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China’s Place in the New Post-American International Order

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Hello, and welcome to this special joint edition of the China Global South podcast and the China in Africa podcast. Both are proud members of the Sinica podcast network. I’m Eric Olander. And as always, I’m joined by CGSP’s head of research based in lovely Cape Town, South Africa, Kobus van Staden. A very good afternoon to you, Kobus.

Good afternoon.

Kobus, you and I are both old enough to remember some of the great speeches of the 20th century. I distinctly remember sitting in front of the television, watching Ronald Reagan in front of the Brandenburg Gate saying,

“Mr. Gorbachev, tear down this wall.”

That was one of those speeches that just, you remember where you were when it happened. I believe this week was also going to be one of those speeches when Canadian Prime Minister Mark Carney spoke at the Davos Forum in Switzerland and just said what a lot of people have been wanting leaders to say and finally contested the United States and called out the United States.

And Kobus, you have been saying for a long time that the rules-based international order died in Gaza. If it wasn’t dead in Gaza, it was killed in Caracas, Venezuela. We are now in the post-American order and I want to play a little bit from Mark Carney’s speech and that will set up our conversation today about China and where China fits into all of this.

The soundbite is a little bit long, but because this is such a seminal speech and it’s so important, I just want to make sure that I get your reaction to it on some of these details. Let’s listen now to Canadian Prime Minister Mark Carney.

For decades, countries like Canada prospered under what we called the rules-based international order. We joined its institutions, we praised its principles, we benefited from its predictability. And because of that, we could pursue values-based foreign policies under its protection.

We knew the story of the international rules-based order was partially false. That the strongest would exempt themselves when convenient, that trade rules were enforced asymmetrically. And we knew that international law applied with varying rigor depending on the identity of the accused or the victim.

This fiction was useful. And American hegemony in particular helped provide public goods, open sea lanes, a stable financial system, collective security, and support for frameworks for resolving disputes. We participated in the rituals. And we largely avoided calling out the gaps between rhetoric and reality.

This bargain no longer works. Let me be direct. We are in the midst of a rupture, not a transition. Over the past two decades, a series of crises in finance, health, energy, and geopolitics have laid bare the risks of extreme global integration. But more recently, great powers have begun using economic integration as weapons.

• Tariffs as leverage
• Financial infrastructure as coercion
• Supply chains as vulnerabilities to be exploited

You cannot live within the lie of mutual benefit through integration when integration becomes the source of your subordination.

Kobus, there we have it. A rupture and references to subordination. Very important, though, that he mentioned great powers, plural, when he talked about supply chain abuse and whatnot. So, clearly a reference also to China there. What was your take from Carney’s speech?

As you said, it was definitely very surprising to hear. Particularly, as you say, different people have called the rules-based order kind of over or dead, for a long time. But it kind of lived in ghost form in places like Europe and Canada, where people may have increasingly had real concerns about how the actual function of power was in that, but then the vocabulary itself remains so powerful.

So, this is definitely, it’s a break in optics, I think, more than necessarily that bigger break in substance, because we don’t really know what a lot of this is going to mean yet. But the break in optics is very significant, because, as he says, you see, optics is essentially what was keeping it together.

Well, I was struck by this, a little bit down in the speech, he said, to help solve global problems, we’re pursuing variable geometry. In other words, different coalitions for different issues based on common values and interests.

And the ones that he mentioned were mostly with fellow, what he called middle powers, which we know don’t necessarily include a country like Indonesia, but kind of include European countries. And those were… The ones that he was mostly name-checking, except for a few kind of specific, like trade relationships with Asian countries. And then the kind of interesting, possible link with TPP, a Trans-Pacific Partnership. But what I’m looking for now, following this speech, is whether any of this goes past the equator, kind of like, because from a lot of the framing of it, it left me wondering a little bit whether this really breaks out of that global north cage.

Kind of whether that paradigm gets questioned at all, or whether we’re essentially looking at an attempt to shore up G7 solidarities, but trying to make it work without the US. So that’s some of the questions it left me with.

Well, if you’ve been following the speeches of Carney over the past couple of weeks, this speech this week in Davos may not have come as a surprise. We heard some similar rhetoric when he was in Beijing last week, and also articulated a line that really stuck with me:

“This is not the world that we want, but this is the world effectively that we have.”

It’s this practical realism that he says he is now practicing for Canada. I have a feeling that other middle powers —

• Australia
• South Korea
• Japan
• European countries

— are going to take some inspiration from what he said.

But it raises the big question now of what China’s role is in all of this. This was the first time that a Canadian prime minister had gone back to China in almost a decade. They want to sell a lot more oil, they want to sell canola, they’re going to now be trading in cars a lot more. So the world is changing in front of us.

Again, what is going to be the role of China in this new world? The timing for our discussion today couldn’t be better, because we have somebody who I’ve been admiring for a long time and who wrote a fantastic article in Foreign Affairs.

Liu Zhongyuan, also known as Zoe, is the author of China’s Long Economic War: How Beijing Builds Leverage for Indefinite Competition. That is the article in Foreign Affairs, which I’m going to put in the show notes.

Zoe is the Maurice R. Greenberg Senior Fellow for China Studies at the Council on Foreign Relations and a Senior Research Scholar at the Institute for Global Politics at Columbia University. A very good morning to you from New York, Zoe.

Zoe: Thank you so much for having me. And Kobus, it’s great to see you again.

