Tue, Jun 26, 2012 - Page 8 News List

China’s divided route to dominance

By Ian Inkster

From April to last month, news media were obsessed with the case of Chinese dissident Chen Guangcheng (陳光誠). China’s failure to compromise or explain the issue allowed the US to once more set off a human rights bomb, make the Chinese authorities look heartless and further isolate China. Similar violations of human rights all over the globe (including those in the US) were forgotten in the flurry of negative reportage. China’s failure to even attempt any sort of ameliorative diplomacy or soft-power persuasion prompts the simple question: Is China stupid?

However, this query is set in a much wider context, that of China’s complete failure to capitalize on a series of opportunities to increase its status and soft-power at a global level. At the onset of the global recession in 2008, China established a stimulus plan worth US$586 billion, approximately 15 percent of its GDP. This artificial stimulation of Chinese demand was clearly a good thing for the US and all other major economies, and it undoubtedly ameliorated many deflationary elements within the global economy. Yet China failed in its press relations and diplomacy to connect this massive expenditure with the global good. From the position of either international political economy or soft-power analysis, this seems stupid.

There are seven contemporary processes that China could — under a sensible regime — develop into the sinews of its drive for soft-power. First, the failure of the European economy and the euro debacle last year were key opportunities for the development of Chinese soft power. However, early possibilities of a joint IMF-China bailout soon shrank into non-existence just months into the crisis.

Second, IMF funding for future bailouts is a clear opportunity for China to increase its global presence, but so far Beijing has been tight-fisted on this issue as well — the most recent estimate from the IMF is that Spain will need a bailout of about 40 billion euros (US$50 billion), a huge sum that would be peanuts to China, if it were to help.

Third, as the US debt crisis continues to smolder, as yet invisibly because of the sheer size of the US economy, China has the opportunity to purchase bonds and other financial instruments to help, staving off financial catastrophe in the US, which has not yet been able to solve its multiple US$1 trillion debt problem.

Fourth, late last year the UK opened up a new element when the Tory government made overtures to Chinese investors to put money into British transport, energy and utility projects, at a time when Beijing was seeking positive returns from its massive investment surpluses. This is significant because of its emphasis on private sector initiatives rather than official lending or bond purchases and because it has been sold as distinct from any problems related to euro-bailouts.

Fifth, the need for a closer alliance with Japan is absolutely clear and still wide-open to possible soft-power initiatives on trade, investment, technological purchases or even territorial negotiations. It will become more crucial whenever the notion of a general Confucian Renaissance reasserts itself across the region.

Sixth, despite territorial disputes with India, China’s membership in the BRIC group of nations — Brazil, Russia, India and China — could have been more properly exploited in the last couple of years, both to increase Chinese influence among smaller or poorer states (for instance in Africa, where oil looms large), and also to act as a negotiation and funding resource for the IMF, the euro and other issues.

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