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The driving forces behind China's foreign policy - has China become more assertive?

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In recent years China’s foreign policy has become more visible to the outside world as the country’s economic power increased. This Special focuses on the driving forces behind China’s foreign policy and looks at whether or not China’s foreign policy has become more assertive. An in-depth view into the developments of China’s foreign policy over the past thirty years is presented.

This Special is the outcome of an internship by Myrthe van der Stelt at the Country Risk Research team at Rabobank Nederland.

Executive summary

In recent years, as the country’s economic power increased, China’s foreign policy has become more visible to the outside world. Some have even looked fearfully at future developments in this regard. In this report, an in-depth view into the developments of China’s foreign policy is presented. We conclude that China has less real global power than many presume.

China’s political influence over other nations or events is generally still limited. China can therefore be seen as a global actor but not (yet) as a true global power, as argued by David Shambaugh as well. There is no single defined foreign policy in China. Rather, foreign policies are closely linked to domestic policies, are reactiveto certain events and are resource driven.Nationalism is also a key enduring driving force that has shaped China’s foreign policy. In the end, the over-arching driving factor behind foreign policy in China, and the common denominator to most of China’s global activities, is China’s own domestic economic development. China does not view itself as a superpower or a hegemon.

China’s diplomacy remains risk-averse and usually a low profile is maintained. This maintenance of a 'low profile' was directed by Deng Xiaoping in the 1978 with his 'reform and opening' policies, a process of integrating China for the first time into the international system. This low profile is also seen in the military field. Although its military capacity is growing, China is largely unable to project power outside the Asian region (other than its ballistic missiles and space program, and cyber warfare capacities). China tries to avoid international conflicts, or to freeze or appease them when they arise. China’s global reputation during 2000-2007 was generally positive, but since 2008 China’s international image has declined somewhat, except perhaps in Africa and some Asian countries. Unaware of its assigned role regarding the taking of initiative in major discussions and conferences, China often remains passive in addressing international security challenges or global governance issues. There are exceptions, though, as China does not keep a low profile on issues surrounding Taiwan, human rights and its maritime territorial claims.

In the past years, China’s foreign policies have become more assertive, but only on a limited range of issues. While China became more assertive on maritime border disputes along China’s periphery in the past years, other major foreign policy drivers, such as maintaining the dominance of the Communist Party, to defend sovereignty and territorial integrity and ensure the maintenance of economic development, have remained unchanged.

In 2010, China’s foreign policies became more forceful in regards to relations with countries in the region and to relations with the US. This triggered strong reactions in the region, and some remain 'hotspots'. The conflict with Japan about the disputed Senkaku/Diaoyu Islands has increased tensions. But since China has become also increasingly economically important to the region, existing tensions are not expected to get out of hand easily. Recently, China’s cooperation regarding the UN sanctions on North Korea indicates a moderation of China’s foreign policies.

In the first months of 2013, China’s foreign policy approach has shifted away from the provocative line seen since 2010, as the Chinese government has become preoccupied with difficult domestic economic and political decisions. On the international front, the desire has thus become to keep things stable.

At times, the picture of China as a potentially threatening superpower, which it may become in the distant future, is projected on present-day China. However, China is far from ready to take on a world leadership role - if it will ever be.

Preface - About this research and why it is important

"China does not see itself as a rising, but a returning power. It does not view the prospect of a strong China exercising influence in economic, cultural, political, and military affairs as an unnatural challenge to the world order – but rather as a return to a normal state of affairs."

- Henry Kissinger (2012) - [1]

In the past years, in line with becoming the second-biggest economy in the world, China’s weight in world politics seems to have increased. Internationally, from time to time, China has been accused of being arrogant and arbitrary. Terms like 'assertive' and 'aggressive' have increasingly been used to describe China's foreign policy, at times implying that China desires a leading geo-political role in the world and that perhaps China will eventually take over as the world’s leading superpower. In this regard, however, one should make a distinction between, on the one hand, what each country would do to defend its interests and, on the other hand, any indications of a broader agenda. It is also hard to say to what extend the foreign policy of china has always been assertive - by nature -, or if it is becoming more assertive. It can be argued that the idea of increased assertiveness is exaggerated, but this is only partially correct. It must, furthermore, be noted that there is still no consensus definition of 'assertive' in the international relations literature

Figure 1: Frequency of academic books and articles that refer to ‘assertive China’

Figure 1: Frequency of academic books and articles that refer to ‘assertive China’

Source: Google scholar, Alastair Johnston [2]

To get a better insight in this issue, this research focuses on China’s changing approach to foreign policy in the period 1980 to 2012, with a special focus on the last three years. The main questions this Special tries to answer are:

What are the driving forces behind China’s foreign policy between 1980 and 2012?

  • Did it become more assertive with regard to its foreign policy?
  • How is China’s foreign policy expected to develop in the future?

Scope and methodology

The chapters in this Special are divided in time periods that distinguish the main streams of China’s foreign policy. The Chinese build international power along several dimensions, such as the economic, governance, diplomacy and military dimensions. Therefore, a distinction between these dimensions is made in every chapter. Interviews held with experts on China and its foreign policies as well as (recent) literature studies have served as the most important inputs for this report.

Some comments on analyzing China’s foreign policy

China’s global expansion did not occur by itself. Instead, it was a direct result of policies launched by the Communist Party’s at the well-known Third Plenary session of the Eleventh Central Committee in 1978 aimed to engage in (economic) reform and opening up of the country. The key objectives of China’s foreign policy since Deng Xiaoping have been:

  • To maintain the dominance of the communist party. Policies, both domestic and foreign, are derived from this goal. To maintain this dominance, the government ensures that the welfare of the population continues to rise, a step that has been incredibly well managed for the past thirty years.
  • To defend sovereignty and territorial integrity as well as seeking to unify the motherland (referencing to Taiwan).
  • To ensure and maintain economic development (communism with a capitalistic view).

