China’s investment and services “great wall”

China’s investment and services “great wall”

Wild Card's progress: fully-fledged

This Wild Card came from: 
Workshops/Meetings

The theme/scheme related to this Wild Card: 
United Kingdom

The sub-theme that best relates to this Wild Card: 
February 2010

The source of this Wild Card: 
Enviro-Tech Group of the iKNOW Workshop in Manchester: David Alexander (University of Florence), Alastair Brown (UK Climate Impacts Programme), Tony Diggle (SAMI Consulting), Pierre Rossel (Swiss Federal Institute of Technology at Lausanne), Anna Sacio (Institute for Sustainable Technologies), and John Turnpenny (University of East Anglia).

Likelihood timeframe and scenario features : 
now-2025

Wild Card's description 
While China’s OFDI is characterised by being politically unconditional, therefore highly welcomed, the predominance of state-owned enterprises (SOEs) investing in Africa and other developing countries could eventually become an “great wall” or major extension of China’s defence, security, science and technology policies. Such a pervasive OFDI strategy could sooner or later create natural market barriers for European and north-American firms to operate in some sectors and industries dominated by China (mainly in the tertiary and the manufacturing sectors, but also in energy and natural resources). With a steady GDP growth, nearly 2 trillion USD in foreign exchange reserves, and a healthy current account, it is not surprising to see the rapid growth of Chinese investments abroad. So the unexpected element of this wild card would be size and pervasiveness of China’s OFDI growth to the point that it becomes a serious challenge for global players. China’s thirst for natural resources and amazing capability to provide affordable and reliable solutions in the service industry may result in the capture and control of raw materials such as oil so that China could control prices and commodity markets. This leads to a major shift of global power and, possibly, to truly multi-polar world with environment-friendly and fair-trade policies driving competition. New political allegiances may arise in line with the new distribution of global investment and humanitarian aid. China could increase its political power becoming the dominant super power – or an idealistic power with production outsourced to Africa, Latin America and the Caribbean. In the long run China-US conflicts could lead to new “cold war” situations but China’s new investment and services “great wall” successfully contains any coordinated effort to stop Chinese influence.