Report of Strategic Studies in China (2019): Once-in-a-Century Transformation and China’s Period of Strategic Opportunity [1st ed.] 9789811577314, 9789811577321

Table of contents :
Front Matter ....Pages i-xxii
Front Matter ....Pages 1-1
Once-in-a-Century Transformation and the World Order (Bin Li)....Pages 3-12
China’s Position and Direction in the Once-in-a-Century Transformation (Zhenye Liu)....Pages 13-27
Transformation of International Order, Globalization and External Constraints on China’s Opening-Up (Hongzhong Liu)....Pages 29-45
Front Matter ....Pages 47-47
Creating and Grasping Strategic Opportunities for China (Angang Hu)....Pages 49-64
The Three-Circle Theory and China’s Periods of Strategic Opportunity (Yilong Yan)....Pages 65-88
BRI in the Vision of Chinese Civilization and Construction of Global Ethical Consensus (Lei Sun)....Pages 89-106
Front Matter ....Pages 107-107
Strategic Thinking on the Rulemaking Under the BRI (Honghua Men)....Pages 109-134
Chain Risks and Solutions for Infrastructure Investment of BRI (G. E. Tianren, Ming Zhang)....Pages 135-150
Reshaping Views on China: A Study on Chinese Soft Power in the Context of BRI (Shu Li, Liang Wu)....Pages 151-167

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Honghua Men Xi Xiao Editors

Report of Strategic Studies in China (2019) Once-in-a-Century Transformation and China’s Period of Strategic Opportunity

Report of Strategic Studies in China (2019)

Honghua Men Xi Xiao •

Editors

Report of Strategic Studies in China (2019) Once-in-a-Century Transformation and China’s Period of Strategic Opportunity

123

Editors Honghua Men School of Political Science and International Relations Tongji University Shanghai, China

Xi Xiao School of International and Public Affairs Jilin University Changchun, Jilin, China

The editors thank Korea Foundation for its financial support for the research. ISBN 978-981-15-7731-4 ISBN 978-981-15-7732-1 https://doi.org/10.1007/978-981-15-7732-1

(eBook)

© The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2021 This work is subject to copyright. All rights are solely and exclusively licensed by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, expressed or implied, with respect to the material contained herein or for any errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictional claims in published maps and institutional affiliations. This Springer imprint is published by the registered company Springer Nature Singapore Pte Ltd. The registered company address is: 152 Beach Road, #21-01/04 Gateway East, Singapore 189721, Singapore

Editorial Board of Strategic Studies in China

Editor Honghua Men, Tongji University

Editorial Board Jae-Ho Chung, Seoul National University Angang Hu, Tsinghua University Feng Liu, Nankai University Yinhong Shi, Renmin University of China Changhe Su, Fudan University Akio Takahara, the University of Tokyo Yongsheng Tang, PLA Defense University Fan Wang, China Foreign Affairs University Xi Xiao, Jilin University Zicheng Ye, Peking University Xianchen Zhang, Chinese Ministry of Commerce Tianyong Zhou, Central Party School

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Preface: Shaping China’s Period of Strategic Opportunity Amid Once-in-a-Century Transformation

Abstract This article reviews the profound changes in the past century and their impact on the world. The authors believe that the greatest challenge to China in this context is how to secure and extend China’s period of strategic opportunity, and actively shaping this period should be regarded as the core trend of China’s response. The past century is fundamentally driven by the acceleration of the technological and industrial revolution as well as the vicissitude of major powers. It is also a century full of uncertainty and radical changes in ideas and values. What dazzles all is that China is moving to the center of the world stage from the edge and is becoming one of the most influential factors. Against this background, apart from following the traditional ideas such as seizing, making good use of, and maintaining strategic opportunities, China should put its strategic priority on extending and actively shaping the period of strategic opportunity. This article suggests that the cornerstone is to focus on China’s all-round development and opening-up, the key is to develop a global vision and provide new strategic opportunities for the world, and the support comes from a stronger presence in the region and an optimized geopolitical and economic environment. Keywords Once-in-a-century transformation • Period of strategic opportunity • China • Strategic studies Co-authors Honghua Men, Distinguished Professor, Dean of the School of Political Science and International Relations, President of the Institute for China and World Studies, Tongji University; Xi Xiao, Distinguished University Professor, School of International and Public Affairs, Jilin University.

Since the end of the Cold War, especially the beginning of the twenty-first century, there has been an increasing interdependence and interplay between global transformation and China’s rise. The world is now in an era of major development, transformation and adjustment, and is undergoing a once-in-a-century transformation. Meanwhile, China is embracing a golden era since modern times, which is also vii

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a critical moment for the great rejuvenation of the Chinese nation. The third decade of the twenty-first century will be important for the three centennial goals of China. As the first goal of building a moderately prosperous society in all aspects by 2020 is about to be achieved, it is necessary to think deeply about another major strategic issue, i.e., how to positively respond to the major changes so that a solid foundation can be laid for the second goal. As General Secretary Xi Jinping points out, we must “focus on two overall situations: domestically we are working toward the great rejuvenation of the Chinese nation, and internationally the world is undergoing the greatest changes never seen in a century. This is where we should start from when we plan our work.” Throughout the history, the world has always been in a changing state. The once-in-a-century transformation has some unique implications, with profound and far-reaching impact on China in particular. Changes will bring rare opportunities and severe challenges to China’s peaceful development. In view of this, whether China is still in an important period of strategic opportunity has drawn wide attention and even triggered heated debate in the academic community of strategic studies. Moreover, how China can seize, make good use of, maintain, extend and shape this period is regarded as a core issue about China’s response to the changes.

China and the Once-in-a-Century Transformation Change is a normal state of the world, and “once-in-a-century transformation” proposed by General Secretary Xi Jinping has its unique meanings. Since the end of the Cold War, Chinese policymakers have been attaching great importance to the evolving world landscape and the possible impact of global changes on China. They believe that China need to reshape its international strategy according to the key external conditions. The world has witnessed even more profound and complex changes since the 2010s. The reports of the 19th National Congress of the Communist Party of China have expounded that “the world is in an era of major development, transformation and adjustment.” Overlooking the evolution of human history, Xi Jinping insightfully points out that “the world is undergoing the greatest changes never seen in a century.” At the Diplomatic Envoys’ Working Meeting on December 28, 2017, he first proposed that “we are facing the greatest changes never seen in a century.” At the Central Conference on Foreign Affairs in June 2018, he systematically expounded his deep understanding of the changes, pointing out that “China is in the best period of development since modern times, and the world is undergoing the greatest changes never seen in a century. The two are intertwined and interact with each other…. There are numerous new opportunities and challenges in this changing world. The international order is undergoing profound adjustment. The international structures of power are changing drastically toward peace and development,” “we need to analyze the evolution of the international situation during the world’s

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transformation period, and understand the basic characteristics of China’s external environment at such a historic turn, so as to make overall plans and carry out work in the field of external relations.” At the BRICS Business Forum in July 2018, he pointed out that “the next decade will be a crucial one in which new global growth drivers will take the place of old ones. The next decade will see faster changes in the international landscape and the international alignment of forces. The next decade will see a profound reshaping of the global governance system.” In a keynote speech at the Asia-Pacific Economic Cooperation (APEC) CEO Summit in November 2018, he emphasized that “the changes we are encountering in the world are unseen in a century…. Mankind has once again reached a crossroads.” At the Working Conference on Military Affairs of the Central Military Commission in January 2019, he stressed that “today’s world is facing a once-in-a-century transformation, and China’s development is still in an important period of strategic opportunity, along with growing risks and challenges, predictable or not.” At the fourth plenary session of the 19th Central Committee of CPC in 2019, he clearly stated that “today’s world is undergoing changes unseen in a century, and our country is in a critical period to realize the great rejuvenation of the Chinese nation. We are required to follow the trend and address the principal contradictions and changes in our society. We must also work hard on our great programs, undertakings, cause and dream to constantly meet people’s new expectations for a better life and address various risks and challenges on the way forward.” In a nutshell, Xi Jinping pays great attention to the rare opportunities and profound challenges brought about by the changes, based on which he gives guidance on China’s overall strategic blueprint and the work in the field of external relations. The major changes are closely related to the international vicissitudes after the Cold War, the rise and fall of major powers and the collective rise of major developing countries, the transformation of the Western countries as a consequence of the global financial crisis in 2008, as well as the acceleration of a new world order driven by the new round of technological revolution. This is an evolving process in which the emerging powers are competing with the established ones. The changes are so unprecedented in breadth and depth that they are profoundly reflected in: (i) balance of power. Great changes have taken place among major powers, between the bloc of developed countries and that of developing countries, and between state actors and non-state ones; (ii) shift of development paradigm. The paradigm is transforming from industrialization to sustainability, largely driven by climate change; and (iii) a new round of technological revolution, mainly the development of emerging technologies such as artificial intelligence (AI) and Internet of things (IoT) that may be used to replace human labor. The authors believe that the most fundamental forces driving changes are the technological and industrial revolution and the acceleration of the rise and fall of major powers. The new technological revolution is reshaping the world at a faster pace. The rapid advancement of technology is not only a result of the changes but also a driving force for the changes. Emerging technologies like AI, big data, the Internet, space technology, biotechnology and quantum technology are fully developing to promote the generation of new tools, industries and forms of business. The new

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round of technological revolution and industrial transformation is triggering revolutionary growth in economic, social and military forces, which in turn will change the way national strength is enhanced, the content of international competition and traditional forms of war, and driving the extension of globalization in breadth and depth. In this sense, it is one fundamental force driving major changes in the world. The other is the rise and fall of major powers. Entering the twenty-first century, the incremental portion of the world’s economic growth has been mainly contributed by developing countries. This is a major change in the modern history of the world development, leading to a cease of unipolarity for the international political and economic structure. Broadly, the world order is seeing a change from Western-centric to non-Western-centric, or juxtaposition. At a time when globalization is adjusted, the international power structure is reshaped, and the technological revolution is in progress, this change is just in its infancy and there is still a long way to go. It is noteworthy that emerging market countries as a whole are experiencing a painful process from rise to decline or transition, in spite of good economic performance of a handful of countries such as China and India. The change is deeply reflected in the sheer uncertainty of the world. In the face of changes, major powers are stepping up their internal and external adjustments to seize the strategic commanding heights and secure their own advantage in the competition. This has accelerated a profound evolution of the international landscape, and uncertainty and instability are becoming prominent. A rise in unilateralism and protectionism has challenged the international multilateralism and global governance system. The world at a crossroads is now facing a significant choice between unilateralism and multilateralism, confrontation and dialogue, or isolation and openness. What is more noteworthy is the radical change in ideas and values. In the face of changes, any country, however strong it is, can neither remain aloof from the world nor be a savior of the world. Instead, all countries should work together to address the changes. In view of the fact that each country needs to handle its own problems in collaboration with other countries, international cooperation appears to be more precious than ever before. However, due to the significant change in balance of power, the “anti-globalization” populist climate is spreading in the USA and other Western countries. Protectionism, ant-globalization and even neo-isolationism are once again on the rise in the USA. In this context, strategic competition among major powers has become increasingly fierce. The authors believe that the world is still in an early stage of change, and the international system is approaching a critical point of transformation. At a time when globalization is adjusted, the international structures of power are moving toward balance, and the technological revolution is just unfolding, the world is now standing at a new crossroads and there will be necessarily all kinds of differences, confusion and concerns from country to country. One of the most notable performances is that China is moving to the center of the world stage from the edge and becoming one of the most influential factors. China’s rapid development and far-reaching influence is an extraordinary phenomenon never seen in a century. At critical moments like this, it is transforming from a big country to a major power. Its strategic vision has attracted worldwide attention. As

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countries around the world are generally confused about the future, China is following the trends of the times to actively build a new type of international relations and a global community of shared future, while push the global governance system to develop in a more just and reasonable direction. It is becoming a cornerstone in this changing world. As Xi Jinping pointed out in a speech at the special seminar of provincial and ministerial officials to study and implement the spirit of the fifth plenary session of the 18th National Congress of CPC, “twenty or even 15 years ago, economic globalization was mainly driven by the USA and other Western countries. Today, however, China is considered the biggest force driving global trade and investment liberalization and facilitation, and we are proactively fighting against Western countries’ protectionism of all kinds.” We need to let the world understand China from a global vision. As a rising power, China’s development and transformation will not only change itself, but also have a significant impact on the world. China’s all-round rise has driven the rise of other developing countries and further cooperation in the developing world. In this sense, it plays a leading role in promoting strategic cooperation and positive competition. Besides, China is becoming a world power while rising as a socialist power in the East. The enormous changes unseen in a century are regarded as a confrontation between capitalism and socialism. The changes will inevitably pose severe challenges to China’s strategic opportunity period, and reversely China’s future direction will also have a significant impact on the changing situation.

China’s Period of Strategic Opportunity Amid Changes The greatest challenge to China brought about by the changes is whether its period of strategic opportunity will continue. Over the years, the period of strategic opportunity has been a buzzword used by the Chinese leadership to advance reform and development. How to embrace the period is regarded as a priority for China’s strategic plan. Opportunity is inherently uncertain and non-permanent, with necessity and contingency combined. In an era of major changes, restructuring and reshuffle, opportunities and challenges naturally coexist, and the former may be greater than the latter. Strategic opportunity is not merely a strategic position, but a combination of strategic competition, challenge, breakthrough, balance, crisis and turnaround. The period of strategic opportunity refers to a specific period in history as a result of various factors at home and abroad that can provide a country with good opportunities for development while having a global, long-term and decisive influence on its destiny. From a global perspective, the period of strategic opportunity is a result of changes in various paradoxical movements around the world. In such a period, opportunities are generated under the influence of various factors at home and abroad. From a national perspective, this period is an intermediate stage in which a country is ready for rapid development. It is critical to a transition from quantitative change to qualitative change. It can be treated as an ecosystem where

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opportunities and challenges coexist and intertwine. On the one side of coin, there are development opportunities and good environments, and on the other side, there are often hidden threats and actual challenges. In view of this, strategic opportunities are closely associated with strategic challenges. The formation and extension of this period depend on objective factors at home and abroad, but more importantly, we can take the initiative to shape it. Grasping strategic opportunities for development has been a valuable experience since the People’s Republic of China was founded. Based on an insight into the international situation, Mao Zedong proposed the “one-line” strategy and the “Two Middle Grounds” and “Three Worlds” theory successively. He seized the strategic opportunities and led China to achieve independence and diplomatic breakthroughs, and break the blockade and encirclement of great powers, with the aim of growing into a major power in the world. From the non-aligned independent and peaceful foreign policy to the primary goal of peaceful development, Deng Xiaoping captured the rare opportunities in global changes and guided China toward reform, opening-up and economic rise. From the end of the twentieth century to the beginning of the twenty-first century, major changes took place in both domestic and international situations. Jiang Zemin seized the historic opportunities in that context and made strategic judgments with guiding significance. In a speech at the graduation ceremony of the provincial and ministerial officials’ class for further studies of the Party School of the CPC Central Committee on May 31, 2002, Jiang noted that “the first two decades of the twenty-first century are an important period of strategic opportunity for our country. We must seize such opportunities to create a promising future.” The report of the 16th National Congress of CPC further defines the time frame of this period. As a result, the 20-year period of building a moderately prosperous society in all aspects has been closely linked to the 20-year period of strategic opportunity whose breadth and depth are greatly extended. Hu Jintao also stressed the importance of seizing strategic opportunities to achieve leapfrog development, saying that “for China or other countries in the world, the key to a successful society is about seizing opportunities for accelerated development. Opportunities are extremely precious and fleeting. In a critical period, it is possible for underdeveloped countries to develop by leap and bounds if they seize opportunities; the incumbent major powers are also likely to fall behind the times if they miss opportunities.” From China’s development experience, especially in 2000–2010, almost every strategic breakthrough was closely related to the translation of crises into opportunities. From 2010 to 2020, in response to any potential global financial crisis, competition is prevailing over cooperation in the international community. And the world pattern is undergoing profound changes. China seems to have suddenly fallen into some strategic dilemma, under severe strategic pressures in security, economic, political and other fields. US President Donald Trump has always regarded China as a strategic opponent since he took office. Then, does China’s period of strategic opportunity exist? Opinions vary across different communities, but many people hold a negative view. General Secretary Xi Jinping is convinced of and optimistic about China’s period of strategic opportunity after an in-depth study was made. He pointed out in

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the report of the 19th National Congress of CPC that the current situations at home and abroad are undergoing profound and complex changes, and China is still in a critical period of strategic opportunity for development, faced with both bright prospects and severe challenges. Strategic opportunities and major risks coexist, while bright prospects are in parallel with severe challenges, which is a striking feature of socialism with Chinese characteristics in the new era. At the opening ceremony of a seminar to study and implement the spirit of the 19th National Congress of CPC on January 5, 2018, Xi Jinping emphasized that China is in a period of historic opportunities for a bright future. At the Central Economic Working Conference in December 2018, he stressed that China is still and will be in a long period of important strategic opportunities. In a world undergoing unprecedented changes in a century, crises more than often go hand in hand with opportunities, which may bring great opportunities for the great rejuvenation of the Chinese nation. By saying China will be in a long period of important strategic opportunities, the Chinese policymakers demonstrate their confidence and determination. Xi Jinping also has an insight into the domestic and international situations, emphasizing that “today’s world is undergoing profound changes unseen in a century, and it is a crucial time for us to realize the great rejuvenation of our nation. The closer we are to the goal, the more complex the situation is, and the more arduous the task becomes.” Xi Jinping made an overall judgment and work deployment in his speech at the symposium to promote the rise of central China in May 2019. He said that “China is still in an important period of strategic opportunity for development, but the international situation grows more complicated day by day. We should be aware of various long-lasting and complicated disadvantages at home and abroad, so that we can get properly prepared for all kinds of difficulties. Above all, we must do our own things well. More specifically, we should make overall research and deployment to push forward reform and development and maintain a stable environment. We must make plans before taking actions. Those who have a solid foundation can make a difference.” China’s period of strategic opportunity is built upon its own sustainable development and strategic innovation. As Xi Jinping emphasized, China’s greatest opportunity comes from its sustained development and growth. From the second decade of the twenty-first century, China begins to embrace its second period of strategic opportunity and lead global development as a great power on the broad international stage. While the international cooperation under the Belt and Road Initiative (BRI) is moving ahead, China and the world have entered a critical period of positive interaction, in which China is creating new strategic opportunities for the world. Meanwhile, the world economy is undergoing profound adjustment and global governance is seeing major changes. There are new opportunities in an evolving international landscape. The booming technological revolution, the global expansion of multinationals, and the aspirations of the developing world provide important strategic opportunities for China’s further development and all-round opening. At a time when emerging countries are rising, the world is experiencing power transition, and the plight of the West remains unchanged and is even getting worse, China is well positioned to maintain its period of strategic opportunity. Looking forward, China

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also has great advantages for further economic development because there are deep-seated contradictions in the USA, Europe and Japan, such as limited development space, weakened growth momentum, large-scale virtual economy, etc. Facing the anti-globalization trend, China’s stance toward economic globalization and its efforts to create strategic opportunities have been widely recognized by the world, which also helps China to maintain its period of strategic opportunity. In this process, China has grown into a major contributor to the world economy from a dependent, and an important leader in the transformation of the international system from an accommodator. It is playing a key role in shaping its period of strategic opportunity. China consolidates cooperation with large developing countries and coordination with major neighboring countries, as well as expanding partnership along the Belt and Road. As an active shaper of new international relations, China is striving to enhance its international cooperation and strategic coordination with major countries, and continues to expand its international influence. Therefore, Xi Jinping emphasized that the connotation of China’s opportunities is expanding, and China has the confidence and capability to maintain its economic growth at a medium-high rate and to create more opportunities for the world. China’s development plan is exactly made according to such an important period of strategic opportunity. However, when today’s world is seeing a once-in-a-century transformation, China is also faced with all kinds of predictable and unpredictable risks and challenges, leading to profound changes in the connotation of and conditions for its period of strategic opportunity. The world has many risks and challenges to address, such as lackluster growth, sluggish demand, repeated turbulence in financial markets, and continued depression in international trade and investment. Deficits in peace, development and governance are growing, while anti-globalization, unilateralism and protectionism are intensifying. Trump’s hostile strategy has put China in a strategic dilemma. China’s national security is under increasing threat. The international economic climate, which is uneasy to predict, is also adding pressure to China. When economic globalization is transforming, it is apparently more difficult for China to maintain its period of strategic opportunity. China is set to face a more complicated international environment. There is such likelihood that someone may create a barrier or stir up trouble in interrupting China’s development. At home, China is facing many challenges relating to economic, political, social and cultural development, ecological civilization and national security, which are closely related to the changes in the international situation. As a result, China must face unprecedented contradictions, risks and wrestle. “If we are absent-minded for a second, we may fall into the traps carefully set by others.” To sum up, China must grow stronger to actively shape its period of strategic opportunity as this period is no longer as stable and spontaneous as before. In view of this, we must correctly understand the profound changes in the connotation of this period, tackle various risks and challenges in a more effective manner, and proactively create opportunities or turn challenges into opportunities. The traditional way of thinking is to seize, make good use of, and maintain the period of strategic opportunity. But now an inevitable strategic trend for China is how to extend and proactively shape this period, with the latter as a dominant direction.

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Embracing Change and Shaping China’s Period of Strategic Opportunity In the face of enormous changes unseen in a century and the evolving period of strategic opportunity, China should follow the historical trends and respond to the changes positively so that it can keep pace with the times. We must improve our abilities to master and apply the laws of market economy, nature and social development, to make scientific and democratic decisions, and to think globally and strategically. In January 2013, Xi Jinping put forward the strategic concept that “we should promote the positive and mutually beneficial interactions with the world by using global opportunities and offering opportunities to the world.” In the speech at the conference commemorating the 200th anniversary of the birth of Karl Marx in May 2018, he pointed out that “we must look at today’s development trends and major issues with the world history in mind. We must adhere to the path of peaceful development, an independent foreign policy of peace and a mutually beneficial strategy of opening-up. We must expand cooperation with other countries and actively participate in global governance for win-win cooperation and common development in more fields and at higher levels. We must neither depend on nor plunder others. Instead, we must work with other countries to build a community with a shared future for mankind and make the world a better place.” At the Central Conference on Foreign Affairs in June 2018, he stressed the strategic thinking that “we must seek a holistic approach to both the domestic and international situations. Stay confident strategically and maintain a strategic focus. Make innovations in our diplomatic theories and practices. Develop strategic plans with a global vision. Defend the core and major interests of our country. Seek win-win cooperation based on a right approach to justice and interests. Embrace bottom-line thinking and risk awareness.” In April 2019 when meeting with UN Secretary-General António Guterres, Xi Jinping noted that “the world is now undergoing profound changes unseen in a century. We must see things as they really are and grasp the historical laws. Economic globalization is an irreversible trend, and win-win cooperation is the right way ahead.” In summary, in the face of profound changes, Xi Jinping led China to expand strategic vision, deepen strategic operations and make strategic innovations based on a strategic willpower. By actively seizing and shaping the period of strategic opportunity, China is building a strategic framework for peaceful development centered on integration, transformation and creation. China is dedicated to playing a more active and constructive role on the international stage after it enriches its peaceful development and plans how to rise. With strategic thinking on a holistic approach to both the domestic and international situations, Xi Jinping has proposed a raft of new concepts and initiatives, including a global community of shared future, a new model of international relations, and the principle of upholding the greater good and pursuing shared interests. He calls for enhanced strategic layout and further implementation of the BRI. China will play a key role in the fields of global economic governance, international financial order, infrastructure construction and comprehensive

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cooperation in East Asia with the aim of shaping a new period of strategic opportunity. Along with these strategic measures, China has not only served as a major powerhouse and stabilizer for global development, but also grown into a key defender and active promoter of world peace and human progress. In this process, China values to the dialectical unity of keeping a low profile and making a difference. It is necessary to have a clear understanding of the long-term and complicated disadvantages at home and abroad, brace for various difficult situations, focus on strategic operations, avoid strategic miscalculations, and prevent from making strategic mistakes. China should implement its plans in accordance with the new connotation of the period of strategic opportunity. China is seeking steady development amid changes and shaping the new period of strategic opportunity, which echoes one of its finest traditional strategies—“be kind to the world, avoid self-interests, work together based on mutual trust.” To shape China’s period of strategic opportunity amid profound changes in a century, it is crucial to remember the following key points. First, the cornerstone is to focus on development and promote opening-up in an all-round way. In other words, China should adhere to the path of peaceful development, strive to enhance its overall national strength, and consolidate the material and spiritual basis for its all-round rise. Meanwhile, it must grab the opportunity to promote reform and opening-up via a package of measures. China’s all-round development is fundamentally based on economic sustainability, and the key to shaping the period of strategic opportunity is the substantive change in the economic development pattern. In this sense, it is essential to make steady progress, maintain strategic willpower, drive structural reform, transformation and upgrading, implement the innovation-driven development strategy and accelerate the development of a modern economic system. The focus of China’s economic growth has shifted from speed to quality. It is now in a critical stage of transforming development pattern, optimizing economic structure and shifting gears. Modernizing the economic system is both a pressing need and a strategic goal because it can help China achieve leap-forward development in a stable way. We must put quality and efficiency first, focus on the supply-side structural reform, drive economic transformation in terms of quality, efficiency and force, improve total factor productivity, shape an industrial system in which real economy, technological innovation, modern finance and human resources can develop in a coordinated way, and build an economic system characterized by effective market mechanisms, dynamic micro-entities and sound macro-regulation. As Xi Jinping stressed, we must closely follow the new connotation of important strategic opportunities, accelerate the optimization and upgrading of economic structure, enhance scientific and technological innovation capabilities, deepen reform and opening-up, expedite green development, participate in the transformation of the global economic governance system, and turn pressure into a driving force for high-quality economic development. We must insist on innovation-driven development while optimizing the driving force, adhere to coordinated development while bridging the gap, seek green development while maintaining a harmony between human and nature, pursue open development along with interactions

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between China and the rest of the world, and promote inclusive development while safeguarding social fairness and justice, so as to fully stimulate and demonstrate the vigor and vitality of socialism with Chinese characteristics in the new era. Meanwhile, we must proactively follow the trend of globalization, and leverage the advanced technological achievements and useful management experience created by human society. We can carry out an array of experimental programs such as building pilot free trade zones/ports, expanding pilot projects in the service industry, and making experiments for an open economy based on new systems, so as to overhaul systems in commercial registration, regulation on trade, and financial openness and innovation. It is also necessary to enhance system integration, improve an international and convenient business environment of fair competition under the rule of law, and open wider to the world based on systematic institutional reform. Meanwhile, we should build an open economy based on new systems at a faster pace, vigorously promote development along the Belt and Road, take an active part in the reform and building of the global governance system, and usher in a new frontier where China leads global cooperation. Second, the key is to develop a global vision and create new strategic opportunities for the world. The changes in the connotation of China’s period of strategic opportunity and its forming conditions are closely related to the interactions between China and the world. As China is approaching the center of the world stage and becoming an endogenous factor and power for the major changes, China is not only hitchhiking the express train of global development, but also creating opportunities for the world. As China has been dealing with the world in a different way since its rise, it will be restricted and contained by diverse forces. That’s why China must also work together with other countries to maintain its period of strategic opportunity. On account of this, we must take notice of accelerated multi-polarization and further adjustment of relations between major powers, understand the sustainability of economic globalization and the profound changes in the world economic pattern, pay equal attention to the stability of international landscape and the complexity of global security challenges, learn from other civilizations and focus on the interactions among ideologies and cultures, so that we can play a more positive and constructive leading role in global affairs. At a time when world economy is at a critical turning point, China seeks to build a global community of shared future and a new model of international relations, make global governance fairer and more equitable, and shape a stable and balanced framework of relations among major countries. And it also strives to promote institutionalized cooperation of BRICS, thus maintains a strategic balance toward the USA. In the meantime, China has been actively participating in and contributing Chinese wisdom to global governance, in an effort to help the international community effectively address common challenges like deficits in peace, development and governance. Impacted by anti-globalization, China has realized that it is in a vortex of debate about the future direction of globalization transformation. China must seek consensus and compromise with the international community to tackle common threats such as terrorism, proliferation of nuclear weapons and other advanced technologies, failed states and climate change. It also needs to consult

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with developed countries to advance a new pattern of globalization, achieve common evolution and prevent a situation of strategic confrontation. As Xi Jinping pointed out, facing profound changes and severe global challenges and standing at a crossroads, all countries should act instead of sitting by. We can be the master of our own future. Fairness and equity, mutual consultation and understanding, concerted efforts and mutual benefit are solutions to deficits in governance, trust, peace and development, which can in turn allow people all over the world to share the fruits of economic globalization. In this process, China should not only seize opportunities for its own global expansion, but also strive to create strategic opportunities for the world and let the world benefit from China’s opportunities and achievements. As a contributor, China must prevent other countries from decoupling and push international cooperation to a new level based on the principles of extensive consultation, joint contribution and shared benefits. Third, the support comes from a stronger presence in the region and an optimized geopolitical and economic environment. Throughout history, all major powers dominated regional affairs before rising into a real power. Generally, those without a global strategy cannot pursue regional leadership. But now with economic globalization and regional integration, those without regional leadership cannot pursue a global strategy. China’s period of strategic opportunity is facing global challenges, mainly from East Asia and its surrounding area. Due to certain historical reasons, China’s regional relations mainly involve its neighboring countries. And the countries along the Belt and Road can be regarded as an expansion of East Asia and China’s surrounding area. In view of this, China’s regional focus is reflected in the three levels of East Asia, its surrounding area and the Belt and Road. Since the 1990s, China has been working hard to promote regional cooperation, help shape an institutional framework for comprehensive cooperation in East Asia, enhance its geopolitical and economic influence, and effectively thwart attempts by the USA and other countries to make trouble around China and disrupt its strategic opportunities. Meanwhile, China has also strengthened cooperation with Russia and Central Asian countries, played a leading role in promoting the development and expansion of the Shanghai Cooperation Organization (SCO), and established further partnerships with India, Pakistan, Afghanistan and other countries in South and West Asia, as part of its efforts to amplify influence in the region and ensure stability and development of its neighbors. On that basis, China proposed the Belt and Road Initiative brimming with profound strategic implications. China seeks to build a high-quality Belt and Road together with its partners, and fulfills its responsibilities as a major power by adhering to the principle of upholding the greater good and pursuing shared interests, a vision of common, comprehensive, cooperative and sustainable security, new approaches to development, and a new outlook on the world. This is a clear proof of China’s initiative to provide the world with strategic opportunities. The BRI is a pan-Asian strategy that involves land and sea, focuses on Asia, radiates China’s neighboring countries and regions, and influences the whole world, reflecting China’s vision of building an open and inclusive mechanism for regional cooperation.

