Recent PRC Rhetoric Does Not Signify Substantive Diplomatic Shifts

Executive Summary:

• Liu Jianchao is expected to succeed Qin Gang as foreign minister, emphasizing a focus on maintaining positive relations and creating a market-oriented business environment. But questions have been raised about Liu’s qualifications, as he lacks experience as an ambassador and is known for his involvement in anti-corruption and national security efforts.
• Li Qiang, who spoke at WEF in Davos last week, is engaged in a power struggle with Cai Qi over the balancing of economic growth and national security concerns.
• Xi Jinping is shifting his diplomatic strategy and rhetoric towards a more conciliatory approach with the United States and Western allies, moving away from aggressive “Wolf Warrior” diplomacy. But no progress will occur before November’s election in the United States.

President Xi Jinping is in the process of recalibrating his diplomatic strategy. By attempting to play nice with the United States and the Western alliance, as well as by courting multinationals, he is shifting away from what has been referred to previously as “Wolf Warrior” diplomacy. This will be further demonstrated by his imminent appointment of Liu Jianchao (刘建超) to succeed the disgraced Qin Gang (秦刚) as foreign minister. This could happen as soon as the end of February, if the Party holds a plenum to sign off on this personnel change. Liu, 59, is currently the ministerial-level Director of the International Liaison Department (中联部; ILD), which is in charge of relations with political parties across the rest of the world. The ILD was spun out of the United Front Work Department (UFWD) in 1951. The exact nature of the links between the two organizations today are unclear, though it is fair to assume that the ILD remains an active part of the UFWD’s operations. For instance, a former UFWD department head has previously compared the ILD’s engagement with foreign parties to the way the UFWD engages with domestic organizations (ASPI, June 9, 2020).

Liu Jianchao’s Background Suggests Hardline Stance

In his recent visit to the United States, Liu made nice with senior American officials. The former assistant foreign minister told an audience of officials and businesspeople that “China will remain committed to the [open-door] policy…Going forward, China will continue to expand institutional opening up with regard to rules, regulations, and management to create a market-oriented, law-based business environment that meets the international standard.” However, he failed to address in detail controversial topics such as tensions in the Taiwan Strait and the South China Sea. He merely underscored the imperative of “establishing a correct understanding jointly, effectively managing differences, [and] promoting mutually beneficial cooperation” (Council on Foreign Affairs, January 9; Global Times, January 9).

Liu also met with US Secretary of State Antony Blinken during his trip. During these talks, Liu had little to say about his country’s human rights record, its detention of several US citizens, or its aggressive tactics toward Taiwan. Blinken pressed the senior Chinese diplomat over his views on the Russian invasion of Ukraine, alleged technological aid to North Korea, and the country’s involvement in Iran in relation to the current conflicts in the Middle East. Liu largely stuck to the official Chinese Foreign Ministry line to take on these sensitive issues. State media outlet Xinhua cited Liu and Blinken as agreeing that both sides “will continue to implement the important consensuses reached by President Xi Jinping and President Joe Biden and take concrete actions to promote the stable, healthy and sustainable development of China-US relations.” (Xinhua, Januaary 14; The State Department, January 12). This “important consensus”—referring to the outcome of the Xi-Biden meeting on the sidelines of APEC last November—echoes the recent upgrade in PRC diplomatic and media discourse of the “San Francisco vision” to the “San Francisco Consensus (旧金山会晤的共识)” (China Embassy, November 21, 2023; Huanqiu, January 31). This rhetorical elevation is yet another indication of attempts by the People’s Republic of China (PRC) to put a positive spin on its most important bilateral relationship.

Questions have also been raised regarding the qualifications of the Foreign Minister-designate Liu and whether he is truly as disposed towards “opening up” as he has claimed. Unlike most of his predecessors, Liu lacks the key experience of being ambassador to the United States or other significant countries such as UN Security Council permanent members. Liu is better known for his heavy involvement in anti-corruption and national security. In the mid-2010s, Liu was in charge of “operation foxhunt (猎狐专项行动),” which involved tracking down corrupt cadres who had fled overseas and bringing them back to the PRC to be subjected to the Party’s justice system. This was often achieved through tasks such as intimidating relatives still living in the PRC or negotiating with the governments of countries to which targets had fled to divide the embezzled money between the PRC and the host country. Rather than focusing on persuading foreign countries to invest more money into a country that has leaned hard into insisting that it has embraced an open-door policy once more, Liu’s priority may well be to strike a more sustainable balance between economic development and national security in his outreach with foreign states an businesses (Wall Street Journal Chinese, January 24; Radio Free Asia, January 24).

Beijing’s “Smile Diplomacy” Belies Toothless Economic Reform

This balance—or struggle—between economic development and national security has played out this month at the top of the Party. Yet another major diplomatic thrust came from a keynote speech recently delivered by Premier Li Qiang (李强) at the World Economic Conference in Davos (WEF, January 17). Li told the assembled global business elite that the PRC was “a supersize market with rapidly unlocked demand,” and committed to continuing to “provide a big stage for various businesses and talents.” More importantly, the Chinese Premier emphasized that his country remains firmly committed to opening up. “We will continue to create favorable conditions for the world to share in China’s opportunities,” he announced (FMPRC, January 17). However, Li’s record as Premier is yet to match up to his rhetoric. He has failed to introduce significant measures to cut party-state and bureaucratic interference with market operations. This is in contrast to the late premier Li Keqiang (李克强) who died from an apparent heart attack last October, prompting public outpourings of grief and implicit critiques of the regime (VOA, October 28, 2023). However, Li’s influence over economic policy is perhaps less sure than previously assumed.

