Themes: China’s post-covid economic outlook; covid’s domestic and international political impacts on China; how post covid global trends impact China; the long-term effects of the zero-covid policy.
Concise commentary on complex issues from different points of view.
The UKNCC Guest Contributor Programme offers contrasting ‘short, sharp reads’ for those seeking a fuller exploration of key questions. This issue explores:
China’s Belt & Road Initiative: What to expect?
Authors, alphabetically by surname:
- Clementine Pippa Ebel, Founder of China Business Breakfast Club, Yenching Scholar, Peking University (2023)
- Dr. Ammar A. Malik, Senior Research Scientist at AidDataLead – Chinese Development Finance Programme
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China’s Belt & Road Initiative: What Can We Expect?
Clementine Pippa Ebel
Founder of China Business Breakfast Club
Yenching Scholar, Peking University (2023)
May 2023
The UK National Committee on China (UKNCC) Guest Contributor Programme highlights contrasting responses, by leading authors, to key questions posed by the UKNCC. The programme is designed to stimulate a deeper exploration of China related issues; drive curiosity; and test conventional wisdom.
Contact us at:
perspective.ukncc@pm.me
Pippa Ebel looks at China’s education strategy within its Belt & Road Initiative. Through case studies across Southeast Asia and Africa, Pippa explains how China is investing in the provision of educational opportunities to partners overseas in order to expand its social and cultural influence.
China’s Belt & Road Initiative (BRI) is typically interpreted as an umbrella concept comprising large infrastructure projects and multi-billion dollar loans. However, this is only part of the picture. Since the beginning of the BRI, education has played a key role in strengthening China’s influence overseas. It continues to shape China’s position on the global stage.
The Role of Education in China’s Belt & Road Initiative
In 2016, China’s Ministry of Education released its ‘Education Action Plan for the BRI’. This outlined four key areas of development: student exchanges, resource building, national cooperation and increased global dialogue with educational partners.
The strategy reinforces Beijing’s existing efforts to promote understanding of Chinese culture and language across the globe – which intensified in the 1990s – and adds new dimensions in terms of long term strategic partnership. The Education Plan reflects China’s holistic approach to investing in BRI partners, where Beijing extends its influence not just financially, but socially and culturally as well.
Beijing’s efforts have had mixed results. But it is clear that they have successfully improved the literacy of students in target regions in both Chinese language and culture. Greater student engagement has enabled smoother implementation and operation of China’s overseas projects, as ties deepen between China and its neighbouring territories.
An Evolution and Intensification of Confucius Institutes’ Influence.
China has increased its influence in education through the expansion of Confucius Institutes. Since 2004, China has been systematically promoting the learning of Chinese language and culture abroad through its Confucius Institutes (CIs) as part of its broader strategy of opening up, which began in the 1990s. These institutes are educational establishments which provide linguistic and cultural programmes overseas. They are funded by the Chinese International Education Foundation; a non-governmental organisation.[1]
CIs play a central role in promoting Chinese studies abroad and have been growing steadily in number since 2006, reaching over 500 in 2022. According to 2018 data, there are over 1,200 Confucius Classrooms, a sister initiative providing teacher training.[2]
Contrary to Europe and the US where the presence of CIs is a source of growing controversy, China’s regional partners have largely welcomed CIs. This is largely because the learning of Mandarin has been equated with employment opportunities provided by local Chinese companies and construction groups. For countries such as Pakistan and Djibouti – key BRI partners – levels of unemployment are particularly high,[3] and therefore the benefits of learning Mandarin are more tangible than for Western countries. In Pakistan, 30,000 students of leading universities are learning Mandarin at the on-campus Confucius Institutes. There is high engagement in African countries, with 61 institutes and 48 classrooms established across the continent. The effectiveness of CIs in increasing Mandarin literacy is evidenced in the number of students taking the HSK Mandarin proficiency exam (which all Confucius Institutes prepare students for) with over 140,000 students sitting the exam in the first half of 2022, up 10% from the previous year.
Although the number of CIs has continued to grow, it appears Beijing has developed its strategy beyond CIs, deepening its foothold within national educational structures. This is particularly visible in Africa, where sixteen countries are teaching Mandarin as part of the core curriculum.
