China | May 22, 2015 Written by Nick Bisley. It is widely recognised that China has become a world power of the first rank. On the back of its epochal economic transformation, the People’s Republic must now be bracketed alongside the US as the most important entities in the international system. This reflects not just economic weight – China is the world’s largest economy in PPP terms and is likely to become the largest in aggregate terms in the next few years – but also political and diplomatic heft. At global summits and regional talk-shops, such as APEC or the East Asia Summit, China’s leaders are the most sought after and its actions most carefully watched. Yet as officials in Beijing will remind anyone who points this out, China remains very much a developing economy. Away from the skyscrapers of Shanghai and the megafactories of Guangzhou, the economic landscape is challenging. In per capita terms, China ranks in the middle of global tables; China’s rankings on development indicator indices like the UNDP’s HDI places it firmly in the middle rungs. The immediate economic issues that need to be addressed by the Chinese government – governance, corruption, environmental damage, infrastructure shortcomings, social dislocation due to large scale urbanisation – are typical of emerging economies. This curious situation of international weight of the first order, coupled with the very real baggage of domestic economic development, means that China’s international behaviour is unlikely to follow expectations. It has long been clear since China again became powerful that there would be profound consequences for the international system. But the outcome and nature of these consequences is much less obvious. Many believe that, in keeping with the inexorable laws of great power politics, China is bound to disrupt the status quo in a contest for power. Others argue that China can and indeed will find satisfaction in the prevailing conditions. The alignment of China’s interests with the broadly liberal configuration of world politics means that it has no incentive for disruption. As evidence of its threat to the prevailing conditions, supporters cite its declaration of an ADIZ in the East China Sea, its building of forts and runways in the contested Spratly Islands and strategic bonding with Russia, while the status quo argument finds comfort in China’s economic dependence on Western powers and its adherence to the core ideas of the prevailing order. As China has moved from having latent potential to its current position, its actions have confounded the expectations of optimists and pessimists alike. While China is plainly not seeking to overturn the global order or contest American primacy in East Asia, it is equally clear that there is much about the existing international environment about which it is less than enamoured. Indeed, since the turn of the millennium, China has shown a distinct interest in shaping aspects of its international environment where it is not controversial so to do. For example, it transformed the ‘Shanghai Five’ into the ‘Shanghai Cooperation Organisation’ in 2001, in an explicit effort to stabilise the geopolitics of Central Asia and harden up the porous borders of that space. Since consolidating power after the leadership transition in 2012, Xi Jinping has overseen a distinct uptick in efforts to shape aspects of China’s international environment. Perhaps the most high profile of these efforts has been the creation of the Asian Infrastructure and Investment Bank (AIIB). The bank is intended to help meet the massive infrastructure needs of Asia’s states and societies. The ADB estimates this to be around nine trillion USD over the coming decade or so. The bank’s establishment also reflects China’s frustrations with the existing international financial institutions, in which it has a weight plainly not in keeping with its global economic standing. More generally, the bank also provides an opportunity for Beijing to shape its region and increase its influence. The US response to China’s promulgation of the AIIB has been poorly handled. Initially citing concerns about governance and diluting the standards of existing IFIs, the US led a concerted and surprisingly public campaign to encourage its friends and allies not to take part in the initiative. When many of them did – the UK, Germany, Italy, Spain, Australia and New Zealand as well as all ASEAN members – Washington rather limply stated that it welcomed the contribution to development needs. As a result of these non-too-subterranean political concerns – China seeking to increase its influence while Washington would prefer it didn’t – the bank has come to represent China’s great power ambitions and Washington’s declining influence. Does the kind of influence and activism represented in the creation of the bank and other initiatives, such as the ‘one belt, one road’ blueprint, represent China’s arrival as a great power? If by great power we mean one of the select group of states that decisively shape the rules of the international game and manage aspects of the prevailing order, then no. China is a great deal more capable and confident than it has been for hundreds of years; the bank represents an important step down the path to become a rule maker, but both in its relatively limited lending facility (initial capitalisation is aimed to be 50-100 billion) and in the ways its influence will be curtailed by the practical realities of a multilateral financial institution, it is hardly a new Congress of Vienna or UN Security Council. Perhaps more importantly, even though Xi is the most ambitious and powerful leader of the PRC since Mao, Beijing does not want to play the kind of managerial role in the international system that we associate with traditional great powers. Even if it wanted to, Beijing would have a great deal of difficulty doing so, in a world so fundamentally influenced by globalisation’s diffusion of power. In the modern period, China has never been more confident or capable in foreign policy terms. It is not happy with elements of the prevailing order and if it can adjust aspects of that order at a relatively low cost it will aim to do so. But China is pragmatic, and has a fairly low tolerance for risk. Perhaps most importantly, China retains an overwhelming focus on its domestic social, economic and political challenges. As a result, Beijing is likely to continue to resist simple categorisations – it is neither content with the status quo, nor challenging that order, it is neither a great power nor one of the middle rank. Perhaps the best way to begin to work out how to respond to China is to recognise its unique qualities and to judge its actions based on their merits, and not on how we think they ought to fit into preordained categories. Nick Bisley is Executive Director of La Trobe Asia and Professor of International Relations at La Trobe University, Melbourne, Australia. 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