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Djibouti's President Ismail Omar Guelleh inspects the honour guard with Chinese President Xi Jinping during a welcoming ceremony at the Great Hall of the People in Beijing, China November 23, 2017. REUTERS/Jason Lee
Report

Great power rivalry in the Red Sea

China's experiment in Djibouti and implications for the United States

Executive Summary

Learn more about Global ChinaChina’s growing presence in Djibouti has thrust unprecedented attention upon the little-known African port nation and made it a touchstone in the debate over Beijing’s expanding global aims. In 2017, the People’s Liberation Army (PLA) opened its first-ever overseas military base there, at the mouth of the Red Sea, breaking a long-established policy against basing Chinese troops abroad. The new PLA Navy facility overlooks not only a major strategic chokepoint and one of the world’s most heavily-trafficked shipping lanes, but also a major U.S. military base — just six miles away.

The PLA’s arrival has prompted new debate about the evolution of China’s military doctrine, sea power development, and expeditionary capabilities. But it has also brought new attention to Beijing’s economic investments astride the Red Sea region, which precede the base by more than a decade. The combination of Chinese commercial and strategic expansion has generated concern in U.S. national security circles and spotlighted the Red Sea as a potential theater of great power competition.

Djibouti is hot, dry, and boasts few natural resources, but its strategic location and deep-water port complex have drawn not only the American and the Chinese militaries, but also the French, Japanese, Italians, and Spanish — as well interest from Russia, India, and Saudi Arabia. Djibouti is home to just one million citizens, its territory is the size of Vermont, and its GDP, at $3 billion annually, is equivalent to China’s output every two hours.1 The asymmetry between the two countries is hard to overstate, and a combination of big-ticket infrastructure projects and major debt obligations has raised familiar unease about outsize Chinese leverage over Djiboutian assets and decision-making, fueling another round of debate over so-called “debt trap” diplomacy.2

Chinese loans, construction contracts, and infrastructure investments in the Horn of Africa and the wider Red Sea region — most now folded into the much-debated Belt and Road Initiative (BRI) — far exceed those of the United States.3 That gap is due to widen, and underscores a larger difference in the two countries’ approach to date: Washington has viewed Djibouti and the Horn of Africa primarily through a security prism, while Beijing’s prism has been predominantly “developmental.” Who benefits from that development is a matter of some debate.

Djiboutian elites believe Chinese finance, technology, and trade volume can not only propel their country to become the “Singapore of Africa,” but accelerate growth and integration across a vastly underdeveloped region — a narrative echoed by Beijing.4 But skeptics see Djibouti and its neighbors as vulnerable outlets for Chinese excess domestic production capacity.5 They also worry that Djibouti, like other eager recipients of Chinese largesse, might default on its debt and be forced to make concessions to Beijing, a sequence which could threaten vital U.S. interests in the region. As elsewhere, the COVID-19 pandemic and global supply chain disruptions wreaked sudden and severe damage on Djibouti’s trade-dependent economy in early 2020. While it is premature to discern medium or long-term implications, projected contractions in both Djiboutian and Chinese GDP have added a new wrinkle to conversations over Djibouti’s long-term solvency.

Concern among U.S. strategists has been amplified by corruption and poor governance atop Djibouti’s political system, a president whose authoritarian style resembles that of his new patrons, and technological inroads made by Chinese telecommunications firms.6 In this, Djibouti evinces the larger contest between China and the West — marked by different approaches to governance, economic development, and individual liberties.

Footnotes

  1. China’s annual GDP in 2018 was $13.6 trillion. “China,” Data, The World Bank, https://data.worldbank.org/ country/china.
  2. Concerns about potential “debt trap” diplomacy have surrounded Chinese engagement in Sri Lanka, Pakistan, Angola, Venezuela, and Ecuador, among others. For example, see: Nicholas Casey and Clifford Krauss, “It Doesn’t Matter if Ecuador Can Afford This Dam. China Still Gets Paid.,” The New York Times, December 24, 2018, https:// www.nytimes.com/2018/12/24/world/americas/ecuador-china-dam.html. Debt sustainability is discussed further in the “Debt vulnerability” section of this report on page 13.
  3. China is the largest trade partner and investor in the Middle East and African continent more broadly. See Payce Madden, “Figure of the week: Foreign direct investment in Africa,” The Brookings Institution, October 9, 2019, https://www.brookings.edu/blog/africa-in-focus/2019/10/09/figure-of-the-week-foreign-direct-investment-inafrica/; Camille Lons, Jonathan Fulton, Degang Sun, and Naser Al-Tamimi, “China’s Great Game in the Middle East,” European Council of Foreign Relations, October 2019, 12, https://www.ecfr.eu/publications/summary/ china_great_game_middle_east; Elliot Smith, “The US-China trade rivalry is underway in Africa, and Washington is playing catch-up,” CNBC, October 9, 2019, https://www.cnbc.com/2019/10/09/the-us-china-trade-rivalry-isunderway-in-africa.html.
  4. For example, see “从吉布提开始 中国民企在非洲试水经济特区” [Starting from Djibouti, Chinese private companies in Africa test the waters on special economic zones], Forum on China-Africa Cooperation, December 19, 2017, https://www.focac.org/chn/zfgx/jmhz/t1520611.htm.
  5. Excess production capacity is an unwelcome side effect of the country’s sustained high rate of growth. For more on excess capacity and BRI as one remedy, see Peter Cai, “Understanding China’s Belt and Road Initiative,” (Sydney: Lowy Institute, March 22, 2017), https://www.lowyinstitute.org/publications/understanding-beltand-road-initiative. The BRI is also believed to serve Xi Jinping’s domestic political objectives as well as China’s expanding economic and geopolitical interests. For more, see Joel Wuthnow, “China’s Belt and Road: One Initiative, Three Strategies,” in Strategic Asia 2019: China’s Expanding Strategic Ambitions, eds. Ashley J. Tellis, Alison Szalwinski, and Michael Wills (Seattle: National Bureau of Asian Research, January 29, 2019), https://www.nbr. org/publication/chinas-belt-and-road-one-initiative-three-strategies/.
  6. Technological inroads include the establishment of data transmission systems and undersea fiber optic cables connecting Asia, Europe, and Africa. For example, the 7,500-mile-long Pakistan and East Africa Connecting Europe (PEACE) cable, a project of a Huawei subsidiary, links Pakistan, Egypt, France, Djibouti, Somalia, Kenya, South Africa, and the Seychelles. “PEACE Cable Project Enters into Cable and Material Manufacturing Stage,” Huawei Marine, October 22, 2018, http://www.huaweimarine.com/en/News/2018/press-releases/pr20181022.
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