China’s “Permanent Reset”

15 october 2010

Moving Away from Static Policy

Dr Bobo Lo is an independent scholar and consultant. He is the author of a number of books, including Axis of Convenience: Moscow, Beijing and the New Geopolitics (2008), Vladimir Putin and the Evolution of Russian Foreign Policy (2003), and Russian Foreign Policy in the Post Soviet Era: Reality, Illusion and Mythmaking (2002).

Resume: Although the military threat posed by China is much exaggerated, there should be no illusions about its determination to change the nature of its interaction with the outside world. While China is by no means ready to lead a new international order, it demands an influential role in the existing one, and it is becoming much more unapologetic in advancing its interests.

China’s foreign policy is a diverse mixture of instincts, assumptions and moods. Growing self-confidence and a desire to engage coexist with a strategic culture firmly rooted in the past. Despite talk of global interdependency and “win-win” outcomes, its leaders continue to view the world through the prism of geopolitical competition and great power balancing. China has never been more outgoing, yet its foreign policy remains, first and last, an extension of domestic priorities.

It is fashionable to speak of the shift in global power to the East and China’s emergence as the 21st century superpower. Yet developments over the past two years have shown that China is as much an object as an engine of global change. Despite its spectacular rise, it remains a developing country in many respects, with a developing country’s mentality towards international relations. It has not acquired the habits of a “natural” great power; its strategic horizons are limited; it remains profoundly risk-averse; and it is acutely conscious of its vulnerabilities. China – and Chinese diplomacy – is in transition, and this transition will be neither easy nor brief.

The combination of self-confidence and self-doubt is evident in Beijing’s approach to the post-Soviet space. To many observers, the rise of China looks hugely impressive and even ominous. It seems only a matter of time before it dominates Eurasia. Yet its record of success is mixed. China has expanded its economic footprint in Central Asia and emerged as the stronger partner in its “strategic partnership” with Russia. However, the recent turbulence in Kyrgyzstan has shown that it is far from ready to become the leading regional power or to project its authority more widely across the continent.

The big question is, of course, whether such conservatism and hesitancy will give way to a more assertive posture as China completes its transformation. The answer is a qualified ‘yes’. Chinese foreign policy is indeed changing, but there is no sign of a grand strategy, let alone one of imperial expansion. Far from being ahead of the game, decision-makers are responding on an ongoing, ad hoc basis to extraordinary developments in the international environment, in which China’s position is at once stronger and more difficult. As it emerges as the next superpower, the challenges facing it will become ever more demanding. These will require not a one-off ‘reset’, but a process of continuous adaptation. Agility and flexibility, not immutable principle, will define Beijing’s approach to the world and the post-Soviet space.

CHINA AND THE INTERNATIONAL SYSTEM

For much of the post-Cold War period, the principal Chinese narrative of international relations has centred on the concept of “one superpower, several great powers.” Although Beijing has spoken frequently about a “multipolar world order,” there is little conviction that it will come about soon. The other great powers are more influential than they were in the 1990s, while the era of Western moral universalism is over. But the United States remains by far the leading power in the world, despite its problems in Iraq and Afghanistan, and the impact of the global financial crisis.

Chinese commentators also believe that the world has become more unpredictable and unstable. Great power frictions, the rise of Islamic radicalism, obsolescent international structures, the growing threat of nuclear proliferation, the profusion of regional conflicts add up to an anarchic operating environment for Chinese foreign policy. There are great opportunities, but there are also great risks.

Beijing has yet to develop a coherent vision of China’s place in the international system. The elite and the general public take great pride in the country’s spectacular transformation. But with pride comes anxiety – that China’s success could be impermanent; that it remains weak and backward in many respects; and that the world – especially, but not only the West – wants to “keep China down.” Even those who believe in the inevitability of China’s rise are conscious that it will bring formidable new challenges.

Such perceptions have had three important consequences. First, they have encouraged a hybrid nationalism, in which the optimism arising from a sense of national rejuvenation is counterbalanced by a reflexive defensiveness. Second, they have concentrated the minds of policy-makers on domestic priorities, in particular economic modernization and regime stability. And third, they have been instrumental in maintaining a conservative strategic culture. More than any other power of the modern era, China is sensitive to the perils of “imperial overstretch.” Its attitude is one of imperial introspection. Modern China is an empire, but one whose interest in the outside world is essentially instrumental.

BEIJING’S VIEW OF THE POST-SOVIET SPACE

The utilitarian and conservative bent of Chinese policy-makers has led them to concentrate on a narrow range of concrete priorities in the post-Soviet space. In effect, their interest is limited to two areas: Russia and former Soviet Central Asia.

Russia. The Chinese view Russia as a great power and as a “strategic partner.” Their attitude combines contempt, residual respect and strategic wariness. The contempt comes from the perception that Russia is a great power in decline – not only relative to China, but also to other powers and even the U.S. This decline stems from its failure to modernize and reinvent itself as a 21st century great power.

Despite that, Russia remains a significant international player. Although its capacity to advance an active agenda is diminished, it is able to obstruct the objectives of others – as demonstrated by the hiatus in NATO enlargement and the checking of Western influence in Ukraine. Russia also retains important influence by virtue of its huge nuclear arsenal, vast territory, abundant natural resources, and permanent membership of the UN Security Council.

Even a weakened Russia can damage Chinese interests. While the likelihood of a direct Russian invasion receded decades ago, the existence of a hostile northern neighbor would divert scarce resources from China’s domestic modernization and hinder the cultivation of a stable and friendly neighborhood.

All these considerations mean that Beijing prefers to have Russia as a “strategic partner.” This partner is sometimes awkward and unreliable, but all the more reason to have it on your side than against you. China’s need for Russian energy is questionable (see below), but the importance of a good neighbour along a 4,000 kilometre border is not. A functional, broadly cooperative relationship with Russia is consequently a key component of contemporary Chinese foreign policy.

