In Chinese Economic Statecraft, William J. Norris introduces an innovative theory that pinpoints how states employ economic tools of national power to pursue their strategic objectives. Norris shows what Chinese economic statecraft is, how it works, and why it is more or less effective. Norris provides an accessible tool kit to help us better understand important economic developments in the People’s Republic of China. He links domestic Chinese political economy with the international ramifications of China’s economic power as a tool for realizing China’s strategic foreign policy interests. He presents a novel approach to studying economic statecraft that calls attention to the central challenge of how the state is (or is not) able to control and direct the behavior of economic actors. Norris identifies key causes of Chinese state control through tightly structured, substate and crossnational comparisons of business-government relations. These cases range across three important arenas of China’s grand strategy that prominently feature a strategic role for economics: China’s efforts to secure access to vital raw materials located abroad, Mainland relations toward Taiwan, and China’s sovereign wealth funds. Norris spent more than two years conducting field research in China and Taiwan during which he interviewed current and former government officials, academics, bankers, journalists, advisors, lawyers, and businesspeople. The ideas in this book are applicable beyond China and help us to understand how states exercise international economic power in the twenty-first century.
Learning China's history lessons -- Orchestrating China's economic statecraft -- Never let a crisis go to waste : Beijing's economic statecraft across Western Europe -- Creating a region : China's economic statecraft in Central and Eastern Europe -- Engaging North Korea -- Crossing lines : China's economic statecraft in Myanmar.
This book presents a comprehensive assessment of China's economic statecraft and its challenges. The contributors explore the various factors and dynamics that determine the effectiveness of China's effort to turn its wealth into global power.
China today is using economic statecraft more frequently, more assertively, and in more diverse fashion than ever before. Yet fears of Chinese economic coercion should not be overdrawn. In many cases, China's use of economic statecraft has been counterproductive. China's domestic challenges and Australia's considerable economic advantages limit Australia's vulnerability to potential economic coercion from its largest trading partner.
This book aims to study China's economic statecraft in the contemporary era in a comprehensive manner. It attempts to explore China's approaches to using its economic, trade, investment, and financial power for the pursuit of its political, security, and strategic interests at the regional and global levels. The volume addresses three major issue areas in particular. The first issue pertains to how Beijing has used its economic clout to protect what it perceives as its "core interests" in its external relations. Three cases are included: the Taiwan issue, human rights, and territorial dispute in the South China Sea. The second major area of inquiry focuses on how China has employed its economic power in its key bilateral relations, including relations with Japan, North Korea, the United States, and other states in the East Asian region. The third issue concerns China's economic statecraft in the global context. It addresses the impacts of China's economic power and policy on the transformation of the global financial structure, developments in Africa, the international intellectual property rights regime, and China's food security relations with the outside world.
China's economic relations with Central and Eastern Europe (CEE) rapidly expanded following the 2008 Global Financial Crisis. However, Western European leaders worried that China's engagement in the region was a ploy to exercise influence through economic statecraft. Of particular concern were several instances where CEE states vetoed or altered joint-EU statements to expunge them of criticism directed at China. However, it remains an open question whether China can use economic statecraft to achieve its strategic goals in CEE, particularly when Chinese demands directly contradict those of the United States. This paper seeks to answer this question using a realist framework by examining the effect of security salience on the effectiveness of Chinese economic statecraft. Through the lens of two case-studies, I argue that China's positive sanctions in CEE will be most effective in a context of low security salience and least effective in a context of high security salience.