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As a regional economic concept, the BRI is designed to promote common development of all participants and it is underpinned by the Eurasian economic integration. With a focus on Asian countries and based on connectivity, this initiative is a regional arrangement in the form of building land and maritime economic cooperation corridors. It is characterized by diversified cooperation mechanisms. The aim is to build a global community of shared future. It shows that China has positioned itself as a global power. Instead of limiting its interests to Asia, China has been expanding its international influence across Asia, Europe and Africa, and looking for institutionalized cooperation globally. The BRI is a major strategy for China to boost economic ties with the rest of the world by land and sea and pursue economic integration in the Asia-Pacific region. It is also an important starting point for China to shape the period of strategic opportunity in the new era. The authors believe that the BRI can be regarded as China’s major strategic vision that focuses on Asia, radiates its neighboring countries and regions and influences the whole world. It is an organic combination of China’s opening-up, regional cooperation and global development. The initiative is an important tool and a core path for China to provide the world with new strategic opportunities as it is making its own opportunities available to the world. Shanghai, China Changchun, China

Honghua Men Xi Xiao

Contents

Once-in-a-Century Transformation and China Once-in-a-Century Transformation and the World Order . . . . . . . . . . . Bin Li

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China’s Position and Direction in the Once-in-a-Century Transformation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Zhenye Liu

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Transformation of International Order, Globalization and External Constraints on China’s Opening-Up . . . . . . . . . . . . . . . . . . . . . . . . . . . . Hongzhong Liu

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Safeguard and Reshape China’s Strategic Opportunity Creating and Grasping Strategic Opportunities for China . . . . . . . . . . . Angang Hu

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The Three-Circle Theory and China’s Periods of Strategic Opportunity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yilong Yan

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BRI in the Vision of Chinese Civilization and Construction of Global Ethical Consensus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Lei Sun

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Strategic Roadmap for the BRI Construction Strategic Thinking on the Rulemaking Under the BRI . . . . . . . . . . . . . 109 Honghua Men

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Contents

Chain Risks and Solutions for Infrastructure Investment of BRI . . . . . . 135 G. E. Tianren and Ming Zhang Reshaping Views on China: A Study on Chinese Soft Power in the Context of BRI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 151 Shu Li and Liang Wu

Once-in-a-Century Transformation and China

Once-in-a-Century Transformation and the World Order Bin Li

To get a clear understanding of the proposition that the world is facing a once-ina-century transformation, we should recognize: (i) the basis for the change, (ii) the changing world; and (iii) the ensuing opportunities and risks. We need to play a positive role in reshaping the world order rather than act on impulse. At a time when the world is at a crossroads, incorrect understanding of the above three issues will make us be passive and conservative, or become blindly optimistic and even fail on the eve of success. Many major changes in Chinese and foreign history are good testament to the dialectics of historical development. What is the basis? This is both an ontological question and an epistemological question. The ontology of the international community is neither economy nor politics, but political economy. It is an economy-based ontology with politics as the superstructure. To understand the changes in today’s world from the ontological perspective featuring historical materialism, it is necessary to find the root cause from the changes in the economic basis. As Engels said, “The ultimate cause of all social changes and political reforms should not be found from people’s minds or their growing knowledge of eternal truth and justice, but from the changes in mode of production and exchange.”1 Globally, the international division of labor is the economic basis of world politics, and the changes in the pattern of division and the mode of exchange are the underlying reason for global transformation. We need to realize that different things are changing at different rates. According to Fernand Braudel’s proposal, such rates can be divided into different levels: (i) world of events, which consists of events relating to people’s daily lives. The resultant “event time” is changing every day; (ii) world of conjunctures, which is composed of some social transitions. The “conjunctural time” takes 10, 20 or 50 years, which reflects “a moderately paced history, a history in which powers are realigned and B. Li (B) School of Political Science & International Relations, Tongji University, Shanghai, China e-mail: [email protected] 1 Marx

and Engels [1].

© The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2021 H. Men and X. Xiao (eds.), Report of Strategic Studies in China (2019), https://doi.org/10.1007/978-981-15-7732-1_1

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combined”; and (iii) world of structures, which requires centuries of “longue durée” (long duration).2 The above three rates reflect the world’s development process at micro, meso and macro levels. Daily changes will lead to transition of social trends, which will ultimately cause transformation and replacement of social patterns and structures. According to Braudel’s theory, the once-in-a-century transformation from a global perspective is just a meso-level change reflecting world trends, i.e., a change in the existing pattern of world power. It may be the beginning of reorganization of power, but it is not the structural change of world capitalism, let alone the impending advent of world communism. It will be improper to predict the future trend of the world in a mechanical and teleological way, thinking that the world is bound to change in some directions. A once-in-a-century transformation means that the world is at a crossroads rather than move in some direction. Although the Western-led world order is now facing a variety of contradictions and crises, there are still a lot of possibilities for future development. Different powers are working towards a new world order in their own interests. In this sense, transformation also brings risks and challenges. However, as the saying goes, “History is created by the brave”, a bright future can only be created by those who are brave enough to overcome difficulties. Therefore, we must throw away the mechanistic view and recognize the role of subjective initiative so that we can see clearly the future direction of the world. Based on a good understanding of the change from the above three aspects, we can have look at the history and overall situation correctly, be well aware of the changes that the world is experiencing and the long and complex progress of human towards civilization, taking our historical responsibilities bravely. In this changing world, we should not be confused about temporary setbacks and troubles, or lose sight of the future in a “world of events”. We must give full play to our subjective initiative based on our own capabilities instead of adapting to the situation conservatively and passively. Meanwhile, we must stay calm and focused.

1 Material Basis of the Change The ultimate cause of all social and political changes lies in the changes in mode of production and exchange. This principle of historical materialism applies equally to the international community. From the perspective of historical materialism, the primary purpose of human production activities is to meet the needs of survival and development. To meet the most fundamental needs like eating, drinking and having shelter and clothing, human must produce and develop the productivity.3 With the development of production, single-person production has been gradually replaced by socialized one. An important feature of the interpersonal relations formed in this process is reflected 2 Helleiner 3 Marx

[2]. and Engels [1], p. 79.

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in the social power relations.4 Therefore, those who dominate the division of labor in social production will dominate the distribution of benefits and power, which will significantly determine the state and order of a society. This echoes what Marx said: “Human beings have definite, inevitable relations independent of their will in social production, or production relations appropriate to the development stage of their material productivity. The sum of these production relations constitutes the economic structure of a society, upon which there are legal and political superstructures, and a certain realistic basis with appropriate social ideology. The production mode of material life restricts the entire process of social, political and spiritual life.”5 Such principle that economic basis determines superstructure, together with the corresponding class analysis, apply to both domestic society and international community. The only difference is that the class in the international community is measured by country. Marx once said, “Under the condition of more developed exchanges, the same situation (division of labor within the nation) will also occur in the mutual relations among ethnic groups.”6 The international division of labor is the embodiment of human’s social division of labor beyond nation-state. A kind of international production relations has taken shape among countries around the international division of labor. Those who dominate the international/global division of labor can gain greater benefits from the international production process (today’s transnational value chains) and can secure a dominant position in the international power relations, thus affecting the international superstructures (international institutions or global governance). The status of a country in the international division of labor is the most important manifestation of its development stage. Marx once mentioned the international politics as a consequence of the international division of labor in his era: “Just as it subordinated a village to a city, it subordinated an uncivilized and semi-civilized country to a civilized one, a peasant nation to a bourgeois one, and the East to the West.”7 It is on the basis of a strong economy that Western countries can dominate global political economy and build production relations in which others must depend on them for a long time. Such relations were first characterized by the colonial system, followed by financial control. Now they rely heavily on technological control.8 Observing the changes in the international division of labor and trade ties in recent years from this perspective, we can discover the underlying material basis of the once-in-a-century transformation. As an important reference index, foreign investment shows whether a country is leading the international division of labor. Western developed countries (including Japan) had been a leader in this regard for a 4 Production

relations, social relations of production, and power relations of production are three different ways to express a problem. The dominant-subordinate relations that reflect power in the production process is the power relations. See Cox [3]. 5 Marx and Engels [1], p. 32. 6 Marx and Engels [1], p. 32. 7 Marx and Engels [1], pp. 276–277. 8 Santos [4], pp. 263–264. Although Sandos made this point in the 1970s, this technological control in the current global production chain has not changed and even become more prominent.

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long time because their foreign investment ranked top in the world. However, China has gradually become the world’s top five countries in terms of foreign investment since 2009 and has been in the top three in more recent years. As a long-time recipient of international division of labor, China is now becoming a leader, which was not seen in the past century. China’s leading role in the world economy can also be proved by its foreign trade scale and its stimulation to the global economy. Starting from 2005 statistically, China has seen a steady rise in exports of goods and services, being the world’s largest exporter since 2012. Meanwhile, it has been the world’s second largest importer of goods and services since 2010. Additionally, (from the asymptotic line) China shows the most notable upward trend in imports and exports among the world’s top three trading nations. More importantly, China as the world’s second largest economy has contributed 30% to global economic growth per annum in recent years, outranking the US, the world’s largest economy. And globally, Chinese companies have made remarkable achievements in the new generation of communication technology (e.g. 5G) and equipment that may trigger the fourth industrial revolution. Although Western companies, especially those in the US, can provide the state-of-the-art 5G components and technology, Chinese companies are already in a leading position in general. A country’s economic status in the world can only be measured by its role in the international division of labor. Other indicators like GDP (including per capita GDP) and PPP (purchasing power parity) are not enough to reflect such status. The service industry is indeed an important part of the GDP indicator, but there are also certain virtual components that cannot reflect a country’s strength. For example, the practice of law is included in the service industry and the attorney fee in the US is very expensive, accounting for a considerable proportion of the total GDP. But this revenue cannot reflect the reality of national wealth. In addition, exchange fluctuation is also a factor affecting the comparison of aggregate economic output between countries by GDP. A decline in the exchange rate may cause distortions in the comparison of economic strength between two countries. Other indicators such as per capita GDP are also unable to accurately reflect a country’s role in the world economy. For example, the per capita GDP of some oil-producing countries in the Middle East is much higher than that of the world’s most developed countries, but no one deems these countries as a modern power. Similarly, PPP is not a good measurement. If each unit of local currency buys more goods and services whose quality is poor, it is also impossible to reflect a country’s economic strength. Therefore, a country’s status in the global power pattern must be fundamentally measured by its position in the international division of labor. Leadership in such pattern is the basis for a country’s dominance in the international relations of production and its transformation into a true modern power. The above indicators including foreign investment, imports and exports, and contribution to world economic growth demonstrate an indisputable fact that China is now playing a bigger role in world economy than ever before. We should not overstate our achievements, but there is a reason for the Chinese people to be proud of such achievements and the remarkable national strength. This is the most fundamental material basis of the transformation.

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2 What is the Change About? The world has been experiencing an unpredictable change since the 2008 global financial crisis. Especially in recent years, unconventional changes are taking place in Western powers. People are shocked at the “Black Swan” events from time to time. For example, before the Brexit referendum, British leaders treated it only a form of Western-style democracy whose result would come as no surprise. But the result turned out to be just the opposite. Donald Trump surprisingly won the presidential election in 2016 although he was made fun of during his election campaign. Trump’s policies after he came to power are in stark contrast with the preceding orthodox. His “America First” policy has turned the US from the leader of the postwar international system into a destroyer, greatly widening the gap in the US-led Western alliance. Before 2008, there was little suspense about Western powers’ overturning the heterogeneous regimes of developing countries, although such regimes were “demonized” by the West. The international force driving this change was an “International League” led by the US. After 2008, however, this situation has changed. Overthrowing the Gaddafi regime in Libya in 2011 was the only successful military operation after 2008. But this operation was different from the past. The US sat back, and France spearheaded the campaign. As a supporter, the US did not send ground forces. Moreover, US President Barack Obama wrote in a letter to Congressmen that there are “limits” on its military operation against Libya in terms of nature, duration and scale, and he wants NATO to dominate the military sanctions against Libya. The Assad regime in Syria, a heterogeneous Middle Eastern one that the West has been trying to overturn, still exists and has a firm foothold. Since 2008, the US has kept a low profile in transforming heterogeneous regimes, partly because it finds itself in deep trouble in Iraq and Afghanistan, and it cannot afford another war amid gradual recovery from the financial crisis. From Obama to Trump, there were signals of withdrawal from the Middle East, which were opposed by some domestic forces for fear of severe aftermath of rapid withdrawal. The result is the US has not fully pulled out until now. After 2008, the world even saw anti-Western “Color Revolutions”. The one in Kyrgyzstan in 2010 marked a major setback for the “Color Revolutions” plotted by the West in Central Asia. It was the first anti-Western “Color Revolution” in Central Asia after the Cold War, and it has never happened before. The transition of the world can also be reflected in the stronger aspirations of some non-Western powers to play an active role. In the summer of 2008, Russia conducted a military strike on Georgia to support South Ossetia, an area within the territory of Georgia that was seeking a split. In 2014, Russia’s crackdown on Ukraine caused Crimea to secede from Ukraine and rejoin Russia. Russia backed the armed confrontation of the breakaway regions in eastern Ukraine against Kiev. Among those former Soviet Union countries, Georgia and Ukraine are two that are most eager to join NATO, except for the three along the Baltic coast. These two actions are a serious warning of Russia to those pro-Western former Soviet Union countries and to NATO’s continuous eastward expansion. They are also the most hawkish actions taken by Russia after the collapse of the Soviet Union. In 2015, Russia began to get

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involved in the Middle East by directly dispatching troops to Syria to help maintain stability, which led to the failure of Western attempts to overturn the Assad regime. No actions are as tough as this after the end of the Cold War. China’s strategic initiative is also unprecedented, but it does not resort to military actions. More specifically, China is actively coping with the strategic containment of the West in its surrounding areas. And it is shaping new mechanisms to jump out of the established framework dominated by the West, which is reflected by the Asian Infrastructure Investment Bank (AIIB) and the Belt and Road Initiative (BRI). Since the US formally proposed the “Pivot to Asia” strategy in 2012, it has begun to regard China as its potential largest strategic opponent, and gradually shift its strategic focus to Asia. In addition to stepping up its military alliance against China, the US has also joined hands with Japan to stir up and intensify disputes over territorial waters between some countries and China, to strategically provent China’s influence in the Asia–Pacific region. But these threats have been handled by China step by step since 2016. China’s most important diplomatic achievement after 2008 is to jump out of the economic framework originally created and dominated by the West, and to shape its own unique political and economic mechanisms. AIIB and BRI are two typical examples in this regard. These efforts are preparing China to lead the new international division of labor. There are many other similar unconventional events after 2008, such as the refugee crisis in Europe, the US non-compliance with international treaties and withdrawal from international organizations, and the rise of protectionism and nationalism, etc. This highlights a fact that neo-liberalism is waning, and the international power structure is changing once again. This also reflects the decline of neo-liberalism and Western powers and the rise of China and other non-Western powers. The declining Western powers find it hard to effectively restrict non-Western countries including Russia. Therefore, the world has been going through a transformation since 2008. More specifically, the liberal order dominated by the West is in decline, so are the Western powers behind this order. In the meantime, emerging powers, especially China, are moving from the edge of the world stage to the center. This is indeed a once-in-a-century transformation for China who has been a sideliner since the Opium War. Although this situation began to improve in 1949, China didn’t truly move to the center of the world stage until 2008. This is the result of neo-liberalism in crisis, and certainly China’s own efforts. However, we must recognize that the capitalist nature of global system remains unchanged, which means the world is still essentially dominated by capitalism. According to the above data, capitalist powers are still dominating the international division of labor and jointly influencing global economy. China alone is unable to change this situation. Therefore, the current change still reflects “a moderately paced history, a history in which powers are realigned and combined”. This change is neither as frenetic as the European revolution triggered by the French Revolution, nor as overwhelming as the world revolution caused by Russia’s October Revolution. In this change, an Eastern power is approaching the center of the world stage with a unique system that is not completely accepted by the orthodox capitalist world system. It has partly changed the international power structure that is still dominated

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by major capitalist countries. In this change, an order that has been considered to bring freedom, security and prosperity to the world is at stake. This change is different from both the French Revolution that overturned autocracy and pushed Europe towards republic, and the October Revolution that brought uprising to the world to replace the capitalist system with the proletarian dictatorship of the Soviet. In this context, the prevailing system paradigm remains unchanged, which is economically private and market-oriented and politically Western democratic. The existing paradigm is not reshaped by an alternative, like what happened in the French Revolution or the October Revolution. More importantly, this major change is not the start pointing of the world communist order (some people combine “a community with a shared future for mankind” with “a community of free individuals” proposed by Marx, which is absolutly a misunderstanding of “a community with a shared future for mankind”). Before the advent of an alternative order, there will be a “longue durée” change that cannot be measured. During this transformation, a non-capitalist country in the East is rising to a world power. The crisis of neo-liberalism has given this Eastern country an unprecedented opportunity to participate in global governance and shine at the center of the international arena. However, the influence of its rise is not enough to change the structure and nature of the world yet. That’s why the change reflects “a moderately paced history, a history in which powers are realigned and combined”.

3 Major Change, World Order and China’s Role As a result of change, the world order is in crisis, with a new world power emerging at the center of the world stage. However, this power is not strong enough at the moment to transform the political and economic attributes of the world system, because its political and economic foundation needs to be improved, while the incumbents still have solid economic and social foundation. Under this circumstance, all major powers, old or new, will strive to reshape a world order in their own direction. Historical experience shows that crises and balance of power are always followed by changes in the world order. But such changes do not necessarily promote the world order in the direction of stability, justice and progress. The real changes in the world order come from the fundamental social changes driven by the way production is organized, which have not yet occurred. From the above analysis, the current situation only reflects some adjustment of the balance of power. Capitalist powers still play an important role in the world’s political economy. This change implying “a moderately paced history in which powers are realigned and combined” has not shaken the material basis of the entire capitalist system economically. Here is a brief historical review of global changes in the past century. A century ago, an unprecedented crisis hit the capitalist world, leading to the collapse of the laissez-faire capitalist order of the nineteenth century. World War I and the Great Depression brought major opportunities for the world revolution and the Bolshevik Revolution. But the world revolution did not keep going smoothly. In a worldwide capitalist crisis, various forces raced to transform and create a new order

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in their interest. Fascism, which originated in Italy, began to spread in the world, and gradually formed an extreme force to transform the world order in Germany, Italy and Japan. Meanwhile, Britain and America were shaping a force to reform capitalism worldwide. Another force centered on the Soviet Union was also seeking to change the world order, but after suffering some setbacks in spreading revolution across the world, it shifted the focus to “building socialism in its own country”. The competition for the world order among the above three forces ended up with the end of World War II. In the subsequent institutional competition, the world split into two blocs: the capitalist one led by the US and the socialist one led by the Soviet Union. The former was characterized by an “embedded liberalism” order and the latter by the Soviet “central planning”, with the former dominating most part of the world. Although the postwar capitalist order did better in social equity than the laissez-faire order, the functions of state intervention and international coordination guaranteed the development of world capitalism. The Soviet system did make remarkable progress and grow stronger after the war. However, in the context of world capitalism, it failed to reform in a timely and effective manner to fundamentally enhance productivity, hence leading to a crisis of world communist movement. The experience and lessons in the past century show us that history is not developing in a linear fashion, and crises and changes in power structure only provide opportunities, rather than naturally lead to progressive development. Whenever the history was at a turning point, there would be leaders from various forces to push forward institutional innovation by proposing and practicing their policies and institutional ideas. They won people’s support and guided the world to advance in the right direction. There are some similarities between the current change and the one a century ago. Today’s world order based on neo-liberalism is also experiencing an unprecedented crisis. There are some major changes in the international structures of power. Emerging powers represented by China are approaching the center of the world stage, but this cannot guarantee progressive changes in history. The world after the 2008 financial crisis is undergoing transformation characterized by instability, making it difficult to determine the future direction. Major powers are also preparing for institutional reform and working towards a new world order. Now there are two trends emerging in the West. First, the right-wing extremist forces represented by Trump (including some far-right forces in Western Europe) are leveraging populism and nationalism to impact the tradition liberalism, in an attempt to reshape the world order. This order will be built on extreme nationalism and the “America First” privilege to ensure that the US can continue to lead the world and handle a rising China. The force behind this is the traditional white class impacted economically and culturally in economic globalization. They are seeking to maintain their traditional status in this way. Second, Western intellectual and political elites are hoping to reshape a world order based on “re-embedded liberalism”. Munich Security Report 2017, a flagship publication of the Munich Security Conference, is entitled “Post-Truth, Post-West, Post-Order”, which is a typical example of the “re-embedded liberalism” pattern. This voice can also be heard in Western civil society. At the Annual Conference 2017 of American Political Science Association, David Lake made his inaugural

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address entitled “International Legitimacy Lost? Rule and Resistance When America Is First”. His views about “re-embedded liberalism” received a big round of applause, reflecting the voice of Western civil society. The goal of “re-embedded liberalism” is to regain the essence of the Roosevelt New Deal and introduce new New Deals to cope with the severe divisions in the American society. Globally, the US should pay attention to “shared gains” and multilateralism, as well as save the legitimacy of American hegemony in the international system based on “new international bargain”, so as to meet international challenges including China’s rise. Under new historical circumstances, there may be a new US-led order coupled with coordination and cooperation of the West. As a socialist country that is heading towards the center of the world stage, China advocates the development of international relations in the direction of mutual respect, fairness and justice, and win–win cooperation, together with the building of a community with a shared future for mankind. The core of this vision is to build an open, inclusive, clean, and beautiful world that enjoys lasting peace, universal security, and common prosperity. Instead of serving China’s interest first or being a declaration of world revolution, this vision is based on the principles of extensive consultation, joint contribution and shared benefits, with a focus on the common interests of countries with different levels of development and social systems. China’s vision is consistent with the reality that countries are interdependent in the context of globalization. It also reflects the requirements of the vast majority of people in the world to promote sound development of globalization and to address various issues brought about by the economic and political paradigms behind the neo-liberal order. China has provided new options for other countries and nations who want to accelerate development and maintain independence, and contributed its own wisdom and solutions to global issues. This profound change has given China a great historic opportunity to transform from “a rich country” to “a powerful one”. It is not easy for us to seize this opportunity to achieve our own goals in the new era and promote the world towards security, fairness and progress. In fact, this requires great efforts, strength, courage and practice. And we must lead the international division of labor because this is the prerequisite for building the international economic foundation and the most important material basis for any world order. History shows that the reason why the UK and the US could shape the world order is that they have the ability to lead the international division of labor. Such ability is built on the basis of economic and development, scientific and technological advancement and flourishing culture that are driven by domestic institutional innovation. In order to play a key role in shaping the new world, China must move from the lower end to the higher end in the international division of labor. We must build our own advantages in science and technology, and lead the world in productivity. We must make our institutions more mature, improve and modernize our national governance system, consolidate the socialist system with Chinese characteristics, and demonstrate how superior this system is. We must shape the influence of the new Chinese culture while inheriting traditional culture, making this unique culture an important force in world culture. In this regard, China still has a long way to go and has much to do. For example, we should develop a high-quality

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economy, promote well-rounded scientific and technological education, and spread the new Chinese culture. A major reform is needed to shape innovative mechanisms and build institutional advantages. In addition, as a practical platform for building a community with a shared future for mankind, the Belt and Road Initiative reflects China’s ambition to reform global governance and international division of lobor, which requires both courage and wisdom. Without courage, we cannot face various difficulties; and without wisdom, we cannot navigate the complicated situation. In China or the rest of the world, in modern or ancient times, the fall of a great power was generally caused by an internal strife. For example, the flourishing Tang Dynasty declined after the An Lushan Rebellion; the Ming Dynasty went downhill sharply after the Tumu Crisis; the collapse of the Soviet Union and the more recent decline of the US are the result of their own policies. With these historical lessons in mind, China has to develop a strong sense of crisis, risk and bottom-line thinking, and must stay calm and cautious, because China is still developing in an unbalanced and inadequate manner, and certain great powers in the world still want to contain China’s development. In this context, we must not be arrogant, impatient, conservative or sluggish. Entering a new era, China is moving towards the center of the world stage. Our achievements have provided us with a material basis, an institutional guarantee and a cultural support to promote the world order in the direction of fairness, equity and progress. But China still has a long way to go towards the goal of reforming the world order. We need to enhance productivity, improve the national governance system, and make cultural innovations. In this way, when the second centennial strategic goal is achieved, China will contribute more to the world and play a bigger role in building a sound world order.

References 1. Karl Marx and Frederick Engels Selected Works (Volumes I, II, III), Beijing: People’s Publishing House, 1995, p. 741. 2. Eric Helleiner, “Fernand Braudel and International Political Economy”, International Study Notes, Vol. 15, No. 3, 1990, p. 75 3. Robert W. Cox, Production, Power, and World Older, New York: Columbia University Press, 1987, pp. 12–13 4. Theotonio Dos Santos, “The Structure of Dependence”, in Marc Genest ed., Conflict and Cooperation: Evolving Theories of International Relations, Beijing: Peking University Press, 2003, pp. 263–264

China’s Position and Direction in the Once-in-a-Century Transformation Zhenye Liu

Today, the world is undergoing profound changes and the global economic and political development has shown a drastic turn never seen before. What is our position and direction in this global change? The change of the times is calling for our rational cognition and courage to embrace change.

1 China’s Position in the Once-in-a-Century Transformation What’s the position of China in the current global change? The global pattern has undergone tremendous changes; the dominance of the West in the world system is facing new challenges; a new round of industrialization has disrupted the “coreperiphery” relations between developed and developing countries; globalization has suffered a reversal; the national governance paradigm is bouncing back after a long period of economic globalization and liberal economic policies; and the China-US relations are confronted with unprecedented uncertainty and historic turn. Facing all these thunderous changes, we should understand and handle them with a very rational attitude.

1.1 The World is Undergoing Drastic Structural Changes The most dramatic change we are experiencing now is the change of the world system, which is reflected in the following aspects: Z. Liu (B) China University of Political Science and Law, Beijing, China e-mail: [email protected] © The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2021 H. Men and X. Xiao (eds.), Report of Strategic Studies in China (2019), https://doi.org/10.1007/978-981-15-7732-1_2

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First is radical change in global development trend. Studies show that the center of the world economy was in Asia before 1820 and then shifted to Europe and the Atlantic Ocean in the following century. The economic center swung back to the Asia-Europe border again around 2010. This center is estimated to go back to the hinterland of Asia around 2025.1 Second is structural change in total economic output. According to the GDP 2017 (Revised) issued by the World Bank in July 2018, the top 11 countries are the US ($19.39 trillion), China ($12.24 trillion), Japan ($4.87 trillion), Germany ($3.68 trillion), UK ($2.62 trillion), India ($2.60 trillion), France ($2.58 trillion), Brazil ($2.06 trillion), Italy ($1.93 trillion), Canada ($1.65 trillion) and Russia ($1.58 trillion). In retrospect of the world economy in 2007, China’s GDP was only 23.7% of that of the US and 75% of that of Japan. And ten years later, the figure has grown to be 63.1% of that of the US, 2.51 times that of Japan, 3.33 times that of Germany, about 4.7 times that of UK/India/France, 6.1 times that of Brazil/Italy, 7.4 times that of Canada and 7.75 times that of Russia. A similar striking phenomenon is that India and Brazil have risen rapidly to become the sixth and eighth largest economies in the world within a decade. According to the World Bank, the world’s total economic output in 2007 was US$57.6 trillion, of which the US occupied approximately 24% and China only 5.7%. But ten years later when global economy in 2017 reached about US$80.68 trillion, the percentage of the US remained basically the same, about 24%, while China’s share rose sharply to 15.2%.2 Third is structural change in world economy by purchasing power parity (PPP) according to international organizations. If calculated based on PPP from the World Bank, as of 2014, the US can be said to have been surpassed by another major power, China to be exact, in terms of GDP for the first time since 1870.3 According to estimates by the International Monetary Fund (IMF), China’s economic share on the PPP basis will rapidly rise from 16% of the world’s total to over 20% from 2014 to 2022, while that of the US will fall to 14%.4 There are also other indicators for the structural change in world’s economic power, including China’s surpassing the US to be the world’s largest trading nation as measured by the sum of exports and imports of goods and the world’s No.1 in terms of the number of Internet users and e-commerce volume by 2013.5

1 Maddison

[1]. Dobbs and Remes [2].

