The Dangers of the Wrong Reactions to China’s Growing International Power Position

China, having become a dominant economic power and one of only two countries in the world with over US$10 trillion in annual GDP, with US$3.2 trillion of foreign currency reserves, has increasingly started flexing its diplomatic muscle. The country’s more vigorous foreign policy has taken many forms and, among other things, China is now a bigger lender to the developing world than the World Bank, is spearheading the creation of multiple supranational institutions such as the BRICs Bank and the Asian Infrastructure Investment Bank (AIIB) to (potentially) compete with established international institutions and is pursuing an increasingly active policy of securing its territorial claims along its disputed borders. This increased activity in the context of the country’s emergence as an economic superpower begs the question as to China’s geopolitical endgame, namely, is China building up to redefine the existing world order and challenge the United States, which since the demise of the Soviet Union 25 years ago has enjoyed de-facto hegemony in world affairs? While Europeans have been anxious not to lose out on a relationship with what may be tomorrow’s political superpower, Americans have been frustrated by the lack of resistance their allies show to the rise of China. Understanding the country’s foreign policy and indeed broader policy priorities is critical for countries seeking to constructively engage with an increasingly powerful and increasingly assertive China. Indeed, reactions based on a poor or superficial understanding of China hold all the promise of misguided friendships and misguided rivalry on the world stage.

China’s Key Foreign Affairs Initiatives

China’s active role in foreign policy is a relatively recent phenomenon. Since the establishment of the People’s Republic in 1949, the communist party’s focus has overwhelmingly been on domestic matters, including economic and social development as well on the distribution of power within the party itself. The People’s Republic itself was diplomatically recognised by the majority of Western countries only in the 1970s, leading to an increase in foreign policy activity up to 1989, when the Tiananmen Square protest effectively shut down China’s engagement again for a number of years. China’s increasing economic growth in the past twenty years has been accompanied by an increasingly assertive foreign policy and its current foreign engagements are becoming increasingly multi-dimensional as the partial list of China’s recent initiatives below demonstrates.

  • Infrastructure and Trade Investments. Major recent examples includes the US$1.6 trillion One Belt-One Road Initiative, linking China to Europe over land and sea through a Chinese network of trade, infrastructure and natural resource investments; The strategy consists of the “Silk Road Economic Belt”, a planned network of overland road and rail routes, oil and natural gas pipelines, and other infrastructure projects from central China, to Moscow and eventually Western Europe, as well as of the “21st Century Maritime Silk Road”, a network of port and coastal infrastructure projects connecting China to the Mediterranean via the Indian Ocean, the South China Sea and East Africa. Other examples include China’s pledging US$250bn of investment, mainly in infrastructure, in Latin America over the next ten years, having previously made similar pledges to Africa and other developing regions.
  • The Creation of Multi-lateral Institutions. Examples of China-initiated international institutions include the “New Development Bank”, more commonly known as the BRICs Bank. Although China will not have outsized rights in the banks governance, its headquarters will be in Shanghai and China will potentially finance the US$10bn buy-in from two of five founders of the bank, demonstrating its “first among equals” status among the stakeholders. More recently, the establishment of the Asian Infrastructure Investment Bank (AIIB), a China led US$50-100bn international bank to compete with the Asian Development Bank and World Bank, is perhaps China’s most ambitious initiative to date, securing the support of nearly 50 sovereign founding members.
  • The Assertion of Sovereignty in Contested Areas. China has also stepped up its assertion of sovereignty over contested territories, including over areas which it does not de-facto already control. Chinese border troops recently held manoeuvres in the disputed no-man’s region of Aksai claimed by both China and India and the country recently extended its air defense identification zone to cover Japanese controlled territory in the Diaoyu/Senkaku Islands. Currently ongoing initiatives include the landfilling of reefs in the disputed Spratly and Paracel Islands and the construction of naval and aviation facilities. (While these actions are all arguably domestic ones from China’s perspective, this is not the belief of their counterparties and that is the definition of the term “dispute” and so these actions have undisputable foreign policy implications).
  • The Build-up and Export of Military Power. China is now the world’s third largest arms exporter, having recently signed a deal to sell up to five submarines to Pakistan for $5bn, followed shortly thereafter by the sale of 110 JF-17 Thunder fighter jets (again to Pakistan) for over US$3bn. China’s rise in the rankings as an arms manufacturer is commensurate with the increase of its own military spending, which has seen the People’s Liberation Army steadily being upgraded from one with purely defensive and littoral naval capability to one with regional power projection.
  • The Promotion of Chinese Cultures and PRC Ideas. China is also pursuing a sundry list of initiatives designed to showcase China’s soft power, ranging from hosting summits and international sports events to the now over 500 Confucius Institutes promoting Mandarin education and the PRC. When well executed, these initiatives showcase China’s achievements and progress in infrastructure, economic development, organisational skills and wealth creation, as well as breaking language and cultural barriers to mutual understanding. However, such actions in the eyes of the outside world are often undermined by China’s handling of protest and dispute, for example in relation to Tibet or Hong Kong. China’s Confucius Institutes also oftentimes unintentionally spark exactly the discussions over the freedom of speech that China has studiously avoided.