This study is about Chinese economic statecraft: what it is, how it works and why it is more or less effective. The study builds a theory of economic statecraft that provides an explanation of how states use firms to pursue their strategic goals. This theoretical construct begins with an understanding of economic statecraft that has its roots in the concept of security externalities. These externalities are the security consequences that result from the commercial activity of firms or other entities that conduct international economic transactions. When states seek to deliberately generate such strategic effects by manipulating the activities of commercial actors, they are engaging in economic statecraft. Such manipulation rests on the state being able to direct and control the commercial actors. Five factors account for when the state will be able to control commercial actors. These factors reflect the business-government conditions under which economic statecraft will be likely to succeed. Given the centrality of state-business relations in this account of economic statecraft, China provides a useful empirical context in which to explore this theory. Chinese economic statecraft provides useful variation across a number of cases to illustrate the dynamics of the theory. Specifically, the study examines three important areas of China's grand strategy that feature economic statecraft prominently: Mainland relations toward Taiwan, China's efforts to secure access to strategic raw materials, and China's sovereign wealth funds. The study compares cases of both successful and unsuccessful economic statecraft across each of these empirical contexts. This study finds that economic statecraft is not an easy lever of national power for states to wield but when they master it, economic statecraft can have powerful strategic effects. These effects are reflected in a typology of security externalities. Control of commercial actors is a critical element enabling states to be able to generate such effects. Alignment of goals between the state and the commercial actors, unity of the state, a limited number of commercial actors, bureaucratic resources, and direct reporting relationships all facilitate effective economic statecraft.
"Orchestration explores the origins, operations, and effectiveness of China's distinctive 'orchestration' approach to economic statecraft. It describes how China engages in economic statecraft, explains why China uses this approach, and identifies when Beijing's efforts are most effective. The first two chapters trace how China's unique historical experiences and complex political-economic structures led to Beijing's orchestration approach. Today, Chinese leaders deploy incentives and innovative policies to mobilize a vast array of companies, banks, and local officials to rapidly expand trade and investment with targeted countries around the world. China's economic statecraft thus requires only a light touch. Four chapters comparing China's economic statecraft across Europe, and in Myanmar and North Korea, reveal Beijing's orchestration in action. Policymakers combined delegation with incentives, encouraged participation by regional authorities and enterprises, and facilitated interest alignment among implementing actors to successfully mobilize domestic actors. When problems with enterprise malfeasance, policy stretching, and moral hazards emerged, central leaders adroitly reversed course. Despite successful implementation, Beijing's economic statecraft exacerbated populist anxieties, undermining China's foreign policy goals. The policy implications for countries targeted by China's economic statecraft are thus broadly reassuring. Orchestration concludes by laying a foundation for future studies in comparative economic statecraft"--
The United States assesses the South China Sea and the Straits of Malacca as vitally important to the world economy due to their location and the amount of trade that passes through the two bodies of water each year. China also believes its security and prosperity is tied to these two bodies of water. As China's power and stature in the international community has grown over the last thirty-years, it has asserted that the South China Sea is a priority issue, and created and employed a vision and strategy to control it. China continually demonstrates its economic might in the region and conducts economic statecraft to influence policy in the region. The U.S. needs to create a policy and long-term strategy that brings to bear all the national instruments of power to counter China's rising influence in the South China Sea. The policy and strategy should incorporate establishing strong economic ties in the region, creating a South China Sea Code of Conduct, further cultivating the U.S.-India relationship, and using lawfare to counter China. The U.S. needs to ensure that it is ready to employ its strategy and be poised and prepared to counter the rise of China to remain relevant in the region.Contents: 1. Introduction / Concerns and Thesis * 2. Organization and Methodology * 3. Chinese Leadership and Strategy * President Xi Jinping * China's Economic Growth * China's Strategy * Other SCS Claimants' Military Expansion * 4. China's Economy * China's Economic Influence on Military Modernization * China's Economic Weaknesses * One Belt, One Road Initiative * 5. China's Application of Economic Levers / China's Economic Statecraft * Rare Earth Elements * China Exerts Economic Pressure on ASEAN * China Uses THAAD to Gain Assurances * Asian Infrastructure Investment Bank * 6. Recommendations * Economic Development * South China Sea Code of Conduct / India / Lawfare * 7. ConclusionThis compilation also includes a reproduction of the 2019 Worldwide Threat Assessment of the U.S. Intelligence Community.The seven nations that surround the SCS all rely on it for their economic wellbeing as well as their security. Brunei, China, Indonesia, Malaysia, Philippines, and Vietnam each claim parts of the SCS. China's interest in the SCS intensified as its economic and military might slowly increased over the last thirty years. In 2009, China formally claimed a nine-dashed line that encompasses most of the SCS. China claims exclusive rights to all that lies within its nine-dashed line including the sea, islands, reefs, shoals, ocean floor and resources under the ocean floor. The nine-dashed line would lock out all the other claimants from the ability to cultivate these resources for economic gain. The SCS by virtue of its location makes it potentially the most contested body of water in the world. The countries that border it rely on it for their economy and security. Moreover, the U.S. and its regional partners and allies rely on it for their economy and security. China has been emboldened to take a more aggressive approach in its foreign policy, as well as to modernize its military. In addition, China began an artificial island building campaign by "reclaiming" nearly 3,000 acres of land in the Spratly island chain on Mischief Reef and Fiery Cross Reef and other shoals in the SCS. Beyond creating islands through land reclamation, it has militarized these newly formed islands.
