China’s Use of Crises To Deepen and Extend Power and Influence In Europe and the World.

Standing in solidarity with countries in Europe and elsewhere in the fight against COVID-19
China scores a diplomatic coup and extends its claim to global leadership.


In 2008 international financial markets collapsed triggered by the sub-prime mortgage crisis in the USA, sending shock waves around the world. The global response, led by the West, was coordinated by France and the USA supported by the G-20.[1]  Today, a new crisis presents different sets of challenges. The contagion this time is biological not financial, and ground zero is China.  The Covid-19 pandemic[2] and its associated human and economic costs is already being projected as the most severe and disruptive crisis since the Second World War.

The financial market collapse of 2008 and its effects on banking and liquidity provided the opportunity for China to extend influence and soft power through an array of strategic investments, not only in the developing world in which it already had a significant presence, but also in rich countries such as those in Europe. The country’s One Belt One Road project (OBOR), supported by a number of bilateral and regional frameworks, including the 17+1 Forum in eastern Europe, and new, Chinese-led institutions such as the Asian Infrastructure Investment Bank (AIIB), played important roles in securing China’s interests.

Even before the banking crisis of 2008, China had been quietly amassing economic and political clout beyond its regional sphere of influence. Rising standards of living backed by growing economic and financial resources had transformed the country and were also fueling its rapid rise in the international world order. Chinese-led overseas investments and development cooperation agreements provided conduits through which China extended and deepened its power and influence, in the process creating a series of client-state relationships around the world.[3] The crisis of 2008 provided opportunities for China to deepen the reach and scope of its influence. Today, as the west tries hastily to mount responses to the Covid-19 pandemic, China is flexing soft power muscle in leading a global response. In so doing, it asserts its claim to superpower status in an evolving bi-polar world order.

The Financial Collapse of 2008: A Crisis Too Good to Waste 

The financial crisis of 2008 coincided with growing levels of public and private debt across much of the world. Access to cheap money, aided by a mix of innovative financing and accounting practices which masked risks ultimately precipitated the USA centered sub-prime mortgage crisis.[4]  While the rest of the world was engaged in profligate spending, the Chinese people had been thrifty, building unmatched levels of national reserves and undertaking strategic investments. By 2011, China had invested almost $1.3 trillion in US bonds, making it the biggest creditor to the world’s largest economy.[5]  China’s reserves of $3.3 trillion in 2012[6] had grown to almost $4 trillion by 2014, the highest levels recorded by any country.[7]

When the financial crisis exploded, contagion effects spread quickly, catalyzing a sovereign debt crisis in the euro zone which pushed several European economies to the brink of collapse. Spain, Portugal, Italy and Greece on Europe’s southern flank, plus the Republic of Ireland, were among those most heavily impacted. Economies contracted, the middle class shrank, unemployment soared and a steady stream of young and bright talent migrated to northern Europe and other parts of the world, including Latin America, in search of jobs. Despite a massive bailout, the prospect of Greece’s exit from the euro-zone (GREXIT), seemed imminent.[8]

In a bid to reduce its own high-level exposure to US capital markets, despite the European sovereign debt crisis, China commenced a process of asset diversification by purchasing European bonds.[9] As state owned capital infrastructure and other assets were put on the market in response to bail-out conditions imposed by the Troika,[10] these were purchased by China. In so doing, commanding stakes were acquired in state owned assets in Greece, for example, including Piraeus, the country’s largest sea port, together with Athens airport and vital railways.[11] Investments were also made in infrastructure and industrial sectors in the poorer countries on Europe’s eastern borders.

By 2018 Europe ranked as the top destination for Chinese investment flows.[12] Within a relatively short period, China had amassed a growing arsenal of infrastructure and assets vital to Europe’s integration, providing the means to project itself into the heart of the European Union (EU). 

COVID – 19: Opportunity to Consolidate Influence & Power

In December 2019 the news of viral pneumonia cases caused by an unknown pathogen in the city of Wuhan, in China’s Hubei province, broke around the world.[13] Speculation that the likely source could be China’s wet markets[14] was subsequently confirmed by scientists.[15]  When China imposed draconian measures aimed at containment on millions of its citizens, the world took notice. Such measures indicated that there was reason for serious concern, but the measures themselves were repudiated as being symptomatic of China’s authoritarian rule, an impression reinforced by the lack of information from Chinese officials during the early stages of the crisis.