As the numbers of Chinese businesses, and therefore Chinese residents increase abroad, they will bring in new job opportunities where proficiency in Mandarin is required. If this trend continues, so too will the number of students taking up Mandarin as a second or third language
Bringing Foreign Talent to China
Beijing’s efforts to promote the learning of Mandarin and Chinese culture are not limited to overseas engagement, but have intensified dramatically within China’s borders. In 2018, the number of African students in China exceeded 80,000, an increase of 260% from 2011. This is significant given only 40,000 African students were studying in the UK and the US during the same period.[4] The speed at which numbers have increased is in tandem with major investment from Beijing into not just infrastructure projects, but also education opportunities in Africa. From 2009 to 2018, the number of international students studying in China doubled, 65% of which came from BRI partner countries. Unsurprisingly, the onset of Covid-19 led to a sharp collapse in the numbers of international students in China, as a result of stringent border and visa restrictions.
Although it may take time for numbers to return to those of 2018, students from developing countries are unlikely to turn down China’s generous offering of fully funded academic programmes, with housing and living stipends included.
Although China is often not the first choice for students in developing countries,[5] the relative inaccessibility of higher education in Europe and the US means that China is often the best, or only, option for students from developing countries. This is unlikely to change in the near future, as China has relaunched its international scholarship programmes in 2022 with the relaxing of border restrictions.
How Beijing’s Educational Strategy Supports its BRI Infrastructure Goals
Whilst China’s educational agenda in the Global South helps China’s image on the global stage, it also plays a very practical role in supporting BRI infrastructure projects. Much of China’s scholarship provision has targeted key development areas, including scientific research and technology.
The ‘Belt & Road Fellowship Initiative’ at Tianjin’s Chinese Academy of Sciences is just one example among many reflecting Beijing’s targeted investment into academic areas that support BRI projects. This fellowship offers full funding to international doctorate students to conduct collaborative research in biotechnology. Upon completion, scientific and technological developments are expected to be transferred back to the students’ home country, and if proven successful, can be implemented across all BRI-partnering countries. Belt & Road Initiative Research Centres are found within most leading universities in China, including Peking and Tsinghua universities (Beijing), Fudan University (Shanghai) and Sichuan University (Chengdu). It is possible that with increasing numbers of collaborative research institutes, China will prove increasingly fertile ground for technological and scientific breakthroughs, the results of which will be seen in BRI partner countries.
Future Geopolitical Impacts
China’s educational strategy fundamentally influences bilateral relationships across the globe, as countries largely within the southern hemisphere move closer to China.
Many students who have benefited from China’s generous scholarship programmes, or who have engaged with CIs at home, are taking up roles in local BRI projects as translators or interpreters. The more ambitious ones are taking up positions in government, think tanks or universities. The next few decades will see more and more individuals in leadership positions across BRIpartnering countries with first hand experience studying in China, or Confucius Institutes at home. Alumni of leading Chinese universities are already visible among Africa’s political elites, including former president of Ethiopia, Mulatu Teshome Wirtu, and former president of the DRC, Joseph Kabila. As the next generation comes through this is likely to become an even more apparent trend.
By promoting engagement with China across all levels of society, particularly the elites, Beijing is pursuing a long-term approach to improve its reputation and political relationship with key BRI regions. This has implications for bilateral relations globally, as we see nations in the southern hemisphere deepen their ties to China socially, economically and perhaps even politically.
Conclusion
Western media and leaders overwhelmingly focus on the economic and military implications of China’s Belt & Road Initiative, rather than its potential social, and by extension, political impact. Although it may be years before China reaps the full rewards of its investment into education, the consequences are likely to be profound and enduring, and therefore merit study.
References:
[1] The Chinese International Education Foundation is in fact a Government Organised NonGovernmental Organisation, otherwise known as GONGO, a structural model unique to China in which an NGO still has governmental oversight. [2]
The last official number of Confucius Classrooms was announced in 2018. Due to a lack of transparency regarding Confucius Institutes and Classrooms it is difficult to confirm whether these numbers have changed. However, given the period of stasis between 2020 and 2023 as a result of Covid19, it is reasonable to assume these numbers are unlikely to have changed. [3]
Unemployment rates are 6.4% and 7.4% respectively – a stark contrast with the UK (3.7%) and US (3.5%). [4]Although numbers of African students studying in the UK and US have also increased since then, with peak numbers in 2020, unlike China regional representation is unevenly distributed, with Nigerian students accounting for over half of overseas student enrolment from Africa. [5] In a 2022 survey of university students from Papua New Guinea and Fiji, 82% of respondents stated a preference for scholarships from “traditional partners” over China. However, this doesn’t prevent them accepting China’s offering
About the Author
Clementine Pippa Ebel is a fluent Mandarin speaker and avid China watcher, Pippa has supported international businesses to understand and operate in China over the past five years. She has worked across a range of areas including education, commercial brands and government. Pippa’s previous work included developing the UK Government’s GREAT Campaigns in China,
as well as the launching of Westminster School in Chengdu, China. Pippa is now researching and writing about China, with a focus on the Belt & Road Initiative and China’s domestic education policy. She will be carrying out research at Peking University as a Yenching Scholar in Autumn 2023.