Figure 2: Actors in the foreign policy process in China

Figure 2: Actors in the foreign policy process in China

Source: David Shambaugh (2013)

When analyzing the changing foreign policy of China several difficulties arise:

  • Firstly, it is not transparent how China’s foreign policy is made and who exactly influences this policy. It is difficult to point to one single institution, group or person who is designing China’s foreign policy. Perhaps China’s foreign policy is best described as a combination of the foreign components of other policies. China's Foreign Ministry is just one of the institutions that influence China’s international agenda, and it has more of a ‘window-function’. Most important, high level officials of the Communist Party can overrule the State Councilor and the Foreign Ministry at any time. Pivotal foreign decisions will be made by the Politburo Standing Committee – consisting of seven men – that is currently headed by President Xi Jinping. His decisions, meanwhile, are also influenced by the desire to boost the party’s domestic popular support. Other influencing groups are the ever-expanding military, as well as large state-owned companies that have significant investments overseas. Private companies may have their own foreign policies and also try to influence China’s foreign policy. Increasingly, the Chinese wealthy elite, who have more international experience than the Chinese leaders is eager to play a role in politics with their own ideas.
    Overall, there is actually much less coordination by the central government in Beijing than often thought. The Chinese government is strong, but it in many ways has less power than is generally assumed. China’s foreign policy in the last five years has become increasingly pluralized with a range of voices and actors interacting in an unprecedentedly complex policy making process. Ultimately foreign policy making has become more diffuse over time. In the past, the regime has largely centralized foreign policy, and all foreign policy was determined by the senior leadership. That however, is not the case anymore but it seems the new leadership is working to recentralize it again. At the end of the day, it is the case that the senior party leadership is the final arbiter of foreign policy, no matter what.
  • Secondly, China’s foreign policy is influenced by the country’s growth path and mostly by domestic issues, also explaining policies related to securing a sufficient resource supply from abroad. It also is difficult to get a clear vision on China’s foreign policy because it is a ‘derivative’ of leading domestic policies. Leaders are constantly concerned with potential domestic costs and impact of any given foreign policy or action. Continuity in China’s foreign policy of the past thirty years exists. However, every government since Deng Xiaoping has had its own characteristics. It is therefore difficult to separate foreign policy from domestic policies, while the latter are leading. When China’s leaders decide for reforms, the focus of China will be first on domestic issues.
  • Thirdly, some changes in foreign policy often take place following certain events; China’s foreign policy can therefore be seen as reactive. One explanation of this phenomenon is that China is still learning.
  • Finally, China’s foreign policy is also influenced by nationalism, which the Communist Party continues to encourage. The Party points to the historical value of a great China and China’s entitlement to its place in the world. Nationalism is one of the key enduring driving forces that have shaped Chinese foreign policy over the research period. We note that, as China increasingly integrates itself into a globalized and interdependent world and Chinese confidence grows, the current expression of Chinese nationalism is taking a more positive form than before. It incorporates an expanding component of internationalism. Motivated in this way, Chinese nationalism is an important factor in generating popular support for the communist party.

Footnotes

[1] Quote by H. Kissinger 2012, in; David Shambaugh, (2013)

[2] Alastair Iain Johnston, How new and assertive is China’s new assertiveness, (2013)

1980-2000 – From ideology to pragmatic independence

"…. Now it is time for us to learn from the advanced countries. We have sent many people abroad to familiarize themselves with the outside world. China cannot develop by closing its door, sticking to the beaten track and being self-complacent."

- Deng Xiaoping (1978) - [3]

In the 1980s, compared to the years before under Chairman Mao Zedong, the idea of reform and opening up of the country - after the 3rd Plenary Session of the 11th Central Committee of the Communist Party in December 1978 - represented the mainstream of China’s economic and development strategy, as well as its foreign policy. The economy changed from a field in which market forces were virtually non-existent in organizing economic activity to one in which these started to play a larger role. China has also gone from a position of receiving virtually no foreign investment and having a low-level of international trade to one where it plays a major role globally. The focus of foreign policy shifted from ideology-driven to a more pragmatic way of acting, aiming at ‘independence and peace’.

Economy

In the first two decades after starting to open up the country, China imported capital and technology from more advanced nations, adopted a course of attempting to build up its national strength. A stable international environment in which it could concentrate on building up its domestic economy was thus preferred. With regard to development China was attempted to adopt economic values of the international community while emphasizing on domestic revitalization. By contrast, in the political realm - regarding democracy and human rights - China consistently took a rather different attitude and did not attempt to adopt the international community’s values. The independence thought was further emphasized by the impact of the Asian crisis - 1997/98 - on China’s economy. Although the country’s capital flow restriction largely shelters it from the worst effects, and it was thus not as heavily impacted as, for example, Taiwan or Korea, it was a serious blow to Chinese companies nonetheless. China learned that a more pro-active attitude towards developments abroad was needed.

Furthermore, in its foreign policy, China was warned about the dangers of being too (economically) dependent on the US and Europe. The Asia-crisis had a significant impact on Foreign Direct Investments (FDI) inflows. China’s share in the world’s total FDI inflows decreased from 8% in 1994 to 3% in 2000. Real GDP growth in China slowed from above 10% in the years before the Asia crisis to below 8% in 1997 and 1998: 7.8% and 7.6% respectively. In 1998 export growth was affected, slowing from above 25% a year in 1996 and 1997 to a mere 2,7% in 1998. As a share total world exports, China’s exports rose sharply between 1985 and 2000, regardless of the Asia crisis, growing from 2% of total exports worldwide in 1985 to 5% in 2000 between, making China an important trading nation globally.