It’s wonderful to have you on the show. Again, the timing just couldn’t be better, given the ideas you laid out in the article.

Before we dive into China’s role specifically, I also want to get your reflection on Carney’s speech and this moment that we’re in — the rupture of the rules-based international order, as Carney put it. Something that’s been building over the past year, or maybe the past 10 years, but here we are now in uncharted territory.

Zoe: Eric, thank you for somehow connecting my article, linking some of my analysis with Prime Minister Mark Carney’s speech. I really appreciate your shout out of my article.

The bit that you played really stuck with me yesterday as I was watching his speech. I actually watched it on YouTube several times. And in addition to the part that you played, there was also a line that stuck with me, which was when he talked about what Canada is going to do. He described it as:

“Canada believed in the strength of values. But going forward, Canada is also going to build and believe in the value of strength.”

I think your description of it as pragmatic realism is perhaps a moment of truth, despite no country being willing to be part of this reckoning.

I cannot agree more with the analysis that Trump probably did not start this, and this is not necessarily the first moment when we are facing a global transformation. But describing it as a rupture definitely highlighted a sense of urgency and a paradigm shift, if that makes sense.

I was wondering, in listening to comments, he was mostly mentioning great powers, which is obviously an on-purpose vague way of talking about it and not particularly calling out any specific great power. So I was wondering how much China you heard in the speech, and how much you felt the speech was mostly dealing with coming from this moment of very heightened tension between Canada and the United States, and the changing world of the United States itself.

Zoe: Right. I think Kobus, that’s a very cleverly crafted way to describe it. He talked about great powers rather than superpowers, because many countries can consider themselves as once a great power or among the great powers, but perhaps countries that can consider themselves or aspire to become… Superpowers. At this particular moment, probably there are only two countries. I’m not in any way suggesting this is a G2 world, but if we measure great power, like superpowers, probably by a lot of matrix, China is, in some ways, can claim it has achieved a superpower status, especially in manufacturing and industrial capacity.

Right. But listening to Prime Minister Mark Carney and when specifically he talks about great powers and the weaponization of supply chains, I immediately realized, okay, so this is not really about the United States. And he cleverly talked about many countries being part of this supply chain diversification or the weaponization of supply chains without naming specific ones. I thought that was very clever.

But then on the other hand, it also begs the question, why a country like Canada, and it takes Prime Minister Mark Carney to say this, whereas no other European leaders, or for that matter, no other Asian leaders step up and make this case. And I’d have to say, this is probably something like a career note for him as well. From Bank of England, the governor to Prime Minister of Canada rising at this particular moment, a leader elected to be a counterweight against President Trump. I thought he is having his moment. And the speech was great.

How do you think the leadership in Beijing is interpreting all of this? In part, because for the better part of 13 years since Xi Jinping came into power, they’ve been frustrated with the rules-based international order. They’ve wanted to change it to create more space for China to maneuver in it.

But China’s not like Russia in the sense that Russia wants to upend the rules-based international order. China has profited extensively from American leadership in the sense that America paid the public goods that Carney talked about and secured a lot of oil supply lines and made sure that it was safe to trade in many parts of the world.

At the same time, as China got more powerful, they also got more frustrated with the constraints that the rules-based international order put on them. How do you think they’re interpreting this moment that we’re in right now in the Carney speech?

I would say China’s relationship with the international order, or the U.S.-led, and to a large extent, the U.S. helped build the existing international rule-based order. The relationship has evolved dramatically.

When China first joined WTO in 2001, that was a long, very convoluted process. And once China joined the WTO, the initial stage was you see a dramatic increase, not just in terms of China’s export, but also it shows up on the PBOC’s balance sheet, the tremendous rise of foreign exchange reserves.

As a result, China today remains to be the largest foreign exchange reserve holding country in the world. And it’s two times of the second number two, like Japan’s foreign exchange reserve holding.

From that perspective, I’d say, Eric, you’re absolutely right. And this is also, I guess, no Chinese policymaker or economist would deny, which is:

• China benefited tremendously from the existing international rule-based order.

And this is why, I guess, I disagree with some analysis saying that China intended to overthrow or completely change the existing rule-based system. Part of the reason is because if you destroy the system from which you benefit from, you do not know what is coming next, the opportunity cost is too huge.

On the other hand, exactly as you described, as China expands, not just domestically in terms of growth, becoming richer, but also its role in the international sphere, the sheer value, the sheer volume, size of the Chinese economy, people, its demand for commodity resources, and its export:

• We’re not just talking about China driving up commodity prices anymore.
• We are also talking about the extremely cost-competitive and price-competitive Chinese goods flooding international markets and causing concerns from global capitals.

It’s not just about Washington. It’s not just about Brussels. Countries like Russia and Brazil have imposed tariffs on Chinese exports. So from that perspective, I’d say China increasingly felt the frustration of the constraints, but it does not necessarily mean it wants to completely overthrow it.

Instead, what China has been experimenting, I’d say probably through three channels as I see it:

1. China tries to change from within as expressed by how it tries to change, revise, or reform the WTO,
   tries to reform IMF, tries to reform World Bank, and the attempt to reform, or for that matter, UN.

2. The attempt to reform this existing rule-based institutions is through the help and support of members of the Global South.

