Developments in Chinese Foreign Policy and International Relations
05 May, 2009 · 2859
Report of the IPCS Seminar held on 21 April 2009
Report of the IPCS Seminar held on 21 April 2009
Chair: Dr. Madhu Bhalla, Professor and Head, East Asian Department, Delhi University
Speakers: Delegation from the Shanghai Academy of Social Sciences (SASS)
Huang Renwei, Research Professor and Vice President, SASS
Li Yihai, Director of Foreign Affairs Office, SASS
Quan Heng, Professor of Economics, Institute of Economics, SASS
Liu Ming, Deputy Director, Institute of Asia-Pacific Studies, and Director of the Center for Korea Studies, SASS
Mei Junjie, Associate Professor, International Political Economy, SASS
The world financial crisis and the related economic downturn as well as the new US administration raise many questions with regard to Chinese foreign policy. In India, there is a lack of debate about the causes and consequences of the global downturn, whereas Chinese debate is focusing on how to deal with the recession in non-Western countries.
The Chinese focus on boosting domestic consumption, and thus expanding the domestic economy, might be one possible solution to the problem. However, China’s economy has been badly hit by the global downturn. Transnational investments are pulling out of the country and the question arises of how the Chinese economy will be able to sustain its emerging leadership role.
As the new US administration is not going to give up its leadership role in the world, questions with regard to the implications for US-China relations emerge. What are the possible impacts on South Asia? How does China intend to deal with the shift in power in the world and, with regard to the crisis in Pakistan and Sri Lanka, what are the medium and long term intentions of China in South Asia? The issue of proliferation in South Asia, especially with regard to Pakistan, should be also be a focus of discussion.
Meanwhile, possible solutions to the problems which face South Asia should be found in new partnerships and debates and India and China should prevent new conflicts from arising out of this crisis.
Delegation from the Shanghai Academy of Social Sciences (SASS)
China and the Global Economic Crisis
After 30 years of high economic growth rates and continuing expansion of the Chinese economy, China and the world was shocked by the disastrous crisis in the financial markets and the global economic downturn that followed. As the Chinese economy is highly export-oriented the crisis had a profound impact on China. The annual GDP growth dropped by five per cent and exports declined considerably. With this, the issue of rising unemployment, particularly amongst young Chinese workers, became a pressing problem. As small-sized factories are closing down in large numbers, the people who once came to the urban areas to seek a better life now have to go back to the countryside in order to somehow make a living on the small portions of land that they own. The situation is not good and it is still worsening.
The Chinese government tries to counterbalance these tendencies by identifying the heavily export-oriented economy as the main problem. The new Chinese policy focuses on the domestic market by trying to strengthen the domestic demand. Huge projects of public spending have been initiated to help the domestic economy, such as the welfare housing project, the development of infrastructure in rural areas and of the social security system, and reform of the hospital system. In the long term, these policies are intended to adjust the overall economic structure of China by developing especially the service sector, which contributes only 38 percent to the GDP as of now. Moreover, as the Chinese economy is regionally unbalanced, more stress and emphasis will be laid on the development of the rural areas in western and central China. A good example of the regional imbalance in China’s economy is the fact that while the coastal areas, which produce most of the exports, were very badly hit by the economic crisis, the central and western China were not that much affected by the downturn. The focus of Chinese economic policies should be on the domestic demand and therefore an extensive stimulus package that seeks to improve welfare especially for people, who have not benefited from the growth of the last several years, has been initiated.
China and the Change in the International System
From a Chinese perspective the major change in the international system is that the severe economic problems being faced by the United States is likely to transform it into becoming just a “normal” mega-power in the world. It seems that the US is slowly but surely losing power.
On the other hand, Chinese policy is seeking to deepen coordination with other countries, particularly emerging economies. It sees the world as being primarily dominated by the West, but China is willing to do more with regard to the problems in Afghanistan, Pakistan and North Korea. China has a vital interest in combating terrorist groups in the Afghan-Pakistan border region, as these groups are allegedly linked to certain insurgent groups within China. It is important to restore order in Afghanistan by dispatching as many troops as possible by the US and its allies. With regard to Pakistan, the strengthening of state capabilities and the improvement of governance constitute a key component of countering terrorism in that country. This should be done regardless of the type of regime in Pakistan.
