Consider this when you hear arguments about foreign aid:

 

CHINA IS TYING THE GLOBAL SOUTH TOGETHER INTO A NEW FORCE

A Long March to the South

compactmag.com

China’s Belt and Road infrastructure-building initiative has transformed the economies of the Middle Kingdom and the Global South, says David Goldman. What’s less appreciated in the West is the “profound impact” of what Chinese officials call the Digital Silk Road: Beijing’s efforts to “penetrate the Global South’s digital infrastructure”, using artificial intelligence, “thus reshaping entire regional economies to its preferences”. 

BIG TECH IS A BLESSING

Three-fifths of global employment is “informal, outside the margins of the world market, insecure, excluded from government services and miserably poor”. Digital technology, though, is changing everything. A cheap smartphone might cost 30% of the monthly income of the world’s 2.5 billion poorest people, but it connects them to the world economy. Impoverished people trapped in subsistence agriculture and barter can then become entrepreneurs. Once internet penetration reaches a threshold of 60%, business formation in the Global South booms. 

Real per-capita income in Southeast Asia, for example, has doubled since 2010 and has the world’s highest growth rate and fastest rate of business formation. This is the fruit of Beijing’s efforts. China “may do many things badly”, but it did “one big thing well”: it took a country of subsistence farmers with a per-capita GDP of $184 in 1979 and turned it into a country of industrial workers with a per capita GDP of $12,700 in 2021. It is poised to deliver similar outcomes across the Global South. 

China has the “manufacturing muscle to wire the developing world”, and the result will be game-changing. Digital payments on cheap smartphones give marginalised people access to the financial system. They allow for the collection of sales taxes and help stabilise government finances. They also help suppress corruption and boost productivity. Little surprise, then, that perceptions of China in the Global South are “largely, often overwhelmingly, positive”. 

Western policy to restrain China has had scant effect on this “Long March into the Global South” – if anything, it has accelerated it. China’s economic domain is “expanding from the 1.4 billion people of the People’s Republic to a tightly integrated trading bloc of perhaps twice as many”, bound together by Chinese digital technology and physical infrastructure. This may be “the great economic event of the 21st century”, which the US has ceded to China by default. That may turn out to be the “biggest mistake” the West ever made.