Marc Lanteigne is a Senior Lecturer in the School of History, Philosophy, Political Science & International Relations at Victoria University, Wellington, New Zealand. He works on the rise of China as a strategic and economic power as well as its evolving interactions and engagements with international organisations and regimes and is the author of China and International Institutions: Alternate Paths to Global Power, Routledge, 2005, 2007, and China’s Foreign Policy: An Introduction, Routledge, 2009.
The following essay, part of a new research project, was presented as a talk at the Australian Centre on China in the World (CIW) in Canberra in The China Forum program organised by CIW with the Lowy Institute for International Policy on 25 February 2013.—The Editors.
During the 1990s, Beijing’s foreign policy was focussed primarily on the United States as well as on its own immediate neighbours in East and Central Asia. The main goals of China’s ‘peripheral’, called in Chinese zhoubian 周边, diplomacy during this period were to prevent further border conflicts, assure surrounding nations that Beijing was no longer seeking to export its ideology or press its influence outward, and to concentrate on complex political restructuring and economic reforms necessary to modernise the country. As China experienced its first peaceful transfer of government in 2002-2003, the country’s foreign policy interests also shifted considerably. Although US relations remained top priority, the Hu Jintao government continued to seek warmer ties with Asia through a series of diplomatic initiatives and economic incentives, a process often referred to as China’s ‘charm offensive’ 魅力攻势. China began to look much further afield as its political and economic interests grew, and the Hu administration in China will be known as the period which touched off an era of Chinese ‘cross-regional’ diplomacy 跨区域外交, and the time when China took the first steps to becoming a global power.
The global financial crisis after 2008, which battered many rich economies, only further underscored the seeming resilience of the Chinese economic system accompanied by the overall shift in economic power on a global scale towards Asia. In many parts of the developing world, resource trade and joint development bore the mark of much Chinese diplomacy. As China’s economy continued to grow, encouraged by manufacturing and exports, the need for raw materials and energy to sustain this juggernaut prompted Beijing to expand its foreign affairs further outward in search of new supplies. Beijing’s ‘resource diplomacy’ 资源外交 has become a common sight in parts of the world well beyond Asia.
The Pacific region is no exception to Beijing’s global economic interests, despite considerable differences between this region and the others in which China has increased its presence. First and foremost, the Pacific covers almost one-third of the earth’s surface, stretching from the Arctic to the waters of the Ross Sea in Antarctica. Therefore communications, transportation and trade pose enormous challenges for any outside actor, while the island states themselves have had to factor in this geography when cooperating politically and economically with each other and with other parts of the world. Second, while there are some exceptions, including the considerable mineral and energy wealth in Papua New Guinea and prized fish stocks in much of the South Pacific, the region as a whole does not have the same amounts of raw materials which have motivated Chinese diplomacy in other developing regions. Despite this, Beijing has begun to not only widen its Pacific economic diplomacy but also to deepen it in several ways.
China’s Pacific Ocean interests are not new, although it was only at the turn of the century when Beijing was in a position to focus a substantial amount of political interest and accompanying investment in the Pacific region, in keeping with its cross-regional diplomacy and expanded economic power. Prior to the Hu presidency, much of China’s interests in the region were based primarily on diplomatic goodwill, as Beijing recognised the region, along with other developing areas, as having kinship with China based upon similar histories of colonialism. As one Chinese government representative noted in 1986, Beijing at the time was seeking non-alignment, ‘Third World’ solidarity, anti-hegemonism and mutual economic benefit in many parts of the world, including the Pacific region, and the Chinese government reacted with concern at the possibility of greater superpower competition in the Pacific. Although China’s economic power has grown considerably since that time, Chinese diplomacy towards the Pacific has nonetheless retained many vestiges of ‘South-South solidarity’. China has stressed the idea that as a former victim of colonialism and possessing an economy which, despite its gains, is still modernising in many ways, the country could not and should not be lumped in with other great powers in its dealings with developing regions in the Pacific.
There was another major impetus for China to maintain and then increase its diplomatic initiatives in the South Pacific region despite the lack of initial economic gains, namely the competition with Taiwan. The South Pacific, along with Africa and Latin America, had been a key diplomatic battleground between Beijing and Taipei over formal recognition, and frequently as an arena for ‘chequebook diplomacy’ 支票簿外交 between both sides as overt financial incentives were frequently part of concentrated diplomatic persuasion to encourage a given Pacific state to recognise one side or the other. The lack of strong economies in the South Pacific, especially those with limited resources and mired in ‘MIRAB economics’, (referring to migration, remittances, aid and bureaucracy), rendered many of the island governments especially susceptible to these types of chequebook diplomacy, especially since both sides, unlike Western aid donors, were willing to overlook domestic governance shortcomings and economic conditions.
These games were abruptly paused when the 2008 elections in Taiwan resulted in the Nationalist Party’s return to power, after an eight-year absence, under President Ma Jing-jeou. Ma had campaigned on a pragmatic platform of rebuilding diplomatic and economic ties with China following a period of frosty cross-Strait relations under his predecessor, Chen Shui-bian of the Democratic Progressive Party. One of the side-effects of the improved relations between Beijing and Taipei was a de facto diplomatic ‘truce’ struck as a precursor to the sides signing the 2010 Economic Cooperation Framework Agreement (ECFA) which improved cross-Strait trading links. This truce signified that neither side would seek to entice one of the other’s diplomatic partners to switch diplomatic recognition. This informal agreement held, and with Ma’s re-election as president in January 2012 the diplomatic ceasefire appeared set to remain in place. Six South Pacific nations are among the twenty-three governments which recognise Taiwan, namely Kiribati, the Marshall Islands, Nauru, Palau, the Solomon Islands and Tuvalu. As well, during 2012 Taiwan quietly opened bilateral free trade negotiations with both New Zealand and Singapore in order to take advance of the more cordial diplomatic atmosphere in the region. The open and at times hostile competition for allies between Beijing and Taipei has quieted and should remain so as long as the post-2008 thaw in cross-Strait relations is maintained.