With regard to Iran and the conflicts in the Middle East, China’s position is that these countries should primarily try to solve their differences by themselves.
China is most interested in finding ways to manage globalization and to understand how it works. It seeks to expand free trade and not to cut off relations with other countries by focusing too much on its own. The G-20 is a step in the right direction to address the problems of today’s world. Its strategies, processes, and institutions provide for possible mechanisms to solve the current crisis. This crisis, in fact, shows the urgent need for South Asian countries to rely on each other and to work together.
There is great scope for India and China to work together. Domestically, the two countries should share their experiences such as those in the promotion of development, poverty reduction, education, and healthcare. Internationally, China and India have common positions on issues regarding energy, the environment, and global warming. Out of this there are many opportunities for cooperation, but cooperation needs security. Leftovers from history should not constrain cooperation and the two countries’ common interests should determine the future of bilateral relations.
Regarding the worsening of the situation in Afghanistan, China in the future is looking to participate more actively in conferences on Afghanistan in order to contribute to possible solutions of the problems facing the country. The Chinese government wants to help Afghanistan overcome its current poverty by granting more civilian assistance and financial funds. However, China perceives that the Afghan government usually favors the NATO states when it comes to seeking support from other countries.
To counter terrorism, the strategy should involve more sharing of intelligence information as well as trying to police terrorism and cooperate with other states to cut off the financial support of terrorist groups.
A solution to the deteriorating situation in Pakistan has to be found because India and China cannot afford to have another failed state in South Asia. Chinese policy is to improve governance in Pakistan in order to restore order, security, and stability. However, since strengthening state capacities in Pakistan bears the problem that just granting more funds to the government might simply lead to the misuse of that financial support, it is important to first identify state institutions or politicians who actually have the capacity to restore order and stability in the country and who are able to effectively confront terrorism. China can play an active role in finding a solution because of its strategic relationship with Pakistan.
Chinese and World Economy
The Chinese government is trying to deal with the reality that the western and central regions of China have not been fully integrated into the rest of rising national economy. In 1999, a new development strategy was put forward to address the needs of these regions and much money has been put into expanding infrastructure, social security and education. Regarding the rising poverty in the urban regions, the government has tried to shape policies in order to reduce poverty and to provide for reemployment schemes.
Regarding the future of institutionalized cooperation in Asia, China has been in recent years more about the role of ASEAN. It is prepared for extending assistance to ASEAN, as the ‘new’ ASEAN+3+3 seems to be a more mature institution. However, ASEAN is still perceived to be comparatively weak and complicated and China’s focus will remain on bilateral relations and agreements. Meanwhile, China also seeks to deepen cooperation and to expand FTAs in South Asia as well.
It is also China’s effort to put more pressure on the new US administration to exercise more responsibility in world economy and politics.
Sino-Indian Relations
India and China should work more closely together as both countries can benefit from one another to a large extent. They should exchange their experiences, for example, Indian strength in financial management, the services sector and education could well be complemented by Chinese expertise in the field of infrastructure among other things. Also, both countries are developing blue-water navies to secure their energy demands, which could be another field of cooperation. India and China should join forces with regard to the exploitation of new energy sources and they could work more closely together in the fields of renewable energies and the reduction of carbon emissions.
However, unless a real solution to the border issue has been found, relations beyond trade will hardly develop. The Chinese informal politics approach to Sino-Indian relations is a problem, as India not only is a national security state, facing internal and external threats, but also a democratic state. Thus, public opinion always has to be taken into account. China’s central elite is not subject to this pressure but has to develop a certain understanding for this mechanism of democracy. Free and globalized trade needs open borders, but without solving the issue there will be no real open borders between India and China.
China’s approach to bilateral relations comprises first, finding potential common interest, second, identifying and eliminating possible conflicts, and third, achieving these interests. Bilateral relations should not be based on differences, conflicts, or other difficulties. The West thinks that India and China are competitors, which is not true. The two countries are not going to face a strategic confrontation just because of a few differences. They should seek to pursue a new, mutual consensus with regard to the G-20. Additionally, as India and China both have huge domestic markets, they should try to boost their bilateral trade, which at the moment stands at only about US$50 billion.
India and China share a long common history and in the larger picture the border issue should not prevent the two countries from developing and deepening their bilateral relations.
