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Foreign Policy

China’s Foreign Policy in the New Era of Globalization

Jan 23 , 2017
  • He Yafei

    Former Vice Minister, Ministry of Foreign Affairs

It is an honor and pleasure to be in Hongkong again talking about China’s foreign policy in the new era of globalization.

I will start with an analysis of what has happened in globalization and why, then move on to give you a panoramic view of China’s growing role in international affairs with particular reference to China’s evolving relations with G20, lastly I will talk about how should China view and respond to this emerging new era of globalization and what her policies should be, especially on managing China-US relationship under the Trump Administration that will come into being in three days.

1/ Nowadays we are witnessing heart-wrenching upheavals in globalization, culminating first in the British referendum to withdraw from the European Union, the election of Mr. Trump to the Presidency of the United States, and defeat of Italian referendum to amend the constitution which greatly boosted “the Five-Star Movement” with many more to come this year and beyond, representing the rapid rise of populism across the globe, creating greater uncertainty to the future of globalization and international relations.

To answer the question of why it is so, we need to be cool-headed and take a realistic and historical perspective to the issues at hand.

When commenting on the result of American election, Prof. Fukuyama said the question is NOT why it so happened, it should be why it happened now, not earlier! That apt comment is also relevant to our question.

Globalization since 1980s has produced much economic progress and wealth for the world which benefitted many countries around the world. Meanwhile globalization has “winners and losers” which manifested in the ever-widening gap between the capital owners and labor providers.

Karl Marx first exposed such an inherent conflict between capital and labor long time ago, mainly talking about European capitalism.

French economist Pikety wrote a thick book “The 21st century Capital” in 2015 about the income gap between capital and labor in this new round of globalization, giving warning to the deepening social division between the elites and man on the street if the gap remains unbridged. He even proposed to levy global tax on capital gains.

The political turn to the extreme right from the US to Europe nowadays indicates that the social division mentioned above has provided fertile ground for populism in western nations which has begun to change the political eco-system and landscape.

In the last few decades, no matter what label a political party has in the west, they all fall prey to the power of capital and become the Party of Capital with invested interests. They are fully preoccupied with distribution of wealth of globalization among themselves to the total neglect of those people on the lowest end of social ladder including working people in manufacturing sectors, in small “rusty towns” and rural areas. Even media and intellectuals are aligned with capital elites as illustrated in the recent US election. That is the social basis that has propelled Mr. Trump to the White House and also the moving force behind what has been taking place in many European nations from Italy, Hungary, UK to France, Denmark, Ausria and even Germany.

2/ Now let us have a look at China’s growing role in the world with particular emphasis on its relationship with G20.

I will first alert you to some turning points in recent history to illustrate when and how China was drawn into and then became proactively engaged in G20 and global governance. Then I will briefly touch upon the sharp contrast between the decline of neo-liberalism and success of China’s development path and model.

The four years of 2003, 2008, 2009 and 2016 come to my mind when reviewing China’s progress in its involvement in global governance.

2003 was the year when five big developing countries(China, Brazil, India, South Africa and Mexico) had been invited for the first time to have consultation on global economic governance with G7/8 representing advanced nations and France in the Chair of G7/8. It took place at a small and beautiful lakeside town of Evian. That arrangement represented a small but significant step in turning global governance from “governance by the west” to “co-governance by both the west and east” and later on evolved into a semi-permanent “8+5” mechanism, providing a platform of consultation between developed and developing countries.

This pattern lasted till 2007 when its unequal nature became apparent and unacceptable as balance of power and global influence between the developed and developing countries changed in favor of the latter. The combined GDP of G7 declined a bit over 30% of world total as compared with more than 60% in 1970s.

2008 brought us face to face with the unprecedented world financial crisis that started right in the heart of advanced countries and quickly spread to the whole world. The urgent call on major economies then was to take immediate and concerted actions to counter and roll-back the crisis. The critical governance structural question was what platform or mechanism could be used for such a huge endeavor.
Some advanced countries still favored some kind of “8+5” arrangement or “8+6/7”, but major developing countries were against it, expressing dissatisfaction over the unequal nature of the previous “8+5” mechanism. Therefore, major developed and developing countries finally came to agree to upgrading G20 to summit level for tackling financial crisis and taking care of global economic governance issues. The reason is simple because G20 composition is fairly balanced in the sense that developed and developing countries take up almost equal numbers in this organization, plus G20 consists of all major economies with good representation and was created in 1999 right after Asia financial crisis of 1997/8.

