Home Economy, Policy & Business Figuring out the China strategy: From soundbites to substance

Figuring out the China strategy: From soundbites to substance

Andrew Cainey
Can China ‘serve the foreign’?
Senior Associate Fellow at the Royal United Services Institute in London
Small figures of men in suits placed atop the map of China

A ‘China strategy’ is the new must-have item for any country. This is a little unusual. Arguably, what a country most needs is a strategy for itself: a plan for national prosperity and security while remaining true to its own values, rather than singling out another nation.

Yet China is garnering attention for two reasons. It now has the scale and ambition to reshape bilateral, regional and global relations. And it is complicated, changing and imperfectly-understood by many policymakers around the world, while remaining distinct in its governance and values from the countries that have shaped the rules-based order since 1945.

The China strategy debate abounds with soundbites: Contain or engage? Collaborate, compete or confront? Choose between the US and China! Democracy vs autocracy! While these single words highlight distinct choices of attitude, they are binary in nature. They do little to illuminate what specific actions make sense in a complex world.  

Chairman Mao talked of ‘making the foreign serve China. Countries need to examine where China can now ‘serve’ or bring benefits to their own country’s interests. And where China instead jeopardises or harms these interests, so that China ‘serves’ only to highlight the need to take action. What policies make sense at home; in bilateral relations with China; and in relations with others that build on the positives and address the negatives? 

For Professor Lawrence Freedman, strategy is the ‘art of creating power’. A China strategy should then consider how, realistically, a country can create some form of power in its relations with China and others. And, like any other strategy, a China strategy requires choices on how to achieve certain objectives; deciding what and what not to do; and allocating scarce resources of time, money and political capital. 

Where you stand depends on where you sit

China presents different opportunities and challenges for each country. Even where there is common ground with others, the specifics will vary.

Geographic proximity often means a greater familiarity and shared history with China, with well-remembered ups and downs including trading links, border disputes and war. Cultural ties and the presence of a Chinese diaspora with its own varied history play a role too. Differences in governance, the role of civil society and values can be large or limited.  

Size and level of economic development matter; so too does the openness of the economy and scale of trade with China already. China can be mainly a source of low-cost manufacturing imports; or a major export market and source of employment. For some, it is an additional source of infrastructure investment, while for others it is the only such source. 

A country can be of interest to China for many reasons, ranging from the availability of natural resources to an export market, a strategically important location or a position of influence in multilateral organisations regionally or globally. 

Six pointers in developing a China strategy of substance

Despite these differences, six pointers are helpful in developing a substantive China strategy.

1. Make sure it is based on a deep and practical understanding of China

Strategy starts with an assessment of reality as it is, not as a country would wish it to be. This requires a fact-based look at China, the country’s position and the geopolitical context. For reasons of geography, history or economic relations, some countries are better at this than others. Critical misperceptions and knowledge gaps need to be addressed before good decisions can be made.

Such understanding takes into account the past; what Chinese leaders say about their ambitions for the future; and the practical constraints that they face in achieving them. It takes into account how relations are developing between China and other countries, in particular the US. It recognises that China is neither all-powerful nor on the point of collapse, and that much is unknown and uncertain: few China experts predicted China’s evolution under Xi. It is hard to know where China will be in 2030.

2. Get specific about what outcomes are best for the country and what the trade-offs are

The simple phrases of grand strategy characterise an overall approach but lack specifics. For the EU in 2019, China is a ‘negotiating partner, an economic competitor, and a systemic rival’. US Secretary of State Antony Blinken has a different ordering: ‘competitive when it should be, collaborative when it can be, adversarial when it must be.’ But the purpose of a strategy is to achieve certain outcomes. If it is a competition, what does winning look like? If there is systemic rivalry, is the aim stable co-existence or that one system wins out? The better question is what outcomes for the China relationship will best help and least hinder a country in achieving its own national goals? What are the priorities and what might the trade-offs be?

3. Policy actions speak louder than words…

Successful policy choices change people’s behaviour to help achieve desired outcomes. And it is usually easier to change what people do in one’s own country than changing what other countries do – though that too can be challenging.

Policy choices fall into four broad categories.

First, governments can invest in capabilities to help more of the population understand China across all dimensions and how to negotiate and engage effectively. This knowledge needs to reach those who need it in their day-to-day decision-making, rather than staying separate in specialist silos.

Second, a country can pass legislation and launch initiatives that support productive engagement with China (such as certain forms of trade, investment or action on climate change) and screen or limit engagement that the country judges to be against its interests. This may include certain company acquisitions, sales of sensitive technologies or lobbying activities. It will typically focus on all such foreign actions, not specifically those from China.

