Chinese Foreign Economic Policy
DEFINITION OF ECONOMIC POLICY:
The actions taken by a government to influence its economy. Types of economic policy actions can include setting interest rates through a federal reserve, regulating the level of government expenditures, creating private property rights, and setting tax rates.
INTRODUCTION:
Being a communist country, China maintained a closed economy until the late 1980s when it finally began to open up to the world economy. Since then, China has undertaken major reforms to improve and modernise their economy and finally was accepted in to the WTO in 2001. Since China’s accession in to the WTO, it’s economic growth took off rapidly and China continues to grow at a very high rate and has become one of the most economically powerful nations in the world. China’s new open door policy is can largely be defined as an adoption of a liberal economic framework driven by the demands of a centralised state, whose economic agencies are at the forefront of a process of development that is couched within the rhetoric of “socialism with Chinese characteristics”.
As the United States and the European Union were still dealing with the financial crisis, China recovered quickly and rapidly started to rise as a global economic power. With this fact in mind, there is consensus among the leadership that they no longer need to carry on their conciliation as it has become obvious to them that China is winning in this new global order.This is followed by China shedding its good neighbor policy and pursuing a more assertive approach justified by feelings of celebrating nationalism. China sees this as being their moment at last and pursues policies to make itself a world power. China’s miracle economic growth under an authoritarian regime is providing the world with an alternative to liberal democracy as lead by the Western nations through their prescription of the Washignton Consensus. The CCP government and the role it plays in the world is becoming more and more important.
RELATIONS WITH OTHER DEVELOPING COUNTRIES:
China’s way of doing things becomes very welcome in many developing nations. These nations with whom China’s relationship has improved are mostly autocratic regimes, which share permanent interests with China. Example - nations such a Pakistan, Sri Lanka and many Central Asian States welcome China and their investments with open arms. Unlike nations like the U.S China offers investments without any demands of democracy or human rights. With China’s economic rise, China is no longer in isolation, many nations realize all that China has to offer and because of this rise they want to plug in to the Chinese economy. China comes in and supports the Sri Lankan government and facilitates Sri Lanka’s economic growth while expanding China’s naval presence around the Indian Ocean. In the same way that China is welcomed in South Asia as a balancer against India, China will be welcomed in Central Asia as a balancer against Russia.
We need to keep in mind that what is the most important aspect of any nation’s foreign policy is to serve its core domestic interests, for China, that is to make sure that the People’s Republic holds together and China is able to do so by keeping close ties with nations with whom China’s ideologies match. The fact that these Central Asian Muslim republics surround China’s western region is a threat to China’s stability in the region, China needs to make sure that their foreign policy in the region doesn’t undermine its core domestic interests. China’s growing need for energy and to diversify its energy resources facilitated by its rapid economic rise, “China sees great economic potential in Central Asia and its surging economy is better positioned than Russia’s to exploit these opportunities.
With that being said, China is investing evermore in the nations of these region and Chinese investments are welcomed in these nations that want to plug into China’s rapidly rising economy. While China is pursuing deep economic engagements in these nations China is forming better relations with these nations based on their common interests to maintain stable regimes and crack down on democracy and separatism. With these nations, China forms the SCO which “contributes to regional stability by helping member states collaborate to stay in power. Each benefits from the legitimacy extended by others and cooperation against domestic opponents and foreign critics.”
China is instead investing in asymmetric warfare, focusing on electro-magnetic pulse weapons, cyber and space warfare, and a small but adequate nuclear deterrent; meanwhile creating a complex network of China-entered bilateral and multilateral agreements such as the Shanghai Cooperation Organization, free trade agreements with states such as Iceland, and less formalized, issue-specific partnerships with states strategically important to China such as Zimbabwe, Sri Lanka and Russia.
FOREIGN ECONOMIC POLICIES:
China’s foreign economic policy-making is reflective of its commitment to modernization and this will remain a priority for the years to come. China’s desire to be an important player on the world stage means that it must adapt to policy-making norms prevalent in the international system. With the efficacy of the reform process yielding the desired results, perhaps the next stage could involve the levels of influence China has in determining trends, not merely restricted to matters economic.
A vital component in China’s policy to open its economy and integrate it into the world economy was the decentralization of the foreign trade apparatus. From a highly centralised system of foreign trade agencies governing international economic relationships, China has managed to introduce a flexible structure that promotes, nurtures and facilitates economic policy-making that is not entirely Foreign Economic Policy-Making in China 463 dependent upon state diktats.
China’s economic and social development as outlined by the State Council has to perform the following tasks:
• To study and formulate strategic guidelines, planning and country policy and other related policies in foreign economic cooperation and trade, and to be responsible for the organization of their implementation after their approval by the State Council;
• To compile long-term and yearly foreign economic and trade plans, and to be responsible for the supervision, management and data collection in foreign economic and trade businesses.