Political

The era under Mao Zedong was characterized by war and revolution. China adopted a foreign strategy in the 1970s, under which it focused more on the US and prepared for a confrontation with the Soviet Union. Overall, China’s participation in the global system was extremely limited. The one-nation course was leading. There would be only one China, which also consisted of Hong Kong, Macao and Taiwan. After Deng Xiaoping assumed power in 1978, there was an awareness that China’s military and economic capabilities lagged behind of those of the superpowers; the US and the Soviet Union. From 1989 on, China switched to a foreign policy focusing on autonomy and independence, without maintaining a strategic relationship with any superpower.

Events that influenced China’s foreign strategy during this period were the Tiananmen Square incident in 1989, which led to greater tensions in relations between China and the international community, and the collapse of the socialist regimes in Eastern Europe and the Soviet Union in the early 1990s. Deng Xiaoping’s view on foreign policy was that China should "watch dispassionately, act calmly, hide its talents, bide its time, and seek concrete achievements".[4] These words emphasized that China should guard against 'peaceful evolution' inspired by the West and keep a low profile in its foreign policy.

In the early 1990s, China activated diplomacy with neighboring countries, beginning by normalizing diplomatic relations. This trend would actively develop in the late 1990s. It can be seen as a reaction to China’s escape from its international isolation that followed the hostile international environment shaped by the Western nations' criticism and sanctions following the Tiananmen Square incident. In China’s eyes, the strategic environment in East Asia had changed, following events on the international stage such as the Cross Strait Crisis with Taiwan and the US-Japan Joint Declaration on Security of 1996. The establishment of the Shanghai Five 1996 [5] and China’s active participation in the ASEAN Regional Forum in the second half of the 1990s can be seen as concrete indications of China’s aim to actively develop its diplomacy. The guiding view of China became that to become a major political power, a low profile has to be maintained while working hard for some years to have more weight in international affairs.

Nationalism was a main driving force behind foreign policy as well. Nationalism in China has generally softened since the early 1980s; a positive form of nationalism has been constructed since then. The new direction also decreased most of the ideological elements in China’s foreign policy: China’s relationship with other countries would no longer be decided by ideology, but rather by national interest. As Jiang Zemin’s 'Three Representations' speech – July 1st, 2001 - indicated; serving the fundamental interests of the Chinese people had become the ultimate mission of the Communist Party of China (CCP). The leadership acknowledged that in order to reclaim its political legitimacy at home and to improve its position in the world, it would be best not to point hostile nationalism towards foreign powers.

Military

"A major aspect of being a strong national power is, a strong defense" [6]

Since the early 1980s, the focus of China defense industry shifted from producing exclusively for the military to producing civilian goods for domestic and international markets as well. As an important part of Deng Xiaoping’s economic reform program, this measure sought to reduce the heavy reliance of the defense industry on government support. The line between defense firms and civilian firms in China has become increasingly blurred as a result. Lessons were learned from China’s war with Vietnam in 1979. Between 1985 and 1991, this evolved into the Chinese doctrines of 'local war'. The first Gulf war in 1991 showed China that its military lagged behind the advanced American weaponry and operational concepts. So, in 1991 (until 2001) a doctrine of 'local war under high-technology conditions' was established. The influence of nationalism on the military is evident in the Cross Strait issue with Taiwan. The rise of the Taiwan independence movement and the administrations of former presidents Lee Teng-hui and Chen Shuibian in Taiwan during the 1990s triggered a re-orientation of the People's Liberation Army (PLA) on modernization. The military modernization was also seen as a sign of overall 'comprehensive national power'. Change occurred in the late 1990s when the government started to rapidly increase the funding for weapons procurement. From 1990 to 2002, the official defense budget allocation for weapons procurement grew from RMB 5 billion to RMB 57.3 billion. Also, the share of the total government budget devoted to weapons procurement increased from 16.3 % to 33.8 % in this time period.

China acceded to the Nuclear Non-Proliferation Treaty (NPT) in 1992, and signed the Comprehensive Test Ban Treaty (CTBT) in 1996, the United Nations Human Rights Covenant A in 1997, and the United Nations Human Rights Covenant in 1998. On the other hand, given that China continued to maintain an independent stance regarding issues of proliferation of weapons of mass destruction and issues of human rights, China cannot really be adjudged to have changed course very much in compliance with the values of the international community in these two areas.

Table 1: Key developments 1980-2000
Table 1: Key developments 1980-2000
Source: Rabobank

Footnotes

[3] Deng Xiaoping, Selected Works, Volume 2 (10 October 1978) 101.

[4] Mitsuro Kitano, China’s Foreign strategy, Asia-Pacific Review (December 15, 2011) 42.

[5] The Shanghai Five - composed of China, Russia, Kazakhstan, Kyrgyzstan, and Tajikistan - was formed to demilitarize the border between China and the former Soviet Union. In 2001, the organization added Uzbekistan and renamed itself the Shanghai Cooperation Organization.

[6] Quote by Defense Minister Liang Guanglie, in: David Shambaugh, China goes Global : the Partial Power (2013) 277.

2001-2009: An era of increased assertiveness

"We oppose hegemonism and power politics of all forms. The international community needs to set up a new security concept with mutual trust, mutual benefit, equality and collaboration at its core and work to create a peaceful international environment of long-term stability and security."

- Jiang Zemin - [7]

Similar words were said by Jiang Zemin in a speech in August 2001, were he called for the establishment of a "fair and reasonable global political order", "Harmonious Development with Neighboring States and Amicable Neighborly Relations".[8]

Economy

In this period, China once again experienced strong economic growth, averaging 10% a year. By the end of the decade, China’s economy accounted for 10% of the world economy. With China joining the WTO in 2001 and world trade rising rapidly, China’s exports grew by an average of 15% a year. As a result, China’s share in total world trade increased doubled from 5% in 2000 to 10% in 2010. Meanwhile, China once again attracts increased amounts of FDI, taking in 22% of the world’s total FDI in 2010, up from 7% in 2000. FDI outflows also posted stellar growth, doubling as a share of total FDI outflows worldwide, from 5% in 2000 to 10% in 2010.

