China's foreign policy U-turn

After years of brinkmanship in the Asia-Pacific region, China is finally showing some goodwill toward its neighbours.

China’s former paramount leader Deng Xiaoping told his successors to “hide your strength and bide your time”, which can be translated into layman’s terms as 'don’t rock the boat until you are strong enough'. Deng’s heirs assiduously followed his lead and to a large extent accepted American global leadership -- albeit reluctantly.

Henry Kissinger, the octogenarian American strategist, describes Deng’s leadership style as “sharply focused: not to boast -- lest foreign countries become disquieted -- not to claim to lead but to extend China’s influence by modernising both the society and economy,” according to his new book World Order.

However, in the past few years, it seems that China has to a large degree deserted Deng’s advice. Many in China see the US as a superpower in terminal decline -- especially after the implosion of the subprime mortgage crisis. Beijing has been flexing its muscles around the region, threatening and antagonising its neighbours, including Japan, Vietnam and the Philippines. 

Internationally, China is drawing closer and closer to Putin’s Russia while shunning crucial global initiatives such as climate change. China’s revisionist stance has set off alarm bells around the region including Canberra and Washington. Many commentators and analysts are predicting a grim future -- especially at a time when the world remembers the horrors of the Great War.

But in the past few days, Beijing has stunned the world with a series of unprecedented policy initiatives including a historic agreement with the US to curb carbon emissions.  The 180-degree U-turn is astounding. People can probably still recall former prime minister Kevin Rudd’s furious invective against the Chinese when they torpedoed the Copenhagen climate change summit in 2009.

China, the world’s largest emitter of carbon dioxide, has committed to peak its emissions by no later than 2030. Beijing also promised to increase non-fossil fuel component of its energy consumption to 20 per cent during the same time span. The US has also pledged to cut emissions by 26-28 per cent by 2025 relative to 2005 levels.

Many have greeted this historic agreement as a game changer in the global effort to fight climate change. Collectively, China and the US account for 45 per cent of global emissions, so their participation is imperative to keep earth from overheating. Matt Schiavenza of The Atlantic regards the US-China agreement on climate change as a historic milestone that marks Beijing’s birth as a “great power”.

Apart from climate change, Beijing and Washington also signed a string of cooperative agreements ranging from closer military ties to easier visa arrangements to encourage more people to people exchanges. China and the US even reached an agreement on eliminating tariffs for high-tech products after years of painful negotiations.  

Caixin, China’s leading business publication, also enthusiastically applauds the thawing of the relationship between Beijing and Washington, the most important bilateral relationship in the world that will shape the 21st century.

Hu Shuli, Caixin’s influential and feisty editor-in-chief has launched an attack on people, who want a quasi-alliance with Russia, saying the Sino-American relations is the most consequential and needs to be nurtured and protected.

“The prediction about the US-China relationship sliding into an abyss has not been materialised, it never would be. Cooperation brings mutual benefits and confrontation, mutual destruction. Successive generations of American and Chinese leaders have made smart choices. We sincerely hope the historic breakthroughs achieved at the APEC summit would continue into the future,” reads Caixin’s editorial.

China and Japan even managed to de-escalate the tension around Diaoyu/Senkaku islands, which are arguably the most dangerous flashpoint in the region. Chinese and Japanese fighter jets and warships have been circling around these troubled waters for months now.

Tokyo and Beijing for the first time acknowledged the tense situation around these disputed islands. This may seem ridiculous to outsiders, but the two countries are not only engaged in geopolitical rivalry but also a bitter history war over Japanese imperial expansion during the Second World War.

The four point agreement between Beijing and Tokyo as well as Xi Jinping’s reluctant meeting and awkward handshake with Japanese Prime Minister Shinzo Abe are much-needed positive signs for the deeply troubled relationship between the world’s second and third largest economies.

After years of playing brinkmanship in the region, China has finally showed some statesmanship on international issues such as climate change and goodwill towards its neighbours. These new positive moves are much needed signs to provide a small dose of comfort to people who are growing disillusioned about China’s claim of a peaceful rise.      

InvestSMART FORUM: Come and meet the team

We're loading up the van and going on tour from April to June, with events on the NSW central & north coast, the QLD mid-north coast and in Perth, Adelaide, Melbourne, Sydney and Canberra. Come and meet the team and take home simple strategies that you can use to build an investment portfolio to weather any storm. Book your spot here.

Want access to our latest research and new buy ideas?

Start a free 15 day trial and gain access to our research, recommendations and market-beating model portfolios.

Sign up for free

Related Articles