Three months later, containment measures largely successful, the people of Wuhan are taking tentative steps to resume normal life. Quarantine measures are expected to be lifted by April 8th. In the meantime, infections have spread world-wide, the epicenter of the crisis has moved from China to Europe and hotspots have appeared in the USA. Fatalities in Italy and Spain have already both surpassed China’s[16] and the Covid-19 outbreak has officially been listed a pandemic.[17] The decoupling of global supply chains and interruptions to world trade and commerce sparked by the US-China trade war which started in July 2018, has deepened. Many countries have imposed lock-down conditions on all but essential activities, and borders have been closed in the face of an invisible enemy.

In response to urgent requests for support from European and other countries, China has mounted and leads the global response, sharing not only its own experience in managing the crisis, but also providing vital supplies, equipment and personnel. This comes at a time when the USA seems not only to have been slow in its initial assessment of the threat, but also ill prepared and equipped to ratchet up its national response quickly and efficiently.

The Chinese were the first to respond to Italy’s urgent calls for assistance, sending critically needed support and the first of 300 intensive care doctors to the beleaguered country.[18] A coordinated response has been initiated with central and eastern European countries through the 17+1 Chinese-led intergovernmental forum.[19] Serbia’s President Aleksandar Vucic refers to Chinese President Xi Jinping as “a brother and a friend,” and China, “the only country that can help us.”[20]

China manufactures between 40-50 per cent of the world’s production of surgical face masks and has significantly expanded capacity to meet increasing world demand.[21] It has been reported that more than 1.8 million masks have been sent to Italy and Spain, 1 million gloves and masks have been sent to France, and that both Poland and the Netherlands have also received supplies.[22] Teams of Chinese doctors, medical supplies and equipment have now been sent to several countries in Europe and the rest of the world.[23]

China is also leading the regional response in south-east Asia and has pledged to build Africa’s first center for disease control in Addis Ababa on the grounds of the African Union (AU) headquarters which it had previously funded and constructed as a gift to the continent, in 2012[24]  The country’s private sector is also engaged in this effort. The Jack Ma and Alibaba Foundations have sent hundreds of thousands of testing kits and millions of masks to the USA and have announced significant supplies for distribution to every country in Africa, as well as  countries in Asia, including India.[25] China’s President has identified this concerted effort at solidarity as part of the “Health Silk Road” initiative launched in September 2017 as a component of the OBOR project through which it sought engagement as a major actor in global health issues.[26]

The Chinese display of leadership, efficiency and capacity is undeniable. In the process, the country has blunted the early criticism regarding the absence of adequate information sharing. Importantly, China’s assistance to Italy came at a time of considerable Italian frustration at the lack of support provided by the rest of its EU neighbors, though EU support has since been scaled up. This was followed by European Central Bank (ECB’s) President Lagarde’s remark, that the central bank’s mandate was not “to close spreads,” which sent Italy’s stock market tumbling.[27] In addition, memories of the European migration crisis of 2015 during which Italy struggled to manage the waves of refugees and migrants seeking safe haven, are still fresh and raw, adding to the sense of isolation.

During the financial crisis, it was China who provided the lifeline of much needed investment financing into Europe’s struggling southern and eastern economies, a point which is not lost today, and one which in the past has undermined EU policy coherence especially in relation to EU policies on China.[28]  As EU member states remain locked in discussions regarding the nature and shape of support measures, China has once again stepped swiftly into the breach inserting a wedge in the oftentimes difficult relationship between southern and eastern European countries and their western and northern neighbors.

The Intervening Years: 2008 – 2020

China was able to exploit opportunities presented by the crisis of 2008 not only as a result of having been thrifty, but also due to the strength of its economy. By 2008 China’s presence as an economic powerhouse was being felt in many parts of the world. The country’s insatiable demand for raw materials drove a commodity boom in mineral rich countries. Its manufacturing sector flooded markets with cheap goods. Modernization of its economy and the opening of various sectors to foreign investment combined with relatively low wages and the skills of the world’s largest labor force, quickly turned the “Made in China” label, the world’s most common.