About the UKNCC
We help leaders make better decisions on China by providing Learning & Development programmes & Pathfinder Dialogues.
In an era witnessing a rise of misinformation, polarising politics and divisive media, the decisionmaking context on matters related to China is extremely complex. Since the end of the ‘Golden Era‘, the discourse on China in the U.K. has become dominated by hawks, apologists, and special interest groups pursuing narrow agendas. Recognising that there was a market failure in the U.K. in fostering a national China-facing capability, the UKNCC was established in 2020.
Today, UKNCC is Britain’s leading independent educational non-profit on China. As a community interest company (CIC), UKNCC is also Britain’s only China-focused organisation that is legally prohibited from lobbying under U.K. law.
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China’s Belt & Road Initiative: What Can We Expect?
Dr. Ammar A. Malik
Senior Research Scientist at AidData
Lead – Chinese Development Finance Programme
May 2023
The UK National Committee on China (UKNCC) Guest Contributor Programme highlights contrasting responses, by leading authors, to key questions posed by the UKNCC. The programme is designed to stimulate a deeper exploration of China related issues; drive curiosity; and test conventional wisdom.
Contact us at:
perspective.ukncc@pm.me
In this interview Ammar Malik looks at the evolution of China as a major creditor to developing countries and its role in rising levels of debt across the globe. Malik considers how debt will influence China’s dialogue with Western powers, as they face challenges of financial and energy security.
How has China’s overseas lending behaviour evolved since the beginning of the BRI?
China started issuing sizeable loans to foreign countries in 2008 in response to the global financial crisis when interest rates fell worldwide and US Treasury bonds became less attractive. Following the official announcement of the BRI in 2013, China’s approach to overseas lending became more creative. This led to the formation of joint ventures and Special Purpose Vehicles (SPVs); structures created explicitly to fund and implement individual projects. Since then, there has been a shift towards debt syndication, in response to the growing risks of projects backed by single lenders.
Multiple additional creditors are brought into fund projects alongside the Chinese state and policy banks, including private-sector banks (such as HSBC and Standard Chartered) as well as multilateral institutions like the IFC.
How is China’s BRI strategy evolving?
The BRI is currently at an important moment in its evolution, as repayment grace periods[1] for loans committed during the first few years are coming to an end[2]. With rising commodity prices and rising interest rates, borrowing countries face even greater pressure in paying back their loans with interest on time. China has responded by providing short term liquidity support loans, which are usually 6 to 12 month term deposits made into recipient countries’ central banks in order to shore up their gross foreign currency reserves. In Pakistan for instance, $25bn has been provided in short term liquidity since 2018.
The era when China makes multibillion dollar investments into industrial megaprojects is over. However, China still has funding to inject into strategic projects, evidenced by the provision of a $246 million grant to fund the Gwadar Airport Project, which represents the single largest gift to date outside of North Korea. In the next phase, China’s approach to new initiatives will be more strategic.
The recently announced Global Security Initiative (GSI) and Global Development Initiative (GDI) are manifestations of that. China’s growing role in the AIIB and the established multilateral institutions will likely become a bigger focus as Beijing shifts gears both to compete with the US and to challenge and reshape institutions holding up the international system such as the World Bank.
How responsible is China for growing levels of debt across the world?
According to the IMF, the percentage of countries in debt distress, or at high risk of debt distress, doubled between 2006 and 2021. This coincided with an increase in the share of external obligations owed to China, which grew from 2% to 18% between 2006 and 2020. In contrast, the share provided by Paris Club lenders shrank from 28% to 10%. It would however be unfair to attribute debt distress entirely to China, as external factors such as the war in Ukraine and policy failures in individual national governments play a significant role. It is not just developing countries who are facing deep financial challenges; the entire international monetary system is currently under stress.
It is likely that in the near future, China will play a key role in providing bailouts[3] and in debt restructuring across the Global South. It will be interesting to see which countries receive bailouts and how that reshapes partner relations.
