What a difference one year makes.

Back in 2017, we were contemplating a “Pax Sinica” as an irresponsible and ignorant American President – Donald Trump – seemed likely to concede global leadership to China’s quasi-imperial Xi Jinping. The roll-out of his signature “Belt and Road Initiative” looked set to cement Chinese ambitions globally.

However, 2018 has been a bad year for China. Why?

First off, the Belt and Road has failed. It has become the object of relentless criticism, if not ridicule: across the globe, projects have been attacked as overvalued and disconnected to the developmental needs of host countries. Indeed, they are mired in corruption, incompetence and skewed to China’s strategic interests.

In short: others pay, China benefits.

In Africa, the Nairobi-Mombasa rail project has accumulated substantial losses within a year of operation as cargo traffic on this critical route has remained stubbornly on trucks and lorries.

In Sri Lanka, the desperately under-utilised Hambantota Port had to be surrendered to Chinese operators in a humiliating example of debt-trap diplomacy. And Pakistan’s new Prime Minister Imran Khan has been scathing in his assessment of the US$60 billion China-Pakistan Economic Corridor (CPEC) – another flagship Belt and Road project.

Beyond infrastructure, allegations of industrial espionage (including against Huawei) have made Western powers increasingly wary of China’s corporate entities, especially state-owned enterprises.

Meanwhile, cracks are emerging in China’s economy and the superpower is looking less invincible. Its debt overhang, currently estimated to be 3 times larger than its GDP, coupled with a huge property oversupply, has sparked fears of a meltdown. Growth has slowed, with preliminary data indicating that many provinces will miss their annual GDP targets. Additionally, deflationary pressure is building up, caused by weaker than expected demand from Chinese consumers and investors – a sign that confidence in China’s growth is fast fading.

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At the same time dissent amongst Chinese policymakers is also growing. With the fortieth anniversary of Deng Xiaoping’s dramatic reforms just around the corner, many observers are assessing both men and Xi, despite his undoubted political muscle, is by no means winning the contest.

Add to that Xi’s brutal crackdown on ethnic Muslim Uygurs in Xinjiang and a compelling portrait of an embattled leader is beginning to emerge. However, the silence from Muslim leaders around the world can be seen as proof of China’s residual influence.

Nevertheless, faced with reversals abroad and a slowdown internally, Xi must be careful to play his cards right. Although the rest of the world was initially dismissive of Trump, it’s clear to all that, with China at least, he means business. His anti-China stance has broad bipartisan support – it’s hard to imagine the newly emboldened Democrats in the US Congress softening this approach.

The trifecta of Belt and Road failures, economic fragility and negative international sentiment makes it difficult to read what China might do next.

Should Beijing be backed into a corner, it has several options at its disposal.

First, it could isolate itself, although historically this has never benefited China.

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Inward-looking and short-sighted leadership in the Qing dynasty crippled China just as Western nations became more outward-looking and trade-oriented. It is no accident that this process roughly coincided with the colonial subjugation of much of Asia.

Second, Beijing could choose a path of increased aggression, dismissing its neighbours’ geopolitical and economic concerns. Given China’s expansion in the South China Sea, Beijing might even resort to a pre-emptive strike, echoing Japan’s attack on Pearl Harbour – sparked by an American oil embargo.

A third and more likely option would see Beijing compromising: making substantial purchases of US goods and renegotiating signature Belt and Road projects.

Malaysian Prime Minister Mahathir Mohamad has forced the Chinese to reconsider the scandal-tainted East Coast Rail Link. Even Myanmar, a virtual client-state, has reduced the price for the Kyaukpyu deep-sea port from a vastly inflated US$7.2 billion to US$1.3 billion.

As long as China is heavy-handed with its neighbours in Asia, the rest of the region will be more than happy to see the local thug beaten up by the bigger, global bully.

We don’t like Trump, but it is arguable that we like Xi even less.