Chair: Dr. Madhu Bhalla, Professor and Head, East Asian Department, Delhi University
Speakers: Delegation from the Shanghai Academy of Social Sciences (SASS)
Huang Renwei, Research Professor and Vice President, SASS
Li Yihai, Director of Foreign Affairs Office, SASS
Quan Heng, Professor of Economics, Institute of Economics, SASS
Liu Ming, Deputy Director, Institute of Asia-Pacific Studies, and Director of the Center for Korea Studies, SASS
Mei Junjie, Associate Professor, International Political Economy, SASS
The Report contains a summary of views collectively and separately articulated by the distinguished Chinese delegation following which there are issues raised during the discussion.
The world financial crisis and the related economic downturn as well as the new US administration raise many questions with regard to Chinese foreign policy. In India, there is a lack of debate about the causes and consequences of the global downturn, whereas Chinese debate is focusing on how to deal with the recession in non-Western countries.
The Chinese focus on boosting domestic consumption, and thus expanding the domestic economy, might be one possible solution to the problem. However, China’s economy has been badly hit by the global downturn. Transnational investments are pulling out of the country and the question arises of how the Chinese economy will be able to sustain its emerging leadership role.
As the new US administration is not going to give up its leadership role in the world, questions with regard to the implications for US-China relations emerge. What are the possible impacts on South Asia? How does China intend to deal with the shift in power in the world and, with regard to the crisis in Pakistan and Sri Lanka, what are the medium and long term intentions of China in South Asia? The issue of proliferation in South Asia, especially with regard to Pakistan, should be also be a focus of discussion.
Meanwhile, possible solutions to the problems which face South Asia should be found in new partnerships and debates and India and China should prevent new conflicts from arising out of this crisis.
Delegation from the Shanghai Academy of Social Sciences (SASS)
China and the Global Economic Crisis
After 30 years of high economic growth rates and continuing expansion of the Chinese economy, China and the world was shocked by the disastrous crisis in the financial markets and the global economic downturn that followed. As the Chinese economy is highly export-oriented the crisis had a profound impact on China. The annual GDP growth dropped by five per cent and exports declined considerably. With this, the issue of rising unemployment, particularly amongst young Chinese workers, became a pressing problem. As small-sized factories are closing down in large numbers, the people who once came to the urban areas to seek a better life now have to go back to the countryside in order to somehow make a living on the small portions of land that they own. The situation is not good and it is still worsening.
The Chinese government tries to counterbalance these tendencies by identifying the heavily export-oriented economy as the main problem. The new Chinese policy focuses on the domestic market by trying to strengthen the domestic demand. Huge projects of public spending have been initiated to help the domestic economy, such as the welfare housing project, the development of infrastructure in rural areas and of the social security system, and reform of the hospital system. In the long term, these policies are intended to adjust the overall economic structure of China by developing especially the service sector, which contributes only 38 percent to the GDP as of now. Moreover, as the Chinese economy is regionally unbalanced, more stress and emphasis will be laid on the development of the rural areas in western and central China. A good example of the regional imbalance in China’s economy is the fact that while the coastal areas, which produce most of the exports, were very badly hit by the economic crisis, the central and western China were not that much affected by the downturn. The focus of Chinese economic policies should be on the domestic demand and therefore an extensive stimulus package that seeks to improve welfare especially for people, who have not benefited from the growth of the last several years, has been initiated.
China and the Change in the International System
From a Chinese perspective the major change in the international system is that the severe economic problems being faced by the United States is likely to transform it into becoming just a “normal” mega-power in the world. It seems that the US is slowly but surely losing power.
On the other hand, Chinese policy is seeking to deepen coordination with other countries, particularly emerging economies. It sees the world as being primarily dominated by the West, but China is willing to do more with regard to the problems in Afghanistan, Pakistan and North Korea. China has a vital interest in combating terrorist groups in the Afghan-Pakistan border region, as these groups are allegedly linked to certain insurgent groups within China. It is important to restore order in Afghanistan by dispatching as many troops as possible by the US and its allies. With regard to Pakistan, the strengthening of state capabilities and the improvement of governance constitute a key component of countering terrorism in that country. This should be done regardless of the type of regime in Pakistan.