Central Asia. Central Asia falls into a different category – bringing together countries that are both neighboring and developing, and which also represent a distinct geopolitical space.  The notion of partnership here is rhetorical, with the Central Asian states being treated as generally passive objects of Chinese regional policy. Beijing’s interaction with them combines a “good-neighborly” policy – emphasizing secure frontiers and cross-border cooperation – with a nakedly commercial attitude towards resource acquisition, typical of its approach to developing countries around the world.

The notion of ‘space’ assumes added importance given developments in Central Asia since 9/11. The flourishing of Islamic radicalism, America’s entry as a major player in the region, and the quagmire of Afghanistan have exacerbated an already fraught environment. China is especially allergic to instability in its neighborhood, which is why it has worked so hard – and successfully – to settle most of its land borders with the exception of India. Its emphasis on the “three evils” of terrorism, separatism and extremism reflects genuine concern about their subversive impact on the heavily Muslim province of Xinjiang.

Security concerns are accentuated by geopolitical anxieties. The substantial U.S. military presence in Central Asia has sharpened long-time Chinese fears of strategic encirclement. Add to this India’s growing activity, the continued economic influence of Japan, and the recent improvement in U.S.-Russia ties, and it is unsurprising that Beijing should feel that the geopolitical situation in Central Asia has become more problematic. Uncertainties over the political succession in key regional states such as Kazakhstan and Uzbekistan may intensify great power rivalries.

WHAT BEIJING WANTS

Beijing’s objectives vis-a-vis Russia and the post-Soviet space are shaped by its view of the world and China’s place in it. There is no overarching strategy, but rather a loosely connected set of priorities.

Reinforcing domestic stability is the most important regional priority. Doctrinally, it is encapsulated in the struggle against the “three evils.” This means reinforcing the Communist Party’s authority in Xinjiang and countering Uighur separatism and Islamic radicalism. To this purpose, Beijing engages in a three-pronged strategy. The first prong is domestic, encompassing measures to suppress Uighur nationalism, change Xinjiang’s demographic make-up through inward Han migration, and raise local living standards. The second prong is bilateral, whereby Beijing persuades the Central Asian regimes to crack down on the Uighur minorities on their territories. The third prong is multilateral: Uighur separatism is conflated with other strands of radical sentiment under the rubric of “international terrorism.” As with Moscow’s approach towards Chechnya, to internationalize the nature of the problem is to legitimize the harsh measures taken to combat it.

Strengthening regional security is similarly viewed through a domestic lens. Its importance derives, first, from the perception that it reinforces China’s internal stability by denying “oxygen” to radical Islamic and separatist movements. Consistent with its commitment to an “amicable neighborhood,” Beijing has assiduously wooed the Central Asians, both at the bilateral level and in multilateral forums such as the Shanghai Cooperation Organization (SCO). But the Chinese also view regional security in larger terms – as the neutralization of all external threats. This thinking was crucial in facilitating the eventual settlement of the former Sino-Soviet border from Central Asia to the Russian Far East. The commitment to secure China’s strategic rear’ is motivated by obvious national security considerations, but also by pragmatic recognition that this allows China to concentrate on economic modernization.

Safeguarding national sovereignty has, likewise, a dual motivation. First, Beijing wants to bolster support for “core interests:” its “one China” policy on Taiwan, its campaign to delegitimize the Dalai Lama and the cause of Tibetan autonomy/independence, and claims to sovereignty over the South China Sea. Second, and more generally, it is anxious to reaffirm the primacy of the nation-state in international politics. The painful memory of the “century of humiliation” (1842-1949), during which China was occupied by a succession of foreign powers, has enshrined “non-interference” as a guiding precept of Chinese foreign policy. Although Beijing was distressed by Moscow’s recognition of Abkhaz and South Ossetian independence in 2008, it nevertheless sees Russia and the Central Asian regimes as generally like-minded in this area. It identifies, in particular, a common interest in rebutting Western criticisms of political and civil rights.

Acquiring resources is key to the success of China’s modernization. As a resource-poor country, it seeks reliable access to energy, precious metals, water, timber and other commodities. That said, China’s resource dependence on Russia and Central Asia is often exaggerated.

Sino-Russian energy cooperation has been dogged by constant delays and major disagreements over pricing, pipeline and supply arrangements. Although belated progress on the East Siberian-Pacific Ocean oil pipeline and a 20-year oil-for-loan agreement concluded in 2009 offer hopes of a brighter future, questions remain. How resilient is such cooperation in the face of Russia’s improved relations with the West? Will Russia subsequently renege on these agreements, as it did with a previous oil-for-loan arrangement concluded in 2004? The prospects are even more doubtful in the area of gas cooperation, which remains a theoretical proposition.

Given these uncertainties, China has turned increasingly to Central Asia. Its 30-year gas supply agreement with Turkmenistan and the construction of the Atasu-Alashankou oil pipeline from Kazakhstan to western China are consistent with a strategy of minimizing dependence on Russia. Even so, Central Asia remains a sideshow in the overall scheme of Chinese energy policy – of peripheral importance compared to the Persian Gulf and Africa.

Projecting power. This is the most misunderstood of Beijing’s objectives. The Chinese care little for traditional great power projection or for abstract concepts such as a New Silk Road across Eurasia. Their purpose is to facilitate the delivery of tangible benefits: easier access to Central Asian energy resources, a more secure regional environment, and opening up new markets for Chinese manufacturing exports.