At the 1st G20 Washington Summit in November 2008, China played a key role in mobilizing G20 members in terms of providing stimulus packages to arrest economic slowdown and putting together a list of deliverables all members could contribute to resist the onslaught of the crisis.

2009 witnessed two G20 Summits in London and Pittsburg and both made important decisions concerning global governance. For London Summit, the essential decision was to expand the rescue facility of IMF in face of imminent bankruptcies of some countries including European countries. The target set was additional 500 billion dollar for the facility. After serious consideration and based on global interdependence of economies, China made an important decision to commit to contribute no more than 10% of the target in terms of buying IMF bonds. China’s fast response to the appeal set a good example for other G20 members and London Summit fulfilled the target and outperformed the expectation with a total commitment reaching 1.1 trillion dollar.
For Pittsburg Summit, the most crucial decision by leaders was to “make G20 the premier forum for international economic cooperation” while getting rid of “8+5”. China was one of the initiators of this historical decision.

2016 was the year when President Xi successfully hosted G20 Summit in Hangzhou with 29 important deliverables some of which were unprecedented in the history of G20. For instance, it succeeded in putting development issues on the top of Summit agenda with China’s strenuous efforts of coordination and consultation.

China also led G20 members to commit to taking both collective and national actions to implement 2030 Agenda for Sustainable Development of the UN. Other essential commitment ranged from innovation, trade and investment, anti-corruption to infrastructure and macro policy coordination among G20 members. We can safely say that China has started to play a more active and significant leading role in global governance with Hangzhou Summit as a shining example.

President Xi Jinping described the historical changes that have taken place in China’s relationship with the rest of the world in following terms: China is moving toward the central stage of global affairs; China has stood at a new starting point in history; China has never been so close to the realization of China Dream of national rejuvenation.

3/ Foreign policy options and strategies available to China in the new era of globalization full of challenges and within the new paradigm governing China-US relations.

(1) Peaceful development and China Dream

Peaceful Development is essential to China’s rejuvenation both philosophically and in reality.

Peaceful development is the choice of necessity based on core values of Chinese culture and fundamental interests of China in keeping with globalization.

Chinese culture since its inception believes that our world is an integral whole where all nations and peoples are inseparable from one another.

Proceeding from that assumption, Chinese culture has always revered peace and harmony as the most important element in managing domestic,national and global affairs (家、国、天下).

Confucianism appeals for building an ideal society where everyone is equal and close to each other. Therefore it is opposed to “conquering by force”.

Taoism advocates “no fights” in pursuit of anything worldly and material. In managing external relations, Chinese culture guides China to follow the principle of “harmony among nations” which entails treating rich or poor, big or small nations on an equal basis and disavowing war as a means to enforce one’s will. The ancient Silk Road and over 5000 years of Chinese civilization offer testimony to China’s imprint of peace and harmony in world history and global governance.

It is easy to see why choosing peaceful development is in the best and fundamental interests of China and of the world.

China’s rapid economic growth and fast rise in the last three decades and more has not only brought about a modern and new China, but also contributed a great deal to the maintenance of world peace and security as well as global economic growth.

In addition, globalization offers a historic opportunity for China to engage in peaceful development and modernization as well as rejuvenation of Chinese nation (make China great again). China’s success in the last few decades has proven once again that China has made the right choice.

Peaceful development is the choice based on China’s belief in socialism and its theory of political economy.

China is a socialist country with Chinese characteristics deeply rooted in Chinese culture which has been a corner stone in the theoretical edifice supporting China’s domestic and foreign policies.

The strategic decision by China to persist in taking the path of peaceful development and in being part of globalization with free trade and investment is just such a good example.

Since the establishment of New China in 1949, Mao Zedong as China’s great leader pronounced at the very beginning that China was a socialist country, not a capitalist country, and as such China would never commit aggression against other nations.

The opening-up and reform that began in late 1970s turned a new page in China’s development. Deng Xiaoping famously said that China would build socialism much more superior than capitalism and China’s socialism would be “peaceful”. What with China’s proposal to build “new type of big power relations” with the US and China’s creative B & R Initiative for common development with both advanced and developing countries, we have seen China’s diplomacy displaying its firm belief in peaceful development.

