“Unilateralism and protectionism won’t solve problems but add uncertainty to the world economy”. You could think that these words come from a liberal politician of the West. Not really. This is a recent declaration by president Xi, which testifies that China has become a strong supporter of globalization, seen as a mean to project its power worldwide.

From 2000 to 2016 China’s investments abroad grew bigger every year. This strategy didn’t affect only developing countries, but also the “old world”. The share of investments into the EU was 25% of the total in 2017. This follows a sharp strategy of China’s government: tear off Europe from US arms. Indeed, in the last decade 63% of Chinese investments into Europe came from state-sponsored companies and investment funds.

But, in 2017, China’s outbound investments suffered a substantial setback, dropping by 29%. This is due mainly to stricter rules by Chinese regulators and growing opposition to China’s influence. Trump’s election played a big role, but we should also consider the willingness of country’s authorities to contain capital outflows.

Now China faces two big challenges: stabilize its economy and fight to extend its global power. History will show us if the red dragon will win.

By Alessandro Bonetti

Categories: Business Post


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