As the USA struggles to define a post 2008 foreign policy, one has emerged from China this month.
The background is summed up in the following paragraphs, followed by a summation of China’s new foreign policy, and some brief comments on the implications for business and policy makers.
In President Bush’s State of the Union speech of 2002, he unfolded a new USA foreign policy focused around the USA as the world’s sole superpower, its responsibilities and the Axis of Evil as its main focus of enmity. This was to shape the world’s affairs through to today, but its flow was interrupted by the financial crisis of 2008, which has dented USA economic stability and supremacy, not to mention that neither the Iraq nor Afghan wars may be said to have gone according to the script. The USA is still adjusting its global view resulting from the huge strain placed on its resources by 2008. While some think the world has changed forever, others think and hope that this is blip, and normal service of Western supremacy led by the USA is still safe and will be fully restored.
It is not the purpose of this article to comment on the USA strategy and its outcomes, except to say that it was the result of the “victory” over the Soviet Union, and which created “Russia” under Putin. The deep emotions and conflicts of the Middle East, previously managed by separated spheres of influence of the Soviets and Americans, have been laid bare, with huge loss of life and security or life and resources, for all. From Afghanistan to Kenya the ripples are now felt in tragic ways and all the USA appears able to do is to try and contain this new wave of fundamentalism, and challenge it where it emerges in violent forms. The USA did not create fundamentalism, but it emerged from under the rocks, where it had hitherto hidden contained by two superpowers assisted by some short term cold war thinking that saw my enemy’s enemy as my friend rather than searching for common interests. (Note: See New York Times 1992 article “A One-Superpower World”- http://work.colum.edu/~amiller/wolfowitz1992.htm )
The financial crisis of 2008 further challenged American domination and caused the emergence of G20 and the fanfare of a move to the East, accompanied by the rise of the BRICS, SCO, ASEAN and its Free Trade Area and the Chiang Mai Initiative.
But the Obama pivot to Asia has arrested some of that wilder speculation, reinforced by the fact that almost 50 per cent of the world’s stock market values are based in the USA, which demonstrates that the change is much less, or much slower, than the prophesy.
Time for a new way of thinking
But change is real and globalisation has its own impact on global governance and power, and corporations and nations need take notice of new forces in the developing world in a way that they never did. And old structures and ideologies will not go unchanged in this changing world. The IMF and World Bank and, even, Nato and the EU, together with the United Nations could increasingly feel the winds of change.
Corporations and Governments will have to consider changing their thinking and structures to a more modest relationship with the new world of developing nations, most of whom do not share Western values and cultures.
Respect for new systems, cultures and societies is only the beginning, and a belief that the new developing world can be used as a market, a source of property buying and investment could be a major misjudgement. The new world is here to stay with a much bigger impact than that.
One of the major sources of global shifts will be China. Let us not exaggerate the impact of China as if it was some huge new form striding down the road eating all before it. China is faulted and challenged and is transitioning and changing. In the process any idea of an immediate, or sudden, huge global impact is an over-estimation. But the Chinese are good at gauging the current situation and the trend lines. So well worth a few minutes to digest where they are placing their flag.
David Cameron and other national leaders missed the Chinese signals and have had to do more than mouth a series of words to placate China’s leaders. The Dalai Lama is a very sensitive issue to China, but it is also the issue which has made most Western leaders comprehend that China has power and expects respect, and that respect will, ultimately, be shown. Global leaders ought to take China very seriously and respect them, or risk missing the boat of change. The Chinese way is quite frustrating to some Western leaders, because it is different and the form of interchange is not so accommodating as previously experienced with what were called then – under-developed nations.
Developing close and working relations with China will be testing, but China is not close to us and it is easy to ignore China in our daily political work. But China is here and needs much more attention, as its impact will grow in many ways. As the American Railway companies ignored the development of planes to their eternal loss, so Western governments and business tend not to see the changes coming from the East.
Recently, China has been announcing the new Foreign Policy which will be guiding the diplomats, business and military of China through to 2049 and beyond.
It is a profound set of outlines, which reads in very bland terms, but will have a major impact on the landscape of the world over the next 20-30 years.
