WSJ What’s News - China Has Been Building Influence for Years. How Will Trump Respond?

Episode Date: March 9, 2025

While China has spent the past 12 years growing its friend circle through its $1 trillion Belt and Road infrastructure program, the U.S. has struggled to come up with a comprehensive response. Could President Trump’s more aggressive approach to diplomacy mean Beijing will meet greater resistance, or will it open more doors for Xi Jinping? In the final episode of our three-part series, “Building Influence,” WSJ reporter Vera Bergengruen, Harvard Kennedy School’s Rana Mitter and the Council on Foreign Relations’ David Sacks discuss how the U.S. has tried to push back on Beijing's expanding footprint so far, and former Trump administration officials J. Peter Pham and David Malpass weigh in on how the president could counter China. Daniel Bach hosts. Check out the full series, or catch up on the first and second parts.   Further Reading: How China Capitalized on U.S. Indifference in Latin America How the U.S. Is Derailing China’s Influence in Africa Why Trump Sees a Chinese Threat at the Panama Canal, and Locals Don’t A New Chinese Megaport in South America Is Rattling the U.S. How Much the U.S. Spent on Foreign Aid—and Where It Went Learn more about your ad choices. Visit megaphone.fm/adchoices

This episode is sponsored by Northern Trust Wealth Management. There is more to being a successful entrepreneur than just good business practices. What is it about an entrepreneur's childhood that helped fuel their entrepreneurial spirit? What are entrepreneurs doing to cultivate this spirit in their own children and build a legacy beyond their business? Tune in each month to the Road to Why podcast by the Northern Trust Institute, where host Eric Schapea dives deeper with leading entrepreneurs on these topics and more. Find the road to why where you listen to your favorite podcasts. China is operating the Panama Canal and we didn't give it to China, we gave it to Panama

and we're taking it back. During his first term as president, Donald Trump changed American policy toward China by framing it as the top economic and security threat facing the United States. Then, to start his second term in January, he used his inauguration speech to pinpoint where he would launch a new challenge against that perceived threat. Panama, where China had been building influence through its Belt and Road Initiative, the trillion dollar infrastructure lending program Beijing has used to plant its flag in more than 150 countries.

Trump's vow to seize back the canal and push out China is part of a broader and still evolving approach to counter Beijing in places where a lack of U.S. presence or interest has allowed a new partner to move in. I'm Luke Vargas for the Wall Street Journal and in today's final episode of our What's New Sunday series, Building Influence, my colleague Daniel Bach will be looking at what the U.S. has done to respond to Belt and Road and whether Trump's early actions in office could signal a new, more aggressive approach. China's involved with the Panama Canal.

They won't be for long. And that's the way it has to be. Marco just got back, as you know, he's in the process. In the early days of Donald Trump's second term, he dispatched America's top diplomat, Secretary of State Marco Rubio, to a surprising place for a first trip abroad. Panama, in Central America, became ground zero for Trump's plan to hit back at China's growing influence in America's backyard.

4% of global trade is ferried along Panama's 50-mile canal between the Pacific and Atlantic Oceans, and Trump was threatening to take control of it. The significance of the decision was clear. Panama was the first Latin American nation to officially join Beijing's Belt and Road Initiative back in 2017. That same year, it dropped its diplomatic recognition of Taiwan in favor of establishing ties with China. Since then, China's built or financed a canal bridge, a new subway line, a cruise ship terminal,

a convention center, and a wind energy farm there. It's those projects, along with port infrastructure, that a Hong Kong-based company has operated on either side of the canal that Trump says violate US-Panama treaties, treaties that required the canal to remain neutral after it was turned over by the US a quarter century ago. Just this past week, word came that a group of investors led by BlackRock had agreed to buy majority stakes in the ports for about $23 billion. A change in ownership could go a long way toward addressing the administration's concerns,

though an executive from the port's Hong Kong owner said the deal was purely commercial. As for those U.S. concerns, in an interview with Fox News, Rubio said that Chinese-owned infrastructure gives Beijing leverage over the waterway. We cannot continue to have the Chinese and through their companies exercising effective control of the canal area. Before he left for a five-country tour through Central America, Rubio wrote in a Wall Street Journal op-ed that the Chinese Communist Party uses economic and diplomatic pressure, including at the canal, to, quote, turn sovereign nations into vassal states.