3. China claims and champions itself as a leader and always a member of the Global South.

So that’s the first approach: change from within. And then the second… The approach, I’d say China tries to work only with Global South. So is China Global South starting new institutions? And this is represented in things like, I guess, the BRICS platform, for example, or the Shanghai Cooperation Organization. Or AIIB, for example. I’d put AIIB in that category as well. It’s slightly different in the sense that that’s China-led, but the membership and participation is slightly broader than just Global South. But it certainly has competed for talent from World Bank and IMF and things like that.

And then the last one, I’d say the third approach, and in no way is not important, which is China go it alone and China just start. And this is also why I’d say, you know, maybe AIIB fits into in between the second approach and the third that I just mentioned, in the sense that if the United States or the West does not necessarily is not willing to make some concessions to give China bigger space, China just decided to, you know,

“I’m just going to go it alone and start things on my own.”

And maybe the best example that I can think of, and in relationship to what Prime Minister Mark Carney talked about, when countries weaponize their dominance of international payment financial system, China responded by starting its own, not necessarily start, but repurpose, more precisely, repurpose its cross-border interbank payment system, not just to promote the broader use of renminbi, but in defense of potential sanctions.

I guess that’s a long-winded answer to say China is frustrated. You know, one of the ways I think to think about it is, as you say, that China benefited massively from the international system, but its rise also changed the international system around it. And so I was wondering, actually, you know, taking that line, whether or how you say China is changing the international system?

That’s a very interesting question. I think somebody should write a dissertation about it, and the China and the Global South project provide a lot of interesting and useful data points and case studies. In terms of how China’s rise changed the international system, I’d say the answer varies depending upon who you are talking to. And I do not think members of the Global South would have a unitary answer as well.

Part of the reason is because, especially these days, if you talk to hawks in Washington, D.C., they might view China as the villain, not necessarily pointing out the fact that under the current administration, America, Captain America, is no longer the positive image, and the Captain America became the villain it used to fight against. So I’d say, to answer the question how China’s rise impacted the global system, I’d say, you know, it’s a mixed picture.

For a lot of countries, especially commodity resource-rich countries, their economic structure is very, very simple, primarily gained from exporting commodities. And one example may not necessarily be a perfect example, but it’s illustrative, would be Venezuela. Despite tremendous Western sanctions, Venezuela was able to get financial support and was able to sell its crude oil through loans for oil projects to Chinese state-owned enterprises. And in addition to that, small independent teapot refineries were also able to buy oil from the sanctioned Venezuelan regime.

So from that perspective, you know, despite from a Western sanctioner’s perspective, this is China’s blatant violation of Western sanctions. From Venezuelan’s government perspective, it provides them with much necessary fiscal revenue. And the similar case can be applied to countries like Iran or, for that matter, Russia.

But from the sanctioner’s perspective, they would question the legitimacy of sanctions. And from China’s perspective, China has long been contesting America’s unilateral power, especially sanctions. So I’d say, you know, how China impacted global order, it really depends upon who you are talking to. But the result is absolute. One absolute result is that the sheer size and the sheer competitiveness of Chinese export has demonstrated its ability to transform a market, regardless where you are, whether it’s in South Africa, whether it’s in Vietnam, whether it is in Germany, whether it is in Mexico or America or Brazil or Argentina.

Every single country around the world can definitely feel that the appeal or sometimes the uncertainty and the unknown about China.

Let’s pick up on that. And I’d like to take advantage of your expertise, because this is a conversation I’ve been having with a number of different people, and there’s not a consensus on it. You talked about the complexity that China brings both benefits and disadvantages, and that’s the nuance we love to celebrate. So if you’re a developing country, actually, let me strike that. If you’re any country and you’re producing a product that China produces, you’re going to have to beat the China price. And that is a very Formidable price, because the Chinese are so efficient and can produce at such a scale and have this process knowledge that Dan Wong talks about in his book that is pretty much unrivaled in the world.

This, on one hand, provides countries like Kenya with very affordable products that are great for countries that have populations with low amounts of disposable income. But it also means that if a country like Kenya wants to move up the value chain to produce some of the things that China produces, it’s going to be very difficult, if not impossible.

And there are some critics out there who say that because China is such a manufacturing powerhouse on a scale that is unprecedented in history, it keeps developing countries stuck at the bottom of the value chain, because at the end of the day, all China wants from these developing countries is raw materials that then go into their factories that they then sell back as finished goods.

We saw this in the latest trade numbers for 2025:

• Exports are up 20% last year
• Imports up 0.5%

So we see that imbalance right there. At Vice Premier He Lifeng, he said this week at Davos, they’re going to do better at imports. But here we are.

What’s your take on this debate about China’s role in terms of commodity exporting countries and the benefits and the drawbacks that they bring?

That is also a very complex question, Eric, because if we put ourselves in the shoes of a Chinese exporter, I’m not talking about the Chinese government. I’m just talking about the Chinese exporter. The reason I will explain why I wanted to focus on Chinese exporters to begin with: you know, you’re talking about the competitiveness of Chinese price.

We all know why Chinese price is so hard to beat as a result of, you know, the magic thing about industrial policies, especially in the context of China, is that the government, once it has identified these are the sectors that going forward we are going to prioritize, it removes one important thing that capital or entrepreneurs do not like, which is uncertainty.

In the Chinese system, that also means you probably have a much higher chance to negotiate with all different local government officials to get implicit or explicit government support. Some people may call it subsidies or in-kind subsidies.

You can also get cheap loans, and you can also get all sorts of venture capital inside of the Chinese financial system.