However, it is unclear what this diverse set of economic, political and military initiatives adds up to and where they lead. The reactions of the international community to China’s initiatives however vary along the full spectrum of paranoia to dismissiveness.

Foreign Reactions, Fear, Anxiety and Delusion

Foreign reactions to China’s foreign policy fall within a wide spectrum because, given the breadth of the initiatives, it is possible to read into them many motivations. For China’s strategic allies, countries such as Pakistan, it plays the role the US played in Europe following the end of the Second World War, a guarantor of security and a supporter of economic Russia, although in Russia’s case its own superpower ambitions still appear to be alive and well.

For most countries, however, particularly for western and western-aligned countries, China’s perceived expansion into a global superpower is met with caution, anxiety and even fear. Europe, which while at the centre of global affairs during the second half of the 20th century has become accustomed to not being in the driver’s seat of global policy and power. Europe’s reaction to China’s rise appears to be one of fear of a rising power that they find difficult to deal with and also a fear of not dealing well with China and missing out on an economic opportunity rather than one of a less stable or less favourable geopolitical order. The US and the Asian allies whose security depends on it on the other hand have the most to lose from China as a global superpower and their reactions reveal their anxiety about a less secure world in which their own influence wanes further. In the US itself there is wide range of reactions to China’s foreign policy with republicans and hawks seeing a clear threat to be contained and the Obama administration trying to walk a fine line between economic engagement (both competitive and cooperative) and security containment. Across all countries, of course, there are the occasional voices that place China’s rise into a historical context, taking the view that over long periods, superpower and imperial power shifts between nations and that this is likely to happen to America too unless it manages a shift that counters the pattern that all other great powers have faced.

What Could China’s Foreign Position Mean?

The international community’s different attitudes, actions and reactions to China’s foreign policy are all based on different interpretation of what China’s foreign policy actually means, or more concisely, what the end-game of China’s foreign policy is. Even the simplistic assumption that “China wants to rule the world” can imply a wide range of political, security and economic end-games that it may or may not be pursuing.

The major strategic positions that China could seek to adopt – only some seem credible at this stage - include the following:

  1. The Creation of An International Economic Sphere of Influence. China’s economy is built on pulling its people out of an economically stagnant or declining state through manufacturing employment. This has created the most resource hungry and export hungry country in the world. It has also led China to build very rapidly an international network of bilateral trade and development arrangements to secure its domestic economic objectives. In order to secure this network, China has provided cash and infrastructure investment in exchange for a steady supply of natural resources and sometimes its support for its network at international forums such as the UN. China has often faced objections in this regard for its willingness to engage with countries facing sanctions by a significant portion of the international community and by its willingness to provide development assistance with “no strings attached”, undermining efforts by the international community to enforce governance or investment standards. The network includes countries accused of genocide such as Sudan or Syria, others facing sanctions such as Russia or Iran and others considered “failing states” such as Zimbabwe, or North Korea. Studies of the Cold War and US Trade demonstrate that “interventions” cause a shift towards importing US goods at the expense of exporters from other countries.

