A Controversial Take on Chinese Neocolonialism

Dr. Jean-Marc F. Blanchard's picture

The long-standing debate about Chinese neocolonialism has been reborn as a result of China’s massive Belt and Road Initiative (BRI) and Chinese multinational companies (MNCs) taking over Sri Lanka’s Hambantota Port and leasing a huge plot of land in Colombo Port. Adding fuel to the fire, the contemporary features of China’s relations with many developing countries bears general resemblance to those of the Europeans in the 19th and 20th centuries.

Beijing counters its investment and projects, unlike those of the Europeans, benefit its partners by rectifying infrastructure gaps, creating jobs, and promoting industrialization. The critics retort Chinese projects principally serve Chinese interests while imposing crushing debt burdens on host countries. Furthermore, they contend Chinese MNCs and projects favor Chinese partners, suppliers, and workers. Finally, they argue Chinese MNCs are failing in terms of sharing technology. While some projects are about enhancing host country links with China, many facilitate internal exchange, integrate host countries into global production networks, and facilitate diversification. As for the issue of debt burdens, China is not forcing countries to incur debts or entrapping them with preferential loans. With respect to the problems of Beijing insufficiently using non-Chinese partners, suppliers, and workers and not transferring technology, they are real ones. The critics’ implicit solution of Chinese MNCs automatically using local alternatives and transferring technology, though, is not ideal or sustainable if, respectively, the local alternative is not comparable in terms of efficiency, quality, and non-corruptibility, or host countries companies and workers lack “absorptive capacity.” Host countries themselves need to act to optimize what they gain from China. First, they must improve the capabilities of their firms and workers. Second, they must enhance their bargaining power by leveraging other countries, companies, and market access. Third, they should analyze carefully the economic viability of all Chinese loans and projects.