As a result, you end up having a highly, highly competitive domestic market that is extremely hard to beat anywhere else. This also benefits from the fact that China, unlike any other country in the world, has perhaps the most holistic supply chain elements.

From that perspective, for any commodity exporting countries, if you were in Chinese exporters’ supply chain, that basically means your input can be fed into China’s gigantic manufacturing system. So that’s a good thing so that you can get revenue.

But I’d say this model is definitely not sustainable.

• It’s not sustainable for Chinese exporters because of the profit-killing evolutionary competition
• It’s basically Econ 101: homogenous goods, nobody can make any money

On the other hand, I’d say the China model may no longer be:

• Not just replicable by other commodity exporting countries
• Also because the world is different

The rise of China, and especially its export-oriented economy, benefited from, apart from all the stuff — all the comparative advantage that China has inside China — it also benefited from an era where everybody was celebrating free trade and globalization.

China joined the WTO without any government talking about economic security.

Yet now we are in an era where people talk about supply chain resilience, things that when we used to think about building buffers and duplicating your supply chains was redundant and bad for your balance sheet.

Now companies all talk about resilience. They all want to build alternative supply chains.

From that perspective, I’d say in a more fragmented world, no other commodity exporting countries can bet on free trade and benefit from it.

But then on the other hand, for a good set of policies, it also means that because of supply chain diversification, countries, if they form blocks — as Prime Minister Mark Carney argued — rather than negotiating with a bigger or greater power unilaterally, then their shared interest probably can have a much higher chance to be preserved.

But for China to continue exporting a lot of manufactured goods, it puts at risk other countries’ capacity, or it significantly raises the entry cost for other emerging markets or lower-level developing countries to enter into the competitive place.

So from that perspective, I’d say, China’s export-oriented model is probably not applicable for other countries aspiring to learn from China in a more fragmented world.

So, you know, there’s all of the vice premier, for example, and President Xi Jinping himself have been committing China to become more consumption-led, and to increase the rates of consumption within China. From your perspective, how will that actually work? And how do you think that may shape this kind of tricky relationship that you, I think you lay out very, very well in your article? You know, this situation, this kind of paradox — paradox where China is incredibly successful at one does, but that doesn’t really buy its trust. You know, it remains very, very powerful, and very respected, but not necessarily close, warm alliances with other countries.

Like, the reason I’m linking this to consumption is, it strikes me that the US, having been such a strong consumption power over such a long time, combined with the US’s power to pump out images of itself, positioned the US as a kind of an avatar of modernity, right? In the 1930s, for example, the Hollywood movies that flowed out of the US showed certain high levels of consumption of certain commodities, like kitchen appliances or cars.

In the process, they set a template for what 20th century consumption looked like but also set the US as this kind of norm setter, or setting of standards of what kind of modern consumption, what consumption, what would modernity through consumption look like?

But it seems to me that China — the first question I think I’m asking is:

• What does a highly consuming China look like?
• What is that kind of effect on the rest of the world?

But then also, China has a very specific, very different way of pumping out images of itself and of its daily life within China into the rest of the world. So I was wondering if you foresee that it would have a similar kind of effect as the kind of visualization of consumption had for the United States in the past.

One thing I think Western economists seem to have underappreciated about China’s so-called overcapacity challenge is that since the end of COVID, when Western governments did major stimulus, followed by President Putin’s war against Ukraine, major Western economies ended up with high inflationary pressure.

We all know democracies do not necessarily deal well with inflation. And at this moment, I think the underappreciated aspect is that when Chinese goods were cheap, before tariffs, it also meant Western countries who were importing Chinese goods—these cheap goods actually could have the effect of smoothing out part of the inflationary pressure.

I think this is the part where Western economists or major Western central bankers probably have not paid enough attention. They focus on the risk of China exporting deflation. But if you have a highly inflationary environment, and you don’t necessarily have a lot of effective tools to deal with inflation, at least importing cheap Chinese goods solves part of the problem.

Of course, at the cost sometimes of forcing some of your local mama’s papa shops or your local smaller uncompetitive factories to close. So it is a mixed picture, I’d say.

Scholars debate how to measure Chinese household consumption in particular. The Chinese government uses data to show, well, China’s consumption — basically total consumption, aggregate demand. That’s literally what economists say — like, consumption is about 80%. But aggregate demand is not necessarily household consumption, right?

If we imagine the Chinese consumers spend 1% more, then the aggregate impact, the domestic aggregate consumption power would absolutely increase, because it’s 1.4 billion people—everybody increasing 1% aggregate across this huge, huge population.

It’s tremendous power. It sounds very nice.

But remember when China first joined the WTO, and immediately followed by a huge jump in global commodity prices, then the rest of the world, major economies, were complaining about:

“The rise of China and China’s industrial activities now drives up commodity prices.”

As a result, very quickly, when you have very high commodity prices, and when your financial market—especially Western financial markets—suffer from a long period of deregulation and financial innovation, we ended up having not just a commodity price crash, which basically crashed a lot of economies of commodity-acting countries, but it also led to a lot of suffering. The crash of the crash of the crash of the crisis in Western economies, the U.S. in particular.

So I’d say I’m very cautious about the call for the government to just have to give Chinese consumers more direct stimulus, and Chinese people ought to spend more. From a macro perspective, I’m very skeptical of that.

