China Really Will Keep Rising

As I mentioned in the previous post, China’s hole card is its cash reserves. And as this NY Times article on China’s dealmaking in South America makes clear, in a time of global economic distress, that’s still a pretty sweet hole card:

In recent weeks, China has been negotiating deals to double adevelopment fund in Venezuela to $12 billion, lend Ecuador at least $1billion to build a hydroelectricplant, provide Argentina with access to more than $10 billion inChinese currency and lend Brazil’s national oil company $10 billion.The deals largely focus on China locking in natural resources like oilfor years to come.

The article points out the significance of the Argentina deal in particular, which is essentially a credit line for importing Chinese goods, but one based in Chinese yuan.

Interesting, though, is the question of whether the moves will “translate into political influence,” as one of the analysts quoted put it. For the time being, the hallmark of China’s deals, which are all designed to feed its thirst for raw materials and energy, is “no strings attached.”

That, combined with Beijing’s emphasis on sovereignty rights and non-interventionism, amounts to a policy of “influence through non-influence,” at least with regards to distant primary-resource providers, as a way to absorb them into China’s commercial web. The real arm-twisting gets done with established and emerging global powers — the U.S., Old Europe, India and Japan — and in its immediate neighborhood in Asia, usually over Taiwan, Tibet and territorial disputes.

Meanwhile, in this Foreign Policy piece (via today’s WPR Media Roundup), Ian Bremmer and Flynt Leverett argue that China is certain to be the most resilient power in the face of the economic crisis, and have this to say about the party’s staying power:

China’s political machine reinforces its economic resilience. Threedecades of double-digit growth have earned the Communist Partyleadership considerable stores of domestic political capital. To besure, severe chronic problems persist: the social turmoil provoked bygrowing gaps between rich and poor, severe environmental damage, andendemic local-level corruption, just to name a few. Yet millions moreChinese citizens are freer and wealthier today than ever. Thus, theparty has fostered, and been a major beneficiary of, a tidal wave ofnational pride.

So for the time being, China’s influence is still demonstrably rising. The speculation involves whether it will be able to maintain that rise despite the structural faultlines that — theoretically, anyway — should be undermining it.