Infographic Of The Day: China's Checkbook Diplomacy

We hear incessantly about the rise of China. So much so that it’s all a bit too abstract: What does it mean that China’s has become a global force? And more importantly, how have they actually accomplished that?

The quick answer? Through business dealings rather than military alliances, and a superb infographic from the Heritage Foundation offers a rarely seen snapshot of that.

I say rarely seen because The Heritage Foundation boasts that it possesses the only database of China’s global investments, and they’ve actually made it available for public consumption. The charts elegantly show the various sectors that China is investing in around the globe, and where they’re doing it. The most obvious thing that’s happening: China is using partners from around the world to secure the raw materials it needs to grow. It’s investments abroad aren’t in technology or industry; they’re in metals and energy and power.

Here are their investments around the world in energy:


[Click to visit interactive version]

And in metals:


The more you look at this chart, the more you start seeing powerful forces at work. For one, you’ll notice that majority of China’s trading partners aren’t in Europe or America: They’re in Asia and Africa and South America. In other words, precisely those countries which have always spoken last on the world stage. China is using its economic relationships to create an alternative bloc of power, which can directly compete with the political might of the E.U. and America.

You could call it checkbook diplomacy, and it’s vastly different than the bedrock of our own diplomatic efforts. Granted, the U.S. does use its economic relationships abroad as a carrot, but the stick has always been our armed forces. China, by contrast, isn’t exactly threatening countries overseas with potential military action (with the exception of Taiwan, of course). Instead, it’s doing hundreds of billions in business with countries that are usually also-rans on the global stage. Look, for instance at its dealings with little old Australia:

The one country that China is pointedly not investing much in is America. Instead, the only thing they’re doing is buying our debt and holding our currency. Here are their investments in the States:

And here is a look at what currencies draw their attention; it’s almost exclusively our own:

This is profoundly clever stuff. China has neutralized our power to oppose it by holding so much of our debt. And it has simultaneously drawn other countries closer to its bloc of power by offering them a taste of its rocketing economy.

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19 Comments

  • Carol S.

    China is not only willing to invest in its own future, but that of other countries such as Australia, Egypt, Brazil, Argentina and west African nations. I was amazed to hear of their launch and test of 2 modules to build their own space station recently. China seems to be aware that future resources, employment and opportunity lie both outside their country and off the planet. I will place a bet that they get to the asteroid belt, the Kuiper belt and the Oort cloud first to mine resources Earth will no longer have - but will need  - in the ever-nearer future. Any takers?!

  • John Ball

    What's apparent to me is China's willingness to invest in the future - spend financial and human capital to secure a significant seat at the table in the future.  Our own, short-term view of ROI becomes increasingly distinct and perhaps out of touch with our nation's long term needs.

    We hesitate only briefly to gamble on financial instruments or shore up those risks through taxpayer contributions, while our corporations and government(s) stumble haltingly when the subject is capital investment in long term projects.

    Could we even consider building a major dam today?  Does anyone have the intellectual or financial capital to develop a highway system?  It seems the Chinese are prepared to pick up our shortage of will to make a difference in the future.

  • Lesaha

    This has nothing to do with Mousad. Mousad is like our CIA.  It has to do with corporatism and the power it holds on the globe. 47 companies affect 147 companies which affect 1360 companies, which affect 43K companies, which affect 37 million companies and investors. This is why countries are protesting. Wealth has hold on every corner of the globe. And, when these entities make unwise and risky investments, we all pay. Some of the members drive this liberatarian/corporatism approach, which has lead to outsourcing (china). It's called the New Economics which is centered, not around manufacturing, but servicing. 

    Go to newscientis.com and read math analysis done by the Swiss Federal Insititute of Techology in Zurch.  It graphs data which displays the connections that 47 finance companies hold. Goldman Sachs, Barclays Bank, JP Moragan Chase & Co are among some of the top dogs. 

  • Bwmmmiller

    A "Greater Intelligence' is afoot here! Watch now, as the Mousad, Israel, fly to jealous rage, try and upset the "apple-cart" but to no real end, for no "Greater Purpose".

  • Ross Patton

    Very interesting chart. My takeaway is that you don't need military power anymore to be a global power: economic power is enough. Although, we could've easily learned that lesson in the 80s when Japan was on the rise.

    Also, it's Heritage Foundation. Basically, a libertarian/corporatist think tank. Doesn't necessarily mean their data is wrong (it could be though), just that everyone who views this should take it with a grain of salt and try to draw your own conclusions.

  • TJ

    The Economist recently wrote that some of these relationship (especially in Africa) are starting to sour as host nations see limited benefit in terms of:
    employment - Chinese firms bring their own people over
    share in profit, which often remains with a select few in high positions in government.
    There are also numerous cases of empty promises - a Chinese firm will promise to build a hospital or school in exchange for access to resources, and then fail to follow-up.

  • KevinK

    yeah, the US people are so desperate now from their own inside problem, of course what they have to do is to lead people's attention on others, like War, like the "evil" China...

  • Lesaha

    This information is trying to establish, not just how powerful free enterprise can be, but also how it can be used for power. It's trying to establish this by making us fear China. But, the same guys that support this Heritage Foundation, are members of the Chamber. The Chamber came up with the “New Economics” which does not include doing business with manufacturing in mind (not in the U.S.). Their goal is to use a slave labor force. Eventually this global inequality will level, thus creating a wage inequality like never seen before. It's happening right now as middle class and below remains stagnant, while cost of goods and service rise.  U.S. is way down the list in terms of wage equality. For example, 400 people own more wealth combine than the bottom 150 million wage earners.

    The Heritage Foundation wants the private industry to own everything and sell the services back to the people.  This study was done to show a plus for free enterprise. I don't see it that way, because it doesn't seem to help the masses prosper. I think it would be interesting to see how much U.S. elite owns across the globe and what percentage of the population owns it. 

    These Heritage guys, or guys that fund this foundation, are the same guys that actually promote war when possible, because the war debt is driven by the biggest contracts in private industry. Of course once you win the war on economics, then you don't need war to profit. 

    I guess I would like to see an info graphic about wealth on the globe. I think that will explain a lot. 

  • Motorpants

    A better definition of "investment" might help but lets assume it's the buying of debt or equity in those countries.  China's strategy (as it's presumed in Canada) is to control public and private companies in order to gain favourable pricing and consistent supply.  There are not many opportunities in the US energy and mining sectors if this is your goal because domestic demand is strong ie. There is no need to export Virgina coal when it can be burned domestically.
    There are many gaps to fill to get to the last couple of sentences of this piece and only succeeds in feeding Chinese economic paranoia.  That is not to say there is not much to fear about Chinese economic policy but this article does not do it.

  • Logan Vickery

    I can't say this loud enough or more often:

    STOP THE DEBT!

    Is the war on terror really worth it?  Who's really winning the war?

  • Lesaha

    I'm not saying that the information is incorrect, but I'm just pointing out that you are taking the information from the Heritage Foundation which is funded by the Libertarian Elite/TEA funders or Koch Brothers.