China and the Rules-Based International System Contents

2China’s new ambition

China in the world

China’s global role under Xi Jinping

5.Through written evidence to this inquiry, in oral evidence sessions with experts, and on our visit to Beijing and Hong Kong in September 2018, one thing has been made overwhelmingly clear to us: China under President Xi Jinping has become more ambitious, more confident, and more assertive in its approach to foreign policy. As Professor Steve Tsang, Director of the SOAS China Institute, told us, Xi Jinping has decided that “China’s moment has come”. Xi’s China is a country, said Tsang, that “requests and requires the rest of the world to pay China due respect”.6

6.Since taking office, Xi has emphasised two centenary goals for China: the achievement of a “moderately prosperous” society by doubling 2010 per capita income to $10,000 by 2021 (the anniversary of the founding of the Communist Party), and the building of a “modern socialist country that is prosperous, strong, democratic, culturally advanced and harmonious” by 2049, the centennial of the founding of the People’s Republic of China.7 These have now been supplemented by a third interim goal to achieve a “basically” modernised socialist society by 2035.8

7.Xi has also articulated a Chinese global vision, captured in the slogan of a “community of shared future for mankind”, although its precise meaning remains unclear.9 Xi’s signature foreign policy, the Belt and Road Initiative (BRI), stretches across continents and sits at the nexus of China’s geopolitical and economic ambitions.10 These policies were reinforced at the 19th Communist Party Congress in October 2017 (the five-yearly meeting to review and set Party policy), where Xi pledged greater assistance to developing countries, and promised that China would “take an active part in reforming and developing the global governance system”, as well as declaring that China’s military would be modernised by 2035 and would comprise “world-class” forces by the middle of the century.11 The BRI has now been enshrined in the Party Constitution.12

8.Xi’s more assertive outlook is an outgrowth of China’s increased economic and military power. At the beginning of Deng Xiaoping’s “reform and opening up” of China in 1978, China’s GDP (measured in current US dollars) was approximately $150 billion; in 2017, it exceeded $12 trillion. The UK’s GDP, for reference, grew from $336 billion to $2.6 trillion over the same period.13 China is now the world’s second-largest economy by GDP, and the largest measured by purchasing-power parity.14 A stimulus of over RMB 4 trillion ($586 billion) in 2008–9 enabled China to weather the global financial crisis with less disruption than Western economies, although in the longer term it has left China with a serious debt problem. As China’s economy has grown, so has its spending on defence: from $19.3 billion in 1989, according to one independent analysis, China’s annual defence spending rose to $228 billion in 2018, second only to the United States.15 China has also made significant funds available for international institutions: it is the second largest contributor to the general UN budget, and the second largest contributor to the peacekeeping budget.16

9.As Dr Kobayashi told us, China has gone from being a “silent watcher … moving on to participating, and finally to revising and reforming” the rules-based international system.17 However, the rapid growth in China’s ambitions under Xi marks a decisive shift from the approach captured in Deng Xiaoping’s famous instruction that China should hide its capabilities and bide its time.18 This change in China’s foreign-policy trajectory, Dr Yu Jie of LSE IDEAS19 reminded us, is framed in historic terms: Xi believes in restoring China to its “rightful” place as a preeminent global power.20 China’s standing was lost in what is known as the “century of humiliation”, stretching from defeat at the hands of the British in the First Opium War up to the proclamation of the People’s Republic of China by Mao Zedong in 1949. Against this backdrop, there is a strong nationalist core to Xi’s “Chinese Dream”, the slogan used to describe his project of “rejuvenation of the Chinese nation”, which includes the righting of historic wrongs.21

China’s attitude towards the rules-based international system

10.The central question for this inquiry has been what China’s new global ambition means for the rules-based international system. Several witnesses said China recognises that international rules and institutions have provided a stable platform for its economic development, and that China has a strong incentive not to seriously disrupt or damage the existing system. Nigel Inkster, IISS Senior Adviser and former Assistant Chief of the UK Secret Intelligence Service, otherwise known as MI6, told us that this distinguishes China from Russia:

[W]hile Russia has adopted this disruptive persona in international affairs and sees its interests as being served by keeping other states off-balance, where China is concerned, order is the main priority. China does not want a disrupted international order; it wants an international order that is more aligned with its interests and priorities.22

11.This does not mean China is satisfied with the current international system. As Dr Yu put it, “Within Chinese Communist Party elites, there is a clear dissatisfaction with the distribution of power within the major institutions of global governance, and some of the norms and principles that underpin them”.23 The University of Oxford’s George Magnus told us that for China, “these multilateral institutions reflect a certain order—a certain political agenda—which they do not really find all that agreeable or acceptable any more”.24

12.We heard this message very clearly from Chinese officials in Beijing, who emphasised both the benefits brought to China under the current international system and the need for reform. Chinese officials and state-affiliated researchers, with remarkable consistency, described what they saw as a rapidly changing global order, characterised by increasing multipolarity, globalisation, and technological change. We were told that the international order should be updated to reflect these shifts, while preserving those features which remain fit for purpose—most of all, the principles enshrined in the UN Charter. In particular, our Chinese interlocutors emphasised that global institutions needed to do more to accommodate the interests of developing countries, among which China counts itself. Chinese officials and researchers were keen to stress that China seeks peaceful relations with other countries as it pushes these reforms, and in this context referred frequently to Xi Jinping’s concept of a “community of shared future for mankind”.

