China\'s Economy and Foreign Policy

China's Economy And Foreign Policy

There have been radical changes in the internal political and economic scenario of China during the last two decades. (Lampton, 2001) The growing economic stability and control has increased the status of china to a great extent among its trading counterparts. Further, it has become obligatory on the part of the Chinese Government to make it certain that the economic development to restructure the political discipline whose ideology had a severe jolt with the fall of Soviet Union. (Part Two - Chinese Foreign Policy) Ever since the inception of economic reforms in China during 1978 there is a considerable enhancement in the Gross Domestic Product to the tune of 9.5% per annum on average. It is pertinent to probe on the factors responsible for such a great success. The success is attributed to the adoption of institutions and policies by the Chinese Government that could make opportunities for the resourceful Chinese people and their foreign counterparts to liberate their energy for the development of the Chinese economy. The productivity of the farmers has increased to a great extent ever since 1979. The township and village enterprises were considered to be the most dynamic element for growth in the 1980s and in the early 1990s. Most of the private and foreign enterprises have flourished. The State enterprises started to contribute to the tune of 28.5% of the total gross industrial output value, while the enterprises which were owned collectively, individually and other types of enterprises attributed for 39.4, 15.5 and 16.5% respectively. (Chow, 2000)

The success of the Chinese economic reforms is attributed to the liberty granted to the non-state sectors to progress in the environment of the market economy. The open door policy is an essential element in the process of economic reforms. It induces foreign investment and encourages the foreign trade. The foreign investment has brought in new capital, new technology, managerial skill and training for labor to China. This has infused the contemporary managerial strategies, business techniques and a legal structure for favoring the business dealings. Additionally, it has generated competition in the domestic market and the competition has compelled the domestic enterprises to become more efficient. The foreign trade has been made easy due to the availability of the low cost and high quality labor in China to produce goods to be sold at higher prices in the world market thereby increasing the compensation to Chinese labor. It has also made the adoption of foreign technology and high quality capital goods for use in the field of production in China along with the import of high quality consumer goods. The availability of high quality capital goods enhances the productive efficacy. The high class consumer products enhanced the consumer welfare that acts as a significant competitive force in the Chinese consumer market which induces the development of the quality of the home produced commodities. (Chow, 2000) China thus becomes an outstanding trading nation in the region, primary to the economic development along with promoting stability in the region. (Chinese Foreign Policy)

It has been equally significant that there has been a wide variation in the Chinese international policy. There occurred a persistent and considerable variation in the Chinese foreign and national security policy during the second part of the twentieth century entailing favorable circumstances as it gradually proceeded through the eras of Mao Zedong, Deng Xiaoping and Jiang Zemin. It was the era of reform that visualized a persistent and gradual variation in the Chinese foreign and security policy-making institutions and process that entailed the generation and execution of Chinese foreign and security policy in quite a different jargon then that of in the era of Mao. (Lampton, 2001) The effective economic reforms executed in China have enhanced tremendous international concentration. (Wang, 2003)

Chinese foreign policy of the mid-1980s results from the four correlated estimations. Firstly, the Chinese reform minded leaders opined that there is possibility for China to attain power and prosperity while safeguarding its national essence only through increased involvement in world activities. Secondly they emphasized that the international environment allows a focus upon domestic development while specifically because Soviet Union is concentrating on other emergent situations and in the process there is ample possibility that China can avail a stable environment in East Asia for the predictable future. Thirdly, they emphasized that China will find it advantageous to participate successfully in the international economic system and by soliciting growing foreign involvement in its own economic development. Finally, it is advocated that China can adopt persistent, independent, pragmatic and purposeful policies not only towards the three major powers of concern to them which are the Soviet Union, the United States and Japan but also towards other crucial areas like Korea, Indo-China and Taiwan. Hence the superseding goals of foreign policy of the reformers that arise from such considerations is to counterfeit a peaceful security environment in support of ambitious internal economic development. The reformers desire to promote economic relationships with all the prospective trading counterparts. They are much concerned in safeguarding the Chinese Sovereignty and autonomy while allowing the impediments of enhanced commercial and security links with the external world. (Okesenberg, 1986)