China's trade with, foreign direct investment in, and development assistance to African countries have increased substantially over the last decade. This paper reviews the scope and context of China's economic statecraft in Africa to assess the intent and impact. China's engagement with Africa is a deliberate policy choice to secure its economic and political objectives; however, it is also consistent with the actions of rational actors in a free market. China's policies may undermine or discourage U.S. efforts to create better governance and improved standards of living in Africa, but these effects are incidental and not a deliberate Chinese goal. The United States should focus on its vital interests in Africa and adopt an accommodating posture towards China, facilitating its peaceful rise. As part of its overall strategic rebalancing, the United States should intensify efforts to increase China's participation in international economic institutions to maintain a global international economic system which facilitates U.S. economic strength.
"The United States assesses the South China Sea and the Straits of Malacca as vitally important to the world economy due to their location and the amount of trade that passes through the two bodies of water each year. China also believes its security and prosperity is tied to these two bodies of water. As China's power and stature in the international community has grown over the last thirty-years, it has asserted that the South China Sea is a priority issue, and created and employed a vision and strategy to control it. China continually demonstrates its economic might in the region and conducts economic statecraft to influence policy in the region. The US needs to create a policy and long-term strategy that brings to bear all the national instruments of power to counter China's rising influence in the South China Sea. The policy and strategy should incorporate establishing strong economic ties in the region, creating a South China Sea Code of Conduct, further cultivating the US-India relationship, and using lawfare to counter China. The US needs to ensure that it is ready to employ its strategy and be poised and prepared to counter the rise of China to remain relevant in the region."--page iii.
What has China gained from its foreign aid and investment activity? Does the instrument China chooses reveal its political motive? Does Chinese economic statecraft present a challenge to U.S. national interest? To answer these questions, this thesis examines the history of Communist China's foreign policy in Cambodia and in Kenya since 1956 and 1964, respectively. China has delivered aid to, made investments in, and traded with both states, but the interests China has pursued, and the vigor with which it has pursued them, are different in each. In Cambodia, China has a rich and continuing record of intrusive political influence and military engagement. In Kenya, China's purchase of political influence under Mao has cooled considerably to become today's arm's-length trade and development relationship. This thesis concludes that Chinese economic statecraft buys political influence in Cambodia but not in Kenya, where aid is developmental and investment is driven by business opportunity. From both realist and liberal perspectives, China's economic statecraft presents a challenge to the interests of the United States. I. INTRODUCTION * A. MAJOR RESEARCH QUESTIONS AND FINDINGS * B. SIGNIFICANCE OF THE RESEARCH QUESTION * C. LITERATURE REVIEW * 1. Aid Outcomes * 2. Policy Objectives * 3. International Relations * D. POTENTIAL EXPLANATIONS AND HYPOTHESES * E. RESEARCH DESIGN * 1. Similarities between Cambodia and Kenya: History, Economy, and Resources * 2. Differences between Cambodia and Kenya: Geographic, Political, and Cultural Proximity to China * F. CONCLUSION * II. CHINA'S INTERESTS IN CAMBODIA * A. PURSUIT OF ONE CHINA * B. CAMBODIA AS A COLD WAR COUNTERWEIGHT * C. PURSUIT OF SOVEREIGNTY IN THE SOUTH CHINA SEA * D. PURSUIT OF DEVELOPMENT ON THE MEKONG RIVER * E. CONCLUSION * III. CHINA'S AID IN KENYA * A. AID IN THE 1960S: ONE CHINA, REVOLUTION, AND COLD WAR POLITICS * B. FREEZE AND THAW, 1965-80 * C. CHINA'S ECONOMIC STATECRAFT IN MODERN KENYA * 1. Aid * 2. Trade * 3. Foreign Direct Investment * D. CONCLUSION * IV. CONCLUSION * A. THREAT TO U.S. NATIONAL INTEREST * 1. Formulation of U.S. National Interest: Realism * 2. Formulation of U.S. National Interest: Liberalism * 3. U.S. National Interest and China's Economic * Engagement * B. HYPOTHESIS VALIDATION * 1. China Buys Influence with Foreign Aid and Investment * 2. China's Expansion of Influence Conflicts with U.S. Interests * 3. Choice of Financial Mechanism Reveals China's Intent * C. FURTHER RESEARCH * 1. Broader Scope * 2. Characterizing China as a Regional or Global Power * 3. China's Intent and the Supply and Demand of Foreign Aid * 4. Do Chinese Aid and FDI Chase Natural Resources? * 5. Is Kenya a Part of OBOR? * D. CONCLUSION