Over a very short period China had also become the first or second trading partner for most of the world’s countries.[29] In the process, the country had become an engine of global growth and output, recording double digit levels of domestic growth and lifting millions out of poverty.[30] As credit constraints compromised export markets following the collapse of global financing, domestic demand from China’s growing middle classes kept the economy afloat. Though formerly impressive double-digit growth rates dipped to levels lower than had been experienced in the preceding two decades, Gross Domestic Growth (GDP) growth still averaged 6-7% per year,[31]  relatively low rates for China, but enviable for much of the world.

The need to secure markets for China’s over capacity in several sectors including steel, cement and aluminum, prompted China’s President Xi to launch the OBOR project in 2013.[32] While the project includes initiatives relative to the energy sector, a big thrust has been the development of infrastructure corridors linking ports, highways and railways in integrated sea and land networks across more than 60 countries in Central Asia, Africa and Europe, to facilitate greater trade efficiencies.[33] The OBOR has been labelled the world’s largest project since the Marshall Plan to rebuild western Europe after world War 11.[34]

For many years, emerging economies, including China, had agitated for greater levels of influence in the Bretton Woods[35]and other institutions of global governance commensurate with their growing contribution to world growth and output.  Frustrated in its own efforts to create change, China launched the Asian Infrastructure Investment Bank (AIIB) in 2016 with a mix of both developing and developed countries as founding members.[36] Despite US pressure on its allies to forgo membership, close to 100 countries, many of them American allies, are today members of the Bank which provides more capital for infrastructure projects than the World Bank and International Monetary Fund (IMF) combined.[37]

China’s growing weight as an economic power has been accompanied by an increasing assertiveness geopolitically, and greater willingness to assume responsibilities of global leadership both of which have coincided with implementation of the USA’s “America First” policy. The latter, in place over the last three years, has effectively resulted in a US retreat from leadership positions in several global fora and institutions which it had designed, and previously shaped and led, with the support of allies. The American stance with respect of the World Trade Organization (WTO) for example, contributed to the demise of the organization’s dispute settlement mechanism and has cast its future in doubt. The US has also withdrawn its membership of the United Nations Human Rights Council (UNHRC) and the United Nations Educational, Scientific and Cultural Organization (UNESCO) among others, and has also withdrawn from a number of agreements in which it previously had played a pivotal role, including the Paris Climate Accord and the Joint Comprehensive Plan of Action (Iran Nuclear Program) to name a few.

America’s retreat has created a leadership vacuum on the world stage which China has quickly commandeered. In response to pronouncements of ‘America First’ policies as these relate to global trade, President Xi spoke of China’s commitment to principles of free trade and globalization in Davos, in January 2017.[38] The Chinese President met with France’s President Macron, Germany’s Chancellor Merkel and EU Commission President Juncker for an unprecedented summit at the Elysee Palace on March 24th 2019  at which he reiterated China’s solidarity in promoting the Paris Climate Accord and principles of multilateralism.[39] China also continued to work with Europe in attempting to salvage the Iranian Nuclear Agreement.[40]

While China has gone to great lengths to portray itself as a steady and reliable partner, the USA’s America First policies have resulted in a framework for unilateral decision making which has proven to be unsettling for her allies. The US’s abrupt decision to withdraw troops from Syria in January 2020, for example, caught allies by surprise. The US-China trade war which started in July 2018 with the announcement of US tariffs on steel allegedly aimed at China, instead caught America’s allies unprepared. While Chinese steel exports to the USA are small, the largest share of American steel imports are from her allies: Canada, Japan, South Korea, Mexico and Europe.[41]

The perception of American unreliability has left Europeans of the view that the continent must formulate decisions with respect of foreign policy, defense, security and relations with China, which are in its best interests.[42]  This growing sensibility has spilled over into US attempts to persuade allies to curtail China’s Huawei involvement in 5G roll-out in western economies. European countries, including the UK for example, while concerned about the lack of viable alternate systems to compete with Huawei on quality and price are also fully alert to China’s status as a trade, commercial and investment partner of vital importance to their economies. They are also weary of following America’s lead to the detriment of their own national strategic interests.[43]

Countries within China’s regional sphere of influence in south-east Asia have additional cause for apprehension. Several, like South Korea, have important security treaties with the USA but China is their most important commercial partner and also the dominant power in their own backyard.  Leaders like Singapore’s Prime Minister Lee have indicated strong reservations with respect of any suggestions that they choose between the two dominant world powers, firm in the view that ‘this would be bad for the world.[44]

The Covid-19 pandemic has done little to dispel the concern among American allies that America First policies will be deployed, even when the interests of allies are at stake. President Trump’s announcement of the closure of American borders to European travelers with seemingly little consultation with Europe, took European leaders by surprise and came at a period when cooperation between allies under stressful conditions, would have been much valued.[45]  Today it is China, supported by Russia and Cuba, who is consulting with American allies in Europe and elsewhere, and leading the global response to the Convid-19 pandemic.