Does the BRI lead to greater economic competition or cooperation with other lenders at times of debt distress?
There is some evidence of China beginning to collaborate with Western lenders and the IMF. For example, when Sri Lanka[4] defaulted on its debt in 2022, Chinese creditors engaged with other international creditors, such as the Paris Club, over debt renegotiations. There have been recent signs that China is working more collaboratively with international financial actors.
Chinese officials from the People’s Bank of China have made it clear that China will only provide emergency lending to countries which remain in good standing with the IMF. China has also indicated that it will back the international system of lending as a last resort, which was established through the Bretton Woods system.
What impact does the RussianUkraine conflict have on the BRI?
The immediate impact has been increased pressures felt by developing countries as a result of rising energy and commodity prices. Such pressure is likely to slow down the progress of projects and repayments.
Strengthened ties between China and Russia will result in a hardening of attitudes to both countries by Western powers, and the exacerbation of tensions between the US and China. Such tensions and increased competition make it harder for developing countries to navigate, as they face pressure to choose one country over the other.
Will China change investment tactics in terms of sectors and geography?
The ten countries where China has committed the most development finance include mineral-rich countries, such as Angola, the DRC and Venezuela. If the UN’s 2050 net-zero carbon emissions targets are to be met, demand for cobalt, lithium and other rare earth minerals will continue to increase, leading to more activity in mineralrich states.
What is one key development that we can expect in the next 10 years of the BRI’s evolution?
One question that is now becoming ever more relevant is how China responds to borrowers facing debt distress, and the possible implications for the Western financial institutions in the Paris Club, who had previously been the primary creditors of debt-distressed countries.
The Paris Club’s method of debt management and coordination involves sharing the burden of losses equally, sharing information about details of debt with full transparency as well as a coordinated negotiation with the borrower in the event of debt restructuring.
As China does not participate in the Paris Club and prefers making bilateral refinancing agreements independently with other creditors, the previous model of coordinated debt restructuring among Paris Club lenders no longer works, as China is now such a major creditor to low- and middle-income countries across the globe.
As more and more countries face debt distress and renegotiation, China and Paris Club coordinators will be pushed to cooperate in finding an alternative solution. Doing so will pave the way for new mechanisms and approaches to debt restructuring that depart from previous models.
For example, in order to secure IMF support, countries need to provide full transparency on the amount and terms of loans outstanding. At times, the terms of lending agreements with China make this difficult. Ultimately, the IMF still plays a very important coordination role, as ‘friendly-country creditors’ wait for the IMF’s agenda to be put in place, knowing it will reset the fiscal structures within indebted countries. How this dynamic between China and the Paris Club develops will provide insight into how crises will be managed in the future as well as how China thinks about its place in the world.
References:
[1] This is a fixed period of time negotiated at the signing of loan agreements where the borrowers are not yet expected to make repayments on loans. [2]
Repayments for many of the projects committed in 2014 and 2015 are due as grace periods come to an end. This is the case with the $943.9m Bar-Boljare highway project in Montenegro signed in 2014 and the $60.5m Tashkent City Subway Project signed in 2017. Governments are now expected to repay their creditors, but many are not in a position to do so. [3]
In recent years, China has provided $240b in rescue lending. [4] During the IMF’s visit to Sri Lanka following the country’s debt default, the IMF acknowledged the important role China plays in debt restructuring as well as the need for “more systematic engagement”.
About the Author
About the UKNCC
We help leaders make better decisions on China by providing Learning & Development programmes & Pathfinder Dialogues.
In an era witnessing a rise of misinformation, polarising politics and divisive media, the decisionmaking context on matters related to China is extremely complex. Since the end of the ‘Golden Era‘, the discourse on China in the U.K. has become dominated by hawks, apologists, and special interest groups pursuing narrow agendas. Recognising that there was a market failure in the U.K. in fostering a national China-facing capability, the UKNCC was established in 2020.
Today, UKNCC is Britain’s leading independent educational non-profit on China. As a community interest company (CIC), UKNCC is also Britain’s only China-focused organisation that is legally prohibited from lobbying under U.K. law.
Disclaimer:
The views expressed in the UKNCC Guest Contributor Programme are of each author and do not
represent those of UKNCC as an organisation or of any individual associated with it.
Copyright © 2024 UK National Committee on China CIC (Company number 13040199) All Rights Reserved.
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