2 Source: Statistics published by the World Bank in July 2018 and September 2008. See World Bank,

“Data Bank”, https://databank.worldbank.org/data/home.aspx, retrieved on December 19, 2018. and Parent [3], p. 21. 4 International Monetary Fund, “World Economic Outlook Database”, https://www.imf.org/en/Data, retrieved on December 19, 2018. 5 Source: The import and export data are from the Ministry of Commerce of the People’s Republic of China. It’s written in the news titled “China Became World’s Largest Goods Trader In 2013” released by the Information Office of the Ministry of Commerce on March 1, 2014 that “According to the preliminary statistics from the Secretariat of WTO, China has become the world’s largest trading nation of goods in 2013. In 2013, China’s total trade volume was US$4.16 trillion, including $2.21 trillion in exports and $1.95 trillion in imports.” And the data about web users come from 3 MacDonald

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Fourth is structural change in global development. First of all, the economic aggregate of developing countries has accounted for 57% of the world economy, contributing to more than two-thirds of global economic growth.6 Developing countries, especially emerging economies, have become an important source of world development finance, infrastructure investment and foreign direct investment (FDI). Second, the ability of developed countries to provide assistance has continued to decline after the global financial crisis. Over a long time, they used to provide official development assistance (ODA) that exceeds 95% of global development assistance, but this figure has been declining in recent years.7 In 2014, the ODA expenditure spent by Organization for Economic Cooperation and Development (OECD) member countries accounted for just 0.29% of their gross national income, far below their target of 0.7% and also lower than the level of aid in the 1990s. Yet this proportion is still falling. The spending on overseas aid in 2014 was decreased by 16% over the previous year, for instance.8 And thirdly, the source for development finance has completely changed for developing countries, which are no longer dependent on the aid from developed countries. In the 1970s, the ODA funds provided by the developed to the developing were almost four times that of FDI. It can be said that developing countries were utterly reliant on aid from the advanced countries then. However, this kind of dependence was completely overturned in 2015, with the FDI exceeding the aid from developed countries by more than four times and the FDI-driven foreign trade volume more than 43 folds the amount of ODA. Therefore, FDI has absolutely replaced the aid of developed countries and become a fundamental driving force for the growth of developing countries.9

1.2 The Dominance of the Western World is Facing a Challenge Since 1500, the Western world has taken the advantages of industrialization and military conquest to constantly push the development of a world pattern centered on it. But this trend is facing unprecedented challenge with the rise of the nonWestern world. Western scholars have proposed various strategies to address this challenge. For example, Samuel Huntington proposed to protect the uniqueness of the Western civilization from other civilizations; Robert Keohane suggested maintaining the hegemonic power of the institutions; and John Mearsheimer put forward David Barboza, “China Surpasses U.S. in Number of Internet Users”, New York Times, July 26, 2008, https://www.nytimes.com/2008/07/26/business/worldbusiness/26internet.html. 6 Yifu and Yan [4], pp. 14–15. 7 Shuai [5], pp. 27–30. 8 United Nations Conference on Trade and Development, “Trade and Development Report, 2015: Making the International Financial Architecture Work for Development”, UN Publications (2015), p. 155, https://unctad.org/en/PublicationsLibrary/tdr2015_ch.pdf. 9 Yu [6], pp. 135–155; Chao [7], pp. 29–49.

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the strategy of balance of power and containment. However, none of these strategies could effectively address the challenge brought about by the once-in-a-century transformation. The root cause may lie in the asymmetry of this challenge. First, this challenge is non-military. Nowadays, the rise of the non-Western world does not involve arms race or competition for a sphere of influence against major powers dominant in the system. Neither does any new emerging power claim or move to scramble for world hegemony. Therefore, the containment strategy of the Western powers is of little value and can hardly work. Second, this challenge is more like an asymmetric economic challenge. The rising powers are not on the same competitive track with the system-dominating countries and the group of advanced countries in terms of per capita GDP, human resource endowment, main contents of industrialization and business models, but they pose challenges. In terms of per capita GDP and human resource endowment, the major rising powers are lagging far behind the Western countries on the whole. But they have the advantages of abundant manufacturing labors and very low pressure on welfare expenditures, which give them a leg up in investment and manufacturing competitions over the West. As to the content of industrialization, developing countries have taken over the manufacturing industry shifted from developed countries and quickly embarked on the path of industrialization in this sector, making great impact on the manufacturing of the developed due to their cost advantage. And then, the innovative growth of the new economy and new business models in emerging powers such as China have brought huge competitive pressure and challenge to the traditional business models of developed countries. For instance, while the tertiary sector had been underdeveloped in China, the impact brought about by e-commerce was slowly digested after a certain period of pain, causing a rapid defeat of the traditional business model prevailing in the West. However, in Western developed countries, traditional services constitute 70% and even more of the total national economy. The new e-commerce model is suppressed by the people and it is hard to obtain policy space for development. As a result, the Western world has fallen behind even before it truly feels the challenge in the competition around emerging business models. Third, the challenge comes from within, rather than outside the system. Today’s major emerging powers have fully joined the global trade, financial and capital transaction systems dominated by the West, as well as various non-traditional security governance mechanisms such as global climate control. Therefore, this new challenge comes from the cooperation rather than confrontation between the dominant nations of the West and emerging powers.

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1.3 A New Round of Industrialization is Disrupting the “Core-Periphery” Relations Between Developed and Developing Countries According to Immanuel Maurice Wallerstein’s world-systems theory, developed countries have controlled production, capital, technology and commerce in the world economy, so that they are in a dominant position and become core countries; and developing countries are peripheral countries that dependent on core countries for production, capital, technology and commerce. But the sustainable development and rise in non-Western world now offer a different way to interpret Wallerstein’s theory: Western developed countries need to seek investment opportunities for their excess capital, make manufacturing transfer due to the high manpower and welfare costs in this sector, and find markets for the advanced technology to realize its market value, and their merchants also need to find business opportunities. These opportunities and conditions can be found in the new wave of industrialization in developing countries. First of all, since they gained independence from colonial rule in the 1950s and 1960s, developing countries after decades of state building have achieved political stability and can provide basic conditions for economic development such as compulsory education, transportation and other most basic infrastructures. Eligible and cheap labors can only be found in newly industrialized countries, which is an important reason for the West to transfer their manufacturing industry and production links to developing countries. Then, industrialization in developing countries has brought huge investment opportunities, broad market demand, and more importantly, massive needs for capital, production (raw materials, energy, equipment and technology), infrastructures and trade. Though manufacturing-oriented, the new round of industrialization in developing countries owns various advantages in like manpower, large-scale production and consumer demand, industrial demand and investment demand, which help building the developing world into the core area and power station in the new round of industrialization in the world economy and the core demand area of world production. Looking at the global economy, the industrialization objective of world development, including that of industrialization of manufacturing, is far from being achieved. At present, besides OECD countries, some industrialized non-OECD economies and a few transition countries like Russia, there are more than 130 developing countries with over 70% of the world’s land and population. They are in a dire need to achieve economic growth and shake off poverty through industrialization. The new round of industrialization led by a group of newly industrialized countries including China is spreading to the majority of developing countries. It is no exaggeration to say that the new round of industrialization rising in the developing world since the twenty-first century turns out to be much wider and deeper than ever. This is truly worldwide industrialization and rising, which will definitely bring about radical global changes. As estimated by the United Nations Conference on Trade and Development (UNCTAD), developing countries will have a total investment gap of $1.9–3.1 trillion

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each year, of which the annual investment gaps for infrastructure, food security and social infrastructure are $1.6–2.5 trillion, $260 billion and $250 billion respectively.

1.4 The National Governance Paradigm is Coming Back Since the 1980s, economic globalization and liberal economy have become the trend of international and domestic governance. However, in the current global transformation, the recovery of national governance has become a prominent feature. Unlike the liberal capitalism and bourgeois civil society-driven industrialization developed for centuries in the first batch of industrialized nations, the industrialization of the majority of developing countries is mainly promoted by national policies. It has the typical characteristics of being strongly driven by government. In some countries, this new industrialization is even fueled with national capital and mainly driven by government departments. And national governance is the most typical feature. Global governance makes way for national governance. There is huge demand for capital in many key areas of global governance, but the biggest beneficiaries of governance and investment are still individual sovereign states. For instance, global climate control requires an enormous sum of money to promote the national economy to develop in a low-carbon way. The big chain of interests, i.e. those who invest will benefit, ultimately promoted the birth of national governance programs under the Paris Agreement. Another example is the UN’s Millennium Development Goals, Post 2015 Development Goals and 2030 Agenda for Sustainable Development, which all took development, poverty eradication and emission reduction as core tasks and considered both national development goals and global common interests. Yet clearly, the most important and direct beneficiaries are the sovereign states. So, national governance is a core component of solutions in these development goals or agenda. Moreover, there is a huge gap between the aid funds requested for global climate control and the implementation of the global development agenda and what’s really needed. Even that small amount of assistance has not been provided as promised. Therefore, it is inevitable to turn back to national governance to realize global governance, which recalls the famous saying of Marx and Engels: There is no savior in the world; and we have to do everything on our own! National governance capabilities are held accountable in theory and in political reality. Theoretically, Francis Fukuyama’s full-length works in recent years have held national governance functions and capabilities accountable. He points out that insufficient capabilities and mismatched functions have become the culprits of the heavy burden of global governance. And practically, the tasks of global governance will ultimately be realized via national governance. The national governance capacity determines not only a country’s own development ability, but also the effectiveness of global governance and the degree to which its goals are achieved. More importantly, the 2008 financial crisis has become a test for national governance capabilities. The accountability in the country’s duty for coping with the financial crisis called for all over the world further promotes the “internalization of global governance”, which

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means countries are only willing to pay attention to and fulfill global governance responsibilities that are aligned with their own domestic governance agenda. As a result, national governance has made a big comeback in today’s world.

1.5 Globalization is Undergoing a Major Change The reversal of globalization is perhaps the most striking in the current global change. Various trends of thought like anti-globalization, de-globalization and backlash against globalization are sparing no trouble to make waves in this global change. The development of globalization indeed encounters twists and turns unseen for decades. Even as we look back at the first climax of globalization cut short by the World War I, we are unconsciously wondering whether this reversal will lead to the end of globalization. Firstly, the reversal of globalization is mainly driven by the “revolution” at the bottom and periphery of the world. After the long-termed development of economic globalization for decades, its negative impact during the financial crisis has been magnified and distorted to the largest degree in some countries. Populism, antiglobalization, trade protectionism, ultra-nationalism and xenophobia have swarmed out. Globalization is truly in reverse. Secondly, globalization inevitably enters into an adjustment period for the contradictions accumulated during the long-term development, and this adjustment period becomes extremely violent when encountering the global financial crisis. Amongst, contradictions like the uneven development of globalization and the imbalance of global trade are more prominent than others. And a typical example for this violent adjustment is the trade imbalance and the ongoing trade war between China and the US. And thirdly, this reversal of globalization has become more intense due to the superposition of the extreme anti-globalization political thoughts and movements across the globe and the extreme de-globalization policies and actions of countries. The salient feature of this round of anti-globalization trend is the ideological trend that completely denies globalization has combined together with ultra-nationalist political movements, party politics, political elections and national de-globalization policies and actions (such as Brexit), evolving into a seismic change on the world’s political stage. It will definitely make a profound impact on the development trend of world politics and economy.

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1.6 The China-US Relations Are Confronted with Uncertainty and a Historic Turn The year 2018 marks the beginning of a big change in the development of ChinaUS relations. This big switch is marked by two major events. One is the Trump administration of the US has launched a trade war with China, which has triggered a mandatory adjustment of contradictions from trade imbalance between the two sides. The economic volume of China and the US altogether makes up nearly 40% of the world economy, and the volume of their mutual trade exceeds 20% of the total world trade. Moreover, China and the US are also ranked the world’s largest and second largest trading partners for other nations. It can be said that the US-China trade war has a direct impact on all countries in the world and has become a key factor affecting the development of globalization and world trade. The other is that China becomes clearer about its domestic development path and strategy. With the convening of the 2018 National People’s Congress as a sign, China has started new exploration in fostering stronger confidence in its own path. Such clarification in development path and strategy will continue to greatly influence the trend of the domestic policies on one hand; and it will also have a profound impact on the judgment of the US strategic community on China’s political trend, raising the debate over “cooperation or confrontation” in the grand strategies of the two countries on the other hand. The historic turn and huge uncertainty in the development of China-US relations have arguably become the greatest systemic variables in today’s global transformation and even largely determined the underlying trend of the global political and economic pattern in the future.

2 China’s Direction Amid the Once-in-a-Century Transformation How should China get along with this changing world? How to rationally deal with the complicated international and domestic changes and then make appropriate strategies for further development? Here are some considerations:

2.1 Maintain Strategic Focus and Keep Moving in the Right Direction Development is a top priority. Development is of overriding importance. Without development, socialism will be a dead end. Any cause cannot be promoted at the expense of development. In a period, there was some separate opinion in the public,

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stating development and economic construction were overemphasized and compromised construction in other fronts. Yet when we summarize the state-building experience during the 40-odd years of reform and opening-up in China and the historical lessons of the demise of the Soviet socialist regime, we can draw a definite conclusion: China’s success is a story of development that focuses on economic construction; and Soviet’s collapse and failure to protect the fruit of its socialist revolution is precisely because it failed to build a robust economy and achieve development well, even though its nuclear arsenal was super powerful and its national security organization “KGB” was extremely well-developed and mature. Therefore, only if we firmly and persistently stick to the core task of development will we surely achieve success in socialist construction. Our cause in socialist construction today is facing challenge from a complex and severe international environment. Western values and ideology have continued to interfere with our socialist road and construction, and ideological enemies of varied forms have not given up infiltrations into China. But as long as our socialist construction develops well, our grand strategy centered on economic construction is firmly held and bearing fruits, and our development can continuously meet the needs and expectations of the people for a better life, any forces or disturbance cannot shake our foundation or falter our determination to take the socialist path. Therefore, only if China, a big socialist country ranking the first in terms of economic strength and comprehensive national strength, stays at the right track strategically and adheres to the grand strategy centered on economic construction essentially, there will be no force in the world that can interfere with its socialist construction or stop its peaceful rising.

2.2 Continue to Open up and Follow the Foreign Policy Featuring Multilateralism and Mutual Benefit The valuable experience of reform and opening-up over the past 40-plus years can be concluded in a word: following the domestic and international development trend, we have carried out reforms at home and opened door to the outside world, making both initiatives the basic standpoint for socialist construction. Amongst, opening-up plays an important guiding role. We have introduced advanced technology, brought in advanced management, become more culturally inclusive by absorbing foreign civilizations, and established the line of mutual benefit and win–win cooperation in foreign affairs. There are many successes in the past four decades of opening-up, best reflected in the following two aspects. First, opening-up is a process of learning and absorption. Through it, we have learned all the outstanding achievements created by human civilization and grown to be diverse and tolerant. It is no exaggeration to say that the results of our reform and opening-up for over 40 years stand for a height of civilization reached on the basis of learning and absorbing all the achievements of human civilization! If we hadn’t

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opened door to the outside world or learned from others, we would have easily fallen into a state of self-complacence and arrogance. Second, we have established the diplomatic path of peace, development and cooperation during opening-up. We have resolutely abandoned the diplomatic line based on class struggle and international revolution, and embarked on a new path marked by rational understanding of the long-term coexistence, peaceful coexistence, common development and cooperation of socialism and capitalism. Then, this path is elevated and developed by our party and state leaders into a diplomatic strategy for building a community of shared future for mankind. As a continuation of internal affairs, diplomacy must serve domestic affairs, more specifically, the task of socialist construction focusing on economic development. If we stick to the old diplomatic strategy, we will not be well positioned to truly open up or create a good international environment for domestic economic development. Forty years of experience demonstrates that opening-up offers a channel for learning and cooperation to enhance the development of socialist construction. But to whom should we open? We once played in hard luck in that question. Building socialism requires us to learn from the world’s most advanced technology and management and all the outstanding results created by human civilization. With that in mind, we have learned during the past 40-plus years of opening-up to deal with the highly developed capitalist countries, to cooperate with all developed countries and international multilateral organizations dominated by them, and to rationally address the complicated conflicts and challenges in different ideological competitions without going backward. Today, we are facing a new and increasingly complex international situation. China-US relations and the ongoing trade war have sparked much debate. Some irrational views have overemphasized the essentiality of the means of struggle and ignored the approach to development through cooperation. We should remember that in face of the difficulty and challenge in socialist construction, we should adhere to the diplomatic path of peace, development and cooperation more steadfastly and advocate and promote the construction of a community of shared future for mankind more persistently. As long as we persist in the opening-up policy to constantly learn from the world’s most advanced technology and management and absorb and draw upon all the outstanding achievements of human civilization, we will be able to make new achievements in socialist construction.

2.3 Seize the Historic Opportunity to Persistently Advance and Lead the New Round of Industrialization The new round of industrialization has surpassed its predecessors with a larger scale, broader scope and higher level and overturned the dominant role developed countries play in it. Some economists call the globalization model it triggered a “dual loop” model. Developed countries and emerging powers including China have formed

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a higher-level loop of cooperation in technology, trade and investment, in which China is at the low tier; meanwhile, emerging powers including China and the vast developing countries have formed a lower-level loop, in which China is at the core and a high tier. The traditional “core-periphery” pattern of developed and developing countries has been subverted and restructured in the new round of industrialization and globalization. This proves two points: First, cooperation in technology, trade and investment with developed countries is still the key path for China to make improvement in industrialization; and second, based on its position in the new round of industrialization and globalization, China is already able to play a leading and dominant role in South-South cooperation. The new round of industrialization covers not only the so-called Industrialization 4.0, but also the industrialization of traditional manufacturing required by the collective industrialization of developing countries. While making compromises with developed countries on Industrialization 4.0, China also has huge historical opportunities to work with the vast number of developing countries to promote the industrialization of traditional manufacturing. As long as we can adhere to the cooperation path that accords with China’s national capacity and meets the industrialization needs of the majority of developing countries participating in the Belt and Road Initiative and the Asian Infrastructure Investment Bank, China will be able to play a leading role in the new round of collective industrialization of developing countries. And then when the vast developing nations smoothly enter the path of industrialization, China’s leading and dominant role will be a matter of fact in the globalization led by that collective industrialization. Of course, to gain such a leading role and core status in South-South cooperation, China has to depend on its own advantages in technology, market and capital in the new round of industrialization. But these advantages are acquired largely from its trade, investment and cooperation with advanced countries. Therefore, we should have a clear understanding of China’s leadership in the new round of industrialization and globalization, realizing that our country may play a leading and even dominant role in the industrialization and globalization of South-South cooperation, but it is still a learner and pursuer in economic and trade cooperation with developed countries.

2.4 Have a Rational View of the Resurgence of Nationalism to Believe in the Path of National Governance and Prevent Nationalism Going Astray There was a theory in the community of economists that every twenty years or so, there would be a trend of thoughts that either affirms or resists nationalism. After the liberalism represented by the Washington Consensus prevailed so long a time after the Cold War, the nationalism is now sweeping with ferocity. Shortly put, this resurgence of nationalism roughly consists of three trends: the first is the tide of populism, anti-globalization and de-globalization that has spread across the Western

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world; the second is the compromise and concession of global governance to national governance programs; and the third is the national governance path of the emerging powers has achieved success and generated competitive effects. Among these three trends, China’s national governance pattern can be said to have produced a great demonstration effect. China has made great achievements in the past 40 years of reform and opening-up. It has shown a typical national governance mode, which is appreciated by many developing countries and even some developed countries in the world while greatly boosting confidence in the path it takes. There should be many kinds of development roads. For a long time, Western countries have forcibly peddled their liberal democracy model worldwide, which does not accord with the national conditions and development needs of the majority of developing countries though. China’s achievement in development provides a different choice. China’s development experience and path should be respected and learnt by others, with developed countries included, rather than being belittled and rejected. But at the same time, we should have a rational view of our national governance paradigm so that we can be proud of our achievements while preventing nationalism going astray. Some domestic scholars have overpraised the national governance model in articles with headlines beginning with “amazing China” and blindly rejected the helpful experience of other governance methods. There were even faulty observations that denied market economy and private economy. These phenomena warn us that if nationalism goes astray, it will shake and undermine our important results of reform and opening-up in the past 40 years. Historically, nationalism has been played up too much, not too little, in thousands of years of national governance in China. In the history of socialist construction, we once fell into the mire of full nationalization and highly centralized system. The task of our reform of the socialist political and economic system is to pull state governance out of this mire and promote the country to develop a socialist market economy that attaches greater importance to the law of the market economy and gives full play to the advantage of the private economy. Practically, we often stress to make state-owned economy larger and stronger, but let the private economy be accused of “original sin” by people with an ulterior motive. When nationalism and national protectionism prevail globally and the legacy idea that left-wing is better than right-wing in our history plays its part, nationalism is much more likely to go off the course. From the gains and losses of New China in its 70 years of state governance, we have learnt that we must be vigilant against nationalism going astray, so that our socialist cause will not take a detour and the great rejuvenation of the Chinese nation can be put on the right track.

2.5 See the Headwind of Globalization and Continue to Lead Global Development Today’s world is indeed experiencing a major anti-globalization trend. But does that mean globalization is on the ebb and will never rise again? Given that China’s

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achievements in socialist construction over the past four decades of reform and opening-up have been mainly made in the context of globalization, it is necessary for us to maintain a rational view of the current development trend of globalization and continue to lead global development on that basis. To do that, we should, first of all, look at the driving force for globalization from a rational perspective. What drives globalization? Technology, market or national globalization policy? Strictly speaking, all the above three. The first driver is technology. Technological progress makes global connectivity possible. Internet and transportation technologies have promoted global connections. Particularly with the rapid development of network and AI technologies worldwide, globalization is evolved, too. These technologies have turned every specific web user into a micro terminal of globalization. Globalization is individualized at the terminal level. Individual terminals are converged and translated into big data. In this way, individuals become the smallest nodes in global big data. This can also be called the “individualization” of globalization. The second driver is market. Global market connects all nations in the world through the international division of labor and trade. At a deeper level, the production and sales chains are linked together across regions and countries, forming a global value chain. Globalization has extended from countries to multinationals and then to inside the multinationals. The formation of global value chains depends on the multinationals’ maximizing profit and minimizing operating cost, and the price and organizational costs of a series of market factors. The invisible hand of markets is pushing the global value chain to extend further, thus driving the realization of globalization inside the multinationals. The third driver is national globalization policy. National globalization policy is affected not only by a country’s own judgment on the economic benefits and losses brought by globalization, but also by the political pressure from domestic interest groups. Especially since the financial crisis in 2008, the drawbacks of globalization have fully revealed. After that financial crisis broke out, there was not a world government for overall governance and rescue and countries in distress could only count on themselves. So the resurgence of nationalism has become a natural response to resolve the crisis. People begin to reflect on the “Golden Straitjacket” countries put on in globalization and hope to regain the legitimacy and autonomy of economic governance policies, which are the most important reasons for the resurgence of nationalism and the prevalence of de-globalization policies in modern times. Yet, the moves of some major Western countries that they have gone from reflection on the disadvantages of globalization to populism, ultra-nationalism and even hatred against globalization and then pursue extreme de-globalization policies are contrary to the general trend of globalization driven by technologies and markets. The new era may be another driver. Today’s globalization also coincides with the collective industrialization of developing countries. Since the 1970s and 1980s, a large group of developing countries have embarked on the industrialization road. This collective industrialization, especially in the new century, has propelled the collective rise of emerging powers, which in turn are leading the industrialization in developing

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countries to a climax through globalization. Therefore, globalization is expanding in the group of developing countries along the path of collective industrialization. The above drivers other than national policy work for the in-depth extension of globalization. As we learn more about globalization, we need to follow its historical development trends and draw on our own strengths to play an active leading role. Additionally, we should despise various de-globalization policies strategically but take seriously the challenge they bring tactically, and then make active response in order to advance our reform and tackle risks. Advocators of the new round of de-globalization policies represented by the Trump administration are not really against globalization. Their true purpose is to promote a globalization dominated by themselves. The high standard market rules set out in the US-Mexico-Canada Free Trade Agreement and the US-Korea Free Trade Agreement have brought new challenges to many of our non-market areas. In the face of challenges, we must keep confidence in the nation’s system and at the same time, follow the general trend, re-examine ourselves from the perspective of the general law of the development of market economy, and deepen the reform of the market economy. It must be acknowledged that over the past 40 years of reform and opening-up, many hard-to-change areas have increasingly consolidated into bastions of sectoral interests and special interests. These areas must be revolutionized. Over the years we have anticipated for a strong political authority that can carry out reform and expected the top leadership courageous enough to boost the top-level design of reform. Implementing reforms is like sailing against the current. We cannot wait until the resistance to change expands from individual interest sectors and special interest groups to a larger scale; otherwise, reforming will be more challenging. Therefore, we must work harder in this regard.

2.6 Leverage China’s Unique Advantages and Strive to Build a Community with a Shared Future and Development Capability In the context of global change and world development at a turning point, the development issue today is more noticeable than at any time in history. During a long period, the development issue of developing countries has been defined by the Western world as an issue of democratization and an issue of approaching and converging with the Western political systems, ideologies and values. In fact, most of the developing countries have adopted the Western democracy. But it is, in fact, comprehensive and complex. Western democracy has not brought about real development to the developing world. Developing countries can only find their own development path through continuous experimentation based on their own national conditions. In more than 40 years since reform and opening-up, China has found its own development path, realized the industrialization of traditional manufacturing, and advanced into the process of new industrialization. In addition, it has initiated the government-led

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national governance process, established and improved the socialist market economy through reforms, implemented import substitution and export promotion strategies through opening-up, had the infrastructure for economic and social development built first, enhanced the construction of industrial parks, and worked with developing countries in development investment and cooperation, etc. This is China’s major experience in development over the past 40 years and the secret to its success. Today, we have shared our development experience and capabilities with other countries across the world via the Belt and Road Initiative and the establishment of a new type of financing mechanism for development, built a community of shared future and shared development capability with the majority of developing countries through various forms of development finance and development cooperation, and built such a community with developed countries by developing a global partnership for development on an equal footing, to truly promote common development and co-prosperity all over the world.

References 1. Angus Maddison, “The World Economy: A Millennial Perspective”, OECD Publishing, 2001 2. Richard Dobbs and Jaana Remes, et al., “Urban World: Cities and the Rise of the Consuming Class”, McKinsey Global Institute Report, 2013, https://www.mckinsey.com/featured-insights/ urbanization/urban-world-cities-and-the-rise-of-the-consuming-class 3. Paul K. MacDonald and Joseph M. Parent, “The Road to Recovery: How Once Great Powers Became Great Again”, The Washington Quarterly, Vol.41, No.3, 2018, p.21 4. Lin Yifu and Wang Yan, Going Beyond Aid: New Ideas of Development Cooperation In A Multipolar World, Beijing: Peking University Press, 2016, pp. 14–15 5. Yao Shuai, “Characteristics, Changes and Future Trend of International Development Assistance”, Journal of International Economic Cooperation, Vol. 1, 2017, pp. 27–30 6. Zheng Yu, “Aid Effectiveness and New Ideas in A New Development Cooperation Model”, World Economics and Politics, Vol. 8, 2017, pp. 135–155 7. Huang Chao, “Transformation of Global Development Governance and China’s Strategic Choice”, Global Review, Vol. 3, 2018, pp. 29–49

Transformation of International Order, Globalization and External Constraints on China’s Opening-Up Hongzhong Liu

1 Introduction Since Donald Trump took office, the global economic and political order has entered a period of severe turbulence. The trade war with China first initiated by the US in 2018 has caused a huge impact on the global economy while pushing the economic relations between China and the US to the edge of “decoupling”. On September 15, the International Monetary Fund (IMF) lowered its forecast for world economic growth for the fifth consecutive quarter and even predicted that the growth rate in 2019 would fall to its lowest level in the ten years since the financial crisis. The SinoUS trade war is a microcosm of the current tense and turbulent international political and economic relations. For a long time to come, all countries in the world will make various difficult strategic and policy choices in this changing international context. Whether to continuously move towards isolationism and confrontation with other countries just as Trump does or to work together to overcome various difficulties faced by all the countries will determine whether the world can return to a peaceful future. The Sino-US trade war is both a bilateral issue and, to some extent, a multilateral issue. From the perspective of the subjects of confrontation, the Sino-US trade war is naturally just a contradiction and dispute between the two countries. However, since the beginning of the Sino-US Trade war in 2018, from the contradictory attitudes generally held by other western countries, i.e. betting on both sides and adopting a wait-and-see attitude, we can observe the multilateral characteristics of the Sino-US trade war. On the one hand, due to their constant friction with the US, their discontent with the unilateralism of the US and the attractiveness of the huge domestic market of China, these countries have to hold high the banner of multilateralism and globalization and advocate the early subsidence of the Sino-US trade war so as H. Liu (B) Liaoning University, Shenyang, China e-mail: [email protected] © The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2021 H. Men and X. Xiao (eds.), Report of Strategic Studies in China (2019), https://doi.org/10.1007/978-981-15-7732-1_3

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to avoid “being trampled like the grass when two elephants fight”; however, on the other hand, since the global financial crisis, while China’s international (economic) influence has continued to increase, many European countries have experienced a sense of frustration that their economic development space has been squeezed. The reason is that these countries have generally believed that China’s opaque policy support and institutional arrangements have led to the rapid increase in the international competitiveness of Chinese enterprises (especially state-owned enterprises), which is obviously unfair for Western countries and enterprises that are based on free market rules. Therefore, these countries had different levels of schadenfreude when the US launched a trade war with China. Even in the eyes of many Western media, Trump has done something that other countries could not afford to resent in the initiation of a trade war with China. The contradiction between China and the western world represented by the US deeply reflects the ongoing transformation of international economic and political order. Since the 1990s, in the wave of economic globalization and neoliberalism, emerging economies represented by China have made full use of their comparative advantages to participate in the international division of labor, and have achieved high-speed economic growth and constant upgrade of their position in the division of labor in the global industrial chain. At the same time, Western developed countries, as initiators and leaders of globalization, gradually lost their way in the 1990s when neoliberalism reached its peak. They thought they had permanently found the golden key to have the financial crisis by the throat, just as former Federal Reserve Chairman Bernanke stated in the preface of the book The Great Contraction, 1929–1933 by Friedman, a representative of neoliberalism, “Let me abuse slightly my status as an official representative of the Federal Reserve. I would like to say to Friedman and Schwartz, ‘Regarding the Great Depression, you are right, we did it. We are very sorry. But thanks to you, we will not do it again’”.1 However, it was this complacency that had led to the failure of domestic policies at many levels, resulting in the increasingly widened gap between the rich and the poor, shrunken social welfare, overflowed financial capital and eventually the outbreak of a century crisis in the country. Since 2008, due to the accumulation of various factors, the economic crisis in developed countries began to transform into a social crisis and gradually spread to the world, eventually leading to the dual crisis of globalization crisis and neoliberalism crisis. Trump’s victory in the election, Brexit and the rise of European right-wing parties indicated that this crisis was entering its climax, with bleak prospects and invisible development direction. So how did all this happen? What do these problems really mean to the current global order? Where will we stand in five, ten or twenty years from now? What would be the alternative for China with the US government launching a trade war with China as a cover up of its domestic problems and other Western countries betting on both sides? All the above questions will be discussed in this article.

