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For at least a decade, developing countries across Asia and Africa have worried about growing dependent on China. They’re concerned about debt traps, coercive policies and hidden costs that might push their economies toward crisis.
Crisis has come and that logic has been turned on its head. After six weeks of the U.S. and Israel’s war on Iran and its ensuing counterattacks, it is the countries that bet on Chinese supply chains that are faring better than the ones that trusted Pax Americana.
Consider Pakistan. By now it should have been in the middle of yet another economic and social implosion. It has always been vulnerable to energy price shocks, given that it imports almost all of its energy, much of it through the Strait of Hormuz. The country has $130 billion in external debt and a persistent current account deficit, and so the slightest nudge should have tipped it over into a familiar spiral: Emergency requests to the International Monetary Fund, 18-hour power blackouts, unrest on the streets.
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