Tensions with Japan led China’s leaders to stay away from a meeting of
global finance chiefs held in Tokyo last week. This is an example of China’s
increasingly assertive foreign policy, which is endangering the mutually
beneficial economic environment it built with the United States and other
trading partners.
It wasn’t always this way. From
1997 to 2005, China had an exceptionally adept foreign policy. Beijing
orchestrated a number of moves that drew favor from its neighbors—and from many
observers in the United States as well.
China offered $1 billion in aid
to Thailand during the 1997 financial crisis without the tight conditions
imposed by the International Monetary Fund (IMF). It also established the
China-ASEAN (Association of Southeast Asian Nations) Free Trade Agreement and
did not require immediate reciprocity in tariff reductions from the Southeast
Asian states. China also encouraged the development of the “ASEAN Plus Three”
framework to link itself with South Korea, Japan and Southeast Asia, and in
many settings Beijing stressed that China would have a “peaceful rise.”
Overall, there was a major effort by the Chinese (and those who spoke for China
in the West) to say that Beijing’s leadership was focused on economic
development, not military strength.
Since about 2005, however, China
has pursued a much more assertive, less cooperative foreign policy. Beijing has
made assorted efforts at slowing progress in the East Asian Summit (where the
United States has some influence). Most importantly, China has taken an
aggressive stance on a series of territorial issues, from the dispute with
Japan over the Senkaku/Diaoyu Islands to disagreements with the Southeast Asian
states over the Spratly Islands and the South China Sea. Beijing has also
reinitiated its disagreements with India over sovereignty in Arunachal Pradesh.
Those who want to portray
Beijing’s policies in a favorable manner have said that these territorial
disputes are long-standing ones and that China is just reasserting old claims.
Yet, there are some new
developments that cast doubt on the view that China is just pursuing a
cooperative, “economics first” strategy. In the South China Sea, China has been
willing to use force to impose its will on Vietnam and the Philippines
regarding disputed claims. To protect its shipping on the Mekong River, China
now has put its armed patrol boats on a part of the Mekong—to the dismay of the
government in Laos.
Moreover, in contesting
sovereignty over the Senkaku/Diaoyu Islands, China has adopted very aggressive
policies toward Japan. Beijing cut off supplies of vital rare-earth metals
(necessary for manufacturing many electronic devices). Chinese ships repeatedly
have violated Japanese waters, and one even rammed a Japanese Coast Guard boat.
Now, apparently in protest over
the transfer of ownership of the Diaoyu Islands from a private investor to the
Japanese government, Beijing has decided to withdraw the participation of Chinese
state-owned banks from this month’s World Bank/IMF meetings being held in
Japan.
What should we make of this new,
more strident Chinese foreign policy?
It is possible that maneuvering
behind the scenes over the current political transition is exacerbating
nationalist trends in China and no one wants to take the unpopular step of
stopping protests and taming the rhetoric.
It is also possible that, because
of censorship and government control of research institutes, many in the
Chinese leadership and the Chinese public more broadly actually believe that
the Senkaku Islands and the entire South China Sea belong to China.
However, the senior leadership in
Beijing and the top figures in the research institutes all have access to
foreign sources. They know that, at a minimum, China’s claims are overstated.
No official explanation has been
given for the withdrawal of the state banks from the World Bank/IMF meetings.
Since Beijing has succeeded in getting a Chinese citizen, Min Zhu, appointed
deputy managing director of the IMF, presumably China wants to keep reasonable
relations with the fund. Thus, the world is left to intuit that this should be
seen just as a protest against Japan. The problem with this type of blunt
diplomacy is that it appears petulant and is unlikely to solve anything. Only
an offer to seek arbitration of some kind is likely to move the Senkaku/Diaoyu
controversy beyond the present miasma.
What does this tell us about the
bigger issues in Chinese foreign policy? Have the Chinese misjudged the
advantages of coercion? We don’t know the Chinese leadership’s views on these
issues, but the current trend casts doubt on the idea that economics is China’s
principal concern.
China continues its rapid
military modernization, has recently used its clout with Cambodia to block any
resolution within ASEAN of the South China Sea territorial issues, and thwarts
the United Nations in developing a comprehensive approach to the Iranian or
Syrian situations.
In addition, although specialists
have been familiar with the problems of Chinese intelligence penetrating
corporations, the American public has only recently gotten information on these
intrusions. Chinese hacking into U.S. government and corporate computers occurs
on a frequent basis. Then there was the attempt by Chinese-owned Ralls
Corporation to buy a wind farm in Oregon overlooking a U.S. military base. This
month, the release of information by the House Intelligence Committee that two
Chinese telecommunications corporations, Huawei and ZTE, are failing to provide
transparency on their operations indicates that strategic objectives prevail
over economic ones in many parts of Chinese foreign policy.
Since China is no longer a net
purchaser of U.S. Treasury securities and now wants to shift its capital
outflows to equity purchases, Washington has greater leverage than it did when
Beijing was a principal financier of the U.S. fiscal deficit.
China is unlikely to give up its
mercantilist diplomacy, so the United States should pose choices for Beijing.
If China’s next leaders want a cooperative economic environment, then they need
to pursue a less abrasive foreign policy. If the stridency continues, then we
know that the peaceful rise was only a phase—and the United States is in for a
more direct challenge.
David Denoon
David Denoon is a professor of politics and economics at New York
University and director of NYU’s Center on U.S.-China Relations
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