1 Friedman

and Schwartz [1].

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2 The Collapse and Reconstruction of the World Order: From “Great Moderation” to “Great Transformation” How Did the World Order Move from “Great Moderation” to “Great Transformation”? “When a world order collapses, reflection on it begins”. These are the beginning words of the book State of Mind of Our Time.2 In this wonderful collection of works by 15 university professors, political critics and columnists from 12 countries around the world, thought-provoking discussions are conducted on globalization crisis and neoliberalism crisis triggered by a series of events since 2015 (the refugee crisis in Europe triggered by the Syrian conflict, Brexit, rising of Alternative for Germany, Trump’s victory in the election, etc.). In the authors’ view, it was precisely due to the combined effects of globalization crisis and neoliberalism crisis that the world has entered a so-called state of “Great Depression”, i.e. “these problems caused by the lack of political regulation of global interdependence have encountered a society that is both institutionally and culturally unprepared”.3 Economists often use “Great Moderation” to describe the characteristic of the global economy from the mid-1980s to 2007, mainly manifested as high output, low inflation and declined economic fluctuations in central countries, with economic crises basically occurring in peripheral countries. In fact, the international order from the 1990s to 2007 was also characterized by “Great Moderation”. Even with the outbreak of major international crises such as the war in the former Yugoslavia, the “911” terrorist attacks and the Iraq war, the end of the Cold War ushered in a relatively stable safety period for the international order from the perspective of changes in the international political landscape. Generally speaking, the international order in this period has two characteristics: one is the international system of one superpower and multiple great powers dominated by the US. With the drastic changes in Eastern Europe and the collapse of the Soviet Union, the world emerged from the shadows of the Cold War. During the period, Europe accelerated the integration process but could barely compete with the US in terms of overall strength, and the international position of rising powers began to creep up but was still far behind Western countries. The US became the only superpower in the international system, and the hegemonic structure featured by one superpower and multiple great powers formed the characteristic of a pyramid-shaped international system. The other characteristic is that neoliberalism and economic globalization became the dominant trend of the world economy. The neoliberalism originated in the developed countries in America and Europe in the 1980s entered its heyday in the 1990s with the end of the Cold War, technological progress and rapid globalization. Whether actively or passively, transition countries in East Asia, Latin America and Central and Eastern Europe were coerced by neoliberalism to join the wave of globalization. The Washington Consensus became a cure-all solution for all the problems during the period. From the 2 Geiselberger 3 Geiselberger

[2]. [2], p. 9.

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end of the Cold War to the outbreak of the global financial crisis in 2008, even with a series of large and small economic crises, such as the East Asian Financial Crisis and the dot-com bust in the US, the wealth created by Western developed countries and emerging economies in this period was unprecedented on a whole and comparable to that in the “Pentium Times” of the 1920s and the “Twenty Good Years” of the 1950s to 1960s. The year 2018 when the global financial crisis broke out is bound to be the first year of the restructuring of the world. The crisis fully exposed the imbalance of growth and development between developed countries and emerging countries as well as the rich (capital) and the poor (laborer) within developed countries in a form of huge disruption and division. Looking back, we can find in it all answers to the above series of seemingly inconceivable events since 2015. Heinrich Geiselberger (2017) summarized the state of the world since the global financial crisis as the “Great Depression” caused by the common effects of globalization crisis and neoliberalism crisis.4 Comparing with the great transformation of European civilization from the pre-industrial world to the industrialized age as described by Hungarian economic historian Karl Polanyi in his classic book The Great Transformation published in 1944, we will find that the two periods had surprisingly similar characteristics: the failure of the free market system and the crack between basic social values (full employment, poverty eradication, social security, etc.) and the ideology of spontaneous regulation of the market.5 The advent of the “Great Depression” also meant the beginning of the era of “Great Transformation”. In this process, changes in three areas would have a profound and vital impact on the changes in the international order. First, the rise and fall of rising powers and established powers. When outlining the main ideas of the book The Rise and Fall of The Great Powers in the foreword, Kennedy [4] pointed out that the relative position of first-class countries in world affairs is always changing for two main reasons: one is that the growth rate of the national strength of each country is different, the other is that technological breakthroughs and changes in organizational forms enable one country to have greater advantages than another.6 According to George Modelski’s long cycle theory, four leaders have appeared successively in world politics since 1500 AD, i.e. countries having overwhelming intercontinental “power projection capabilities” and more or less presiding over and stipulating the basic norms of world politics, respectively Portugal in the sixteenth century, the Netherlands in the seventeenth century, Britain in the eighteenth and nineteenth centuries, and the US in the twentieth century.7 Although Kennedy did not define the exact meaning of the national strength of a country, the economic aggregate is undoubtedly the most basic and important indicator. A large number of studies have shown that, since the end of the twentieth 4 Geiselberger

[2], p. 9. [3], p. 8. 6 Kennedy [4], p. 35. 7 Wang Zhiming, “The Last Great Powers”, in Paul Kennedy, The Rise and Fall of The Great Powers, Foreword 2. 5 Polanyi

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Source: IMF World Economic Outlook Database, April 2018.

Fig. 1 Proportion of advanced economies and emerging market and developing economies in global GDP. Source IMF World Economic Outlook Database, April 2018

century, the world is moving towards another era of the rise and fall of great powers. From the perspective of the country alone, the changes in the relative national strength of China and the US are becoming more and more favorable to China. But from a broader perspective that profoundly affects the changes in the structure of the global order, it is undoubtedly more meaningful in the long term to examine the replacement of the relative economic strength of emerging countries and developed countries on a whole. Figure 1 shows that, due to the difference in growth rates, the proportion of emerging market and developing economies in global GDP has continued to increase since the 1990s, reaching 40% in 2018, which was almost twice the proportion of 21.8% in 1990; correspondingly, the proportion of developed countries in the same period dropped from 78.2 to 60%. Although there is still a gap between the economic strength of emerging countries and developed countries as a whole, the gap is narrowing rapidly. Just looking at China, its rate of contribution to the increase of global GDP has exceeded 30% in each year. The rising relative strength of emerging countries will undoubtedly have an important impact on the global order. Whether new global governance can adapt to the changes in the international landscape will, to some extent, determine the smooth advance of the adjustment of the future international order and ultimately ensure the peaceful development of the world. Second, the reversal of neoliberalism and economic globalization instead of stagnation. Since the 1980s, neoliberalism and economic globalization have kept pace with each other like twin brothers. From 1980 to 1981, when Mrs. Thatcher and Reagan adopted pro-cyclical economics to initiate the disruption of traditional industries in order to achieve the specific goal of atomizing the working class and

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undermining the effectiveness of trade unions, with the help of economic globalization driven by the information technology revolution, neoliberalism has been advancing triumphantly and won a victory worldwide. However, neoliberalism and economic globalization have not been able to realize the aspiration of universal prosperity as proclaimed by Mises and Hayek, originators of the ideology and theory, and Milton Friedman, their legacy carrier. Swept by the idea of freedom and profit-seeking capital, neoliberalism and economic globalization have brought many profound structural changes to the international division of labor and the world economy, such as offshore outsourcing of manufacturing, formation of global value chains that restructure large enterprises into small companies, tax cuts to shrink governments, privatization of public services, and financialization of daily life.8 While enabling capital to gain more profits, these structural changes have gradually destroyed the comfortable and decent middle-class life of workers and other working classes. According to Hanspeter Kriesi, the classification caused by globalization has separated the beneficiaries from the losers completely. “The beneficiaries of globalization may include entrepreneurs participating in international competition and qualified employees in related sectors, as well as global citizens. On the contrary, the losers in globalization are entrepreneurs and qualified employees in traditionally protected sectors, all low-skill employees, and citizens with strong identification with their country”.9 The social disruption caused by neoliberalism and economic globalization eventually destroyed themselves under the impact of the global financial crisis in 2008, putting themselves in a serious “twin crisis”. From the “Arab Spring” and the Occupy Wall Street movement in 2011 to the constant “Black Swan Events” and Brexit since 2015, and to Trump’s rise to power in 2016, neoliberalism and economic globalization continued to suffer the impact of what Polanyi called “countermovement”. Neoliberalism was on the verge of collapse, and globalization was also in a state of devastation. From the development trend, and according to Paul Mason, globalization will fall apart unless we give up neoliberalism. What’s more, it is very clear that the process of falling apart has begun.10 But what are the alternatives to neoliberalism? The rise of authoritarian populism in Europe and the US has brought great uncertainty to the future world development and the transformation of the global order. Third, the severely hampered multilateralism. Towards the end of World War II, in order to maintain the position of the US, a country rising from the war, as the world’s most powerful leader, US President Franklin D. Roosevelt and his colleagues were determined to create a world order that would not only enhance their wealth and power, but also extend their values to any corner of the world. In the end, as a hegemonic power, the US chose a “highly demanding institutional form” that had an extraordinary historical significance for the reconstruction of the post-war global order, i.e. the multilateralism that was defined by Robert Keohane as “coordinating

8 Geiselberger

[2], pp. 150–151. [2], p. 61. 10 Mason [5], p. 157. 9 Geiselberger

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the practice of national policy among three or more countries”.11 The complete set of international systems constructed under the leadership of the US covered almost all areas including world politics, economy and security. Under this framework, the design of a series of institutions of multilateralism such as the United Nations, the World Bank and the IMF had laid a solid institutional foundation for the world peace and economic growth as well as the cooperation and development between countries after World War II. After the end of the Cold War, the unipolar hegemony of the US reached its peak, but in the context that multilateralism had become the basic paradigm of global governance, the US would still be subject to certain constraints and restrictions in its hegemonic diplomacy, being unable to do whatever it liked. In other words, multilateralism had gained strong vitality and vigor after decades of self-reinforcement, and was an invisible and tangible constraint for any country trying to exercise hegemony and unilateralism, including the US. Nevertheless, with the rapid and profound evolution of the international economic and political situation, the uncertainty and instability bulged, beginning to challenge the foundation of multilateralism in global governance unprecedentedly. The main manifestations were as follows: firstly, the reform of the global governance system was even more difficult and could not reflect the profound changes in the structure of international political and economic power. For example, the Doha Round of WTO trade negotiations that began in 2001 was in trouble, with no hope at all; IMF’s quota reform was in a stop-and-go state, and the quotas of emerging powers such as China were completely unequal to their economic strength. Although China’s GDP was more than double that of Japan, its quota (6.41%) after IMF’s quota reform, which was finally adopted in 2016 after five years, was unexpectedly lower than that of Japan (6.48%). The 15th quota reform was originally planned to be completed at the IMF Fall Meeting in October this year. If the quota reform was completed, China’s quota and voting right in the IMF would rise from the third place to the second. But in the end, due to the obstruction of some developed countries, the quota reform plan was stillborn. Secondly, the prevalence of unilateralism, protectionism and populism had greatly shaken the foundation of the governance system of multilateralism. The US was the most important cornerstone for the stable development of multilateralism after the war, although it often took unethical actions of “multilateralism a la carte” or “instrumental multilateralism” based on the need to seek hegemonic benefits. But generally speaking, the US had not sought to withdraw from the institutional arrangements of global governance of multilateralism. However, since Trump came to power, under the governing principle of “America First”, the US has been addicted to “retreating groups”, having withdrawn from a dozen of groups, including TPP, Treaty of Paris, Iran’s Nuclear Deal, UNESCO and HRC. He even threatened to withdraw from the WTO and even the United Nations. The unilateralism policy of the US has become the biggest element of uncertainty in the future development of multilateralism, having caused many adverse effects in the international arena, such as Brexit, Japan’s withdrawal from IWC and Qatar’s withdrawal from OPEC.

11 Changle

[6], pp. 170–181.

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In the field of economics, many economists, from Paul Krugman to Joseph Stiglitz, and from Dani Rodrik to Thomas Piketty, have done a lot of research to attack the shortcomings of the existing economic development paradigm. At the same time, they have also put forward many proposals to promote the progress of the times in response to the current disordered international and domestic economies. They stressed the importance of the government role and fair income distribution to economic development, and emphasized that excessive and unrestricted international competition would inhibit economic growth. However, the world order has been systematically disrupted, and a new era of transformation of the world order, which is very similar to the characteristics of the “Great Transformation” of the early twentieth century as defined by Polanyi, has been opened. So, where will the future world order go? Zygmunt Bauman, a professor of sociology at the University of Leeds in the UK and the University of Warsaw in Poland, cited a paragraph from a novel of Austrian writer Kafka, The Departure, to vividly summarize the current confusion facing our world: “A clarion came from afar, and I asked the servant what it meant. He knew nothing and heard nothing. At the gate, he stopped me and asked, ‘Master, where are you going?” I don’t know’, I said, ‘I just want to leave this place, I just want to leave this place, just want to leave this place. Just want to leave this place, only then can I reach my goal’. ‘So you know your goal?’ He asked. ‘Yes’, I answered him, ‘I have already said that: leave this place. This is my goal.’”12 German sociologist Wolfgang Streeck advocated the use of the concept of “interregnum” proposed by Antonio Gramsci to describe this stage, i.e. this is an indefinite period, during which the old order has been destroyed and the new one has not yet been established. The old order was the global capitalist world that collapsed under the charge of populist savages in 2016; as for the look of the new order to be established, the essence of the term “interregnum” has described it—indefinite. According to Gramsci, “a variety of pathological phenomena”13 will take place before the new order is established.

2.1 The Core Issue of “Great Transformation”: Rise of Populism “Populism” is a broad label that encompasses a series of different movements. The term originated at the end of the nineteenth century, when a coalition of farmers, workers and miners in the US joined forces to oppose the Gold Standard System as well as Northeast banks and other financial institutions. Today’s populism involves a wide range of political movements, including anti-euro and anti-immigration political parties in Europe, Coalition of the Radical Left in Greece and Podemos in Spain, Trump’s anti-trade nativism in the US, Chavez’s economic populism in Latin America, and many other populisms in between. These different types of populism 12 Geiselberger 13 Ibid.,

p. 256.

[2], p. 32.

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have a common feature, the so-called anti-establishment tendency. They claimed to be the spokesperson of the people, opposing the elite, liberal economics and globalization, and often showing a preference for autocratic totalitarian governance.14 The two most important forms of populism are right-wing populism and leftwing populism. Right-wing populism usually stresses cultural divisions, nationalities, nations, religions or people’s cultural identities, and accordingly opposes external groups, regarding them as a threat to public opinion. This populism currently exists mainly in Europe and the US. In Europe, right-wing populists portray Muslim immigrants and minorities (Gypsies or Jews) as “others”, while in the US, Trump has repeatedly demonized Mexicans, Chinese and Muslims. Left-wing populism is largely caused by economic divisions, which are mainly manifested by the distinction between the wealthy group (the minority elites) that controls the economy and defines its rules and the powerless low-income group (the majority civilians). This populism mainly exists in Latin America and has begun to spread in the US after the global financial crisis. In Latin America, the low-income group has been subject to the huge impact of rapid trade liberalization, financial crisis and entry of foreign companies into sensitive domestic industries (such as mining or public utilities), so its anger after mobilization is aimed at these forces and domestic groups supporting them. In the US, mainly due to the increasing imbalance in income distribution under the huge impact of neoliberalism since the 1980s, which has downsized the middle class in the country, the dumbbell social structure has gradually evolved into a pyramid structure, and finally transformed rapidly into the Occupy Wall Street movement, which was 99% v 1%, after the outbreak of the financial crisis in 2008, by means of opposing government’s use of taxpayers’ money to save large financial institutions, the creator of the crisis. Currently, the growing populism, especially right-wing populism, is the result of the failure to make timely adaptability adjustments to domestic policies in the rapid development and combined effects of neoliberalism, technological change and globalization since the 1980s. Neoliberalism, which is characterized by advocating market fundamentalism, has brought privatization, deregulation of labor markets, abolition of worker protection measures, expropriation of land and full liberalization of financial capital markets to all countries. The fourth technological revolution, with Internet and information technology as its main content, has really turned the world into a “global village”. The combination of neoliberalism and technological progress has effectively promoted the rapid development of economic globalization. Financial capital has swept the world, winners have taken all, and losers have been completely eliminated. As former Prime Minister Tony Blair warned at the Labor Party conference in 2005, the debate on globalization is like debating whether autumn comes after summer. “The nature of this changing world has nothing to do with tradition. No need to show understanding and sympathy for any fragility, or to respect past honors. There are no habits or conventions to speak of. It is full of opportunities,

14 Rodrik

[7].

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but these opportunities are only for those who quickly adapt to the status quo without complaint, those who are open-minded and willing and able to make changes.”15 Advocators of neoliberalism are convinced that, through the penetration effects of the so-called trickle-down economics, everyone, including the poor, will benefit from growth. But Polanyi’s research showed that this conclusion is not supported by historical facts at all.16 Polanyi’s conclusion is once again confirmed by the unequal development between and within countries that has prevailed since the twenty-first century. The vast working class coerced and abandoned by the wave of neoliberalism and globalization has gradually become “the stranger of its own country”. As Bauman [8] put it, “Once upon a time, people thought that the future meant more comfortable and speedy, but nowadays, people regard this idea as a terrible threat, fearing that they will be identified and classified as one who is both incapable and unsuitable for the burden of the future, who loses value and dignity and is thus marginalized, excluded and abandoned.”17 To understand more fully how populism rose in the US and how Trump came to power, we can find answers from the books of three authors. In his book Our Kids, through a lot of statistical data and case facts, Robert Putnam, a political scientist at Harvard University and former Chairman of American Political Science Association, describes the phenomena of the current American society, such as severe polarization between the rich and the poor, almost closed channel for poor children on their way up, increasingly greater class divide, and the end of the American dream in the early twentieth century.18 In his book Hillbilly Elegy, J. D. Vance, a writer and a senior manager of an investment company, describes the impact of the decline of American society, regions and classes on those borne to be entrapped in it through his personal experience. He was lucky to break through a white blue-collar family of underclass that was full of drug abuse, alcohol, poverty and trauma, and eventually became a senior manager of an investment company. But his success was one of the few to the white blue-collars of underclass in the US, as most of them were unable to get rid of hereditary poverty and distress tightly wrapped around their necks like an inherent chain. Being born with poverty “is like the original sin, haunting the locals for life”.19 In his book An Empire Wilderness, Robert Kaplan, a famous American geopolitical expert, who traveled from St. Louis in the Central United States to Portland in the west, and from the Canadian border in the north to the Mexican border in the south, found an America that is full of divisions and fragmentations in race, class, education and geography. In this America, wealth is rapidly increasing, but the gap between the rich and the poor is also widening; traditional beliefs have been lost, but new beliefs are only in the bud. The author concludes that the most successful country in the world has entered the last stage of its history, which is also a highly unknown stage.20 15 Geiselberger

[2], p. 153. [3], p. 1. 17 Bauman [8], p. 33. 18 Putnam [9]. 19 Vance [10]. 20 Kaplan [11]. 16 Polanyi

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2.2 How Globalization Becomes Scapegoat for Populism? Harvard professor Frieden [12] once said that “globalization is an option, not a fact”.21 Through the rise and fall of global capitalism throughout the twentieth century, he showed that the assertion believed by many people at the present day that globalization is inevitable and irreversible is completely wrong. In fact, globalization is a double-edged sword. On the one hand, it has greatly increased opportunities for exporters, multinational companies, investors and international banks in various countries to greatly increase global trade and investment. While promoting the economic interests of developed countries, it has also helped some developing countries achieve rapid economic growth and poverty reduction through integration into the world’s industrial division. On the other hand, if there is no effective management, globalization will also become a disruptor and a destructor of the traditionally stable and effective order. The two biggest “negative heritages” brought to the economies of the world and various countries by the wave of globalization driven by neoliberalism and the information network technology revolution are global economic imbalance and domestic economic imbalance that appear simultaneously. Global economic imbalance. In 2003, IMF sent out the first warning of global economic imbalance, stating that there had been a worrying trade imbalance between emerging economies represented by China and developed economies represented by the US. Such imbalance would bring great uncertainty to the future development of the global economy and become a hidden danger for the development of the world economy. But the global economic imbalance had not been alleviated as a result of the IMF warning. Instead, it had continued to expand until the outbreak of the global financial crisis. Global economic imbalance has not only boosted the outbreak of the global financial crisis, what’s more, it could lead to conflicts among related countries with imbalanced trade. American economists Gomory and Baumol [13] conducted an in-depth analysis in this regard. They raised and analyzed the question that, in the modern world economy, the increase in the production capacity of one country would usually impair the general welfare of other countries, and international trade might lead to major conflicts of interest among trading countries. According to the study of the two authors, there are two factors worldwide that determine the level of welfare of a country: the size of the “cake” and its share in it. Therefore, countries depend on each other (to make the cake bigger) and conflict with each other (to get a bigger share). The optimal equilibrium for country A is likely to be sub-optimal for country B. Whether international trade is reciprocal or benefits one side and damages the other depends on the composition and choice of trading partners. Gomory and Baumol theoretically and empirically demonstrated the logic of the dynamic change of trade, which is from win–win to conflicting. Their conclusion showed that, in a two-state model, when the share of one country exceeds 70% and that of the other is less than 30%, reduction of the share by the large trading power will help make the cake bigger. Even if its 21 Frieden

[12], p. 1.

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share is small, the overall welfare will be improved, which is a win–win situation and therefore reciprocal. However, when the share of a country is between 30 and 70%, conflicts often arise between trading partners.22 In reality, the figures are not necessarily as accurate as in the model, but the essential meaning is that, in the process of catching up, and as their amount of economies grows larger, developing countries’ trade relations with established powers will more likely change from reciprocal to conflicting. Both the US-Japan trade war in the 1980s and the Sino-US trade war since 2018 have confirmed the above conclusion to a certain extent. Domestic economic imbalance. Where domestic policies have not changed with the times, the unbalanced development of the international economy will also bring about imbalances in the domestic economy. The well-known Stolper-Samuelson Theorem (1941) held that trade liberalization would lead to very dramatic distributional effects. Specifically, in a model with two commodities and two production factors, where each element has sufficient inter-sectoral liquidity, the owner of one of the elements will inevitably be harmed by the trade liberalization. The actual returns of those factors widely used by importable goods will inevitably decline. By comparing the rate of return on capital (r) with the rate of economic growth (g), Piketty [14] proved how unconstrained capitalism in the context of neoliberalism since the 1980s had led to the formation and expansion of income inequality in a country. His study showed that the rate of return on capital always tends to be higher than the rate of economic growth, while the wages of ordinary people usually increase in pace with GDP. Therefore, with the continuous growth of the economy, the income gap between capital and labor will continue to expand.23 Unregulated free trade can lead to economic imbalance between countries, and if the issue of redistribution brought by trade is linked to unfair trade, greater problems will emerge. For example, if currency manipulation, problems of state-owned enterprises, government subsidies and property right issues are used as the targets of attacks, public opposition will be aroused. In other words, it is not the inequality itself that the public opposes, but rather being treated unfairly. The fundamental reason for the Trump administration to launch a trade war with China was that China had taken great advantage of the US in the trade between the two countries, and to achieve this, he believed that China had adopted unfair industrial and trade policies. Regarding the above points, a recent study by three psychologists has provided interesting support.24 Their thought experiment is as follows. Suppose Harry and John own two competing companies. In each competition, Harry overcomes John, causing John and his employees to lose their jobs. In this context, the authors’ question to the participants is to ask them to express their feelings about each of the following scenarios: (1) Harry works hard, having a lot of savings and investments, and proposing new technologies and products, while John lags behind; (2) Harry finds a cheaper (or superior) supplier in Germany; (3) Harry has a supplier in Bangladesh that provides outsourcing services and employs workers who work 12 h 22 Gomory

and Baumol [13]. [14]. 24 Starmans et al. [15], p. 82. 23 Piketty

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in a shift and under dangerous conditions; (4) Harry brings Bangladeshi workers to the US on temporary contracts and make them work under conditions that violate domestic labor, environment and safety laws. The results of the experiment showed that, although Harry’s returns are greater than John’s losses in each scenario, most viewers reacted very differently to them. Few people disagreed with scenario (1) or scenario (2), which was considered acceptable market outcomes, even with the existence of losers. However, their reactions to scenarios (3) and (4) were very negative and they considered them unfair and must be stopped. This study can largely explain the popular basis that the Trump administration dared to launch a trade war with China. The 301 survey used by him played this role. Although he attacked other things, such as SOE subsidies, industrial policies, intellectual property theft, forced technology transfer and opaque rules, the essence was actually the same. Globalization was not the only shock that destroyed existing social contracts. As analyzed above, it was neoliberalism, technological change, globalization and the failure of domestic policies of developed countries that led to the rise of populism. According to Rodrick [7], in fact, from all perspectives, automation and new digital technology have played a greater role in deindustrialization and space and income inequality.25 However, the reason why right-wing populists from developed countries have not attacked technological progress but focused their efforts on globalization is mainly because losers in globalization believed that their failure was not due to their bad luck in market competition, but the unfair rules of globalization and the behaviors of trading partners. At the same time, when the impact of globalization was manifested mainly in the form of trade, finance and foreign investment, populist politicians in developed countries would easily take identifiable foreigners—Chinese or Mexicans—as the root cause of the problems, and would more easily mobilize the public according to the income/social class or us/them division, thus making globalization a convenient scapegoat.

3 China’s New Round of Opening-Up: Promoting the Inclusive Growth of the World Economy China is both a beneficiary of economic globalization and a defender and a strong promoter of the continuous advance of economic globalization. Over the past 40 years, it was through reform and opening-up that China has actively integrated into economic globalization and begun the process of continuously creating economic miracles. Today, China’s economic aggregate has steadily ranked second in the world, becoming one of the upper-middle-income countries from a low-income country. China has witnessed greatly improvement of national strength, continuous optimization of industrial structure, leapfrogged development of infrastructure construction, and great progress in education, technology, residents’ life and business environment. Globally, China has become the largest contributor to world economic growth, 25 Rodrik

[7].