But then on the other hand, I think for the Chinese economy to rebalance itself, I think they just ought to change their growth model. Not just because the existing model is losing its steam, also because China’s rise for almost four decades now has not necessarily translated into a stronger sense of individual economic security and individual economic prosperity. I think that is not a good thing.

Chinese people used to go abroad and travel. Chinese middle class used to like to buy luxury goods. But now, in the name of xiaofei jiangji (消费降级), like downgrading, you can package it up as “we are prioritizing values rather than brand.” But then, again, new people don’t occasionally spend or do some conspicuous expenditure.

So from that perspective, to rebalance the Chinese economy, to achieve a better, more sustainable model, it ought to stimulate consumption. But again, this is easier said than done.

Part of the reason is because the government really does not have good measurement of consumption. This is also why among economists there is a huge debate. And then on top of that, within China, the purchasing power is very different.

• In Shanghai, maybe 3,000 renminbi doesn’t mean anything,
• but 3,000 renminbi for somebody living in Tibet means a lot.

So the idea for the government to give money, I just cannot imagine how that can be done without any contest. Because if you give everybody the same amount, people in Shanghai would be like, “my expenditure is so costly, why are you giving me limited?” And then if you give Shanghai more because life there is more expensive, then people elsewhere would say, “well, they are already living in Shanghai. Their wage is already relatively higher than us. Why are you giving them more money?”

And the ancient Chinese saying is,

“The fear is not about scarcity. The fear is about inequality.”

And I think that literally captures the policy dilemma there.

So then again, the other dilemmas, other challenges like government physical capacity and who is going to simulate the challenge of embezzlement. So I’d say it’s very difficult.

I want China to rebalance towards consumption so that Chinese people can benefit from a more prosperous China rather than profit redistribution being concentrated in only SOEs. Well, that’s the challenge that they face domestically.

Your article also talks about the challenges that they face internationally as well. You go into detail about how what China’s trying to do is unprecedented by trying to rival the largest economic power in the world, the United States, without triggering the Thucydides trap.

The Thucydides trap kind of is a Greek story that says basically,

“Rising powers will always challenge an incumbent power and it leads to conflict.”

And so China has become rich, it’s become powerful, but you also talk about a major credibility gap, particularly in the developing world.

And this is why I am so excited to have you on the show to talk about the debt trap. We at the CGSP have wondered for years why this narrative of the debt trap, that was started in 2017 by an Indian pundit, Brahma Chellaney, has had such durability, even though leading universities from Johns Hopkins to Boston University to think tanks like Chatham House, and we can go down the list, have debunked it. There isn’t any evidence of it.

Yet, nonetheless, in Kenya, in Uganda, in Southeast Asia, people still believe the debt trap narrative, in part because there’s a credibility gap—they don’t necessarily trust China.

Let me just read what you wrote, and then I’d like to get your expansion of it. You said,

“Consider the widely held view that Beijing has been deploying debt trap diplomacy with poorer countries, deliberately ensnaring them in unsustainable debt to seize strategic assets. Although empirical studies have found little evidence of such deliberate intent, the pervasiveness of this narrative shows the extent in which China’s opaque lending practices and the political leverage that appears to be built into its financing model have led to global unease.”

Can you expand on that?

The reason I wanted to emphasize credibility, and especially I wanted to emphasize the debt trap as a case, I’ll start with the puzzle that I have had for a long time. Over the past few years, there have been a lot of discussions about the Chinese government intentionally doing something to achieve strategic interest. They intentionally lend to countries that they know have no capacity to pay, and with the idea that they can somehow capture their commodities or strategic asset.

And there is also the overcapacity argument. Some European leaders even made the statement saying that China intentionally produces overcapacity so that they can flood the global market. Argument like this make me wonder.

We know multiple things can be true simultaneously, even though they’re seemingly in conflict with each other. But if we believe the Chinese government and Chinese leaders and the CCP are assuming that they are so far headed, they think in 100 years. No leader wanted to do bad business and run their country down persistently across 100 years. Their economy is going to go down. Like why would you intentionally do something that is going to eventually hurt you more than hurting others?

So to answer that question, I sort of, and especially in the context of U.S.-China rivalry, I learned and I borrowed from the finance literature, and credibility is one of the four Cs that lenders evaluate the credit risk of somebody. And I think credibility is very useful for others to evaluate China, not just, you know, great power. It’s not just for Western countries to evaluate China, whether it is a credible stakeholder in the responsible stakeholder in the international system. It’s also very much important for global South to, or members of the global South to see how China is similar or different from the West.

And the debt trap diplomacy argument is particularly interesting for me. Like I learned so much from the work that you and your team have done through China, the global South project. But also, you know, I like my friends and colleagues’ work a lot on this issue. And no case studies that we’ve done, we’ve seen. And I myself looked into Chinese overseas investment, and I talked with many people. Then I realized, you know, in this whole process, I remember talking with, you know, like a high school friend of mine. He now works as basically a project contractor, building communication towers in African countries.

So the story of him basically illustrated this, why debt trap diplomacy is completely unfounded. You know, like, from his perspective, by communication with him, I learned that folks may not necessarily have the privilege of time or resources to understand the complicated ways of how China functions.

And in addition to that, I just have to, I hate to say this, but it’s true that the Chinese government and Chinese companies tend to just have very, very bad PR. They seem to not understand the boundary between propaganda versus public, like public relations, community engagement, or corporate social responsibility.

