China in 2012: Foreign Affairs a Secondary Priority but Salient Challenges Ahead

This year holds major domestic preoccupations for Chinese leaders. Heading the list are preparations for the 18th Chinese Communist Party Congress later this year and the following National Peoples Congress in early 2013. To ensure a smooth transition that will sustain the unity and legitimacy of Communist Party rule, President and party leader Hu Jintao and his colleagues in China’s collective leadership are expected to devote special attention to carefully managing the leadership changes involving most top posts and thousands of important positions in the Chinese party and government structure.

Chinese foreign relations take a back seat in Chinese policy priorities during such transitions. For almost a year during the lead up to the 17th party congress and related National People Congress five years ago, Hu stopped his usually busy foreign travel schedule and stayed at home to deal with the transition and related issues (“Incremental Progress without Fanfare,” Comparative Connections, April 2008).

International harmony is an important goal of the Hu Jintao administration. It provides an appropriate environment, a “strategic opportunity,” for China to continue to develop national wealth and power in the first two decades of the 21st century. As a result, the outgoing Chinese leadership has worked hard to promote stable relations with China’s neighbors, the United States and other powers in China’s ever widening scope of deepening international involvement. The upcoming Chinese leaders expected to take top-level positions dealing with foreign affairs in the new party and government hierarchy have come up the ranks and duly supported harmonious foreign relations.

Unfortunately, the foreign policy objectives of harmony and stability have been challenged at home and abroad. Domestic commentators seen as representing important leaders, bureaucracies or other interests have pushed in recent years for more assertive policies that employ China’s growing power and capabilities in order to defend Chinese sovereignty and interests in the face of perceived intrusions and challenges by neighboring countries, the United States and other powers. They have supported sometimes tough statements by the Chinese foreign affairs apparatus and periodic shows of force and resolve by Chinese military and other security forces. Even Chinese leaders stressing harmonious relations with neighbors and involved powers like the United States also have underlined Chinese resolve in defending “core interests” involving sovereignty, disputed territorial claims and interference in Chinese internal affairs.

Chinese neighbors generally have not been intimidated by Chinese truculence. While continuing to seek mutual benefit in close economic and diplomatic engagement with China, they have engaged in self strengthening, cooperation with other concerned neighbors in bilateral relations and multilateral forums, and growing ties with the United States as means to protect their interests. The United States has weighed in with a new emphasis on the Asia-Pacific region that strengthens allies and associates at odds with China over territorial or security concerns, competes with China for leadership in regional economic and security forums, and sets forth a vision of a Pacific community with democratic values and trade and security goals opposed by China.

As a result, China has endured recent setbacks in Asian multilateral groups where it had previously held sway. China’s leaders lost face as they failed to keep the controversial and sensitive issue of the South China Sea off the agenda at the ASEAN Regional Forum meeting in Vietnam in July 2010 and at the Asian leadership summit meeting in Indonesia last November. Among China’s troubled bilateral relations, even Myanmar, the neighboring country sometimes seen as most dependent on China, reflected weakened Chinese influence when it surprised China by cancelling a several billion dollar Chinese dam project in September 2011 and subsequently reached out to an interested United States in seeking to broaden its foreign options (“China Assesses President Obama’s November 2011 Asia-Pacific Trip,” China Brief, December 20, 2011).

In sum, China’s main problems in foreign affairs in 2012 relate to Chinese leaders’ difficulty in sustaining an effective and unified approach to foreign affairs amid challenges along China’s periphery in Asia.

A second set of problems in Chinese foreign affairs involve consequences of the protracted weaknesses in the economies of the United States, Europe and Japan, the main destinations of China’s export-oriented economy. One questions is how the negative consequences of falling exports for China’s domestic economy will mesh with Chinese nationalistic sentiment and reinforce China’s usual negative reaction to growing international criticism of Chinese trade-related economic practices. Another is the impact that strengthened Chinese preoccupation with concrete economic gains for China will have on its interaction with other countries and international organizations. The self-centered Chinese approach has often disappointed those seeking more generosity and leadership from the world’s second largest economy.