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keeping its contribution rate to global GDP basically at above 30% every year since the financial crisis in 2008. However, as analyzed above, China’s rapid economic growth has indeed brought global concerns. Under the clamor of some populist elites and ill-disposed Western media, China became the initiator of increased unemployment and lower wages and benefits for workers in Western countries. Empirical studies on the China Shock represented by David Autor and Daron Acemoglu of MIT and Gordon Hanson of the UC San Diego have further exacerbated the fear of China in Western society.26 Therefore, the above analysis of the domestic social crisis in developed countries, when finally presented to the world, has been simplified into accusations and resistance to globalization, despite multiple and complicated reasons. Among them, China has become the best scapegoat. In this context, in the face of an increasingly complex international situation, we must soberly realize that the traditional development path is no longer applicable. In order to realize the grand plan for the century revival, we must start a new round of reform and opening-up. This is not only the need to resolve the social contradiction in China in the new era, which has changed to the contradiction between the people’s growing needs for a better life and the unbalanced and inadequate development, but also the need to resolve international contradictions and push economic globalization back to the normal track. Following the logic of the previous analysis, this article puts forward some reflections on China’s new round of reform and opening-up from three aspects: development goal, development concepts, and path of opening-up. Development Goal. On March 23, 2013, Xi Jinping made his first trip after his election as president. In his speech at Moscow State Institute of International Relations, he put forward the concept and initiative of “a shared destiny for mankind” to the world for the first time and provided a lot of arguments afterwards in this regard. In 2017, in his speech at the opening ceremony of the high-level dialogue between the Communist Party of China and the world’s political parties, President Xi Jinping specifically explained the connotation of a shared destiny for mankind. He pointed out that the so-called “shared destiny for mankind, as its name implied, means that the future and destiny of all nations and countries are closely linked, and we should share the same storms and hardships as well as honors and shames, work hard to build a harmonious family on the planet where we were born and raised, and turn the aspirations of people around the world for a better life into reality.” With the current turbulence in the international economic and political order, President Xi’s 26 Studies by Autor et al. show that import competition from China during 1990–2007 had led to increased unemployment, reduced participation and lower wages for workers in the U.S. importcompeting manufacturing sector (see David H. Autor, David Dorn, and Gordon H. Hanson, “The China Syndrome: Local Labor Market Effects of Import Competition in the United States”, American Economic Review, Vol. 6, No. 103, pp. 2121–2168; and David H. Autor, David Dorn, and Gordon H. Hanson, “The China Shock: Learning from Labor Market Adjustment to Large Changes in Trade”, NBER Working Paper, No. 21906, 2013; Acemoglu also joined the above study group in 2014, and their cooperative study further showed that, due to increased imports from China, US jobs decreased by 985,000 in manufacturing and 2–2.4 million in all industries in 1999–2011. See Acemoglu, Daron, Autor David H., David Dorn, and Gordon H. Hanson, “Import Competition and the Great US Employment Sag of the 2000s”, Journal of Labor Economics, 2014.

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initiative has undoubtedly pointed out the direction of future development of the world. But how to get more countries and people in the world to accept this initiative requires our interpretation of this concept in a more systematic way and our efforts to gradually transform China’s development initiative into an action plan and guide that is accepted by all countries and worth fighting for by them in joint efforts. Development concepts. The initiative to build a shared destiny for mankind shows that the historical background of China’s new round of reform and opening-up has been essentially different from that of 40 years ago. In the period of globalization and neoliberalism dominated by western countries led by the US, China’s integration into the world economy through reform and opening-up is not only a conscious choice for backward countries to follow the trend of the times, but also a process for backward countries to take advantage of the favorable international environment to change the identity of peripheral countries to central countries in the global system. At this stage, we are more concerned about the growth and development of our country. The economic spillover effect of the economic development of our country on other countries is the result of natural exchange, and the specific growth and distribution are usually internal affairs of other countries, about which we are not concerned. After more than 40 years of development, China’s economy has created a development miracle in the history of mankind, not only pushing China into the center of the world stage, but also surpassing the US and becoming the most important engine of world economic growth. China has become the largest trading partner of more than 120 countries in the world, and its influence on the economy of each country is increasing day by day. In this context, our policy options should break through the relatively independent traditional framework of “letting things drift if they do not affect us personally”, and link the economic development of our country with that of others closely, fully considering the spillover effects of our policies, especially the domestic distribution effect on trading partners, and striving to achieve inclusive growth among and within countries. Specifically, in the new round of reform and opening-up, we must hold two development concepts: one is to change from focusing only on the overall national income to also caring about social and personal benefits; the other is to change from focusing only on economic growth to also caring about income distribution. In other words, we must pay attention not only to the balance of overall interests among countries, but also to the rebalance of the distribution of group interests among countries. In fact, domestic debates on the Sino-US trade war, whether discussions on “how to win the trade war” or the view that “the Sino-US trade war is a rare opportunity for China to start the reform again”, are based on self-centered growth supremacism and nationalism. The individuals that make up the country and the distribution after growth have been seriously ignored, and this is precisely an important reason for the fission of the international economic system today. Although the launch of a trade war with China by the US government is an action of xenophobia and opportunism taken by right-wing populists represented by Trump, we must still see the broader social foundation behind it. As some of the people at the bottom of the heap believe, despite the massive loss of employment and earnings due to the Sino-US trade war, they are still willing to endure the temporary pain and support Trump’s protectionist policies, because they will eventually benefit

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in the long run.27 Therefore, in this era of globalization, in which “one rarely stands or falls alone”, as the new growth center of the world economy, we need to consider as far as possible the wide range of domestic and international consequences when we formulate our national policies. Otherwise, when domestic policies of economic and trade partners are not effectively adjusted, which puts their own countries in trouble, the foreign trade and economic development of China may have a negative impact, which will eventually hurt ourselves. Therefore, our policy options should be more internationally inclusive. We cannot control the strategic direction of other countries towards China, but we can adjust ourselves to influence their strategic choices. Path of opening-up. The ultimate goal of the new round of reform and opening-up is to change China’s traditional mode of extensive economic growth, promote structural transformation, and achieve stable and sustainable economic growth, while continuously increasing the recognition of China’s development model by countries around the world, gradually dissolving the spread of right-wing populism in western countries, and pushing economic globalization back on track. To this end, the path option of opening-up should go beyond the previous policy model featured by the free flow of goods and factors and develop toward the rule and system-based opening-up. From the policies and measures constantly issued since 2018 (such as the Foreign Investment Law), China has indeed made great strides towards internationally advanced rules and institutional systems. From the business environment reports released by the World Bank in 2019 and 2020, we can see the remarkable results of domestic opening measures. According to the reports, China’s business environment in 2018 ranked 46th in the world, a significant advance of 32 places over the previous year, making China one of the top ten countries with the most significant improvement in the business environment in 2018, also the only one selected in the Asia–Pacific region. In 2019, the global ranking of China’s business environment rose again by 15 places, ranking 31st in the world, achieving a leapfrog development. Changes in the business environment will not only demonstrate China’s determination to open to the outside world, but also help strengthen the confidence of foreign companies in China’s economic development, thereby alleviating the growing discontent with China’s business environment at the international level in recent years. Finally, the Belt and Road Initiative (BRI) is an ambitious one initiated by China to carry out regional and international cooperation, and has made world-renowned achievements in the past six years of construction, having become the best practice of China’s provision of institutional public products to the international community and creation of communities of interest, responsibility and shared destiny with countries along the route. In order to further promote the inclusiveness and long-term sustainability of the BRI, we need to pay more attention to two aspects in the future development process. Firstly, we must fully recognize the historical, systematic, open and win– win feature of the “Belt and Road” construction, i.e. the international cooperation covering various fields, in which countries and international organizations around the world participate jointly and share the results by adhering to the principle of

27 Kotlowit

[16].

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openness. Therefore, we must especially emphasize the extensiveness of participation in the construction process, and in particular, vigorously promote third-party cooperation under the BRI to build it into a regional and global cooperation platform of high quality and high level. Secondly, we must address some prominent issues emerged in the early stage of construction and pay more attention to the actual needs of countries along the route, attaching importance to welfare improvement brought by project construction and economic and trade cooperation to ordinary people in countries along the route, and building the “Belt and Road” into a shared cooperation and development platform that benefits more countries and more people.

References 1. Milton Friedman & Anna Schwartz, The Great Contraction, 1929–1933, Beijing: CITIC Press, 2008, Preface. 2. Heinrich Geiselberger, State of Mind of Our Time, Shanghai: Shanghai People’s Publishing House, 2018. 3. Karl Polanyi, The Great Transformation, Hangzhou: Zhejiang People’s Publishing House, 2007, p. 8. 4. Paul Kennedy, The Rise and Fall of The Great Powers, Beijing: International Cultural Communication Co., Ltd., 2006, p.35. 5. Paul Mason, Overcoming the Fear of Freedom, in Heinrich Geiselberger, ed., State of Mind of Our Time, Shanghai: Shanghai People’s Publishing House, 2018. 6. Ma Changle, “On Multilateralism of the US after the Cold War”, The Journal of International Studies, Vol.1, 2007, pp.170-181. 7. Dani Rodrik, “Populism and the Economics of Globalization”, NBER Working Paper, No.23559, 2017. 8. Zygmunt Bauman, Symptoms of Looking for Targets and Names, in Heinrich Geiselberger, ed., State of Mind of Our Time, Shanghai: Shanghai People’s Publishing House, 2018, p.33. 9. Robert Putnam, Our Kids, Beijing: China University of Political Science and Law Press, 2018. 10. J.D. Vance, Hillbilly Elegy, Nanjing: Jiangsu Phoenix Literature and Art Publishing Ltd., 2017. 11. Robert Kaplan, An Empire Wilderness: Travels into America’s Future, Beijing: Central Compilation & Translation Press, 2018. 12. Jeffry Frieden, Global Capitalism: Its Fall and Rise in the Twentieth Century, Shanghai: Shanghai People’s Publishing House, 2009. 13. Ralph Gomory and William Baumol, Global Trade and Conflicting National Interests, Beijing: CITIC Press, 2003. 14. Thomas Piketty, Capital in the Twenty-First Century, Beijing, CITIC Press, 2014. 15. Starmans, Christina, Mark Sheskin, and Paul Bloom, “Why People Prefer Unequal Societies,” Nature: Human Behaviour, Vol.1, 2017. 16. Alex Kotlowit, “The Small-Town Cost of Donald Trump’s Trade Wars”, The New Yorker, December 20, 2018.

Safeguard and Reshape China’s Strategic Opportunity

Creating and Grasping Strategic Opportunities for China Angang Hu

The success of major strategic decisions is extremely important, and periods of strategic opportunity must be clearly identified before making major strategic decisions. For China, it is necessary to follow general trends, craft overall plans, thoughtfully analyze the opportunities and challenges presented by the development environments both at home and abroad, and make continuous efforts to coordinate the overall internal and international situations to achieve its two centenary goals on schedule. Socialism with Chinese characteristics has entered a new era, in which challenges and opportunities coexist. The report to the 19th National Congress of the Communist Party of China (CPC) clearly proclaimed that both China and the rest of the world are in the midst of profound and complex changes, and China is still in an important period of strategic opportunity in relation to its development. The prospects are bright, but the challenges are significant, and China should “be mindful of possible danger in a time of peace.”1 It was further pointed out at the Central Economic Work Conference in 2018 that “China will have an important period of strategic opportunity for its development. We are witnessing major changes unfolding in our world, and crises and opportunities coexist during these major changes, which bring significant opportunities for the great rejuvenation of the Chinese nation. We must be good at turning risks into opportunities and crises into safe environments, keep in mind the new connotations of important strategic opportunities, accelerate economic restructuring and upgrading, improve our scientific and technological innovation capabilities, deepen the reform and opening up, accelerate

A. Hu (B) Tsinghua University, Beijing, China e-mail: [email protected] 1 Hu

and Zhang [3].

© The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2021 H. Men and X. Xiao (eds.), Report of Strategic Studies in China (2019), https://doi.org/10.1007/978-981-15-7732-1_4

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green development, participate in global economic governance system reform, and use pressure as a driving force to accelerate high-quality economic growth.”2 Therefore, how should we understand the new connotations of this important period of strategic opportunity? How do we create and grasp strategic opportunities for China? And how do we actively respond to major challenges and turn them into important opportunities? In essence, it is necessary for us to create the time, space, and harmonious relations necessary to achieve our two centenary goals and build a community with a shared future for mankind. This paper explores the theme of creating and grasping important strategic opportunities for China, and is organized as follows. The first part analyzes and summarizes the first centenary goal proposed at the 16th National Congress of the CPC, as well as successful cases in relation to the period of strategic opportunity during the first 20 years of the twenty-first century. The second part analyzes the second centenary goal, as well as both the internal and international conditions and foundations in relation to the period of strategic opportunity over the next 30 years. The third part further outlines the ways to proactively create Chinese opportunities for the world, and the fourth part discusses how China should better respond to major internal and international challenges in the future and turn them into important opportunities from the perspective of China’s modernization.

1 The First Centenary Goal and the Period of Strategic Opportunity In the early twenty-first century, the Central Committee of the CPC made some important judgments regarding the period of strategic opportunity, and proposed several strategic goals to be achieved by 2020. Jiang Zemin’s report to the 16th CPC National Congress on 8 November 2002 noted that “An overview of the situation shows that for our country, the first two decades of the twenty-first century are an important period of strategic opportunity, which offers bright prospects that we must seize firmly.” Based on this important judgment, the report proposed the first centenary goal, that is, building a well-off society in an all-round way. Efforts were to be made to quadruple China’s GDP in 2000 by 2020. China’s comprehensive power and international competitiveness were set to increase substantially, and comprehensive industrialization was to be achieved by 2020. Thus, Zeng Peiyan, the former director of the National Development Planning Commission, proposed three important targets: by 2020, China’s per capita GDP was to reach at least USD 3000, the degree of urbanization should exceed 50%, and the percentage of agricultural workers should be reduced to around 30%.3 2 Xi

Jinping and Li Keqiang Made Important Remarks at the Central Economic Work Conference Held in Beijing, website: https://www.xinhuanet.com/politics/2018-12/21/c_1123887379.htm, accessed on: December 26, 2018. 3 Zeng [6].

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On reflection, it can be seen that several sessions of the Central Committee of the CPC have grasped and fully exploited this important period of strategic opportunity, overcome a series of major internal and international challenges, properly handled a series of emergencies, turned crises into opportunities and then into safety, withstood various severe tests against complicated backgrounds both at home and abroad, received recognition from the people, and successfully participated in open global competition. These sessions, which involve top Chinese leaders, have been likened to a relay race, in which a successor must receive the baton properly and then carry it onward toward the finish line. Now, China is only one step away from achieving its first centenary goal. In fact, China achieved the goal of quadrupling its 2000 GDP, as proposed at the 16th National Congress of the CPC, in 2016, 4 years earlier than expected. The country also achieved the goal of quadrupling per capita GDP, as proposed at the 17th National Congress of the CPC, in 2017, 3 years earlier than expected. All three important goals have been achieved ahead of schedule. In 2017, China’s per capita GDP reached USD 8827 (which remains the current level). Based on 2010 USD values, China’s per capita GDP in 2017 was USD 7329, 4.14 times the 2000 figure of USD 1772, with a degree of urbanization of 58.52% and the proportion of agricultural workers down to 27.0%. As a result, even higher development objectives and goals were proposed at the 18th National Congress of the CPC based on the Outline of the 13th Five-year Plan. The results of the mid-term evaluation of the implementation of the plan indicate that all tasks are proceeding smoothly and that progress toward the major objectives and goals is generally in line with expectations. The implementation of the seven strategies proposed in the Outline of the 13th Five-year Plan is advancing smoothly, and progress is being made in terms of the 25 major indicators of social and economic development. Indeed, two development goals have been reached in advance, 19 are showing expected levels of progress, and only four (related to the added value of the service industry as a percentage of GDP, intensity of R&D, scale of new construction land, and percentage of Class V inferior surface water) are not on schedule to meet the requirements.4 This is a critical moment in China’s attempt to build a well-off society in an allround way. As the Chinese saying goes, “the last part of an endeavor is the hardest.” The more critical the moment, the more it is necessary to maintain confidence. It is expected that China will soon achieve its first centenary goal. As a result, China, with a population of more than 1.3 billion, will occupy a stronger position from which to embark on a new journey toward the second centenary goal. General Secretary Xi Jinping has pointed out that it is necessary for us to establish the correct views of history, the overall situation, and various roles when examining the international situation. The so-called correct view of history involves not only looking at the current international situation, but also reviewing the past, summarizing historical rules, and looking into the future to understand the general future trend.

4 The

Mid-term Evaluation Report Shows that the Tasks of the 13th Five-Year Plan is Progressing Smoothly, included in Economic Daily, December 25, 2018.

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From an international perspective, China’s rapid rise in the twenty-first century has driven the economic takeoff of Southern countries and triggered major global changes compared with the situation in the previous century. These significant global transformations have, in turn, provided China with important opportunities. The global economy is undergoing a major shift from the Northern countries (members of the Organization for Economic Cooperation and Development) to the Southern countries. The World Bank has reported that between 2000 and 2017, the annual economic growth rate of the Southern countries reached 5.3%, indicating that they are undergoing economic takeoff. Meanwhile, the economic growth rate of the Northern countries was only 1.79%, much lower than that of the Southern countries and also lower than the global average of 3.7%. Essentially, the Southern countries’ share of global GDP increased by 15.9% from 39.9% in 2000 to 55.8% in 2017, with China’s share rising by 10.8% from 7.4% to 18.2%. Conversely, the Northern countries’ share of global GDP fell from 60.1% to 44.2%, with the USA’s share falling by 5.3% from 20.5% to 15.2%. The Southern countries’ share (in 2010 USD values) of global added value arising from industry and construction rose by 18.1% from 30.9% in 2000 to 49.0% in 2016, with China’s share increasing by 13.6% from 6.8% to 20.4%. Conversely, the Northern countries’ share fell by 18.1% from 69.1% to 51.0%, with the USA’s share falling by 5.5% from 20.4% to 14.9%. Science and technology are also undergoing major transitions among Southern and Northern countries. For example, in 1990, Northern countries dominated global patent applications, accounting for 97.1% of all patent applications filed, but by 2015, China had become the world’s largest patent applicant, accounting for 46.8% of all patent applications, enabling the Southern countries to surpass the Northern countries in terms of the percentage of global patent applications. In 2000, the Northern countries accounted for two-thirds of global R&D investment, but by 2015, this had fallen to half. China’s huge increase in R&D investment, from 3.3% of the global total in 2000 to 17.1% in 2015, second only to the USA, was the main reason for this shift. China has become one of the most important forces driving the recent dramatic changes to the century-old global economic and technological layouts. Both China’s economic takeoff and “Belt and Road” Initiative have helped Southern countries to enter an era of economic takeoff and globalization. They also mark the world’s entry to a period in which both Southern and Northern countries are maintaining the same general trend, indicating that there has been a fundamental change to the historical pattern of divergence between these groups of countries that has existed for more than two centuries. These are both extremely important events in the twenty-first century, and present China with an extremely valuable period of strategic opportunity over the next 30 years. Just as Xi Jinping, General Secretary of the Central Committee of the CPC, proclaimed, “China has now entered the best stage of development in modern times, and the world is experiencing changes unseen in a century. These two trends are unfolding in parallel and impacting each other.”

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2 The Second Centenary Goal and the New Period of Strategic Opportunity The second centenary goal, that is, building a modern, powerful, socialist country during the 30-year period from 2020 to 2050, was proposed at the 19th National Congress of the CPC, at which strategic arrangements were made for two clear stages. For China, the 30-year period from now until 2050 will be full of strategic opportunities that must be grasped, and numerous goals should be actively pursued. China will achieve its second centenary goal by transforming itself from an era of rejuvenation to an era of strong power. So, how should we understand such a period of strategic opportunity? It is not a short-term period of opportunity, but a medium- to long-term one that will last for at least 30 years. Furthermore, it is not a typical period of opportunity, but a globally strategic one. It is not only a period of opportunity for China, but also a period of “Chinese opportunity” for the entire world, especially the Southern countries. Thus, we should analyze this new period of strategic opportunity from both internal and international perspectives. Internally, China is shifting from a high-speed growth stage to a high-quality development stage, with plenty of favorable conditions and development opportunities. China is now ranked among the top countries in the world in terms of its economic, industrial, market, technical, and human resources performance. The country is shifting from an era of rapid expansion to one of gradual structural optimization and industrial upgrading, more diversified and personalized consumption, major innovations, highly efficient use of human resources, and significant improvements in the ecological environment. In addition, while facing long-term challenges, China is now under huge pressure in the form of an economic downturn. China now boasts the strongest physical capital base in the world, and is pursuing the strategic opportunities that are essential for its innovation-driven growth. China enjoys a high domestic savings rate, achieving a figure of 47.0% in 2017, far higher than the global average of 24.5%. China’s domestic savings first exceeded those of the USA in 2008, and were 1.52 times those of the USA in 2016. During the period from 1982 to 2017, China’s average annual growth in fixed asset investment reached 20.7%, although it has fallen to 10% or less in recent years. In terms of gross capital formation (in 2010 USD values), China surpassed Japan in 2006, the USA in 2009, and the EU in 2012. China’s share of global gross capital formation rose by 17.2% from 5.5% in 2000 to 22.7% in 2016, easing the technology, energy, and transportation bottlenecks that had long constrained China’s economic growth. This has provided the momentum for China’s high-quality development. For example, during the period from 1995 to 2017, China’s average annual growth in R&D expenditure reached 19.5%, and R&D expenditure as a share of GDP increased from 0.57% to 2.13%. Further, China’s R&D expenditure (in PPP2011 international dollars) compared with that of the USA increased by 78.3% from 12.3% in 2000 to 90.6% in 2017, an average annual increase of 4.6%. China is expected to approach or surpass the USA’s R&D expenditure in 2020, which will enable China to enter

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a breakout period of technological innovation, especially independent innovation.5 China has also witnessed a significant increase in the contribution rate from scientific and technological progress, up from 50.9% during the period 2005–2015 to 60% during the period 2016–2020. However, it should also be noted that China continues to display shortcomings in terms of fundamental scientific research and lacks major original discoveries. Thus, the situation whereby key technologies are subject to control by other countries has not fundamentally changed.6 China has a modern, independent, open industrial system, which represents a strategic opportunity for the country to accelerate the building of a modern economic system. China’s industrialization over the last 70 years has contributed to a powerful industrial system with 39 major categories, 191 medium categories, and 525 small categories, and China is the only country in the world that hosts all categories listed under the United Nations Industrial Classification System. China has become the world’s largest manufacturer, and has contributed significantly to the global manufacturing industry’s added value, up from 8.7% in 2004 to 26.4% in 2016, a total increase of 17.7% and an average annual increase of 1.5%, 1.49 times that of the USA.7 The National Science Foundation of the USA database reveals that the added value for China’s high-tech industry accounted for 3.16% of the global total in 2000, rising to 29.08% in 2015, ahead of the USA (28.94%).8 More importantly, through more than 40 years of the reform and opening up, China has established a modern, independent industrial system incorporating open competition, innovation, and entrepreneurship that is now fully integrated with the global industry chain, value chain, logistics chain, and innovation chain. In reshaping its industrial system, China now possesses new technologies, service patterns, organizational forms, and industry clusters that are developing faster than anywhere else in the world. However, it can also be seen that China’s manufacturing industry is still toward the low end of the global value chain, and its service industry still lags that of the USA. In 2016, the USA contributed 29.6% of global added value in relation to the service industry, while China contributed 11.9%. This is the biggest shortcoming of China’s modern industrial system, but also provides a huge opportunity in terms of future development. China has met the fundamental conditions necessary to become a world-class consumer market, which constitutes a strategic opportunity for the country to develop a powerful market for the rest of the world. China ranks first in terms of market scale and offers significant future potential. At present, total retail sales of consumer goods in China are roughly the same as those in the USA, making China one of the largest markets in the world. China’s development focus is shifting from investment to consumption and from the sovereignty of producers to that of consumers, which will 5 National

Bureau of Statistics of China [4, 5]. Jinping, Remarks at the 19th Academician Meeting of the Chinese Academy of Sciences and the 14th Academician Meeting of the Chinese Academy of Engineering, included in China Daily, May 28, 2018 (Edition: 1). 7 Website: https://data.worldbank.org/indicator/NV.IND.MANF.CD?locations=CN-US, accessed on: May 2, 2019. 8 Hu and Ren [2]. 6 Xi

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continue into the future as China strives to satisfy the needs of more than 1.3 billion people seeking a better life. China has already become the world’s largest middleincome country, and is currently undergoing a new stage of continuous upgrading of domestic consumption. China not only enjoys a huge consumption volume but is also continuously optimizing its consumption structure. In terms of the consumer market, the shift in focus from consumption of goods to consumption of services is another trend that will continue into the future. In particular, the consumption of education (from preschool to higher education), information (there are currently 1.417 billion mobile phone users), the Internet (772 million netizens), pensions (currently more than 250 million pensioners), medical services (currently 8.18 billion visits annually to medical institutions throughout the country), and culture and tourism (five billion domestic trips in 2017) is supported by more than 1.3 billion citizens. This offers huge potential for development, with multiple levels of diversified and personalized consumer demands. China has built the world’s largest consumer market in various major fields, creating a large export market for the rest of the world. However, China’s final consumption accounted for 8.4% of global expenditure in 2016 compared with 25.0% in the USA and 24.8% in the EU, indicating that China still lags behind Western countries,9 but also demonstrating China’s huge development potential in terms of general consumption. China has the world’s largest pool of human resources, providing a strategic opportunity for the country’s long-term development. In 2017, China had a labor force of 787 million, accounting for 22.8% of the global total, which was 1.51 times the number of Indian laborers (520 million), representing 15.1% of the global total. The main reason for this is that China had a high percentage (43.6%) of female laborers, while only 24.5% of India’s laborers were female. China had 776 million workers, which will continue into the future. There were 567 million non-agricultural workers, and this figure will continue to rise in the future, while the number of agricultural workers will continue to fall. The amount of physical capital and human resources capital per laborer will gradually increase, which will enable a sustained increase in labor productivity and provide a long-term comparative advantage. China has developed a competitive advantage in terms of human resources as a result of its pool of 175 million highly trained individuals. In 2017, there were 37.79 million students enrolled in higher education institutions, and 170 million or 16.9% of the working-age population had undertaken higher education or acquired professional skills. The average length of education for workers is about 13 years, and China has more than 42 million engineers. The number of full-time equivalent R&D personnel exceeds four million man-years, which is nearly three times that of the USA. China has more than 100 million people who have legally registered market entities, and thus has become the largest kingdom of entrepreneurs in the world. More than three million people have returned to China after studying abroad, accounting for 83.73% of the total number of students who have completed their studies overseas. All of these factors have contributed to China’s gigantic pool of human resources, which 9 Database

of the World Bank: https://data.worldbank.org.cn/indicator/NE.CON.TOTL.KD?end= 2017&locations=CN-1W-US-EU&start=1990, accessed on May 2, 2019.

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has become the driving force behind China’s social and economic development and represents China’s most valuable resource in terms of embracing the future. However, despite the progress that has been made in China in terms of human resources, the lack of world-class talent and teams makes it necessary to vigorously cultivate a large number of well-rounded and qualified personnel with global vision.10 Globalization remains a key driver of the world’s economic growth at present, and trade liberalization, investment liberalization, and service facilitation are all increasing. Although global trade as a percentage of GDP declined from 60.5% in 2011 to 56.2% in 2016, it can be seen that more than half of the world’s economic activity involves international trade.11 The long-term trend indicates that global trade is playing an increasingly critical role in GDP, and China, as the world’s largest trader, will continue to play a key role. Despite the severe impact of the global financial crisis, global trade in services as a percentage of GDP grew by 12.8% from 2010 to 2017, while growth in China was relatively low at just 5.5%. This demonstrates the huge opportunity that China has to develop trade in relation to its services industry and eventually become a global power in the services industry. A new round of scientific and technological revolutions, as well as significant industrial changes, have brought significant opportunities. The new industrial revolution in the twenty-first century is being driven by technological development, which has profoundly reshaped the world’s economy and society, while also presenting various new risks and challenges. Thus, scientific development has become the top priority.

3 Creating Chinese Opportunities for the World: A just Cause Gains Great Support What global role will China play in the future? General Secretary Xi Jinping has provided a clear answer to this question, stating that we need to develop the correct point of view regarding China’s role. This requires stepping back and undertaking a calm analysis of various international phenomena, understanding the problems faced when taking China’s relationship with the world into consideration, clarifying China’s role in the evolution of global patterns, and scientifically formulating appropriate foreign policies for China as it immerses itself in the global scene.12 Internationally, China must create the global conditions necessary to achieve its second centenary goal. Numerous opportunities lie ahead for China, which has 10 Xi Jinping, Remarks at the 19th Academician Meeting of the Chinese Academy of Sciences and the 14th Academician Meeting of the Chinese Academy of Engineering, included in China Daily, May 28, 2018. 11 Database of the World Bank: https://data.worldbank.org.cn/indicator/NE.CON.TOTL.KD?end= 2017. 12 Xi Jinping,Remarks at the Central Conference on Work Relating to Foreign Affairs, included in China Daily, June 22, 2018.