The Party leading Group on Foreign Affairs, led by President Xi and managed by State Councillor Yang – former Minister of Foreign Affairs – is where to look for the guiding policy lines. The Minister of Foreign Affairs is part of their work, but has more responsibility for implementation.
So I add below a link to a recent article by Yang, which is a typical piece of Chinese broad-brush but it contains all the nuggets. The essence of it is repeated in the second piece by President Qu of a significant institute. He goes on to define two national targets for 2027 and 2049 for the broader context of China’s vision, which are, really, very educational, and which we will examine in the months ahead – a well to do society by 2027, and a modern socialist country by 2049. The meaning of both those, and the differences are important for us to understand, and clearly the Chinese Dream and the Economic Plenum of this November/ December are important parts of these.
China is moving from low cost export led to domestic consumption led, but within that China’s Foreign trade and Investment will be global, but increasingly with the developing world, and China’s currency looks set to rise over the next few years and become increasingly a second reserve currency. China’s higher value RMB means imports will get sucked in in larger amounts to satisfy China’s increasing per capita demand, and this will fuel the move of developing nations to identify China as its biggest trade partner, with political consequences.
China’s Foreign Policy used to be based on Non-Interference and the Principles of Peaceful Co-existence. This was logical when foreign trade was small, and investment minor, but now it’s all changed and Xi is leading the move of China into establishing its twin targets for 2027 and 2049. So as we leave the Deng era and enter the Xi era so foreign policy has had to evolve and change.
It has had to recognise that the idea of the Middle Kingdom and an outside world is gone. China now depends on the outside world for resources, and to pay for that needs to add value to its exports and investments in ever increasing ways. China is part of the world now, and for the foreseeable future, and needs a policy based upon the world, and not just China peering out.
Because of that China’s role in foreign affairs has changed to managing its global interests, and the issues that creates.
China’s global interests & foreign policy priorities
This is my succinct resume of their approach.
First and foremost China needs to maintain peaceful relations with its 14 bordering nations.
This makes for interesting business opportunities as China’s growth spills over up to 100 miles or more into neighbouring countries as a tactic to spread prosperity and thereby give neighbouring countries an investment in stable relations. But it goes much further with major trade and investment policies developing those relations with those 14 countries.
If you have a commercial interest in any of those 14 countries then you need to be aware of how China will impact that countries trade, investment and long term structures and outlooks. You only have to see the impact of China on Pakistan, Myanmar, Kazakhstan, Vietnam and India to see how China affects these neighbouring nations. It creates opportunities but also risks of being marginalised.
China’s approach is much more multi-layered and thought through than other nations. China is new and breaking into deeper relations. China will not be deterred from having major relations with each of these 14 nations, but the purpose is peaceful relations. Some say China wants to create a tributary relationship with the 14 along historical lines. That is unreal in a world which is global – dependence on one nation is difficult to see happening and leads to a Soviet Union which self-destructs. China will have powerful impacts on its 14 neighbours but its goals are relations which do not cause problems for China, and that means positive relations, and vibrant commercial development where possible.
If that fails a stronger approach will be used, but only as a real last resort.
Second, China’s goal is to have positive relations with the USA and Russia – what they call major power relations. This new concept is not spelt out in detail and we have to try and assess what it means from a variety of sources.
While Kissinger saw the opportunities of working this triangle, the world is now positioned such that no single nation can control the world as the USA once did, and so a calmer less rivalry based relationship between these three nations is now possible. But old ways die hard, and the Kissinger approach is not yet apparent. So China’s relationships with Russia and the USA will be both bilateral but also mindful of their relations with each other. China’s tactics will be affected by that, but not its core strategy to work on a benign relationship with the USA, based on respecting its global power and interests.
China will continue to grow its geopolitical and energy based relationship with Russia and Siberia will also play an important role as an area for joint development. They share common interests in Central Asia and share interests in managing Iran and the Middle East for stability and commercial reasons. Russia and China have had a chequered history but their common interests should overcome any challenges and prevent a return to a difficult relationship. For business this means watching as China and Russia increase their economic work with the Central Asian nations, which has been helped by the American sanctions on Iran which has moved huge amounts of trade routes East instead of West.
