Macromegas #52 - Global Economic Dependence on China
Most emerging countries are in debt to China, especially in Africa
People often compare economic hegemony between the US and China only.
If we have recently seen that Europe is largely a straw man from a military perspective, it remains today an economic power of similar size as the US and China.
When we look at main trading parters, this 2021 map shows that the trading world is rather divided between Europe and China rather than between the US and China:
If we look at main source of imports (in 2019) rather than overall trade, the picture changes a bit, but the overall message remains the same:
But the key difference between the 3 economic powers is that China is generating an evergrowing, mindblowing trade surplus (those are monthly amounts!):
And it reinvests these surpluses into a global trade infrastructure centered on itself, therefore pulling the cover from the hegemonic balance the US had take from Europe during WWII:
China is more than happy to see as many countries as possible accept its investment ties, as most developping countries do (in 2019):
This leads to high levels of capital dependency across the world (2018):
Especially in Africa (2021):
This strategy is old as the world, and not some original evil plan designed by expansionist China.
With a very large pinch of salt, it could even be compared to the Marshall Plan:
In any case, when you have your hands on such an incredible flow of capital surplus, it is hard to find a better ROI than that of investing in even higher future trade dividends.
China will also need a correspondingly global military reach, especially its navy, but we already discussed that point extensively. If you have not read that analysis yet, you can find it here, in 3 parts: