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China has limited ability to project power but still has increasing global influence

August 6, 2013

nextbigfuture.com

China has no overseas military bases.

chinastringThe United States has about 700 bases overseas with about 280,000 personnel at those bases.

Russia has bases in 12 countries with about 30,000 personnel.

Britain has about 8000 personnel in 6 countries.
France also has bases in 5 countries with 7000 personnel.

The Commonwealth of over 50 nations still are united by language, history and culture, and their shared values of democracy, human rights and the rule of law. There is a movement in some member states seeks to establish a Commonwealth Union (CU) through the creation of a free trade area, visa-free travel area, common foreign policy and representation at the United Nations and Group of 20

China has several free trade agreements and is in talks on significant new free trade agreements.

China’s biggest free trade agreement is with ASEAN.

China’s talks with Japan and South Korea have been slowed by territorial disputes.

The big free trade discussion is between the EU and the United States which could come together by 2014. Such a deal would pressure Japan and China and everyone else to join the super North American-Europe free trade zone.

Currently only the USA, France and UK have blue water navies. The USSR used to have it and Russia is rebuilding their navy.

China String of Pearls

The String of Pearls refers to the network of Chinese military and commercial facilities and relationships along its sea lines of communication, which extend from the Chinese mainland to Port Sudan. The sea lines run through several major maritime choke points such as the Strait of Mandeb, the Strait of Malacca, the Strait of Hormuz and the Lombok Strait, as well as other strategic maritime centers in Pakistan, Sri Lanka, Bangladesh, the Maldives and Somalia.

China’s growing empire of ports abroad is mainly about trade, not aggression.

In Sri Lanka’s capital of Colombo, it is clear that something extraordinary is happening: China is creating a shipping hub just 200 miles from India’s southern tip. The terminal opens in July and will be complete in April 2014. The old port took centuries to reach its present capacity. China will have almost doubled it in under 30 months. Operated at full capacity, it would make Colombo one of the world’s 20 biggest container ports.

Colombo is part of a “string of pearls”—an American-coined phrase that suggests the deliberate construction of a network of Chinese built, owned or influenced ports that could threaten India. These include a facility in Gwadar and a port in Karachi (both in Pakistan); a container facility in Chittagong (Bangladesh); and ports in Myanmar.

Is this string theory convincing? Even if the policy exists, it might not work. Were China able to somehow turn ports into naval bases, it might struggle to keep control of a series of Gibraltars so far from home. And host countries have mood swings. Since Myanmar opened up in 2012, China’s influence there has decreased. China love-bombed the Seychelles and Mauritius with presidential visits in 2007 and 2009 respectively. But since then India has successfully buttered up these island states and reasserted its role in the Maldives. Besides, China’s main motive may be commerce. C. Raja Mohan, the author of “Samudra Manthan”, a book on Sino-Indian rivalry in the Indian and Pacific Oceans, argues that China’s port bases partly reflect a desire to get easier sea access for trade to and from west China.

China’s maritime interests already reflect its status as the world’s largest exporter and second-largest importer. Many of the world’s biggest container ports are in China. It controls a fifth of the world’s container fleet mainly through giant state-owned lines. By weight, 41% of ships built in 2012 were made in China.

The next step is to own and run ports. Hutchison Whampoa, a buccaneering, privately owned Hong Kong conglomerate, has long had a global network of ports. The pioneer among mainland firms was Cosco Pacific, an affiliate of state-owned Cosco, China’s biggest shipping line. In 2003-07 it took minority stakes in terminals in Antwerp, Suez and Singapore. In 2009 it took charge of half of Piraeus Port in Greece. It has invested about $1 billion abroad. China Merchants Holdings International, a newcomer, has spent double that. It invested in Nigeria, as well as Colombo, in 2010. Last year it took stakes in ports in Togo and Djibouti. In January it bought 49% of Terminal Link, a global portfolio of terminals run by CMA CGM, an indebted French container line.

The pace is quickening. In March another firm, China Shipping Terminal, bought a stake in a terminal in Zeebrugge in Belgium. On May 30th China Merchants struck a multi-billion deal to create a port in Tanzania. Even the more cautious Cosco Pacific is thinking about deals in South-East Asia and investing more in Greece.

China invests in Greece and uses the Piraeus Port

Chinese solar PV manufacturers are considering transferring part of their production lines to Greece in an attempt to circumvent EU anti-dumping duties on their products.

China already has business interests in Greece and has been praised for turning around the fortunes of the Greek port of Piraeus, managed through its state-owned shipping giant Cosco. China appeared to be interested in expanding its presence in Greece’s ports.

The Greek privatization program has seen the country consider selling state assets such as airports railways, real estate, utility companies and even Greek islands. Some of the world’s top hedge funds have also looked to make big investments in Greek banks, which are seeking investors for their recapitalization plans.

China builds and buys access to the world

China is building and buying access to world resources, trade and other economic objectives. China has set up huge mining operations in Africa. They have also built infrastructure (roads, rails, ports, airports, hospital etc..). China uses this to gain access to resources and political and economic influence. China also sells small arms and other equipment.

Less than NATO, Commonwealth and EU

China’s efforts are a lot less than NATO, Commonwealth and the EU and other alliances established by the US, Europe and the UK.

China is working on improving bilateral economic and military relations with Russia and on closer ties with Brazil.

China also is able to leverage the informal network of over 47 million overseas chinese.

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