China’s Rise: What Next?

23 september 2014

Prospects of Chinese Foreign Policy in the Next Decade

Vladimir Portyakov is Deputy Director of the Institute of Far Eastern Studies, Russian Academy of Sciences. He holds a Doctorate in Economics.

Resume: In 2021 Russian-Chinese Treaty on Good-Neighborliness and Friendly Cooperation may be not just extended but transformed into a format that would be close to an alliance. So, Russia’s equidistance from the United States and China in the geopolitical triangle is hardly possible in the foreseeable future.

The dynamic development of China has brought this country to the position of a world leader in terms of the scale of the economy and geopolitical influence. Already now, China is regarded as de facto country number two in the world hierarchy, second only to the United States in overall power and with a chance to leave the U.S. behind in the foreseeable future.

Relying on the successful implementation of the Four Modernizations program in the 1980s-2000s (over that period China’s GDP increased by 540 percent, compared to the planned 300 percent), the Chinese government set a goal to make the best use of the first two decades of the 21st century. This period was seen as a “period of strategic opportunities” for a further build-up of the country’s economic, defense and foreign-policy might and for improving its positions in the world. In particular, a task was set to increase GDP by 300 percent by the year 2020, as compared with 2000, and to build a “moderately prosperous society” (xiaokang), that is, to achieve the world average consumption level.

The high rate of saving, the efficient use of opportunities offered by the world market after China joined the World Trade Organization in late 2001, and the country’s comparative advantages as the world’s largest producer enabled China to not only maintain its fast growth rates but also boost its weight in the world economy.

China’s GDP in 2013 in comparable prices increased by 243 percent, as compared with 2000, and by 191 percent, as compared with 2002 when the 16th Congress of the Chinese Communist Party formulated the country’s main development goals for the period until 2020. In dollar terms, China’s GDP increased from $1.2 trillion to $9.18 trillion (as converted from renminbi at the current exchange rate) and from $3 trillion to $13.4 trillion (at the purchasing power parity of the national currency). China’s share in the gross world product increased from 3.66% in 2000 to 12.4% in 2013 (at the renminbi-to-dollar current exchange rate) and from 7.04% to 15.4% in PPP terms. Importantly, the percentage of China’s GDP to that of the United States increased from 11.65% in 2000 to 54.65% in 2013 (in current dollars), and from 29.3% to 79.7% in PPP terms.

China’s economic growth relied on an even faster growth of its foreign trade. In 2001, before China joined the WTO, it stood at $509.6 billion, and in 2013 it reached $4.16 trillion. This enabled China to surpass the United States ($3.91 trillion) and become the largest trading power, accounting for 14.7% of world exports and 12.9% of world imports. 

FROM “RISE” TO “DREAM”

The high growth rates and the fast-growing scale of the Chinese economy inevitably raised the issue of converting Beijing’s economic power into greater political influence in international affairs. Although this transformation reflected not only subjective desires of Chinese leaders but also the objectively increased capabilities of the country, Beijing sought to forestall and neutralize a possible negative reaction from the international community.

In 2003, China launched an official policy of “peaceful rise” intended to ensure other countries that China, as a rising power, would not follow in the footsteps of Germany and Japan of the first half of the twentieth century, that it would not play zero sum games and would not seek confrontation or hostility with any “descending power.” However, the term “rise” was found controversial as it implied a challenge, and the phrase was changed to “peaceful development,” placing the emphasis on the peaceful nature of China’s actions in the international arena. This emphasis was further enhanced by a concept of building a “harmonious world,” put forward in 2005. At the same time, starting in the second half of 2008, China’s practical policies became more pro-active and even tough, especially as regards protecting its “vital interests” and “development interests,” approaches to the settlement of territorial disputes, and struggle for regional leadership.

At the same time Beijing sought to avoid confrontation with the United States, despite the anti-Chinese implications and context of the Washington-declared “return to Asia” and the strengthening of the system of U.S. alliances in East Asia. China is well aware that the United States alone can, if not prevent its further rise, at least seriously slow it down. In addition, the great economic interdependence between the two countries prevents them from making sharp moves. For example, in 2013 the United States accounted for 12.52% of China’s foreign trade, including 16.67% of China’s exports and 7.82% of imports. In the same year, China accounted for 13.3% of U.S. foreign trade, including 9.66% of exports and 15.8% of imports.

The fifth generation of Chinese leaders led by Xi Jinping, who came to power in late 2012-early 2013, fully shared the idea of continuing the country’s consistent rise and put forward their own ambitious slogan for implementing the “Chinese dream.” This is viewed as “the great rejuvenation of the Chinese nation,” to be achieved in two steps. China is to become a “moderately prosperous society” by 2021, the 100th anniversary of the Chinese Communist Party, and it is to become a fully developed nation by 2049, the 100th anniversary of the founding of the People’s Republic of China.

