林中斌 部落格 / Blog Chong-Pin Lin

Will China's New Trade/Debt
Diplomacy Strategy Reshape

The World?

accessed April 27, 2018

以下是《 國際經濟》雜誌今年年初邀稿下所提出之淺見。

敬請賜正。

林中斌 2018.4.27

Will China’s New Trade/Debt Diplomacy Strategy Reshape the World?

Chong-Pin Lin

Word count： 492 word limit：500 Due date ：February 16, 2018

Three factors suggest that China’s new strategy may succeed.

First, economy, rather than military might or political ideology, takes command in the 21st century. In democracies, economic performance has long swayed the voters in elections. Since the former Soviet Union, notorious for its anti-democratic governance, collapsed in 1991 due to its unsustainable economy, political leaders of all governments, democratic or otherwise, have equated the economic viability of their countries to their own political future. That explained the 2017 turn-about of British Prime Minister Theresa May from suspension to approval on the Hinkley Point C nuclear reactor project. It was heavily financed by China, which caused a political backlash May must face but eventually overcame. The same applies to Sri Lanka’s President Maithripala Sirisena on the Hambandota Port project which, launched by his predecessor in cooperation with China, was first suspended in 2015 and then approved in 2017 for a 99-year lease to Beijing for $292 million due to the country’s mounting debt to China. The Port has potentials of becoming a naval base for China, which raised security concerns of India, Japan and the U.S. Given time, economic benefits offered by China to a recipient country may just overtake political and security reservations.

Second, China’s skillful blend of the hard and the soft prongs in foreign policy makes its “debt diplomacy” more effective than expected. With the “Belt Road Initiative” under the way, Beijing’s unsaid goal seems to be dominating “Eurasiafrica”— the landmass cluster of Europe, Asia and Africa -- without war. When China was poor, it was prone to warfighting. As China began to rise, it has become averse to bloody conflict. The People’s Republic fought five wars from its founding in 1949 to 1979 when Deng Xiaoping launched the modernization drive. From 1979 to 2018, China has fought no war except the 1988 clash with Vietnam over the Johnson Reef in the South China Sea.

China’s grand strategy in the new century is to deploy “extra-military” instruments -- such as economic, diplomatic, and cultural ones – on the front, with the rapidly advancing military capabilities on the back, which allows China to quietly expand its influence far and wide while encountering minimum resistance. The extra-military approach transcends ,but not excludes, the military ones. The idea is reminiscent of Teddy Roosevelt’s adage, “Hold a big stick and speak softly”.

Third, China’s internal economic obstacles are rooted in flawed policy, which in turn has stemmed from its problematic officialdom. Clean officials tended to be incompetent, while competent officials, corrupt. At the 19th Party Congress in October 2017, China’s President Xi Jinping emerged the strongest leader since Mao Zedong. After five years of persistent and pervasive anti-corruption campaign, Xi has appointed clean and competent officials in key positions. The Harvard educated Liu He, touted as “the brain' behind Xi’s economic overhaul”, has disagreed with Premier Li Keqiang’s conservative approach may succeed in reining in China’s soaring debt without creating a collapse in the market.

Chong-Pin Lin is a former deputy defense minister of Taiwan and co-author of a recent book Sunlight Through the Clouds：Cracking the Taiwan-U.S.-China Complex in Chinese.