So as a result, you ended up having people talk about,

• “Well, you know, China, did you have a bad experience with China?”
• “Yes, you did.”
• “Okay.”
• “So did China end up seizing the collateral that you gave to China?”
• “Yes, unfortunately.”
• “So did you realize that they intentionally did that to you?”
• “Oh, yeah, that sounds about right.”
• “It’s like I didn’t understand them. It seems like they tricked me in the alert contract that I didn’t quite understand.”

So I just say it’s the combination of China’s lack of proven track record to engage in a responsible way to do environmental. Maybe they did previously, they didn’t have the technical sophistication to do impact assessment or project evaluation. They tend to not understand countries outside of China do not necessarily work the same way as they work inside China.

A project manager building highways inside China might have thought,

“Oh, okay, so as long as I work with the national government, as I got the approval from the government, things could be done.”

They never thought about the chance of regime change. They never thought about tribal conflict.

So as a result, you ended up having this debt trap narrative stuck. It really speaks to China’s unproven track record and the broader credibility deficit. And the debt trap is just one example.

You know, you have concerns about the Chinese overseas investment in ports, like American military folks would be, or strategic studies people, oftentimes concerned about,

• “Well, is China going to build all these ports around the world and they have ownership?”
• “Is this the clue that they are going to build a global network of naval bases?”

And from my perspective, like if I put myself in the shoes of Chinese policymakers,

“If somebody else is providing security and I benefit as a free rider, why not do it?”

So I’d say the credibility gap is pervasive. And it also speaks to China’s lack of sophistication in making itself better understood. And there are reasons for lack of transparency. In that context, you point out also that China depends a lot on the global south for political coordination and that the politics of global south solidarity kind of underlie a lot of some of the risks that China financial risks and some of the China takes on in parts of the developing world.

So I was wondering, in some ways, from being embedded in the global south, particularly at a moment when my own country, South Africa, is in this very fraught relationship with the United States.

In some ways, China plays very, very sophisticatedly into a wider kind of cross-cutting set of problems, set of disputes that the global south has with the way that kind of a US-centric or US-centric rules-based international order has functioned so far.

In some ways, China does—that messaging of self-solidarity, of opposing hegemony and so on. China uses that vocabulary very often, and I think in some cases, sophisticatedly. But still, it hasn’t really translated into an organic, actual working together with all of these global south countries. It tends to still be very dominated by bilateral relations.

There’s a lot of, as you said, kind of this structural distrust, even within South Africa. Even as South Africa feels anxious about what the US might do next, I don’t necessarily see South Africans being like,

“Oh, our close, warm relation with China is going to help us,” right?

It’s kind of like, they do see China as an ally, but not necessarily as—they’re not necessarily coming from the same world. To an extent where even they, I think South Africa sometimes feels worse, certainly feels from a country like Cuba, for example, or, but even to an extent with India.

So, I was wondering if you could talk a little bit about that kind of paradox and how you see this developing from now on. Because, of course, as things get more and more extreme in terms of superpower tensions, this dependence on South-South networks becomes in some ways more important to China.

Right. That’s a really interesting way to describe it. And I think China itself struggles with how to maintain its dual identity, in the sense that on the one hand, it wants to become a global superpower, at least economically.

And on the other hand, several Chinese leaders, including President Xi Jinping, have repeatedly said:

“China is always going to be a member of the global South and China remains a developing country.”

Economically, I’d say there are ways that China can defend its position as a developing country, especially if you look only at the lesser-developed part of China. If you remove Shenzhen, Shanghai, like the top-tier cities, China is a developing country.

And that speaks to the unbalanced development inside China. But if we zoom out and look at China as if it’s a unitary piece, then how China can defend itself as a leader of the global South is really a part of its identity in the existing international system.

This is a sort of shared identity: China views itself as having shared grievances with a lot of countries that either were former colonies of major powers in the world, or have never been part of the rule writers of the existing international system.

This also tries to defend their rights in the existing system, especially as China rises as the number two largest economy in the world. It fits into China’s drive, not just for recognition, for prestige, but also for strategic autonomy when everybody else is also talking about economic security.

As China recognized that, yes, it benefited from the existing system, as it was admitted not just in the UN, but in WTO, and as China tries to revise and reform the existing system, it’s harder for China to find common ground among major Western economies.

So that’s part of the reason, and I think this is a very important reason, that during the entire reform and opening up period, China learned from the West but specifically

doesn't want to become the West.

So I think that identity is very important. It learned from the West without wanting to become it.

This is why China wants to fundamentally guard itself ideologically and identity-wise. It wants to be members of the global South so that it doesn’t have to talk about regime issues. It doesn’t have to talk about whether you are a democracy or not.

You only focus on doing business, growing your economy. And as long as we can trade, find ways to trade, that’s good enough.

As long as you and I can both grow our economies, and that’s probably as good. And this also fits into China’s, perhaps the party’s pledge of ending China’s century of humiliation, especially being emphasized by President Xi Jinping many times. The idea is to restore China’s great place in the international system. And I think this resonates with a lot of members of the global South. A lot of countries were proud Asian civilizations from Egypt to Iran to India.

So from that perspective, I’d say claiming itself as a member of the global South gives China a sense of moral obligation to practice foreign policy agenda. And even sometimes being perceived as assertive because it can legitimize its assertiveness or sometimes even aggressiveness. It can recast this as, you know, it’s a victim of being abused by the West trying to reassert itself.

