Economy,International Relations | October 16, 2013 Written by Zhengxu Wang. There is a growing consensus that China is willing to join the existing world system by accepting international rules and institutions. It is rising into, instead of bringing changes, to the existing system. This appears to be one major element of China’s “grand strategy”, rising into the existing world system instead of unsettling it. The world system will evolve or adapt in order to reflect the change in the relative powers of various countries. One way is to shift some power in the existing institutions from those in (relative or absolute) decline to those that are on the rise. For example, there has been shifting of the voting power in the IMF from US and European countries to emergent powers such as China. Another way is to create new institutions and platforms to re-distribute power to China and the other emerging countries. The G-20 clearly represents such a creation. Yet for a rapidly rising power like China these two approaches often fall short. Such adaptation of the existing and creation of new institutions can take very long time, and the powers that still dominate the existing system are unenthusiastic regarding such changes. A new development seems to have emerged since the new leadership took office in China. China is now much more proactively providing new multilateral institutions. Among other less notable ones, in the past few months China proposed or co-proposed to various parties the following new multilateral institutions: The BRICs Development Bank (27 March 2013, Deben, South Africa) and the Asia Infrastructure Investment Bank (2 October 2013, Jakarta, Indonesia) How these proposals will work out in practice still require us to wait and see, but they clearly reflect a new trend in China’s engagement with the global society. This I call China’s Incremental Way to change the power structure in the world. Simply put, to avoid frustration in trying to change power structure in the existing institutions (the IMF or World Bank, for example), China has decided to create a new space for its own activism. Such an approach, however, explicitly recognize the legitimacy of the existing institutions, i.e. China is not leaving or revolt against the existing institutions. By contrast, while proposing new platforms, China continues to show its commitment to the existing platforms. The changes China brings about are incremental, i.e. they will add to the body of existing multilateral institutions instead of replacing them. The proposed BRICs Bank is not aimed at unsettling the World Bank, but merely to provide more financial cooperation on top of what the World Bank is doing. Similarly, the Asia Infrastructure Investment Bank does not aim to unsettle the existing Asia Development Bank, but rather to increase the financial capacity of Asian countries in pooling financial resources for the development of Asia. These measures are incremental because they aim at creating new capacities without closing-down or downgrading the existing ones. This is likely to be a major character of China’s new “grand strategy” as it tries to reshape the world system. Whenever possible, China will not aim to directly unsettle the incumbent, but rather create new space in which it will have more influence. Indeed if we take the end of the Cold War (1991-1992) as the starting point for China’s search for best way to rise into and help shaping a multipolar world, two decades have passed and China seems to have settled on such an approach. In the coming years we are likely to see the mushrooming of the new multilateral organizations and platforms opening for business with China at the founding table. Zhengxu Wang is Deputy Director of the China Policy Institute. “National Day”: Protest Day Chinese Investment in Taiwan: Challenge or Opportunity for Taiwan’s Industrial Development?