While Li was in Davos, Cai Qi (蔡奇)—Xi’s national security czar and close ally who seems to have secured dominance over a wide policy portfolio—chaired a January meeting at the Central Party School where CCP Chairman Xi Jinping delivered an important speech on “financial and monetary policy under socialism with Chinese characteristics” (Xinhua, January 17). The supreme leader has emphasized “strict party control” over financial policy; and noted that economic development, which must include the introduction of investments from multinationals, should be balanced with national-security concerns. As the PBSC member in charge of overall anti-espionage and national security, Cai is said to be responsible for the execution of the anti-espionage and related legislation (Nikkei Asia, January 25). He is also believed to be responsible for taking the decisions to raid the PRC offices of a number of foreign firms over suspicions about their access to information that Beijing believes to be too sensitive.

In theory, Li remains at the helm. He is the second-ranked member of the Politburo Standing Committee (PBSC), and chairs the recently founded Central Financial Central Financial Commission (Xinhua, November 20, 2023). But there are suggestions that he is locked in a power struggle with his fellow Politburo Standing Committee member. Although Cai is ranked fifth in the PBSC, he holds considerable sway in Beijing. And it is possible that he was doing more than merely filling in for Li in his absence. Cai’s work was also specifically praised at the monthly politburo meeting earlier this week (RFI, January 31).

Li Qiang’s grandstanding in Switzerland is yet to produce any measurable effect in stemming the outflow of multinationals’ positions within the PRC. This is true both financial terms and in terms of their de-risking by diversifying their bases of production away from the PRC. The latest statistics released by the Ministry of Commerce noted that the country only attracted newly utilized foreign investment of $153 billion last year. This was an 8 percent decrease over 2022. Companies including Blackrock, Apple, Walmart and Hewlett-Packet have continued with their plans to withdraw from the market (MOFCOM, January 19; VOA, December 3, 2023). This might suggest that Cai’s responsibilities are more likely to come to the fore as Xi doubles down on national security imperatives.

Sullivan-Wang Talks Underdeliver

On January 26, US National Security Advisor Jake Sullivan and Politburo member in charge of Foreign Affairs Wang Yi met in Bangkok (FMPRC, January 27). The two sides discussed a variety of issues but failed to narrow down exact dates for Presidents Biden and Xi to either call each other or conduct a virtual meeting. Similarly, there is no firm date on a proposed visit to the PRC by Secretary of State Blinken. Instead, Wang and Sullivan merely confirmed that forthcoming bilateral talks on curtailing Chinese-made narcotics from entering North America and on future cooperation on AI-related technology would go ahead as planned (The Diplomat, January 30; The White House, January 27).

The meetings saw minimal engagement on substantive issues. Concerns were voiced from the PRC side of the United States’s efforts to downgrade multinationals’ investments in China, particularly in high-tech areas. Meanwhile, the United States noted their fears over potential conflicts in the Taiwan Strait. But the talks saw no progress from previous positions. The White House cited Sullivan as emphasizing “maintaining peace and stability” in Taiwan. In his response, Wang insisted that Taiwan-related issues were domestic concerns of the PRC that should not be exploited by other powers. While Western multinationals have faulted the Xi administration for allowing national-security to trump its welcoming of international business, Wang reiterated “there should be no politicizing or overstretching of the concept of security” when it came to the global semiconductor supply chain, and warned that concerns should not be used to “suppress and contain other countries’ development.” Xinhua cited Wang as merely adding that “the two sides agreed to further discuss the boundary between national security and economic activities” (Xinhua, January 27).

Conclusion: Breakthroughs Unlikely In US Election Year

2024 is an election year in the United States. As such, Biden will believe that he cannot be seen as soft on the PRC. Any significant progress regarding a rapprochement between the two “systemic competitors” on issues of trade and geopolitics are therefore unlikely. Meanwhile, Beijing is carefully weighing the policies of a possible second Donald Trump presidency. From the point of view of Xi Jinping, bilateral ties are hardly worth attempting to reconfigure until a new president has settled into the Oval Office. It is clear that Beijing has little intention of altering its substantive positions towards the United States until the dust settles on the presidential election later this year.

In internal meetings at the mid-January conclave at the Central Party School, Xi lectured senior officials on following a “socialist, Chinese-style financial policy.” Xi’s ideologic conservativism came through as he stressed the balance of the seemingly contradictory—upholding party control of finance and economic policy on the one hand while attracting and reaping the benefits from the activities of foreign investors and Chinese entrepreneurs on the other (People’s Daily, January 18; Xinhua, January 17). This contradiction is unlikely to be resolved any time soon. Despite what officials may say to their counterparts and other elites around the world, there is no sense of a genuine change in policy direction.