Most recent statements from China seem to suggest that once more the second-largest world economy is refusing to use its commercial strength to increase its global soft power.
The notion of soft-power has become very complex in recent analyses, but in the end, the argument still runs that any large nation has three types of power beyond its borders: hard, soft and commercial.
Hard, physical military power, is embodied by both the US and China.
Soft power — meaning cultural and diplomatic power — usually evolves over time through cultural, diplomatic, intellectual, commercial and mass media networks and global interactions.
Commercial power, often neglected, translates mainly into physical, hard power, terms (such as the purchase or sale of military equipment) or into soft power terms, such as loans, aid, cultural exchanges and projects, and transnational enterprises that pass popular culture through the global system. Coca Cola and McDonalds are supreme examples because they incorporate in their simple products complex messages about Western democratic culture.
Major powers have developed different mixes of these three modes of power, often beginning with the first and then developing the second and third over time. Thus, Great Britain started with the gunboat diplomacy that dominated the later 19th century, shifted to soft power colonialism in many parts of the world, and then used commercial soft power through large aid packages to Africa, Asia and other systems.
This was often in an effort that was not only humanitarian, but also commercial — in the middle of the 20th century Britain was struggling against the US for control over key oil resources in the Middle East, and for both nations, commercial soft power was an essential component of a global battle that still continues.
The US clearly emerged after 1945 as the great hard power victor of World War II and accelerated its hard power position throughout the Cold War, at the same time as using transnational corporations to “Americanize” much of European popular culture (from hamburgers to jeans to Hollywood), and this process, beginning in the 1950s and 1960s has continued as a global process till today.
Smaller or defeated nations had a checkered history of using the power mix: Germany is a great example of a system that emerged from 1945 with no credibility on any three of the power modes, yet now has emerged wielding all three in partnership with the IMF in order to dominate the failing European movement, at least as represented with the EU and policies towards Greece, Spain, Cyprus and others. This reverse of fortune was dominated by German economic success and also by reunification after 1989, which increased its population and allowed it to stand as an arbiter between East and West.
China is now the great, unexpected global giant. Its use of physical power has been clumsy, undirected and unconvincing with its reiteration of stale positions over Taiwan, border areas and North Korea. Its cultural power is minimal, with the East Asian cultural impetus having been in the hands mainly of Japan since the 1960s and now increasingly owned and demonstrated by the smaller newly industrialized countries of the region — Taiwan, South Korea and Singapore in particular.
Using the English-language as a cultural weapon, they have wielded increasing soft power as a group that can prove East Asian democracy, high standards of living, innovative enterprises, basically peaceful motives and methods and a range of consumer goods that are attractive throughout the globe.
If China does not extend its soft-power reach through commercial means it will be culturally confined by development elsewhere in East and South Asia, and there will be greater danger of China-US tensions evolving into a dramatic new cold war set up, replacing the multipolar world emerging since 1989. There can be little doubt that the absence of Chinese soft-power could spark major global crises in a context of declining US commercial soft power, but continued military dominance.
The obvious objective solution is for China to spend large amounts of money in extending its commercial soft power skillfully and to maximum effect. The latter depends not just on money spent, but on choice of tactics.
So far, China has pursued commercial soft power mostly in Africa and other areas where its interests in securing vital raw materials or markets are obvious. This can only lead to cynicism, distrust and possibly fear in the West, particularly among power brokers and political cliques.
China has instead been crowing about how the US federal government shutdown has exposed the weakness inherent in US-style democracy, claiming that partisan politics has led over a period of time to irresponsible public spending policies — this is very reminiscent of Western commentary on Japan during its financial problems in the 1990s, prior to the disasters of Western-led recession since 2008.
An obviously superior soft power tactic would be to address the US problem positively; one technique would be to very publicly allow the yuan to appreciate.
Currency appreciation has tended — in most nations, including all present major powers at some time — to reflect strength (not weakness) of the political economy, and anyway, as Japan found in the 1970s, severe appreciation of currency can lead to huge benefits through external capital investments. If your currency is appreciating you can buy foreign assets more cheaply.
Through forcing modernization and cost savings in all export industries, which would certainly now act as a cost corrective in many Chinese industries. In other words, there is a case to argue that appreciation of the yuan would not harm the Chinese economy much in the longer view. However, it might result in two other things.
It would reduce the Chinese purchase of US government debt and ease pressure on the US Federal Reserve pouring of cash into the money market (“quantitative easing”) in an effort to keep the value of the dollar down. This would take great pressure away from US public policy. Second, it would instantly provide China with a vastly improved image, a driver for increases in soft power at a global level.
Of course such actions would need backing in order to collect the potential rewards. So, at the same time China could liberalize and broaden its investment portfolio in Africa and other poorer areas of the world, liberalize its trading relations with smaller systems generally and public policy could be used to encourage Chinese enterprises to export technologies and experts in aid of development projects.
China should publicize such actions as part of a commercial soft power approach, but also as appropriate to its current stage of economic development. Established opportunities for investments within Chinese workshops and plants are declining and might be substituted by further efforts at diversifying growth within China itself, and deploying a greater portion of its massive foreign-exchange reserves to projects overseas.
If China itself makes real effort to interpret all such actions as aiding the international system, and especially the US position in that system, the resulting global political rewards could be enormous, and eventually serve to increase commercial outcomes as relations between Chinese and foreign agencies ease and liberalize.
At the same time, success in soft power advances might well reduce frictions and promote more liberalism in China itself and give power to progressive forces generally. This in turn will improve China’s global image even further.
Presently, US pundits are claiming that the petrifying of US President Barack Obama’s tour of Asia during the government shutdown is a gain to China as it detracts from the US role in East Asia. It would be good to turn this attitude around. Yet China will rightfully be held in low esteem if it continues to fail to use its potential commercial soft power.
The application of soft power remains a valid test of China’s ability to be pragmatic, to move politically toward a more liberal position without destabilizing either its economic growth or its political equilibrium. The evidence is now mounting that China, at best, is a very slow learner, witness its predictable and weak position over North Korean nuclear program.
China is not going to reinvent itself overnight. No large system can, even after defeat in war. Look at the massive assistance received by both Germany and Japan after 1945 and the slow, uncertain political crawl back during the 1960s, only successful in each case after a phase of significant economic growth.
An alternative is to replace the periodic stand-off tactics with a pragmatic soft-power policy, extending goodwill at very little cost to the economy and possibly immense reward to China’s cultural image and potential for greater integration into the comity of nations.
Taking a slightly different tack on the old Chinese adage, seeming crisis may be edged into realistic opportunity.
Ian Inkster is a professor of global history at Wenzao University of International Studies