China’s Global South Strategy By Dr Hasnain Javed
China is a land of immense capacity and with it comes great lessons for developing countries to learn. China’s Global South Strategy has been in discussion for years and I believe there is a great deal that developing countries like Pakistan and developed nations can learn from it.
China’s Global South Strategy took a stronghold in the 1990s. This was when China was seriously struggling with an “industrial overcapacity” challenge. Simply put, the country was in a struggle where it had invested money in inefficient state-owned enterprises (SEOs), but the domestic demand continued to take a hit from the imported products. The Chinese economic thinktank knew that if the cycle continued it would lead to several challenges. First of which would be the ballooning domestic debt due to the nature of investment in SOEs that is backed by implicit government guarantees. Secondly, the high saving rates would increase further pushing household inequality in an upward trajectory. Thirdly, the domestic industry would not gain momentum to become an effective part of the economic cycle or improve product quality. The solution was simple, the Chinese think tank resolved to “go global” for its local production. Hence, the country engaged in exports for its domestic production with the developing or underdeveloped countries in the global south.
Chinese economists believed that the fiscal stimulus alone would not be sufficient to revive the economy.
This brings me to the first lesson from China’s Global South Strategy: diversify and expand markets. In this instance, China did not diversify to a great extent, but it looked for new markets outside of its domestic market. Criticise their product quality all you can, but their solution led to great advantages. The state-owned enterprises were able to gain economic momentum and gradually improve their product quality by tapping into new markets in the global south. This also allowed Chinese producers to not only increase their export revenue but also gain valuable experience and knowledge about different markets and consumer preferences. Pakistan can also achieve similar if not the same results by finding export markets for its products amongst the developing or underdeveloped nations across the globe.
Economists who are closely watching the Chinese economy will tell their readers a great deal about the country’s excessive investment in real estate and manufacturing. This was also exposed during the pandemic during which the manufacturing industries were impacted greatly and accumulated inventory while the domestic demand remained slow in gaining pace with the supply. As the Chinese economists believed that the fiscal stimulus alone would not be sufficient to revive the economy, they turned once again to the Global South Strategy.
The big idea was China’s Global Development Initiative which includes green and clean technology. Now all of this taking place at a time when Chinese green tech firms are experiencing overcapacity and high domestic labour costs. Chinese think tanks have begun to smartly integrate the global south countries into the global value chain and invest in the infrastructure to enable these countries. This is leading to several global benefits including the transfer of technology, global knowledge sharing and the rise of global green or sustainable entrepreneurial practices. Also, China’s emphasis on green entrepreneurship and sustainable practices helped them position themselves as a leader in the global south. They prioritized environmental protection and implemented policies and practices that promoted sustainable development, such as the adoption of clean technologies and the reduction of carbon emissions. This approach not only helped China improve its global reputation and attract environmentally conscious consumers, but it also contributed to the overall well-being of the planet.
This is the second most important lesson, today the global powers can criticise China as an expansionist country. The truth is China has been extremely intelligently resolving domestic challenges which creating global opportunities. This would in the future reap great benefits for the country in the shape of reduced costs and highly competitive products. Some may even believe that this is part of China’s ambition to challenge US dominance in the global south and establish itself as a new leader in the region. However, I truly believe that it is an incredibly strategic move by China to address its own economic and environmental concerns while also contributing to global sustainability. Therefore, the developed nations have a lot to learn from China’s approach to integrating the global south into their green development strategy. The United States is following in Chinese footsteps through its Indo-Pacific pivot and initiatives like the Green New Deal. The truth be told, China does have the first movers’ advantage here.
The final lesson we learn is from China’s brilliance in its management of foreign relations and diplomacy. Yes, indeed China winning at diplomatic fronts. For convenience, we will try to see it in light of the current scenario of the Ukraine-Russia war and the US-China Cold rivalry. The countries in the global south region at this time are experiencing severe financial, food, energy, and climate challenges.
These countries envision a multipolar global arena where there are multiple options for economic and political partnerships without the condition of subjugating to global power. Therefore, the countries in the global south are currently looking at multilateral institutions such as BRICS to gain economic and development advantages while maintaining their autonomy and sovereignty. As these countries avail this period to augment their weight, they see it in the light of diminishing US influence and freeing themselves of the Western values that being part of the US brings with it. Also, as I mentioned the global south has been long ignored by the US and its allies, these countries do find themselves more closely aligned with China in developing an alternative network of diplomatic, economic, cultural, and security partnerships.
President Xi’s humble approach during his US visit was seen as a submission to the mighty West. However, I believe that the world was served a humble pie instead. To me it was clear as day that China was strategically positioning itself as a global leader, showcasing its willingness to engage with the West while also ensuring it maintains its interests and alliances in the Global South. China’s Global South Strategy has allowed it to build strong relationships and partnerships with countries in the region, offering financial assistance, infrastructure development, and technological cooperation through the Belt and Road Initiative and other collaborative projects.
As the global economies and political landscapes continue to interplay, there will be many more lessons from this deeply inspiring nation and its enigmatic leadership.
The writer is Foreign Research Associate, Centre of Excellence, China Pakistan Economic Corridor, Islamabad
China’s Global South Strategy By Dr Hasnain Javed
Source: https://dailytimes.com.pk/1153807/chinas-global-south-strategy/