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How China’s Economic Strain Provides an Opportunity for the West to Push Back

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For years, China has strategically utilized its economic gains, especially those made from capitalizing on U.S. technologies, to amplify its global influence. Its footprint has particularly deepened in the developing world, where Beijing’s lending strategies have often left countries indebted and inextricably linked to China. However, the latest developments suggest that the tide is turning. Amid China’s emerging economic challenges, there arises a timely window for the West to offset China’s far-reaching influence in these developing regions.

Recent discussions at the U.S.-China Economic and Security Review Commission (USCC) in Washington have revealed startling truths about China’s economic trajectory. Logan Wright from the Rhodium Group said, “The severity of China’s ongoing economic weakness is still widely underappreciated.” This, he believes, hampers China’s potential to overshadow the U.S. economically in the upcoming decades.

The implications of this economic downturn for China are far-reaching. Nicholas Borst of Seafarer Capital Partners detailed how China’s tight grip on its private sector and lack of foresight for the post-pandemic world are making the nation lose its economic momentum. The evidence is in the numbers: China’s exports and foreign direct investments have seen significant declines recently.

China’s weakening economic position is particularly evident in its diminished capability to sponsor infrastructure projects in Southeast Asia, Latin America, and parts of Africa and the Middle East. Historically, China’s external lending strategies, notably its Belt and Road Initiative, had woven these regions’ economies tightly with its own. However, with increasing loan defaults and renegotiations, it’s evident that many countries are seeking alternative economic partnerships.

This scenario offers the West, especially the U.S., a pivotal moment to step in. President Joe Biden’s initiatives like the Indo-Pacific Economic Forum hint at the West’s keen interest in reestablishing its influence in these areas. U.S. Treasury Secretary Janet Yellen’s inclination towards investment in international groups, such as the Inter-American Development Bank group and the African Development Fund, further signifies the West’s intent to offer more sustainable and less coercive financial partnerships to these regions.

But as the West navigates this opportune moment, strategic caution is advised. While it’s tempting to distance from China completely, Nicholas Borst warns that an isolated China could pose a greater risk. He believes in balanced interconnectivity, saying, “an angry and isolated China is a greater danger to US interests than one that is interconnected.”

To sum up, China’s current economic struggles present the West with an invaluable opportunity to counterbalance China’s previously unchallenged influence in the developing world. The question remains whether the U.S., the Biden Administration and the West in general can gather into a cohesive force and work to deter the expansion of China under the Chinese Communist Party.

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