With regard to Iran and the conflicts in the Middle East, China’s position is that these countries should primarily try to solve their differences by themselves.
China is most interested in finding ways to manage globalization and to understand how it works. It seeks to expand free trade and not to cut off relations with other countries by focusing too much on its own. The G-20 is a step in the right direction to address the problems of today’s world. Its strategies, processes, and institutions provide for possible mechanisms to solve the current crisis. This crisis, in fact, shows the urgent need for South Asian countries to rely on each other and to work together.
There is great scope for India and China to work together. Domestically, the two countries should share their experiences such as those in the promotion of development, poverty reduction, education, and healthcare. Internationally, China and India have common positions on issues regarding energy, the environment, and global warming. Out of this there are many opportunities for cooperation, but cooperation needs security. Leftovers from history should not constrain cooperation and the two countries’ common interests should determine the future of bilateral relations.
DISCUSSION
Regarding the worsening of the situation in Afghanistan, China in the future is looking to participate more actively in conferences on Afghanistan in order to contribute to possible solutions of the problems facing the country. The Chinese government wants to help Afghanistan overcome its current poverty by granting more civilian assistance and financial funds. However, China perceives that the Afghan government usually favors the NATO states when it comes to seeking support from other countries.
To counter terrorism, the strategy should involve more sharing of intelligence information as well as trying to police terrorism and cooperate with other states to cut off the financial support of terrorist groups.
A solution to the deteriorating situation in Pakistan has to be found because India and China cannot afford to have another failed state in South Asia. Chinese policy is to improve governance in Pakistan in order to restore order, security, and stability. However, since strengthening state capacities in Pakistan bears the problem that just granting more funds to the government might simply lead to the misuse of that financial support, it is important to first identify state institutions or politicians who actually have the capacity to restore order and stability in the country and who are able to effectively confront terrorism. China can play an active role in finding a solution because of its strategic relationship with Pakistan.
Chinese and World Economy
The Chinese government is trying to deal with the reality that the western and central regions of China have not been fully integrated into the rest of rising national economy. In 1999, a new development strategy was put forward to address the needs of these regions and much money has been put into expanding infrastructure, social security and education. Regarding the rising poverty in the urban regions, the government has tried to shape policies in order to reduce poverty and to provide for reemployment schemes.
Regarding the future of institutionalized cooperation in Asia, China has been in recent years more about the role of ASEAN. It is prepared for extending assistance to ASEAN, as the ‘new’ ASEAN+3+3 seems to be a more mature institution. However, ASEAN is still perceived to be comparatively weak and complicated and China’s focus will remain on bilateral relations and agreements. Meanwhile, China also seeks to deepen cooperation and to expand FTAs in South Asia as well.
It is also China’s effort to put more pressure on the new US administration to exercise more responsibility in world economy and politics.
Sino-Indian Relations
India and China should work more closely together as both countries can benefit from one another to a large extent. They should exchange their experiences, for example, Indian strength in financial management, the services sector and education could well be complemented by Chinese expertise in the field of infrastructure among other things. Also, both countries are developing blue-water navies to secure their energy demands, which could be another field of cooperation. India and China should join forces with regard to the exploitation of new energy sources and they could work more closely together in the fields of renewable energies and the reduction of carbon emissions.
However, unless a real solution to the border issue has been found, relations beyond trade will hardly develop. The Chinese informal politics approach to Sino-Indian relations is a problem, as India not only is a national security state, facing internal and external threats, but also a democratic state. Thus, public opinion always has to be taken into account. China’s central elite is not subject to this pressure but has to develop a certain understanding for this mechanism of democracy. Free and globalized trade needs open borders, but without solving the issue there will be no real open borders between India and China.
China’s approach to bilateral relations comprises first, finding potential common interest, second, identifying and eliminating possible conflicts, and third, achieving these interests. Bilateral relations should not be based on differences, conflicts, or other difficulties. The West thinks that India and China are competitors, which is not true. The two countries are not going to face a strategic confrontation just because of a few differences. They should seek to pursue a new, mutual consensus with regard to the G-20. Additionally, as India and China both have huge domestic markets, they should try to boost their bilateral trade, which at the moment stands at only about US$50 billion.
India and China share a long common history and in the larger picture the border issue should not prevent the two countries from developing and deepening their bilateral relations.
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