Domestic developments

The Communist Party of China: strengthened control

13.We asked our witnesses what changes they had observed to China’s political system under Xi Jinping. The near-unanimous verdict was that Xi’s time in office has seen a strengthening of the Communist Party’s determination to remain in power, consolidation of power within the party in the hands of Xi himself, and a shrinking of space for political dissent. This runs counter to liberalising trends in other areas of Chinese society since the beginning of Deng’s reforms. As former Australian Prime Minister Kevin Rudd told us:

Where things have changed under Xi Jinping most recently is the absolute centrality he attaches to the future of the Communist party. A doubling down on the centrality of communist ideology and orthodoxy is now being reflected in what is acceptable or unacceptable in university curricula, in what is acceptable or unacceptable in what we might call the political arms of the media, and in a greater contraction of the space for what I describe as political conversation.25

14.Professor Eva Pils of King’s College London went further, assessing that Xi and the Communist Party have been mounting “an intensified attempt to control all aspects of society and the economy, and to repress those parts of civil society in particular that have posed challenges and been critical of the Government”.26 George Magnus told us that the Party “is devouring the state in China, [and] collective and state institutions are being downgraded or made less important”.27 The 19th Party Congress codified many of these changes, including by enshrining “Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era” in the Communist Party Constitution.28 These changes have drastically tempered international expectations that China’s political system might liberalise along with its economy, and give the sense that China’s leadership is determined to avoid the paths trodden by other countries before it. As the Minister put it, “going down the route of perestroika or glasnost, in terms of reform and opening up, is something that is absolutely not on the cards as far as modern-day China is concerned”.29

Economic growth and challenges

15.Our meetings in Beijing reinforced to us the emphasis Chinese officials and state-affiliated researchers place on China’s status as a developing country. We were reminded several times of China’s achievement in bringing some 800 million people out of poverty.30 But we were also told of the challenges involved in meeting both the 2021 centenary goal and the new interim goal that “socialist modernization is basically realized” by 2035. Our witnesses back in Westminster emphasised to us the problems that acute wealth disparities, including regional inequalities, pose for the Chinese party state. Professor Tsang said that “the scale of disparity in China has now reached a point that is probably higher than at any time since 1949”, and that as a consequence the Chinese government is “incredibly worried about the risk of social instability”.31 Our witnesses noted that government anxiety about inequality extends even to a “crack down” on researchers attempting to gather data to measure China’s Gini coefficient, a statistical measure of inequality.32 These inequalities include sharp regional wealth disparities, which the government is attempting to solve by means including subsidies of poorer regions by richer ones.33 Aside from inequality, China’s debt has risen considerably in the years following the financial crisis—standing at 255.7% of GDP in 2017, according to the Bank for International Settlements—and industrial overcapacity has not proven easy to cut.34 China’s reliance on heavy industry is a contributing factor to serious environmental problems, which have sparked numerous and high-profile popular protests.35

The relationship between China’s domestic and external affairs

16.In a number of areas, we were told that China’s domestic affairs have shifted its attitudes towards international governance. One example is areas where China has become more engaged in international mechanisms in part as a potential solution to problems at home, such as environmental sustainability and financial regulation.36 Dealing with environmental concerns, the Minister told us, “is fundamental to the legitimacy of the Communist Party in China”.37 Perhaps more significantly, the strengthening of Party control in China is having a significant impact on foreign policy. “The big thing that Xi Jinping has done since he came to power”, Professor Tsang told us, “is to put emphasis on revitalising the Leninist nature [of the state] and institutions in China to make them much more effective in controlling the country and controlling foreign policy.”38 This matters because the interests of the Party are not the same as those of the Chinese people, or of the country as a whole. As Kevin Rudd told us:

[W]hat are the core priorities of Xi Jinping’s Administration at home and abroad? They intersect in this institution called the Party. The interest of the Chinese political leadership is for the Party to remain in power. That is the No. 1 priority, the No. 2 priority and the No. 3 priority.39

17.Witnesses argued that a core foreign-policy goal for China under Xi Jinping is to shape international order to protect China’s domestic political system. This means resisting the spread of liberal norms and the encouragement of democratic governance, and inveighing against any proposals to enforce international norms that could be seen to undermine the sovereignty of individual states, on the basis that this could set a precedent that could be used to challenge CCP rule in China. Several witnesses told us that this amounted to an attempt by the Chinese government to “make the world safe for authoritarianism”.40 This is consistent with China’s behaviour in a number of policy areas, and in evidence to us the FCO seems to endorse such a reading (although not necessarily the specific phrase), commenting that “China engages with international institutions on issues like internet governance and human rights in order to promote internationally its own authoritarian approach in these areas, and to reduce external criticism”.41 China is, for example, the only permanent member of the UN Security Council not to have ratified the UN Covenant on Civil and Political Rights.

