Charm Offensive at

Beijing’s Free Will?

Yang Jiang

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1809

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Diplomatic Strategy

•From: 韬光养晦 tao guang yang hui (hide the blade and accumulate strength)

•To: 与时俱进 yu shi ju jin (advance with time)

•‘a responsible great power’

connotation• Yang Jiechi March 2008:

• to deepen strategic and political mutual trust between China and other countries, and to create a good environment and atmosphere for international economic cooperation;

• to propel multilateral and bilateral free trade cooperation and resolve economic disputes through dialogue;

• to support the realisation of important cooperation projects and to protect legal rights of overseas Chinese citizens and companies.

instruments

•bilateral trade agreements (FTA)

•(regional) financial cooperation

•outward investment

•resource diplomacy

•WTO

•foreign aid

FTAsStatus Countries / Regions

Proposed

Mercosur (South American Common Market),

Northeast Asia, Shanghai Cooperation

Council

Feasibility Study India, South Korea, Switzerland

Under negotiation

Chile on investment, Australia, Costa Rica,

the Gulf Cooperation Council, Iceland,

Norway, South Africa Customs Union.

Agreement on Trade in

GoodsChile

Agreement on Trade in Services Chile

‘Comprehensive’ agreement

ASEAN, New Zealand, Pakistan, Peru,

Singapore, Hong Kong, Macau

FTA Policy: Liberals vs. Protectionists

• Lack of imperative to enforce domestic reforms, in contrast to the WTO

• Liberals: MOFCOM, exporters

• Protectionist forces

• Agriculture: ‘Three Agricultural Problems’ and MOA

• Services and Investment: economic security, partial reform and monopoly profits

• NDRC (National Development and Reform Commission)

• Ethnic problems

• National People’s Congress

FTA policymaking: Politics and Economics

•Ministry of Commerce (MOFCOM)

•Ministry of Foreign Affairs: ‘big country morality’ of ‘giving more and taking less’?

•The leadership

•Bureaucratic capacity and coordination

(regional) financial cooperation

• From response to responsibility?

•Asian Monetary Fund

•Chiang Mai Initiative: surveillance? A supra-national body?

•Exchange Rate Coordination...

• constrained by the exchange rate policy, a closed capital account and weaknesses in the banking system

IMF and World Bank

•Call for increased voting power for developing countries, for Asia--G20

•International Reserve Currency - Special Drawing Rights: ‘testing the water’

•Experimenting internationalization of RMB

•Issues:

• conditionality - Beijing Consensus/China Model?

• transparency

• call for a new international economic order?

outward investment

•2001 from restrictive to encouraging

•2004 more supportive measures

•2006 reflection on ‘neo-colonialism’

•2008 from caution to aggression

•now in the process of making a strategy...

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Outward Investment

• MFA: support, service, bridge

• SASAC: the great butler; unclear

• Dept. of Organization of the CCP: personnel

• NDRC: the small State Council; proposals

• MOFCOM: contracts

• SAFE: supportive

• banks: policy, commercial

• SOEs: central, local

Chinese company

MFA

foreign company

NDRC

MOFCOM

banksSAFE

SASAC

CCP

Climate Diplomacy?

•support for other developing countries: solar water heaters, bio-energy and nuclear? a green development fund?

•COP15

To be continued...

•State-business relations?

•A national strategy for economic diplomacy?

•Political and economic interests?

•China’s identity?