China's foreign ministry says Beijing respects Panama's sovereignty over the canal and that China has never participated in managing and operating it. But Trump ratcheted up the rhetoric, saying if Panama doesn't limit China's influence... We're going to take it back or something very powerful is going to happen. Trump got a lot of pushback. Panamanian officials and several former U.S. military officials, including a former NATO commander say Chinese-built infrastructure there doesn't breach the canal's neutrality, let alone show that Panama's come under the influence of Beijing.

But Journal reporter Vera Bergengruen was on the Latin America trip with Rubio, and she says the administration's threats were heard loud and clear. When Rubio arrived in Panama City, he came with an ultimatum from Trump, and he told Panama's president, José Raúl Molino, that his country either had to curb China's presence around the Panama Canal or face some kind of unspecified response from the U.S. But behind closed doors, we were told that it was actually a very productive meeting and Panamanian officials were really eager to show the Trump administration that they were willing to curb Chinese influence and welcome all kinds of US investment in the

country. The biggest outcome of all of this? Molino announced that Panama will leave the Belt and Road program when its funding agreement with China expires and will also seek to end the deal sooner. And it was a big concession for his government. But it's important to remember that Molino is a very pro-U.S. president who is very eager to align his country with the U.S. over China. And this kind of strong-arming tactic may not be as productive with leaders who have

a warm relationship with Beijing. I reached out to the State Department, and a spokesperson told me Panama's exit from Belt and Road proves the Trump administration's approach to diplomacy works. It's too soon to say what Panama leaving the program will mean in practice. It's hard to imagine any small nation completely turning its back on the world's second biggest economy. As for whether Washington would pressure other countries to cut ties with Beijing or its investments as a condition of working more closely with the U.S., the State Department declined to

comment. After the break, we'll hear why past efforts by the West to counter Belt and Road have been slow to get off the ground. This episode is sponsored by Northern Trust Wealth Management. There's more to being a successful entrepreneur than just good business practices. What is it about an entrepreneur's childhood that helped fuel their entrepreneurial spirit? What are entrepreneurs doing to cultivate this spirit in their own children and build a legacy beyond their business? Tune in each month to the Road to Why podcast by the Northern Trust Institute, where host As China has backed more and more projects in the developing countries across Africa,

Asia, and Latin America, often referred to as the Global South, the U.S. has struggled to respond. Ron Emitter teaches U.S.-Asia relations at the Harvard Kennedy School in Massachusetts. A few years ago, one of the biggest challenges that the Global South was giving the Western world was how to answer the availability of cheap and easily given finance from China when it came to goods and services they wanted right now, particularly infrastructure. And I'd say in the years since then, certainly into the early 2020s, the Western world and the United States in particular has come up with partial but only partial

answers to those questions. So what do those answers look like? In 2019, under President Trump's first term, the US set up the International Development Finance Corporation, known as the DFC, to help finance projects, including infrastructure, in developing nations. As of December, it had invested nearly $50 billion across 114 countries. That same year, Trump reauthorized

the Export-Import Bank of the United States. It's the American equivalent to China's policy banks that, as you'll remember from episode one of this series, paved the way for Beijing's overseas lending push. And Washington also successfully pressured its European allies to cut out Huawei, arguing that allowing the Chinese company to build 5G networks posed an espionage threat. During the Biden years, the US and Western partners continued to look for ways to bring together public and private financing to offer an alternative to Chinese lending.

But overall, the US approach has struggled to compete with China's direct full-core press. A few years ago, David Sachs, a fellow for Asia Studies at the Council on Foreign Relations, co-directed an independent task force on Belt and Road, involving private sector experts and former government officials. And they concluded that it presented significant risks for American economic, political, security,

climate and health interests globally, and that the U.S. response had been insufficient. Sachs still thinks so. If a second Trump administration is highly transactional, it's going to be far more difficult because competing with BRI requires a more far-sighted approach and also a kind of broader thinking about the costs and benefits of international assistance and loans and aid. That raises the question of what a robust response from the West to China's expansion across continents through building and lending actually looks like.