So I’d say this also fits into the lack of credibility because credibility is not something that you assert yourself. Credibility is not something that you pass a law and then you suddenly have credibility. It must be earned.

And yet, because of China’s lack of a clear vision, or if we can quote Prime Minister Mark Carney as his speech that stuck with me, you know, the strength of value. It’s practical. It makes sense. It’s even for many countries in the world. It’s even that they don’t like the West going into their country and talk about values, talking about democracy and human rights. And the fact that China doesn’t talk about this makes China a great alternative to the West. But that does not make China in any way a respected, credible, long-term, trusted partner.

The article is “China’s Long Economic War: How Beijing Builds Leverage for Indefinite Competition” by Liu Zhongyuan, or Zoe. Zoe is the Maurice R. Greenberg Senior Fellow for China Studies at the Council on Foreign Relations and a Senior Research Scholar at the Institute for Global Politics at Columbia University. We’re going to put the article in the show notes. It is absolutely essential reading. You always get one free article at Foreign Affairs. So make this the one free article.

Zoe, thank you so much for your time and your insights. Just couldn’t be more timely given everything that’s going on. It was such a thrill to have the chance to speak with you.

“Thank you, Eric and Kobus for inviting me. And also thank you so much for the shout out of my article. Really appreciate it.”

Kobus, when we were in Indonesia last week and speaking with various stakeholders there, the way that the China-Indonesia relationship was described to us was that Indonesians see China as an opportunity, not an ally or a threat.

But opportunity is a conditional relationship. If the opportunity goes away, then people will look elsewhere. And I think this speaks to the credibility gap that Zoe was talking about in her article. And I think it’s absolutely true.

Now, I can hear the China supporters out there saying the reason why there’s a credibility gap is because the United States government spent years and millions of dollars with propaganda to undermine the Chinese. The Indians as well, the Indians as well, and Indian media, and these narratives have just taken off.

So don’t blame the Chinese, blame Western media and Indian media for that.

I think that’s partially true. I mean, you can’t discount that. But I also think that the Chinese have done themselves no service whatsoever by the opacity that they conduct their business around the world. The fact that we can’t book anybody from China to come on our show and to talk to them. The fact that, you know, in all sorts of places in Africa and elsewhere here in Asia, Chinese stakeholders are not to be seen in the media, participating in the conversations and being more transparent in how they do things. That is the fault of the Chinese.

And I think that speaks to the credibility gap, which does fuel these rumors of

• debt traps
• overcapacity
• other things

that they really resent to their core. And they are partially to blame for it.

Yes, I think there’s definitely, you know, there’s definitely, I think both of those things are true. Like, I think China, you know, like, as you were also saying that China is not good at communicating itself. It is unnecessarily opaque occasionally, unnecessarily rigid, you know, kind of like there’s this difficulty to step away from official language, for example, you know, to personalize the conversation. Those are all true.

At the same time, there’s also been like, there is very significant, you know, by some of the most robust communication systems in the world, there is a very significant anti-China narrative, you know, kind of coming from those communication systems. That is also true. I think there may be, you know, there’s another issue, I think, which is an issue that I think comes from being a kind of a relatively mono-ethnic, like East Asian developmental state, you know, and some kind of like ways in where there’s some problems I think that China is facing, that Japan and South Korea also faced as they moved into the world.

And Japan and South Korea developed very specific kind of communication strategies that ended up, like, smoothing that way, right? Kind of like, in both cases, that includes very strong focus on pop culture.

And in a lot of ways, pop culture stands in for and smooths the way for, you know, kind of like, you know, companies that are still—in the Japanese case, for example—still not very good at international communication.

You know, Japanese companies are not necessarily that much better at communicating with African publics than Chinese companies, right? I think that they are somewhat better, but not by orders of magnitude.

So, I think there’s a kind of an East Asian issue there, I think, you know, kind of, you know, kind of which the U.S. being such a, you know, the U.S. is just a unique unicorn, but it’s also an incredibly diverse society, right?

You know, so it has all of these ways of using, you know, embedded links to other countries as a kind of a vector to build those relationships. China just doesn’t have that in a way that, you know, in a way that Japan and South Korea also didn’t.

So, I think, you know, that’s an interesting problem for me because it doesn’t seem in the Chinese side that they really set up to use pop culture in the same way as the other two. You know, and there, I think, we’re facing a China-specific issue.

And one of the other issues that’s not unique to China, we also see it in other authoritarian states like Vietnam as well, where you don’t have active civil society. You don’t have a free press, and so companies, individuals, universities, think tanks are not accustomed to participating in pluralistic societies.

So, when they do go abroad to South Africa and you have this very robust independent media, you’ve got a very robust civil society, they’re just not experienced. And that’s because they come from a system that you’d never do any of that.

And so, the instinct is, “I don’t want to get in trouble.” It’s also fair to say that in Xi Jinping’s China, that repression has grown and that the risks of speaking out have become significant. This is also true now in Donald Trump’s America.

The fact that we can say things that get us in trouble and we have to think about what we say is a new reality that many Americans aren’t accustomed to. But it is part of our reality now. That makes us very similar to the dynamics in China as well.

I would add one more thing in there, which is that, you know, I think as Zoe was also pointing out, the default assumption, right? If China comes from the Chinese state, you know, you can say all kinds of bad things about it, but like the Chinese state is an incredibly robust system for service delivery, right? That’s right.

The social contracts in China remain very strong. And that’s something very important with their own people.

