Wild card

Aggressive Chinese outward foreign direct investment (OFDI) outstrips and halts European and US investments and technology leadership in Africa and developing countries. While China’s OFDI is characterised by being politically unconditional, therefore highly welcomed, the predominance of state-owned enterprises (SOEs) investing in Africa and other developing countries could eventually become a “great wall” or major extension of China’s defence, security, science and technology policies. Such a pervasive OFDI strategy could sooner or later create natural market barriers for European and north-American firms to operate in some sectors and industries dominated by China (mainly in the tertiary and the manufacturing sectors, but also in energy and natural resources).

Surprises ("wild" scenario features)

With a steady GDP growth, nearly 2 trillion USD in foreign exchange reserves, and a healthy current account, it is not surprising to see the rapid growth of Chinese investments abroad. So the unexpected element of this wild card would be size and pervasiveness of China’s OFDI growth to the point that it becomes a serious challenge for global players. China’s thirst for natural resources and amazing capability to provide affordable and reliable solutions in the service industry may result in the capture and control of raw materials such as oil so that China could control prices and commodity markets. This leads to a major shift of global power and, possibly, to truly multi-polar world with environment-friendly and fair-trade policies driving competition. New political allegiances may arise in line with the new distribution of global investment and humanitarian aid. China could increase its political power becoming the dominant super power – or an idealistic power with production outsourced to Africa, Latin America and the Caribbean. In the long run China-US conflicts could lead to new “cold war” situations but China’s new investment and services “great wall” successfully contains any coordinated effort to stop Chinese influence.

Possible interpretations

This wild card has multiple interpretations. People eager for a revolution to bring about change in global politics would see Chinese’s influence expansion as a positive step toward a truly multi-polar world. However, the conservative political and economic elite would interpret this as a major threat that requires urgent action in order to maintain the status quo. Politicians, industrialists and the civil society in Africa and developing countries would see this as a major opportunity to develop new infrastructures, promote industrialisation and achieve major technological and socio-economic development goals. Some researchers and social activists would see this wild card as a sign of cultural shift towards collectivism.

Key actors

• Scanners or "early warners" such as international and national financial institutions monitoring OFDI (e.g. OECD, Eurostat, the World Bank, and the International Monetary Fund, etc).
• Shapers (i.e. enablers/inhibitors) : Chinese State Owned Enterprises (SOEs) in China, transnational companies, financial institutions and global aid and humanitarian agencies.
• Stakeholders positively or negatively impacted include governments as well as public/private actors in China, African countries, developing countries, USA, Russia, Iran and European countries with interests in Africa, among others.

Potential impacts

The impacts of China’s investment and services “great wall” could include: Manufacturing activities being reduced in China and outsourced or increasingly provided by Africa and developing countries. China could eventually control global CO2 policy, export media and culture as well as global poverty reduction solutions. Consequently, the EU and USA may get closer.

Potential actions

This wild card may be associated with Chinese science and technology overtaking Europe and the US. The current European policy based on leading the global knowledge economy would be undermined. Would the maturation of China follow conventional routes and how this will affect Chinese communism? Will China be more capitalist? Can Europe have an influence on this? Will China dictate ideas and cultures to the world in a way that happened with the US with beverages, fast food and via Hollywood etc? Could Chinese become the dominant language of the web or global lingua franca? For that reason, a number of early actions (pre-wild card) and early reactions (if the wild card occurs) should be considered:

• Policy actions

  Early actions: Strengthening national/EU business enterprises; Paving the way for European businesses and corporations worldwide; Strengthening EU/national relationships with African countries; Investment in science and technology research; Focus on education policy is vital.

  Early reactions: Putting in place policy measures that protect EU businesses (imports and exports) Continuing investment in science and technology research.

• Business actions

  Early actions: Strategic innovation to compete with Chinese SOEs, strengthening of business relationships with African countries.

  Early reactions: Continuing innovation and relationship building with Africa, as well as with the rest of the world.

• Research actions

  Early actions: Focus on the legislative environment of businesses, innovation research; Research into Chinese business models and ideology.

  Early reactions: Continuing focus on innovation, science, technology, business and economic research to support the EU market system.