From Russia, and Cuba, With Love

Despite sanctions imposed by Europe since 2014, on March 22, 2020, nine military Russian aircraft loaded with supplies and medical personnel left Moscow for Italy in response to an urgent request from Italian Prime Minister Giuseppe Conte for support. Messages of solidarity from the Russian people, “From Russia with Love,” were emblazoned on the aircraft fuselage.[46] Russian delivery was being shipped while the EU, in the midst of its own unfolding crisis, was still attempting to agree a region-wide response, helping to feed Italy’s sense of isolation and raising questions about European solidarity the latter brusquely dismissed by Serbia’s President: “European solidarity does not exist.”[47] Meanwhile, for Russia, the pandemic provides an opportunity for the Russian State to seek out friends in Europe.

Cuba has provided doctors and other medical personnel to Italy, Venezuela, Nicaragua, Jamaica, Suriname and Grenada, upholding its home-crafted model of medical diplomacy for which it is well known.[48]The extraordinary Cuban efforts in supporting public health sectors and providing training for thousands of medical professionals over the decades, are debts which the tiny countries of the Caribbean can never repay.


The COVID-19 pandemic is far from over. Many countries are bracing for the surge in new infections. The EU is not deaf to the troubling questions which have been raised regarding European solidarity and is aware of the contours of the geopolitical landscape within which the pandemic is being played out. EU High Representative for Foreign Affairs and Security Policy, Joseph Borrell Fontelles speaks of the need to demonstrate that the “EU shows it is a Union that protects and that solidarity is not an empty phase,” summing up the support provided to the various European countries as one bound up in competing narratives, “including a struggle for influence through spinning and the ‘politics of generosity.’[49]

The Covid-19 pandemic has also exposed differences in the ability of states to organize and manage the engines of economic production and the freedoms enjoyed by citizens under different political systems. In an article examining China’s response to the virus, a Financial Times columnist relates a conversation with a Chinese political commentator in January 2020, in which the latter posited that, “state capacity and a collective culture are the two uniquely strong characteristics of China’s political system…that will ultimately enable the country to successfully combat this crisis.”[50]  It is difficult to dispute such an assessment.

China’s ability to clamp down on the movement of millions of its citizens very early on, turned out to be an important factor in its ability to contain the virus both in terms of rates of infection and fatalities, despite the scale of its population. Images of deserted streets in Hubei province at the beginning of those measures contrast starkly with those of hundreds of people crammed on Australia’s Bondi beach, college students partying and enjoying spring break on Florida beaches, (“corona virus or no corona virus”), and hundreds out in city parks in London and elsewhere, even while measures relating to social distancing were already in place.[51] While countries like the USA invoke wartime powers contained in the Defense Production Act[52] to compel  private companies to switch production in times of national emergencies, others, like China, are able to dramatically expand or command shifts in production processes, not only because of the level of state control over critical economic assets, but also as a result of the real threat of the sanctions which obtain with failure to support State policies.[53]

For some time now, there has been a growing sense that economic power is shifting from west to east.[54] Today, the scales of geopolitical power seem also to be tipping in the same direction. The degree of this tilt, like all else to do with power, is hard to measure. There is the view that, “the last global crisis – the financial meltdown of 2008 – triggered a loss of western self-confidence and a shift in political and economic power towards China. The coronavirus of 2020 could force a much bigger shift in the same direction”[55] Others are somewhat more definitive:the coronavirus could reshape the Global order.”[56]

Whatever happens, there seems to be general agreement that the world will not be the same. China has proven adept at turning crises into opportunities; both words are organically linked in their language. The Chinese words crisis and opportunity possess one character in common, imparting an understanding that crises contain the seeds of opportunity.[57] The financial crisis and the coronavirus pandemic have both provided opportunities which China has seized and used as means to extend the reach and scope of its power and influence. Could the Covid-19 pandemic be the crisis which ultimately consolidates China’s claim to superpower status in a bi-polar world?  Time will tell.