(2) Globalism and building a global cooperative partnership network versus alliance-based world order

Global cooperative partnership is an innovation in China’s diplomatic thinking and practice based on China’s historical experiences and the reality of globalization.

Partnership and non-alignment have combined to pave the way for democratization of international relations.

China will continue to be non-aligned while having as many friends as possible to knit a global network of cooperative partners.

By the end of 2016, China had established partnership relations with over 97 countries and some regional organizations, covering all major parts of the world.

Equality, peace, inclusiveness and tolerance are the three salient features of a cooperative partnership.

What is equality? From China’s perspective, partnership does not distinguish between poor and rich, big and small. It does not denote a relationship of “master and servant”. Equality is essential to any partnership and countries involved must be free to choose their own political system and economic growth model.

What is peace? There should be no hostility or confrontation in partnership based on mutual benefits rather than on “zero-sum” rivalry.

What is inclusiveness and tolerance? It tells us that partnership transcends ideological and institutional differences.

Countries can be partners whether they are of the same ideology or not. They will be able to seek common grounds while shelving differences.

Global partnership is an improvement upon and adjustment of a simple and mechanic understanding of non-alignment.

Non-alignment is a long-held Chinese policy which dictated in the 1980s that China “would never subjugate itself to any big power or power group.”

China adopted non-alignment to maintain independence in the narrow international space between two superpowers during the Cold War.

In 1992, the CPC announced at its 14th National Conference that “China will not be aligned with any country or group of countries and will not take part in any military grouping.”

Alliances are viewed as a relic of “Cold War thinking” or “an outdated concept of security” that would increase risks of military confrontation rather than providing peace.

After the 2008 World Financial Crisis, China’s global influence has been on the rise and expectations for China to play a greater role in international arena have also risen.

China has maintained its non-alignment policy while trying to knit a global network of cooperative partners. Take China-Russia Relations as an example.

China and Russia will not become allies for the following reasons:

Neither intends to form an alliance targeting a third country.

Alliances are traditionally formed on an ideological basis as in the case of NATO. There are no ideological bonds between China and Russia.

(3) China has started to play a leadership role in global governance by providing Chinese thinking, ideas and programs.

With that in mind, China has plunged herself into global governance with great determination as a defender, contributor and constructor of the current system that was built after WWII.

I have talked about China’s history with G20 and global governance in the 2nd part of my speech. It is quite clear that China has started to play a key leadership role in globalization as well as global governance. The best example is G20 Summit in Hangzhou last September that produced a shining report card with many new ideas for furthering globalization while overcoming its “negative impact” on social justice and fairness.

President Xi Jinping recently delivered a much-welcomed speech at the APEC Economic Leaders Meeting held in Lima outlining China’s continuous efforts to promote global free trade and investment with particular reference to quicken the pace of the Asia-Pacific Free Trade Area Agreement.

The US is no doubt still a major moving force in globalization as Americans use to comment that “globalization is Americanization”. There are two things that appear to be influencing the American engagement in globalization and global governance today. The feeling that globalization is no longer on the track of “Americanization” is obviously running deep in the US, prompting the US to change the rules in global economic governance with TPP, TTIP and its likes. The newly elected President Trump will no doubt continue to effect changes in globalization by jettisoning some rules, changing others and making new ones, albeit in a different direction.

With continuous overall American strategic retrenchment that focuses more on domestic political and economic agenda with an ever stronger inward-looking approach to international affairs that started in early 2009 when President Obama came into the White House, what the US will do under Trump Administration will provide a new paradigm for the future of globalization.

What can be safely predicted is that the US under Trump’s leadership would backpedal in some critical areas of global governance such as existing free trade arrangements and American commitment on Paris Agreement on Climate Change. This has already created much uncertainty around the world about the future of globalization and global governance.

On a positive note, we can rest assured that globalization per se will not disappear overnight or be rolled back across board because it has promoted global economic growth to an unprecedented degree and knit nations into an interlocked and interconnected web of networks with ever greater interdependence and common interests. The question that ought to be answered is not about the death of globalization, rather it is about “re-globalization” or “globalization reborn”. In other words, international community is entering a new era of globalization wherein global free trade and investment and cooperation to tackle global challenges will continue while more efforts will be directed to address “global governance deficiency” in promoting social justice and fairness such as the widening gap between rich and poor both domestically and among nations.

