Is China buying influence in its region?

A stack of 100 Yuan notes

TEXT OF STORY

Steve Chiotakis: China is promising an infusion of $25 billion for its Asian neighbors. It is yet another high-profile deal that follows up on its high-profile G20 summit performance earlier this month. Our China Bureau Chief Scott Tong is with us from Shanghai. Scott, much of this money is for infrastructure in the so-called ASEAN countries, Southeast Asian nations. Why is China doing this?

Scott Tong: Well, China wants to help them do it for its own reasons. First of all, China's not been blessed by Mother Nature as far as raw materials, so it needs to get them somewhere -- by ship or by rail or by canal. And this will help them get those. It also helps, after China makes all these products to export to the world, it helps them get products to markets in Southeast Asia. And for the countries that are receiving this, obviously, they want better ports and railroads in general. So arguably, it's a win-win situation.

Chiotakis: So Scott, the devil's advocate in me, though, says this sounds a whole lot like China buying influence. Is that what's going on here?

Tong: There's a big debate about this, and I think it just depends on how you see China. If you see China as a more responsible stakeholder in the world, that this is just a natural manifestation of its economic clout, you'll see it that way -- this is just kind of natural. In fact, a lot of opinion polls in Southeast Asia find China's reputation is getting better, and it's better than Washington's reputation. If you think there's something darker -- you start uttering words like "Monroe Doctrine" and "Sphere of Influence," that China's rewriting the rules of foreign aid and kind of nudging aside these old institutions like the World Bank.

Chiotakis: So what can go wrong with all of this, then?

Tong: Well Steve, Americans know how it can go wrong. You think about Halliburton, you think about Katrina, we always wonder how companies get these giant deals. On this side of the world, China has a big deal with Pakistan to sell trains for Pakistan Rail. Now late last week, a scandal started brewing there, that the Chinese company involved, which actually beat an American competitor, General Electric, in the process, it got the deal through fake paperwork.

Chiotakis: So how did they defend themselves, then, against those charges?

Tong: Well, the Chinese companies in the middle of these controversies tend not to say much, but academics in China who watch these things they say hey you know what, China is new at this. And if it's making these mistakes it's because it's never had to deal with these international transparent rules before. And the optimists would say well, these Chinese companies are going to learn their lesson, they're going to get burned, and in the future it's, it'll get better.

Chiotakis: Marketplace's Scott Tong joining us from Shanghai. Scott, thank you.

Tong: OK, Steve.

About the author

Steve Chiotakis was the host of Marketplace Morning Report until January 2012.

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