This could well lead to a rapprochement between the USA and Iran. This combines with a growing concern in the USA that the Sunnis are too closely tied to the Fundamentalists.
The relationship with the USA is difficult, as the USA has resisted the rise of any power that might challenge their global leadership – see Bush State of the Nation Speech also 2002. The Obama pivot towards Asia reflected that approach, but the consequences of that and the long term effects of 2008 have left the USA wondering if they can rebuild their economy and be the world’s superpower.
China is offering the USA a major state relationship – called a major power relationship – which will lead to mutual access and a changed relationship. Much more intense and active but always suspicious of each other until such time as the USA feels that China is not a long term threat to its core interests. At that time the USA will cease challenging China’s system but that is some time off.
So the next period will be marked by greater mutual access, and significant shared approaches to global issues, and the USA will be surprised by how much China is prepared to invest in this relationship, which is the only one that can subvert China’s long term development goals.
China, Russia and the USA need to find common global goals, based upon real respect. It will not be easy. But the European Union needs to ensure that global trade and investment developments include them. British companies have a major interest in ensuring that the debate about Europe is well handled so that they stay in global discussions.
China’s third arena is the developing world, where BRICS, ASEAN, SCO, Chiang Mai are key mechanisms for building China’s strong trade, investment and political alliances with Asia, Africa and Latin America. These should continue to grow and lead to a changing face of global management of economic and political issues. China views these relationships is strategic and also leading to a long term balancing in global relationships. British companies can benefit inside and outside China by working with China in controlled forms to use its global reach into the developing world, to create new strategic relationships with China. These ways are new and need careful thinking about, but the British have key assets, which they can play for wider benefits with the Chinese.
Australia, the Arctic and Antarctic, as well as the North West passage are all key parts of China’s plans and ideas.
Is China a threat to the world, to Western interests? It is if the West plays a containment game and fails. It is a single track approach that is too risky. Better to engage with China now in creating a safe global landscape with effective rules than try to compete and contain China. China may fail because of internal challenges of changing an economy of 1.4 billion people, but, as you can already see, those challenges have not affected China’s growth into being a new global power.
China should soon become the world’s largest economy and its companies will reflect its global impact in line with that scale.
Business is best advised to stop thinking about China as a market, and see China as a global challenge which is resolved by finding new ways to have balanced relationships with, and where the global pie is increased including access to the Chinese market. China will respond well to well thought out approaches to allow greater access to China in exchange for greater global access. But Business needs to start at the top thinking that China deserves a lot more resource and innovative thinking. The successful models are rare and the thinking is largely contained in old ideologies that prevent the very innovative approaches from being seen. Few companies are run by those with real China experience so can they lead China global strategies?
You can consult with us about the specifics but the window is about 10 years…
– Stephen Perry
(In both cases the translations might suffer and , in time , benefit from researching the precise Chinese words used.)
State Councillor Yang’s reported comments
Qu Ying’s comments are reproduced below
Government Think Tank: China’s Diplomacy for the China Dream
Qu Xing, President of the China Institute of International Studies, stated that China should not maintain stability at the cost of its sovereign rights and China’s safeguarding its rights should not put China and its neighbour into conflicts. Qu made these remarks during an interview with the state media, the International Herald Leader.
According to Qu, the core of the “China Dream” has two “one hundred year” goals: to build China into a well-to-do society by the 100th anniversary of the Chinese Communist Party and to build China into a modern socialist country by the 100th anniversary of the new China.
To make the China Dream a reality, China should first, handle well its relationship with major powers, particularly with the United States, mainly through bilateral cooperation; second, handle well the relationship with China’s neighbouring countries through safeguarding sovereign rights and maintaining stability; third, proactively develop multilateral diplomacy through participation in U.N. affairs and in the G20 group; fourth, handle well the relationship with emerging countries in Asia, Africa, and Latin America; fifth, make special efforts in public diplomacy; and lastly, strengthen the protection of overseas Chinese and businesses. When asked about the balance between safeguarding sovereign rights and maintaining stability, Qu stated that maintaining stability should not be at the cost of sovereign rights, and that safeguarding sovereign rights should not put China and its neighbouring countries into conflicts.