In contrast to Russia, which has a globalist world-view with mostly regional capabilities, China retains a regional mindset in spite of its expanding global reach. There is a marked discrepancy between what China could do and what it wants to do. While the energy agreements concluded with Turkmenistan and Kazakhstan may in time reap strategic dividends, Beijing has been rigorously commercial in its approach to negotiations.

China’s strategic interest in Central Asia is largely prophylactic. It wants to see an end to militant Islam, but opposes a dominant America as well as Russia’s return as the leading power in the region. It hopes for a level playing field where the great powers eschew hegemonic ambitions and instead reach a balanced accommodation.

Similarly, Beijing has no interest in converting anyone to the so-called “China model” of development; there is no American “sense of manifest destiny” towards the world. But it is keen to prevent the spread of Western values to China’s neighbourhood. The ‘colour’ revolutions in Georgia, Ukraine and Kyrgyzstan exemplified for Beijing the pernicious consequences of Western normative influence: contributing significantly to Eurasia’s destabilization while offering a bad example to malcontents at home.

The Chinese understand that their comparative advantage lies in softer forms of power – trade, investment and aid. Despite the modernization of the People’s Liberation Army (PLA), China’s capacity to project military power beyond its borders remains very limited. Economic power is both more effective and less risky, which is why it has spearheaded China’s penetration into the post-Soviet space.

Promoting a “harmonious world” is closely identified with Chinese president Hu Jintao. However, the spirit behind it goes back to Deng’s “reform and opening” in 1978, and was reflected in Jiang Zemin’s 2002 notion of a 20-year “period of strategic opportunities.” Its rationale is straightforward: China’s modernization needs a stable and supportive international environment. This would improve access to vital natural resources, critical technologies and global markets; lessen external opposition to China’s rise; and discourage others from exploiting its weaknesses. In a “harmonious world,” great powers and small states alike would see the advantages of cooperation with China.

A stable relationship with Moscow is part of this vision. Although the Chinese find much to criticize about Russia, they recognize that the vast improvement in relations over the past two decades has brought significant political and security benefits. At the same time, they are keen to ensure that Sino-Russian accommodation does not undermine their far more important relationship with the U.S. A “harmonious world” implies that China should have as few enemies as possible, least of all a hostile America.

Influencing international politics. Beijing wants a greater say in global affairs and, accordingly, has called for a “multipolar world order,” a new financial architecture, and increased representation in the IMF and World Bank. It has also engaged in selective caucusing with Moscow on common priorities, such as opposing tough sanctions against Iran, obstructing reform of the UN Security Council, and facing down Western criticisms of human rights abuses.

But, as noted previously, Beijing has avoided associating too closely with one or other great power. Instead, it is promoting the idea of China as a good international citizen, increasingly active on larger regional and global issues. China’s participation in UN peacekeeping, anti-piracy operations and G20 discussions is consistent with this approach. So is its diplomacy towards the developing world, particularly in Africa, where it provides soft loans and development assistance in exchange for direct access to natural resources. In the context of the post-Soviet space, Chinese good citizenship is apparent in organizations such as the SCO, whereby Beijing portrays its interests and priorities as issues of pan-regional concern.

Minimizing commitments. For most of the post-Cold War period, China’s leaders have followed Deng’s advice to “observe calmly, secure our position, cope with affairs calmly, hide our capacities, and bide our time.” They hope for a greater role for China in the international system, but want to do it on the cheap. Accordingly, they have played down China’s capabilities and avoided debilitating entanglements.

Beijing’s commitment-phobia is demonstrated by its approach to the recent events in Kyrgyzstan. Despite substantial Chinese economic interests in the country, many of which were badly damaged, it did virtually nothing. This passivity highlighted the “thinness” of Chinese influence and the ideological straitjacket of the doctrine of non-interference. But most of all it reflected the belief that China had nothing to gain – and much to lose – from becoming involved. Beijing’s attitude might be described as one of conditional regionalism – participation in regional affairs under conditions of minimum liability.

Such conditionality is apparent at the global level too, where a supposed likemindedness with Russia is more rhetorical than real. The Chinese leadership talks of a multipolar world order, yet its foreign policy remains thoroughly America-centric. It advocates reducing global dependence on the dollar, yet economic self-interest ensures that it continues to funnel billions into U.S. treasury bonds. It participates in BRICs summits, yet has done nothing to invest these with substance. In effect, Chinese foreign policy operates on a dual-track basis: a virtual path festooned with all manner of grandiose principles; and a real path forged by a hard-nosed appreciation of national interests.

A MIXED RECORD

China has achieved much in relation to Russia and the post-Soviet space. It has secured regional cooperation in clamping down on Uighur activity; Islamic radicalism has not spread significantly into western China; there is broad support for Chinese sovereignty over Xinjiang, Tibet and Taiwan; Chinese energy companies have become entrenched in Central Asia; and Beijing has managed to avoid burdensome commitments. Overall, Chinese influence in the region is greater than at any time since the heyday of the Qing dynasty in the 17th and 18th centuries.

Nevertheless, not everything is rosy. Some difficulties are linked to Beijing’s broader conduct of international relations, some to the interweaving dynamic between China’s extraordinary rise, the impact of the financial crisis, and a volatile global environment. There are also difficulties of a more “local” nature – between China and Russia, and between China and Central Asia.

The first problem lies, paradoxically, in the very success of the Sino-Russian “strategic partnership.” Until now, this has benefited from relatively low benchmarks. Because Beijing and Moscow have not expected too much of each other, they have placed a high value on any progress that has been achieved. This phase, however, is coming to an end. The combination of the global downturn, China’s continuing rise, and the reset in U.S.-Russia relations suggests that previously tacit tensions between Moscow and Beijing are becoming more overt. Recent statements by senior Russian military figures and the “leaked” Russian Foreign Ministry global assessment point to a change in atmosphere. While any decline in Sino-Russian relations is likely to be gradual, above all because neither side desires confrontation, we now see a gradual shift in Russia from viewing China principally as an economic and strategic opportunity to looking at China as a long-term geopolitical threat.