* Senior Fellow Policy Center for the New South




[1] Nicholas Burns. How to Lead in a Time of Pandemic. Foreign Affairs. March 25, 2020.
[2] The World Health Organization officially labeled the Covid-19 virus as a pandemic on March 11, 2020.
[3] Len Ishmael. Soft Power & Global Ambition: The Case of China’s Growing Reach in Europe. The Fletcher Forum World Affairs Vol.43:1 Winter 2019.
[4] Martin Neil Baily, Robert E. Litan and Matthew S. Johnson. The Origins of the Financial crisis. Brookings. November 2008.
[5] Wang Yongzhong and Duncan Freeman. The International Financial Crisis and China’s Foreign Exchange Reserve Management. Brussels Institute of Contemporary China Studies. Asia Paper. Volume 7. Issue 2. March 29, 2013.
[6] Wang Yongzhong and Duncan Freeman. The International Financial Crisis and China’s Foreign Exchange Reserve Management. Brussels Institute of Contemporary China Studies. Asia Paper. Volume 7. Issue 2. March 29, 2013.
[7] Keith Bradsher. How China Lost $1 trillion. The New York Times. February 7, 2017.
[8]  Since 2010, Greece has undergone three bailouts worth a total of nearly €310 billion ($360 billion). The aid money was made available to Greece’s government from other euro-zone member states and the International Monetary Fund over the past eight years
[9] Keith Bradsher. How China Lost $1 trillion. The New York Times. February 7, 2017.
[10] The Troika included the European Commission, the European Central Bank and the International Monetary Fund. the group responsible for overseeing the terms of bailouts extended in the European Union
[11] Len Ishmael. Soft Power & Global Ambition: The Case of China’s Growing Reach in Europe. The Fletcher Forum World Affairs Vol.43:1 Winter 2019.
[12] Andre Tartar, Mira Rojanasakul, and Jeremy Scott Diamond. How China is buying its way into Europe. Bloomberg, April 23, 2018.
[13] Eunice Yoon. How the coronavirus changed life in China. CNBC. March 13, 2020.
[14] Peter Li. Why new diseases keep appearing in China. And why COVID-19 was bound to happen. March 6 2020.
[15] Jonathan Marcus. Coronavirus: US-China battle behind the scenes. March 23 2020.
[16] Kate Mayberry, Joseph Stepansky and Merisha Gadzo. Italy reports 602 new coronavirus deaths: Live updates. As of March 24, Italy’s death toll stood at 6077 with numbers infected rising to 63, 928. March 24 2020. This compares to total deaths in China of 3200 and an infection rate of more than 80,000. Deaths top 16,500; Lockdowns Dent Europe’s Economy: Virus Update. Bloomberg News. March 24, 2020.
[17] Susannah Luthi. World Health Organization declares coronavirus outbreak a pandemic. March 11 2020.
[18] Gideon Rachman. How Beijing reframed the narrative. Financial Times. March 17, 2020.

