China as a Leading Partner State

President of China, Xi Jinping. Photo: Foreign, Commonwealth & Development Office UK (CC BY 2.0)

Franc Stregone

The pattern of global governance depends on the international balance of power, and the transformation of the global governance system originates from changes in the balance of power. […] We should actively participate in global governance and shoulder international responsibilities. We must do all we can within the limitations of our capabilities.

President Xi Jinping, September 27th 2016. [1]

Xi’s words, delivered at a group study session of the Political Bureau of the 18th Communist Party of China (CPC) Central Committee, marks how far China has come in its view of its position in global politics. The seeds of this transformation took place during the Reform and Opening-Up period under the auspices of then-paramount leader Deng Xiaoping. However, during that period of development, China’s economic growth was still much behind most states and was not in a position to take a leading role. Furthermore, even if China was in an economic position to lead, the leadership styles exhibited by Western countries such as the US are foreign to China’s approach culturally. [2]

That is what makes Xi’s words above so noteworthy. They display a markedly different approach than all of Xi’s predecessors: With China’s major economy, it must shift into being a willing and active participant in global affairs. Xi’s signal came at a pivotal moment. It followed the successful G20 Hangzhou summit – marking China’s turn – and on the eve of Donald Trump’s presidential election victory – which would change the course of US foreign policy (more on these below).

But while China’s role in global governance has evolved, it has not simply morphed into a leadership style we have been accustomed to by former great powers. In the following, I will qualify China’s elaborate role in global economic governance as a leading partner state. I will elaborate on this idea, present counter-theories, and explain why they fail to capture the totality of China’s role. I will demonstrate China acting as a leading partner state through examining its experiences in the World Trade Organisation (WTO), G20, and the Belt and Road Initiative (BRI). Lastly, I will discuss the obstacles China faces in global economic governance.

The concept of China as a leading partner state emphasises two positions that China holds as fundamental to global governance: countries with the capacity to lead must lead, and global governance as a process of collective decision-making. However, this philosophy, in altered forms, also reflects China’s approach to governance internally. On leadership, CPC rhetoric, particularly since the start of the “Reform” period, places great emphasis on its members being “skilled in one’s field of endeavour” [3] and “ready to take on responsibilities.” [4] Here, knowledge and preparedness are seen as core components in whether one has the capacity to lead. Without such things, one does not have the means to lead. Secondly, collective decision making is fundamental to the processes of the CPC and its governance of China. Generally, the post-Deng period has been characterised as “a new era of collective leadership” where former party leaders such as Jiang Zemin and Hu Jintao were considered “first among equals.” [5] While many debate whether the Xi era is a continuation or a reversal of this trend, we will see below how this preference for collective work manifests in global affairs.[6]

Turning to global economic governance, we can see the above perspective in China’s foreign policy doctrine Tao Guang Yang Hui from 1989-91. Translations and interpretations of this policy differ. It is officially translated as “keeping a low profile”; however, many international scholars translate it as “hiding one’s capabilities and biding one’s time.” [7] Thus, as noted above, China’s position on leadership is that one must first have the means to lead (i.e. have the “know-how” and be prepared). Thus, China’s approach to global economic governance accords with Tao Guang Yang Hui as it waited until it had the economic capacity to participate in international affairs. The examples below show how China’s entrance into the financial world order is an acknowledgement of its current economic position.

However, before I turn to the examples mention above, it is important to acknowledge where the idea of China as a leading partner state sits with other concepts of China. China, as a leading partner state, has areas of agreement and disagreement with other theories. For instance, those that conceptualise China as a trading state, based on the “profound impact that China has had on the international trading system (and vice versa),” would not be completely at odds with the concept of China as a leading partner state.[8] Trade has indeed had a profound impact on how China interacts in the international economy. However, as outlined above, China’s approach to global economic governance is philosophical rather than purely economical. As will become evident, China sees trade as important, but it constantly highlights an inclusive philosophical approach. Indeed, those that criticise the “trading state theory” highlight its “apolitical nature, with its attendant inability to satisfactorily account for how states that are locked in a relationship of deep interdependence nevertheless experience high levels of conflict.” [9] However, those that hold an “offensive realist view” of China are likely to find the concept of China as a leading partner state appealing. Here, those who hold this view, such as John Mearsheimer, believe that “almost certainly translate its economic might into military might and make a run at dominating Northeast Asia.” [10] This idea runs absolutely counter to the concept as a collaborative participant and demonises it as an imperialist power. In fact, as Nicholas Khoo states, Mearsheimer believes that China is “more dangerous” (emphasis his) than Imperial Japan and Nazi Germany.[11] However, Khoo refutes much of this claim stating that it is “it is far from clear […] [that] China’s ability to achieve regional hegemony are as inevitable as he claims” largely on the basis that “dislodge[ing] the US from its post-1945 position of maritime supremacy in East Asia” would be a monumental task.[12]

