The coronavirus plague has harmed China’s international reputation, but it has also weakened many developing countries to such an extent that they will find it all but impossible to turn down offers of financial help.
By now there can be little doubt that the next decades will be dominated by the contest between the democratic West, led fitfully by the United States, and China, where the Communist Party has combined Leninist single-mindedness when it comes to politics with a tough version of the “neoliberal” policies which permitted Western countries to get far richer far quicker than any others, until the Chinese showed that a nominal adherence to Marxism was compatible with economic success.
Until very recently, most Europeans, Australians and Japanese wanted to get along with China’s Communist bosses and many attributed Donald Trump’s growing hostility towards the emerging superpower to nothing more than his desire to rally his compatriots in the hope they would vote for him in November, but lately they seem to have changed their mind. As well as criticising the Chinese regime harshly for its initial handling of the coronavirus outbreak – when it silenced doctors who warned that something very nasty was brewing in Wuhan and for weeks allowed people from soon-to-be quarantined city to travel to Milan in Italy and other places – almost all have expressed themselves appalled by the assault on the civil liberties of the now barely autonomous city of Hong Kong. They are fast coming to view China as a hostile predatory power determined to replace the “rules-based” international order overseen by the US with something very different in which the Chinese Communist Party runs the entire show.
Unlike the Soviet Union, which fell apart largely because of the government’s inability to provide people with enough material goods to keep them happy, China seems to have solved that particular problem. Though average incomes as registered by the International Monetary Fund are, or were until the great pandemic struck, about the same as here in Argentina, large areas of the country are booming and the regime has a huge amount of money to spend.
In contrast to the people who are in charge of Western economies or the big investment funds, China’s leaders are more than willing to give cash-strapped countries loans they know will never be repaid. They do this for blatantly strategic reasons: debtors can be induced to offer concessions which otherwise they would be most reluctant to consider, such as allowing the Chinese to set up space stations “for civilian use only” in their sovereign territory they can use to keep tabs on whatever is going on not just out there but also back here on earth. They already have one in Neuquén. In other parts of the world, they lend a hand in running power plants or managing ports, among them Piraeus in Greece which is billed as “China’s gateway to Europe.” Their shopping list is getting longer by the day.
Argentina is currently wobbling on the very brink of default. The sums involved are not that great, but unless a last-minute agreement is reached with enough creditors, the country would once again be blacklisted, which, economists warn us, would mean that apart from some dodgy speculators, nobody would dream of investing a single cent either in government bonds or in private business concerns – that is, nobody apart from individuals connected with the Chinese regime who, with the wholehearted approval of Xi Jinping, can be relied upon to make the most of a chance to play the role of selfless benefactors determined to help a country in distress.
The way things are going, Argentina could soon find herself incorporated into the Chinese sphere of influence. The country was dead broke well before the coronavirus arrived. By the time it departs, if it ever does, it will be far worse off, with over half the population in deep poverty, the wreckage of businesses big and small littering the landscape and a truly desperate need for new investments. Though the pandemic has hammered most other countries with similar ferocity, few of them were already in as bad a shape as Argentina which, in the almost three months that preceded the lockdown, was already sliding downhill at an accelerating rate, in large measure because it was clear that Alberto Fernández and his crew had no idea of what to do to put things right.
Blaming Mauricio Macri for all the country’s many woes and promising to put money in people’s pockets so they could go out and spend it, an allegedly Keynesian policy he said would give industry a much-needed boost, certainly helped him Fernández the elections, but it did not offer any clues about what he would do once in office. Outside the circles Alberto moves in, hardly anyone thinks the economy can recover from decades – in Argentina’s case, some would say the best part of a century – of mismanagement by pulling itself up by its own bootstraps. But the Chinese can say they have done just that and, by adopting similar methods and accepting their cooperation, Argentina could do the same.
For many, the coronavirus pandemic is proof, if such were needed, that China is a thoroughly untrustworthy country run by people who, like their Soviet counterparts, are so obsessed with security and their own personal future that they are capable of making and then covering up colossal blunders. Chinese leaders respond angrily to such charges by saying that as soon as they saw what was happening they ordered strict quarantines which were soon imitated, with far less efficiency, by most other countries. They seem to be winning the propaganda battle as people forget where the pandemic came from and remember the terrible impact it is having in Europe and both North and South America, where, among other things, critics of whoever happens to be in government are incomparably more virulent than they are in China.
Even though the coronavirus plague has harmed China’s international reputation, it has also weakened many “developing” countries to such an extent that they will find it all but impossible to turn down offers of financial help. If the leaders of the US, the big European countries and Japan thought in strategic terms, they would understand the risks involved and step in by proposing an ambitious programme in which an obligation to undertake difficult structural reforms would be accompanied by big subsidies designed to make them less painful, but before China came striding onto the scene they saw no reason to do more than leave such matters to the markets which, being short-sighted by nature, are not that interested in geopolitics.