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arrived at the center of the world stage and become a key driver of global change. China is not only taking advantage of global development opportunities, but also creating global development opportunities. It is creating Chinese opportunities to build a global community that can enjoy a shared future. There are several aspects of this process, as outlined below. First, creating a “Chinese market” for the world. In the context of economic globalization, as well as trade and investment liberalization and facilitation, big buyers are big winners, and super buyers are super winners. China has developed and maintained a favorable and proactive position, and the dependence of the rest of the world on China’s import and export markets has continued to increase. China has become the world’s second largest importer and exporter of goods and services, accounting for around 10% of annual global imports. Over the next 5 years, China will spend more than USD 10 trillion on imported goods and services as it strives to become the world’s largest importer of goods and services. China now has more than 200 trading partners worldwide. For example, China has become Africa’s largest trading partner, with trade between China and African countries increasing from USD 10 billion in 2000 to USD 220 billion in 2014. Since then, a sustained decline in global trade has led to a fall in trade between China and these African countries. A report published by China’s Customs Department revealed that the total value of imports and exports between China and African countries in 2017 was about USD 169.75 billion, or 17.9% of Africa’s total imports and exports. The value of China’s imports from Africa was approximately USD 75.25 billion. China also needs to continue to reduce the tariff rate from the present 7.5–5% or less, and will strive to gradually reduce the tariff rate to around 2% before eventually eliminating tariffs on most goods and services. China currently imposes no tariffs on 97% of the products of the least developed countries, which greatly promotes the export of these products to China. This practice could be extended to low-income countries (with approximately 730 million people) and medium-income countries (with 2.97 billion people) at various stages. China should improve the level of customs facilitation, reduce the institutional costs of importing, and accelerate the development of new patterns and models such as cross-border e-commerce, thereby becoming the largest export market for most of the world’s developing countries. The first China International Import Expo, held in 2018, is a case in point. It attracted 172 countries, regions, and international organizations and more than 3600 overseas enterprises with a total turnover of nearly USD 60 billion. This was an indication of China’s sincerity and practical actions in terms of opening its market to the world and enabling all parties to share in the development opportunities. China will continue to actively promote an open, inclusive, balanced, and win–win form of economic globalization. Second, creating “Chinese tourists” for the world. Tourism is one of the world’s largest service industries, and China has now entered a golden period of tourism development, becoming the world leader in terms of the number of outbound tourists and tourism consumption. “Chinese tourists” have become an outstanding new symbol of China’s enhanced international status and influence. The World Tourism Organization reported that global tourism revenue in 2017 was USD 1.34 trillion, of

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which outbound Chinese tourists accounted for USD 257.7 billion (19.2%). Around 130 million Chinese citizens traveled abroad for private purposes, and Chinese tourists are now highly sought after by numerous countries. However, they only account for less than 10% of China’s population, below the desired threshold of 15%. International tourism has entered a new phase of popularization and industrialization, and has also become an important pillar in the trade of services. Chinese tourism has contributed significantly to total imports of services, increasing by 19 from 36% in 2000 to 55% in 2017, which was significantly higher than both the average global figure and that for the USA (both 25%). This has contributed significantly to the development of the global tourism industry, particularly the explosive growth of tourism in East Asia and the Pacific region. Chinese tourism as a percentage of total imports of services increased from 26% in 2000 to 34% in 2017, helping to promote the development of services such as air transportation. “China cruises” catering for Chinese tourists have become a major attraction and a new source of growth in international tourism. Since 2006, the average annual number of Chinese cruise passengers has increased by more than 40%, and China has now established 11 cruise ports. In 2017, more than 1180 cruise ships visited China, and the total number of inbound and outbound cruise passengers exceeded 49 million, or 3.5% of the country’s population. Trade in services should be further expanded through bilateral and multilateral cooperation, and in particular other countries and regions should be encouraged to either grant Chinese citizens landing visas or provide them with an exemption from the need to obtain visas. Third, creating “Chinese innovation” for the world. The first element is to provide “Chinese patents” for the world. China has become the largest patent applicant in the world, with its share of total patent applications increasing by 53.50% from 3.08% in 2000 to 56.58% in 2016. The second is to provide “Chinese knowledge” for the world. China has surpassed the USA and become the world’s largest producer of scientific and technological knowledge based on its share of the total number of scientific and technological journal articles published, which increased by 11.26% from 7.30% in 2003 to 18.56% in 2016. The third element is to provide “Chinese trademarks” for the world. China has become the largest trademark owner in the world, with the number of trademark applications by domestic residents increasing by 21.03% from 27.23% in 2005 to 48.26% in 2016. The fourth element is for China to export high-tech products to the rest of the world. China has long been the world’s largest high-tech exporter, its share of all high-tech exports increasing by 22.43% from 3.60% in 2000 to 26.03% in 2014. The fifth element is that China’s original achievements including super-hybrid rice, nanomaterials, manned spaceflights, lunar exploration projects, quantum science, supercomputing, and Beidou satellites will all benefit the rest of the world. Chinese innovations in various fields such as navigation, e-commerce, mobile payments, and the sharing economy are leading the world, and have enabled China to develop the ability to go global, and to integrate with and contribute to the rest of the world. Chinese enterprises are being encouraged to go global, in particular investing in Southern countries, developing new markets, and driving the global dissemination of Chinese engineering, technologies, equipment, construction, standards, brands, and services, thus becoming “China’s business

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brands” in terms of the application, diffusion, and sharing of Chinese innovations. China has acquired the capabilities and conditions necessary to spearhead the fourth industrial revolution, which will be a global industrial and technological revolution, and enable it to shift from being a follower and imitator of developed countries to becoming the world’s leading technological innovator and sharer. Fourth, creating “Chinese green energy” for the world. China occupies an important global position in terms of the new field of green energy, and has become the world’s largest developer of green energy sources. BP’s Statistical Review of World Energy has reported that China’s share of global renewable energy increased from 1.45% in 2000 to 20.5% in 2016. China’s shares of global solar energy and wind energy production increased from zero and 1.87%, respectively, in 2000 to 19.9% and 25.1%, respectively, in 2016, making it the top producer in the world in both fields. The Renewables 2018 Global Status Report noted that China’s investment in renewable energy accounted for 45% of the global total in 2017. China is currently experiencing an unprecedented period of green development and transformation, with the share of green energy sources as a percentage of total energy generation increasing from 26.56% in 2010 to 37.76% in 2017. The number of electric vehicles and new energy vehicles sold in China reached 770,000 in 2017, with the number of these types of vehicles owned by Chinese citizens exceeding 1.6 million, half of the global total. China is accelerating its green development, making significant progress in terms of energy conservation and emissions reduction, strengthening the development of an ecologically sustainable society, and actively participating in and guiding the international response to climate change. Fifth, providing “Chinese investment” for the world. In 2000, China initiated a strategy of “going global” and entered a stage involving the rapid development of foreign direct investment, which increased from USD 2.7 billion in 2002 to USD 124.6 billion in 2017, an annual average growth of 29.1%. China has become the world’s third-largest foreign investor behind the USA and Japan. As of late 2017, China’s outward foreign direct investment totaled USD 1.48 trillion and its overseas corporate assets exceeded USD 5 trillion. Between 2015 and 2017, China’s foreign investment in the equipment manufacturing industry was USD 35.1 billion, accounting for 51.6% of the global total. China’s investment in equipment manufacturing projects such as China High-speed Railway, China Nuclear Power, and China Electric Power has enabled China to present its national business card to the rest of the world. Numerous countries are discovering the advantages offered by “China’s Processing Zone,” “China’s Development Zone,” and “China’s Bonded Area,” and are actively pursuing “Chinese Investment” and the “Made in China” label. Sixth, providing “Chinese development aid” for the world. China has received international development aid ever since the beginning of the reform and opening up, with the net amount of aid increasing from USD 16.85 million in 1978 to a peak of USD 3.841 billion in 1995, accounting for 0.482% of gross national income and USD 2.9 per capita. During that period, China was the poorest country in the world as measured by those indicators, but since then has experienced a dramatic change in terms of both indicators, eventually becoming a net contributor of development aid in 2011. Despite continuing to receive international development aid, China now

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provides foreign development aid to more than 120 developing countries. The white paper China’s Foreign Aid (2014) reported that China’s foreign aid amounted to 89.34 billion yuan during the period from 2010 to 2012. Based on the 3-year weighted average exchange rate (whereby USD 1 = 6.5136 yuan), this was equivalent to USD 13.716 billion, an average annual contribution of USD 4.572 billion. China provides foreign aid to various developing countries, which are mainly located in Asia, Africa, Latin America, the Caribbean, Oceania, and Eastern Europe, and directs around twothirds of this aid to the least developed countries (52.1%) and other low-income countries. In September 2015, President Xi Jinping stated at the UN General Assembly that China would establish the South–South Co-operation Assistance Fund and would provide initial funding of USD 2 billion to support developing countries in their implementation of the post-2015 development agenda. Intergovernmental interestfree loans owed by the least-developed countries and landlocked developing countries that were due to be repaid at the end of 2015 were waived, and China has continued to increase its investments in the least-developed countries, with the aim of investing a total of USD 12 billion by 2030.13 China provides foreign aid over a wide range of areas including economic infrastructure, public infrastructure, human resource development, trade development, environmental protection, humanitarianism, and materials in the least-developed countries and various low-income countries. China has made substantial contributions toward poverty reduction and the improvement of people’s livelihoods in these countries, actively addressing its international responsibilities that match its international status, and has been highly commended by the recipient countries and the broader international community. The report of the 19th National Congress of the CPC proposed an intensification of efforts to provide aid for developing countries, especially the least-developed countries, to narrow the development gap between Northern and Southern countries. To this end, China has established the China International Development Cooperation Agency and formulated foreign aid development plans and annual implementation guidelines in accordance with its foreign policies. In future, China will continue to expand the scale of foreign aid, broaden the areas of aid, and improve the quality of aid. In particular, China will provide developing countries with consulting and training services in relation to human resources, development plans, and the economy. For example, 490,000 international students studied in China in 2017, ranking China third in the world in terms of hosting foreign students. China is increasing its aid in the form of government scholarships for students from developing countries and implementing policies regarding the employment of international students in China following graduation. China will continue to provide more aid for developing countries to enable them to increase the quality of their human resources, and has provided funding for nearly one million foreign experts and various professionals to work in China for periods of more than 90 days, and for millions of foreign professionals to undertake visits to China and exchanges with their Chinese counterparts for periods of up to 90 days. 13 Xi Jinping, Implement the Post-2015 Development Agenda for Shared Development, included in China Daily, September 27, 2015(Edition 1).

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Seventh, creating a “Chinese global governance plan” for the world. China must fulfill its role as a responsible great power in supporting the progress of developing countries and actively participating in the reform and construction of the global governance system. The most prominent example is the “Belt and Road” Initiative. More than 100 countries and international organizations have signed “Belt and Road” cooperation agreements with the Chinese government, providing public goods for the world. The “Belt and Road” Initiative aims to promote policy coordination, facility connectivity, unimpeded trade, financial integration, and people-to-people bonds, as well as facilitating global intercommunications, reshaping the world economy and enhancing third-party market cooperation to provide mutual benefits and win–win results over a wider scope. China has, for the first time, participated in and led the development of the global governance system. For example, China has strengthened the role of the UN as a key platform for global governance and has actively engaged with the World Bank, the International Monetary Fund, and the G20 to strengthen global economic governance and macro policy coordination. It has maintained the rules of the World Trade Organization, supporting a multilateral trade system and promoting the building of an open world economy, supported the international community in jointly advancing the 2030 Agenda for Sustainable Development and promoting the effective implementation of the Paris Agreement on climate change, and proactively established a network for cooperation among developing countries, such as the “BRICS+ “ cooperation model, the Shanghai Cooperation Organization, and a dialogue mechanism between China and Africa to provide a vital platform for emerging and developing countries to participate in global governance. The top priority is to fully facilitate the economic takeoff of Southern countries, implement a global strategy that is friendly to Southern countries, and enable China to contribute to global development, especially in relation to Southern countries. Eighth, providing “Chinese peaceful diplomacy” for the world. Peace, development, and cooperation remain the main goals in the modern era. China will make full use of the benefits of an era of peaceful development, adhere to a policy of independent peaceful diplomacy, always follow the path of peaceful development, and resist hegemonism and power politics. China will not seek hegemony, no matter how strong it becomes. When China becomes strong, it will greatly empower the world’s ability to avoid war and play an important role in safeguarding world peace. Most importantly, China will continuously contribute Chinese wisdom, Chinese solutions, and Chinese strength in the interests of world peace and development, and become a builder of world peace that is recognized by the international community. Overall, as China approaches the center of the world stage, it will always adhere to the principle of “a just cause gains great support.” China has never been a destroyer of world peace, a hinderer of world development, or a disruptor of the international order, but a builder of world peace, a contributor to global development, and a defender of the international order that is recognized by the international community.

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4 Challenges to China’s Modernization and Response Mode During the 40-year period since the reform and opening up, China has always adopted a typically modern “challenge and response” mode. It has faced major challenges, both at home and abroad, and both foreseeable and unforeseeable, and sometimes these challenges have been intertwined. The more integrated the global economy, the more profound the influence on China will be of events such as the Asian financial crisis and the global financial crisis. Thus, we should not only comprehensively analyze and respond in a timely manner to major challenges or crises, but also turn these challenges and crises into development opportunities. For example, although the global financial crisis in 2008 had a major impact worldwide and a significant impact on China, it also presented a rare opportunity. Since then, fundamental changes have occurred in both China and the USA in terms of economic strength, technological strength, and comprehensive national strength. In the future, China will face unprecedented development opportunities, as well as significant challenges. China will create and grasp key links in this period of strategic opportunity and turn unprecedented challenges into development opportunities. The likelihood of occurrence of these challenges and risks varies significantly. Some are foreseeable (“gray rhino” threats), while others are unforeseeable (“black swan” threats). Some are similar, such as economic and financial crises, while others vary significantly, such as natural disasters. The greater the integration of the global economy, the more profound the influence on China will be of events such as the Asian and global financial crises. The domestic challenges that China faces are mainly related to unbalanced and inadequate development, which has become a major constraint in relation to attempts to satisfy the Chinese people’s increasing demands for a better life. This is closely related to China’s basic national conditions and stages of development. In terms of problems related to unbalanced development, China continues to experience one of the largest development gaps between urban and rural areas in the world. Regardless of whether it is measured in terms of per capita income, consumption expenditure, basic public services, or basic social security, there is a large gap between China’s urban and rural areas, and it will take a long time to bridge this gap. In terms of problems related to insufficient development, China continues to be hampered by areas of relatively low productivity, particularly in relation to agricultural labor. In 2017, each agricultural worker only supported 6.6 people (including themselves). By 2020, China will have eliminated its absolutely poverty-stricken population based on the existing rural poverty standards. However, based on the international poverty standards issued by the World Bank (daily expenditure of USD 5.5 per capita), China still had 373 million poverty-stricken citizens in 2015, more than the total population of the USA (321 million), and it will take more than 10 years, that is, until 2030, to lift these people out of poverty. China’s underdeveloped regions have experienced insufficient and delayed development in terms of the economy, society, culture, and ecology. The challenges that China has always faced include how to

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provide high-quality job opportunities for 780 million people, high-quality education for 200 million people, high-quality health services for 1.4 billion people, basic pension insurance for 900 million people, and universal health insurance for 1.4 billion people, that is, building the world’s largest social security network. These challenges are unprecedented, but also present huge development opportunities. From the perspective of China’s national conditions, the conflict between mankind and nature is significant, and is associated with the unbalanced and insufficient development of Chinese society. China has a large population, relatively scarce resources, and a fragile ecological environment, and thus still has a long way to go in terms of resource conservation and environmental protection. China is the world’s largest consumer of energy and emitter of carbon dioxide, and the early introduction of carbon emissions standards is not only China’s greatest commitment to the rest of the world but also its greatest challenge, while also providing a huge opportunity for green innovation. China is undergoing unprecedented social progress and transformation involving various intertwined challenges and problems, which also present opportunities to build a harmonious socialist society. In terms of international challenges, the world faces significant instability and uncertainty in various areas, including reduced economic growth, an increasing gap between the rich and the poor, constant regional hot-spot issues, the sustained spread of terrorism, cyber-security issues, the spread of infectious diseases, climate change, and other non-traditional threats. The world faces numerous common challenges, and the rapid development of China has seen great changes in the distribution of power between China and the USA in terms of economic strength, technological strength, national defense strength, and comprehensive national strength.14 In an attempt to ensure its ongoing global hegemony based on “America First” thinking, the USA has shifted the relationship between China and the USA from “cooperative partnership” to “national security threat” and subsequently provoked a trade war with China. Similar to the period from the late 1980s to the early 1990s, the USA has imposed economic sanctions on China and become China’s greatest international challenger. In the abovementioned period, with the political support of Deng Xiaoping, the central government led by Jiang Zemin resisted the economic sanctions and political pressure applied by Western countries led by the USA. This history provides extremely rich international political lessons for Chinese leaders in terms of grasping the overall strategic situation, maintaining their strategic determination, and effectively handling the relationship between China and the USA. China now enjoys greater comprehensive strength than in the past, and is fully capable of responding intelligently to the significant challenges presented by the USA. China should maintain its strategic determination, adopt the correct strategies, and provide an effective response, including necessary compromises and concessions, to gain time and popularity and seize the initiative to properly deal with what is likely to be an ongoing crisis. In relation to foreign affairs, “comprehensive national power is the ultimate truth.” The greater China’s comprehensive national power, the greater its ability to

14 Hu

et al. [1].

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meet the challenges presented by the USA and other Western countries, and the longer its period of strategic opportunity will last. In the future, although opportunities and challenges will coexist, we believe that the opportunities will outweigh the challenges. The key is to firmly grasp this important strategic opportunity for China’s development, turning risks and challenges into opportunities, danger into safety, and pressure into power. This is possible because “we have a unique system advantage, strong leadership of the Party and the political strength of concentrating all our efforts on major issues.”15 The aim is to comprehensively enhance China’s economic strength, technological strength, national defense strength, comprehensive national strength, and soft strength. China has the capabilities, conditions, and confidence to firmly grasp and make full use of this strategic opportunity as it progresses toward the second centenary goal. Acknowledgements I thank Geoff Whyte, MBA, from Liwen Bianji, Edanz Group China (www. liwenbianji.cn/ac), for editing the English text of a draft of this manuscript.

References 1. Hu Angang et al., The Rise and Fall of Great Powers and China’s Opportunity: Evaluation of National Comprehensive National Strength, included in Economic Herald, No. 3 (2017), pp. 14–25. 2. Hu Angang, Ren Hao, How China Surpasses the USA in High-tech Industry, included in Bulletin of Chinese Academy of Sciences, No. 12 (2016), pp. 1355–1365. 3. Hu and Zhang Wei: Major Challenges Facing China In the New Era and Proactive Responses, included in the Journal of Beijing Jiaotong University, No. 1 (2018), pp. 1–8. 4. National Bureau of Statistics of China, A Collection of Statistical Data for Sixty Years of the People’s Republic of China, China Statistics Press (2010), p. 77 5. National Bureau of Statistics of China, China Statistical Yearbook 2018, China Statistics Press (2018), p. 171. 6. Zeng Peiyan, Main Tasks of Economic Construction and Reform in the First Two Decades of the 21st Century, included in the Tutorial on the Report of the Sixteen National Congress of the Communist Party of China, Beijing: People’s Publishing House (2002), pp. 79–80.

15 Xi Jinping, Remarks at the Workshops for Private Enterprises, included in China Daily, November

1, 2018 (Edition 1).

The Three-Circle Theory and China’s Periods of Strategic Opportunity Yilong Yan

In the second decade of the twenty-first century, China and the rest of the world have entered a new era. The whole world is in the middle of significant changes that have not been encountered for a century. Under these turbulent conditions, the major world powers are undergoing in-depth strategic adjustments and the international order has experienced a profound reorganization. The new China has experienced three periods of strategic opportunity since its founding and the third period has gradually come to an end. China must now actively start a fourth period of strategic opportunity, i.e., an irreversible great rejuvenation process in China amid the entry of new global powers onto the world stage. The next 30 years will be the last crucial juncture for the great rejuvenation of the Chinese nation since modern times and will include decisive moments where global powers will gamble on outcomes in the twenty-first century. This new period implies not only important strategic opportunities, but also major strategic risks.

1 The Three-Circle Theory: A Framework Analysis How can the periods of strategic opportunity be understood? The combination of three elements, i.e., time, place, and harmony, constitutes a period of strategic opportunity. Time as in the right timing, place as in the advantage of geography, and harmony as in the harmony of man are familiar expressions that also contain profound traditional wisdom. Heaven, Earth, and people are combined in The I Ching, or, Book of Changes, where they are integrated in the changes in six lines, which are each also divided

Y. Yan (B) Associate Professor of the School of Public Policy & Management at Tsinghua University, Beijing, China e-mail: [email protected] © The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2021 H. Men and X. Xiao (eds.), Report of Strategic Studies in China (2019), https://doi.org/10.1007/978-981-15-7732-1_5

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Fig. 1 China’s three-circle theory in strategic management

Time

Place

Harmony

into two lines. Heaven is easy to understand, Earth is simple to see, and people may learn the Doctrine of the Mean. Time, place, and harmony were regarded as important military strategic thoughts during the Warring States Period. The He Guan Zi noted that “Time, place and harmony are important factors for wars… The one who fights well is careful to win the war by seizing the right time and identifying the right place, based on harmonious relations.” Gui Gu Zi, a political strategist, emphasized that the strength of a state should be analyzed from the perspectives of time, place, people, and diplomatic relations.1 Sun Bin further proposed that time, place, and harmony are three necessary factors for winning a war. He believed that “without time, place and harmony, troubles would come even if you win.”2 We can modernize and theorize these thoughts of time, place, and harmony by referring to the three-circle model proposed by Harvard University, applying it to a strategic management analysis of China and organizations, and then taking time, place, and harmony as three factors for determining the success or failure of strategies in China’s three-circle theory (see Fig. 1). Harvard University’s three-circle model refers to the analytical framework of value, capability, and support. The model is an analytical tool for strategic management and decision-making in terms of leadership proposed by the John F. Kennedy

1 Chapter

V of Feiqian, Guiguzi: “A governor must be capable of measuring and weighing in order to govern the country. He should understand whether the situation is good or poor, whether the land is wide or narrow, whether the danger is large or small, whether people’s wealth is high or low, as well as intimacy, relationships and grudges among dukes.”. 2 Moon-like War, Military Science of Sun Bin.

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School of Government at Harvard University and is widely used in public management courses and strategic analysis. Mark H. Moore proposed a strategic management triangle in his book Creating Public Value, including value, external support, and internal feasibility.3 In a strict sense, the three-circle model cannot be called a theory, but refers to a strategic analysis framework. Nevertheless, the model has become well known in China as the three-circle theory. Just as Mark Moore described, the contribution of Harvard University’s threecircle model lies in breaking through the classical tradition of American public administrations, which mainly considers public administration as a way of efficiently achieving a given goal by exploiting the existing resources. The model reminds public administrators to give greater consideration to external issues, e.g., creating public value and obtaining external sustainable support. Of these two issues, the first is the key concept, which is derived from the need of enterprises to survive in the market by creating individual value for consumers and the need for public sectors to survive in the political market by creating public value for collective consumers (i.e., citizens). The problem lies in that the market value of an enterprise can be tested and the result of the test can directly determine whether the enterprise becomes successful or fails. Although public value can be vaguely measured, such measurement cannot be tested adequately to produce a decisive impact on the survival of organizations such as the market. Most crucially, the market mechanism is a competitive type. An enterprise should create more value that can be well received by consumers than other enterprises. Under a competitive environment, the key is not to create value, but to create new differential services, which is the value creation concept’s insight for corporate strategic management. Every public sector undoubtedly has public value; otherwise, there is no need to set such a sector. However, once the soul of competition and testability is removed, value creation in the public sector will tend to become an empty slogan or a self-promoting strategy, and will not add much real insight for the strategic management of the public sector. Moreover, the three-circle model was developed for application to public sectors in the USA, but was simply transplanted to China, which has great differences in its political situation from the USA. In China, the model was applied as an analytical framework for the strategic management of different types of organizations. In most cases, the theory was just copied mechanically. In contrast, China’s three-circle theory is an “analytical framework of time, place, and harmony” for strategic management.

1.1 Grasping the Right Time The primary element of strategic management is to grasp the right time. Unlike the description from Harvard University’s three-circle model, time does not refer to external supports but to external situations, such as the time and situation for 3 Moore

[6].

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strategic management, but refers to opportunity, season, and period, which change continuously. Situations include large, medium, and small situations, which can be quite complicated. There are negative situations in the positive situation, while there are positive situations in the negative situation: i.e., “there is no lasting straightness but no hindrance and no lasting advancement but no repetition.”4 Grasping the right time is simply grasping the general situation and opportunity. Thus, the primary element of strategic management is time rather than the “public value” mentioned in Harvard University’s three-circle model. However, the situation is the key to the success of a strategy. Some ancient Chinese sayings note that “although there is wisdom, it is better to follow the situation; although your farming tools are ready, you had better wait for the right time,”5 and “if it is the right time, everything under the heavens and on the Earth will support you, but even a hero will be helpless if he is unlucky.”6 This is the meaning indicated by Hexagram 17—Sui in I Ching. Only if “you follow the time” can you be “free and joyful.” For China, time encompasses the major situation of the world and grasping the right time is to follow the world trends, just as Sun Yat-sen observed, “The world trend is advancing. Those who follow it will become prosperous and those who go against it will perish.”

1.2 Identifying the Right Place The basic element of strategic management is identifying the right place, which provides the strategic conditions. Thus, the right place does not only refer to the capabilities mentioned in Harvard University’s three-circle model, but also the strategic conditions, such as position and resources. The role of directions was much emphasized in I Ching; hence, precedence, centering, and uprightness are affected by directions. The right place is the basic condition for strategic management. This condition constitutes support for a particular strategy, including both strategic support and constraint factors. Of course, the supporting factors are also rational; e.g., dry land is not fit for planting rice, but is suitable for growing wheat.

1.3 Seeking Harmony The active element of strategic management is to seek harmony. Harmony refers to joint efforts, which mainly include the capabilities of strategic decision-making and execution.

4 Line

93 of Hexagram 11—Tai, I Ching. Sun Chou, Mencius. 6 Luo Yin, In the Camp of the Sketching Brush. 5 Gong

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Harmony is the most crucial and active element of strategic management. Mencius believes that “The right time is not more favorable than the right place, and the right place is not more favorable than harmony.”7 Harmony contributes to the combination of time and place, which shape the period of strategic opportunity. No period of strategic opportunity can be won “by lying down.” Thus, all success should be sought through a struggle. This is true even today. Different combinations of time, place, and harmony form different zones of strategic management, which are described as follows: There are three situations when there is only one element present: (1) Strategic envy zone: The right time is present, but there is no right place or harmony and one can only wait in envy. For example, a wave of industrial transfer occurred during the 1950s and 1970s. During this process of industrial upgrading, the USA, Germany, and other Western developed countries transferred their labor-intensive industries to Japan and emerging Asian countries. These countries developed rapidly by grasping this opportunity. However, China was in the camp of socialist countries at that time and had neither the right place nor the harmony to grasp this development opportunity. (2) Strategic dream zone: The right place exists, but there is no right time or harmony; therefore, only a strategic dream exists. In the 1920s, for example, Mr. Sun Yat-sen proposed some grand industrialization plans for China, such as developing its mineral resources and transportation, opening up commercial ports and building factories, which can be regarded as a great prospective idea that exploited the advantages of China’s vast land and abundant resources. However, neither harmony nor the right time was present. China was fragmented at the time and lacked the basic preconditions for industrialization. The Western powers regarded China as a source of raw materials, a product-dumping ground, and a semicolonial power, and had little interest in Sun’s plans to develop China through investments from world powers.8 (3) Strategic rejection zone: Strategic rejection will occur if there is harmony but no right time or place. This is the situation described in Line 63 of Hexagram 10—Lu in I Ching where those who were not wise, insufficient in capabilities, improperly positioned, but still brave enough to step on the tiger’s tail, were counterattacked.9 A typical example is the Great Leap Forward, when the enthusiasm for promoting socialist industrialization throughout the country can be described as harmony, but it did not conform to the right time and surpassed its development stages and conditions with disastrous consequences.

7 Gong

Sun Chou II, Mencius. Yat-sen [8]. 9 Line 63 of Hexagram 10—Lu, I Ching, “The blind man may see and the lame man may walk, but this may lead to misfortune. When following a tiger, he stepped on the tiger’s tail and fell into danger. He could only serve his upper official or emperor as a strong man. Xiang Zhuan states, ‘The man who had a problem with his eye cannot be said to identify things. The man who became crippled and thought he could walk actually could not walk far.’” He risked being bitten by the tiger, indicating the improper position of line 63. That a strong man can serve his upper official or emperor indicates the strong will in Line 63. 8 Sun

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There are three situations when there are two elements: (1) Strategic delay zone: Although it is the right time and place, there is no harmony; thus, strategic opportunities would be missed. The Hundred Days’ Reform during the late Qing Dynasty conformed to the trends of the times and China’s needs; however, owing to a disagreement in the leadership group, the movement was aborted after a fierce struggle. As a result, China missed a major historical opportunity. (2) Strategic overambitious zone: Although the right time and harmony are present, there is no right place; therefore, the insufficient self-conditions would lead to strategic ambition. For example, many foreign policies with strong internationalist focus were proposed in the 1960s and 1970s. This can be described as conforming to both time and harmony but exceeding the national strength of the period. (3) Strategic self-reliance zone: When the right place and harmony but not the right time are present, some achievements can be made by exploiting the strengths of harmony and the right place. For example, the international situation was unfavorable to China in the 1960s and 1970s, but the country actively explored new strategic perspectives: i.e., the “two middle zones” and “three worlds.” Thus, China worked independently through its self-reliance and extensive efforts to establish an independent and complete industrial system and a strong national defense system. Opportunities are always taken by those who have prepared; thus, this zone also prepares for the start of a new, fourth period of strategic opportunity. We welcome strategic opportunities with all of these necessary elements, i.e., the so-called “everything goes well at the right time and in the right place” in Hexagram 11—Tai in I Ching. Time and place interact with each other, which ensures sound internal development and a stable external situation. As for harmony, it “completes the right time and place” and promotes the integration of the three elements. The period of strategic opportunity should contain various states, such as birth, stasis, change, and destruction, which include opening, maintenance, changing, and closing stages.