When China joined the World Trade Organisation (WTO) in 2001, it marked the first concrete step by the state to engage in world affairs. This ascension to the WTO was no mere symbolic gesture. It committed itself to “the objectives of the WTO,” international rules in specific sectors such as textiles and telecommunications, and “signed a series of bilateral agreements” with the US, EU, and Japan.[13] Furthermore, since its entry into the WTO, “China is largely complying with WTO rules, albeit with varying levels of compliance” and is “using the WTO dispute settlement mechanism […] to resolve trade disputes, […] generally complying with adverse rulings.” [14] These actions are indicative of China being a willing partner in the international economy.

As a partner of the WTO, China has also been a leader in defending the institution. Donald Trump’s presidency challenged the WTO, imposing tariffs without going through its processes and “accusing it of bias against the US.” [15] Such was the president’s disdain for the organisation that he “allegedly ordered the drafting of legislation that would ignore WTO disciplines.” [16] While Trump was publicly returning America to an era of protectionism, China stepped up to the plate to defend international trade. At the World Economic Forum in Davos, Switzerland, in 2017, Xi made a critical but clear defence of economic globalisation. Xi cited China’s past reservations about economic globalisation (referencing China’s entry into the WTO) and the obstacles it faced. However, Xi stated that it was “the right thing to do” and that countries “should adapt to and guide economic globalisation, cushion its negative impact, and deliver its benefits to all countries and all nations.” [17]

Others have a different perspective on China’s participation in the WTO. While noting that China has increased their presence and want to lead, Marcia Don Harpaz states that the “willingness of other WTO members to follow China is, however, the most problematic aspect of China’s WTO leadership potential” as “China is perceived to pose a competitive trade threat to developing countries and developed countries alike.” [18] Here, China’s role as an economic leader isn’t defined by how it acts but by how others perceive and act in response to China.

While its relationship with the WTO has evolved, particularly under Xi, China’s desire to lead in partnership with other countries became apparent during the Global Financial Crisis (GFC) period. The GFC was a foundation-shaking event for the international economy. China, which had been a part of the G20 since its foundation, was one of the first countries to answer the call for collective action to fight the crisis.[19] In 2008 at the first G20 summit in Washington, then-president Hu Jintao, far from staying quiet, delivered a speech on what China’s vision for a post-GFC must entail. Hu Jintao spoke to “reforming the international financial system” with an aim to establish “a new international financial order that is fair, just, inclusive and orderly.” [20] This was part of four major proposals China presented with “particular attention to the damage the crisis has brought to developing countries.” [21]

However, China’s message was not just rhetoric. As the GFC came to pass, the role of the G20 in subsequent years worked on various reforms until it stalled during Australia’s G20 presidency.[22] Instead of allowing the summit to languish, when China took over the presidency, it started several initiatives that highlighted its serious commitment to leading in economic affairs. In 2016, there were 3300 investment agreements that were “fragmented” and “complicated.” [23] China put on the agenda time to coordinate better investment policy. The result was “The G20 Guiding Principles for Global Investment Policymaking,” which was ratified at the Hangzhou Summit. This was a huge achievement as it was “the first multilateral guideline for global investment, thus filling the void in this area.” [24] It also initiated the “1+6” Roundtable, which was considered to be an “imaginative and creative collective dialogue” with “Chinese Premier Li Keqiang and six leaders of the world’s leading international economic and financial organisations” such as the World Bank and IMF.[25]

Furthermore, China backed up its rhetoric and brought developing countries into the fold. For example, China took “the lead in implementing the 2030 Development Agenda,” which “for the first time agreed to take collective actions to support industrialisation in Africa and the least developed countries.” [26] China also invited leaders from various groups representing developing nations, such as the African Union Chair Chad and the Group of 77 Chair Thailand.[27] The Hangzhou Summit, as a result, had the most leaders from developing countries invited in the history of G20.[28]

Thus, while China’s work in the WTO has shown its willingness to participate and defend the international economy, it is in the G20 we see substantial examples of China working with leading financial institutions along with developed and developing countries. Therefore, the 2016 Hangzhou Summit can be seen as a watershed moment for China as a leading partner state in global economic governance.

