Communist China is infamous for leading an “axis of evil” composed of itself, Russia, Iran, North Korea, and, arguably, Venezuela and Burma (Myanmar). This axis is terrorizing its own citizens and those of neighboring countries.
Chinese investment in the second tier allows Chinese companies to continue producing for export to the United States and our allies despite tariffs and sanctions, while rewarding authoritarian regimes that are reasonably close to Beijing politically and diplomatically, even if they are not as close as the first tier.
This Chinese Communist Party (CCP) strategy makes sense from its own malign perspective, given that Chinese investment in the United States and allies would be at risk of confiscation in a war scenario, and the first tier is already under U.S. sanctions or tariffs, and so are sub-optimal from the perspective of Chinese export-oriented investment.
That leaves countries sitting on the fence, between U.S. allies and the original first-tier axis countries, for Chinese export-oriented investment. From a CCP perspective, the best of these middle countries to serve as conduits for investment and trade targeting the United States and allies are those that are ideologically closest to Beijing: the second tier.
First-tier axis countries, on the other hand, are optimal for China to import from, given that existing U.S. and allied sanctions or tariffs make them so desperate to sell. This gives Chinese companies bargaining leverage that results in billions of dollars of discounts from global market prices, most importantly in the energy markets for oil and gas. It also incentivizes the CCP to push countries from which it imports to violate international laws and norms, so they get sanctioned, join the first tier, and are forced to sell to China at a discount.
That the CCP uses its leverage this way indicates that its partnership with axis countries is primarily transactional. The supposed axis ideology or value for “multipolarity” against “U.S. hegemony,” for example, is more about maximizing each country’s power and territory than truly seeking a multipolar world. Given the chance, each axis power undercuts the others for its own selfish purposes, under the banner of “national interest,” just as China undercuts the price of Russian energy despite that the sanctions imposed on Russia were because of Moscow’s violation and redefinition of a national territorial integrity norm with respect to Ukraine, with the acquiescence of Beijing, and that Beijing also seeks to redefine at the expense of Taiwan.
Therefore, Beijing’s strategic approach to investing in exports to the United States and its allies must be different from its approach to inter-axis trade and investments meant to support that trade, such as Belt and Road infrastructure.
Perhaps it’s time to change that. Perhaps it’s time to follow a sentiment that leaders from both major U.S. parties have communicated to foreign nations in the context of the war on terror: You’re either with us or against us.