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The myth about China's "chequebook diplomacy"

Editor: zhenglimin 丨Xinhua

05-12-2017 21:11 BJT

Full coverage: Belt and Road Forum for Int'l Cooperation

BEIJING, May 12 (Xinhua) -- As the popularity of the Belt and Road (B&R) grows, so do the attendant misconceptions and occasional outright lies.

One of the the most popular myths is that of China's "chequebook diplomacy."

A recent article in the Deccan Chronicle suggested that "China is using 'cheque book diplomacy' to make friends and also acquire real estate in strategically-located foreign lands" as part of the B&R strategy.

The comment comes as China begins to flex its considerable economic muscles and play a more central role in global economic affairs and governance, as it rightly should, given its status as the world's second largest economy and a driving force behind world growth.

It is not the first time the phrase has been aired, with Reuters describing the establishment of the Asian Infrastructure Investment Bank in 2015 as the time when "China's chequebook diplomacy came of age," and the Financial Times reporting in 2016 that "China tries chequebook diplomacy in Southeast Asia."

"Chequebook" invokes the feeling of money that can be disposed of at the government's discretion or whim, without any real expectation of a return. In this sense, that could describe almost all international aid whereby the haves gift or loan some of their national wealth to the have-nots.

But unlike traditional aid from the West, China seldom gives budgetary support or other forms of monetary donations to foreign governments. Suitcases bulging with cash are not the Chinese way. China prefers to see itself as a country that "teaches men to fish" rather that one which simply dishes up plates of fish and chips.

B&R deals are predominantly cooperation projects, but not grandiose development plans, which with an accompanying nudge and a wink, foisted on recipients with a "nanny knows best" attitude. China first finds out what recipient countries need, and then works with those countries to help them, as far as possible, to fulfill their own goals, under their own steam, with China's support.

WHERE HAVE ALL THE CRONIES GONE?

Secondly, chequebook diplomacy implies dangling some vague economic benefit in front of a needy country's eyes and expecting to curry diplomatic favor in return.

China is not trying to buy friends.

This is no Marshall Plan.

China does not have a clique of allies to cajole or enemies to coerce. The Belt and Road is open to all. The benefits are open to all. Investment is open to all. What is good for one's neighbor, generally, is good for oneself.

The B&R is not some geopolitical Mexican stand-off. No participating country, for example, has been asked to choose sides. B&R countries cooperate for mutual economic benefit, not to forge alliances, nor to separate insiders from outsiders.

NO FREE LUNCH

Finally, chequebook diplomacy is a denial of the profitability of most B&R projects. The B&R is not a philanthropic fiction. It is a sound business project created with the intention of making profits for investors and stake-holders.

Loans and investment are not aid. Loans need to be serviced and repaid. Even policy banks are not inclined to lend money to non-bankable projects.

A development bank is still a bank, not a charity or a protection racket. Some large infrastructure projects lose money at the beginning, but banks do not lend to projects that do not have capacity to turn a profit in the long run.

This is also the case with investment, which cannot be forced on a company. It is China's private companies which are leading the investment drive, running ahead of state firms in outbound investment.

Companies invest because they see opportunities, not because the government asks them to do so. They use their shareholders' money to make the best, sustainable return for them as they can.

What is wrong with countries striking mutually beneficial deals? Perhaps the problem is that the deals China strikes nowadays are often quite big. But are not the problems the developing world faces "quite big"?

Many rich, developed countries in the West have had ample opportunities to solve the massive problems which beset poor countries, but for whatever reasons, these problems persist.

Should the world's second largest economy -- so recently a genuinely poor nation itself -- not be applauded for trying to use some of its new-found wealth to help build a better world?

China is not coming to solve the problems of others, but stands ready to help others solve their own.

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