China’s most ambitious project –the Belt and Road Initiative (BRI) – is perhaps the clearest example of China’s willingness to lead while working with other nations in building a connected, international economy. Proposed during Xi’s visit to Kazakhstan in September of 2013, the BRI “aims to promote the economic connectivity and partnership of Asia, Europe, and Africa and their adjacent seas along six economic corridors.” [29] Rather than challenging and competing against the existing Western hegemony, many, such as Thomas D. Lairson hold that the BRI “reflect[s] and operate[s] within the liberal world order created by the USA.” [30] Indeed, China’s leadership, particularly in the BRI, is cooperative rather than antagonistic as its “leadership understands the nature and value of structural power in a global system of deep interdependence.” [31]

China’s willingness to work with various countries, as an equal rather than a superior, can best be seen not in its relationship with established Western powers but its treatment of smaller, developing countries. This is evident in China’s relationship between Latin America and the Caribbean (LAC). China has worked with LAC on sustainable development and the 2030 agenda, with “several official documents […] emphasis[ing] the importance to have dialogues and cooperation, including South-South cooperation.” [32]

However Lairson’s raises some concerns about the BRI and its ability to be the game-changer that China states it to be. Part of the issue “significant capability deficits” from several of the participating countries.[33] However, Lairson’s states that “Chinese experiences with similar efforts in Africa and Asia” which have been a mixture of “poor choices for projects, coupled with loan defaults” and that “even in successful cases Chinese management has generated considerable hostility due to the inability to organise sufficient mutual gains.” [34]

In the above, I have highlighted how China has participated and lead through outlining its work in the WTO, G20, and the BRI. I’ve also brought in some perspectives that have cautioned about China’s ability to lead based on experiences within the WTO and foreign investment projects. However, I think the greatest obstacle to China being able to lead, or be a part of a collective leadership are the challenges that Western hegemony present.

Resistance to socialist countries or those not within the sphere of the West’s influence (e.g. non-aligned movement) has been well-documented for decades. For example, despite China working in earnest to be in accordance with the rules and regulations of the WTO, Chinese firms from the outset have been the subject of “discriminatory treatment.” [35] This is most evident in the labelling of China with non-market economy status, which was “exclusively set for China, and China is the only victim of such a discriminatory provision while all other WTO members can invoke this provision at their own discretion to impose discriminatory restrictions on imports from China.” [36] The resistance towards China has perhaps been most evident since Xi became the leader who has changed the way China has engaged in the world economy through various statements, policies, and actions within different institutions. Trump’s presidency brought, albeit crudely, out many of these tensions. As mentioned above, Trump’s protectionism and “America First” approach marked a stark contrast to the free trade, neoliberal world order that the US had created and led since WW2. As a result, Trump’s presidency reorientated the US’ position in the international economy, which meant that the US was no longer seeking to be the bastion of free trade. While the US in this period raised taxes on virtually everyone (e.g. steel tariffs), China was a primary target of many trade spats.[37] In order to undermine the Chinese economy, the US made a number of protectionist policies, such as “$50 billion in proposed tariffs on imports” and “banning [Huawei] from buying vital US technology without special approval” sanctions for reasons such as “repeatedly engaged in practices to unfairly obtain America’s intellectual property” and “national security grounds” respectively.[38]These efforts by the Trump administration to frustrate China were limited in their effect as many countries continued to trade and foster economic relations, such as the EU who also decried Trump’s protectionism.[39]

However, the US did find some success in undermining China’s ability to be a leader. The human rights stories concerning Uyghurs and the Hong Kong riots were areas where the US was able to garner support. In regards to the former, the US passed the Uyghur Human Rights Policy Act. In conjunction with this act, the Trump administration imposed sanctions and visa restrictions against members of the CPC Politburo such as Chen Quanguo and Zhu Hailun.[40] The EU also responded by freezing “the assets of the Xinjiang Production and Construction Corps Public Security Bureau, which it describes as a ‘state-owned economic and paramilitary organisation’ that runs Xinjiang and controls its economy.” [41] The EU also imposed sanctions on China due to the activity in Hong Kong by limiting exports.[42] And while the Trump administration has been responsible for many anti-China actions, it is important to note that it is continuing under the Biden administration, with Washington sanctioning “24 Chinese and Hong Kong officials over Beijing’s ongoing crackdown on the city.” [43]

This is a legitimate point of weakness for China. However, while one may see the irony of the US calling out human rights violations, the international narratives curated to support Western hegemony pose severe challenges to China being viewed with legitimacy in the West. Its internal politics are simply not congruent with the liberal conception of democracy and rights, and as long as it continues as a one-party state, particularly as one that promotes a proletarian perspective, it will never be in full agreement with the capitalist West. Here, China will have to continue to find ways to separate its internal and international politics, which given its global status from the above, it has managed to do fairly successfully.

From the above, if one thing is clear, understanding China’s role in global economic governance is no simple task. However, it is important to understand that China, much like all countries, position and role in the world are not static and subject to change as history progresses. Moreover, global economic governance should be considered a shared responsibility, and it is a position that China has understood well.

Notes