[19] The 17+1 configuration is an intergovernmental forum established by China as a mechanism to engage with 17 countries in Europe 13 of whom are EU members, on promoting investment and business relations.
[20] Joe Penney. As the US Blames China for the Coronavirus Pandemic, the Rest of the World asks China for help. The Intercept March 18, 2020. The
[21] Tom Mitchell and Xinning Liu. US-China ties worse in decades after expulsions. The Financial Times. March 19, 2020.
[22] Ibid.
[23] To date, Chinese support has been received by France, Spain, Poland, the Netherlands, Greece, Italy, Serbia Iran, Iraq, the Philippines, Latin America and the Caribbean
[24] China to Launch Construction of Africa Center for Disease Control and Prevention soon. ENA. January 30, 2020.
[25] Jack Ma, Alibaba Foundations, donate to seven more Asian countries to fight COVID-19. Arab News. March 30, 2020.
[26] Editorial. Facing forwards along the Health Silk Road. The Lancet Global Health. October 2017.
[27] Geoffrey Smith. ECB’s Lagarde to coronavirus-ravaged Italy: you’re pretty much on your own. Fortune. March 13, 2020.
[28] Len Ishmael. Soft Power & Global Ambition: The Case of China’s Growing Reach in Europe. The Fletcher Forum World Affairs Vol.43:1 Winter 2019.
[29] Len Ishmael. Global Governance in the Post-American World Order. The End of Hubris. Atlantic Currents 6th Edition. Policy Center for the New South. December 2019.
[30] Len Ishmael. Soft Power & Global Ambition: The Case of China’s Growing Reach in Europe. The Fletcher Forum World Affairs Vol.43:1 Winter 2019.
[32] Tom Hancock. China encircles the world with One Belt, One Road strategy.  Financial Times. May 4, 2017.
[33] Zheping Huang. Your Guide to understanding OBOR, China’s New Silk Road. Quartz. May 15, 2017.
[34] China’s OBOR project has been billed as the world’s largest overseas undertaking by a single country since the Second World War.
[35] Bretton woods institutions include the World Bank and International Monetary Fund established at a meeting of 43 countries in Bretton Woods, New Hampshire, USA in July 1944 to help rebuild the postwar economy and to promote international economic cooperation in the rebuilding of western Europe after the Second World War.
[36]  Founding members of the AIIB apart from China include: India, Indonesia, Malaysia, Singapore, Saudi Arabia, Brunei, Myanmar, the Philippines, Pakistan, Australia, Britain, France, Germany and Spain. On July 13, 2019, the AIIB announced meeting an important milestone that of hitting the 100-member mark.
[37] Len Ishmael. Soft Power & Global Ambition: The Case of China’s Growing Reach in Europe. The Fletcher Forum World Affairs Vol.43:1 Winter 2019.
[38] Noah Barkin and Elizabeth Piper. In Davos, Xi makes case for Chinese leadership role. Reuters. January 17, 2017. Cited in Len Ishmael. Soft Power & Global Ambition: The Case of China’s Growing Reach in Europe. The Fletcher Forum World Affairs Vol.43:1 Winter 2019.
[39] Yoan Valat. Macron, Xi, Merkel and Junker hold talk in Paris. France
[40]  Len Ishmael. Global Governance in the Post-American World Order. The End of Hubris. Atlantic Currents 6th Edition. Policy Center for the New South. December 2019.
[41] Len Ishmael. Soft Power & Global Ambition: The Case of China’s Growing Reach in Europe. The Fletcher Forum World Affairs Vol.43:1 Winter 2019.
[42] Shada Islam. Stop Whining and Start rethinking the Global Rulebook. Friends of Europe. June 19, 2018.
[43] Ryan Morrison. France will allow Huawei to bid to supply equipment for its 5G equipment. February 13, 2020. Daily Mail
[44] Choo Yun Ting. The Straits Times. October 6, 2019.
[45] Corona Virus. Trump suspends travel from Europe to US. March 12, 2020.
[46] Henry Foy, Michael Peel. Putin flexes soft power muscles with medical aid airlift to Italy. Financial Times. March 24, 2020.
[47] Ibid.
[48]Prensa Latina. Cuba’s Doctors fly to Italy to help fight Covid-19. March 23, 2020. support
[49] EEAS Blog. The Coronavirus pandemic and the new world it is creating. March 23, 2020.
[50] Gideon Rachman. How Beijing reframed the narrative. Financial Times. March 17, 2020.
[52] Claire Bushey, Andrew Johnson and Kiran Stacey. Trump invokes federal law to compel General Motors to make ventilators. Financial Times. March 27, 2020.
[53] Grady McGregor. Hands and Sanitizers replace iPhones and Perfume: Firms redeploy factories to make corona virus supplies. March 17, 2020. Fortune.
[54] Len Ishmael. Soft Power & Global Ambition: The Case of China’s Growing Reach in Europe. The Fletcher Forum World Affairs Vol.43:1 Winter 2019.
[55] Gideon Rachman. How Beijing reframed the narrative. Financial Times. March 17, 2020.
[56] Kurt M Campbell and Rush Doshi. The Coronavirus could reshape the world order.” Foreign Affairs. March 20, 2020.
[57] Marcus Vinicius De-Freitas. Posts. Linked-in Profile. Retrieved March 24, 2020.



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