Amid an economic downturn and intensifying competition in the Pacific, China is refining its foreign investment strategy, increasingly starting projects it calls ‘small but beautiful’.
Although modest in scale, they can quietly build influence and can catch foreign policymakers off guard. With this shift, China can foster economic growth and deepen geopolitical ties across the Pacific region.
The phrase ‘small but beautiful’ (‘xiao er mei’) has become prominent in Chinese business, emphasising the value of customised, flexible, focused and efficient products.
On 19 November 2021, at the Third Symposium on the Construction of the Belt and Road Initiative (BRI), Chinese President Xi Jinping used the phrase to describe foreign cooperation projects for which he wanted prioritisation. In October 2023, he re-emphasised the point as a key action for China to support high-quality BRI construction projects, undertaken jointly with the governments of the investment-destination countries.
To this end, Beijing has tightened capital controls and investment regulations amid growing concerns over investment risk, political instability, corruption and project quality. The average scale of projects has declined.
Applying the small-but-beautiful idea to BRI projects reflects Xi’s evolving strategic approach to enhancing cooperation and mutual understanding with other countries. Big BRI projects in the Pacific have been promoted as efforts to enhance sustainability and improve lives, but they have been tainted by corruption, suffered from defaults by debtors in the target countries and provoked foreign wariness of China’s intentions.
Xi clearly hopes shifting the focus to smaller and better targeted projects will improve foreign public sentiment towards China.
In May 2022, China reaffirmed its commitment to enhancing comprehensive strategic partnerships in the Pacific island countries. Since then, projects have included promoting planting and using juncao, a kind of economically productive grass, and proposals to offer 2500 scholarships for government officials and training in human resources for 3000 people from Pacific island countries from 2020 to 2025. This has been intended to demonstrate dedication to the region’s development.
Some small but beautiful projects have been technology transfers, which have attracted little attention. Sharing the knowhow for using juncao has been an example. Since February 2024, there’s been notable activity at the China-Pacific Island Countries Juncao Technology Demonstration Center in Fiji. The chairman of the China International Development Cooperation Agency, Luo Zhaohui, surveyed the centre and spoke highly of its contribution to promoting friendly China–Fiji cooperation and future expansion into the South Pacific region.
In March 2024, 34 representatives from across the Pacific region attended a one-week course to learn how to use juncao. Some participants expressed gratitude towards China for helping their communities.
China has set up Luban Workshops in Asia, Europe and Africa. These offer vocational education programs to cultivate locally sourced technical personnel trained in operating Chinese technology and equipment, and match Chinese companies with skilled labour.
The training programs also help to improve perceptions of China among attendees. For example, teachers, students and alumni of Luban Workshops held in Indonesia, Ethiopia and South Africa have expressed gratitude towards China and dismissed criticism of Beijing’s handling of the Covid-19 pandemic and its treatment of Uyghur Muslims.
Building on this success, China may seek to expand its Luban Workshop network and range of small but beautiful project offerings in the Pacific to gain influence. China’s public messaging will no doubt prioritise the merits of sustainable development for local communities while subtly strengthening its presence and sway. These seemingly modest initiatives may be easy to overlook, but they are an important element of China’s strategy to increase its standing in the Pacific.