Second, China’s attempts to portray itself as a benign power are becoming less convincing. Its success in riding out the financial storm when nearly all the other G20 economies have been in freefall has become a rod for its own back. China’s leaders continue to insist that it is a “developing country,” yet virtually no one else believes this. Jiang’s 20-year window of “strategic opportunity,” during which China could take advantage of a benign international environment to concentrate on domestic priorities, has closed dramatically. There is a growing perception internationally of a parasitic and arrogant China. Whereas it once enjoyed a far better image than Russia, this has become noticeably less true over the past 12 months. The “harmonious world” to which Beijing aspires is no longer so harmonious – and that includes the post-Soviet space.

Third, Beijing’s distinction between its economic interests on the one hand, and political and security influence on the other, is becoming blurred. There are two problems here: the growing perception of China as a free-loader; and suspicion among other players, including Russia, that Beijing is exploiting its economic assets for geopolitical gain. Even if there is no such intention, the fear remains that the growth in Chinese economic influence is in itself creating new strategic realities.

Finally, while Chinese influence in Central Asia has grown dramatically, it suffers from several limitations. These include the competing ambitions of other great powers – not only the U.S. and Russia, but also India and Japan; the suspicions and sometimes Sinophobia of the Central Asians; the relative weakness of Chinese soft power in the region compared to Russia’s; and the flimsy institutional foundations of Beijing’s presence in the region. It is significant that the Chinese government’s pride and joy, the SCO, played no role in tackling the crisis in Kyrgzystan; has failed to resolve sensitive issues of membership and observer status, and is no nearer to articulating – never mind implementing – a longer-term mission.

A “PERMANENT RESET”?

It is clear that Chinese foreign policy cannot simply continue along the path of “more of the same,” either globally or in the more immediate context of Russia and Central Asia. For much of the last two millennia, China has been accustomed to the world coming to it, rather than reaching out to the world. But the 21st century strategic environment demands a revolution in its mindset – a psychological “modernization” to accompany the economic and social modernization of the post-Mao era. The challenge for decision-makers is to move away from essentially static notions such as a harmonious world towards a more dynamic approach characterized by agile and flexible responses to fast-moving trends. In effect, what is required is a “permanent reset” in Chinese foreign policy – not so much a kick-start as a constant process of adaptation both to its external operating environment and China’s expanding capabilities. There are signs this is already happening.

New world order. Most policy-makers and thinkers do not believe that China will catch up with the U.S. for at least two decades. Matching the latter’s GDP is only one criterion of “equality,” and not the most important. Consequently, China must work with the U.S. – its only true analogue – despite ongoing problems and occasional crises. The U.S. will find it psychologically difficult to treat it as an “equal” partner, but ultimately their interdependence, amidst a larger global interdependence, offers the prospect of a world in which Chinese interests can flourish.

There is little room for Russia in this vision. Although Beijing will continue to speak of a multipolar world order, it envisages an eventual Sino-American bipolarity in which the other major powers occupy wholly secondary positions. Russia’s weighting in Chinese foreign policy will diminish further. Beijing could occasionally be tempted to enlist Moscow in an “anti-hegemonic” coalition against Washington, but lack of faith in Russia’s capacity (and reliability) points to a less committal approach against the potential threat of geopolitical encirclement. Meanwhile, the widening imbalance in Sino-Russian relations suggests that bilateral interaction will become more difficult, although the Chinese leadership will look to “manage” Russia. One caveat: should an overtly nationalist regime come to power in Moscow, Russia would again become a major security concern for China, as it was during the Brezhnev years (1964-82).

New Eurasia. China will become increasingly active in projecting influence across the post-Soviet space. This will arise naturally out of a more globalist outlook, supported by much enhanced capabilities. However, the extension of Chinese geopolitical influence is unlikely to translate into the urge to acquire more territory, either in the Russian Far East or Central Asia. Natural strategic caution, lasting domestic challenges, and the presence of multiple regional and global powers on the Eurasian continent represent formidable obstacles to the spread of a “new Chinese empire.” Although the irrational can never be ruled out, the collective nature of the Chinese Communist regime favours more conservative preferences – exercising indirect influence rather than direct rule, and engaging in long-term processes instead of sudden actions.

Beijing will continue to give priority to economic engagement: not only with Russia and Central Asia, but also in time with other parts of the post-Soviet space – Ukraine and the Transcaucasia. It will portray itself as the one truly non-imperialist great power in Eurasia, and play up the notion of a larger Central Asian regional identity in which China is a pivotal player. It will take many years for China to develop the inter-elite networks enjoyed by Russia in its Near Abroad, but eventually this will happen. The expansion of China’s footprint in over the past decade shows how quickly things can move. Beijing is already devoting greater efforts to courting the Central Asian elites in areas that go beyond the usual parameters of energy and economic cooperation. Inevitably, it will become more engaged in regional security issues, as well as in the domestic politics of the Central Asian states. This involvement will be partial and often uncertain. But it will increase steadily.

New China. Although the military threat posed by China is much exaggerated, there should be no illusions about its determination to change the nature of its interaction with the outside world. While China is by no means ready to lead a new international order, it demands an influential role in the existing one, and it is becoming much more unapologetic in advancing its interests.

The bolder face of Chinese foreign policy is evident above all in Beijing’s dealings with the West. But it is also making its mark in the post-Soviet space. Uncertainty is giving way, unevenly but surely, to self-belief. The instinctive caution of Chinese decision-making remains, but is increasingly mitigated by the perception that Chinese interests in a fluid environment demand much more vigorous action.