Third, a country can invest in measures that strengthen its own position, regardless of what China does. If the fear is over-reliance on imports from China, a country can increase domestic manufacturing or diversify its supply sources. Where China is seen as an economic competitor in key technologies, the right response is to compete better through the right mix of private and public involvement at home. 

Finally, and importantly, a country can work closely with other nations that have similar interests or concerns – be those economic, territorial or related to values. Benefits flow from pooling of resources, common standards and greater integration. Depending on objectives, groupings may include China (for example, the 17+1 group in Central and Eastern Europe or the RCEP trade agreement in Asia) or not (for example, the Quad of Australia, India, Japan and the US, or the CPTPP trade agreement).  

Short of invasion or blockade, no country can truly force another to change. But, alone or in concert, countries are continually seeking to shift the balance of power and to alter the cost-benefit calculus of policy decisions for one another. This can be through current alliances or through the formation of new affiliations, loose or tight. Such partnerships are of particular value to smaller countries, but even the largest rarely have the scale or capability alone to shape the context in which China and others make choices.

4. …but words still matter

Kevin Rudd’s advice to “Do More, Talk Less” on China is wise, but words still matter. Communication is key to implementing strategy: people need to know what to do and why they should do it. 

More broadly, as a rising power, China is committed to increasing its ‘discourse power’, projecting its perspectives and framing of issues around the world. Competition for global audiences is rising.

Tone matters too. Countries have an interest in maintaining debate that is as fact-based and straight-talking as practical. Wolf-warrior diplomacy and Trumpian rhetoric provide more heat than light. Avoiding over-emotionalism and exaggeration also reduces the risk of increasing racism and violence against those of Chinese ethnicity in a country.

5. An integrated perspective to China policy is required, but don’t try to centralise everything

A China strategy requires an integrated, top-down perspective. Critically, China takes such a holistic view of bilateral relations, linking together questions of trade, investment, security and values. Increasingly, so too do the US and others. Moreover, there are often important substantive links between topics such as environmental and technology policy. But a fully centralised approach is feasible or desirable in only the smallest or most autocratic countries. Government needs to have a clear view of priorities, trade-offs and linkages, while ensuring that the many China-related decisions are taken by the right people spread across the country’s relevant institutions.

6. What matters in the end is the implementation and adaptation

A strategy that is not implemented has no value. Research suggests that ‘most strategies fail’ in the corporate world. Similar challenges apply in international relations. Strategic decisions need to be followed by resourcing that matches the ambition; clear responsibilities and accountabilities; incentives and sanctions to encourage action; and durable leadership commitment. The actions proposed need to fit a country’s cultural and institutional norms. 

And strategies need to adapt as circumstances change and there is better evidence on what works and what does not. The tenor of the relationship with China is an outcome not just of a country’s strategic intent, but China’s too; of events and how both sides react to them.

Turbulence before a new stability?

Today everyone wants a China strategy, reflecting the new, unfamiliar geopolitical terrain. Countries are grappling with how to respond to China’s larger, more assertive role across all aspects of global relations. Throughout this, countries need to remain focused on their own interests; on how China feeds into their own national strategy, with the potential to both help and hinder – while remembering that not everything is about China.

This time is a time of uncertainty, adjustment and learning for all countries, including China. All are figuring out where to draw lines, how to respond to actions, and where to engage. Indeed, maybe in years to come, as this new terrain becomes more familiar, the ‘China strategy’ will become more settled and less contentious, falling out of the headlines and back into the preserve of foreign policy specialists.

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Andrew Cainey
Senior Associate Fellow at the Royal United Services Institute in London

Andrew Cainey is a senior associate fellow at the Royal United Services Institute in London and author of Xiconomics: What China’s Dual Circulation Strategy means for global business. Andrew has 30 years’ experience advising governments, companies and non-profit organisations across Asia and Europe. Andrew was previously the managing partner of Booz & Company’s Greater China consulting operations; the partner leading the Rt Hon Tony Blair’s Asian government advisory practice; and the partner in charge of Boston Consulting Group’s Asian financial institutions practice. He has also been a Senior Fellow with Fung Global Institute in Hong Kong; an Associate Fellow in Chatham House’s Asia-Pacific Programme; a Senior Fellow in the Security and Crisis Management Programme (International Centre) at the Shanghai Academy of Social Sciences; and a Policy Advisor in the Conservative Party’s Policy Unit.

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