Sachs said the best way to counter the influence China has built is not by trying to outspend them. There is a consensus that the United States should not try to match China dollar for dollar around the world. That's just not a game we can play and that we can win it. So if China is building a road, we're not going to say we will build this road in a neighboring country for cheaper or the same price. We just don't have that advantage. We don't have that kind of state-backed support that China can bring to the table. So the question is really what are the strategic sectors that

we should compete in? And I think that the Lobito corridor shows that. The 800-mile Lobito corridor railway runs through Angola, and a plan to upgrade and extend it back by the US and Europe has been hailed by US officials as a blueprint for how Washington can counter China's infrastructure push in Africa. Angola has received more infrastructure loans from China than any other country in Africa, over $45 billion in total, including four constructing railways.

But years of neglect left the Lobito Railway with run-down stations, equipment that local operators didn't know how to use or fix, and parts of the tracks disappearing into long grass. That opened the door for Washington to gain a bigger foothold in 2022, when Angola rejected a Chinese bid to refurbish the railway in favor of a plan from a European consortium backed by the U.S. During his presidency, Joe Biden made shoring up commercial ties with Africa a policy priority. Because the United States understands how we invest in Africa is just as important as how much we invest in Africa.

That was Biden last December when he traveled to Angola on his last foreign trip as president. On that trip, he announced more than $560 million in new funding for the libido corridor, bringing total U.S. investment in it to over $4 billion. So what's the upshot for the West? The U.S. and European investment will help connect a copper-rich region of Zambia and the copper, lithium, and cobalt mines of the Democratic Republic of Congo with the port city of Libido on Angola's Atlantic coast.

That'll allow the U.S. to access the critical minerals trade in the region, something China has dominated, and speed up the transport of those green energy minerals from the source. A few months ago, the DRC sent the first copper shipment on this railway for transit on the United States. Journal reporter Vera Bergengruen traveled with then-President Biden to Angola.

Biden officials in Angola were very clear that they had heard from a lot of Republican lawmakers, they had heard from Trump officials, that they are very interested in continuing this. There's a high level of interest because it's a lucrative business opportunity, but also because it's a blueprint that can be replicated across many other continents as well. So could this blueprint get picked up by the Trump administration? The America First, Make America Great Again agenda cannot be carried out without inputs of resources, access to these resources, and access to markets. That's Peter Fom.

He was Trump's special envoy for the Sahel and Great Lakes regions of Africa during the president's first term. Fom says focusing on projects that have a strong business case for securing critical minerals like those in Angola would align with Trump's aim of rebuilding America's firm. Fom says focusing on projects that have a strong business case for securing critical minerals, like those in Angola, would align with Trump's aim of rebuilding America's industrial base. I think critical to U.S. national security and economic security interests going forward. America's goal is a diversified supply chain. It doesn't benefit America and it certainly doesn't benefit African countries that have an outside power,

any outside power, much less one like China monopolize these supply chains. Coming up, a look at what Trump's first weeks back in office can tell us about how he might counter Belt and Road. The most secure and hassle-free way to pay. The DC politicians want to change that with the Durbin Marshall Credit Card Bill. This bill lets corporate megastores pick how your credit card is processed, allowing them to use untested payment networks that jeopardize your data security and rewards. Corporate megastores will make more money and you pay the price. Tell Congress to guard your card because Americans lose when politicians choose. Learn more at guardyourcard.com.

In the first month of Trump's second term, plenty of his actions have disrupted the global diplomatic order and America's leading role in it. But perhaps the boldest was his move to shut down USAID. Breaking overnight, workers at the USAID and Washington were told to stay home. The Trump administration has accused the United States agency for international development of wasting money. The USAID organization in the United States is being stripped down to bare bones by Donald Trump's administration.

The $40 billion agency helps some 130 countries fight famines, diseases, and human trafficking. Many lawmakers, including Republicans, say it's a crucial soft power tool in combating Beijing. As we heard in episode one of this series, Marco Rubio has long warned of dangers posed by China's Belt and Road program. And as a U.S. senator, he spent years praising U.S. aid as a way of countering China. Here he was speaking at an event hosted by the Washington Institute for Near East Policy in 2013. We don't have to give foreign aid.