Fractured Authority amid Challenges in Asia
 
Specialists remain unsure what exactly prompted more assertive Chinese actions since the end of the past decade regarding contested claims along China’s periphery, perennial disputes with the United States over Taiwan and Tibet, challenges to U.S. economic policies and the leading role of the US dollar, and other issues. Some specialists played down the assertive nature of the Chinese actions, but a more mainstream view based on in-depth study and extensive interviews held that the harder Chinese approach reflected a spectrum of opinions in what is seen as “fractured” Chinese foreign decision making, ranging from Maoist leftists and a strong nationalist wing on one side to much less influential liberal internationalist officials on the other. Monitoring how the Chinese leadership reflects such varying views and endeavors to weave them into an approach that supports the stated objective of harmonious foreign relations represents a major task for analysts during the coming year and beyond [1].

The consequences of the Chinese assertiveness and truculence, presumably supported by strongly nationalistic leaders, have been widely seen abroad and also by some leading commentators in China as negative for Chinese interests in preserving a stable environment needed for smooth economic development and leadership transition. Authoritative statements by the Chinese government and senior Chinese leaders, notably China’s top foreign policy official, State Councilor Dai Bingguo, have reaffirmed China’s longstanding commitment to peace and development in an effort to reassure neighbors and other concerned powers. At the same time, however, Chinese security forces confront foreign intruders as they build ever greater capabilities to secure Chinese contested territorial claims. When Secretary Clinton at the July 2010 ASEAN Regional Forum meeting joined others in expressing concerns about China’s position regarding the South China Sea, the usually diplomatic Chinese foreign ministry reacted harshly to this perceived American “attack” on China (“China’s Search for a Grand Strategy,” Foreign Affairs, March/April 2011; Beijing Review, December 23, 2010).

The mix of messages of reassurance and signs of assertiveness put many of China’s neighbors on edge, strengthening their interest in developing closer ties with one another and with a willing and re-engaging United States to deal with their common China problem. One way out is for China to show clear commitment to policies of reassurance. Unfortunately, such an approach can easily be seen in China as appeasement that might encourage growing foreign intrusions involving China’s territorial claims and other key interests. Moreover, China’s recent truculent behavior has alerted foreign powers that Chinese reassurances may be ephemeral. As a result, current wariness by Chinese neighbors probably will not be easily reduced unless declarations of reassurance are accompanied by concrete actions involving compromises of important Chinese interests and principles.

A major step forward in improving Chinese relations with its neighbors would see China undertake serious efforts to define its uniquely broad claim in the South China Sea in a clear way that is compatible with principles accepted by the international community, especially China’s neighbors. Also helpful in easing tensions and improving relations would be more active and accommodating Chinese negotiations with ASEAN members on implementing the declaration of the code of conduct in the South China Sea. Analysts also will need to evaluate the behavior of Chinese fishing and other coastal security forces for signs of moderation or assertiveness in dealing with perceived intrusions by foreigners along China’s maritime rim.

The salience of the recent disputes is reinforced because China’s periphery in Asia has always been the area where Beijing has exerted greatest influence and devoted the greatest attention in Chinese foreign relations. One needs to add here that these disputes are generally not great matters of war and peace. All parties are inclined to avoid military conflict and to sustain active engagement with one another as they endeavor to manage disputes in ways that benefit their respective interests. China and most other neighboring states as well as the United States and other concerned powers see their legitimacy resting heavily on economic development, which would be undermined by serious conflict. Moreover, not all sectors of China’s periphery show serious challenge. The Central Asian countries and China have witnessed improved relations in recent years. Relations with North Korea and Taiwan also have improved, though not without reservations or negative implications. Relations with Russia seem stable. Elsewhere, in northeast, southeast and southern Asia, China’s relations have encountered continued and often growing troubles.

China’s Asian Priorities

In China’s calculus, Taiwan probably remains the most important area around China’s periphery [2]. In the past four years, cross strait relations have improved dramatically and to the benefit of Chinese interests in halting moves toward Taiwan independence and moving Taiwan ever closer to China. The victory of incumbent President Ma Ying-jeou and his Kuomintang Party colleagues in the presidential and legislative elections on January 14 helped to preserve the gains China has made. Looking out, analysts will need to assess the influence of Taiwan’s vibrant political opposition among other factors limiting Taiwan’s moves closer to China, and to evaluate China’s positions in dealing with the Ma government, especially as Hu Jintao, the main architect of China’s current Taiwan policy, retires from leadership positions.

