MENU

Reason.com

Free Minds & Free Markets

A Rising China Bets Big on Infrastructure Spending Overseas, As U.S. Wavers

China's recent moves to be a world leader could be beneficial in some areas, particularly when it comes to those investments in the developing world.

Ruletkka | DreamstimeRuletkka | DreamstimeWhen President Donald Trump withdrew the United States from the Trans-Pacific Partnership in January, he left a power vacuum in the Pacific region that China is seeking to fill.

The Regional Comprehensive Global Partnership, a proposed trade deal that encompasses 16 countries, already promises to bring China closer to its Asian neighbors. China is currently spending $150 billion a year on infrastructure a year in 68 countries. It has proposed building roads, bridges and railroads to link the 54 African nations. And China has pledged to spend $250 billion over the next 10 years in South America, including building a high-speed rail line in Brazil.

The wisdom of those investments can be questioned, but there's no doubt that China is positioning itself to challenge American dominance. Concern over growing Chinese influence is not without warrant. Despite market reforms, China's government remains a Communist regime with a horrendous record on human rights. It seems to be challenging Milton Friedman's notion that with economic freedom comes political freedom.

Still, China's recent moves to be a world leader could be beneficial, particularly when it comes to investment in the developing world.

Take the Asian Infrastructure Investment Bank, which China launched in 2016 and which now counts Germany, Great Britain and a few other Western countries among its 50-plus shareholders (although China retains the most power).

The AIIB provides financing for infrastructure projects in the Asia-Pacific region. There's a big hole to fill: estimates are that meeting all the needs for regional roads, sewers, power stations and the like would take about $8 trillion.

"We like to talk about barriers to trade being tariffs, red tape or customs...Well, a lack of infrastructure is also a barrier to trade," said Colin Grabow, a trade policy analyst at the Cato institute, at a briefing last week. "If you can't get your product from point A to point B, you can have all the best rules in the world and it's not going to matter."

Grabow acknowledges China's violations of intellectual property rights and aggression in the South China Sea. The simplest thing the United States could do to counter Chinese influence is to start competing again, especially in the Asia-Pacific region.

Currently the AIIB is either building or planning to build telecommunications, energy and road improvement work in the Philippines, Azerbaijan, India and Sri Lanka, among others. While China may have founded the bank to increase its power in the region, the fact that leading European nations now have a seat at the AIIB table reduces the likelihood that China will be able to use the bank as a foreign policy tool.

China's One Belt, One Road initiative to build roads, bridges and tunnels for companies to transport their products across the Asian continent also promises to cement its relationship with central Asian countries.

"We need to worry more about what we are not doing rather than what China is doing," Grabow said at a Cato event. "We can't disengage and then snipe from the sidelines or serve as some kind of international peanut gallery. We need to focus more on competing with China instead of trying to contain China. What we know is that the region needs more infrastructure. If China is providing it, let's see what happens. It isn't our money on the line."

This post was updated to correct the attribution to a quote from Colin Grabow.

Photo Credit: Ruletkka | Dreamstime

Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of Reason.com or Reason Foundation. We reserve the right to delete any comment for any reason at any time. Report abuses.

  • Hugh Akston||

    We need to focus more on competing with China instead of trying to contain China.

    Why do you have to do either?

  • DJF||

    Because there is infrastructure being built around the world and the US taxpayer is not going deeper into debt to pay for it!!!!!!!!

    Do you know what this means? This could be the slippery slope that could cause the US taxpayer not being put deeper into debt for all sorts of things both foreign and domestic!!!!!!

  • CatoTheChipper||

    China is just building infrastructure targets for future American bombs.

    Keynesians and Krugmanites see that as a win-win situation for both China and the US.

  • Telcontar the Wanderer||

    Ask Reagan.

  • DJF||

    For anyone interested here is a link to the 2017 Five Year Plan for China. As put forward by the 19th National Congress of the Communist Party of China. So you know that its the free market system at work.

    http://english.gov.cn/2017npca.....eyearplan/

  • DJF||

    And here is the Chinese National anthem and so you can join in here is the lyrics

    Arise! All who refuse to be slaves!
    Let our flesh and blood become our new Great Wall!
    As the Chinese nation faces its greatest peril,
    All forcefully expend their last cries.
    Arise! Arise! Arise!
    Our million hearts beat as one,
    Brave the enemy's fire, March on!
    Brave the enemy's fire, March on!
    March on! March on! On!

    https://www.youtube.com/watch?v=UctriMuXYS0

  • BestUsedCarSales||

    I think that's also one of the intro songs for JoJo's Bizarre Adventure.

