. It asserted, The EU will live to regret the deal”; and, That is a remarkably shortsighted decision to make, for a ‘geopolitical commission’.

Poland’s wPolityce.pl did not out rightly oppose CAI, though it reflected sort of unfavourable view of German Chancellor Angel Merkel’s lead role in getting this CAI deal agreed upon by the EU. It commented under the heading Germany wants to benefit from polarisation. And that, For wPolityce.pl, the agreement bears the signature of the German government: “Clearly, the main reason why Berlin pushed the EU into the agreement is political. Foreign Minister Heiko Maas emphasised on July 1st, at the beginning of Germany’s six-month EU Council presidency, that Germany wants to be a ‘mediator’ between Washington and Beijing. … In other words: the world is to become bipolar. In such a world, however, decisions would be made over the heads of the Europeans, who would have to take sides on every major political step. In this way Germany would be able to tip the scales as the ‘honest mediator’ between the warring powers, with all the advantages that such a position brings with it”.

Switzerland’s Neue Zürcher Zeitung presented a rather supportive view of CAI under the heading Dialogue more effective than rejection. Its extract in eurotopics goes further: “The agreement is better than it is being made out to be, the Neue Zürcher Zeitung counters:  “An investment agreement is not a vehicle for changing a regime. … And we should not harbour any illusions: the Chinese regime will always find ways to enforce its ideas vis-à-vis private interests. … Nevertheless the cooperation bodies and mechanisms for resolving disputes provided for in the agreement will at least make it easier to denounce violations of obligations and take action against them. Dialogue is more effective than rejection. For systemic competition to remain peaceful and productive, we must cooperate and agree on certain rules of the game”.

Analysis

As for any opposition to CAI, US’ likely opposition is understood. US’ anti-China policy is based upon the harsh reality that all economic and geoeconomic indicators are clearly showing that China’s economic potential and its soft powereconomic influence expansion in the world is most likely to overtake that of US in not too distant a timeframe. Faced with this reality US’ administration tries different measures like sanctions etc to fulfill its hope, albeit vain, to somehow stop China’s economic advancement.

Opposition to CAI asserted by UK’s Financial Times reflects possible opposition of CAI by UK’s policyformulation institutions. That is also understood; because factually UK is too dependent on US’ support in all aspects of international relations hence the possibility of UK opposing the CAI for taking the side of US. However, opinion published in Poland’s wPolityce.pl did not reflect any opposition to CAI. It’s sort of objection only to Germany’s lead role is not an objection to CAI rather that is related to the historical rivalries of European nations. In the case of Switzerland’s Neue Zürcher Zeitung the published opinion is rather supportive of CAI.

In essence, therefore, final approval of CAI by the European Parliament is most likely not to face any serious problem. That assessment is further corroborated by the fact mentioned in the aforementioned 2 January 2021 article of Hong Kong’s South China Morning Post, European officials have said, the deal is the best the EU can get. (9)

As for the significance of Regional Comprehensive Economic Partnership (RCEP) and Comprehensive Agreement on Investment (CAI), these very recent agreements achieved by China reflect major geoeconomic and geopolitical advantages gained by China in the already changing ‘world order.

From geoeconomic angle the Chinaled RCEP agreement, between 15 South East Asian countries, formed the world’s largest free trade bloc that accounts for nearly a third of all economic activities and covers almost 30 per cent of the world population or 2.2 billion people. And, from geopolitical angle it is noteworthy that the 15 members of RCEP also include Australia and Japan which are the members of fourmember USled South East Asia strategic partnership QUAD which is basically antiChina.

As for CAI, from geoeconomic angle, it is worth noting that trade and investment between China and EU member countries is not a new phenomenon. In fact there were already 26 existing bilateral investment treaties between 27 individual EU Member States and China”; and as for the volume of trade According to Eurostat data, in 2019 the EU had exported goods worth approximately €198 billion (US$242 billion) to China and imported goods worth €362 billion (US$442 billion) from China, with a bilateral trade worth some US$650 billion last year, according to Bloomberg (10). And, now this comprehensive and mutually regulated trade/investment arrangement between China and EU (as a bloc) is most likely to massively enhance and consolidate the mutual trade/investment relations between China and EU. The geopolitical significance of CAI is evident from the fact that EU’s eagerness to arrive at this agreement disregarding US concerns about any such deal with China has clearly shown EUs resolve to, whenever so warranted, take its own decisions in international arena irrespective of US. That is surely the harbinger of the major evolving change in the hitherto USled world order. That evolving change is highly significant in view of the fact that at least prior to Donald Trump’s presidency USglobal power potential depended heavily upon USdeeply integrated partnership with EU; and, this serious weakening of the old USEU integrating link is most likely to result in USloss of sole global supper power potential.

