How China is weaponizing capital all over the world
China's move to boost defense spending has sparked dismay among US officials in recent days, but it is Beijing's efforts to gain influence that are more worrisome, the secretary of the US Navy said on March 7, 2018.
China's finance ministry said this weekend that the country's defense budget will rise 6% to 1.1 trillion yuan or $173 billion. It is the biggest increase in three years and makes China's defense budget the world's second-largest — behind only the US.
Chinese state media defended the new budget as proportionate and low. "If calculated in per capita terms, China's military lags well behind other major countries," official English-language newspaper China Daily said.
On March 6, 2018, US Navy Adm. Scott Swift, the head of US Pacific Fleet, said the military budget lacked transparency and that China's "intent is not clearly understood."
On March 7, 2018, US Navy Secretary Richard V. Spencer — asked about Russian and Chinese activity in relation to the newest US National Security Strategy— echoed those concerns but pointed to a different kind of spending.
"When it comes to China, the bottom line there is the checkbook, to be very frank with you," Spencer told members of the House Appropriations Committee. "Not only in the dollar and cents that they are writing to support their military expansion and their technological [research and development] work, but what they're doing around the globe that I know you all are aware of, which is weaponizing capital, to be very frank with you."
Secretary of the Navy Richard V. Spencer speaks during an all-hands call at Naval Station Mayport. (Navy photo by Mass Communication Specialist 2nd Class Timothy Schumaker.)
Spencer pointed to a summer 2017 deal China signed with Sri Lanka, the island nation just south of India, where Beijing agreed to a 99-year lease to operate the strategically located deep-water port of Hambantota, which is located near important shipping routes in the Indian Ocean.
"Going into Sri Lanka, redoing the port, putting an interest rate — not as aid, but as a total secured loan with a pretty hefty coupon — [the] debtor fails on that, and the asset owner comes and reclaims it and says, 'These are now ours,'" Spencer told the committee of the deal. "They're doing that around the globe. So their open checkbook keeps me up at night."
Many Sri Lankans were themselves dismayed with the agreement, taking to the streets to protest what they saw as growing Chinese influence in their country. India, which has eyed Chinese infrastructure deals and military activity in South Asia and the Indian Ocean region warily, also objected.
"This is going to be a standing example for the other countries to watch, because China is not Father Christmas, handing out dollar bills. They want return on the money, and they want the money to come within a certain, certified period," K.C. Singh, former secretary at the Indian Ministry of External Affairs, said in July 2017.
"Is it a model then for future extension of the Chinese strategic footprint?" Singh added. "When ... countries can't return the money, then you grab territory?"
China's One Belt, One Road initiative. China in Red, the members of the Asian Infrastructure Investment Bank in orange, and the 6 proposed corridors in black. (Map by Lommes)
The port deal was a part of China's One Belt, One Road initiative, a project to link scores of countries in Asia, Oceania, Africa, and Europe through Chinese-backed railways, shipping routes, and infrastructure projects.
As a part of that effort, China has funded development projects in poorer countries, which it leverages for more advantageous relations or for regional access. The trend has also been called "debt-trap diplomacy."
Hambantota is not the only port deal secured by the Chinese government or a Chinese state-owned company in recent years. Beijing has spent hundreds of millions of dollars to win over locals and develop a deep-water port in Gwadar, on Pakistan's Indian Ocean coast.
The moves are a departure from China's usual approach to such foreign projects, but the focus has concerned India and the US, which see Beijing's investment in Gwadar as part of efforts to expand Chinese naval influence.
Gwadar port of Pakistan. (Photo by Umargondal)
Chinese state firms are also growing their presence in Europe, buying up ports and cargo terminals on the Mediterranean and Atlantic coasts — including Spain, Italy, Greece, and Belgium.
Chinese state-owned enterprises now control about one-tenth of all European port capacity.
European leaders have become concerned Beijing plans to leverage its financial interests into political clout. Greece, where Chinese influence has grown in recent years, has blocked recent EU efforts to condemn China over its human-rights record and other policies.
US Marine Corps Commandant Gen. Robert Neller, speaking alongside Spencer, voiced similar concerns about China.
"The Chinese are playing the long game. They are, as the secretary said, everywhere I go, they're there," Neller said. "They're going and they're buying airfields and ports to extend their reach ... they want to win without fighting."