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China an Active and Stable Force in Multilateral Organizations

Martin Edwards, Assistant Professor, Seton Hall University
June 2, 2011
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US publics and policymakers pose a consistent question about American involvement in international organizations: What do we get from them? The answer to this question is simple – international organizations provide a forum for states to both advance and defend their interests. The simple fact that countries use them in these ways, then, demonstrates their value. The People’s Republic of China has learned to do the exact same thing in recent years, which is a sign of its increasing prestige in the global community. Some examples from the areas of international finance and human rights will make this larger point clearer.

In terms of China using international organizations to advance interests, it has formed a like-minded coalition of rising powers known by the acronym of BRIC -- so named for its members: Brazil, Russia, India, and China. Just last week, the BRIC countries, together with South Africa, issued a joint statement advocating for a competitive selection process for the next Managing Director of the IMF. This flies in the face of the unwritten rule that the head of the IMF be a European, and this statement was intended to slow down momentum for the French Finance Minister, Christine Lagarde, who is campaigning for the position formerly held by Dominique Strauss-Kahn.

This coalition could not have formed without the type of discussions that can only take place in multilateral meetings. The BRIC countries have been releasing joint statements at the G-20 meetings summarizing their views of the state of the world economy for years now. The fact that the Chinese have used these meetings, not merely to make their own views known, but also to caucus with other countries on matters of common interest signifies that they view multilateral cooperation as a means to larger ends.

China has used its role in the IMF and G-20 not only to advocate changes in how the Fund does business, but also to call attention to broader problems in the world economy. It has taken the podium at the IMF/World Bank joint meetings to stress the importance of additional fiscal consolidation in the developed world and additional financial sector reform. Both of these issues, if left unaddressed, will only add to additional tensions in the US-China relationship as concerns mount over the value of the dollar. What is important here is not merely what is being said, but how the message is being delivered. Public signals convey more influence than private ones, and taking advantage of the opportunity to speak at these meetings only serves to underscore the importance of what is said in private conversations with US policymakers.

China has moved decisively to become a financial contributor to the IMF. In addition to its traditional contribution to the Fund’s coffers, it purchased $50 billion in IMF notes in September 2009. This allowed the IMF to expand its lending facilities and has given it more flexibility in managing economic crises in both the developing and developed worlds. This underscores China’s growing role as an international stakeholder in the global economy.

China has also used its engagement in international organizations strategically to defend its interests when they are assailed by other countries. The evolution of IMF policy regarding the exchange rate is illustrative in this regard. China has blocked the release of IMF reports suggesting that the RMB is undervalued, and sought to tone down criticism by Fund staff about the magnitude and sources of the exchange rate imbalance. This is certainly consistent with Chinese behavior in other areas – the UN Human Rights Commission never censored the PRC for Tiananmen, and this is attributable to the ability of Chinese diplomats to mobilize other countries on the commission to vote against any resolutions. Again, this is what great powers do: use their influence over international organizations to avoid censure where possible.

International organizations are a means by which countries achieve their common interests. Moving forward, we can expect countries to use international organizations to produce greater cooperation. The IMF provides yet another recent example. As noted above, the Chinese have pushed for greater progress on financial sector reform in developed countries in order to safeguard their own assets. At the same time, they have concerns about the stability of their own financial sector. This interest in cooperation both at home and abroad makes win-win deals possible internationally. It is no accident, then, that the countries with the 25 most important financial sectors are now required by the Fund to produce a Financial Stability Assessment. Though this program was created in the wake of the East Asian currency crisis, the US had never submitted an assessment until last year. China is working with the IMF on the first assessment, which should be completed later this summer.

What this episode shows us is what active partners in the global community perennially do – use multilateral fora like the IMF to broker deals that benefit both themselves and their partners. Most importantly, none of these episodes noted above signify a rivalry between the US and China. Interdependence creates the possibility of conflict, but enduring joint interests create strong incentives for cooperation. Just as in the 1980s, the US economic relationship with Japan was complicated by the economic downturn, so as it is with the US-Chinese relationship today.

The fact that the PRC is active in international organizations is both significant and underappreciated. Not only does this tell us that they view this cooperation as valuable, but it also points to their self-perception as a responsible stakeholder in the international community. All we need do to appreciate this fact is consider the level of cooperation that would exist if the PRC were not so engaged.

Martin S. Edwards is an Assistant Professor at the John C. Whitehead School of Diplomacy at Seton Hall University.

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