The new nuance in Chinese diplomacy

Author: Peter Drysdale, East Asia Forum

Much energy has been expended on projecting the impact of the rise of Chinese economic power on its political and military might and the strategic contest with the United States. In a conflation of geo-economic and geo-strategic analysis, two camps have emerged: one warns about the consequences of the United States not conceding strategic space as Chinese economic and strategic power continue to grow; the other asserts the continuing dominance of US military-strategic and economic power as Chinese power peaks, in some scenario or another. As the nuance in Chinese diplomacy over the past week or two suggests, the geo-political and economic world would appear a tad more complex than either camp allows.

China's President Xi Jinping during his recent visit to Australia and New Zealand, 21 November 2014. (Photo: AAP).

There is certainly no evidence that there is a one-for-one relationship between economic size and political and military power — defence spending and military capacity varies greatly as a share of GDP across countries — though there is clearly a degree of interdependence between these variables. The mobilisation of military capability is, for one thing, likely to lag behind the growth of economic size — itself the product of both the population base of countries as well as their industrial sophistication reflected in output per capita. And economic size and its impact through the international economy yield their own independent dividend in political power, although how that dividend is reaped depends very much upon the way in which the rules of the game in international exchange are organised.

In the interwar period, at the end of the age of imperialism, the industrial powers were also imperial powers and the international system was ordered largely around the contest of imperial power. After the Second World War, the Bretton Woods system entrenched a set of principles and rules that secured the gains from trade and international exchange without resort to the use of imperial and military power. It is true that the system needs a revamp — a matter that is squarely on the agenda of the G20 today — because the structure of governance and modus operandi of its core institutions such as the IMF, the World Bank and the WTO, need updating to reflect the growth in importance of the emerging economies and new issues. But it is still happily the foundation of a functioning multilateral trade and economic (as well as political) regime that underpins global economic security today. Only if that system were to fall into disrespect by the major powers or disintegrate would we revert to a world in which the correlation between economic and military power dominated overwhelmingly the economic and political security equation.

This — admittedly truncated — analysis serves simply to remind us that the international system today is, technically speaking, very much a mixed interest game. The cacophonous chorus around the analysis of the rise of China tends to fall quickly into casting it otherwise — as a simple zero-sum game and ill-prepares us for the range of nuance in strategies that can, and need to, be brought to bear on managing the shift in Asian power that is its consequence.

The APEC summit in Beijing began with the notable symbolism of the forced shut-down of pollution-generating factories for a week of welcome blue skies in the capital — a taste of how it might be if the big, hard decisions on pollution control and carbon emissions can be digested (as the Beijing wags put it, a new meaning for APEC as Air Pollution Eventually Controlled). The climate change agreement reached with the United States, of course, was not a binding international agreement on the two countries’ climate change strategies but was no less remarkable as a joint declaration of national commitments. Importantly, it signified China’s willingness to accept actual target dates for a reduction in total emissions. ‘That’s important for climate change’, the Economist declared, ‘but it is also a signal that China is going to grasp the responsibilities that come with being a global power’.

In the area of economic diplomacy, China launched the Asian Infrastructure Investment Bank just prior to the APEC summit and gained endorsement for the realisation of a Free Trade Area of the Asia Pacific (FTAAP). China also reached a substantive agreement with South Korea on their bilateral FTA, moved to conclude a significant bilateral with Australia and had a breakthrough on negotiations with the Americans to expand the coverage of the Information Technology Agreement — which promises to re-energise a US$1 trillion market in technology goods trade.

These developments may also have signalled the start of a shift in China’s foreign policy. In many ways, China to date has been a weak diplomatic power. It doesn’t have many allies, and has not had a clear vision of its goals on the international stage. This looks like it’s beginning to change.

Our lead essay from Mireya Solís this week asks why China chose FTAAP as its landmark initiative for the APEC summit. ‘The FTAAP’, she points out, was a concept which ‘was first developed by the Americans, so why did China borrow it to stake a leadership claim in defining the future of Asia Pacific economic integration?’

She advances three good reasons. First, FTAAP defines a grand regional vision that encompasses both China and the United States. Second, it takes the focus off the TPP without challenging it with an exclusively Chinese option — as the Regional Comprehensive Economic Partnership (the ASEAN+6 initiative) is commonly but wrongly described. And third, it puts China on the same pedestal in crafting a new regional and global trade order.

These developments, and signs of flexibility in China’s management of its neighbourhood problems in the South China Sea around the East Asian Summit and earlier with Japan at APEC, signal a mature and nuanced Chinese diplomacy. As Solís says, there is scant evidence that China is a revisionist power. China to date has been a relatively weak diplomatically. A more influential role in regional and global affairs will inevitably attract increased scrutiny. If it is prepared to accept and respond constructively to that, as it has in recent summitry and in managing its relations with Japan, South Korea and Australia, it may yet deliver a new model of great power relations, because of contemporary circumstances as well as by design.

Peter Drysdale is Editor of the East Asia Forum.

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