The strategically vital Korean peninsula comes next in Chinese priorities. To deal with uncertainties caused by the dynastic leadership succession in North Korea, Beijing has solidified political, economic and military relations even though Pyongyang periodically attacks South Korea, continues developing nuclear weapons and governs malignantly causing recurring food shortages. What President Obama depicted as China’s “willful blindness” to North Korea’s provocations has undermined past gains in Chinese relations with South Korea, posing a major challenge for Chinese diplomacy (New York Times, December 6, 2010). China can be expected to emphasizes the broad common ground between Beijing and Seoul over burgeoning economic, cultural and political relations in order to offset South Korean anger and concern over China’s close alignment with the North. South Korea also seems dependent on China as the main foreign intermediary for interaction with the reclusive North.

Chinese tough handling of territorial disputes with Japan has added to concerns over Chinese support for North Korea and the buildup of the Chinese military to reverse tendencies by the Democratic Party, in power since 2009, to adjust Japan’s position more toward China and away from the United States. As in the case of South Korea, China probably will expand trade and other economic relations in order to ease tensions and improve relations. Also, analysts will assess the implications of Chinese, Japanese and South Korean leadership meetings and other efforts to develop common policies, thereby closely integrating the three countries as a multilateral group.

The states of Southeast Asia and their regional groupings centered on the Association of Southeast Asian Nations (ASEAN) come next in priority in Chinese interests. As noted above, China’s ability to return to its impressive advances in relations in the region during the post -Cold War period will depend heavily on how it deals with recent disputes, especially over the South China Sea.

The massive geographic barrier of the Himalayan Mountains means that southern Asia is somewhat lower in China’s regional priorities. India’s rise has followed China’s and coincided with Chinese and Indian overtures that significantly improved relations. However, progress on border issues stalled, and in recent years the two sides have registered sharp public disputes amid periodic reports of troop mobilizations along the frontier. They also differ over Tibet and regarding India’s developing strategic relationship with the United States and China’s close security ties with Pakistan.

The U.S. re-engagement in Asia undertaken by the Obama government means the United States will be more deeply involved in all of these sensitive areas along China’s periphery. Chinese officials in the past registered often prickly opposition to such perceived U.S. efforts to “contain” and “encircle” China. Recent Chinese commentary has been more reserved and measured, though deep suspicion of U.S. policies and practices persists. How such sentiment influences Chinese foreign policy represents a crucial and as yet unclear determinant in Chinese international behavior in the near future.

Meanwhile, India, Japan and Australia are the leading Asian-Pacific powers seen working with or in parallel with the United States in complicating China’s approach to its periphery. India’s military cooperation with the United States and Japan, its “look east” policies focused on Southeast Asia, and its cooperation with Vietnam in oil exploration in South China Sea areas claimed by China head the list of Chinese concerns.

Against this background, analysts and other interested observers will need to assess the following: (1) possible lapses in Chinese efforts to maintain a measured public stance toward its neighbors and the United States in Asia; (2) gains China makes through growing economic and other cooperation with neighboring countries; and (3) signs of Chinese flexibility in the handling of territorial or other disputes with its neighbors. Indicators of tougher Chinese policies and practices include the kinds of assertive and truculent actions seen directed at the United States and neighboring states during 2009-2010, that have subsided somewhat over the past year.

Meeting Economic Expectations Abroad

Poor world economic growth featuring stagnating U.S., European and Japanese development poses challenges for Chinese foreign relations as well as Chinese economic growth. In these circumstances, major developed countries have less ability to play their past leadership roles in supporting efforts to assist world development. Increasing international attention is focusing on China as the world’s second largest and best performing economy. With over $3 trillion in foreign exchange reserves and other resources, China is seen by various foreign representatives as needing to assist others in order to restore stronger international development and deal with related common concerns. The international spotlight also focuses more on narrowly self-serving features of China’s economic practices and their negative consequences for broader international development (New York Times, November 22, 2011; “An Economic Assessment of China’s Rare Earth Policy,” China Brief, November 5, 2010).

Preoccupied with declining Chinese economic growth amid sensitive leadership transition at home, Chinese leaders show little sign of responding positively to these international interests and concerns. Analysts will assess the resulting implications of persistent and probably growing friction in relations with both developed and developing countries. Chinese leaders insist that Chinese assistance and other economic involvement abroad adhere to China’s “win-win” formula whereby China’s contribution needs to provide generally concrete benefits (a “win”) for China’s development. Thus, China eschews most grant aid or foreign assistance that may not be paid back, while it continues to receive several billion dollars annually in assistance from international financial institutions and UN programs, along with various programs from developed countries. China also ensures that it continues to enjoy low annual dues to the UN budget—about the same as Spain—and a commitment to the UN peacekeeping budget—about the same as Italy. China generally dismisses international complaints regarding Chinese state directed and financed trade, investment, intellectual property rights and market access practices as unwarranted and is quick to retaliate against foreign pressure [3].