These FDI outflows, or overseas direct investment (ODI), were driven by the 'going out' or 'going global policy' implemented under Jiang Zemin. This policy was first mentioned in some of the internal speeches he gave in 1992 and was referred to further throughout the 1990s and finally discussed at a Politburo meeting on January 20th, 2000. In his annual report to the National People’s Congress, premier Zhu Rongji referred to the going out policy in the light of the nation preparing for its accession to the WTO in 2001. Herewith, Zhu Rongji’s words indicated the beginning of a new foreign policy. Like most Chinese policies, this policy had evolved over a considerable period of time.

Figure 3: China’s GDP growth slows strongly as a result of the global financial crisis

Figure 3: China’s GDP growth slows strongly as a result of the global financial crisis
Source: EIU

For the Chinese, the global financial and economic crisis in 2008 represented a confirmation that capitalism and democracy are not necessarily superior. China also became aware that a crisis in a major advanced economy implied a substantial negative impact on their export performances, particularly via reduced external demand, which presented a major economic downside risk that they was outside their control. Until then, the Chinese hadn’t realized the true scope of this nexus. In response to the global financial crisis, China rapidly developed a massive economic stimulus plan focused on investments in ten major areas in order to achieve still relatively high GDP growth. The stimulus had the intended effect, as year-on-year real GDP growth still amounted to 9.2% in 2009, despite the massive external headwinds.

Political

Since Jiang Zemin became president of China in 1993, the number of foreign visits of Chinese leaders increased remarkably. He changed the style of diplomacy from careful observation to outgoing actions. Zhu Rongji visited the US in April 1999 to discuss China’s accession to the WTO in 2001.

In 2003, Zheng Bijian - President Hu Jintao’s (2003-2013) foreign policy expert - advanced the concept of "China’s peaceful rise", but this fell into disfavor with the Chinese government. The term 'rise' was thought to be too threatening to some abroad. Instead, a compromise solution was reached: the official terminology of 'peaceful development' was authorized, which was consistent with Deng Xiaoping’s statement of peace anddevelopment. It also implies that China’s economic 'rise' would not be a threat or disrupt the existing global order. President Hu Jintao’s statements about a "harmonious world"- an expression he began emphasizing in 2005 - was as least partly intended to counter the notion of China as a threat as well.

In view of China’s foreign policy, the leadership of Hu Jintao started to place a greater emphasis on the promotion of the overseas interests of individual Chinese citizens, along with the national interests of the Chinese nation and state as a whole. Resulting in the development of a new doctrine, the ‘human-based diplomacy’ to take in the needs of individual Chinese citizens and to protect their rights and interests abroad.

Since the adoption of the policy of opening up and reform, the main objective of China’s foreign policy had been to create conditions that were advantageous for economic development. In this period, however, China added national sovereignty and security to the equation, and has come to exhibit the belief that its foreign policy should be geared towards safeguard its national sovereignty, security, and development interests. One area where China is pushing this agenda is in global finance.

"Facts have proved and will continue to prove that the friendly relations and cooperation between China and ASEAN are not only in the interests of our two sides but also benefit the Asia-Pacific region" [9]

China’s approach to international institutions and global governance had shifted; the aim to use the international institutions to its own benefits became more important. Previously, China took a more passive position in the world order. Until the People’s Republic of China’s (PRC) admission to the United Nations in 1971, China was largely kept outside of the international institutional order. A change towards a more active role was witnessed during the early 2000s, when China’s role in international institutions became more selective and active. In this period, Beijing became more confident and outspoken. An example is its active role in the World Trade Organization Dispute Settlement Board (WTO/DSB). Beijing hosting the 2008 Olympics demonstrates the success of China’s positive nationalism strategy, which further consolidates nationalism at home.

Since 2008, China has followed a more revisionist attitude and seeks a ‘balance of influence’ from within existing institutions; as the PRC gains power and confidence, it will more actively attempt to shape existing institutions, as well as challenge the norms and authority structures on which those bodies are based. This appeared to be the case with China’s behavior towards the G7. At the same time, China pursues and has a long articulated foreign policy agenda that favors multi-polarization [10], equality in international relations, and empowerment of developing nations.

The development does, however, reflect China’s growing confidence. Striking is that ‘global governance’ and the associated 'responsibility', are met with much skepticism in China. Besides, China remains very conflicted about its international identity and responsibility. China is now fully integrated into the international institutional architecture; it is now one of the world’s strongest advocates of the UN on the basis of its main principles: state sovereignty and universal equal representation. China is a member of the World Trade Organization, the International Monetary Fund, the United Nations Security Council, the Association of Southeast Asian Nations (ASEAN) Plus 3, and the China-ASEAN Free Trade Agreement.

"Being left out means being left behind" [11]

Interestingly though, this is an area in which there has been an evolution of the Chinese point of view, and the PRC has shown greater pragmatism in supporting peacekeeping operations; China has participated in UN peacekeeping operations, as well as in antipiracy activities in the Gulf of Aden While its overall aid budget is still less than what the large institutions can provide, China is increasingly in a position to displace multilateral organizations as a source of development aid. China’s aid program in Africa, for example, has already exceeded that of the World Bank.

With its growing influence in the world, Washington expects China - as its counterpart- to be more assertive and take a leading role in searching for a solution in major issues.

Military

For decades, China’s defense industries have lagged far behind technologically and been beset by numerous domestic and international impediments. Since the creation of the General Armaments Department in 1999, bureaucratic obstacles have been broken down and market mechanisms introduced. These reforms have spurred a variety of important technological and production breakthroughs. China’s stance towards Russia has become more confident in the period 2000-2009. Because of the arms and defense technology embargo of the US, European Union, Australia, Canada, Japan and South Korea against China, China has long leaned on the Russian arms industry for technology as well as arms imports. The Chinese not only imported the systems themselves but also the technological know-how which enables them to make their own weaponry. Within ten years China’s attitude has developed from a dependent attitude to a confident (sometimes superior) attitude.