This thesis aims to investigate the reasons for the variation in China's oil diplomacy performance in Africa and South America in the period 2000-2010. Lacking sound experience in pursuing oil security overseas and enjoying strong financial muscle, China's oil diplomacy is largely rooted in the extension of soft loans for infrastructure to oil-rich countries in exchange for steady oil supply and favoured access to oil acreage. Taking Angola and Brazil as case studies this thesis argues that differences in the institutional structure of the oil industry in each country, determined different outcomes regarding Beijing's oil security goals. This thesis has found that although this template fitted well with the more centralised institutional environment in Angola, it was highly unsuitable for the more liberal and regulated Brazil setting. Furthermore, the advent of the recent global economic crisis (2008-2009) caused China to adjust its approach to the institutional particulars of Brazil becoming more efficient in that country regarding its oil security goals. Building on foreign policy analysis tools and concepts, an empirical analysis of the interplay between Chinese infrastructure-for-oil loans (hereby regarded as positive economic statecraft) and the institutional structure it met in each country, is presented. Through the case studies, this thesis aims to uncover to what extent the institutional context constrained Chinese oil diplomacy efficiency in Brazil for most of the past decade, and how innovation has surfaced in the context of the global financial crisis. This analysis thus gives interesting insights not only into the dynamics of China's oil diplomacy in Africa and South America, but also into Chinese economic statecraft in general and how constraints that surface at the implementation level feedback into foreign policy formulation.
Introduction -- Techniques of statecraft -- What is economic statecraft? -- Thinking about economic statecraft -- Economic statecraft in international thought -- Bargaining with economic statecraft -- National power and economic statecraft -- "Classic cases" reconsidered -- Foreign trade -- Foreign aid -- The legality and morality of economic statecraft -- Conclusion -- Afterword : economic statecraft : continuity and change / Ethan B. Kapstein.
Starting from the key concept of geo-economics, this book investigates the new power politics and argues that the changing structural features of the contemporary international system are recasting the strategic imperatives of foreign policy practice. States increasingly practice power politics by economic means. Whether it is about Iran’s nuclear programme or Russia’s annexation of Crimea, Western states prefer economic sanctions to military force. Most rising powers have also become cunning agents of economic statecraft. China, for instance, is using finance, investment and trade as means to gain strategic influence and embed its global rise. Yet the way states use economic power to pursue strategic aims remains an understudied topic in International Political Economy and International Relations. The contributions to this volume assess geo-economics as a form of power politics. They show how power and security are no longer simply coupled to the physical control of territory by military means, but also to commanding and manipulating the economic binds that are decisive in today’s globalised and highly interconnected world. Indeed, as the volume shows, the ability to wield economic power forms an essential means in the foreign policies of major powers. In so doing, the book challenges simplistic accounts of a return to traditional, military-driven geopolitics, while not succumbing to any unfounded idealism based on the supposedly stabilising effects of interdependence on international relations. As such, it advances our understanding of geo-economics as a strategic practice and as an innovative and timely analytical approach. This book will be of much interest to students of security studies, international political economy, foreign policy and International Relations in general.