The Chinese Dream is a complex concept covering various aspects of state life. There is a prevailing view in China that it is too early to speak of the revival of the Chinese nation as a fait accompli. This requires, above all, restoring the unity of the Chinese state and the Chinese nation – that is, reinstating Beijing’s jurisdiction over Taiwan. In addition, according to retrospective estimates of Angus Maddison, in the early 19th century China accounted for one-third of the gross world product. Achieving this level again may also be a kind of criterion attesting to the revival of the country and the nation.

Hu Angang, a renowned scholar of Tsinghua University, equates implementing the Chinese Dream to becoming “number one in the world.” He believes this would “put an end to the long-term hegemony of the United States” and would have “very positive international significance.” According to Hu’s forecast published in 2011, by the year 2030 China will complete its transition from a moderately well-off society to a society of common prosperity and become an economic superpower, an innovation-based state, and a “green country.” Also, it will surpass the U.S. in terms of GDP and its share in the world economy by 120 percent (see Table 1).

 


 

After Xi Jinping came to power, China’s economic forecasts have shifted their focus to the next decade (2014-2023), the period when the present leaders will rule the country and after which they will hand over the power to the next, sixth generation of leaders. The latest known fundamental forecast, prepared by the State Council’s Development Research Center, provides for a 170% growth of the nominal size of GDP in 2013-2014 prices over the decade (actually somewhat less, if adjusted for inflation) and a gradual decrease in annual GDP growth rates from 7.5% to 5.5% (see Table 2).

China’s GDP in 2023 is forecast at $28.4 trillion dollars (as converted from renminbi at the current exchange rate), which may be slightly ahead of U.S. GDP. If estimated at PPP, China’s GDP may surpass that of the U.S. already in 2019, according to an IMF forecast (see Table 3). 

 

The above estimates suggest that China has a chance to surpass the United States in terms of GDP in the foreseeable future. But this is only a forecast, which is yet to be fulfilled. As The Economist wittily wrote several years ago, “For China’s rise to continue, the country needs to move away from the model that has served it so well.” The vitally important shift of the economic growth model from accumulation and export to consumption and technological progress requires huge costs and long-term and unremitting efforts to develop science and national technologies, promote resource-saving, achieve a more equitable distribution of income in society, and introduce a universal social welfare system. China may also fall into the “middle income trap.” Another serious challenge to Beijing can be efforts by many countries to reduce their trade dependence on China and develop integration formats without its participation (for example, the Trans-Pacific Partnership).

Perhaps, the most unknown thing about China is whether or not it is capable of making a major technological leap in the foreseeable future and moving from using primarily borrowed technologies to technologies based on its own intellectual property. In recent years, it has been repeatedly suggested in Russia that after 2020 the United States’ advantage in R&D will become quite prominent and the U.S. will leave China far behind. For example, Kyrgyzstan’s ex-president Askar Akayev, now a professor at Moscow State University, believes that the ability of countries to increase the use of new – Nano-Bio-Info-Cogno (NBIC) – technologies will be of paramount importance. China is well behind the U.S. and leading European countries in this field. At the same time, Chinese scientists calmly react to this kind of forecasts, citing the existing program for the development of new strategic industries, largely based on the latest technologies, and practical achievements in developing the digital economy, creating new materials, etc. In any case, China’s real achievements in space exploration in general and lunar programs in particular, deep ocean research, the development of low-carbon technologies, and active use of renewable energy sources suggest that the gap in science and technology between China and other nations has decreased significantly.

The past decade has also seen a marked growth of China’s soft power, which is especially evident in culture. Of course, there are elements of intense and sometimes annoying advertising coming from Beijing, but there is also objective evidence of the attractiveness of the “Chinese culture” brand in the world. This includes the growing popularity of the Chinese language and Chinese contemporary art, especially painting, and the awarding of the Nobel Prize in literature to Chinese writer Mo Yan.

As regards another important component of soft power, diplomacy, the presence of China in world politics has been steadily growing. China is broadening the geography of its strategic interests and introducing more and more initiatives to address economic cooperation issues, settle crises, etc.

China is increasingly confident in the international arena as a leading world power. Whatever estimates of China’s overall power are used, the public opinion in a majority of countries generally views it as power number two, second only to the United States. 

EMERGING FROM SHADOW

China’s foreign policy during the first 18 months after the fifth generation of leaders came to power is of interest not only per se but also from the point of view of whether or not it can be used to judge the features and priorities of the international policy of Xi Jinping and Li Keqiang for the entire period until 2023. There arises a natural question about “continuity and novelty” in Beijing’s foreign policy after the 18th Congress of the Communist Party of China.

There is obvious continuity with the previous period as regards the general configuration of priorities in China’s interaction with the outside world. The main of them are relations with great powers, and the majority of commentaries by Chinese political analysts interpret the task of building relations of a new type with other powers, set by the Congress, as building a constructive relationship with Washington on the basis of equality and mutual respect. Some publications on “inter-power relations” consider relations with Russia to be part of them as well. A consistent policy of good-neighborly relations is acquiring particular importance in light of the fact that China’s overly tough position towards some of its neighbors in recent years has shaken Beijing’s image in the region.