After 2001, the doctrine of ‘local war under high-technology conditions’ was changed into ‘local war under high technology and information conditions’, which emphasizes the important role played by information technologies in modern warfare. As mentioned by David Shambaugh, the doctrinal speech ‘Understand the New Historical Missions of Our Military in the New Period of the New Century’ given in 2004 by President and Chairman of the Central Military Commission Hu Jintao, mentioned new military sessions. Hu’s speech is used as the operative PLA doctrine to this day. This is the time where Beijing started to realize that it had to be able to compete asymmetrically. Not just in terms of a hard power race with the US, but China began looking for other ways to grow its capabilities and influence and clearly moved its focus into high-tech and cyber capabilities.

Table 2: Key developments 2000-2009
Table 2: Key developments 2000-2009
Source: Rabobank

Footnotes

[7] Speech by Jiang Zemin to mark the 80th anniversary of the founding of the CCP (July 1st 2001).

[8] Jiang Zemin, Selected Works of Jiang Zemin, Volume 3 (August 6, 2001).

[9] Cao Yunhua and Xu Shanbao, China’s policy of Good-neighborliness and ASEAN relations (2004) 4.

[10] Multi-polarization is the contemporary phenomenon that various regional arrangements take shape and interact with one another. The days are gone when a couple of mighty powers decided the destiny of the rest of the world.

[11] David Shambaugh (2013).

2010 - Present: A turning point?

"A prosperous and stable China will not be a threat to any country. It will only be a positive force for world peace"

- Xi Jinping, 2012 - [12]

The year 2010 has become known as China’s ‘year of assertiveness’. In the aftermath of the global financial crisis in 2008/2009, the Chinese management of a number of key political tensions in Asia - in particular acts of aggression from North Korea, to which China responded to in a different way than usual - demonstrated a change in posture and tone of China’s foreign policy. This also applied to issues regarding China’s maritime borders. China’s external/foreign approach seemed to have become more forceful towards countries in the region, as well towards the US. This change was driven by two main factors.

The first driver was that many people – strategic and economic thinkers in Beijing - were arguing that the financial crisis had significantly weakened the US - particularly due to the US government’s weakened financial position - and that the US government was therefore incapable to maintain its security presence in Asia. This was seen by China as an opportunity to press harder on some of its interests in terms of regional relations with Japan and outstanding territorial disputes and other issues in South East Asia.

The second driver emerged in 2010, when the upcoming major political transition in China started to come in sight. That year, the Chinese government was concerned about domestic instability ahead of the political transition. In that context there was a view in China that a more assertive foreign policy would be a winning story for the government. As a result, the Chinese government pushed ahead on, for example, the maritime border disputes and implemented a more forceful foreign policy in 2010, 2011 and early 2012. This approach backfired, however, as China lost a huge amount of their geopolitical credibility and political capital in Asia while its relation with the US deteriorated.

China’s assertive behavior has been interpreted by many as an indication that China was becoming an increasingly tough and narrowly self-interested nation, throwing its weight around seeking to maximize its own comprehensive power. But in the wake of these actions, after it became clear that the change in diplomatic stance had backfired, China recoiled and recalibrated/reviewed its diplomacy stance.

Economy

China is the second-largest economy in the world after the US, but average per capita income is still far below those of advanced economies. Furthermore, although growing, China’s overseas direct investments (ODI) and overseas development assistance (ODA) remain limited compared with those of other major nations. China has risen in rank quickly, but is still the world’s fifth-largest overseas investor (ODI was USD 60.5bn in 2011) and its ODA does not rank among the world’s top ten donor nations. China’s overseas investments are expected to grow considerably in coming years. Aid levels, however, are likely to remain more or less steady. Commentators’ estimates of Chinese aid expenditures vary, depending on which elements of Chinese aid are included in the calculation. Determining the exact amount of aid is complicated because of the strong link between Chinese aid, trade and investment. Official bilateral aid figures, for instance, which are released annually by the Chinese Ministry of Finance, do not include concessional loans. In 2012, the total budgeted figure for non-military aid, excluding concessional loans, was RMB19.2bn (USD3.05bn), and expenditure was RMB16.7bn (USD2.72bn). The 2013 budget excluding concessional loans is RMB19.8bn (USD3.23b).

China surpassed Germany as the world‘s largest exporter in 2009 and now accounts for more than 9% of total global exports. China’s continues to primarily export to the developed world, although exports to other emerging markets and developing countries are rapidly expanding. Meanwhile, China has grown increasingly dependent on the developing world for imports of raw materials inputs for its economy. In the coming years, as China’s export and investment-driven growth model is no longer sustainable, China has to undergo a major economic transformation. This will involve introducing market forces and environmental controls, raising incomes and distributing them more evenly. Increasing welfare no longer implies merely raising incomes, but also to generating sustainable growth. Double-digit growth rates are no longer feasible. Moreover, China has to address its inefficient state-owned enterprises and banking sector while dealing with a legacy of overcapacity and bad debt. China will thus need to focus on domestic issues in the coming years. The future role of China in world economics and politics depends for the bigger part on internal developments and stability.

Resources, especially raw materials, are a major driving force of China’s foreign policy, and an important determinant of external economic relations. Besides oil, China also actively seeks other natural resources or energy commodities – such as a variety of minerals, metals, copper, gold, etc. – and, increasingly, agricultural commodities, of which China needs to import larger amounts each year. Foreign economic relations are thus essential to ensure a steady and sufficient supply of commodities in order to maintain stable domestic growth. China’s export markets are important for gaining access these commodities and, in turn, supply China with the raw materials needed to keep its economy going. Advanced economies, meanwhile, supply China with high technologies, machinery, and specialized equipment. The importance that raw materials and natural resources play in the composition of China’s imports is increasing, which can partly be explained by China’s energy profile. China has an insatiable appetite for energy, which has so far been ever-growing. The majority of China’s oil imports arrive via sea and 77% pass through the strategic chokepoint of the Straits of Malacca. Therefore China is developing an ‘overland’ oil pipelines that traverses central Asia and the Caucasus mountains.