Ultimately, the true significance of China’s “permanent reset” lies less in its impact on individual issues than in a larger attitudinal shift that is changing the underlying assumptions and character of China’s foreign policy. This “revolution” will take decades to play out, but the direction is clear. Deng Xiaoping’s call to “hide our capacities” and “bide our time” has been overtaken by events, and there is no inclination – or even possibility – to put the genie back in the bottle. An increasingly capable, assertive and, in many respects, more “difficult” China is a reality that requires a fundamental reset in the thinking of all those who engage with it.

    It is fashionable to speak of the shift in global power to the East and China’s emergence as the 21st century superpower. Yet developments over the past two years have shown that China is as much an object as an engine of global change. Despite its spectacular rise, it remains a developing country in many respects, with a developing country’s mentality towards international relations. It has not acquired the habits of a “natural” great power; its strategic horizons are limited; it remains profoundly risk-averse; and it is acutely conscious of its vulnerabilities. China – and Chinese diplomacy – is in transition, and this transition will be neither easy nor brief.
The combination of self-confidence and self-doubt is evident in Beijing’s approach to the post-Soviet space. To many observers, the rise of China looks hugely impressive and even ominous. It seems only a matter of time before it dominates Eurasia. Yet its record of success is mixed. China has expanded its economic footprint in Central Asia and emerged as the stronger partner in its “strategic partnership” with Russia. However, the recent turbulence in Kyrgyzstan has shown that it is far from ready to become the leading regional power or to project its authority more widely across the continent.
The big question is, of course, whether such conservatism and hesitancy will give way to a more assertive posture as China completes its transformation. The answer is a qualified ‘yes’. Chinese foreign policy is indeed changing, but there is no sign of a grand strategy, let alone one of imperial expansion. Far from being ahead of the game, decision-makers are responding on an ongoing, ad hoc basis to extraordinary developments in the international environment, in which China’s position is at once stronger and more difficult. As it emerges as the next superpower, the challenges facing it will become ever more demanding. These will require not a one-off ‘reset’, but a process of continuous adaptation. Agility and flexibility, not immutable principle, will define Beijing’s approach to the world and the post-Soviet space.

CHINA AND THE INTERNATIONAL SYSTEM
For much of the post-Cold War period, the principal Chinese narrative of international relations has centred on the concept of “one superpower, several great powers.” Although Beijing has spoken frequently about a “multipolar world order,” there is little conviction that it will come about soon. The other great powers are more influential than they were in the 1990s, while the era of Western moral universalism is over. But the United States remains by far the leading power in the world, despite its problems in Iraq and Afghanistan, and the impact of the global financial crisis.
    Chinese commentators also believe that the world has become more unpredictable and unstable. Great power frictions, the rise of Islamic radicalism, obsolescent international structures, the growing threat of nuclear proliferation, the profusion of regional conflicts add up to an anarchic operating environment for Chinese foreign policy. There are great opportunities, but there are also great risks.
    Beijing has yet to develop a coherent vision of China’s place in the international system. The elite and the general public take great pride in the country’s spectacular transformation. But with pride comes anxiety – that China’s success could be impermanent; that it remains weak and backward in many respects; and that the world – especially, but not only the West – wants to “keep China down.” Even those who believe in the inevitability of China’s rise are conscious that it will bring formidable new challenges.
Such perceptions have had three important consequences. First, they have encouraged a hybrid nationalism, in which the optimism arising from a sense of national rejuvenation is counterbalanced by a reflexive defensiveness. Second, they have concentrated the minds of policy-makers on domestic priorities, in particular economic modernization and regime stability. And third, they have been instrumental in maintaining a conservative strategic culture. More than any other power of the modern era, China is sensitive to the perils of “imperial overstretch.” Its attitude is one of imperial introspection. Modern China is an empire, but one whose interest in the outside world is essentially instrumental.

BEIJING’S VIEW OF THE POST-SOVIET SPACE
The utilitarian and conservative bent of Chinese policy-makers has led them to concentrate on a narrow range of concrete priorities in the post-Soviet space. In effect, their interest is limited to two areas: Russia and former Soviet Central Asia.
    Russia. The Chinese view Russia as a great power and as a “strategic partner.” Their attitude combines contempt, residual respect and strategic wariness. The contempt comes from the perception that Russia is a great power in decline – not only relative to China, but also to other powers and even the U.S. This decline stems from its failure to modernize and reinvent itself as a 21st century great power.
    Despite that, Russia remains a significant international player. Although its capacity to advance an active agenda is diminished, it is able to obstruct the objectives of others – as demonstrated by the hiatus in NATO enlargement and the checking of Western influence in Ukraine. Russia also retains important influence by virtue of its huge nuclear arsenal, vast territory, abundant natural resources, and permanent membership of the UN Security Council.
    Even a weakened Russia can damage Chinese interests. While the likelihood of a direct Russian invasion receded decades ago, the existence of a hostile northern neighbor would divert scarce resources from China’s domestic modernization and hinder the cultivation of a stable and friendly neighborhood.
    All these considerations mean that Beijing prefers to have Russia as a “strategic partner.” This partner is sometimes awkward and unreliable, but all the more reason to have it on your side than against you. China’s need for Russian energy is questionable (see below), but the importance of a good neighbour along a 4,000 kilometre border is not. A functional, broadly cooperative relationship with Russia is consequently a key component of contemporary Chinese foreign policy.
Central Asia. Central Asia falls into a different category – bringing together countries that are both neighboring and developing, and which also represent a distinct geopolitical space.  The notion of partnership here is rhetorical, with the Central Asian states being treated as generally passive objects of Chinese regional policy. Beijing’s interaction with them combines a “good-neighborly” policy – emphasizing secure frontiers and cross-border cooperation – with a nakedly commercial attitude towards resource acquisition, typical of its approach to developing countries around the world.
    The notion of ‘space’ assumes added importance given developments in Central Asia since 9/11. The flourishing of Islamic radicalism, America’s entry as a major player in the region, and the quagmire of Afghanistan have exacerbated an already fraught environment. China is especially allergic to instability in its neighborhood, which is why it has worked so hard – and successfully – to settle most of its land borders with the exception of India. Its emphasis on the “three evils” of terrorism, separatism and extremism reflects genuine concern about their subversive impact on the heavily Muslim province of Xinjiang.
Security concerns are accentuated by geopolitical anxieties. The substantial U.S. military presence in Central Asia has sharpened long-time Chinese fears of strategic encirclement. Add to this India’s growing activity, the continued economic influence of Japan, and the recent improvement in U.S.-Russia ties, and it is unsurprising that Beijing should feel that the geopolitical situation in Central Asia has become more problematic. Uncertainties over the political succession in key regional states such as Kazakhstan and Uzbekistan may intensify great power rivalries.

