The Geopolitical Implications of China’s Evolving Economy
In 1997, the People’s Republic of China (PRC) entered the world’s top ten exporters, contributing 3.3% of the world’s exports. For the previous 16 years, the PRC has been the leading global exporter, totaling 14.7% of the aggregate exports in 2020 (“Evolution of the World’s Top 25 trading Nations”). The majority of these exports are telecommunication devices and computers. These computers, phones, satellites, and various other devices are almost entirely manufactured by two companies– Huawei and ZTE. Both companies are partially state-owned, meaning that the PRC’s government directly sources a percentage of their funding. For years, the U.S. Government has propounded the theory that Huawei products can be used for cyber espionage, and in 2022 an FBI investigation found that “...Huawei equipment can be used to disrupt U.S. military communications, including those about the U.S. nuclear arsenal” (Berman et al., 2023). Additionally, China is currently the 15th largest exporter of cobalt and they are the single largest importer of cobalt, with the majority of the mineral coming from the Democratic Republic of Congo (DRC). The state control of these exports and the imperative import of cobalt present a potentially profound impact on the geopolitical landscape. The indispensable military-industrial purposes for cobalt and the PRC’s seemingly unending supply, as well as the international security concerns surrounding one of the PRC’s largest exports have the potential to disrupt the current geopolitical sphere.
A series of coups and wars in the DRC and their resulting political and economic instability led western investors to aim their investments away from the risky mines in the country. This vacuum of investors allowed the PRC, which had an insufficient stock of cobalt and was looking to expand their cathode battery production as well as their economy and political reach, to invest heavily in Congolese cobalt as they were developing their “Going Out Strategy” (Gulley, 2022). This initiative developed plans that were imperative to China’s evolution as a competitive world power, and it included obtaining tremendous quantities of minerals from Africa. These schemes happened to coincide with the DRC’s need to procure funding for the extraction of its deposits of copper-cobalt ore. The longstanding political relationship between the PRC and the DRC also facilitated China’s ability to rapidly sec over the cobalt industry in the country. Because of this, in 2007, the two agreed to trade a rebuilding of Congolese infrastructure in the war-torn country for the rights to mine copper-cobalt (Gulley, 2022). This initial agreement resulted in China’s eventual ownership of 15 out of the 19 mining contracts in the DRC. The military applications of cobalt such as heat-resistant alloys in jet engines, propulsion systems for nuclear weapons, magnets in electronic weapons and alloys in munitions, and the PRC’s control of this valuable mineral demonstrate the powerful position in which the country has placed itself. Their control of over 70% of the world’s refined cobalt market, around half of the battery market (Gross, 2023), and an immense amount of telecommunications product supply may pose a threat to the current geopolitical climate as China continues to exert its force on the global economy and communications infrastructure.
Although sparse data are available for the market share of Huawei’s products, in the fourth quarter of 2011, Huawei’s products comprised 3.5% of the aggregate smartphone market; however, as time passed, that number jumped to 20% in the second quarter of 2020 (Laricchia, 2023). Despite the jump, Huawei’s growing presence in the global telecommunications market may be coming to an inflection point. In 2021, the company dropped from number one in production to number six as their shipments fell 41% due in part to U.S. sanctions (Kharpal, 2021). Over the course of the past decade, U.S. intelligence officials have been demonstrating increasing concern for the threat of espionage on U.S. soil by the PRC. In 2022, the Federal Bureau of Investigation (FBI) completed an investigation into Huawei’s presence in the United States, specifically its products on cell towers near military bases. The study revealed that these devices had the capability to collect intelligence and disrupt communication. Their primary concern was the ability to interrupt communication between segments of the nuclear arsenal. Since then, the PRC’s government has staunchly denied anything of the sort. As a measure against preventing any further espionage linked to Huawei products, the United States has placed bans on the use of the company’s products, as of November 2022 (Apler and Bartz, 2022).