2 Three Periods of Strategic Opportunity in China 2.1 The First Period of Strategic Opportunity (1949–1958) The most significant problem experienced by China in this period was the formation of the Cold War pattern, which was dominated by the USA and the former Soviet Union. Following China’s active involvement in the global conflict, a strategic balance between the USA and the former Soviet Union was reached in Asia and a dividing line in the region was formed by the Korean and Indochina wars. The new China adopted the strategy of “leaning to one side” precisely because of a deep insight into the world’s general trends. Chairman Mao Zedong said that the idea that being neutral between the USA and the Soviet Union would lead to more independence for China was only a fantasy because the USA and the UK would not

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support China. Thus, “leaning to one side” meant that China should align with the Soviet Union as equals but remain master of its own destiny.10 China internally implemented the strategy of “one body with two wings.” According to this strategy, socialist industrialization is the main body and the socialist transformation of agriculture and handicrafts and of the capitalist industry and commerce are the two wings. This strategy opened up the first period of strategic opportunity in China. This first period of strategic opportunity helped the new China to win international recognition and safety guarantees. The Soviet Union was the first country to establish diplomatic relations with the new China. The first 11 countries that established diplomatic relations with the new China were all socialist countries,11 which helped China to find a foothold in the world economy. In addition, China gained support for its socialist industrialization. The 156 industrial projects aided by the Soviet Union constituted the backbone of the “First Five-Year Plan,”12 which established the primary foundation for China’s socialist industrialization. This first period of strategic opportunity lasted for a short time and gradually ended in the 1950s owing to the deteriorating diplomatic relations between China and the Soviet Union. During this period, both countries started to become alienated from each other and encountered continuous friction, which eventually ended in confrontation. Internally, strategic mistakes were also made. China had abandoned a prudent industrialization route, implemented the Great Leap Forward, changed its judgment on major domestic contradictions, and then turned to tackle class struggle as a principle. As a result, China encountered major setbacks during its domestic economic construction and fell into unprecedented international isolation to become an “isolated angry power” in the eyes of the Western powers. The end of the first period of strategic opportunity also promoted a strategic adjustment of China. In 1972, the US President Nixon visited China and the Sino– US relationship started to ease. The reconciliation of the Sino–US relationship was described by Nixon as “the most dramatic geopolitical event” since the Second World War.13 This event also led to preparations for the start of the second period of strategic opportunity.

10 Mao

[5]. [4]. 12 The First Five-Year Plan stipulated that for the construction of 156 industrial projects aided by the Soviet Union, 145 projects were to be started during the First Five-Year Plan period, while the other 11 projects were to be completed during the Second Five-Year Plan period. Of the 156 projects, 150 were actually implemented, mainly heavy industry projects, of which 44 were for the defense industry, 20 for the metallurgical industry, 52 for the energy industry, 24 for the institutional industry, 7 for the chemical industry, and 3 for light industry. Please refer to the Office of the Financial and Economic Committee of the National People’s Congress: A Collection of Important Documents of the Five-Year Plans for National Economic and Social Development Since the Founding of the People’s Republic of China, Beijing: Democracy and Law Press of China, 2008, p. 623. 13 Nixon [7]. 11 Jin

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2.2 The Second Period of Strategic Opportunity (1978–1989) The second period of strategic opportunity was initiated after China’s adoption of the reform and open-up strategy. The most important world trend during this period was peace and development. Deng Xiaoping believed that the real big issues in the world during this time were global strategic issues: i.e., peace and development. Peace refers to the East–West issue and development refers to the North–South issue. Regarding the East–West issue, Deng judged that there would be no world war in the future, and regarding the North–South issue, he believed that if the southern countries did not develop in the future, the northern countries would also be unable to develop.14 Compared with the early days of the new China, great geographic changes had taken place. China had built a completely independent industrial system and a national economic system, accumulated strong national defense strength, and boasted abundant natural and human resources. Meanwhile, China still had a low income per capita where most people lived below the international poverty line and the country was still socioeconomically undeveloped. Deng Xiaoping and other leaders adopted more pragmatic, independent peace diplomacy policies and established equally beneficial diplomatic relations with other countries worldwide by reviewing the situation and transcending ideological boundaries. Formal diplomatic relationships were established between China and the USA. Furthermore, the normalization of Sino–Japan, Sino–India, and Sino–Soviet relationships created a favorable external environment for China’s reform and open-up strategy. Internally, the focus of work was shifted from class struggle to economic construction, where the reform and open-up strategy was promoted. Thus, the second period of strategic opportunity formally began. During this period of strategic opportunity, China established peaceful international relations and integrated itself into the world economy, which facilitated a strategic opportunity for development. Economic reform drove China’s reform and open-up strategy, which in turn led to greater opening up. Thus, China entered a fast track of development. The main reasons for the end of the second period of strategic opportunity included the political crisis in 1989, the upheaval of the Soviet Union and Eastern Europe, and the collapse of the Cold War pattern. The USA did not regard China as a tool for balancing the Soviet Union’s power. The common interests of the two countries in suppressing the Soviet Union as Nixon described ceased to exist. Meanwhile, following the highlighted ideological conflict between China and Western countries, some Western countries including the USA imposed sanctions on China after its political crisis in 1989.

14 See

Deng [1].

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2.3 The Third Period of Strategic Opportunity (1993–2016) In the face of sudden international changes, Chinese leaders adopted the fundamental national policy of “never being a leader,” hid their capabilities, and waited to respond to the outside world after reviewing the situation. When talking with Jiang Zemin and Li Peng, Comrade Deng Xiaoping said that “some countries in the Third World hoped that China could be a leader. We should never do so, and this is a fundamental national policy. We cannot afford to do so and we are not strong enough. Being a leader would bring no benefit to us and many initiatives would be lost by doing so.”15 At that time, China did not have a large economic scale. As a developing country, China should first develop itself well before helping others. Of course, “making a good fortune by hiding oneself” is a wise strategic choice, which is described by the “liking to hide,” “hiding when becoming prosperous,” and “hiding when becoming rich” in the Divine of Retiring in Hexagram 33—Dun in I Ching. Internally, China adopted an unwavering reform and open-up strategy. At the third plenary session of the 14th Central Committee of the Communist Party of China, the Decision of the Central Committee of the Communist Party of China on Some Issues Concerning the Establishment of a Socialist Market Economy System was adopted. Following a short-term adjustment, a new period of strategic opportunity was initiated. This new period fundamentally differed from the second period because it occurred in the international order after the Cold War. The USA had strong confidence in the peaceful evolution of China and believed China would follow the Soviet Union and Eastern Europe like falling dominos in embracing the international order. This engagement policy could externally promote China’s changes, while an isolation policy would compel China to return to a state of anger and pose a threat to the West. In its 1991 US National Security Strategy, the Bush Administration stated that “China is bound to change” and the focus of the US policy towards China was “dialogue and engagement.” Later, the Clinton Administration’s policy towards China was implemented within the broad framework of engagement and expansion strategies, and its basic goal was to include China in the “market democracy” system through engagement. US President George W. Bush regarded China as a strategic competitor within a short period of time after he came into office. After the 9/11 terrorist attack on September 11, 2011, the Bush Administration changed its perspective and regarded international terrorism and the so-called “axis of evil” as the main threats. The Obama Administration considered the prevention of nuclear proliferation and nuclear terrorism as a top priority for national security. The USA continued to carry out its policy of engagement with China. As a result, China could continue its third period of strategic opportunity without making fundamental strategic adjustments.

15 See Volume 3 of the Selected Works of Deng Xiaoping, Beijing: People’s Publishing House, 1993,

p. 363.

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Meanwhile, the global information technology revolution developed rapidly during this period. China joined the World Trade Organization by actively participating in the third industrial revolution, which promoted China’s rapid growth. The competitive strength of China’s abundant labor resources was exploited fully and low-cost Chinese products started to be sold worldwide. China appeared on the world stage as a factory for the world and an economic power (Table 1).

3 Change: Creating a New Period of Strategic Opportunity Since the 1990s, China has seen its influence increase worldwide without many economic shocks. In the early twenty-first century, no major issues occurred despite the small conflicts between China and the USA as well as between China and the West. In the second decade of the twenty-first century, however, China started to shake the USA’s hegemonic status and shifted the economies of Western countries. Thus, opposition to China in the world economy followed. This process began after the 2008 financial crisis and turned into an antiglobalization process, which was marked by Trump’s rise to power. The old period of strategic opportunity officially ended and a new period of strategic opportunity became necessary. The present Sino–US trade war has made this need explicit. Certainly, some compromise could occur in the Sino–US trade war; however, this compromise does not mean that deeper conflicts on paths, institutions, and interests can be eliminated. The basic reason for the end of the third period of strategic opportunity is that the integration of China as allowed by the US-led neoliberal international order has a ceiling and China has reached it. As a result, in the eyes of some Western elites, two fundamental changes have occurred in Sino–US and China–West relationships.

3.1 From an Economically Complementary to a Competitive Relationship Economically, China’s complementary relationship with the world became competitive. Including the USA, Western countries occupied the high end of the industry chain and outsourced its middle- and low-end aspects to developing countries, such as China, through outsourcing and offshore business operations. This model has worked well for more than 30 years. However, with the increase in China’s technological strength and its advancement towards high- and medium-end industries, a profoundly competitive relationship began between China and the Western countries led by the USA. In the recent reports issued by the USA and Europe, China

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Table 1 Four periods of strategic opportunity in China Period

First period of Second period of Third period of strategic opportunity strategic strategic opportunity opportunity

Fourth period of strategic opportunity

(1949–1960)

(1978–1989)

(1993–2016)

(2013–)

Time (international environment)

The Cold War pattern between the United States and the Soviet Union was formed, and the third industrial revolution started

The bipolar Cold War pattern was loosened, peace and war became the theme of the world, and the third industrial revolution was advanced

The Cold War ended, the pattern of one superpower and multiple powers appeared, and the information technology revolution witnessed rapid development

The pattern of two poles and multiple powers appeared, the fourth industrial revolution started, the capitalist integration process was broken, and southern countries rose on the world stage

Place (domestic conditions)

With extremely low industry levels, people lived in extreme poverty, 80% of the population was illiterate, and a new socialist China was founded

China was equipped with an independent and complete industrial system as well as abundant human and natural resources, but most of the population still lived below the international poverty line and the economy and the society was still lagging behind

China entered a middle income stage, began to transform from a shortage economy to a buyer’s market, and became the second largest economy in the world

China transited from a middle-income to high-income society, witnessed the highlighted problem of insufficient effective demand, and moved from the second largest to the largest economy in the world

Harmony (major strategies)

Pursued the strategy of “leaning to one side” externally and promoted socialist industrialization internally

China carried out the reform of the planned economy, formed a dual-track system, opened itself to the outside world, and actively attracted foreign investment

China promoted its market economy reform, joined the World Trade Organization, followed the principles of “never being a leader,” hid its strength and bided its time

China entered a stage of high-quality development, formed innovation-leading benefits, advanced the Belt and Road Initiative and the community of a shared future for humankind, and achieved an inclusive rise (continued)

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Table 1 (continued) Period

Strategic opportunity benefits

First period of Second period of Third period of strategic opportunity strategic strategic opportunity opportunity

Fourth period of strategic opportunity

(1949–1960)

(1978–1989)

(1993–2016)

(2013–)

Established a foundation for industrialization, obtained security guarantees and international recognition

China entered a stage of fast development and people’s living standards improved rapidly

China accelerated its reform and open-up strategy and witnessed rapid economic growth to become the world’s second largest economy

China’s great renaissance process is irreversible. China has become a new global power and its comprehensive national strength jumped from the second in the world to the first

is considered as a major competitor in terms of key technologies such as 5G and artificial intelligence.16

3.2 Checks and Balances Politically, China’s absorption relationship was transformed into checks and balances. Following China’s adoption of the reform and open-up strategy, the inclusion of China in the US-led global capitalist system has remained an unchanged precondition of the USA’s engagement with China. The USA also believed that they had the strategic confidence and patience to wait for China’s final changes. However, their confidence has now been suddenly overthrown. The USA found that the Chinese model was not only unable to be digested by the Western system, but also may produce an increasingly larger global influence and challenge the Western-dominated institutional models and international order. The 2017 US National Security Strategy states that “For decades, the US policy has been rooted in such belief as supporting China’s rise and its integration into the post-war international order would assist China in opening up. However, contrary to our wishes, China is expanding its power by sacrificing the sovereignty of other countries.” In a speech colored by Cold War terminology, the US Vice President Mike Pence stated that China is expanding its

16 EU-China: A Strategic Outlook, a report issued by the EU on March 12, 2019, states that “China cannot be regarded as a developing country any more. It is a key global actor and leading technological power.”.

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regional and global influence, and is trying to change the global order to benefit itself, which conflicts with the USA’s geopolitical interests.17 Consequently, the West reexamined its relationship with China and changed its original idea of ending the Cold War to the so-called “Cold War Rematch.” As a possible conclusion of this rematch, the winner may be China and the West may fail. On the November 2017 cover of Time (Asia), “China has won” was written in both English and Chinese versions. This outmoded hegemonic attitude, Cold War mentality, and zero-sum gambling thoughts led some Western elites to become worried about the rise of China in the global economy. These Western elites believed that the rise of China would lead to the weakening of the West by weakening its technological and industrial strengths. They believed that China’s ascendancy would also ruin the foundations of Western institutional models and lifestyles. This fear is the root cause for the so-called new China Threat theory. The 2017 US National Security Strategy listed the revisionist countries represented by China and Russia as the first of the three challenging forces faced by the USA. This action changed the view maintained in the decades after the resumption of Sino–US relations. The strategy also considered that “China is seeking a strategy to replace the USA’s influence in the Asia–Pacific Region, expanding the sphere of influence of its dominated economic model and rewriting regional order in a way favorable to itself.” Accordingly, the USA has also fundamentally adjusted its strategic positioning to China from being “a responsible stakeholder” proposed by the Bush Administration, to “a responsible leader” proposed by the Obama Administration,18 and finally to “a strategic competitor” by the Trump Administration. This represents the largest transformation of the US strategy towards China since the establishment of Sino–US relations. The old times are passing by, whether we like it or not. We need the courage and wisdom of Comrade Mao Zedong’s exclamation, “Farewell, John Leighton Stuart!” to say “Farewell, Kissinger!” and “Welcome, Trump!”.

17 White House. Remarks by Vice President Pence on the Administration’s Policy towards China https://www.whitehouse.gov/briefings-statements/remarks-vice-president-pence-administr ations-policy-toward-china/. Accessed on March 12, 2020. 18 The 2015 National Security Strategy of the United States of America points out that the USA hopes that China, along with the USA and the international community, takes a responsible leadership role in advancing economic recovery and address climate change and nonproliferation priorities.

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4 Time: Major Global Trends in This New Period 4.1 Rise of the Fourth Industrial Revolution The fourth industrial revolution will lead to the subversion and transformation of traditional industries, the replacement of key industries, and reorganization within the industrial chain, which will revolutionize the economic structure. Historically, the key factor in the rise of world powers is that they have controlled the leadership of the emerging industrial revolution. From the 1760s to the 1840s, the UK led the first industrial revolution and became the main world power. In the 1860s and 1870s, Western developed countries, including Germany and the USA, led the second industrial revolution and also became world powers. Since the 1940s or 1950s, the USA has led the third industrial revolution and maintained its status as the most powerful country in the world. China was marginalized during the first and second industrial revolutions. After the founding of the People’s Republic of China, China had to catch up with the industrialization of the world. On the one hand, China completed the first two industrial revolutions. On the other hand, it became a follower and active participant in the third industrial revolution. However, characterized by digitalization, intelligence, biotechnology, and quantum technology, the fourth industrial revolution is in full swing. The fourth industrial revolution is the greatest and most profound socioeconomic change since the industrial revolution of the eighteenth century. This revolution may excel the previous industrial revolutions in terms of its speed, depth, and breadth. The competition for the commanding heights of the fourth industrial revolution has become a focus of gambling among the major world powers. In February 2019, the White House National Science and Technology Council issued a new industry initiative and listed artificial intelligence, high-end manufacturing, quantum information science, and 5G as the key to dominating the future industries of the USA. On April 11, the White House issued a statement that the USA wished to dominate the world’s 5G industry competition. In Germany’s National Industrial Strategy 2030, it is clearly indicated that “only the countries who have owned and mastered new technologies can maintain a favorable position in the competition.” Unlike the previous industrial revolutions, China has become a leader of the fourth industrial revolution. China leads the world or keeps pace with other major powers in digital economy, artificial intelligence, quantum computing, 5G and other key areas. The industrial revolution certainly facilitates huge opportunities that also involve huge risks. China will not only encounter fierce market competition, but also experience efforts by its competitors to suppress and block its products.

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Table 2 Ratios of major powers (Regions) and the USA (Unit: USA = 100) Country/region

Total population (2015)

GDP (2017, based on the purchasing power parity)

Land area

Total exports (2015)

Total imports (2015)

Total military expenditure (2016, based on the exchange rate)

USA China

100.0

100.0

100.0

100.0

100.0

100

427.2

108.6

97.7

142.1

68.0

35.59

Russia

44.4

19.3

174.0

21.1

8.4

13.29

Japan

39.7

25.9

3.8

39.0

26.6

7.07

India

391.3

44.7

33.5

18.0

18.4

10.02

EU

160.6

106.7

44.0

141.4

95.6

40.56

63.8

17.6

86.7

11.8

7.4

4.23

Mexico

37.8

12.4

20.0

27.0

18.5

1.04

Indonesia

79.7

15.8

19.4

9.5

5.9

1.39

Brazil

Note Source of calculated data: CIA. The World Facebook, https://www.cia.gov/library/publicati ons/resources/the-world-factbook/rankorder/rankorderguide.html (accessed March 12, 2020)

4.2 Transformation of the World into a Superpower and Multiple Powers The basic pattern of the world after the Cold War ended was characterized by one superpower and multiple powers. Although global strengths were scattered in multiple centers, the USA remained the only superpower. However, this basic pattern has changed gradually since the beginning of the new era of industrial revolution. This change is mainly driven by two factors. The first is the decline of the US hegemony. Maybe it is too early for us to call it the decline of USA as a country now, but the decline of the US hegemony has been observed. This decline is caused by the country’s internal crisis, separation of the real economic center from the virtual economic center, mismatching between the investment in the global military system and its benefits, and that the global presence of the US has exceeded its national capacity. In addition, China’s rise as a world power gradually enabled the separation of China from the second group of powerful nations and China is approaching the USA in terms of strength.19 Meanwhile, in terms of land area, total population, total economic volume, total foreign trade, scientific and technological strength, and military strength, no other major world powers have the conditions to grow into global superpowers like China and the USA and become poles of the world (see Table 2). Of course, this does not mean that there will be a pattern of Sino–US cogovernance like the G2; instead, the mutual competition, checking, and high-intensity gambling between the two will continue, which President Trump called a new era 19 See

Yan and Cui [10].

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of great power competition. At the same time, mutual dependence and complementation of the two countries also appear in the global governance system, which is similar to the global order of “contact of extremes” previously mentioned by Karl Marx.20

4.3 Breakage of the Integration Process of the Global Capitalist System Since the Second World War, the rapid development of productivity and continuous improvement of living standards have led to the integration of global capitalism. Internally, the integration process shows itself as a major easing of class contradictions; i.e., the bourgeois’ interests are the “universal interests” of the whole society, the middle class has risen and become the pillar of the society, and the poor class has obtained better welfare support. In the Western world, the “comfortable, stable, reasonable and democratic” one-dimensional society described by Herbert Marcuse has emerged.21 The integration process among countries manifests as a win–win scenario between developed and developing 2 countries. Free capital investment and trade between developed countries also further promotes the prosperity of developing countries. With the outbreak of the global financial crisis, the integration of the global capitalist system since the end of the Cold War has become broken. The middle class in Western developed countries is increasingly becoming a “tragic class” because the olive-shaped income distribution is shifting to an “M type” and a small percentage of the population have become enormously wealthy. According to Oxfam data, the 26 wealthiest people in the world in 2018 were as wealthy as the 3.8 billion people living in poverty among the global population. Confrontational contradictions between the classes have intensified. Populism and far-right forces reappeared politically and political parties’ operations have shifted from centralization to polarization. In terms of international relations, the breakage of the integration process of world capitalism is manifested as the shrinkage of global foreign trade and investment. An antiglobalization trend has emerged, with unilateralism, isolationism, separatism, and trade protectionism making a comeback. The breakage of the global capitalist integration process means that a profound transformation of the Western economy and society is underway, which will bring many uncertainties for the future development of the world and also may mean many new possibilities. Accordingly, with the rise of China, the new type of socialism will increasingly show vigor and vitality in the twenty-first century.22

20 For

a specific analysis, see Yan and Cui [10]. [2]. 22 Yan et al. [9]. 21 Marcuse

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4.4 Transformation of World History from Great Divergence to a Great Overturn Since the sixteenth century long explored by historians, the world has witnessed a major divergence between Western and non-Western countries. The Western world has emerged as a leading civilization in the global system. Under the huge pressure of the military, material and spiritual advantages exhibited by the West, all nonWestern and Western civilizations and national differences have been disciplined into promodern and modern, and peripheral and central gaps. The combination of Western and modern features has been transformed into a global universal system and non-Western countries have been actively or forcibly included in this system. China’s rise will lead to the overall revival and collective rise of southern countries. From 1950 to 2015, the proportion of the GDP of both Western Europe and the USA of global GDP dropped from 53.6% to 32.7%. This continuing downward trend will change the global pattern of Western centralization, which has lasted for hundreds of years. Thus, the world will develop from its great divergence to a great convergence and overturn Western centralization.23 The process of economic convergence is followed by the collective renaissance of non-Western civilizations, which are transforming from the recipients of the world system into joint builders. By this process, different civilizations of the world gain true universality through equal exchanges and dialogues rather than universality under the disguise of Westernization. It is also the process where non-Western civilizations, countries, and populations obtain subjectivity in world history. Once the potential, suppressed, and marginalized subjectivity is overturned, a new era of human history will be written. The end of the American century does not mean that a new hegemony will appear and replace the USA to dominate the world. The twenty-first century is neither an American century nor a Western century or a Chinese century. The twenty-first century is shared by all countries in the world.

5 Place: Internal Conditions of the New Period Internally, China has entered a new era. Compared with the second and third periods of strategic opportunity, a profound transformation has occurred to the geographical conditions of China in the following four aspects.

23 See

Hu et al. [3].

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5.1 The Transformation of Comprehensive Strength from Regional to Global Power As we mentioned earlier, apart from the USA, China is the only country in the world with the comprehensive strategic resources for becoming a superpower. China has become greatly different from Deng Xiaoping’s days, when its strength was insufficient. In this context, China has the conditions and also the strength to become a global superpower.

5.2 The Transformation of Economic Development Contradictions from Insufficient Effective Supply to Insufficient Effective Demand The uneven distribution of wealth under market economy conditions would lead to insufficient consumption and the decline in average profitability would lead to insufficient effective investment. As a consequence, all countries worldwide would encounter the issue of insufficient effective demand after they develop to a certain level. China’s economic development has also entered a phase of relative surplus from the earlier shortage economy. Thus, insufficient effective demand has become a fundamental challenge.24 Objectively, China must plan its own development within the larger scope of the world economy.

5.3 The Transformation of a Basic Social Pattern from a Mid-Income to High-Income Society In 2018, China’s per capita income reached USD 9500. By 2025, it is estimated that China’s per capita GDP will be close to USD 15,000. Thus, China will cross a high-income threshold during the 14th Five-Year Plan period. All aspects of this period have been quite different from the previous periods. China has transformed into a society with mostly urban populations and a service-based economy. Its global competitiveness has shifted from the element of cost advantage to comprehensive strength with innovation at the core. People’s needs have become more diversified and the contradictions of imbalanced socioeconomic development have become more prominent. Problems like aging, low fertility, increased chronic disease, and dissatisfaction with little wealth have become prominent.

24 Yan Yilong, Response to the Challenge of Insufficient Demand with New Demand Management,

included in the World Socialism Studies, No. 10 (2018).

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5.4 The Transformation of the Engine of Modernization from the Previous Five Modernizations to Five New Modernizations In the second and third periods of strategic opportunity, five modernizations, including industrialization, urbanization, internationalization, informatization, and marketization, provided a sustained momentum for China’s development. In the new period, the driving factors for China’s development have changed into five new modernizations, i.e., industrial system modernization, urban agglomeration, urban– rural integration, new globalization, digitalization, and intelligence. Thus, industrialization has been transformed into the modernization of the industrial system, i.e., building a modern industrial system. Urbanization no longer mainly relies on population and land. In 2018, China’s urbanization rate was close to 60% and the period of rapid urbanization soon passed. The driving forces of the new round of urbanization are mainly urbanization and urban–rural integration. Internationalization has also transformed China’s strategy from benefiting from its internal reform and openup strategy to the external strategy of benefiting from being the recipient and then exporter of the global market. In the context of antiglobalization, China has become an important world leader in the new type of globalization. Informatization has further transformed into digitalization and intelligence and leads the fourth industrial revolution, which promotes digitalization and intelligence. The momentum of marketization is also weakening; e.g., the marginal benefits released by market-oriented reforms are becoming increasingly smaller and the new impetus for institutional innovation comes from the modernization of the national governance system.

6 Risks: Strategic Traps of the New Period In this new period, China also faces several strategic traps and risks that should be avoided as practically as possible.

6.1 New Cold War Trap China and the USA will be unlikely to fall into the so-called Thucydides trap. Unlike the previous conflicts of great powers, as an emerging power, China is not expansive and aggressive. With its deep integration into the existing global order, China is a conservative force and defender of the global order. The USA, as a defending superpower, is characterized by pragmatism. As the main founder of the global order, the USA has kept withdrawing from and disrupting the world situation. China does not intend to overturn the existing international order but to reshape the international order for greater benefits.

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As for the Sino–US relations, China should keep alert against falling into a new Cold War trap. Specifically, China should avoid the transformation of international relations towards a comprehensive confrontation of economy, technology, and culture, further global isolation of itself, and possible comprehensive competition with and blocks by developed countries. China must actively promote the reversal of the so-called “decoupling” of economy, politics, and society in China and the USA, stabilize and expand the common interests of China and the USA, and promote Sino–US relations based on “coordination, cooperation, and stability.” In addition, China should make more friends regardless of their ideologies and avoid the emergence of new bipolar camps. Finally, China should make positive achievements, hide its weaknesses, and look for strategic gaps.

6.2 The American-Style “Contemporary Mansion Jia” Trap The contemporary Mansion Jia is a house in the classical Chinese novel A Dream of Red Mansions. The mansion is large and luxurious, but its resident is burdened with worries about local problems. China will not repeat the mistakes previously made by some powerful nations, such as Japan and Germany, who engaged in military expansion after becoming powerful. However, China should keep alert against becoming the contemporary Mansion Jia, i.e., looking great on the surface like the USA but heavily burdened in reality owing to its kindnesses despite its powerful strength. When Mao Zedong commented on the US, he quoted Wang Xifeng in A Dream of Red Mansions, “Strong as it is, it has difficulties of its own.”25 China would encounter these difficulties after becoming strong. Although China will not reach out to every corner of the world as the US does, it must keep alert against the heavy burden of supporting its friends all over the world. China should also prevent the burden from the assumption of so many responsibilities exceeding its national strength when promoting its global strategy. China should not only care for the whole world but also attach primary importance to its own development without shaking its foundation. China’s foreign aid and shouldering of international responsibilities shall be based on the precondition that its development stage and national strength will not be transcended. China’s implementation of its international cooperation strategy should be based on mutual benefits and win–win results.

25 A

Chronicle of Mao Zedong (1949–1976), Volume V, Beijing: Central Party Literature Press, 2013, p. 262.

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6.3 High Income Trap Developed countries such as Japan have long since fallen into a high-income trap of approaching zero growth. China needs to make forward-looking plans in advance to deal with the challenges of aging and low fertility. If the huge gap between the rich and the poor cannot be better reduced, China will not only lose the momentum of economic growth but also witness severe social unrest and conflict.

6.4 Manufacturing Hollowing Trap After entering the postindustrial stage, many developed countries have transferred their manufacturing requirements to other countries. While resources can be allocated more efficiently, the problem of manufacturing hollowing emerged. As a result, a decline in national competitiveness occurred and a large number of laborers have lost job opportunities. The USA, Germany, and other countries have proposed the goal of remanufacturing. For example, Germany and the EU proposed to increase the proportion of their manufacturing industries to 25 and 20% by 2030, respectively. The lessons learned by developing countries will be experienced in China’s future if they are not learned. Thus, manufacturing hollowing is a strategic trap to be avoided during China’s economic transformation and upgrading. Meanwhile, the manufacturing industry must maintain its strength by relying on its comprehensive advantages rather than traditional cost advantages to continue producing goods in China.

