The People's Republic of China (PRC) opened the doors of its economy to the world in 1990, leaving behind its 20th-century policy of autarky. It is Chinese foreign policy to safeguard the common interests of humanity, promote multilateralism, and establish a fair and rational international political and economic order. It also protects the world's diversity and advocates the democratisation of international relations and the diversification of development models. Its policy makes Chinese ventures appear much friendlier to host countries than those of other G7 countries with a colonial past.
The country achieved solid economic growth and development, improved its technology and expanded its spheres of influence, concentrating mainly on its neighbouring countries and entering other more distant but equally important areas to demonstrate its role as a superpower.
One of the main items in this policy of prestige is investing in foreign countries. According to data from the China Global Investment Tracker, the PRC registers 3,740 transactions worldwide with a total value of more than USD 2 trillion between 2005 and 2021.
PRC property have been on the rise since 2005, thanks to bilateral agreements signed mainly with neighbouring countries in Southeast Asia and the Pacific Rim. It resembles a "wave" that spreads close to its shores but reaches as far as the American continent, where the PRC also has cooperation agreements and major trading partners (e.g. the USA or Brazil).
2018, new expenditures, both in quantity and total amount, have started to decrease. By 2020 they reached levels similar to those seen in 2010 also due to COVID-19 Pandemic. The decline focuses on Oceania and Africa, where expenditure halved. They recovered in 2021, thanks to the resumption of economic activities there. Europe and the Americas saw a less steep decline with more rapid recovery in the number of transactions.
The PRC's impact on its continent is evident, but it is noteworthy that there are a large number of transactions in places as distant as the Americas. The American continent is a major destination for Chinese assets, similarly growing in Europe and decreasing in Africa and Oceania, even though the former was a favorite destination for Chinese assets at the beginning of the 21st century. The search for sources of raw materials, mainly energy-related, drives new Chinese purchases abroad.
Energy is the primary sector in which Chinese stakes are present on the supply side, particularly fossil fuels (mainly oil and gas). More recently, since 2015, they have bet on renewable energy development. It explains the People's Republic of China's interest in countries with large energy reserves. However, it is not only limited to these areas, as the transport sector, on the demand side, is the second most important and is a direct complement to transport the resources extracted and the necessary technology. The energy and transport sectors eclipse other areas by their numbers and values.
The Trade Agreements that the PRC are as follows:
- ASEAN (Bangladesh, India, South Korea, Laos, Sri Lanka).
- APTA (Brunei, Myanmar, Cambodia, Indonesia, Laos, Malaysia, Philippines, Singapore, Vietnam, Thailand, China).
- RCEP (Australia, Brunei, Cambodia, Indonesia, Japan, Laos, Malaysia, Myanmar, New Zealand, Philippines, South Korea, PRC, Singapore, Thailand, Vietnam).
- Bilateral Agreements with Australia, Chile, Costa Rica, Georgia, Hong Kong, South Korea, Macao, Mauritania, New Zealand, Singapore, Iceland, Moldova, Norway, Pakistan, Peru and Switzerland.
This table shows the importance of the PRC's bilateral and multilateral agreements and the clarity of its area of leadership. Thanks to this, it is clear that the PRC's primary way of investing in nearby and more distant foreign countries is through cooperation agreements. However, it does not have any with the USA, its leading asset destination.
In the Americas, assets remain small for the PRC relative to countries in China's direct sphere of influence but can be huge for the recipient countries. Substantial new Chinese ventures have been coming into the continent since 2005. It resembles the weakening status of the UK in the post II World War period with the arrival of US money and firms buying them out.
A benefit of Chinese firms is that they do not intervene directly in the political systems of the recipient countries, making the assets friendlier for the country and not the other way around. There are also disadvantages and criticisms: one example is the case of the Las Bambas mine in Peru. The objections are mainly related to environmental and labour issues and the continuous complaints from international organisations about the mistreatment of workers, similar to ventures from other countries throughout the continent and the world, which is why this is not an exceptional case.
The influx of Chinese resources into the Americas is a sign of the power shift in the world from West to East. It results in the US losing clout in its own "backyard" and the PRC gaining more followers in the quest to create a symbiosis between it and the recipient countries and replace a model of subordinate dependency, or perhaps be a substitute. It remains to be seen.