In the context of China’s recent major successes by achieving RCEP and CAI, it is also worth noting that the Chinese President has indicated that China “will favorably consider joining” the renegotiated version of the TransPacific Partnership, which was originally led by the US and aimed at excluding China(11). That TransPacific Partnership (TPP) was the outcome of US President Barak Obama ‘Pivot Asia’ policy. It comprised 12 countries of the Pacific Rim,

The TPP member countries

(Map: courtesy Council on Foreign Relations backgrounder, 1 December 2020) (12).

 

including US, Canada, Mexico, Peru, Chile, New Zealand, Australia, Singapore, Malaysia, Brunei, Vietnam, and Japan. According to the abovementioned 1 December 2020 backgrounder published by Council on Foreign Relations, TPP was set to become largest trade deal covering 40 % of global economy; and also to advance USstrategic interests in the AsiaPacific. However, US under President Donald Trump had withdrawn from TPP; leaving rest of the member countries to work on a revised agreement (13). It is obvious that if China manages an entry in the revised version of TPP, its influence from South East Asia through RCEP will extend further eastward to cover Asia-Pacific too.

The Upshot

All the aforementioned published reports clearly show that during the last decade China has been highly successful in applying its soft powerinfluence expanding policy in the world. The most significant aspect of this policy is that, unlike US and certain Western powers, China does not attach any strings/conditions to its offer of economic/investment assistance to the needy countries. Needless to clarify that such mutually beneficial economic/investment projects also consequentially entail development of geopolitical goodwill between such countries and China.

By now that soft powergeoeconomic/geopolitical influence of China has already expanded to 138 countries of the world. And, the very recent successes of China in consolidating that influence in South East Asia (through RCEP) and in the EU bloc as a whole (through CAI) certainly reflect marked Chinese success in its ongoing competition with US reason being: RCEP includes two of the members (Australia and Japan) of USimportant South East Asia four member strategic allied group QUAD; and the clear tilttowards China of the EU bloc as a whole which hitherto has been the most important USgeoeconomic/geopolitical ally.   

These evolving changes in the global geopolitics are surely the harbinger of major changes in the hitherto unipolar world order, most likely resulting into multipolar world order in not too distant a timeframe an aspect deserving serious attention of governmental policy formulators.

References

(1). https://green-bri.org/countries-of-the-belt-and-road-initiative-bri

(2). https://twitter.com/ChinaDaily/status/1341374326092783622

(3).https://www.news18.com/news/business/what-is-rcep-key-points-to-know-about-worlds-largest-trade-agreement-3089252.html

(4). https://www.eastasiaforum.org/2020/11/30/why-rcep-is-a-big-deal/

(5). https://besacenter.org/perspectives-papers/asia-rcep-free-trade/

(6). https://ec.europa.eu/commission/presscorner/detail/en/IP_20_2542

(7). https://edition.cnn.com/2020/12/30/business/eu-china-investment/index.html

(8). https://www.scmp.com/week-asia/opinion/article/3116147/china-eu-trade-deal-strengthens-beijings-hand-power-game-us (Hereinafter cited as SCMP Article of 2 January 2021).

(9). ibid.

(10).https://www.china-briefing.com/news/eu-china-comprehensive-investment-agreement/

(11). SCMP Article of 2 January 2021. op.cit.

(12). https://www.cfr.org/backgrounder/what-trans-pacific-partnership-tpp

(13). ibid.

 

Brigadier (Retd.) Dr. Ahsan ur Rahman

Brigadier (Retd.) Dr. Ahsan ur Rahman Khan is a retired officer of Pakistan Army; a graduate of Command & Staff College and a post-graduate of National Defence College; with Command, General Staff, and rich battlefields experience of war; had to retire due to heart ailment; a post-retirement PhD from University of Peshawar, with the thesis relating to Afghanistan; a published free-lance research/analyst; chose to be a post-retirement teacher; lectured in Social Sciences in the universities of the twin cities of Islamabad and Rawalpindi for about 11 years; and now house-bound due to health reason, retaining his passion for research/analysis.

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