Iliopoulos: Beijing’s expanding soft power – “Chinese plans are not shrouded in mystery”

beijing chinese president xi jinping china

The Western World underestimates Beijing when it fails to account for the speed of its energy strategy changes and the incredible flexibility of China’s Belt and Road Initiative (BRI) program, an unprecedented geopolitical lever. Beijing is constantly strengthening its ties with the Gulf Cooperation Council (GCC) and especially with Saudi Arabia, placing Russia in second place.

A dozen years ago, when Chinese President Xi Jinping presented his plan to connect Eurasia with China through extensive freight corridors to economically link the global economy to Beijing, the goals of the initiative were seen as obvious and focused on the massive investment program.

The initiative is indeed a giant investment project focused on infrastructure projects in emerging markets, but with geopolitical benefits as an ulterior motive. Of course, with the ongoing Ukraine crisis, the program is moving away from Russia and Africa, to shift with great intensity to Saudi Arabia and the Middle East.

The countries participating in the Gulf Cooperation Council (GCC), namely the Emirates, Qatar, Kuwait, Bahrain, Oman and Saudi Arabia, have been the target of the Chinese initiative since its declaration. However, they are not its primary target, mainly due to the fact that they do not have access to low-cost borrowing, such as African and East Asian countries.

Critics of the BRI program argue that it is debt trap diplomacy, citing the Sri Lankan situation, glossing over debt cancellations in 17 African countries, and completely omitting the broader geopolitical dimensions of the program and its the objectives of its goals.

Aggressive lending

Like any country with a large financial volume, China also adopts the tactic of aggressive lending to third parties, keeping up with the dictates of the international economy. The extremely interesting thing in its program concerns the fact of the evolution of the BRI, into a vehicle of geopolitical influence and a lever that is turned with intensity in the Middle East.

On the Gulf side, China’s BRI initiative is a vital link with allied countries, such as Egypt and Pakistan. The Suez Canal Development Program is progressing in Egypt, while port facilities in Gwadar are being upgraded in Pakistan.

During the last few years, China has been moving with increased aggression in the Middle East and the Gulf countries, promoting its interests with this tendency being particularly pronounced in the case of the giant Saudi Arabian group ARAMCO. When the group’s 2021 IPO on the New York Stock Exchange was rejected, another golden opportunity was given to Chinese investors to get into its equity.

Although the attempt was ultimately unsuccessful, the Saudis appreciate the fact that the Chinese have stepped in to bolster the group in times of need, following the terrible losses of the price war in the crude market during the spring of 2020.

The investments of the Chinese BRI initiative are, however, increasing in 2022 to $5.6 billion in Saudi Arabia, while similar investments in Russia are being canceled due to the crisis in Ukraine. The full extent of the deals is not yet known, although most analysts believe they are related to the energy sector, with the shift in investment flow revealing China’s long-term ambitions in the Middle East.

The rapid restructuring, centreed on disinvestment from Russia, is largely due to the problems of the Eurasian land transport bridge, with the main rail axis passing through Russia, Belarus and ending up in Poland or the Baltic.

Ukraine’s route has been blocked, while Lithuania is also not going to serve the ambitious plan. Although rail transport to Europe represents only 5% of the total, the new axis has the potential to immediately double it.

The Middle East

On the other hand, Saudi Arabia’s relations with the US do not appear particularly warm, with the result that Beijing sees an opportunity to stabilise its position in the region, moving the focus of the BRI, in order to take advantage of a new geopolitical tide.

In fact, at the end of August, the Saudi Energy Minister revealed that the OPEC+ oligopoly is studying reductions in crude oil production, with the obvious aim of keeping prices high.

The statements document the declining course of American influence in the region in favour of China, but also Russia, despite the tour of the American president with the aim of moving the threads in the opposite direction, i.e. towards production increases.

Undoubtedly, the Saudis do not need Chinese capital, but the BRI network seems particularly attractive to their interests, allowing Beijing to usurp US leadership in the region.

The new developments threaten the dominance of the petrodollar and take advantage of the trend of American foreign policy away from the Middle East, so the Ukraine crisis becomes of minor importance when the BRI initiative adapts with tremendous agility to meet the new challenges.

The latest August memorandum of understanding between Saudi Arabia’s ARAMCO and giant Chinese group SINOPEC covers everything in the energy sector, from field exploration to fuel production and distribution.

This is another strategic move that reveals that the plans of the Chinese are not shrouded in mystery, but as a rule the media marginalise them, succumbing to the need to show news that causes emotional charges in the public, such as what is happening in Ukraine, or the nightmarish increases in prices per MWh in energy.

China’s aggressive maneuvers against Taiwan gain publicity for a few days, but without leading the markets into any significant swings, which reveals that they are considered insignificant.

The indirect control of the media

The media do not follow the structure and investment methods of the BRI, which clearly betray Beijing’s geopolitical planning since they are not going to impress the public and provoke popular sentiment.

This is the art of soft power used by Beijing, thanks to which it indirectly controls the narrative of the mass media, which are indifferent to its movements, considering that they do not really cause much sensation in the public.

The BRI has quietly turned China into the continent’s largest creditor, lending $932 billion over the past eight years, according to the Green Finance and Development Center at Fudan University in Shanghai, excluding loans from its banks. to emerging market businesses.

The most recent ones are quite problematic and according to New York consulting firm Rhodium Group, $52 billion has been restructured in 2020-2021, with this amount appearing three times higher than in 2018-2019.

Although the data converges on the fact that the BRI is a method of connecting the global economy with China, few consider the possibility that it is the export of Chinese geopolitical will to the rest of the world.

However, after the American withdrawal from Iraq and the similar withdrawal from Afghanistan just twelve months ago in indulgently dramatic circumstances, Beijing realises that the decision to leave the Middle East has been consolidated in American foreign policy.

In fact, Biden’s latest tour to Israel and Saudi Arabia demonstrates a rather lackluster American interest in the region, with the exception of the problem of crude oil prices.

Beijing has been eager for a number of years to gain a significant presence in the Middle East and takes advantage of any opportunity it gets, giving Saudi Arabia both technology to design and manufacture long-range ballistic missiles, but also technology in the field of nuclear energy.

If the attempt to acquire a stake in the ARAMCO group is not successful, the recent investment in the framework of the BRI is being implemented at the right time, coinciding with the rather dubious attempt by the White House to advance US interests in the Middle East.

Chinese objectives are clearly focused on introducing the Chinese currency into bilateral energy trades, at the expense of the petrodollar, in order to topple US dominance of the crude oil market, a fact that is now an open secret in the markets.

However, to accurately track Chinese intentions requires continuous monitoring of BRI investments and their progress.

Georgios Iliopoulos is a columnist for SLPress.

Guest Contributor

This piece was written for Greek City Times by a Guest Contributor