Srikanth Kondapalli.
Credit: DH Illustration
As the second-largest economy in the world and staking claims to global leadership, China is primarily concerned with two outcomes of the recent G-20 summit in Delhi: One, on issues related to the Global South, and two, on debt, on which considerable global attention had risen.
First, with India’s success in getting the African Union admitted into the G-20 and its mobilisation of a majority of Global South countries through the Voice of Global South virtual meeting earlier this year, channelling their concerns into the G-20 meeting, China appears to be losing ground among developing countries.
Formed in 1964, the Group of 77 (G-77) countries expanded to include more than 130 countries, mainly representing the developing world. With slogans of “Third World” and left-leaning ideology, Mao’s China had moved politically closer to these developing countries. However, as China itself moved toward the West beginning in the 1970s, when it started to reform and open up, dependent as it was on the US-led financial and technological order, Beijing adapted to the new situation by showing rhetorical support to the Global South but following certain neo-colonial policies.
As the Global South, along with the rest of the world, was battered by several disruptions over the last two decades, including the global financial crisis, the Covid pandemic, the Ukraine conflict and supply chain disruptions, rising China was unable to provide them solutions or support. With India’s ‘Vaccine Maitri’ and aid programmes and its voicing of the Global South’s concerns on rising energy, food and fertiliser prices, Chinese interlocutors have sensed competition, if not loss of influence. China is seen as aligning with ‘emerging economies’ to seek concessions from the developed world while ignoring the issues of the Global South.
Earlier, China did raise the concerns of the Global South on climate change, WTO, restructuring of global financial institutions, etc. But it is now seen as being interested only in its own national interest and inexorably falling into a hubris trap.
Secondly, China has become the largest creditor in the world, with cumulative lending of $2-3 trillion, including to the Global South. This has become controversial recently. China is wracked by its own domestic debt of about $23 trillion. Beijing feels it can avoid a financial crisis at home due to modest growth rates and pandemic recovery. However, the G20 and other global institutions have raked up its external debt.
Countries need credit for development, infrastructure, weathering financial crises, etc. Such assistance is useful. However, a creditor could also use loans, aid, holding of forex reserves or other tools of leverage to elicit political support, chase strategic resources like oil, or assets like ports, or even pursue ambitious goals of domination. China’s ‘loan-for-oil’ in Angola, for instance, has become controversial. So also has China’s taking away of the Hambantota port from Sri Lanka for 99-years lease as the latter could not pay back loans.
Asian countries owe China an estimated $400 billion, constituting 15% of the region’s external debt. More than one-third of this is owed by Pakistan, Laos, Sri Lanka, Cambodia and Mongolia. Africa owes over $70 billion to China, which is 12% of the region’s external debt, with Angola, Ethiopia, Congo, Zambia and Sudan as the largest debtors. As for South America, it owes nearly $140 billion to China, with Venezuela, Brazil, Ecuador, Argentina and Bolivia together owing more than 95% of that. European countries owe an estimated $160 billion to China, of which nearly 85% of loans are extended to Italy, Greece, Spain, Portugal and Hungary.
The G-20 had discussed a Debt Service Suppression Initiative and formulated a Common Framework for Debt Treatments, putting global creditors on notice. Transparent mechanisms, sustainable financing of projects, responsible borrowing practices, debt-rescheduling or even moratorium, are some measures suggested so far. However, the debt crisis in the Global South needed urgent action. It is surprising that the New Delhi summit did not press too heavily on this but it is expected to come to the fore shortly.
The New Delhi G-20 summit, while harmonising several interests and issues, has brought out features that could become harbingers of a new emerging world order. While previously it was characterised by an emerging Cold War 2.0 due to the US-China confrontation, the Delhi G-20 meeting placed the Global South on a high pedestal amidst the East-West and North-South divides. China’s ambition to emerge as the global leader are threatened by this. While the Washington and Beijing Consensus have exhausted their relevance in the past two decades, it is time for a Delhi Consensus, based on a middle-path approach, to be given its due place.