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Foreign Policy

China’s Post-G20 Bounce

Oct 04 , 2013

Without attracting much attention, Chinese foreign policy has been on a roll since last month’s G-20 summit in St. Petersburg, Russia, which met September 5-6, 2013. That organization holds considerable potential; its members represent 90% of the world’s economy. But their deliberations have failed to yield major concrete achievements in such areas as shadow banking, corporate tax shopping, and reducing persistent barriers to trade and investment. 

Richard Weitz

At the summit, Chinese President Xi Jinping managed to make progress toward Beijing’s goals of promoting free trade and mutual investment and championing the objectives of the world’s emerging economies. China considers the G20 as the main global institution for advancing the needs and concerns of the world’s developing countries. Despite their growing economic and military power, Chinese leaders still insist on calling China a developing country, which causes tension with developed countries such as the United States. They want Beijing to adopt their generally higher ecological and other standards. 

Attending his first multilateral summit since becoming president in March, Xi held a series of important multilateral and bilateral meetings at the G20. Among the former was a one-on-one session with the head of the World Trade Organization (WTO). China has sought to revitalize global trade negotiations. In recent years, the stalemated WTO Doha process has received little attention, with most efforts devoted to bilateral free trade agreements as well as regional initiatives such as the Trans-Pacific Partnership and the more recent Transatlantic Trade and Investment Initiative. 

Working with Russia, China also made progress in establishing a $100 billion currency reserve arrangement within the BRICS bloc to ease the short-term liquidity of emerging markets, though Beijing had to commit to pay the most, $41 billion. However, China’s efforts to establish a BRIC development bank made less progress; the participants could only agree on the basic structure but few of the details. Thus far, the BRICS (Brazil-Russia-India-China-South Africa) remains a supplementary global economic bloc rather than the potential foundation of a new world economic order. It has considerably less importance than the G20, the World Bank, the International Monetary Fund, and other existing Bretton Woods institutions. But China and Russia are struggling to change this. 

Xi held his second one-on-one meeting with host President Vladimir Putin, following his earlier trip to Russia this March. The two leaders made progress in resolving details concerning their long-sought natural gas deal, but continued to differ regarding price. Xi had more success with his meetings and side trips to various Central Asian governments, which saw a number of important energy contracts. China has generally backed Russia’s position on the Syria and Iran crises, but has managed to assume a lower profile than Moscow on these controversial issues even while benefiting from Russia’s firm stance on behalf of the Syrian government. 

China and the United States agreed to limit use of hydrofluorocarbons (HFC), a greenhouse gas, on the basis of 1987′s Montreal Protocol. China had previously been unwilling to adopt such a measure, and other major developing countries like India and Brazil have followed suit. Chinese officials have said that they will now encourage other countries to limit HFC use as a contribution to limit global climate change. 

Many of the suggestions offered by Xi’s speech were incorporated into the G20 Leaders’ Declaration at St. Petersburg. In his main speech at the summit, entitled “Preserve and Develop an Open Global Economy Together,” Xi called on members to “implement responsible macroeconomic policies”, “preserve and develop an open global economy,” and “improve the management of global economy to better achieve fairness.” The above ideas were prominent in the summit’s concluding declaration. Xi sought to reassure other countries by insisting that the Chinese government was committed to domestic economic reform and that its economy would maintain a healthy growth rate, boosting global economic prospects.    

Following the G-20 summit, President Xi attended his first summit of the Shanghai Cooperation Organization (SCO), where he reaffirmed Beijing’s traditional faith in the “Shanghai Spirit”—based on “mutual trust, mutual benefit, equality, consultation, respect for diversified civilizations and pursuit of common development”–that the Chinese claim permeates the organization’s work and differentiates the SCO from other international institutions. 

China has found the SCO a convenient instrument to reassure the other members (Russia and the Central Asian countries except for Turkmenistan) about Beijing’s intentions in their region. Chinese diplomats take care to define their commercial and other deals with the individual states as occurring within a SCO framework that benefits all members. In a September 7 speech at Nazarbayev University in Kazakhstan, Xi insisted that China would never “seek to dominate regional affairs or establish a sphere of influence.” In this manner, Beijing tries to expand its economic and other influence in Eurasia without directly challenging Russia’s predominance in Central Asia, a vital region for Moscow, and strives to assuage worries in Central Asian countries regarding Chinese domination. 

Beijing’s strategy has been largely successful. Central Asian leaders have generally welcomed a greater Chinese economic role in their region despite the risks of their countries’ becoming an appendage of the Chinese economic colossus. Between the G20 and SCO summits, Xi visited several Central Asian countries and announced major new business deals. For now, Central Asian leaders believe they have achieved major net benefits from China’s growing regional presence—increased investment and trade opportunities with China and enhanced leverage with Moscow. 

Lacking the means to exclude China from Central Asia, Russian policy makers have sought to channel China’s growing presence in areas that would also benefit Russia, such as in developing the region’s infrastructure, even while striving to reestablish Moscow’s authority through such means as the proposed Eurasian Union, which Chinese analysts profess to see as not directed at limiting their country’s economic presence in Eurasia. 

Richard Weitz is a Senior Fellow and Director of the Center for Political-Military Analysis at the Hudson Institute.

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