  • mtrueman||

    "Arise! Ye who refuse to be slaves!"

    Who isn't stirred by such words. The RoC anthem is also very inspirational.

  • Juice||

    Let our flesh and blood become our new Great Wall!

    Like Attack on Titan?

  • gaoxiaen||

    Beat this, running dog capitalist lap dog imperialists!

    https://www.youtube.com/watch?v=0-0ChljgWCQ

  • gaoxiaen||

    Lackey and Marine should be in there somewhere.

  • Ron||

    Is Reason suggesting we build infrastructure in other countries? I though we wanted to get out of other peoples business let china develope the roads for a change since it clearly hasn't helped us gain any friends

  • timbo||

    Let them go bankrupt on foreign adventures.

    They need the taste of some massive big gov boondoggles and some failed cronyist investments.

    If we could get the oil companies to take 100% of the risk on their overseas investments without the guarantee of gov't intervention to save their investments in ....stan, we might not go to war every 10 days.

  • Telcontar the Wanderer||

    "Let them go bankrupt on foreign adventures. They need the taste of some massive big gov boondoggles and some failed cronyist investments."

    -Carthage

    "If we could get the oil companies to take 100% of the risk on their overseas investments without the guarantee of gov't intervention to save their investments in ....stan, we might not go to war every 10 days."

    And if we let grocery store owners take on 100% of the risk on their investments, we, too, could be like our friends in Somalia. Be a little unfair, though, given all the tax money they pay for police and military protection. Although on that note, if you want to deny corporations government protection in exchange for giving them a 0% tax rate, I'd be perfectly fine with that.

  • ||

    China is currently spending $150 billion a year on infrastructure a year in 68 countries.

    China, as in the Chinese government? And we should care why, exactly? Because that Government cock sucking Ignatius at WaPo says so?

  • Rhywun||

    Yeah, this is a curious article. Maybe the reason US companies aren't pissing away hundreds of billions of dollars in Asia and Africa is that they've decided it's a poor investment? I certainly hope the author isn't advocating we throw tax dollars down that rabbit hole.

  • Cranedoc||

    This article is clearly a lament for the TPP and the decline of globalism. Not to worry: Trump will negotiate fair trade agreements with foreign nations. Business and negotiation is what he's most proficient at doing! Lawyers like Obama and the Clintons never had a prayer of getting this right.

    America first!

  • Devastator||

    Lol Trump can't negotiate his way out of a wet paper bag.

  • Thrackmoor||

    A wet paper bag can't contain his luxurious mane.

  • BestUsedCarSales||

    , including building a high-speed rail line in Brazil.

    That's a NAP violation if I ever saw one.

  • Ron||

    you know how you build a high speed rail in Brazil
    by deforestation and literally killing of native tribes some who still have not met a white man. It takes a communist country to do that kind of thing.

  • Butler T. Reynolds||

    "including building a high-speed rail line in Brazil."

    Muh high speed rail!

    What's a hyperventilating progressive to do? Learn Chinese or Portuguese?

  • Devastator||

    It costs a fraction of USA build prices to build high speed rail in these other countries because the real estate simply isn't values as high. The rails and technology aren't nearly as expensive as buying up land rights to build the rail in the first place when one considers building the same projects in the USA. It's just economically feasible compared to alternatives such as wider roads.

  • Thrackmoor||

    "...and is second in peer reviewed research..."

    So?

    It's not like peer-reviewed research is right a large percentage of the time. I truly weep for actual, vetted and tested research these days.

  • mtrueman||

    "the fact that leading European nations now have a seat at the AIIB table reduces the likelihood that China will be able to use the bank as a foreign policy tool."

    Rest assured its being used as a foreign policy tool even as you read this.

  • Thrackmoor||

    Foreign Policy Tool is a great band name.

  • BYODB||


    The wisdom of those investments can be questioned, but there's no doubt that China is positioning itself to challenge American dominance.


    Yep, it's true that slavery appears to be a superior system for crushing one's enemies. Apparently the Soviet Union was uniquely shitty at socialism, but China's figured out how to keep those proles in line. Namely, if someone steps in front of your tanks you just run their ass over. Monks getting uppity? Invade their monasteries and shoot them all.