Global commodity prices are affected by China’s surging appetite for raw materials. This is one area where China definitely influences global trends. The vast majority of all China’s imported minerals and metals (over 90%) comes from direct purchases from suppliers or from international commodity markets. Its share of, and control over global production resources (e.g. mines) is, however, small compared to those of other national governments and leading international corporations. China’s own mining industry is one of the world’s largest producers of minerals including gold, but consists of thousands of small companies and is thus very fragmented, implying far-stretching consolidation is needed to create global majors. In January 2013, the Chinese government said it would promote mergers in nine industries to create globally competitive enterprises in, at least, the fields of steel and rare earth.

Political

In the past 30 years, China’s interests in the world have rapidly increased and China’s position in the world has become more important. In spite of China’s increased relevance to the world economy, the Chinese government’s interests remain strongly inward looking and focused on the further development of China into a strong, independent and wealthy country. It seems that China finds it difficult to make optimal use of its ‘new’ position and capital. China implements a trial and error approach, constantly receiving feedback in the form of unresolved issues that arise, reactions from other countries, and domestic reactions, and then makes re-adjustments to its foreign policies. Although China is ‘a regional superpower, and a global economic powerhouse, China is not (yet) a global superpower the diplomatic sphere and is not expected to play such a role in the next 20 or 30 years. China is mindful of the fact that such a global strategy has downsides risks.

With regard to international conflicts, China does not want such conflicts to distract from its economic development. Therefore, if possible, China tries to avoid international conflicts, or to freeze or appease them.

As one of the region’s superpowers, China has alternated in its behavior and orientation in the region; at times it take a tough stance against neighboring countries while, other times, more of a charm offensive is applied. In general, it is in China’s interest to keep the status quo – concerning Taiwan and the East and South China Sea conflicts- as it grows stronger more rapidly than its counterparts. In this way China can wait until it has become much more influential and turn the odds in its favor. At the same time, China puts domestic issues ahead of regional relations - at times at the expense of foreign relations. This creates a lot of anxiety in the region. As China’s economy continues to grow, its political importance to the region increases, as China becomes economically more important to countries in the region. Countries in the region therefore look to the United States for a strategic partnership as a counterbalance. It is striking that even Myanmar, traditionally close to China, is doing so.

Hotspots

A clear example of increased assertiveness in China’s Foreign policy in the last few years has been with regard to maritime border disputes along China’s periphery. China’s strengthened strategic posture is affecting the balance of power throughout the Asian-Pacific Region.

Table 3: Hotspots in the region
Table 3
Source: Rabobank

In China’s international relations community discussion on the issue of ‘soft power’ in major power diplomacy have become more frequent. Hu Jintao first drew attention to the importance of building China’s cultural ‘soft power’ – to improve its relatively poor image abroad - in 2007. In the areas of e.g. film, sports, tourism, fashion and design, education and research, China is more deeply etching itself in the consciousness of the global community. However, the overall impact of China’s global cultural presence should not be overestimated, as it lags far behind for example United States in most areas. China’s ‘soft power’ and global cultural appeal therefore remains very soft. In the words of David Shambaugh: ‘The Chinese government is approaching soft power as if constructing a high-speed rail; by investing money and expecting to see development. Soft power is not build this way, it has to be earned.’[13]

Military

China’s military position is far behind the United States. We are not a peer of the United States. We have been elevated – in the eyes of others – against our will. We have no intention to compete for global leadership.

Vice Foreign Minister Cui Tiankai - [14]

As stated before, from 1996 until recently (approximately 2008), there was a singular primary driver for Chinese military modernization: Taiwan and the Cross Strait crisis. However, the preponderance of the US in East Asia, also a factor in the Cross Strait crisis, has also been driving China’s military modernization and remains the main objective of its naval modernization to date.

Over the past two decades, China has been improving and expanding its military capabilities. Although its capabilities have strengthened, China’s military deployments have been limited to its own sovereign territory, its Asian maritime areas, and, from time to time, in international peacekeeping missions in other regions. China is able - by missiles and submarines - to operate within East-Asia as an Asian regional military power and strategic actor.

The only global power-projection capabilities China has are cyber warfare capabilities, its space program and international ballistic missiles. Chinese civilian and military officials frequently state that, as a matter of principle, that ‘China will never build military bases or station forces abroad’.

Republic of China (Taiwan)
The current situation is the result of the victory of Mao Zedong’s communists on the nationalists in 1949, which then relocated to Formosa (later Taiwan). Constitutionally, Taiwan claims sovereignty over the entire mainland China, while the People’s Republic of China sees Taiwan as one of its provinces. In July 1987, 38 years of martial law in Taiwan came an end. A new turning point in the relations took place in 1996. In Taiwan, democratic elections were held that year. These elections were to the chagrin of the Chinese Communist Party, as it considers itself the sole true authority of Taiwan. Four years later, the Democratic Progressive Party (DPP) led by Chen Shui-bian won Taiwan's elections. He made a case for an independent Taiwan and was re-elected in 2004. China wants to reunite Taiwan with the mainland. In recent years, closer economic ties between Mainland China and Taiwan, as well as changing public feeling towards China in Taiwan have led to an easing of tensions between the countries. However, China will still see any unilateral declaration of independence from Taiwan as an act of war.

Most major wars in history were caused by a shift of powers - as seen in the history of Europe from the last 200 years - rather than because of ideology. Against this background, the Chinese want to make clear that they don’t seek hegemony but desire a ‘peaceful rise’. However, as military capabilities improve, domestic nationalistic pressure grows. Within China (including within the PLA) some are urging China to become more assertive in protecting its interests abroad. How influential such voices are is difficult to estimate due to the lack of transparency regarding the relationship between the top political leadership and the PLA.