  2. The Establishment and Control of the Asian Trade Bloc. The world's two most powerful economies, the United States, and the European Union, have each sought to forge links to neighboring countries and in turn this denies equal access to rivals. In the last decade, China has expanded beyond simple bilateral commercial agreements to a more regional engagement, signing treaties with ASEAN and establishing forums with organisations such as Community of Latin American and Caribbean States (CELAC), creating or paving the way for free trade infrastructure with entire regions. The most ambitious of these takes the form of the “One Belt-One Road” strategy mentioned above, in which China will pursue investments affecting some 65 countries and 4.4bn people. This strategy, although still in its early stages, has been referred to as “Asia’s Marshall Plan”, with an initial US$40bn Silk Road Fund endowed by China for investments. However, the strategy is much broader in ambition than simple trade, and will also include efforts to promote greater financial integration, use of the Renminbi for international trade, the integration of regional information and communications technology networks into a “digital silk road”, among other initiatives. The crux of these initiatives, to borrow a phrase from Rome, is that all roads will lead to China, and position it as a, if not the, leading force in the East.

  3. The Rival to the Western Alliance, The China-Led Eastern Alliance or Political Bloc. The Western Alliance or Bloc led by the United States and NATO fought the Cold War against the Soviet Union and its allies and its success led to the US being the sole superpower. This victory was facilitated by the enshrining of international platforms such as the UN and World Bank and the use of capital in the pursuit of trade and political ends. Other than at the UN, where China enjoys one of five permanent seats on the Security Council, it does not exert the same level of power and influence in international institutions. (see inset)The leadership of these institutions is split between established powers with head of the World Bank, IMF and Asian Development Bank always an American, European and Japanese, respectively. China’s strategy for building influence through supranational institutions therefore has been to create entirely new or resurrect defunct than at the UN, where China enjoys one of five permanent seats on the Security Council, it does not exert the same level of power and influence in international institutions. (see inset)The leadership of these institutions is split between established powers with head of the World Bank, IMF and Asian Development Bank always an American, European and Japanese, respectively. China’s strategy for building influence through supranational institutions therefore has been to create entirely new or resurrect defunct existing institutions, under Chinese leadership. Despite ongoing US attempts to limit the scale and scope of initiatives such as the AIIB, a large number of countries, including G7 members and other US allies, have signed up as founding members of China led institutions. These institutions, when seen together, have the potential to set up a counterweight and potential competitor to the existing international financial order dominated by the West and the ideas of the Washington Consensus.

    China’s creation of international institutions is also not limited to economics but extends to security as well. Since the demise of the Warsaw Pact, NATO has ruled supreme in the West as security organisation – China’s Shanghai Cooperation Organisation, however, while not at NATO’s level of coherence, has the potential to develop into a Eurasian counterweight.

  4. Control of Eastern Routes and the Establishment of the World’s Second Military Power. The PLA in the past decade has undergone a significant transformation, following 20 years of double digit budget growth. China’s defence budget today is 3.6x that of its nearest security rival, Japan’s. This upgrade has taken many forms: China has invested significantly in the development of up to date military hardware particularly in aircraft and naval hardware and is also increasing its ability to project power beyond its borders (and shores) with the development of a modern, blue-water navy. The country has commissioned its first aircraft carrier and reportedly building several more, which will further increase the operational range PLA Navy along the “String of Pearls”, as the series of Chinese built deep water ports under construction in the Indian Ocean are colloquially known. China’s navy is already ranging further a sea, participating in anti-pirate patrolling off the coast of Somalia and more recently sending a guided missile frigate to assist in the evacuation of foreign nationals in Yemen. This build-out of naval power has the potential to allow China to expand its defence doctrine beyond sealing off the Yellow Sea, East China Sea and South China Sea from any foreign military presence (by securing the “first island chain” of Japan, Taiwan the Philippines and Borneo) to effectively controlling the some of the world’s most important sea routes critical to East Asia.

China’s Foreign Policy, What is China?

