China’s receding regional ambitions?

Few would disagree with the idea that China is a rising power with great international ambitions. For many policymakers, commentators and citizens in China, restoring its greatness and accustomed centrality in East Asian affairs is a crucial and entirely legitimate goal.

In this context, China’s immediate neighbourhood provides an important testing ground for its more general international ambitions.

And yet events of the last couple of years – even the last couple of weeks – have cast doubt on these ambitions, at least in the short term. Perhaps China’s current geopolitical and geoeconomic problems will ultimately prove an insignificant footnote on the path to global primacy. Or perhaps not. If we ask what it takes to be powerful and exert international influence then China may be exhibiting some surprising vulnerabilities.

The world’s current hegemon – the United States – became so because it was far more powerful both economically and militarily than any other country on the planet in the aftermath of the second world war. But it is also important to remember that many other states and peoples actually liked the US and the sorts of values it projected through the conscious efforts of its policymakers and the inadvertent contribution of its creative industries and lifestyles.

Whatever we may think about the theoretical and practical utility of so-called “soft power”, most observers – in China, too – would agree that China doesn’t have a great deal of it. Significantly, growing numbers of China’s most gifted and employable citizens have chosen to be educated overseas and work in places like the US when they can.

Equally importantly, China’s diplomatic “charm offensive” in Southeast Asia, after some remarkable initial successes, has effectively ground to a halt. Frightening the life out of the neighbours is not the nest way to win friends and influence people.

It is not just the implausible nature of some of China’s territorial claims that is causing such regional angst, however, but the way that they are being underpinned by increasingly aggressive actions on the ground.

The pursuit of China’s territorial claims is a non-negotiable, popularly supported policy at all levels of society – despite the obvious and enduring negative impact on the country’s overall image. This would be important at any time, but it is especially consequential when China’s principal instrument of regional influence – the strength of its economy – is also looking decidedly less effective.

There is an important but unresolved debate about whether the recent devaluation of the yuan is a masterstroke of far-sighted economic diplomacy, or a rather panic stricken effort to boost a flagging economy with some increasingly visible structural weaknesses. My guess is it’s probably a bit of both, with the timing of one helping to make the case for the necessity of the other.

Whatever the truth of it, however, there is less doubt about its impact on the region.

China is the most important bilateral trade partner for nearly every economy in East Asia. The depreciation of the yuan means countries that compete in the same export markets as China does will find it tougher. Commodity exporters, like Indonesia, will find the price of their resources being driven down – as we know only too well in Australia. The associated fall in the value of regional currencies will make servicing dollar denominated loans all the more difficult, too.

There are, in short, some unnerving similarities with the Asian crisis of the late 1990s – with one crucial difference, however. During the Asian crisis China won universal praise for not devaluing its currency and adding to the mayhem. This time around, China’s immediate national priorities and the government’s paranoia about rising unemployment and possible social unrest are plainly in the ascendancy and shaping policy.

China’s leaders are generally obsessed with “American hegemonism" and what they see as the US’s unfairly dominant position in world affairs. They might, however, have paid closer heed to some of the lessons that flow from the American experience.

First, being the dominant economic actor clearly has its advantages, but it is no guarantee of universal popularity. Perhaps the geopoliticians that inhabit the politburo and China’s growing number of think-tanks judge that it is better to be feared than loved. But the US demonstrates the limits of this idea, too.

For all its overwhelming military power, the US has not been able to definitively defeat or deter the likes of the Taliban, North Korea, Islamic State or any of the other members of the contemporary international rogues’ gallery. Military might is not what it used to be.

For a country that measures its history in millennia, such considerations may be petty and insignificant. The outcome of the long game may be what ultimately matters to a policymaking elite that is not as constrained by the truncated electoral cycles of their democratic counterparts.

But even the most far-sighted leaders have to pay attention to quotidian reality. To judge from China’s growing list of domestic and regional problems, it is not clear that China’s current elites are quite so good at the short game.

For a more extensive version of this argument, see Beeson, M. and Li, F. (2014) China’s Regional Relations: Evolving Foreign Policy Dynamics, (Boulder: Lynne Rienner).