    Indeed, China is a great partner to the U.S. and will remain so for precisely as long as they feel like it.


    American's seem to believe there is no downside in using Chinese slave labor, and in fact love slave labor. Why, then, are we not allowed to have slaves in the United States you might ask? Because it doesn't belong in our backyard, it belongs where we can't see it. That way, we don't need to think about it.


    Ignorance is bliss, and cheap products outweigh any possible human rights interests. Personally, I'm all for the individual to choose to use slave labor but it seems no one else agrees with me even while they utilize slave labor. Confused yet? I know I am!

  • BYODB||


    China has also surpassed the United States in patent applications and is second in peer reviewed research...

    And first in the world at stealing and reverse engineering things that they are paid to manufacture because of their 'comparative advantage' in things like labor. Hmm...it's almost like we're turning a blind eye to intellectual property theft because it advantages us with cheaper production. Amazing!

  • mtrueman||

    "I'm all for the individual to choose to use slave labor but it seems no one else agrees with me even while they utilize slave labor. Confused yet? "

    I'm not sure who are these slaves whose labours you are happy to utilize? Chinese prisoners or American prisoners? Most work done on these infrastructure projects will be done by wage earners who are doing the job voluntarily.

  • BYODB||


    Most work done on these infrastructure projects will be done by wage earners who are doing the job voluntarily.

    When the state owns your labor, what is that called?

  • mtrueman||

    These infrastructure projects will be done by companies and they will own the labour, as they are the ones who will be paying the wages, assuming they are paid, which isn't necessarily a guaranteed thing, as I'm sure you know. What is it called? How about business as usual.

  • BYODB||

    *strokes his chin knowledgably*

    Yes, yes that's the ticket! The Chinese are really capitalists! I mean, just look, they have things that they call companies! And they sell products! And there are jobs that people can have! It looks just like America if you squint really hard!

    /sarc

    Of course, it's all a sham since the Chinese government owns everything. It's called 'Communism' if you haven't run into the word before. You should perhaps look it up. We bend over backwards to pretend they're not, because we love their labor and virtually zero environmental protections, but to say that out loud is considered a modern heresy.

  • mtrueman||

    "The Chinese are really capitalists!"

    Some Chinese are capitalist. I suggest a visit to Hong Kong if you doubt my word.

    "since the Chinese government owns everything."

    There's a Chinese government in every province, prefecture, and county. And they all value their property every bit as much as you'd expect them to. However since the reforms of Deng, individual Chinese have been proud owners of property including land, houses, automobiles etc. There are indeed private companies though it's hard to imagine them prospering without good relationships with authorities. (ie kickbacks) That's pretty much the same as it's been in pre-revolutionary days.

    Slave labour in China is pretty much confined to the prison system, just like America, only, counterintuitively, on a smaller scale than the millions caged in the US. A Libertarian magazine might even have an article about it, though don't bother checking out Reason which, concentrates their editorial efforts on stories about children being sent home from school coz the teacher didn't like their T-shits and such like.

  • Sanjuro Tsubaki||

    I don't think "ownership" in places like Russia and China really means anywhere near the same thing as "ownership" in the US or Europe. The wealthy in China are trying to get their cash out of China.

  • Inigo Montoya||

    Alas, ownership doesn't mean a hell of a lot more around here either. If the government really wants your stuff, they find a way to just grab it. See civil asset forfeiture and eminent domain if you don't believe me.

  • Sanjuro Tsubaki||

    "Despite market reforms, China's government remains a Communist regime with a horrendous record on human rights. It seems to be challenging Milton Friedman's notion that with economic freedom comes political freedom."

    Oh, you noticed that, did you? Shall we talk about other bastions of political freedom like Saudi Arabia, Vietnam, Russia, Turkey? Indeed, these countries are challenging.

    Milt was right on much of the time, but making him out to be the messiah is no way to be taken seriously.

  • Sanjuro Tsubaki||

    The era of good feelings/"end of history" that occurred when the soviet union collapsed lasted all of five minutes. Communism is a disaster by any measure, but it won't go away entirely. More to the point, autocrats hold sway over much if not most of the world's population, and it remains a threat to liberty everywhere else if we think we can just ignore them. I'd like to think that regimes like China are unsustainable in the long run, but then that could be equally true of the US.

GET REASON MAGAZINE

Get Reason's print or digital edition before it’s posted online