Searching for a new paradigm

China’s expanding interests have uncomfortably outgrown its foreign policy framework, writes Damien Ma of the Eurasia Group

Searching for a new paradigm

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Chinese foreign policy has seemed rudderless lately. Just over the last two years, Beijing has bungled its peaceful development policy in its backyard and witnessed the Middle East in paroxysms. The former has pushed regional countries to tighten their relations with the US, while the latter has threatened China’s energy security.

That these dynamics undermine Chinese strategic and economic interests is obvious. What is less obvious is how Beijing will adjust its foreign policy to confront new and rapidly shifting realities. Fundamentally, this is because the long-standing paradigm that has anchored Chinese policy for the last decades is no longer the steadying force it once was.

Conceived by Deng Xiaoping, China’s foreign policy blueprint was born with the patriarch’s characteristic brevity. Totaling just 24 characters, the paradigm centered on “hide our capabilities and bide our time (韬光养晦, taoguang yanghui).” Put simply, the idea prioritized creating stable external conditions conducive to China’s domestic economic development. Beijing had little appetite to meddle in the affairs of other nations.

Chinese diplomats deftly settled almost all border disputes and convinced neighbors that its intentions were about business, not geopolitical machinations. Such actions were distilled into what may be considered China’s foreign policy “doctrine”: peaceful development and non-interference. These tenets proved effective. Over the last 15 years, deepening trade and investment ties and emergent regional institutions have stitched Asia closer together, with China as the demand center. Geopolitical tensions retreated into the background, at least momentarily.

Chest-thumpers

Yet having faithfully stuck to Deng’s script, Beijing’s attitude began to change in the late 2000s. The wild success of the Beijing Olympics and the collapse of the US financial system provided fodder for those who argued that the Middle Kingdom’s “biding time” was over. Fueling such sentiments was a shift of global perception that saw China sprint out of the economic crisis with double-digit growth and the US limp into a protracted and severe recession. China’s rise was unstoppable and US decline inevitable – or so it seemed in some quarters in Beijing.

These factors likely prompted what transpired in 2010: the year of premature Chinese hubris. It was marked by Beijing’s chest-thumping, from Taiwan arms sales and territorial claims to uncouth outbursts that derided Singapore as an insignificant country. A string of assertive Chinese behavior unnerved regional players, who began to question whether the benign giant had ulterior motives. The more they contemplated the possibility of a China-dominated Asia, the more they seemed to sour on the idea. They sought a counterbalance, and the US stood to benefit. The extent of the resistance probably took China by surprise. It watched the US strengthen ties from Manila to Seoul, eventually culminating in the White House’s so-called “pivot” to Asia.

Realizing that these developments were counterproductive to China’s interests ahead of a major political transition, top leadership stepped in to calm the waters. State Councilor Dai Bingguo, China’s foreign policy czar, set the tone in December 2010 in an essay that reiterated, in no uncertain terms, China’s commitment to peaceful development. It was a clear signal to party members that China was getting ahead of itself in its bluster. To foreign audiences, it was an act of reassurance that the political consensus on peaceful development remained firm.

But the fact that Beijing had lurched from strident teeth-flashing to rapid de-escalation left lingering doubts about Chinese intentions. And despite the top-level commitment to quiet things down, voices in the media and military continued to pop up in opposition to Zhongnanhai’s rhetoric. Concern grew over whether the center was capable of forcing all interests to toe the line. Yet the reality was that foreign policy was already highly pluralized, and the center no longer had full ownership of it.

For decades, the foreign policy paradigm aimed to serve an economy that grew breathlessly. Ironically, it is precisely because such economic growth created powerful new interests – from state-owned enterprises to regional and municipal governments – that these interests are now shaping and undermining China’s foreign policy to a greater extent than ever before. In other words, there is now a considerable mismatch between China’s expanding interests and the existing foreign policy framework.

Nowhere to hide

Take the Middle East and Africa. As a direct result of its hyper industrialization and energy-intensive growth, China relies on the Arab world for half of its oil imports. Yet as instability shook the region, China had little capacity to shape outcomes from Libya to Iran, where its oil companies have significant interests.

In Sudan, too, the unanticipated bifurcation of the country meant that CNPC, China’s largest oil company, was caught in a bind as it spent its political capital in cozying up to Khartoum in the north. But its oil assets were located in the new south, where the government in Juba decided to stop exporting oil until a pipeline dispute with the north was resolved.

Such threats to China’s corporate interests and energy security would normally mobilize the government to remedy the situation. Yet Beijing was reluctant to intervene, in part because it continued to hew to non-interference, but also because its capacity to defend its interests remained weak. The Juba government has yet to allow the oil to flow again.

For some policymakers in Beijing, it appeared that China was becoming the “new US” in the Middle East, another oil-hungry power that is tying its energy fate to the region. But the difference is that Beijing neither has the diplomatic clout nor the military capability to mitigate potential damage to its interests. Moreover, the recent reduction of US dependence on Middle East oil unnerves some in Beijing, as they believe that this may further allow Washington to “stir things up” in the region and indirectly harm Chinese interests.  

The last two years saw a China thrust into the global spotlight on matters of diplomacy and crisis management. In retrospect, China was largely at the whim of events, reacting in ad hoc fashion, rather than being able to bend them to meet its own interests. These self-inflicted wounds weakened the credibility of Beijing’s peaceful development concept, and its non-interference principle seemed more fitting as an abstraction than as a reality.

Deng’s “hide and bide” no longer suits the world’s second-largest economy. China’s global interests, a direct reflection of the massive economy it has built, have expanded so rapidly that it can no longer hide its footprint. China has entered the global stage of the 21st Century as a formidable actor. Yet it continues to rely on a foreign policy that was concocted at the end of the 20th Century and suited for an economy one-quarter of its current size.

Officials in Beijing increasingly recognize the inadequacies of this policy, and are heatedly debating how to upgrade an outdated paradigm. Far from reaching a consensus, Chinese leaders seem at a loss over how best to shepherd a still-developing global power to meet the expectations increasingly demanded of it. It is a struggle that will not sort itself out easily, even under a new leadership.

In the meantime, Chinese foreign policy will continue to be pulled in multiple directions, simultaneously confounding and unnerving. For top foreign policymakers, settling on a new course is a matter of urgency, not only to better protect China’s interests but also to unambiguously offer reassurances of its intentions.