WHAT BEIJING WANTS
Beijing’s objectives vis-?-vis Russia and the post-Soviet space are shaped by its view of the world and China’s place in it. There is no overarching strategy, but rather a loosely connected set of priorities.
Reinforcing domestic stability is the most important regional priority. Doctrinally, it is encapsulated in the struggle against the “three evils.” This means reinforcing the Communist Party’s authority in Xinjiang and countering Uighur separatism and Islamic radicalism. To this purpose, Beijing engages in a three-pronged strategy. The first prong is domestic, encompassing measures to suppress Uighur nationalism, change Xinjiang’s demographic make-up through inward Han migration, and raise local living standards. The second prong is bilateral, whereby Beijing persuades the Central Asian regimes to crack down on the Uighur minorities on their territories. The third prong is multilateral: Uighur separatism is conflated with other strands of radical sentiment under the rubric of “international terrorism.” As with Moscow’s approach towards Chechnya, to internationalize the nature of the problem is to legitimize the harsh measures taken to combat it.
Strengthening regional security is similarly viewed through a domestic lens. Its importance derives, first, from the perception that it reinforces China’s internal stability by denying “oxygen” to radical Islamic and separatist movements. Consistent with its commitment to an “amicable neighborhood,” Beijing has assiduously wooed the Central Asians, both at the bilateral level and in multilateral forums such as the Shanghai Cooperation Organization (SCO). But the Chinese also view regional security in larger terms – as the neutralization of all external threats. This thinking was crucial in facilitating the eventual settlement of the former Sino-Soviet border from Central Asia to the Russian Far East. The commitment to secure China’s strategic rear’ is motivated by obvious national security considerations, but also by pragmatic recognition that this allows China to concentrate on economic modernization.
Safeguarding national sovereignty has, likewise, a dual motivation. First, Beijing wants to bolster support for “core interests:” its “one China” policy on Taiwan, its campaign to delegitimize the Dalai Lama and the cause of Tibetan autonomy/independence, and claims to sovereignty over the South China Sea. Second, and more generally, it is anxious to reaffirm the primacy of the nation-state in international politics. The painful memory of the “century of humiliation” (1842-1949), during which China was occupied by a succession of foreign powers, has enshrined “non-interference” as a guiding precept of Chinese foreign policy. Although Beijing was distressed by Moscow’s recognition of Abkhaz and South Ossetian independence in 2008, it nevertheless sees Russia and the Central Asian regimes as generally like-minded in this area. It identifies, in particular, a common interest in rebutting Western criticisms of political and civil rights.
Acquiring resources is key to the success of China’s modernization. As a resource-poor country, it seeks reliable access to energy, precious metals, water, timber and other commodities. That said, China’s resource dependence on Russia and Central Asia is often exaggerated.
Sino-Russian energy cooperation has been dogged by constant delays and major disagreements over pricing, pipeline and supply arrangements. Although belated progress on the East Siberian-Pacific Ocean oil pipeline and a 20-year oil-for-loan agreement concluded in 2009 offer hopes of a brighter future, questions remain. How resilient is such cooperation in the face of Russia’s improved relations with the West? Will Russia subsequently renege on these agreements, as it did with a previous oil-for-loan arrangement concluded in 2004? The prospects are even more doubtful in the area of gas cooperation, which remains a theoretical proposition.
Given these uncertainties, China has turned increasingly to Central Asia. Its 30-year gas supply agreement with Turkmenistan and the construction of the Atasu-Alashankou oil pipeline from Kazakhstan to western China are consistent with a strategy of minimizing dependence on Russia. Even so, Central Asia remains a sideshow in the overall scheme of Chinese energy policy – of peripheral importance compared to the Persian Gulf and Africa.
Projecting power. This is the most misunderstood of Beijing’s objectives. The Chinese care little for traditional great power projection or for abstract concepts such as a New Silk Road across Eurasia. Their purpose is to facilitate the delivery of tangible benefits: easier access to Central Asian energy resources, a more secure regional environment, and opening up new markets for Chinese manufacturing exports.
In contrast to Russia, which has a globalist world-view with mostly regional capabilities, China retains a regional mindset in spite of its expanding global reach. There is a marked discrepancy between what China could do and what it wants to do. While the energy agreements concluded with Turkmenistan and Kazakhstan may in time reap strategic dividends, Beijing has been rigorously commercial in its approach to negotiations.
    China’s strategic interest in Central Asia is largely prophylactic. It wants to see an end to militant Islam, but opposes a dominant America as well as Russia’s return as the leading power in the region. It hopes for a level playing field where the great powers eschew hegemonic ambitions and instead reach a balanced accommodation.
    Similarly, Beijing has no interest in converting anyone to the so-called “China model” of development; there is no American “sense of manifest destiny” towards the world. But it is keen to prevent the spread of Western values to China’s neighbourhood. The ‘colour’ revolutions in Georgia, Ukraine and Kyrgyzstan exemplified for Beijing the pernicious consequences of Western normative influence: contributing significantly to Eurasia’s destabilization while offering a bad example to malcontents at home.
The Chinese understand that their comparative advantage lies in softer forms of power – trade, investment and aid. Despite the modernization of the People’s Liberation Army (PLA), China’s capacity to project military power beyond its borders remains very limited. Economic power is both more effective and less risky, which is why it has spearheaded China’s penetration into the post-Soviet space.
Promoting a “harmonious world” is closely identified with Chinese president Hu Jintao. However, the spirit behind it goes back to Deng’s “reform and opening” in 1978, and was reflected in Jiang Zemin’s 2002 notion of a 20-year “period of strategic opportunities.” Its rationale is straightforward: China’s modernization needs a stable and supportive international environment. This would improve access to vital natural resources, critical technologies and global markets; lessen external opposition to China’s rise; and discourage others from exploiting its weaknesses. In a “harmonious world,” great powers and small states alike would see the advantages of cooperation with China.
A stable relationship with Moscow is part of this vision. Although the Chinese find much to criticize about Russia, they recognize that the vast improvement in relations over the past two decades has brought significant political and security benefits. At the same time, they are keen to ensure that Sino-Russian accommodation does not undermine their far more important relationship with the U.S. A “harmonious world” implies that China should have as few enemies as possible, least of all a hostile America.
Influencing international politics. Beijing wants a greater say in global affairs and, accordingly, has called for a “multipolar world order,” a new financial architecture, and increased representation in the IMF and World Bank. It has also engaged in selective caucusing with Moscow on common priorities, such as opposing tough sanctions against Iran, obstructing reform of the UN Security Council, and facing down Western criticisms of human rights abuses.
But, as noted previously, Beijing has avoided associating too closely with one or other great power. Instead, it is promoting the idea of China as a good international citizen, increasingly active on larger regional and global issues. China’s participation in UN peacekeeping, anti-piracy operations and G20 discussions is consistent with this approach. So is its diplomacy towards the developing world, particularly in Africa, where it provides soft loans and development assistance in exchange for direct access to natural resources. In the context of the post-Soviet space, Chinese good citizenship is apparent in organizations such as the SCO, whereby Beijing portrays its interests and priorities as issues of pan-regional concern.
Minimizing commitments. For most of the post-Cold War period, China’s leaders have followed Deng’s advice to “observe calmly, secure our position, cope with affairs calmly, hide our capacities, and bide our time.” They hope for a greater role for China in the international system, but want to do it on the cheap. Accordingly, they have played down China’s capabilities and avoided debilitating entanglements.
Beijing’s commitment-phobia is demonstrated by its approach to the recent events in Kyrgyzstan. Despite substantial Chinese economic interests in the country, many of which were badly damaged, it did virtually nothing. This passivity highlighted the “thinness” of Chinese influence and the ideological straitjacket of the doctrine of non-interference. But most of all it reflected the belief that China had nothing to gain – and much to lose – from becoming involved. Beijing’s attitude might be described as one of conditional regionalism – participation in regional affairs under conditions of minimum liability.
    Such conditionality is apparent at the global level too, where a supposed likemindedness with Russia is more rhetorical than real. The Chinese leadership talks of a multipolar world order, yet its foreign policy remains thoroughly America-centric. It advocates reducing global dependence on the dollar, yet economic self-interest ensures that it continues to funnel billions into U.S. treasury bonds. It participates in BRICs summits, yet has done nothing to invest these with substance. In effect, Chinese foreign policy operates on a dual-track basis: a virtual path festooned with all manner of grandiose principles; and a real path forged by a hard-nosed appreciation of national interests.

