China’s complicated foreign policy

Shi Yinhong
31st March, 2015

China’s economic, financial, and military strength has dramatically increased. It is now the second-most powerful country in the world in some key areas of national power. The country still faces multiple and complex challenges at home. However, it has become much more concerned with external affairs and with its influence on the outside world, because of its internal economic imperatives, its heightened desire for the “geopolitical strategic rights” and national glory that are due to it as a major power, a sharp increase in popular nationalism and “triumphalism” within the country, and its much more militant and ambitious armed forces.

China is a “re-awakening lion” under a leader who has centralised power in his hands and who believes in the resurgence of China’s national greatness. Xi Jinping is proud of his hard-line posture toward China’s rivals, big and small, and is keenly aware of the domestic popular support for his stance. He strongly prefers the strategic and operational approach of “pushing towards the bottom-line without breaking it”.

The country is a great power that is undertaking a substantial transformation of its foreign policy. Many things have changed from the country’s previous discourse and practice within a relatively short time-span. This has left both China and its partners under-prepared, somewhat confused, and with increased chances for miscalculation.

Contradictory messages in China’s external relationships

Xi’s leadership has put forward two contradictory sets of messages in its words and actions. The first set, which is probably more fundamental and certainly more impressive to the other major powers, suggests that China is taking a more assertive line. Its elements include:

1) Xi Jinping’s repeated use of the theme of “the great resurgence of the Chinese nation” (more officially referred to as the “Chinese Dream”).

2) The shift in the driving aim of the People’s Liberation Army (PLA), from an effort to build up modernised forces to the simpler but more comprehensive and forceful aim of “being capable of fighting, and fighting victoriously”.

3) Extraordinarily frequent official reports of breakthroughs in China’s military build-up, including in advanced weaponry, military technology, and the PLA’s increasing capabilities in terms of its combat readiness.

4) The further hardening of China’s posture on its territorial and maritime disputes with neighbouring countries, especially Japan and the Philippines. However, it should be noted that since Japan’s Prime Minister Shinzo Abe launched the formal process of “re-interpreting the Constitution” to give Japan the military rights to collective self-defence, China’s posture towards Japan has quietly begun to show some indications of change towards moderation.

5) China’s sudden establishment of the East China Sea Air Defence Identification Zone (ADIZ) in November 2013, a major strategic action that was taken in the context of the intense confrontation with Japan. This represents the first formal expansion of China’s maritime “strategic space” beyond China’s immediate offshore waters since the foundation of the People’s Republic in 1949. Of course, China is fully aware of the implications that this move has for the strategic dominance of the United States in the Western Pacific.

6) A remarkable decline, especially in the months before Xi’s early April 2013 Bo’ao speech on Hainan Island, in the leadership’s number of references to the principle of “peaceful development”. This principle used to be the key element in guiding Chinese foreign policy and in previous years was frequently alluded to by the Chinese government. Another traditional principle of contemporary Chinese foreign policy, Deng Xiaoping’s “keeping a low profile”, also seems to have been put aside.

However, another set of developments has taken place in parallel since the 18th Party Congress in November 2012, and especially since the early summer of 2013. These tend in a different direction than the first set, and reflect the complexity and inner dilemmas of China’s foreign policy under Xi Jinping:

1) Since April 2013, leaders’ statements have often returned to the “peaceful development” orientation.

2) The objective of creating a “new type of great power relationship” between China and the US has been repeated again and again as China’s favoured central concept for the future of China-US relations. Xi himself has insisted on this concept. He has made frequent efforts to gain US President Barack Obama’s acceptance of this characterisation of the China-US relationship. However, Obama has not so far accepted the idea, especially since the declaration of China’s East China Sea ADIZ.

3) China’s cooperation and accommodation with the US has increased on important international security issues, including North Korea, Syria, and Iran. Significant progress has also been made in broadening market access for US service capital in China. In the past, Washington had real trouble getting cooperation in both areas.