Finally, China continues to position itself in the world, above all, as a developing country, backing up these declarations by establishing ties with new partners and strengthening ties with old friends in Africa, Asia and Latin America. As before, China skillfully uses memorable dates – major anniversaries of the establishment of diplomatic relations with this or that country, the 60th anniversary of the proclamation by China and India of the principles of peaceful coexistence, the 50th anniversary of Zhou Enlai’s visits to African countries (1964), etc.

At the same time, explanations and commentaries by Chinese officials and political analysts put the emphasis not on the continuity but on the  novelty of the foreign policy pursued by the fifth generation of leaders. Indicative in this respect is an article headlined “Innovations in China’s Diplomatic Theory and Practice” by Yang Jiechi, member of China’s State Council in charge of foreign policy. He wrote that “with the layout being more comprehensive and more balanced, China’s diplomacy under new circumstances displays such features as rich ideas, clear priorities, firm positions, flexible approaches and distinctive styles.” This factor has enabled China to achieve “a series of major breakthroughs in diplomatic theory and practice within a very short period of time,” he concludes. These breakthroughs include the introduction of the Chinese Dream concept, and the beginning of the construction of a new model of relations with the U.S. – conflict-free, non-confrontational and based on the principles of mutual benefit and respect.

One of the leading specialists in China’s contemporary international relations, professor Wang Yizhou of Peking University emphasized that Xi Jinping and Li Keqiang belong to the first generation of leaders who were born after the founding of the People’s Republic of China in 1949. Due to this, they “bear a lesser historical burden than their predecessors and have a different world outlook – more confident, ambitious and enterprising.” Indeed, the difference in the foreign-policy style of Xi Jinping from that of his predecessor is evident in everything – from the dynamism and range of activities to the greater emotionalism. Obviously, the Xi Jinping-Li Keqiang team is showing readiness for a more pro-active and sometimes even tougher foreign policy than the one pursued by their predecessors, and for a broader range and more flexible uses of diplomatic tools.

Conspicuous is the use in Yang Jiechi’s article of the phrase “bottom line” in the context of China’s declared determination to protect its legitimate interests. The promise that “in our diplomatic work we will not dodge disputes or problems” is also symptomatic.

Indicative in this regard is the change in China’s approach to its differences with some neighboring countries over border issues. Whereas formerly this subject was not widely discussed, now it is openly admitted that China, which shares land borders with fourteen countries and sea borders with another eight countries, has “sovereignty disputes” with ten of them. Often statements about the commitment to “protecting sovereignty and territorial integrity” mention the task of “improving the quality of national defense” and “turning China into a powerful maritime nation.” It is also noteworthy that Beijing has begun to increasingly often use the potential of economic diplomacy, regularly resorting to not only the “carrot” but also the “stick.” In 2013, for example, Japan and the European Union felt the effects of this policy.

At the same time, Beijing does not always take tough approaches in situations where there are differences and diverging positions with other countries. For example, unlike in previous years, it is more inclined to look for compromise solutions in relations with India and Vietnam. On the whole, Beijing’s foreign policy is becoming more nuanced and differentiated.

The expert community in China, which becomes increasingly aware of its strength, is actively discussing possible parameters and qualitative characteristics of the country’s foreign policy for the medium term. The overall forecast of Chinese political analysts predicts a greater international responsibility, growing influence of both hard and soft power, and a gradual increase in China’s contribution to global processes. In general, Beijing’s international activities objectively go beyond the framework of Deng Xiaoping’s legacy, which is intrinsically restrictive. It is no longer mentioned by the new leaders. Contrary to his advice for China to “keep a low profile,” this country has finally come out of the shadow and becomes increasingly active in all regions of the world and in all spheres of international life.

In the coming decade, Sino-U.S. relations will continue to resemble a pendulum moving from cooperation to rivalry and back again. Beijing does not take risks, as it is aware that it lags behind the United States in military power. Yet, it will not make any fundamental concessions to Washington on the Taiwan issue or other aspects of sovereignty and territorial integrity.

There are objective prerequisites for a further deepening of Sino-Russian relations. In the previous year or two, when the United States and its allies tightened their encirclement of China, Chinese political analysts repeatedly spoke of the need to elevate relations with Russia to the level of alliance. The direct attack of the West on the rights and interests of Russia after the events of the winter and spring of 2014 in Ukraine increases the need for Moscow to establish closer ties with Beijing. The chances for that are growing significantly as the positions of advocates of Russia’s strategic orientation towards the West have weakened. At present, any unbiased person is much better aware than before that today’s and tomorrow’s threats to Russia from the West are greater and more dangerous than a hypothetical threat in the future from China that continues to gain strength.

Under favorable circumstances, the 2001 Russian-Chinese Treaty on Good-Neighborliness and Friendly Cooperation may be not just extended but transformed into a format that would be close to an alliance, if not in letter then in spirit. So, Russia’s equidistance from the United States and China in the geopolitical triangle, now being formed by the three countries, is hardly possible in the foreseeable future.

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