China’s current foreign policy actions alone, particularly when seen piecemeal, support a wide range of divergent views on the country’s objectives and priorities.“The USSR still lives in antagonistic "capitalist encirclement" with which in the long run there can be no permanent peaceful coexistence.“
George Kennan, The Long Telegram 1946
Depending on the context, the international community is encountering a China that can be any one or more of three things, an expansionist political superpower slowing building strength to challenge the US, a mercantilist trader focused solely on economic gain to the exclusion of other forms of engagement,or an isolationist that has dug in on a wide range of bilateral and international issues leaving little or no room for engagement to the international community on these situations. It was the last of these three that led Kennan to recommend the “Containment Strategy” be adopted against the USSR. Clearly, the appropriate Response to China needs to be informed by what one believes China is today and what its intentions might be. Three clear points on the spectrum of defining China are worth consideration.

  • China the Expansionist Superpower. Many countries see (and fear) China as harbouring the ambition to challenge the US as the dominant international superpower, with all of its foreign policy actions being chess moves to further Chinese power and leverage. To these observers, the proposed AIIB and other supranational agencies set up a block of international institutions under Chinese control, China’s naval build-up is the first step to Pacific security hegemony, and its alliances and initiatives such as the Silk Road belt are designed to encircle strategic competitors and US allies such as India and Japan. Chinese rhetoric also helps supports this view of its foreign policy, speaking of a “New type of great power relations” with the US, seeking to establish an engagement framework based on the avoidance of conflict or confrontation, mutual respect for each other’s core interests and mutually beneficial cooperation, implying that China is seeking détente or accommodation as an equal with the world leading superpower. To supporters of this view of Chinese foreign policy, the key policy responses are containment and, it that should fail, conflict.
  • China the Mercantilist. The significant number of countries in the developing world, particularly in Africa and South America experience China as a merchant trader, pursuing commercial interests through a series of bilateral economic exchanges. Like the British East India Company in the 18th century, the primary drivers of its actions appear to be economic in nature. Unlike the East India Company, however, it seeks cooperation through monetary incentives rather than the use of force. To potential partners, China the mercantilist looks markedly different from the established Western rich nations in how it seeks to access their natural resources and markets: its interactions are based on the principle of not seeking to own and manage political affairs and peoples directly and its cheques, commercial or aid, are not tied to specific uses or to improvements in governance or political, monetary or fiscal reform. This is perhaps an oversimplification of China’s goals and modus operandi and misses the many lessons of history of where one begins and where one ends up; the East India Company began as a merchant trader and gradually turned into a landlord and master. To supporters of the view that China is a Merchant Trader and will remain one, the appropriate policy response is commercial engagement.
  • China the Isolationist. One reading of China is that China places its own interests above all others. This approach is what is seen as behind a stance of non-negotiation on a wide range of matters from territorial issues to the expansion of citizen rights. So, closer to home, China’s neighbours often encounter China as an isolationist, a country that refuses substantive engagement on a wide range of political and security matters including a long list of outstanding territorial claims. China today is in territorial disputes with no less than nine neighbouring countries (not including Taiwan) and is becoming increasingly assertive in exercising its claims of sovereignty. Countries encountering China’s refusal to engage on any matter it considers to be domestic issues, such as human rights or governance can also be tempted to see China as an isolationist. China’s track record of (non-)participation in international bodies, such its refusal to vote for UN sanctions or statements condemning other countries provide further support to this view of China. To supporters of this view, the appropriate policy response is encirclement, that is, to work together to stop losses and if possible secure concessions.

All of these views of course are true and false at the same time. China’s multi-faceted foreign policy and the fact that most countries are exposed to only part(s) of the whole picture create the risk of oversimplification of China’s aims. Countries that encounter China in “its own backyard”, so to speak, are tempted to see an expansive regional power building up military strength and politicising its economic relationships; developing countries (or their elites at least) see China as an easy way to make money with no questions asked; while many Western countries see bits and pieces of all strategies broadly applied and assume that China is trying to rule the world. These types of assumptions are dangerous oversimplifications and responses based on them may have unintended consequences as examined below. However different China’s foreign policy strategies appear to be at first glance though, they are bound by the common thread of the country’s stated “core interests”, which form the basis of all national, and not just foreign, policy. According to China’s State Council these core interests include:

  1. State sovereignty;
  2. National security;
  3. Protection of China’s territorial integrity, including national reunification with Taiwan;
  4. Continuity of China’s political system (including rule by the Communist Party) and overall social stability, and;
  5. Sustainable economic and social development

These “core interests” are of a relatively recent vintage, with the phrase itself only taking off in official communications during the second half of the Hu Jintao era, but have significantly shaped China’s foreign policy since this time. Every foreign policy action and engagement is designed to further one or more of the country’s core interests, e.g. bilateral trade agreements ensure economic development, and thereby social stability and the political system, non-engagement protects China’s sovereignty and territorial integrity in situations where the leadership believes an open dialogue might compromise the country’s flexibility to act in the future.

For countries seeking to engage with China it is critical to not only understand these core interests but also the implications of what is not on the list: an ideology or set of values. While the Cold War and the Clash of Civilisations that was meant to follow it was driven (at least partly) by the competing world views of the actors, modern China has, for now, discarded ideology as a motivation for action, first throwing out older Confucian ideas and values during the Cultural Revolution and more recently abandoning communist ideology during its economic opening up. In the absence of a value based framework, China’s foreign policy today is ultimately driven by materialist considerations, and other countries will need to calibrate their engagements accordingly, regardless of their own frameworks and priorities. However, even that is not enough. Unintended consequences apply to both sides. A nation that begins with the aim of trade and self-interest may well end up somewhere other than its goal due to unintended consequences. The idea of an accidental world power bears closer scrutiny. America, when it was a merchant trader, arguably had no interest in displacing Great Britain when the latter was the major world power.

Patterns and Responses

China’s foreign policy and their goals pose a clear question: what is the most appropriate form of response? If we accept the stated goals, Chinas own priorities are clear, namely, consolidated domestic power and ongoing development. For the first 60 years of the PRC’s development the Communist Party has focused on domestic initiatives to further these goals, with the occasional successful (e.g. the Korean War) and less successful (e.g the short lived Sino-Vietnamese War of 1979) international interlude. However, China’s own success at developing its economy has been facilitated by the international economy and in turn led to the need to participate in the international order. This participation which began with trade and economic affairs to secure the natural resources, expertise and technology and new markets required for development has taught China that some of it aims (China needs to secure approximately 50% of all global resources if it is to continue to maintain the kind of growth rate required to maintain social order) cannot be met through participation in the existing multilateral systems and this in turn has led to the increasing importance of foreign policy on the overall leadership agenda in China. Foreign policy and its domestic perception are also an important part of the “China Dream” and its emphasis on the resurgence of the Chinese Nation.

Response One: Common Ground or Pacify and Avoid?

Other countries will need to interpret China’s actions and priorities against this backdrop to develop effective engagement strategies. Europe to date has engaged on common ground but have also embraced the idea of “pacify and avoid” which, focusing on shared interests while largely excluding areas of contention from discussions, regardless of European values and beliefs. This is why human rights and the three T’s (Tibet, Taiwan and Tiananmen) have largely fallen off the agenda in EU-Chinese trade talks. China’s reaction to this approach is generally self-congratulatory and contemptuous while encouraging the behaviour with “gits” of trade and status. By way of example, UK Prime Minister David Cameron saw his 2012 trip to Beijing unilaterally cancelled at short notice after meeting the Dalai Lama in the UK earlier that year and in response recently embarked on a Chinese trade mission that was widely derided by the press in both countries as “self-abasing” “embarrassing” and “an excruciating example of the muddle of high-mindedness, mercantilism and subservience that often describes European responses to China’s rise”.

