China’s Alternative Diplomacy

Chinese President Xi Jinping has certainly kept China experts busy since he came to power in 2012. Xi has made major changes to Chinese policies, domestic and foreign. These policies have been quite different from those of his predecessors, keeping China scholars occupied explaining their meaning and implications. This has been particularly evident in the foreign policy sphere. China watchers have been combing through the details of the new initiatives and proposals Xi has recently introduced, such as “One Belt, One Road” (1B1R) and the Asian Infrastructure Investment Bank (AIIB). Even though these new initiatives are still under construction, the fact is that this has been the biggest foreign policy shift in Beijing since 1989. The bigger question here is, what is the grand strategy behind Xi’s plans?

I call it China’s “alternative diplomacy.” Xi’s strategy is a sophisticated and progressive one. Instead of directly challenging existing international institutions, the Chinese are trying to create new platforms that Beijing can control or substantially influence. Through these new initiatives, Beijing aims to create a new international environment that is more favorable to China, one that will limit strategic pressures from the United States. Beijing wants to gradually take progressive, but not provocative, steps forward in these endeavors. On the surface these steps aim only to further economic development enterprises, and Beijing is trying to promote them as pure economic and trade initiatives. Below the surface, however, Beijing is trying to work for China’s greater security and long-term strategic objectives.

During last November’s APEC meeting, Beijing presented its proposals for regional integration. These included the creation of the Free Trade Area of the Asia Pacific (FTAAP) and the AIIB. The FTAAP is basically a Chinese alternative to the Trans-Pacific Partnership (TPP); rather than directly working against and undermining the TPP, it’s a Chinese version of the proposed trade bloc. Similarly, the AIIB is a Chinese version of the Asia Development Bank (ADB) and World Bank. While the new institutions will be open to all and multilateral, they are to be centered within China. Beijing wants to maintain influence and control within the organizations, and provide incentives for other states to participate. Instead of withdrawing from existing institutions and systems, China is trying to progress one step at a time. In creating its own alternatives, China maintains more control, and can make a greater impact.

Scholars have long debated whether China is a status quo or revisionist state. From a Chinese perspective though, a key question for a rising nation is how to handle its relationship with existing global institutions and systems. Although China is the largest economy in Asia, Japan dominates the ADB. Japan’s voting share is more than twice that of China’s, and the bank’s president has always been Japanese. Looking at the landscape from Beijing’s point of view, this is unquestionably a biased situation. Even with the IMF, reforms to give China a greater voice have been delayed for years. In response, China’s new strategy is to try to establish new institutions and platforms as tools for Beijing to play the kind of role China cannot play in the ADB or IMF. However China has been cautious not to upset the current global system and has been taking a two-track approach in this endeavor. On the one hand it is creating new institutions, and on the other it is still actively participating in existing institutions such as the World Bank, WTO, IMF and ADB.

In the realms of security and politics, China has also been working hard to strengthen or revitalize several organizations, such as the BRICS, Shanghai Cooperation Organization (SCO), and Conference on Interaction and Confidence-Building Measures in Asia (CICA). With the same alternative strategy, Beijing is trying to use these organizations to counterbalance the NATO and U.S. military alliances in Asia. Even though it cannot control these three organizations, Beijing is still trying to bolster its leadership within them.

One Belt, One Road: China’s Asia Pivot

On the surface, “one belt, one road” simply describes a far-reaching economic development plan and focuses on improving trade, infrastructure and connectivity in this region. The new Silk Road Economic Belt will link China with Europe through Central and Western Asia, and the so-called 21st Century Maritime Silk Road aims to connect China with Southeast Asian countries, Africa and Europe. The real purpose of this initiative, however, is security. China is using this plan as an attempt to improve relationships with its Asian neighbors. Its neighbors in East and Southeast Asia meanwhile hope this initiative will help mend relationships after much divisiveness over the South China Sea in recent years.

China is also looking to increase friendly dealings with countries in Central Asia and West Asia. Its reasons are twofold. First, it simply wants greater access to resources, specifically oil and gas. The second relates to China’s trouble with the Muslim population in western China, especially the Uyghur separatists who have connections with Central and West Asian countries. Beijing hopes this initiative will help in dealing with these security challenges by gaining better support and collaboration from the governments of the Central and West Asian Countries.

