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China Geopolitics and Geoeconomic Developments

How the Chinese are Pursuing a Dual Approach

On the positive side, the agreement to resume military communication was welcome as a way to reduce military accidents that could escalate into war. This happened during the Asian-Pacific Economic Forum in San Francisco in November 2023. In addition, Xi had met US business leaders during a dinner event. The result was a stabalization of US-China relations since Xi and US President Joe Biden met at APEC Forum.

The recent invitation of US Multinational CEOs to meet China’ President Xi Jinping were another positive development. This is a result of recent weakness in the Chinese domestic economy and a significant drop in foreign direct investment (FDI) into China.

There are rising concerns among the major trading partners about the China oversupply in manufactured goods and potential dumping in international markets. In addition, the deep property slowdown in China could potentially pose additional risks. Finally as mentioned in prior posts, Chinese exports of electric vehicles (EV) will result in protectionist policies in the European Union and to a lessor extent in the United States. A recent report in the Financial Times, states that the percentate of Chinese EV sales into Europe will rise to 25.3% in 2024.

In contrast, China announced that both Intel and AMD chips will be blocked from government computer systems. In addition, Microsoft’s Windows will be sidelined and replaced by a domestic system. This is known as the Xinchuang Policy and will require about $90 Billion USD investment by China and require about four years to implement, thus from 2023 to 2027.

For Intel, China represents 27% its business and is its largest foreign market. The actual revenue impact will be much smaller at 1 or 2% since this only affects government computers and this will take several years thus impact is not immediate. However, the political message is clear to the US and its allies. This is certainly an escalation of the Tech War.

Thus, we see mixed signals in the evolving relationship between China and the US plus allies. Recently, the US and Japan agreed to upgrade their security alliance. This is the biggest upgrade since these allies signed a mutual defense treaty to counter China in 1960. The meeting between Japan and the US will take place in the White House in April 2024.

Finally, the Peruvian government removed an excusivity clause for Cosco, a Chinese state-owned shipping and port company, to operate the new port of Chancay which north of Lima, Peru. This shows that even for China there is political risk in development projects.

Overview of China’s Geopolitical Position

As the world’s most populous country and second-largest economy, China’s geopolitical position is pivotal. With a strategic location in Asia and a history of ancient civilizations, China stands as a key player in regional and international affairs. The country’s ambitions to assert itself as a global power have led to significant shifts in the balance of power, causing ripple effects across various regions.

China’s role in shaping geopolitical strategies is of critical importance on the global stage. The rapid rise of China as a major economic power in recent decades has reshaped the geopolitical landscape, challenging the traditional influence of Western powers. Beijing’s strategic moves and foreign policy decisions have far-reaching implications for regional dynamics and global governance. In this article, we will delve into the latest aspects of China’s geopolitical position, its impact on regional affairs, and the geoeconomic strategy.

Chinese Geoeconomic Strategy

In addition to its geopolitical maneuvers, China has been actively pursuing geoeconomic initiatives to enhance its influence globally. The Belt and Road Initiative (BRI), a massive infrastructure development project, aims to boost connectivity and trade across Asia, Africa, and Europe. Through strategic investments and partnerships, China seeks to strengthen its economic ties with recipient countries and expand its sphere of influence.

In addition, this is backed by the Asian Infrastructure Investment Bank (AIIB). This bank is headquartered in Beijing and since its beginning can be seen as potentially a rival and at a minimum an alternative multilateral development bank to the World Bank and IMF. Currently, the AIIB is the world’s second largest multilateral bank. The United States, Japan and Mexico are not members and have no intention to join. Taiwan was rejected since China does not view it as an independent state. In the European Union, the baltic countries of Estonia, Lithuania and Latvia have not joined while the Czech Republic is considering it.

China’s Belt and Road Initiative (BRI) has reshaped regional governance by offering infrastructure development and investment opportunities to participating countries. While some view the BRI as a pathway to economic growth and connectivity, others raise concerns about debt dependency and environmental sustainability. The geopolitical implications of the BRI are intertwined with China’s broader strategy of expanding its influence and soft power globally.

China’s Role in Shaping Geopolitical Strategies and Asia Implications

China plays a central role in shaping geopolitical strategies through its diplomatic influence and economic clout. As a major player in global affairs, China’s strategic decisions impact the balance of power and regional stability. Beijing’s engagement with international institutions like the United Nations reflects its ambition to shape the rules-based international order and promote its own interests.

China’s strategic decisions have a profound impact on regional dynamics, especially in Asia. Beijing’s assertive actions in territorial disputes, trade agreements, and military advancements have created tensions with neighboring countries and the broader international community. The competition with China has prompted other nations to reassess their own geopolitical strategies and alliances, leading to a complex web of relationships and power struggles.

For exaample, China’s assertiveness in territorial disputes in the South China Sea and its strategic alliances in the Asia-Pacific region have raised concerns among neighboring countries and the United States. The geopolitical tensions in Asia reflect the complex interplay of strategic interests and power dynamics.

The Geopolitical Risk Factors in China’s Strategy

Despite its economic prowess, China faces several geopolitical risk factors that could impact its long-term strategy. Tensions with the United States, regional adversaries like India and Japan, and geopolitical uncertainties in the Middle East pose challenges to China’s pursuit of hegemony and global leadership. The shifting geopolitical landscape requires China to navigate complex international relationships and mitigate potential risks effectively.

China’s pursuit of hegemony and influence in the international order has been a focal point of its geopolitical strategy. Through initiatives like the BRI and active participation in global governance institutions, China aims to challenge the existing power structures and promote a more multipolar world. The competition with the United States and other major powers underscores China’s ambition to reshape the global order in line with its own strategic interests.