A MIXED RECORD
China has achieved much in relation to Russia and the post-Soviet space. It has secured regional cooperation in clamping down on Uighur activity; Islamic radicalism has not spread significantly into western China; there is broad support for Chinese sovereignty over Xinjiang, Tibet and Taiwan; Chinese energy companies have become entrenched in Central Asia; and Beijing has managed to avoid burdensome commitments. Overall, Chinese influence in the region is greater than at any time since the heyday of the Qing dynasty in the 17th and 18th centuries.
Nevertheless, not everything is rosy. Some difficulties are linked to Beijing’s broader conduct of international relations, some to the interweaving dynamic between China’s extraordinary rise, the impact of the financial crisis, and a volatile global environment. There are also difficulties of a more “local” nature – between China and Russia, and between China and Central Asia.
The first problem lies, paradoxically, in the very success of the Sino-Russian “strategic partnership.” Until now, this has benefited from relatively low benchmarks. Because Beijing and Moscow have not expected too much of each other, they have placed a high value on any progress that has been achieved. This phase, however, is coming to an end. The combination of the global downturn, China’s continuing rise, and the reset in U.S.-Russia relations suggests that previously tacit tensions between Moscow and Beijing are becoming more overt. Recent statements by senior Russian military figures and the “leaked” Russian Foreign Ministry global assessment point to a change in atmosphere. While any decline in Sino-Russian relations is likely to be gradual, above all because neither side desires confrontation, we now see a gradual shift in Russia from viewing China principally as an economic and strategic opportunity to looking at China as a long-term geopolitical threat.
Second, China’s attempts to portray itself as a benign power are becoming less convincing. Its success in riding out the financial storm when nearly all the other G20 economies have been in freefall has become a rod for its own back. China’s leaders continue to insist that it is a “developing country,” yet virtually no one else believes this. Jiang’s 20-year window of “strategic opportunity,” during which China could take advantage of a benign international environment to concentrate on domestic priorities, has closed dramatically. There is a growing perception internationally of a parasitic and arrogant China. Whereas it once enjoyed a far better image than Russia, this has become noticeably less true over the past 12 months. The “harmonious world” to which Beijing aspires is no longer so harmonious – and that includes the post-Soviet space.
    Third, Beijing’s distinction between its economic interests on the one hand, and political and security influence on the other, is becoming blurred. There are two problems here: the growing perception of China as a free-loader; and suspicion among other players, including Russia, that Beijing is exploiting its economic assets for geopolitical gain. Even if there is no such intention, the fear remains that the growth in Chinese economic influence is in itself creating new strategic realities.
    Finally, while Chinese influence in Central Asia has grown dramatically, it suffers from several limitations. These include the competing ambitions of other great powers – not only the U.S. and Russia, but also India and Japan; the suspicions and sometimes Sinophobia of the Central Asians; the relative weakness of Chinese soft power in the region compared to Russia’s; and the flimsy institutional foundations of Beijing’s presence in the region. It is significant that the Chinese government’s pride and joy, the SCO, played no role in tackling the crisis in Kyrgzystan; has failed to resolve sensitive issues of membership and observer status, and is no nearer to articulating – never mind implementing – a longer-term mission.