To understand further the influence of the intense participation of China in the global economy in the sphere of its foreign policy making process and behavior is worth probing. 3. A common premise among several observers of contemporary China, inclusive of foreign leaders, business people, and scholars is that the progressive economic reliance persistently generates diplomatic circumstances in which considerable restraints are infused on the Chinese activity. Such persistent economic interdependence will give rise not to a basic shift in the way in which China realizes the nature of international politics but also to more accommodating activity in its foreign policy. In such circumstances the elements of interdependence infused by the increasing involvement of China in the global economy acts as a better safeguard against the Beijing becoming an element of instability in East Asia. (Lampton, 2001)

Beijing acknowledges the significance of enhancing the image of China abroad and the consequences of this enhancement for reinforcing the domestic economy. The new leaders of China have ventured their legitimacy on drawing improved levels of foreign direct investment and attaining all-round economic development. With this objective in view China persistently strived to develop its relationship with the U.S. And other countries. China could successfully, apply its soft power so as to integrate its pressure in Asia and to develop its image worldwide. The new diplomatic approach concentrated on a more proactive and multilateral strategy in attaining its objectives. Traditionally, the Chinese leaders such as Mao Zedong and Deng Xiaoping hardly ever endeavored to travel abroad. Contrary to this the Chinese approach to the bilateral relations and multilateral organizations presently entails a new dimension of elasticity and sophistication. (Carr, 2004) Particularly, China has drifted away from an insular, despotic state into one that has a significant part in the global affairs striving to participate in the full range of debates regarding relations among sovereign countries. Therefore China increasingly became a member of several governmental organizations in the international arena. Besides, China has entered into each and every dimension of international politics and sought to be involved in the prime accords and treaties that control the activities of the state. (Lampton, 2001)

During the last several years the principles embodied as the Five Principles of Peaceful Co-existence-FPPC has been influencing the Chinese foreign policy with regard to its relationship with its immediate neighbors and with others nations of the world. These were in the beginning improved during the de-colonization period of the 1950s, when China and its Asian counterparts specifically, India and Indonesia confronted common challenges to maintain and consolidate their newly attained independence and autonomy during the post World War II periods. But the five principles enshrined in the historic state of self-imposed isolationism and containment pressures confronted from the Western countries particularly rose from the deficiency of any significant economic interdependence with its neighboring countries. The Chinese market restructuring and persistent economic interdependence both in respect of domestic and international trade have initiated to question the efficacy of such principles. China increasingly provides considerable importance to the principle of non-intervention in the domestic affairs of other states and is not ready to eliminate it. But China is regulating its foreign policy in consonance with the changes that takes place in Asia. In the current years, China has attempted to persuade regionalism and induce regional integration in both theory and practice. The new security policy of China accords much significance to non-military means as well as security cooperation with other states and this is considered as a drift in its policy to adjust to the shortfalls in the FPPC. (Some Points on Understanding China's International Environment)

During the initial years when China opened up its economy for the purpose of trade many conflicts for struggle with regard to sovereignty between China and several ASEAN members were evident. During this time Deng Xiaoping came up with a proposal for eliminating the disputes and differences for the purpose of the mutual developments of the countries under question. (Some Points on Understanding China's International Environment) Further all along the 1990s China enhanced its foreign direct investment by 100% in the 10 member Association of Southeast Asian Nations- ASEAN and sanctioned a bilateral swap agreement under Chiang Mai and took significant measures with regard to the creation of a China-ASEAN Free Trade Agreement. (Carr, 2004) The shared sovereignty adjustments as a method of attaining the long-term solution to the prevailing territorial disputes is expected to be evident during the coming decades. (Some Points on Understanding China's International Environment)

To understand further China's significance as an economic and military power has been considerably enhanced since 1949 and particularly since the liberalization policies adopted in the 1980s. Such developments have been visualized in both positive and negative ways by its regional and foreign counterparts. Irrespective of China's growing significance as a regional trading partner in developing the region, such development has been conceived as a hazard as a result of the low competitive prices, decent quality and the availability of the cheap labor that could be provided by China. An identical structure can be detected in the country's relationship with the international community. The Chinese involvement and interdependence with the external world could not conveniently eliminate the military risks that China could exert. The Chinese position in the region is quite dominating with its growing economy, advanced military forces and nuclear potentialities. This creates an atmosphere where the neighbors are not feeling comfortable. (Chinese Foreign Policy)