Yeah. So, Chinese life remains very, very state-centric, right? And, you know, and that also infuses their relationship with other countries, you know, kind of as she was saying, you know, like in a lot of cases, there’s an assumption that:

“If you’re okay with a state, then you’re okay with a country.”

Which is, you know, anyone who goes to any other country, particularly in the Global South, knows that that’s not true.

So, you know, connecting to Global South publics is a different job than connecting with Global South states. And frequently, in order to connect to Global South publics, you need to have some form of implicit understanding that that public is sitting in opposition to the state frequently. And you need to have a vocabulary in which you can move and, you know, kind of like maneuver that difference.

And there, I think that is lacking frequently, you know, in Chinese interactions. Because it’s, for a lot of Chinese reasons, it’s very difficult to position yourself outside of the state or in opposition to the state. People don’t want to do that for clear reasons.

But if you don’t, if you can’t do that on your own side, then you also can’t do it in response to the reality that you’re facing on the Global South side, which is frequently a lot of resentment of the state or just implicit differences between the state and the people, right?

So, I think there lies the real thing. And I think that feeds really into this ongoing distrust of China because there is, from the Global South side, then it’s like:

• “Oh, well, they’re in the pocket of the government”
• “Or they have our government in their pocket”
• “Or anywhere that you own could”

So, you can’t trust them because we don’t trust our own government. And I think that’s a fundamental difference that is very difficult to bridge for Chinese actors because they have such embedded other big issues that they have to deal with on their side.

Well, however bad the Chinese are at soft power, at least this particular brand of soft power, they can take comfort in the fact that, well, the United States now is even worse.

And what we’ve seen over the past year is an implosion of soft power credibility that I think is unprecedented in history.

And just in the time that I’ve been overseas, which is now 20 years, I have never seen the views of the United States anything close to where we are now. And again, in Indonesia, in Vietnam, in South Africa, pick your country, in Western Europe, where they, in Canada, I mean, Canada.

So, here we are in this new world where the United States is entirely distrusted. It has burned, just with a match, lit on fire, billions of dollars and decades of effort to build up soft power.

And I don’t know if you have President Gavin Newsom in 2028 and he says, like Joe Biden did,

“We’re back.”

No, this is trust that has been burned.

And as we learned from Zoe, credibility in geopolitics is an incredibly important resource. And once you lose it, I don’t know if you get it back or anytime soon. It’ll take generations.

The thing is, you know, they’re losing it in countries with old populations, right? And so they’re losing it, they’re losing this credibility or this soft power in countries where people can remember the 80s, for example, right? Like people are old, like us.

You know, but you have to keep in mind for like, in global South countries where the population on average is a lot younger, like Trump 1.0 is 10 years ago, right? Kind of like a whole population of global South people have never seen the US, like, you know, since the time that they started kind of consuming international relations. They never seen the US being the kind of Cold War outreach, you know, kind of like Berlin Airbridge kind of hope and change, right?

Hope and change.

Yeah, like even like Obama is a long time ago, you know, for young people, particularly in Africa.

And so they’ve only ever, like a lot of them have only really ever kind of like seen just mounting Afrophobia, for example, from the US. Like increasingly negative things said about Africa over years, you know?

So in that sense, like, I think in a weird way, it’s becoming normal. It’s in the new normal already.

And so, yeah, like, as you say, like, I don’t think there’s a clear bounce back there, particularly because I think, because a lot of, I think a lot of the differences between the Democrats and Republicans, sadly, and this is, again, just my perspective from the outside.

But I think a lot of those differences are more about optics and style than they are necessarily about substance, you know?

So I don’t know that there would be an appetite to restore USAID, even if Gavin Newsom has a huge kind of return. You know, even if there’s a massive Democratic return, I don’t know that they necessarily want to step back.

Like, I wonder. Over the years, I was wondering whether there were some Democrats who were secretly relieved that it was Donald Trump who stepped up and axed USAID so that they didn’t have to.

You know, I don’t know. It’s difficult for me to say.

But, like, you know, overall, like, I think just this also, even if that’s not true, the machinery has already been dismantled.

Like, and so putting that machinery back together again is going to be a lot more expensive and therefore a lot harder to sell.

I’ll disagree with you on the differences between Democrats and Republicans because certainly in some of the foreign policy realm, I 100% agree with you in domestic policy and kind of spiritual policy.

And that’s kind of what we’re trying to figure out, and that’s the work that we’re doing at CGSP.

And if you’d like to follow all the great work that COBUS and the team around the world are doing at CGSP, Zoe follows our work.

We’re very humbled and honored on that.

And go to ChinaGlobalSouth.com.

We have some amazing content there.

And by the way, we’ve got a new photo essay, two new photo essays coming from Indonesia, actually, on Chinese e-commerce.

And so we’re just doing lots of cool stuff.

We’ve got some research projects coming out.

I just met today with our producer who’s going to be producing this incredible interactive map of China-Africa security engagement.

We’ve got a new tracker coming for Chinese e-mobility in Africa.

These are tools that nobody else has.

And the amazing work that Jiro is doing in tracking the cobalt supply chain, and later this year, we’re also going to be releasing an interactive map,

the most comprehensive map on the Chinese nickel supply chain in Indonesia.

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So that’ll do it for this edition. We’re going to call this a special edition. It’s a bonus edition of both the China in Africa podcast and the China Global South podcast. We’re putting it on both feeds.

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