European leaders seeking Chinese financial support for faltering state finances have been disappointed by China’s reluctance to lend and its insistence on clear guarantees for repayment with interest. The calculated Chinese support for its “all weather friendship” with Pakistan has carefully avoided the kind of broad assistance Islamabad seeks now that its relations with the United States and its multibillion dollar annual aid efforts are in decline. After eschewing criticism of Chinese trade and other economic practices for many years, President Obama has publicly lost patience and joined a growing chorus of American and other international critics in attacking China for “gaming” international economic practices in self-serving ways that come at the expense of others and the overall viability of the liberal trade and investment regime (Reuters, November 14, 2011).

China has the option of following the requests and demands of the United States and various developed and developing countries to adopt more generous and “responsible” international economic practices that help to sustain the existing international economic system, which has benefited China’s development. Whether or not China is willing the bear the costs of these kinds of change in policy will be an important determinant in what role China actually plays in the world political-economy.

Meanwhile, China’s growing importance in fostering economic activity among developing countries has been accompanied by continuing and sometimes growing dissatisfaction with Chinese practices that seems likely to persist with stagnating international growth. China provides extensive financing for often Chinese built infrastructure projects that facilitate exports of raw materials to China’s remarkably resource intensive economic growth. China’s need for foreign resources was underlined by a Chinese official who told the media in 2010 that China used four times the amount of oil to advance its economy a specific amount than did the United States (China Daily, May 6, 2010). China balances these massive raw material imports by promoting through state support and other means large flows of Chinese exports of manufactured products to developing countries. The overall pattern is seen by critical observers in developing countries and the West as reminiscent of past colonial efforts to gain valuable commodities, markets and contracts to produce infrastructure projects; the recipient country is required for many years into the future to make payments in kind or cash for infrastructure that historically has proven to be hard to maintain and of limited use apart from export to international markets. Chinese commentary reacts defensively to such criticism. Whether China will shift its approach, giving greater attention to truly sustainable development, remains to be seen

Outlook

Chinese leaders are preoccupied for now with domestic issues headed by a massive leadership transition and thus appear more likely to adhere to current foreign policies than to change course despite important challenges in the Asian region and self-serving economic policies that act as a drag on China’s international stature. Nevertheless, the past three years have featured a muddled picture of repeated Chinese statements of reassurance accompanied by firm actions by Chinese military, border security forces and diplomats to protect Chinese claims in disputed territories and to protect Chinese interests in international forums.

As a result, analysts will want to determine as well as possible how dynamic and conflicted foreign policy decision making actually is within the secret deliberations of the Chinese leadership. Observers also should be watching closely for signs that Chinese leaders may decide that the recent U.S. reengagement in Asia accompanied by frictions between China and many of its neighbors requires a new Chinese approach regarding regional disputes. At present, a markedly more forceful or more accommodating approach each has significant negative implications for China. But the current trajectory can be viewed as costing China dearly through loss of territorial claims and growing challenges posed by other powers along China’s sensitive periphery. Such issues head the list of concerns of nationalistic Chinese leaders who presumably would favor responses with more forceful Chinese policies.

Meanwhile, China needs to determine the appropriate mix of incentives and pressures to continue Taiwan’s movement toward closer integration with China. The dynastic succession arrangements in Pyongyang head the list of immediate and possibly perilous concerns that could impact China’s foreign policy and practice in ways that may be hard to predict. Observers also will be on the look out for indicators of changing Chinese economic policies that would be more supportive of international common goods and take more account of the perceived negative consequences of China’s economic practices on others.

Notes:

1. Linda Jacobson and Dean Knox, “New Foreign Policy Actors in China,” Stockholm International Peace Research Institute, Policy Paper No. 26, September 2010.
2. For this and other points on contemporary Chinese foreign relations noted here, see among others, Robert Sutter, Chinese Foreign Relations: Power and Policy since the Cold War, 3rd Ed., Boulder, CO: Rowman and Littlefield, 2012.
3. Sutter, Chinese Foreign Relations, pp. 83–85.