A “PERMANENT RESET”?
It is clear that Chinese foreign policy cannot simply continue along the path of “more of the same,” either globally or in the more immediate context of Russia and Central Asia. For much of the last two millennia, China has been accustomed to the world coming to it, rather than reaching out to the world. But the 21st century strategic environment demands a revolution in its mindset – a psychological “modernization” to accompany the economic and social modernization of the post-Mao era. The challenge for decision-makers is to move away from essentially static notions such as a harmonious world towards a more dynamic approach characterized by agile and flexible responses to fast-moving trends. In effect, what is required is a “permanent reset” in Chinese foreign policy – not so much a kick-start as a constant process of adaptation both to its external operating environment and China’s expanding capabilities. There are signs this is already happening.
New world order. Most policy-makers and thinkers do not believe that China will catch up with the U.S. for at least two decades. Matching the latter’s GDP is only one criterion of “equality,” and not the most important. Consequently, China must work with the U.S. – its only true analogue – despite ongoing problems and occasional crises. The U.S. will find it psychologically difficult to treat it as an “equal” partner, but ultimately their interdependence, amidst a larger global interdependence, offers the prospect of a world in which Chinese interests can flourish.
There is little room for Russia in this vision. Although Beijing will continue to speak of a multipolar world order, it envisages an eventual Sino-American bipolarity in which the other major powers occupy wholly secondary positions. Russia’s weighting in Chinese foreign policy will diminish further. Beijing could occasionally be tempted to enlist Moscow in an “anti-hegemonic” coalition against Washington, but lack of faith in Russia’s capacity (and reliability) points to a less committal approach against the potential threat of geopolitical encirclement. Meanwhile, the widening imbalance in Sino-Russian relations suggests that bilateral interaction will become more difficult, although the Chinese leadership will look to “manage” Russia. One caveat: should an overtly nationalist regime come to power in Moscow, Russia would again become a major security concern for China, as it was during the Brezhnev years (1964-82).
New Eurasia. China will become increasingly active in projecting influence across the post-Soviet space. This will arise naturally out of a more globalist outlook, supported by much enhanced capabilities. However, the extension of Chinese geopolitical influence is unlikely to translate into the urge to acquire more territory, either in the Russian Far East or Central Asia. Natural strategic caution, lasting domestic challenges, and the presence of multiple regional and global powers on the Eurasian continent represent formidable obstacles to the spread of a “new Chinese empire.” Although the irrational can never be ruled out, the collective nature of the Chinese Communist regime favours more conservative preferences – exercising indirect influence rather than direct rule, and engaging in long-term processes instead of sudden actions.
Beijing will continue to give priority to economic engagement: not only with Russia and Central Asia, but also in time with other parts of the post-Soviet space – Ukraine and the Transcaucasia. It will portray itself as the one truly non-imperialist great power in Eurasia, and play up the notion of a larger Central Asian regional identity in which China is a pivotal player. It will take many years for China to develop the inter-elite networks enjoyed by Russia in its Near Abroad, but eventually this will happen. The expansion of China’s footprint in over the past decade shows how quickly things can move. Beijing is already devoting greater efforts to courting the Central Asian elites in areas that go beyond the usual parameters of energy and economic cooperation. Inevitably, it will become more engaged in regional security issues, as well as in the domestic politics of the Central Asian states. This involvement will be partial and often uncertain. But it will increase steadily.
New China. Although the military threat posed by China is much exaggerated, there should be no illusions about its determination to change the nature of its interaction with the outside world. While China is by no means ready to lead a new international order, it demands an influential role in the existing one, and it is becoming much more unapologetic in advancing its interests.
The bolder face of Chinese foreign policy is evident above all in Beijing’s dealings with the West. But it is also making its mark in the post-Soviet space. Uncertainty is giving way, unevenly but surely, to self-belief. The instinctive caution of Chinese decision-making remains, but is increasingly mitigated by the perception that Chinese interests in a fluid environment demand much more vigorous action.
Ultimately, the true significance of China’s “permanent reset” lies less in its impact on individual issues than in a larger attitudinal shift that is changing the underlying assumptions and character of China’s foreign policy. This “revolution” will take decades to play out, but the direction is clear. Deng Xiaoping’s call to “hide our capacities” and “bide our time” has been overtaken by events, and there is no inclination – or even possibility – to put the genie back in the bottle. An increasingly capable, assertive and, in many respects, more “difficult” China is a reality that requires a fundamental reset in the thinking of all those who engage with it.
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