Such negative attitudes have been changing in the current era when China is discovering itself amidst a considerable amount of variation in its foreign policy objectives of being viewed as a responsible player in the international field. In the same manner the conventional attitude of China has varied and the neighboring states are now becoming more at ease with China, irrespective of the fact that the suspicion of her intentions still remains. A better illustration of such a variation is the Chinese policy during the time of the Asian financial crisis in the year 1998, where most Southeast Asian states have visualized China as a positive force when it came to managing the negative influence of the crisis particularly when seen in comparison to the European Union, Japan and the U.S.A. which were been considered as being inactive against the background of the Financial adversaries that affected the region. (Chinese Foreign Policy)

The Asian Financial Crisis during 1998 was considered to be a historic break through for Chinese efforts to counterfeit a new relationship in the region on the basis of the new evolving geo-economics. In consequence to this China at last could realize that the regional political framework might appear to be assisting the persistently growing Chinese international environment. At the time of the Crisis China attempted to propose assistance to its neighbors and contributed in the efforts of other Asian countries for the first time. The effort was to help the other South East Asian nations overcome the crisis by not devaluing its own currency and strongly supporting the IMF strategy to counteract such crisis. China has persistently maintained its currency stable irrespective of a radical decline in its export growth aid in the midst of a global economic recession. This is growing to be a prime element in strengthening the continuing regional economic recovery in Asia. The enhanced collaboration between China and its surrounding countries also ensures the significance of settling the conflicts through regional adjustments. (Some Points on Understanding China's International Environment) The successful diplomatic approach of China has entailed it to integrate its influence in Asia and has enhanced its position worldwide. (Carr, 2004)

With the modernization efforts of the Chinese economy during the past decade, its activity in relation to international organizations and its desire to enter into alliances also has improved. The Sino-Soviet friendship Alliance of 1959 emphasized the prospects for cooperative activities of the Chinese and this led to another pact of friendship and cooperation on July 16, 2001. Irrespective of the fact that the Russian-Chinese pact is not as forceful as that of the treatise of the 1959 the two nations are still very apprehensive of one another, in consonance with the theory of defensive realism on regional alliances. One facet of such a contemporary affiliation is the attitude of China with regard to working co-operatively with the Russians as a defensive policy, functioning to expertise the foreign policy which will counterbalance against the U.S. (Part Two - Chinese Foreign Policy)

Even though the Chinese leaders are emphasizing on the concept of multi-polarization as the present trend contrary to the American Unilateralism, the Chinese analysts are aware of the fact that their country is quite unable to challenge the U.S. global influence ever or even in the near future -- even though such dynamics in Asia are less certain. One of the renowned Chinese foreign policy experts has brought out an article that differentiates among hegemonic power and hegemonic behavior and predicts that the Chinese can suitably adopt the former and not the latter one. He is of the view that the peace and development along with the economic objectives of China can also foster in a unipolar world, -- as actually as it already exists. However, a great paradox that has not been taken into account by many of the Chinese is that the economy of China has been assisted a great deal by the primacy of the U.S. military and the American efforts to maintain stability in Asia over the last 20 years. (Medeiros; Fravel, 2003)

Thus during the last four years and particularly since September 11, 2001 the Chinese experts have concentrated in their writings about the necessity of a crucial transformation in their attitude towards the international system and the part played by China in it. To illustrate, articles stimulating such ideologies have presently been published in the newspapers and journals advancing the ideology that China avoid its mentality of being a long-held victim. The experts reject the continuous stress on the 150 years of shame and humiliation through which China visualized their place in the contemporary international affairs. This has even been supported by Jiang in a seminal July 2001 speech on the occasion of the 80th anniversary of the Communist Party. The prominent Chinese experts have initiated to encourage the country's adoption of that of a great power mentality. Such a growing ideology strives to replace the Chinese victim hood with the confidence sprouted out of two decades of impressive economic growth and with a tacit acknowledgement of both the past willingness of China to presume international responsibilities and the confinements of its present international pressure.