4) In October 2013, a “Peripheral Diplomatic Work Conference” was held, attended by all the members of the Standing Committee of the Chinese Communist Party’s Politburo. This conference forcefully emphasised that the “good neighbour policy” must be the guiding star for China’s behaviour toward neighbouring countries. The strong impression it made at the time was somewhat diluted after the confrontation with Japan intensified following Prime Minister Abe’s visit to the Yasukuni Shrine in December 2013. However, things changed in the weeks and days before the beginning of the Beijing Asia-Pacific Economic Cooperation (APEC) summit in November 2014, and a China-Japan “Four-Point Consensus” was declared on 7 November 2014. This major and positive development was aimed at mitigating the China-Japan confrontation. It made possible the 25-minute meeting that was held between Xi and Abe three days later, the first high-level political contact between the two countries in two years.

5) China has recently been extremely moderate in its actions regarding the disputes in the South China Sea, up until the sudden outbreak of confrontation with Vietnam over the deployment of a Chinese oil rig in the offshore waters of the Paracel Islands in summer 2014. China has also increased its efforts to improve relations with the Association of Southeast Asian Nations (ASEAN) and its member states, including Vietnam, one of China’s primary rivals in its territorial disputes. This has taken place in spite of rumours that China may soon declare the establishment of a South China Sea ADIZ.

The development of Chinese foreign policy

The prospects for China’s foreign policy are still uncertain. Its development will depend on domestic and international elements that will continue to change dynamically as well as frequently to be at odds with each other.

Current Chinese foreign policy could seem contradictory, which reflects the mutually conflicting domestic and international factors that are shaping its development. China’s changing position on the Ukraine crisis is one good illustration of this trend.

Before Russia’s annexation of Crimea, China appealed again and again to the principles of non-intervention, peaceful settlement of international disputes through diplomatic dialogue and negotiation, and respect for sovereignty and territorial integration. China maintained this stance throughout the early part of the crisis, in spite of the strategic importance of relations with Russia as China’s major strategic partner, not to mention Xi’s close personal relationship with President Vladimir Putin.

However, precisely because of the strategic importance of the relationship with Russia, as well as because of the severe tensions with the US since the declaration of the East China Sea ADIZ, China’s public appeal to the above principles has lessened drastically in the context of Russia’s continued efforts to split off Ukraine’s eastern part. Beijing has begun to provide Russia with a huge amount of financial assistance in the guise of commercial payments to help it weather the economic difficulties largely brought about by the US/European Union sanctions. This “new stage” of the China-Russia strategic partnership, which has been announced both by President Xi and by President Putin, is dramatic and could have far-reaching effects.

A major change in strategic approach

Among the uncertainties and contradictions, one thing seems certain: Xi aspires to increase China’s power and influence (both soft and hard) and even, in the long term, to give it a dominant role in Asia and the Western Pacific – at the cost of the US ascendancy. Washington has been quite sensitive to this goal, and US suspicion and precautions towards China are increasing.

There have been many indications of China’s intention to increase its role at the US’s expense: for example, Xi’s statement that “Asian affairs should be led by Asians ourselves” made at the Conference on Interaction and Confidence-building Measures in Asia (CICA) in Shanghai in May 2014. Xi’s pet projects of the Silk Road Economic Belt and the Maritime Silk Road aimed at building China’s “strategic economy” are also intended to increase China’s influence. China has advocated for and taken a leading role in the Asian Infrastructure Investment Bank established in October 2014 with its headquarters in Beijing. Another indication was China’s suggestion of creating an enormous Asia-Pacific Free Trade Zone (FTAAP), issued shortly before the opening of the Beijing APEC summit. This initiative would obviously compete to a degree with the US-sponsored Trans-Pacific Partnership (TPP), already in intensive negotiations since 2011. Negotiations on Free-Trade Agreements with South Korea and Australia have already been substantially completed. And in recent months, China has pushed hard on various projects to export its high-speed railway systems to numerous regions and areas.