“One belt, one road” can also be seen as China’s first formal response to the United States’ so-called pivot to Asia. Since the U.S. announced its Asia rebalance policy the Chinese have perceived it as a major threat to their security. While making Beijing very uncomfortable, for several years there has been no direct response in the form of policy or behavior from Beijing. In fact, 1B1R is China’s own Asia pivot. Beijing is in a manner masking the real intent of the proposal to avoid a direct confrontation and challenge to the U.S. rebalance. Beijing has been smart in borrowing the Silk Road moniker to name the initiative, reducing the sensitivity of the geopolitical connotations, and the PRC government has refused to agree that the initiative is China’s Marshall Plan.

Beijing also wants to use 1B1R to make the best use of the strengths it does have. With these initiatives China is planning to build highways, express railways, pipelines and ports, and to use these new outlets to bind China with other countries in the region. This is an area where China has strengths. First, it has a large trade surplus and seeks effective ways to use that surplus. Moreover, in the wake of the global financial crisis, investment in Europe and America became more risky, so allocating its surplus to Asia-Pacific infrastructure looks a good option for Beijing. Second, excess capacity has been a problem for China with all its development ventures in recent years, and all this has created huge environmental issues, such as smog generated by steel factories in the north of the country. By promoting 1B1R and regional infrastructure development, China could send these factories and manufacturing hubs to other nations in the region. We shouldn’t be surprised to see China’s steel manufacturing move to Kazakhstan or Cambodia in the next several years. Moreover, China has seemingly unending human capital and infrastructure development experience, which makes it unique in its ability to put this plan into action and export these large reserves to its neighboring states.

By exporting technologies and deepening economic and trade relations with surrounding regions China also hopes to find new and bigger markets for “Made in China.” This development will improve transportation and integration between China and the Asian regions, which may also encourage China’s neighbors increase their reliance on Chinese markets and capital. Finally, it would help China take on a leadership role in the region, allowing it to more successfully balance the U.S. pivot to Asia.

From ‘Free Rider’ to Provider

In an interview with the New York Times in August 2014, U.S. President Barack Obama said that China had been a “free rider” for the last 30 years and blamed it for not taking on more of its international obligations. The accusation is not without foundation. For a long time, Beijing has mainly been a participant and follower in global affairs, rather than an active leader, initiator, or provider of public goods. With these new initiatives, however, China’s shift to a more active leadership role is clear. For Beijing, this is indeed a major transformation. In a response to Obama’s comments, Xi has talked openly about China welcoming its neighbors to be free riders on China’s development through these new initiatives. This change of attitude is positive, and one that needs to be encouraged. The international community should welcome a rising China that willingly takes on greater global responsibility and leadership, no matter whether Beijing has any special strategic motives behind its investment plans. It is important that in this globalized world we avoid seeing everything from a zero sum perspective.

It is still too early to foresee the success of these new initiatives China has planned. It will very much depend on how China’s neighbors respond. Beijing still has some major hurdles to clear. It is possible that China’s neighbors will welcome the influx of money and resources to their shores, but won’t reciprocate in granting China greater influence or closer political and security ties. In recent years we have seen a rising anti-Chinese sentiment in many neighboring states, one that could magnify with the new initiatives. People in area nations have grown weary and unhappy at the major Chinese presence already in their home. China’s new investment will definitely bring with it a greater Chinese presence, and this could even cause new tensions. The recent presidential election in Sri Lanka saw pro-Chinese President Mahinda Rajapaksa voted out of office, after President-elect Maithripala Sirisena strongly criticized Rajapaksa during the campaign for his China policy, accusing him of turning Sri Lanka into something of a new Chinese colony.

The worst scenario for Beijing is for all the new proposals and plans to wind up being China doling out money to regional states without getting the influence it seeks in return. Many of these countries will still choose to work with the United States on security issues while cooperating with the Chinese on development. As it goes in international relations, money cannot buy loyalty. Influence does not derive from a country’s coffers, but rather from the promotion of shared values and soft power. Whether China can accomplish its strategic objectives will be very much dependent on whether Xi’s new initiatives and policies are supported by China’s ability to inspire its neighbors to share in its vision. The integration of Asia will not work itself out not only through railroads, highways and pipelines, but will depend on whether Asian countries can build common identity and values.

Additionally, taking on a new leadership role is also a challenge for Beijing. It is always easier to be a follower than a leader. Leadership builds on capabilities in policy research, communication and implementation, as well as soft power. For China to fill this leadership role it needs to strengthen the instruments that shape these ideas, improving policy research and think tanks. To serve as a leader without being well prepared for the role could be risky. Ultimately, extending hard power requires a healthy dose of soft power.