Although concerns about competition with Taiwan have faded somewhat, China has not taken advantage of the lull to turn its attention away from the Pacific region. Instead, China’s presence, diplomatically, economically and strategically, has accelerated since the truce went into effect. The Chinese government has become a widely-recognised benefactor throughout much of the South Pacific and has provided loans, aid, and assistance with infrastructure projects. As in other parts of the developing world, these economic assistance packages are often granted without any conditions and irrespective of types of government. The current era of trade and cooperation, and the opening signal that China was deepening its Pacific engagement, can be said to have started with then-Chinese Premier Wen Jiabao’s participation in the April 2006 Pacific Islands Forum (PIF) summit in Nadi, Fiji. Wen announced that Beijing would strengthen economic cooperation in the region, apply zero tariffs to goods from least-developed economies which recognised Beijing, provide medical and other training and promote Chinese tourism as well as offering three billion yuan (US$375 million) in loans for Forum members. Since that time, China has continued to offer numerous bilateral loans and grants to its Pacific partners. Although China has not yet become the single largest donor in the South Pacific, a position still firmly held by Australia, Beijing is now widely viewed in the Pacific region as the alternative donor, one which is called upon especially for infrastructure and construction projects and for economic assistance, loans or grants.
Although economic partnerships and joint development projects, as opposed to strategic agreements, have dominated Chinese diplomacy in the Pacific, there has been a great deal of Western concern about Beijing’s expanded presence in the region. Much of the West’s anxiety about China’s Pacific strategies is directly attributed not to Beijing’s actions in the central/South Pacific but rather closer to Chinese territory in the western Pacific, for example the disputes in the East and South China Seas. The rise of actual and perceived Chinese power in recent years, compounded by the global recession and resulting decrease in American diplomatic and strategic influence internationally, has highlighted the question of Chinese ‘power counterbalancing’ behaviour in the Pacific region. This has led to much policy debate over whether a hard power-balancing scenario was beginning to appear in the Pacific.
However, the same sort of potential hard power behaviour that is developing between China and its immediate neighbours, greatly prompted by Beijing’s rise in Asia, is not manifesting itself in the Pacific as a whole. Instead, the shifts in power in the greater Pacific are as a result of ‘soft balancing’, meaning balance of power behaviour which is not military in nature and instead falls in the realm of economics, institutions and diplomacy. China is engaging in soft balancing behaviour in the greater Pacific region, and the other major powers in the region, including the United States, have begun to respond in kind in a variety of ways.
There are many reasons for this:
- First, the geography of the greater Pacific region is too big and too sparsely distributed for effective military balancing to take place, and the costs of doing so would be very high;
- Second, it has been argued that economic interdependence is a barrier to hard balancing, but not soft balancing. In the Pacific, states are small and largely dependent upon outside support via trade, aid and assistance, and thus cannot afford to choose sides in a hypothetical competition between China and the West. Although there have been significant policy differences between some Pacific Island states and Western powers, the most visible being the cooling of relations between Fiji and Australia/New Zealand, no small Pacific state can afford to eschew economic cooperation with any great or medium power. As well, there is also a high degree of interdependence among the great and medium powers themselves. In addition to the strong, if not always cordial, economic relations between the United States and China, Beijing also maintains considerable trade links with Australia and New Zealand, which no party wants to see minimised;
- Third, the greater Pacific region contains massive power disparities which would also adversely affect any attempts at hard power balancing. Most Pacific island countries are developing states with limited economies and resources. Attempting to choose sides in hypothetical hard balancing competition would produce few gains either for the small states or for the coalition as a whole. The same holds true for China itself, as although Beijing’s political and military power are growing, its power projection capabilities including naval power continue to lag well-behind those of the United States, and such shortcomings would be magnified in such a huge arena as the Pacific Ocean. As well, China’s political experience with the greater Pacific remains very new compared to longstanding powers including the US, Australia and Europe. Here again, hard balancing behaviour on Beijing’s part would produce limited gains at high costs, and therefore soft balancing is a more viable option; and,
- Finally, unlike in other parts of the developing world, there are few economic incentives for hard balancing behaviour. Unlike, for example, Africa and the Middle East, the number of resources in the greater Pacific are both limited and expensive to obtain for China or any other great power.
Despite the lack of military power competition in the South Pacific, competition in the areas of diplomatic influence and economic power is becoming much more visible and has resulted in a rise of soft balancing behaviour among external powers. The participation of China as a diplomatic partner and alternative economic aid and assistance provider to many South Pacific governments has prompted much rethinking in the United States, Australia and New Zealand as well as in other parts of the Asia-Pacific about the degree to which power has shifted in the region. The questions which therefore must be asked are what might China’s longer-term goals in the region be, and will these goals evolve into more prominent policy conflicts with the West?
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 Colin Alexander, ‘Public Diplomacy and the Diplomatic Truce: Taiwan and the People’s Republic of China (PRC) in El Salvador’, Place Branding and Public Diplomacy, vol.7, no.4 (2011), p. 273.
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 Kai He and Huiyen Feng, ‘If Not Soft Balancing, Then What? Reconsidering Soft Balancing and US Policy Toward China’, Security Studies 17 (2008): 363-95.