18.We asked witnesses whether, given this context, the UK should be concerned that China was trying to encourage other countries to adopt its political system. We heard that China is trying to increase the international appeal of its political and economic model, but not necessarily because it wants other countries to follow suit. Rather, it seeks to bolster the international image of China’s political system for a domestic audience, and to export themes of governance, such as in the area of human rights or non-intervention, that suit China’s interests.42 We consider more evidence on this theme in Chapter 4.

19.China is seeking a role in the world commensurate with its growing economic power, and the UK should welcome China’s desire to participate in global governance. There is no evidence to date that China wishes to jeopardise the benefits it has reaped from a stable, rules-based international system. The UK should, however, recalibrate its policy towards China to fully take into account the consolidation of power in the hands of the Chinese Communist Party under President Xi Jinping. The nature of the Chinese state goes to the heart of China’s attitude towards the international system, and is fundamentally important for the UK in considering its China strategy. On this basis, Chinese domestic politics cannot be treated as if they were separate from foreign policy. The Government must recognise this reality and adjust to it.

20.China is a force for order—but not liberal order. China wants rules to be enforced—but not rules which encroach on what it sees as its core interests. Protecting core interests is what all states try to do in foreign policy, but what makes China different is that those interests are inextricably linked with the interests and perceived legitimacy of the Communist Party. This makes China a viable partner for the UK on some issues, but an active challenger on others. On the positive side of the balance sheet, the Party’s requirement to deliver economic growth in order to maintain legitimacy makes China an advocate, like the UK, for a stable trading order. The threat that environmental degradation poses to the Party’s legitimacy has led China to join in, along with the UK, with international efforts on climate and sustainability. On the negative side, the Party’s need to maintain domestic control leads China to oppose global initiatives, supported by the UK, which promote free societies and protect human rights. China’s fear of domestic disorder and external influence aimed at regime change makes it exceptionally cautious about any attempts to enforce international norms over the objections of individual sovereign states, which puts it in opposition to some UK efforts at the UN Security Council.

6 Q96

7 See Q51 and China a step closer to centenary goals, Xinhua, 9 October 2017

9 Dr Yu Jie (CIR0014)

10 Dr Yuka Kobayashi, Lecturer in China and International Politics at SOAS, told us that the BRI amounts to an attempt at “Global Governance with Chinese characteristics”. Dr Yuka Kobayashi (CIR0022)

11 Xi Jinping, Report to the 19th National Congress of the Communist Party of China, 18 October 2017, pages 54 and 48

13 GDP (Current US$), World Bank.

14 See GDP (Current US$), World Bank; and GDP, PPP (current international $), World Bank

15 Figures in constant 2016 US dollars. Military expenditure by country, in constant (2016) US$ m, Stockholm International Peace Research Institute, 2018

17 Q9

18 See, for example, Q166

19 Dr Yu represented LSE IDEAS at the time of providing written evidence to the inquiry, but is now a Research Fellow at Chatham House

20 Dr Yu Jie (CIR0014)

21 As the Minister put it, Xi “has overseen great growth in patriotism and nationalism in China”. See Q167. See also Center for China and Globalization (CIR0009); Dr Lee Jones (CIR0003)

23 Dr Yu Jie (CIR0014)

24 Q1

27 George Magnus (CIR0023)

28 Among the items enshrined in the Party Constitution at the 19th Party Congress were: Xi’s policies and slogans, including “Xi Jinping Thought”, the two centenary goals and the “Chinese Dream”; and an obligation on party members to study Xi Jinping Thought; the Party’s “absolute leadership” over the military, and Xi Jinping’s thinking on strengthening the military; and the principle that “the leadership of the Communist Party of China is the most essential attribute of socialism with Chinese characteristics, and the greatest strength of this system; the Party exercises overall leadership over all areas of endeavor in every part of the country.” Resolution of the 19th National Congress of the Communist Party of China on the Revised Constitution of the Communist Party of China, 24 October 2017

30 A figure endorsed by the World Bank. See The World Bank in China, World Bank

34 See BIS Statistical Bulletin, Bank for International Settlements, September 2018

35 See, for example, Yan Shuang, Seeking justice from pollution, Global Times, 31 October 2012

36 See Q2

40 See, for example, Q96, Q15, and Qq22–23

41 Foreign and Commonwealth Office (CIR0018)

Published: 4 April 2019