The rapid increases in defense spending in the past years have mainly been the result of China’s growing economy. As the main goal in the field of defense, to modernize the army, will remain, it is likely that defense spending will continue to grow in the future. China’s military capabilities still lag far behind those of the United States. China military power, therefore, should not be overestimated. Furthermore, spending on domestic security is higher than spending on the military, reflecting China’s focus on domestic rather than external stability.

According to Chinese leaders, China’s army is not yet able to fulfill all necessary and important aims. These are: defending the Party against internal or external enemies, defending the territorial integrity by defending the boarders and preventing the Tibet and Xinjiang provinces from gaining independence.

Figure 4: Military Budget Spending
Figure 4: Military Budget Spending

Source: Global Securiry

However, eventually China’s involvement in global security will all be shaped by its own national interest, apart from reactions from the international community. With this aspect, Beijing’s continuing twofold thought over international involvements, concerns about domestic development and issues influencing its interests, like maritime disputes, will continue to have a limiting effect on China’s role in global security. China continues to clarify to the world that it will ‘never seek hegemony’ once it emerges as a major international power. “China doesn’t have the desire or history to be a hegemon. But we do want to be a leader!”[15]

Table 4: Key developments 2010 – present
Table 4: Key developments 2010 – present
Source: Rabobank

Footnotes

[12] Quote by Xi Jinping, David Shambaugh, China goes Global: the Partial Power (2013) 45.

[13] David Shambaugh (2013).

[14] Vice foreign minister Cui Tiankai, 2012 – David Shambaugh(2013)

[15] David Shambaugh (2013).

Conclusion and outlook

"The greatest danger we have is overestimating China and China overestimating itself. China is nowhere near close to the United States. So this magnification of China, which creates fear in the United States and Hubris in China, is the biggest danger we face"

- Joseph Nye - [16]

It is clear that the world is facing a different China than thirty years ago. When analyzing China’s foreign policy, numerous actors play an influencing role. No single defined foreign policy exists. China’s foreign policy is influenced by the country’s growth path and mostly by domestic issues. Besides, China’s foreign policy can be seen as reactive.China’s foreign policy is also influenced by nationalism, and is resource driven.

The key objective of China’s foreign policy since Deng Xiaoping has been maintaining the dominance of the communist party. To maintain this dominance China seeks to keep the integrity as well as seeking to unify the motherland (referencing to Taiwan) and to ensure and maintain economic development (communism with a capitalistic view). The main goals of China’s foreign policy have little changed: keeping the CCP in power, defend sovereign and territorial integrity and increase economic development are still leading in China’s foreign policy decisions. The focus is now even more on domestic issues.

In the first years of the period 1980-2000, the focus of foreign policy shifted from ideology-driven to a more pragmatic way of acting, focusing on 'independence and peace'. After 1989the Tiananmen Square incident - China switched from a foreign policy that focused on the Soviet Union as an enemy and the USA as a quasi-strategic partner, to a low profile foreign policy focusing on autonomy and independence in which it did not maintain a strategic relationship with any great superpower. In the early 1990s, after Deng Xiaoping’s opening up of the country policies, China activated diplomacy with neighboring countries - by participating in regional institutions - beginning by normalizing diplomatic relations and demarcating mutual borders.

Military modernization in the early 1990s was triggered by the First Gulf War, at which time China realized that its military lagged behind the advanced American weaponry and operational concepts. China continued to maintain an independent stance regarding issues of proliferation of weapons of mass destruction and issues of human rights. However, it more 'assertively' claimed territorial and maritime disputes. The independence thought was further emphasized by the impact of the Asian crisis - 1997/98 - on China’s economy. China learned that a more pro-active attitude towards developments abroad was needed and was warned about the dangers of being too (economically) dependent on the US and Europe. Increased emphasis on national interest and nationalism was witnessed in this period. Hostile nationalism towards foreign powers was avoided in this period.

Between 2000 and 2009, China again experienced strong economic growth, averaging 10% a year. China’s economy now accounted for 10% of the world economy. Change to a more active role was witnessed in China’s position in international institutions during the early 2000s. After China joined the WTO in 2001, exports grew rapidly. Growth of FDI inflows stimulated China’s economic growth and China’s share in world trade increased. Jiang Zemin changed the style of diplomacy from careful observation to outgoing actions. The statements of his successor, Hu Jintao, about a "harmonious world" - an expression he began emphasizing in 2005 - was also as least partly intended to counter the notion of China as a threat. Since 2006, China has come to exhibit the belief that its foreign policy should be geared towards safeguarding its national sovereignty, security, and development interests.

In response to the global financial crisis of 2008 - aware that a crisis in the western economy implied a substantial impact on their export performances - China rapidly developed a massive economic stimulus plan focused on investments in order to achieve the still, relatively high GDP growth projections. With regard to foreign policy, China has followed a more revisionist attitude since 2008. Since, China has been trying to improve its international image by building its 'soft power', although the impact of this has so far been relatively limited. At the same time, China pursues and has a long articulated a foreign policy agenda that favors multi-polarization, equality in international relations, and empowerment of developing nations. China remains very conflicted about its international identity and responsibility. China’s participation in UN peacekeeping operations is therefore an evolution in China’s viewpoint. In the military field, the doctrine of 'local war under high-technology conditions', modified in 2001, emphasizes the important role played by information technologies in modern warfare.

The year 2010 has become known as China’s 'year of assertiveness'. It was argued that the financial crisis had significantly weakened the US and its security presence in Asia, which was an opportunity for China to press harder on some of its interests in regional relations with Japan and outstanding territorial disputes. Another driver for increasing assertiveness was the 2013 political transition in China. With the Chinese government being concerned about domestic instability ahead of the political transition, a more assertive foreign policy would be help to cement support for the government. However, China’s assertive behavior was interpreted by many as an indication that China wanted to maximize its own comprehensive power. China’s more assertive stance backfired, however, as China lost a lot of political capital in the region. Hereafter, China recoiled, reviewed and moderated its diplomacy stance.