We do so because it furthers our national interest. That's why we give foreign aid. Now, obviously there's a... But almost overnight, President Trump gutted U.S. aid, saying its work doesn't align with American interests and leaving Rubio to preside over a vastly reduced assistance program. Foreign aid workers and some Democrats say they worry that the void left by U.S. aid cuts and leaving Rubio to preside over a vastly reduced assistance program. Foreign aid workers and some Democrats say they worry that the void left by U.S. aid

cuts will push countries into China's arms. The State Department declined to comment. In its annual report ahead of November's election, a commission of security and economic experts convened by Congress said that to counter China's ambitions, there was a need for a quote, clearly coordinated US led effort to build a coalition of likeminded countries. So far, Trump seems to be going down a different path, primarily focusing on extracting from other countries concessions that serve American interests, like agreements with Colombia and

Venezuela to take in deportees, or pushing for a mineral rights deal with Ukraine. David Malpass, a former World Bank president and U.S. Treasury official in Trump's first administration, says the president's approach, which emphasizes negotiating, could help put China on the back foot. The U.S. has an opportunity to really push back on China by working through a changed framework for international organizations. They can't have the rules set up for the benefit of China. And that enters Trump's wheelhouse. That's renegotiating bad deals. And that would give the U.S. a more level playing field in dealing with China in developing countries.

Ron Amitter from the Harvard Kennedy School, on the other hand, thinks Trump's tactics risk backfiring. He says that if the president makes good on his threat to impose tariffs on swaths of countries and at the same time demands that they draw down links to Beijing, he could end up making other countries more reliant on China. And what will probably end up happening is in many sectors, countries like Germany or countries like Canada, might find themselves having to have conversations that we never dreamed of having, you know, two, three, five years ago, possibly even with Beijing,

out of necessity. Mitter says it remains unclear what the US is pitching to countries it wants to bring onside, while China is telling a compelling story about what's on the table when it invests in a country, making Belt and Road an ongoing risk to US economic and security interests. David Sacks from CFR agrees that this threat won't be easy to displace. This is a signature foreign policy initiative of Xi Jinping. It has been incorporated into the Chinese Communist Party constitution. This is not something that Xi Jinping is attempting to distance himself from. It is actually something that Xi Jinping is trying to lean into.

And I also think that right now there is a certain geopolitical logic for Beijing to continue down this path. I reached out to China's Ministry of Foreign Affairs and the US State Department for comment, but they didn't respond. So while Washington has signaled a transactional approach to foreign policy and given few specifics about how it plans to counter China's global infrastructure campaign, Beijing's ambitions remain laser-focused. In 12 years, China has planted its flag

in more than 150 countries, financing and building everything from roads, megaports, and mines, to green energy and digital infrastructure. It's weathered an economic downturn at home, and a pile of loans turning sour, adapting its program so it can continue to lend to developing nations. And what China has bought and paid for is influence, which will remain key to advancing

Xi Jinping's strategic goals for years to come. And while the U.S. has warned of the dangers, if the aim is to push back, so far it hasn't put forward a comprehensive plan. And that's it for our What's New Sunday series Building Influence. Today's show was hosted and produced by Daniel Bach, our sound designers are Jessica Fenton and Michael Laval. Michael wrote this series' theme music. Our supervising producer was Christina Rocca. We had editorial support from Chris Zinsley and Flana Patterson. And special thanks to Ryan Dubé, Sharon Weinberger, and James Aradie.

I'm Luke Vargas for The Wall Street Journal, and we'll be back right here tomorrow with a brand new show. Until then, thanks for listening. I'm Luke Vargas for The Wall Street Journal, and we'll be back right here tomorrow with a brand new show. Until then, thanks for listening. This episode is sponsored by Northern Trust Wealth Management. There is more to being a successful entrepreneur than just good business practices.

What is it about an entrepreneur's childhood that helped fuel their entrepreneurial spirit? What are entrepreneurs doing to cultivate this spirit in their own children and build a legacy What is it about an entrepreneur's childhood that helped fuel their entrepreneurial spirit? What are entrepreneurs doing to cultivate this spirit in their own children and build a legacy beyond their business? Tune in each month to the Road to Why podcast by the Northern Trust Institute, where host Eric Schapea dives deeper with leading entrepreneurs on these topics and more. Find the Road to Why where you listen to your favorite podcasts.