European countries’ joining the China sponsored AIIB is driven by similar thinking, partially by the (largely illusory) hope of creating a true supra-national institution justified by the hope that they will help shape the bank’s agenda and infuse it with international governance and safeguards, while clearly motivated by the fear of being left on the outside of the party if they don’t join. The miscalculation in this thinking of course is that the fear of being left out in the first place leaves countries with no cards to play with once they are at the table, and therefore with no option but to fold once there is Chinese resistance to Europe’s proposals of improved governance. The irony is that this mode of engagement applied consistently can lead to China ending up in exactly the place most Western countries fear it is aiming for, namely in the position of a superpower leading a block of countries and institutions at odds and competing with the existing international order, a position that far exceeds the brief implied by China’s stated core interests, but one that would likely be welcomed by President Xi Jinping nonetheless, if handed to him on a silver platter. The other irony is that, at least in Europe’s case, acquiescence to Chinese foreign policy has little to do with the growth of trade. The EU is a supplier of high value products and services rather than of interchangeable commodities. German-Chinese trade is flourishing because Germany makes high quality products China wants to buy, not because Angela Merkel failed to invite the Dalai Lama over on the last trip to Germany .

Response Two: Passive Aggression, Defence and Containment

China’s neighbours have over the last decade been huge contributors to China’s rise. “They do not think they are a rising country. The Chinese think they are reclaiming the place that has historically been China'”
Henry Kissinger, Former US Secretary of State
This has taken the shape of providers of know-how and investment (e.g. Japan), natural resources (e.g. Australia) and markets (e.g. India). Americans, Europeans and Japanese are some of the biggest employers of China’s urbanised and migrant urban populations. Many of these countries feel that China has not been grateful and as the Pew survey on global attitudes shows, they feel threatened by China’s rise. This is often spurred by territorial disputes, sympathy to student protests in Hong Kong, poor experiences in commercial negotiations and the reports of China’s rising military armaments. The response to China then becomes one that favours opposition and containment. This is particularly true of neighbours with a history of rivalry such as Japan and to a less degree Vietnam. These countries find themselves at the receiving end of China’s more aggressive moves of territorial assertion and increasing nationalism. This approach has led to hardening of views and positions to the point where constructive and multi-dimensional engagement is in many cases no longer possible. In Japan’s case, this has also led to increasing domestic nationalism in a tit-for-tat escalation, especially concerning the country’s actions in World War II and China’s perception of inadequate penance on the former’s part.

This opposition between China and its neighbours is complicated by the fact that China is clearly the most important trading, investing and economic partner of nearly every country in the region, territorial disputes notwithstanding. The key issue for these countries is that with questions of their own sovereignty at stake, and their economy dependent on China, they lack the capability to engage comprehensively as an equal across a number of fronts. Smaller countries in Southeast Asia such as Vietnam and the Philippines have tried to counteract this imbalance by working together, attempting to use multi-national forums such as ASEAN to engage with China on sovereignty issues and contain what they see as the country’s recent expansionism. China on the other hand has remained adamant about its position and has often successfully used “dividing and rule” methods, to pursue its aims, e.g. by insisting on bilateral engagements to discuss territorial disputes with countries individually, and allowing it to bring its significant economic clout to bear. The issue with these countries’ engagement strategy lies less in the goals they are pursuing than in the fact that they have no clout with which to face China: individually they are too weak and the multi-national institutions they are seeking to work through lack the executive structure and power for decisive and concentrated action.

Constructive Engagement: Induct, Curb and Encourage

The answer for constructively engaging China needs to be to do as China does: define a set of non-negotiable core interests whose advancement or at least protection underpin every foreign policy discussion, whether economic, technical, cultural or political. For Western liberal democracies these may well be founded on agreeing the values and beliefs that set the principles of engagement and are likely to include economic interests, security interests and “socio-political” interests such as the spread of liberty and universal human rights. These interests have largely been defined by countries before, although among western nations only the US has displayed any consistency in not discarding potentially controversial ones at the first sign of impasse. The US accordingly has the most complex relationship with China, and is the country that China knows it has to woo or isolate to enter create a “new type of great power relationship.” However, it is important to note that the at time strained US-China relationship, with FDI restrictions, trade tariffs, the exclusion of each other’s technology companies from domestic markets, and other challenges, has not stopped massive bilateral trade and investment that has benefitted both countries over the past 30 years. It is also important to note that for all of the rhetoric, the effective restrictions the two countries place on each other are still lop-sided, with the US’ general preference for free markets creating some strangely uneven outcomes in favour of China. The US government may shut Chinese telecom company Huawei out from government contracts but Chinese insurance companies are still free to buy heritage buildings in New York City, such as the Waldorf Astoria. It is difficult to imagine a US company being allowed to spend US$2bn on a landmark building on Chang An Avenue in Beijing near the Forbidden City, even if there was one in private ownership available for sale.