So to what extend did China really become more assertive? China has become more assertive only on a limited range of issues, while the overall policy framework has remained largely unchanged. Thus, China increased assertiveness on some issues did not constitute an across-the-board new assertiveness or a fundamental change in China’s foreign policy. A clear example of China increased foreign policy assertiveness could be seen in regard to maritime border disputes in recent years. However, in the end, China does not want such conflicts to distract from domestic economic development. Therefore, whenever possible, China prefers to avoid international conflicts, or to freeze or appease them. China has been steadily improving and expanding its military capabilities over the past two decades. However, China has thus far limited its military deployments to its own sovereign territory, its Asian maritime littoral, or in international peacekeeping missions in other regions.

The Chinese government’s interests remain strongly inward looking and focused on the development of China becoming a strong, independent and wealthy country. Its diplomacy remains risk-averse and guided by national interests. Although China is a regional superpower and global economic powerhouse, it is not (yet) a diplomatic global superpower. China’s diplomacy is usually adopting the safest and least controversial position. Exceptions here are Taiwan, Tibet, Xinjiang, human rights and its maritime territorial claims. Other than protecting these narrow national interests, Chinese diplomacy remains extremely passive for a nation of its size and importance.

China has become more assertive with regard to its position within international institutions such as the United Nations, but this is also mainly economically driven.

China seems to have become most assertive in the military field. However, it often remains passive in addressing international security challenges or global governance issues. China is present but not influencing. Militarily, China is not able to project power outside of the Asian region.

Looking forward

How is China’s foreign policy expected to develop in the future? China’s going global will undoubtedly be the most significant development in international relations in years ahead.

China predominantly wants to send out a signal that the focus is on domestic issues, and thus wants to calm foreign issues. The new foreign policy team in China has signaled a more moderate approach to diplomacy. Even so, the current issues will remain while new issues will likely arise as China becomes further integrated in the world in economic sense. As China attaches great importance to stability, it is unlikely to provoke conflicts unnecessarily.

In the first months of 2013 there has been a key shift in China’s foreign policy line away from the at times provocative line seen in the last years under President Hu Jintao. China has become aware that realizing the 'Chinese dream' requires a peaceful and stable international and neighboring environment. As the focus is on taking on difficult domestic reforms, China prefers to maintain more stable international relations. This policy line is expected to persist in the coming years. The new, more moderate approach in the foreign policy of the New Leadership is seen in China’s recently started diplomatic effort to ease tensions with Japan (e.g. conversations involving Japanese companies were approved again). President Xi Jinping and the other members of the Standing Committee of the Communist Party’s Politburo are much more experienced in foreign policy than their predecessors. However, on the textual and rhetorical level, there are some minor changes; on the rhetorical level China is a more self-conscious about its role and its own interest, but in a natural way and non-threatening manner.

China isn’t fully aware of the role which it is increasingly being assigned by the world; China is expected to take initiative in major international discussions and conferences.When it concerns an international stakeholder position with international responsibilities China prefers to keep a low profile. Many countries in Asia, Europe and the United States think of China as a 'bigger' and political more important country than it actually is. The picture of a China as a threatening superpower, which it may become in the distant future, is projected on present day China. China is far from ready to take on a world leadership role - if it will ever be.

Footnote

[16] Joseph Nye, in: David Shambaugh, 2013.

Literature

Alastair Iain Johnston, How new and assertive is China’s new assertiveness? International Security vol. 37, no 4, 2013.

Cao Yunhua and Xu Shanbao, China’s policy of Good-neighborliness and ASEAN relations, Peace Quarterly, serial no. 42, 2004.

Chen Zhimin, Nationalism, Internationalism and Chinese Foreign Policy, Journal of Contemporary China, vol. 14, issue 42, 2005.

David Shambaugh, China goes Global: the Partial Power, 2013.

Deng Xiaoping, Selected Works, 10 October 1978.

Jiang Zemin, Selected Works of Jiang Zemin, Volume 3, People’s Publishing House, 2006, August 6, 2001, pp. 314–317.

Jiang Zemin, speech to mark the 80th anniversary of the founding of the CCP, July 1, 2001.

Jonathan Holslag, The reluctant pretender: China’s evolving presence in the Indian Ocean, Asia Paper, vol. 7, issue 1, 15 January 2012.

Kees Homan, China, Vreedzame opkomst of militaire dreiging?, Atlantisch Perspectief, vol. 30, issue 2, 2006.

Linda Jakobsen, Seminar China’s Foreign Policy Dilemma, National Security College, Australian National University, May 2013.

Linda Jakobsen and Dean Knox, New foreign policy actors in China, Sipri Policy Paper, 2010.

Mitsuru Kitano, China’s Foreign Strategy, Asia-Pacific Review, 2011.

Olson and Prestowitz, The evolving role of China in international institutions, The Economy Strategy Institute, 2011.

Interviews

Interview AIV, Mark Waanders, Jantinus Smallenbroek, Advisory Council on International Affairs, May 30th 2013.

Interview Frank Pieke, Professor, Leiden University. May 8th 2013.

Interview Haico Ebbers interview, Director of Europe-China institute, Nyenrode business University, June 11th 2013.

Interview Marten Wiegman, NOS, International Economist, July 26th 2013.

Interview Robert Lemstra, Cultuur Historische Achtergronden, Ministry of Defense, August 9th.

Interview Nick Consonery, Eurasia, April 5th and May 20th 2013.

IHS Forum Amsterdam Session IV ASEAN Economic Outlook: Risks & Opportunities for the ASEAN Giants, May 21st 2013.

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