Analysis & Opinions - Carnegie Endowment for International Peace

China’s Rise as a Geoeconomic Influencer: Four European Case Studies

| Nov. 15, 2018

China is increasingly central in world politics. Western nations should remain open to its initiatives and engage it in dialogue through multilateral institutions.

Over the past decade, China has become central to the world economy. Building on its economic successes, it is becoming increasingly central in world politics. China is also now more ambitious, aiming to establish itself as a regional as well as a global power. In his October 2017 report to the Chinese Communist Party’s 19th Congress, President Xi Jinping stated that by 2050, China will have “become a global leader in terms of composite national strength and international influence.” Despite a growing internal debate about the country’s international positioning in the context of taking a confrontational tone with the United States, Xi believes he has the power to realize these ambitions. In June 2018, he chaired an important foreign policy meeting in Beijing, which reaffirmed the notions of a foreign policy with Chinese characteristics, “diplomacy of socialism with Chinese characteristics,” and redefined the concept of a “global community of common destiny.”

China’s rise has been driven by economic development, starting with the launch almost exactly forty years ago of Deng Xiaoping’s Open Door policy, which made China the economic powerhouse it is today―not just domestically, but in most parts of the world.

On the world stage, China has become a strong player in such institutions as the United Nations and the World Bank. It has developed strong bilateral relations with most countries around the world, with the exception of a handful of nations that still recognize Taiwan diplomatically. Globally, Chinese diplomats have been incredibly active, with the Ministry of Foreign Affairs (MFA) receiving a 15 percent budget increase in 2018 to help project Chinese diplomacy and soft power throughout the world. In the six years of President Xi’s rule, the MFA budget has jumped to 60 billion renminbi ($9.5 billion) from 30 billion renminbi in 2011.

Although it has created quasi-institutional initiatives (such as the Asian Infrastructure Investment Bank, the New Development Bank, and the Silk Road Fund), China is willing to use the existing international order to continue assuming a bigger role on the multilateral stage.

China stepped up its overseas presence a decade ago by increasing its outbound investment. One of its key policies is to increase its footprint in developed economies, where it can acquire technologies, brands, and management skills, as well as access to major markets including the eurozone.

According to the China global investment tracker established by the American Enterprise Institute (AEI), since 2005, the total stock of overseas Chinese investments is approaching $1.8 trillion worldwide. China’s overseas investment spree has included numerous developing economies, where Beijing initially looked for natural resources but is now expanding its business activities locally by constructing public buildings, railways, roads, energy projects, and other infrastructures. From Africa to Latin America, it is hard to miss China’s massive presence. For the past six years, many of these projects have been encompassed within the Belt and Road Initiative (BRI), a major China-led undertaking launched by Xi Jinping himself in 2013, initially aimed at building or rebuilding infrastructures across the Eurasian continent.

The plan stresses that the scope of the initiative will extend well beyond infrastructure construction. For example, it includes efforts to promote greater financial integration and foreign countries’ use of the Chinese currency (the yuan, or renminbi), to create an Information Silk Road linking regional information and communications technology networks, and to lower barriers to cross-border trade and investment in the region, and other initiatives. Given the broader BRI definition brought forward in 2017, some analysts have described China’s ambition as “higher, more aggressive, and opportunistic due to the relative decline” of U.S. power. Although not officially supported by most leading world economies (the G7), the BRI is gaining visibility and often has strong support from local authorities. Beijing thus aims to create a new, massive economic platform.

The BRI also aims to demonstrate China’s will to engage with the world by building infrastructures and relaunching the world economy through its own initiatives. Some experts have noted that China’s foreign aid is conditional―helping to rally diplomatic support and provide political benefits to Beijing as well as to some local elites in recipient countries.

With China entering an important phase of its political development after the 19th Party Congress and heading toward the party’s hundredth anniversary (in 2021) and the People’s Republic’s hundredth anniversary (in 2049), it is worth pointing out that the country’s economic rise is already challenging traditional geopolitics, despite a clear “divergence of views about how threatening this might be to traditional US dominance and agenda setting,” as Harvard scholar Tony Saich has put it.

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For Academic Citation: Le Corre, Philippe.“China’s Rise as a Geoeconomic Influencer: Four European Case Studies.” Carnegie Endowment for International Peace, November 15, 2018.

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