History will surely not repeat itself but similarities do often occur. The world is witnessing very likely another round of American strategic retrenchment and partial withdrawal from global engagement which will create new paradigms for globalization and global governance if President-elect Mr. Trump would carry out what he has repeatedly uttered “to make America great again” along the lines of “de-globalization”.

Of course it is still in the domain of unknowns and what will be American policy toward globalization needs to be closely observed.

Against that backdrop, China’s role becomes more prominent and decisive. Expectations are on the rise as to what should and could China do to “make globalization work and great again”. This will not only be an onerous task for China, but also have a great deal of impact on the future of globalization.

There are a few things that China needs to do to keep globalization on the right track and direction. First and foremost it is to reinforce the core position of the UN in maintaining world peace and security. Then it is of importance to keep implementing the decisions of G20 Hangzhou summit. China should also continue to keep the momentum of 2030 SDGs and Paris Agreement on Climate Change by utilizing such platforms as WEF, G20, APEC and SCO.

(4) How to manage China-US relations in the new era of globalization and with Trump Administration

One is for China to continue engaging the US as American new Administration comes into office and the process of policy review starts in earnest for the purpose of enhancing cooperation bilaterally to minimize differences and expand cooperation not only on traditional areas, but also on new fronts such as cyber-security, energy security and infrastructure building. Second-guessing does not help, so keep our heads cool and observe closely what Trump administration’s China policy will be is what China should do now.

It is imperative for the US new Administration to continue to commit to One China policy based on three joint communiqués between China and the US with full understanding of the sensitivity and importance of the issue of Taiwan. This is of core interest to China and One China principle has been the very political foundation upon which Sino-US relations rest. This principle has been held by 8 US Administrations ever since President Nixon and is definitely non-negotiable!

At the same time, China needs to talk to the US as early as possible to seize “the window of opportunity” to talk through tough issues like trade and South China Sea etc to better understand each other. If possible, both sides might try to reach a broadly based “framework of agreement”, as two countries did in 2009 when President Obama came into office, to pave way for reducing suspicions and second-guessing and increase mutual trust and confidence as to how should we better manage this bilateral relationship which is among the most important ones in the 21st century on the basis of “no confrontation, no conflict, mutual respect and win-win cooperation” as suggested by President Xi in his first phone call to President-elect Trump.

We believe that a sound and stable China-US relationship will serve the fundamental interests of both countries and the world as a whole. As to possible more trade frictions and other differences, they can be minimized as much as possible through timely and frequent consultations like S & E D that have become a regular feature in China-US relations.

Two is for China to keep the US engaged multilaterally on issues of common concern such as trade, investment, energy security, climate change and counter-terrorism.

We all know that consensus and cooperation by the US and China as two major economies and key players in globalization is essential in influencing the pace as well as direction of globalization.

China needless to say will continue to lead global efforts through the United Nations, G20, BRICS, APEC and other international and regional platforms to combat climate change, promote free trade and investment as well as implement SDGs for the benefit of the international community as a whole and developing countries in particular.

Leadership in this connection is done in terms of more proactive discussions about and negotiations on safeguarding global governance system while advocating needed changes to make the system better suited for the emerging new era of globalization. For example, Paris Agreement on Climate Change will see its support being undermined should new US Administration go back on its commitment.

Three is for China to continue to provide new ideas and new programs in terms of better global governance including new models of international cooperation. The “Belt & Road Initiative” fits neatly into such a framework where common development and prosperity is the key words. China’s experiences and successes in its efforts of modernization and fast economic growth by themselves are a source of new ideas with useful reference for other countries particularly developing ones.

In sum, as a permanent member of the UNSC and key one of G20 and other organizations, China will play its due role and contribute to a shared future. China’s diplomacy will continue to reflect the new status China now enjoys.

Globalization is always an evolving process with inevitable ups and downs and not moving in a linear fashion. What we are witnessing today is not “the toss out of globalization” or “de-globalization”, but rather a new era or phase of globalization or “re-globalization” wherein greater and more complicated challenges become the order of the day. Therefore we need concerted efforts more than ever before to ascertain the big trends as well as individual difficulties and work out consensus and solutions for collective actions to “make globalization great again”. China has no option but to be in the fore front of globalization and global governance.

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