The only seeming contradiction in China’s aim of gaining greater influence at the cost of American power has been in the mitigation of some of the more hard-line aspects of Beijing’s peripheral diplomacy, as noted above. This robust regional diplomacy had frightened many of China’s Asian neighbours and proved convenient for Washington’s efforts to shape and consolidate a strategic “united front” to check China in the region.

“Strategic economy” as a tool of foreign policy

The vigorous and almost sudden push to build China’s “strategic economy” is strategically significant, especially considering the two major security agreements recently reached with Japan and the US: the “Four-Point Consensus” with Tokyo and the military agreement with Washington aimed at preventing clashes between the two sides’ warships and military aircraft.

Broadly speaking, China uses two categories of major policy instruments to serve the objective of increasing its influence at America’s expense: “strategic military” and “strategic economy”. Since China’s 18th Party Congress, Xi Jinping mostly used “strategic military” instruments, engaging quite intensively in strategic/military rivalry and competition with the US, conducting severe confrontation against Japan, taking an assertive and hardliner approach in the South China and East China Seas disputes, and carrying out intensive military and paramilitary activities. These activities strengthened China’s “hard power” and extended its strategic presence. However, they also damaged the country’s international “soft power” and further complicated its peripheral diplomatic/strategic situation, at the same time as increasing the risk of conflict. Therefore, strategic review has probably led to the decision to favour the use of “strategic economy” tools.

It is very likely that, from now on, China will focus on “strategic economy” in its foreign policy, based on its enormous economic and financial strength and its broader diplomacy in the region and on the world stage. Considering the remarkable logical connections between and integration of all the above-mentioned major developments, it could even be said that China is beginning to come up with a grand strategy in its foreign relations, which has been lacking in recent years because of too many foreign policy contradictions and variations.

China’s strategic rivalry against the US and its associates in Asia and the Western Pacific will probably become less hot but more profound and widespread. This will make regional geopolitical competition more complicated for all concerned – and will make life more difficult for the US, whose strategic concerns about and distrust towards Xi’s China will probably grow even more intense and more holistic.

Shi Yinhong is professor of international relations, chairman of the Academic Committee of the School of International Studies, and director of the Centre on American Studies at Renmin University of China in Beijing.This text is based on a presentation that he gave at ECFR’s Berlin office on 24 March 2015.

China’s foreign policy dilemma*

The international community assumes that China is on the rise. Stunning economic growth and rapid military modernisation reflect the ascent of this huge and populous nation to world-power status.

Chinese, on the other hand, regardless of whether they are policymakers, businessmen or intellectuals, are deeply worried about the future of their country. They question China’s ability to continue to rise because of daunting domestic problems, many of which can only be tackled by bold reform of the one-party state. The leaders of the Communist Party of China (CPC) are aware that far-reaching legal reform and major structural changes in the financial sector are prerequisites for continued economic growth. The establishment of the rule of law would also curb corruption and social injustice, causes of widespread public dissatisfaction. While there is general consensus among Chinese officials that reform is necessary, there are significant disagreements on the specifics of reform. Powerful interest groups, upon which the Party relies for political support, do not want to see their privileges eroded.

This gulf between the outside world’s perceptions of China as a rising power and the preoccupation of Chinese leaders with internal problems complicates attempts to understand China’s foreign policy. On the one hand, China’s rise causes jitters in the international community, especially since China in recent years has become more assertive internationally. No one knows with certainty how a rising China will use its power. In private, many Chinese policymakers and analysts concede that they do not know either, despite China’s assurances in public that its rise will be peaceful.[1] On the other hand, China’s international role is not the foremost concern of the country’s leaders. Time and again over the course of 2012, in discussions with officials working on foreign policy, China’s serious domestic challenges were the main topic of conversation.[2] These officials highlighted the amount of effort that China’s top leader, Xi Jinping, will need to devote to tackling domestic problems. Only about one-tenth of the lengthy work report of the 18th CPC Party Congress, a policy guidance document for the next five years, dealt with external issues.