China's economic statecraft for the twenty-first century

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--By Zhang Shuguang, Professor of International Relations & Standing Vice Rector for Academic Affairs , Macau University of Science and Technology




Striving for a great power status, the People's Republic of China (PRC) has slowly but invariably developed its economic statecraft. Along with military, diplomatic and cultural asserts,economic measures have incrementally been incorporated into the PRC's foreign-policy instrumentality. Although not yet up to the maturity level of statecraft for an established power, Beijing's use of economic power in pursuit of foreign-policy objectives assumes a significant role in the overall PRC diplomacy. How, then, would one characterize China's economic diplomatic behaviors? How may the past experiences of Beijing's economic diplomacy offer a clue as to the roles that China's growing economic power might play in shaping China's foreign policy in the decades ahead? Hence is this think piece on China's power from an economic statecraft perspective.

China's economic statecraft behaviors as well as potentials are by far understudied. If defined as a government's ability, intention and actual policy in using economic instruments in pursuit of foreign-policy goals, Chinese economic statecraft stands out as an unavoidable test case to many core theoretical assumptions in the field of international relations as well as international political economy.

China's economic statecraft seems to exhibit distinctive characteristics of its own. They are reflected in the intricate and evolving experiences in both strategic thinking and policy formulation that the PRC leadership has undergone over the past four plus decades. Several aspects deserve attention. First, the Chinese leaders seemed to have understood and culturally familiar with the political functionality of economic power. Second, Beijing's economic statecraft started with the employment of short- and long-term economic and political measures to counter and break international economicsanctions. Third, seeking foreign aid, the Chinese leaders consistently tried to strike a balance between maximizing economic benefits from and minimizing political influence by the sender. Fourth, growing its economy, the PRC attempted to cultivate "friendly" relations with carefully selected countries, communist and non-communist alike, through economic inducement. Fifth, building economic leverage over the targets, Beijing never hesitated to employ negative economic measures when inducement failed to accomplish its foreign-policy objectives. Sixth, striving for China's modernization, Beijing in the end turned development into a strategic objective of its economic statecraft.

Several internal dynamics seemed to have played a salient role in shaping the evolution and functionality of China's economic statecraft. They include, but not limited to: first, the PRC leadership's aspiration for power and vision of modernity and identity rationalized and guided Beijing's economic diplomacy; second, China's economic statecraft was profoundly embedded in its institutional structure and politics; third, the leadership style and personality seemed to have constituted a key factor in driving the evolution of China's economic statecraft; and fourth, the PRC economic statecraft seemed to have evolved within the country's unique domestic context.

How, then, can the China case be squared with the current scholarly and policy debate on economic statecraft?Several analytical clues are offered. First, on the relationship between economic statecraft and national security, some have assumed that great powers tend to use economic statecraft to achieve strategic objectives as well as economic gains.Second, on the relationship between economic interdependence and alliance maintenance, the liberals have suggested that the promotion of economic interdependence through positive economic statecraft helps strengthen alliances and the realist school argues the opposite, pointing to the high possibility that economic interdependence leads to international conflict.Third, on the relationship between negative and positive economic statecraft, some propose to conceive of positive and negative measures as substitutes or compliments to one another; others believe that policymakers will resort more regularly to negative tools than positive ones because sanctions are more cost-effective.Fourth, on the relationship between economic statecraft and domestic politics, some have argued that, either through a specific sanction or a long-term engagement, domestic politics of the target will change to meet the sender's requirements. Lastly, on the relationship between power status and the evolution and functioning of economic statecraft, the existing literature remains vague and limited.

After all, the rise of China is still an ongoing process. With its economy expected to grow for at least another fifteen years, China would soon become a super economic-power around the world.As its gross power has seen unprecedented growth, the PRC's international behaviors should expectedly be so contextualized.Many have observed Beijing's adoption of pluralistic approaches to the world affairs, either through its "charm offensive" or with it calls for a new order of international political economy or in its moves toward "regionalization". As China gets further integrated into the international politics and becomes an established power or "responsible player",there is reason to believe that the PRC's economic diplomacy will surely take a central position in Beijing's international overtures for the decades to come. It thus can be anticipated that China will surely become more resolved than ever before to utilize its economic instrument in pursuit of strategic and defense objectives. China will continue its integrated pattern of economic measures but with an emphasis on combined exercises of inducement and sanctions. China's economic diplomacy will gradually but surely become domestically salient. Reaching the truly statecraft's level, China's economic diplomacy will be further institutionalized.

In the final analysis, Beijing's economic statecraft will remain evolutional in the decades ahead. The nature and scope of its functionality in the world affairs will hinge significantly on multiple factors. Among them, how soon the PRC will become content with its drive for power and how the established or predominant powers will treat China's irreversible rise will play out as the key.

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