China expanding global clout as US, EU retreat from global stage, says report

China has been free to quietly advance its global interests and influence as US President Donald Trump and European Union leaders retreat from the world stage amid domestic distractions, according to a new report by leading American and European think tanks.

Beijing’s growing global clout – visible in its aggressive handling of regional disputes and expansive economic diplomacy – are “undermining” the interests of the US and Europe, which may now be unable to make up lost ground, the report from the Centre for American Progress and the Mercator Institute for China Studies said.

This has become particularly apparent under Chinese President Xi Jinping, newly empowered after the 19th Communist Party Congress, as he pushes his government’s Belt and Road international trade and infrastructure initiative and depicts himself as a defender of globalisation, it said.

“China’s influence in Asia has been rising for years, but without a coherent US or European strategy to work with China where possible and push back against China when necessary, the Trump administration and the European Union are allowing regional challenges to fester,” Helena Legarda at the Mercator Institute and Michael Fuchs at the Centre for American Progress wrote.

While China may not overtake the US’ position as world leader yet, a “distracted” US and Europe have allowed Beijing to be more combative in maritime disputes with neighbours in the South and East China Seas, avoid resistance on human rights offences and significantly expand its influence across Asia, Europe and the Middle East, the two analysts found.

Trump’s “myopic” focus on North Korea and trade issues have damaged American credibility in Asia, they said, as his “America first” protectionism focuses on criticism of existing trade agreements and deficits with US allies, such as Japan and South Korea.

It follows the US overall trend of pulling back from its global leadership role, according to the report.

Trump abandoned the Trans-Pacific Partnership trade agreement and withdrew from the Paris climate accord, making the US the only country in the world to not participate. He has also rowed back on the Iran nuclear deal and his administration withdrew from the UN body Unesco.

Meanwhile in Europe, China has made inroads with its vast investments in the European Union – reaching a record US$35 billion last year. These include Chinese state-owned enterprises controlling stakes in regional infrastructure projects, such as a port in Piraeus in Greece and a power plant in Serbia. This has been fuelled by Europe’s focus on “trying to manage a newly unreliable US government while focusing on major internal crises, including Brexit, immigration, slow economic growth and the rise of populist right-wing parties”, the report said.

As the US and Europe disengage from the energy-rich Middle East – with which China has historically had limited ties – this has allowed Beijing to expand its economic, diplomatic and security ties with countries such as Saudi Arabia and Iran.

The shifts in these power dynamics, with the US and Europe ceding ground for China, are “significant and lasting”, Legarda and Fuchs said.

“With China’s growing reach, it’s unclear whether the United States and Europe will be able to make up lost ground when and if they are once again able to adopt robust, focused foreign policies,” they wrote.