The execution of a principles based and more assertive foreign policy towards China will be a long-term game for those with the patience to play it, and one that will see them undermined time and again by countries that do not. Relatively simple engagements will become complex and multi-dimensional and the parties will often fail to reach agreement on matters that were previously straightforward. These set-backs and the slow-down in progress may seem reminiscent of Cold War foreign policy, particularly to China which will see its objectives repeatedly stymied in what appears to be a new form of containment of its ambition by Western powers. However, unlike Cold War containment, the purpose of the West’s engagement with China is not to restrain and confine China’s growth and influence; the ruling assumption is that peaceful co-existence is possible because there are no irreconcilable ideological differences. In contrast, Soviet foreign policy had defined itself in opposition to the capitalistic-democratic West, and any actions therefore placed it in conflict with Western countries. This is not the case for China today, whose ideological logic is inward-facing and China has already subscribed to a largely capitalist economic model. The objective of a constructive long term foreign policy vis-a-vis China needs to be the creation of a level playing field with clear rules that allow all parties to achieve their objectives sufficiently to avoid an escalation of conflict while systematically inducting China to not transgress the principles that the majority of the existing powers subscribe to. For the approach to be successful,, even without aligning on key shared goals each party must derive enough value from the game to continue playing. This framework implies that value of the parties increases with alignment, and provides an incentive to continuing constructive engagement.

The alternative is a long term Cold War type stand-off with the world aligning into geopolitical blocs, with the West and its allies standing across from China and a hodgepodge of regional dependents, trade partners and emerging countries opportunistically choosing sides, each with its own multi-lateral economic, trade political and security institutions.

With the benefit of 50 years of Cold War games, America and Europe should have all the experience to know how to play. More importantly, the allies should know all the reasons to avoid another Cold War. Globalisation of trade, information and ideas all suggest the board is set for a different kind of game. That game is one more like today’s electronic games - fast-paced, multi-player, collaborative, flexible, and virtual – rather than yesterday’s deliberate game of chess. If successful, the end game would see no discernible difference in China’s values from the West’s. However, if the West’s values are not fit-for-purpose (in delivering value to the citizenry) or the West is weak or lacks the energy, commitment and adeptness to play well, in the absence of a conflict, China as it is today, no matter how threateningly divergent that might be from the West’s approach to life, will prevail.


  1. E.g. China’s tough suppression of political protests in Tibet during the 2008 Beijing Olympics or its reaction to the international protests during the torch relay are sharply at odds with picture the country was seeking to promote at the games, with Chinese security officials accompanying the torch being referred to “thugs” by London’s mayor.
  2. “Commercial Imperialism? Political Influence and Trade During the Cold War, William Easterly, New York University and NBER, Preliminary research following declassification of CIA documents, September 2009
  3. According to the U.S. Chamber of Commerce, NAFTA increased US trade with Canada and Mexico from $337 billion in 1993 to $1.2 trillion in 2011, while the EU is Russia’s largest trading partner and foreign investor (providing 75% of its FDI), and has accordingly taken a much softer foreign policy line than the US to its neighbour.
  4. First developed in the “Long Telegram” sent from US Embassy in Moscow to Washington, 1946, later published as The Sources of Soviet Conduct, in Foreign Affairs magazine, 1947.
  5. 2011 White paper: “China’s Peaceful Development” See full text at:
  6. Official PRC media mentions of China’s “core interests” increased from one People’s Daily article in 2001 to 260 articles in 2009 and 325 articles in 2010.
  7. The March 2015 Sign of the Times leader: “The China Dream: Beyond the Purge, Arresting Decay” examined the impact of materialism on society and domestic policy
  8. Covered for example by the Financial Times
  9. Actually, the cautious Ms Merkel has not met the Dalai Lama on any of his last four trips to the country