Beijing Diplomacy

3rd May, 2006

The lack of concrete results from President Hu Jintao’s visit to Washington last month – apart from a Boeing airliner contract – has led to a widespread belief that the trip was a failure, and that Washington and Beijing should not make greater efforts to get on with one another.

The lack of results may have been galling for Americans who hoped for an announcement by the Chinese leader that Beijing would increase the value of its currency by 20 per cent, thereby supposedly miraculously wiping out a large slice of the US trade deficit and removing one of the clouds hanging over the world’s largest economy.

That was never going to happen. As earlywarning has forecast for more than a year, China will move at its own pace in liberalising the currency, and will certainly not be seen to be bowing to pressure from the Bush administration.

The down-beat assessment of the Hu-Bush talks overlooks one key element with which the world is going to have get used,

China does not seek broad agreements with other major powers, even if they are great as the United States. What Beijing wants is simply non-obstruction.

Goal

The post-1945 pattern set by the West of a network of global and regional agreements has little meaning for policy-makers in Beijing.

They insist that China is set on a peaceful rise in harmony with the rest of the world. With the exception of the recovery of Taiwan and continuing hostility towards Japan, Beijing does, indeed, lack, aggressive intentions.

But it is also set on constructing its own place in the world. In this, its over-arching requirement is that it should be free to pursue that goal as it sees fit, unencumbered by the need for approval or agreement from Washington, or anybody else.

To that extent, the idea of China and other countries ‘getting on’ has little meaning in positive terms.

Economy

China’s economy is certainly over-dependant on exports and investment projects. Attempts by Beijing to stimulate domestic demand as another driver of the economy have produced little result as yet. Investment and bank credit are still rising, the latter out of official control.

But President Hu and his colleagues knows that, for all the protectionism being voiced in Congress, America has developed its own dependency on Chinese exports and China’s financing of the federal deficit, which helps to keep down interest rates and fuel the consumer demand driving the US economy.

So they calculate that, in the end, they are in the driving seat – short of a major swing towards protectionism by a Democrat successor to Bush.

Energy

Politically, Beijing wants to go being free to forge links with countries which serve its purposes, even if they are pariah states. This trend, highlighted by earlywarning last year, will see Beijing – with its UN Security Council veto - increasingly acting as the only protector of regimes like those in Burma, Sudan and Zimbabwe. The Beijing –Teheran axis will be played for all it is worth in the confrontation between Iran and America.

Energy strategy will continue to be at the core of China’s global approach.

After Iran and Venezuela, Beijing is now moving in to Nigeria. Despite some difficulties it will also be drawing in increasing supplies from Central Asia and former French colonies in West Africa.

Alongside that will be an attempt to use its buying power in other commodities, notably copper and zinc.

Human rights

Though Bush has continued to mention the issue, and Germany’s Angela Merkel also believes in speaking up, the old question of China’s behaviour on human rights has been largely sidelined as a negative factor in dealing with Beijing.

No government wants to risk being cut out of the Chinese infrastructure investment; no company wants to be cut out of the domestic Chinese market for political reasons as shown by the readiness of US technology firms to abide by Chinese legislation to help in the current crack-down on dissents.

Europe

Beijing calculates that Europe will not do anything that would be a serious source of discomfort. Links with Moscow will be strengthened by China’s need for energy. India is also anxious for a stronger partnership.

Though Bush cannot abandon democratic Taiwan, US backing for the maintenance of the status quo as regards the relationship between the island and the mainland suits Beijing at a time when the Communist leadership is seeking closer links with the opposition Kuomintang Party (KMT) of the 2008 presidential election.

If, as looks probable, the KMT candidate wins, the way will be open for gradual moves towards rapprochement, founded on Taiwan’s growing economic dependency on the mainland through its big investments there.

Power

In that overall context, all Hu wanted in Washington was an assurance that America would not seek to contain China, economically or militarily. This he got.

Beijing has formed multi-national agreements where this suited it – for instance with the Shanghai Group bringing in Central Asia countries. It joins in international negotiations when its interests are similar to those of other states – for instance, over North Korea. It will play its hand carefully on a major issue like Iran.

It sees itself challenging Japan as the main voice in East Asian and Pacific forums. None of these involvements cramp its style. Hu finds himself able to lecture America on democracy, and Beijing is becoming adept at playing trade politics with Europe.

The fundamental aim is to retain freedom of politico-economic action. Beijing is fast putting itself in a global position where it is difficult to see any check on its actions. That is the true nature of the rise of China.

It is why, even if the mainland’s economy falters from 10 per cent growth, Beijing is emerging as the master of what is, at one and the same time, a new example of global diplomacy and a very old form of national power.

TOMORROW CHINA'S DOMESTIC POLICY