The PRC’s quasi-control of the world’s markets, including its role as the primary exporter of goods, presents a massive risk to the sovereignty of nations large, like the United States, and small, like Taiwan. Taking into consideration the imperative function that cobalt plays in the building of a successful modern military containing stockpiles of munitions, jets, nuclear weaponry, and modern electronic weapons, and China’s ability to gather intelligence from nearly every country in the world, the PRC has positioned itself to become a dominant world power.
Author’s Note: I am a student at West Virginia University. All information contained within this body of work is a result of research and prior knowledge and is a reflection of facts. I have no conflict of interest to disclose.
References
Alper, A., & Bartz, D. (2022, December 1). U.S. bans new Huawei, ZTE equipment sales, citing National Security Risk. Reuters. Retrieved March 11, 2023, from https://www.reuters.com/business/media-telecom/us-fcc-bans-equipment-sales-imports-zte-huawei-over-national-security-risk-2022-11-25/
Berman, N., Maizland, L., & Chatzky, A. (2023, February 8). Is China's Huawei a threat to U.S. National Security? Council on Foreign Relations. Retrieved March 11, 2023, from https://www.cfr.org/backgrounder/chinas-huawei-threat-us-national-security
Evolution of the world's 25 Top Trading Nations. UNCTAD. (2021, April 6). Retrieved March 11, 2023, from https://unctad.org/topic/trade-analysis/chart-10-may-2021
Gross, T. (2023, February 1). How 'modern-day slavery' in the Congo powers the rechargeable battery economy. NPR. Retrieved March 11, 2023, from https://www.npr.org/sections/goatsandsoda/2023/02/01/1152893248/red-cobalt-congo-drc-mining-siddharth-kara#:~:text=On%20how%20China%20came%20to,anyone%20knew%20what%20was%20happening.
Gulley, A. L. (2022). One hundred years of cobalt production in the Democratic Republic of the Congo. Resources Policy, 79. https://doi.org/10.1016/j.resourpol.2022.103007
Kharpal, A. (2021, January 28). From no. 1 to no. 6, Huawei smartphone shipments plunge 41% as U.S. sanctions bite. CNBC. Retrieved March 11, 2023, from https://www.cnbc.com/2021/01/28/huawei-q4-smartphone-shipments-plunge-41percent-as-us-sanctions-bite.html
Laricchia, F. (2023, February 21). Smartphone market shares by vendor 2009-2022. Statista. Retrieved March 11, 2023, from https://www.statista.com/statistics/271496/global-market-share-held-by-smartphone-vendors-since-4th-quarter-2009/
Lillis, K. B. (2022, July 25). CNN Exclusive: FBI investigation determined Chinese-made Huawei equipment could disrupt US nuclear arsenal communications | CNN politics. CNN. Retrieved March 11, 2023, from https://www.cnn.com/2022/07/23/politics/fbi-investigation-huawei-china-defense-department-communications-nuclear/index.html
Observatory of Economic Complexity. (n.d.). China (CHN) exports, imports, and trade partners. OEC. Retrieved March 11, 2023, from https://oec.world/en/profile/country/chn
The Associated Press. (2022, November 26). U.S. bans the sale and import of some tech from Chinese companies Huawei and ZTE. NPR. Retrieved March 11, 2023, from https://www.npr.org/2022/11/26/1139258274/us-ban-tech-china-huawei-zte#:~:text=U.S.%20bans%20the%20sale%20and,Chinese%20companies%20Huawei%20and%20ZTE
The Associated Press. (2022, November 26). U.S. bans the sale and import of some tech from Chinese companies Huawei and ZTE. NPR. Retrieved March 11, 2023, from https://www.npr.org/2022/11/26/1139258274/us-ban-tech-china-huawei-zte#:~:text=U.S.%20bans%20the%20sale%20and,Chinese%20companies%20Huawei%20and%20ZTE