• Under the authorization of the State Council to enter into multilateral, bilateral governmental economic and trade treaties and agreements on behalf of China and to be responsible for their implementation.
• To be responsible for the organization and coordination of negotiations regarding foreign governmental loans, foreign business investments, technology imports and the utilization of foreign capital.
• To oversee sectoral management of economic and technical cooperation and exchange with United Nations and other related international organizations and
• To organize research and study on international economic and trade situation and markets, and to keep abreast of international economic and trade information.
CHINA RELATIONS WITH INDIA:
Chinese president Xi Jinping came to India on Wednesday, September 17, 2014.
A high level delegation from china that accompanied President Xi Jinping to Ahmedabad signed three memoranda of understanding (MOUs) with India in presence of Indian Prime Minister Narendra Modi.
The pacts mainly focus on boosting trade and investment between the two countries.
1. One between the china development bank and the industrial extension bureau of Gujarat government for developing industrial parks in the state.
2. Another pact signed between china’s Guangdong province (the most populous province of china) and the Gujarat government for developing a ‘sister province’.
3. MOUs covers cooperation in trade and industry, environment studies, science and technology, health, culture, and tourism, waste water management, sports and infrastructure in the sister province.
4. MOU was between Ahmedabad municipal corporation and Guangzhou for knowledge sharing.
China will invest $20billion in India in the next five years in industrial and infrastructure development projects.
China will work for introducing of fast train in India. China will also assist Indian railways with its semi-high speed plans. It helps to strengthen tracks so that the maximum speed of passenger train. Recently they test semi- high speed train between Delhi to Agra. They were also planning to build Chennai –Bangalore – Mysore corridor. And also signed agreement to redevelopment of railway stations, and both side agree on a training programme.
Did indo- Japan ties make worry to China?
Chinese foreign minister Hua chunying clarified that president Xi Jinping’s recent remarks about winning “regional war” was not aimed at India. She told that that will never allow border area to influence Sino-India relations. She also mentions that we will be happy to see other countries develop friendly bilateral relations as long as such relationship is positive and conducive to regional peace.
Another diplomat says that china would do whatever else it feels necessary to keep India from joining hands with Japan. China is determined to be a regional bully and India and Japan combine could destroy china. Beijing has a long history of rivalry with Tokyo and considers it a serious threat to its rise. May be China worried about the relation between the indo- Japan because she was the most powerful nation in Asia and she wanted to continue with that. So that she can show her hegemony power to neighbouring countries.
China taking active role in Indian Ocean:
Maldives had earlier given the $511 million contract to an Indian company, GMR infrastructure, and cancelled it two years ago over user charges. The deal has now gone to Beijing Urban construction group company Ltd.
The move has strategic significance in the Indian Ocean area, particularly in light of Chinese contractors building sea ports in Sri Lanka. Maldives also accepted Xi’s request to join the Chinese Maritime Silk Road programme, aimed to linking china to Europe through the seas of south Asia. Sri Lanka and Singapore have earlier expressed their desire to join the programme, which will connect China with the Indian Ocean. Xi also expected to India to participate in the plan to transform the ocean zone into a regional shipping hub.
CONCLUSION:
China’s economic model requires new markets and privileged access to resources and this will be a moderating factor in their foreign policy approach. Beijing can’t afford to offend its neighbor Russia for a complex range of reasons, ranging from internal and external security and access to new sources of energy supply. The competitive and contentious external environment China faces in its immediate neighborhood requires Beijing to take a relatively cautious and tactful national security approach in the short to medium term. At the same time it is strengthening its external environment, especially on the periphery, whenever it can.
This is why as a rising great power, despite this year’s 12.2 percent budget increase to the PLA, China is not likely to follow the U.S. or the Soviet Union in making burdensome investments in military spending. The PLA budget is only 2 percent of China’s GDP versus the current U.S. figure of 4.4 percent and the Soviet Union’s figure of 13-14 percent just before the Gorbachev era began in the mid-1980s.
Chinese play an important role in Asia through its economic power. She tried to connect the sea route from each neighboring countries so that she can make her economic growth faster. Maldives also offer china to play a bigger role in the South Asian Association for Regional Cooperation (SAARC). Which mean that China is becoming more powerful!
BIBLIOGRAPHY:
-Chinese Foreign Policy: The Micro-Macro Linkage Approach, Oxford University Press, Hong Kong, 1996.
-Shambaugh, David L. China Goes Global: The Partial Power. Oxford: Oxford UP, 2013. Print.
-Economic policy making in China:Dr.Narayanan
-Chellaney, Brahma. Asian Juggernaut: The Rise of China, India, and Japan. New York: Harper Business, 2010. Print.
- Newspaper (Times of India)
TENZIN SHENYEN
IIndYear MA .International Relations
Madras University (2015)
