China: Economic Investment Equals Political Influence

Story revised: -

The Chinese government has been investing heavily throughout the world for many years to build its own industrial and economic infrastructure, consequently, its political stature within China has grown, as have its financial reserves.

One global strategy to further China's industrial power is for China to invest heavily in natural resources globally in order to help ensure continuous production at home.

The government of China is now accruing a ‘fiscal surplus’, that is, money (assets), to engage in ‘discretionary’ investments.

This friendly business transaction could be used as leverage in the future by manipulating any foreign government that borrows money. A recent example seems to have taken place in South Africa.

A journalist reporting about financial ties with China, interviewed Mr. Phosa, a South African government official who explained China's contribution to South Africa's economy:

“AFRICAN National Congress treasurer-general Mathews Phosa says the partnership between China and SA [South Africa] will be stepped up after the election. "Source: TMCNET.COM ANC… Johannesburg,
 Mar 17, 2009 (Business Day/All Africa Global Media via COMTEX)"

The ANC treasurer Phosa:-

“… was speaking at the launch of a representative office of the China-Africa Development Fund in Johannesburg -- the first of its kind in Africa.”

which was:

“Established in 2007 by the China Development Bank, the fund stems from a pledge by Chinese President Hu Jintao at the China-Africa Co-operation summit in Beijing in 2006 to foster closer ties with the African continent.

and the political indebtedness grew from the economic:

COMIT was set up with an initial capital injection of $1bn by the China Development Fund, but capitalisation will eventually reach $5bn, said Chen Yuan, chairman of the China Development Fund. Source: TMCNET.

to having a non-agreed component, the political influence, in this case:

On February 12, 2009, a none-too subtle threat, or manipulation, by Nyima Cering, was published under the headline: “China warns against playing Tibet card".  Nyima Cering is the vice chairman of the Standing Committee of the People's Congress of the Tibet Autonomous Region.

“He added, some countries, paying no heed to their relations with China and the Chinese people's feelings, blatantly conferred honors and titles on the Dalai Lama for nothing but using him as a tool to conduct secessionist activities against China.” Source: People’s Daily Online

To prove that  it had muscle the Chinese government evidently reminded the South African government that it would be ill-advised to host the Dalai Lama at a planned peace conference in Johannesburg.

“Beijing, an ally when South Africa's now-governing African National Congress was a liberation movement, and Pretoria have diplomatic ties stretching back a decade and an economic relationship based on trade as well as aid.” Source: MACLEANS via Donna Bryson, THE ASSOCIATED PRESS

“Thabo Masebe, spokesman for President Kgalema Motlanthe, said now was not the time for such a high-profile visit from the Tibetan spiritual leader and added that South Africa hoped to avoid being "the source of negative publicity about China."

“Thabo Masebe, spokesman for President Kgalema Motlanthe, said now was not the time for such a high-profile visit from the Tibetan spiritual leader and added that South Africa hoped to avoid being "the source of negative publicity about China."

“Masebe insisted his government was not bowing to pressure from China.”

"We make our own decisions," he [Masebe] said.

But diplomatically, the reality is that whichever cash-strapped governments are economically indebted to the government of China they must feel that they might, at any time, have to adapt to the political influence of the lender before the debt is repaid.