7 Harmony: A Great Strategy for Creating the Fourth Period of Strategic Opportunity Although the third period of strategic opportunity ended with Trump’s ascendance to the US presidency in early 2017, China has taken the initiative to pursue a major period of strategic transformation since 2013. Internationally, China’s most important action was to move from “never being a leader” to fully giving play to its global leadership. China is promoting the Belt and Road Initiative and building a community of shared future for humankind. Internally, the most important practice is to promote the transition of its development model and its transformation from highspeed development to high-quality development with innovation as the focus. These early actions have promoted the gradual starting of the fourth period of strategic opportunity. In this paper, the following three additional suggestions are made:

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7.1 Promoting the Second Ideological Emancipation As for the three periods of strategic opportunity since the founding of the People’s Republic of China, ideological discussions reached a consensus of looking ahead by joining hands. In particular, the start of the second period of strategic opportunity benefited from the discussions on the sole criterion for testing the truth. The Resolution of Several CPC’s Historical Issues since the Founding of the PRC was formulated at that time. As a result, China eliminated dogmatism and formed a consensus on its reform and open-up strategy, thus ideologically creating the conditions for the second period of strategic opportunity. Although the report of the 19th National Congress of the Communist Party of China clearly stated that China has entered a new era, a social consensus is far from being reached. Many people have physically entered the new era but are still mentally living in the old era. The group that continues to think in old ways has become the biggest obstacle impeding the institutional innovation of the new era and the implementation of many strategic initiatives. China should call for new ideological emancipation and break the new dogmatism, especially some foreign dogmas that formed since the reform and open-up strategy. China should comprehensively summarize both the experiences and lessons of the reform and open-up strategy to create the ideological conditions for the fourth period of strategic opportunity.

7.2 From the Benefits of the Reform and Open-Up Strategy to the Benefits of Innovation The reform and open-up strategy represented the core strategy of the second and third periods of strategic opportunity, but its benefits have been declining. The institutional mechanism of reform will inevitably continue, but it increasingly encounters a stage where no target model can be followed. Thus, it is essentially institutional innovation rather than traditional institutional reform. In terms of China’s relationship with the outside world, the benefits achieved from integrating into the world through opening up are also declining, but they have increasingly become the leading benefits. The benefits from opening up are in line with the world’s trends, but the leading benefits are to drive the world’s trends and provide Chinese products, solutions, standards, and examples. The core strategy of the fourth period of strategic opportunity should be innovation and leadership. From the benefits of the reform and open-up strategy to the benefits of innovation, China must build an innovative society and state, create an atmosphere of innovation, and catch up in all fields to obtain new strategic opportunities and vitality. Thus, China can form a leading advantage. The following aspects are included. In terms of scientific and technological innovation and catching-up, China’s scientific and technological innovation system includes three major systems: a new

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national system oriented to major strategic needs, an efficient research and development application system with market-oriented enterprises as the main participants, and a basic research system oriented to cutting-edge technologies and theories. In the future, these three major systems must be further improved, especially the basic research system. In addition, it is necessary for China to promote product innovation and leadership, e.g., shifting from “Made in China” to “Created in China,” and actively promote the innovation and leadership of its systems. In its economic, political, and social systems, China must create the most advanced institutional model for the world. In terms of its ideological innovation and guidance, China should tell Chinese stories well and provide Chinese solutions and wisdom to the rest of the world.

7.3 China’s Peaceful to Inclusive Rise It is necessary to fully understand the influence of China’s rise as a world power on the whole world. Developed countries were initially worried that China’s rise would weaken their industries and pose a challenge to the Western-dominated global order. Regional powers in geopolitical areas like India were afraid that with the expansion of China’s power, they would face a geopolitical threat from China. Third, neighboring countries feared that China’s rise would lead to the restoration of a tributary system. Talking about China’s peaceful rise is not enough to deal with the so-called new China threat; therefore, an inclusive rise is required. China’s inclusive rise means that its rise as a major world power is peaceful rather than aggressive; i.e., it is win–win rather than exclusive. China aims to improve the global order rather than destroy it; i.e., China brings opportunities not threats. The peaceful rise of China means that it will neither repeat the logic that a world power must seek hegemony nor remake the mistakes of other countries’ territorial expansion. This is determined by the characteristics of China’s civilization, institutional, and national strategy. China will not expand geopolitically and will be a definite defender of world peace, not a saboteur. China’s rise is a win–win scenario because its international influence is mainly reflected in providing a platform for the shared development of the world. China’s Belt and Road Initiative is the largest political platform for geodevelopment in the twenty-first century. For developing countries, China’s inclusive rise will bring real opportunities and China’s investments will become a driving force for development. The Belt and Road Initiative is the best gift that China has presented to the world. For developed countries, China’s inclusive rise will not pose a threat, but bring about favorable competition. The first industrial revolution lasted more than 200 years, but only a little more than one billion people have become members of developed countries. The world also has huge development potential. Thus, the rise of China can enable more of its resources to be shared with other countries to help their development rather than take more of any other countries’ resources.

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For its surrounding countries, China will neither repeat the logic of great powers’ seeking hegemony nor territorial expansion. Simultaneously, China’s development will have the effect of a corresponding rise in the general situation, which forms a radiation effect of economic development and suggests that East Asia is becoming the third-largest developed economic circle following North America and Europe. China’s rise will not overturn the existing global order; instead, it promotes the perfection of the existing global order. China has been integrated into the existing global system and has become a big player. China is a conservative force not a disruptor of the existing global system; i.e., it is committed to driving the global order towards a more just direction by building a community with a shared future for humankind. China’s rise is not exclusive but inclusive. China will not pose threats to the rest of the world, but bring Chinese opportunities to other countries, thus bringing peace, stability, and prosperity to humankind in the twenty-first century.

References 1. Deng Xiaoping: Peace and Development are Two Major Issues of the Contemporary World (March 4, 1985), included in Volume III of the Selected Works of Deng Xiaoping, Beijing: People’s Publishing House, 1993, pp. 105–106 2. Herbert Marcuse: One Dimensional Man: Studies on the Ideology of Advanced Industrial Society, Shanghai: Shanghai Century Publishing (Group) Co., Ltd., 2008. 3. Hu Angang, Yan Yilong, Wei Xing, China 2030: March Towards Common Wealth, Beijing: China Renmin University Press, 2013. 4. Jin Chongji: A Biography of Zhou En-lai (1949–1976), Beijing: Central Party Literature Press, 1998, p. 33 5. Mao Zedong, “Leaning to One Side”: Right or Wrong?, included in the Mao Zedong on Diplomacy, Beijing: Central Party Literature Press, 1994, pp. 278–279. 6. Mark H. Moore, Creating Public Value: Strategic Management in Government, The Commercial Press (2016), p. 34 7. Richard Nixon, 1999 Victory without War, Beijing: The World Knowledge Press, 1997, p. 284. 8. Sun Yat-sen, Strategies of Founding a State, included in the Selected Works of Sun Yat-sen (Volume I), Beijing: People’s Publishing House, 2011 9. Yan Yilong et al., The World is for All: China’s Socialism and the Long 21st Century, Beijing: China Renmin University Press, 2018. 10. Yan Yilong, Cui Jing: On a New World Order of “Contact of Extremes”, included in Discovery, No. 1 (2017).

BRI in the Vision of Chinese Civilization and Construction of Global Ethical Consensus Lei Sun

Ever since BRI was proposed by President Xi Jinping in September 2013, it has achieved outstanding economic outcome. However, as an important international strategy its theoretical construction lags behind its practice. Among the existing theoretical studies on the BRI, geopolitical theories and international political economic theories have more explanatory power. The report of the 19th National Congress of the Communist Party of China proposed that BRI should be the focus to “make new ground in opening China further through links running eastward and westward, across land and over sea,”1 which mainly adopted the above two perspectives. Additionally, global governance theories also provided theoretical support. BRI is the actual practice of the “new theory of global governance based on consultation, collaboration and Shared benefits”. In tackling global governance crisis, China democratically exercises plural governance and equal participation so to contribute Chinese idea and solutions to the crisis. However, the above-mentioned influential theoretical studies on the BRI seldom underscored the characteristics of Chinese civilization and did not dig deep into the cultural assets of traditional Chinese world order. As a result, the communications of BRI which had very rich Chinese expressions such as “amity, sincerity, reciprocity and inclusiveness”, “Community for Shared-Future, community of interests, and community of responsibility”, lack profound interpretation of the connotation of Chinese civilization. This also made the Western countries represented by the United States and the countries along BRI raise many questions about China’s BRI. Among the studies relating BRI with Chinese civilization, the historical research on the tributary system is given great importance. But it lacks theoretical interpretation over traditional Chinese world order and Chinese civilizational world view, and very few people tried to connect BRI theories with it. Moreover, though more L. Sun (B) Tongji University, Shanghai, China e-mail: [email protected] 1 Xi

[15].

© The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2021 H. Men and X. Xiao (eds.), Report of Strategic Studies in China (2019), https://doi.org/10.1007/978-981-15-7732-1_6

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researches and debates among IP scholars over Tianxia, and the idea of “Doctrine of new Tianxian” has aroused some repercussions, the current research still lacks the in-depth excavation of the connotation of the “Chinese civilization”, and how to build the ethical consensus of global governances. Ethics of fairness and justice in global governance cannot be achieved only through a consensus on democratic values of pluralism and equality. How would a universal international morality be respected and protected in the realization of the mutual benefit and win–win situation between countries? How could Chinese civilization contribute to global governance both from its own civilization and a universal ethical consensus? These are the very questions to be explored. Based on the previous discussed studies, this article attempts to consider how BRI can enrich Chinese civilization and promote the construction of ethical consensus on global governance. First of all, we will investigate the role of civilizational changes in post-Cold War world order construction which primarily laid the world historical background for BRI. Secondly, we will re-examine the civilizational implication of Chinese Tianxia order around the discussion over traditional Chinese world order in domestic and international academic circles. Thirdly, we will discuss how to build the ethical consensus of global governance through the civilizational implication of Chinese Tianxia order, and how to enrich the implication of Chinese civilization in BRI. This article aims at offering the thoughts over the theorization of BRI, and enriching the Chinese civilization in the theory of BRI. Putting BRI in the context of civilizational change and world order construction, we will compare and communicate between China and the West, and provide conceptual support for the Chinese solution to global governance.

1 Change of Civilizations and the Building of Post-Cold War World Order Civilization and the construction of world order is a permanent question in international politics. Thucydides’ History of the Peloponnesian War has profound observation over the change of world order in the context of the rise and fall of Ancient Greek civilization. Roman empire was built on the basis of Ius Gentium. Civis Romanus Sum (I am a Roman citizen) implies the sense of pride of people towards the Roman civilization. Historically, China has built the tribute system centered around Confucian civilization. For if not having any civilizational root, the world order built by force cannot sustain itself, e.g. the Mongolian empire.2 From globalization point of view, Roman empire, China and Mongolian empire were still largely regional world order. The globalization of human history began in the age of great voyage marked by Columbus’ discovery of America in 1492. In the following five hundred years, continents connect each other through trade. The builders of the modern world order were 2 Brzezinski

[1].

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mainly the vanguardist countries in the oceans. The British and Americans successively dominated the modern world order. Why did America successfully overthrow Britain and claim a time of its own in world politics? The renowned strategic thinker Zbigniew Brzezinski argued that in the first 4 decades of the twentieth century, American foreign policy was dominated by isolationism and idealism and the rampant exceptionalism. After WWII, the GDP of the United States is over 50% of the entire world. Brzezinski approached America’s global supremacy from military, economic, technological and cultural dimensions: militarily, America is the world police and plays the role no one can compete; economically, America is still the locomotive of world economic growth despite the mounting challenge by other countries; technologically, America leads the world in innovative and cutting edge areas; culturally, the modern western civilization with individualism and liberal democratic values as the core is still very appealing to the rest of the world.3 Nevertheless, Brzezinski has foreseen the relative decline of the United States: economically, Europe, China and Japan’s share of GDP keeps surging; culturally, the spread of popular culture coupled by hedonism and responsibility evasion will restrain popular support for American overseas leadership. The Grand Chessboard published at the end of last century was more of a precautionary piece in order to protect American primacy in Eurasia continent and prevent the rise of an adversary major power in this region. Another influential American strategist Samuel Huntington approached the remaking of world order in the post-Cold War era from the perspective of the clash of civilizations. Firstly, Huntington also believed that the relative decline and the influence of the West will be a slow process. He rejected to equal western civilization with universal civilization, and modernization with westernization. What he intends to express was a kind of deep anxiety–due to the rise of civilizational and cultural influence in the post-Cold War era, the universality of western civilization faces incremental challenges. Meanwhile, he reminded the West not to be complacent about its supremacy and the “end of history”. Secondly, Huntington compared the changing civilizations and found that with the relative decline of western civilization, the economic, military and political power of Asian civilizations continues to grow while Islamic civilization will face more conflicts and instability due to religious quarrels. He argued that regional civilizational order will emerge around every core state, and the West should particularly be aware of the fault line wars by the Islamic countries.4 The Clash of Civilizations was also written at the end of last century is again a precautionary one aiming at thinking about how to maintain the West’s civilizational edge while live in peace and harmony with other core state civilizations. Both Brzezinski and Huntington are influential strategic thinkers and their way of thinking starts from the fact of relative decline of the Western/American civilization and deals with the rise of the rest and resorts to the making of a world order in America’s favor. Among the emerging civilizations they highlighted, China sits at the center. From the geopolitical perspective, Brzezinski argued that America’s Asia 3 Brzezinski

[1]. [11].

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Pacific strategy must face China’s rise and consider “what is the practical definition and …the acceptable scope of China’s potential emergence as the dominant regional power and of its growing aspirations for the status of a global power.”5 At the same time, America has to consider how to balance China and Japan’s power and roles in Asia Pacific. Brzezinski’s judgment is that China will become a regional power in Asia and primarily make its Asian neighbours be differential to its concerns. China should be America’s Far Eastern anchor and Japan should be America’s global partner so the balance of power in Asia Pacific can be maintained. He specifically mentioned the rising nationalism in China originated from the sense of superiority of thousands years civilization. America should not organize an alliance to contain China, but draw China into wider international cooperation to have “the effect of dulling the sharper edges of China’s national ambitions.”6 Based on his observation of the change of civilizations, Huntington predicted that if Chinese economy keeps its current speed in the next decade or two, China will have the ability to restore the pre-1842 hegemony in East Asia.7 He found that East Asia will present multipolar fluidity and instability: the 6 civilizations and 18 countries in East Asia have great differences and low level of regional integration. Under this circumstances, how will East Asian countries react to China’s hegemony? There are two options. First, adopt the European style balance of power to contain China. America will enhance the military alliance with Japan, develop military connections with other Asian countries, and expand military presence in Asia. Second, Influenced by traditional culture, East Asian countries will pursue bandwagon and seek protection from China. Huntington pointed out that the traditional Chinese world view will push East Asia to choose the second option, since band wagoning requires higher level of trust between East Asian countries. We found surprising accuracy from Brzezinski and Huntington’s forecasts 20 years ago. Since the onset of the twenty-first century, the Asia–Pacific rebalancing to a certain degree confirmed Huntington’s judgment of the United States will balance and contain China. The Far Eastern anchor and not to ally against China ideals have been proved illusional. The two thinkers were both paying attention to the role of Chinese civilizational world view on Asian order, except that the band wagoning does not prevail in the current making of East Asia order. We should think BRI in a wider perspective of civilizational changes and postCold War world history order remaking. Huntington’s sharpest strategic insight was not the lurid “clash of civilizations, “but the fundamental role of inter-civilizational dialogue in the post-Cold War world order construction. To understand China and the world, we have to revisit the traditional Chinese world order and its world view, and its possible contribution to the revision to the existing world order. We should give the factor of civilization full credit in the theorization of BRI.

5 Brzezinski

[1], p. 152. [1], p. 186. 7 Chinese preface, Huntington [5]. 6 Brzezinski

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2 Revisit the Civilizational Implications of the Traditional Chinese World Order In the literatures of traditional Chinese world order, we found that American sinologists represented by J. K. Fairbank’s “China centrism” and “hierarchy” has deep rooted impact on contemporary Chinese scholars. To correct the misperception, it is necessary to revisit the civilizational implications of traditional Chinese world order by digging deep into what is “China” and what is “inside and outside.” 1. What is “China”?—revisit the implication of “Chinese” civilization Along with the debate over Tianxia order, the question of what constitutes “China” has also attracted lots of attention. According to American Sinology and domestic mainstream viewpoints, the “China centrism” represented by the Tianxia order reflects the pride and arrogance of Chinese civilization.8 However, the debaters did not reflect on what is “China” and what kind of “China” is positioned at the center. Is this kind of centered status self-proclaimed? If we stick to the understanding of “China” through a nationalism lense, we cannot properly examine the civilizational implication of the Chinese world order. In the following parts, we will explain what is “China” from the perspectives of thought and history. The word “China (Zhongguo)” firstly appeared during the King Cheng’s reign in the Western Zhou Dynasty. The 1963 unearthed Hezun bronzeware was inscribed “Zhai Zi Zhongguo.” In Confucian classic Shang Shu-Zi Cai, we can find the line “The Heaven has trusted the people and land of Zhongguo to the kings (of Zhou).” Geographically, “China” in the beginning was referred to the central area of the dynasty (wangji, jingshi), compared to the peripheries (sifang). Following the unification of Qin and Han, the geographical scope of “China” expanded to the larger Central Plain (Zhongyuan) region, which is politically referred to the areas under the direct control of central government. However, this understanding of “China” from geographical perspective has not yet touched on its inherent cultural implication—the consciousness of the Chinese civilization community. Many studies have shown that the feudal order of Zhou Dynasty embodies the political community of “the world is one” built on the basis of an ethical community. This community, which was neither a unity of territory nor governments, reflected an identity of civilization.9 At the turn from Zhou to Qin, the way of political rule of has changed dramatically from “the world is one” to “the world is unified under one house”. Despite the change, something has not changed in what’s being “China”, that is, “China” as an “orthodox” idea of the civilizational community persisted in the later diachronic communities. Dynasties may end, but “China” would not.10 This shows that since ancient times, China’s understanding of politics is beyond specific dynastic rule but connects with a higher level of civilizational community. In this regard, Gu Yanwu’s has expressed it perfectly: “there is a difference between the death of state 8 Fairbank

[3]. Zhao [12], Yao [24], Xu [25]. 10 Yao [2]. 9 See

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(guo) and the death of Tianxia: the death of stat refers to the change of the ruling house. The death of Tianxia is found in the perish of benevolence, the cruelty of the ruler against people and cannibalism…He who knows to protect Tianxia prior to protect the state, for protecting the state is the responsibility of the ruling class, but protecting Tianxia is the responsibility of every human being”.11 The civilizational community consciousness of “China”, preserved in the classic literature of the six classics (liujing), is continuously explained by later generations and integrated into the politics and life of Chinese civilization. For example, the interpretation of “China” by Confucian Gongyang School on the Spring and Autumn Annals well embodies the consciousness of civilizational community. According to He Xiu, “China” is a country of propriety and righteousness. The legitimacy of the king’s rule lies in following the rules of rites and moralizing the country with rites and music. “Honor the king” proposed by Qi Huan and Jin Wen is to respect the legitimacy of civilized rule. Dong Zhongshu’s “Tianxia follows the good ruler (王者; 天下归往矣)” also shows that the legitimacy of political rule is based on the “orthodox” concept of civilization.12 The history of China is a verification of the consciousness of the “Chinese” civilizational community. If we only approach Tianxia from the perspective of ideology, we will often conclude that Tianxia order is a perfect ideological system based on the civilization of propriety and righteousness. But historians will question that such a world order is only an imagination and is not historical fact. Although in reality, dynasty sometimes identify itself as “China”, the center of Tianxia, objectively speaking, the thought and institutionization of Tianxia order has presented a very complex process in history. The Tianxia order was a compound interdependent model formed in the interaction between China and its neighbours. When China was strong, it provided the guarantee of material exchange and system legitimacy (public goods) for its neighbours. What the neighbours provided for China was the respect for its civilization. Although the legitimacy of civilization originated in China, it didn’t mean that China has always claimed the center of civilization. In any case, in the East Asian order, there would always be powerful state willing to continue the “orthodoxy” of Chinese civilization. For example, the reverse tribute of the Song Dynasty to the Northern neighbour just showed that the peripheral areas did not recognize the weak Song Dynasty but Tianxia order based on civilization.13 It shows that “China” has become a synonym for Tianxia order as a public product, and it has not entirely depended on the rise and fall of China proper. In Zhao Tingyang’s words, this is “China with the world in it”. It represented the East Asian order or the Chinese civilization circle. Any member who joined it would safeguard this civilizational order. When the territorial China’s strength and civilization weakened, there would be other members who claim themselves continuators of “China”. For example, after the fall of Ming Dynasty, Japan and Korea both regarded themselves as the successors of Chinese civilization and did not recognize the legitimacy of the 11 Gu

[18]. [20]. 13 Li [17]. 12 Zeng

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Qing Dynasty. When Japan invaded China in modern times, the construction of the “Greater East Asia co-prosperity circle” was abusing the civilizational heritage of Tianxia order. 2. What is “inside and outside”—revisit the civilizational implication of “YiXia differentiation (夷 夷夏之辨)” When discussing Tianxia order, scholars often interpret it as a concentric hierarchical order, that is, with China being the inside, periphery being the outside; China being the civilized (Xia), and periphery as the barbaric (Yi). This hierarchical order implies inequality between China and its neighbours, as well as discrimination against neighbouring civilizations stemmed from a sense of civilizational superiority. In this regard, it is necessary for us to further examine the civilizational implication in the “debate of inside and outside” as well as “Yi-Xia differentiation”. The “debate of inside and outside” is the strategic thinking embedded in the Chinese civilization, and it is an understanding of China and the external world, forming a pattern of differences based on civilization. This kind of thinking is mainly reflected in the Confucian Gongyang School in the Spring and Autumn Annals. First of all, how to understand the pattern of “China-Zhuxia-Yidi”? Geographically, “China” was initially referred to the capital where Zhou Tianzi resided, which was named due to its centrality. With the weakening of Zhou Tianzi’s power, the vassal states known as “Zhuxia” were also included in the scope of “China”. From a cultural point of view, “China” is also called “Huaxia”, which means the state of propriety and righteousness.14 In the Spring and Autumn Annals, He Xiu explained the wellknown three subjects and nine purposes. Among them, the “differentiation between inside and outside” subject is: “when inside is the China, outside is Zhuxia; when inside is Zhuxia, outside is Yidi”. That is, the state of Lu is China, Qi, Lu, Jin, Song, Wei and other feudal states as Zhuxia, Chu, Wu, Yue as Yidi. In the “ChinaZhuxia-Yidi” internal and external difference order structure, we found the following characteristics. First, the distinction between inside and outside is based on the principle of benevolence that is strict with oneself and lenient towards others. Taking “China” as inside implies a very high moral requirement for “China”. Because Zhou Tianzi could not order Tianxia, he entrusted Lu with the right to rule. The dukes of Qi Huan and Jin Wen were called “Zhu Xia” because they “Honor the king and fight against Yi” (zunwang rangyi), and were even promised to be included in “China”. The entrustment of Lu in the Spring and Autumn Annals showed that Lu should first reflected on himself, and forgave others. This is the implication of “be strict for the inside and lenient for the outside.” In Spring and Autumn Annals, the distinction between inside and outside is to “begin with those who are near”, “China should first be strictly disciplined, and gradually Zhuxia and Yidi”.15 Apparently this reflects the Chinese civilization’s view of benevolence and justice when dealing with external affairs. 14 Zeng 15 Ibid,

[19]. 194.

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Second, the status of Yi and Xia has never been fixed, but determined by changes in the level of civilization. The Spring and Autumn Annals has always emphasized to use virtue to judge Yi and Xia. When Zhuxia degenerated into Yidi, it devaluate and criticized them; when Yidi embraces civilization, it praised and glorified them. The barbaric Kingdom of Chu gradually became Zhuxia in the constant collision with Chinese civilization. King Chu Zhuang treated the defeated Zheng benevolently and stopped the attack after victory. The powerful reinforcements of the Jin, however, stubbornly thought that they could defeat Chu by taking advantage of Chu’s precarious position. The Jin army was defeated, and had its deserted soldiers fingers chopped off and piled up. King Chu Zhuang thought that the two armies were at war, but the civilians were innocent, so he ordered to stop chasing and release the soldiers of Jin.16 King Chuzhuang, who treated Jin with respect, and did not use tricks but morals, was highly praised in the Spring and Autumn Annals. The Jin, who regarded itself as Zhuxia, was unfaithful, took advantage of the weak and treated its own soldiers with cruelty, was at last undervalued as Yidi. Third, the core evaluation standard of the Spring and Autumn Annals is ethical civilization. China and Yidi are often used in the sense of civilization. According to whether Yi Di’s behavior is in line with propriety and righteousness, Spring and Autumn Annals uses different names to praise or criticize, and deals with Yi-Xia relations in a conciliatory fashion. The Analects of Confucius said: “If people from afar don’t agree, we will cultivate their virtue. As they come, they will feel safe”. This shows the basic principle of Chinese politics in treating foreign nations with morals and attracting the outside world with culture. On the one hand, and they are progressively and gradually recognized according to the degree of ritualization; on the other hand, it is a non-violent way that primarily based on persuasion. However, the “Yi-Xia differentiation” in the Spring and Autumn Annals sometimes coloured with ethnicities, especially when the Huaxia ethnic group faced a crisis of invasion from the peripheries, such as “Southern Yi and Northen Di press close, China is in great danger”.17 There would be a “honor the king and fight against Yi” by Qi Huan and Jin Wen to save China. China and Yi, Di intermingled and mutually construct each other in Han and Tang dynasties which reflected the phenomena of “Xia changes into Yi” and “Yi changes into Xia”. However, the “Yi-Xia differentiation” became even complicated in late history. When Song, Liao and Jin coexisted, the interpretation of “Yi-Xia differentiation” became more or less “Yi-Xia segregation”. The Gongyang School in late Qing dynasty highlighted the civilizational implication of “inside and outside/Yi-Xia” to legitimize the great unification. But the very ethnic policy of the rulers of Qing was tainted with racial discrimination. As a consequence, the revolutionaries proposed to “dispel the barbarians and restore China” to ratify their cause in overthrowing the Qing government. Sun Yat-sen later called for the “republic of the five ethnic groups” and tried to build a “diverse but 16 Chunqiu

Gongyang Zhuan, Xuangong Shier Nian [Spring and Autumn Annals and biography of Gongyang, 12th year of Xuangong]. 17 Chunqiu Gongyang Zhuan, Xuangong Shier Nian [Spring and Autumn Annals and biography of Gongyang, 4th year of Xigong].

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unified” Chinese nation. Zhang Taiyan in his Interpreting the Republic of China detailed “to build a country of one nation, to merge them into one and expand the cultivation and education” in order to plant the Chinese civilizational community consciousness to the new born nation-state.18 It can be seen that the “differentiation of inside and outside” in Chinese history has both tendencies: civilization matters more than ethnicity and ethnic identity be the stronger force. The two were often intertwined. When China was open and strong, it would demonstrate its civilizational inclusive capacity; when China was troubled with crisis and closed up to foreigners, it would show its ethnic colour of “Yi-Xia segregation”. But even the ethnic colour in the “Yi-Xia differentiation” is different from racism and nationalism in modern western countries. And between the two tendencies, the supremacy of civilization always prevails, and the theory of ethnic superiority has been refrained by supremacy of civilization and cannot grow further.19

3 Civilizational Implication of Chinese Tianxia Order and the Construction of Global Ethical Consensus As a commonly envisioned ideal in Chinese history, the “benevolent Tianxia” world view should be inherited and carried forward by China today. Since modern times, China has been forced to transform into a modern nation-state and become a sovereign country in the globalized world system, but it has never fundamentally given up the spirit of “benevolence, people-oriented, integrity, justice, unity and great harmony”. The world today has entered the era of multi-polarization and in-depth development of economic globalization. The globe is one in facing a shared future. At the same time, it is also facing many crises and challenges, such as sluggish economic growth, the increasing gap between the rich and the poor, the rise of trade protectionism, and cold war mentality and power politics. In 2015, President Xi Jinping put forward the beautiful vision of jointly building a “Community of shared future of mankind”, adhering to the basic spirit of Chinese world view of Tianxia order, and trying to make due contributions to global governance from the perspective of Chinese civilization. Regarding the origin of the “Community of shared future of mankind”, some scholars have discussed it from the aspects of traditional Chinese culture, socialism and the diplomatic thought of New China.20 The following part will focus on the core spirit of the Chinese view of the world- “benevolent Tianxia”, and clarify its implication for building an ethical consensus of “community of shared future of mankind”. The foundation of the human community is above all the community of interests, which relates to the correct view of justice and benefit. The modern world system 18 Tang

Wenming, Yi Xia zhi bian yu xiandai zhongguo guojia goujian zhong de zhengdangxing wenti [Yi-Xia differentiation and the legitimacy of modern China nation building], Sixiangshi Yanjiu[History of Thoughts] Vol. 9, pp. 139–161. 19 Yao [2]. 20 Zhang [14], Wu [23].

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has been built on the logic of hegemony. European countries’ competition for and division of overseas colonies, British Empire’s trusteeship of overseas colonies and the export of overseas capital, and the United States exercised new imperialism, are all hegemonic in nature based on force and power. With the rise of China, people worry about whether China will become the second United States and repeat the mistakes of hegemony. To this end, China must promote the spirit of benevolence and oppose hegemonic thinking in global governance. In recent years, the “correct view of justice and benefit” highlighted in China’s diplomacy is the embodiment of the spirit of benevolence. The “debate of justice and benefit” is an important subject in Confucianism and a concentrated expression of the spirit of benevolence. The Confucian benevolence politics follows the principle of “prioritizing justice over benefit, pursuing benefit in a rightful way and the integration of justice and benefit”, so to demonstrate the virtue of being China in external exchanges. After the 18th National Congress of the Communist Party of China, President Xi talked about the relationship between justice and benefit in diplomatic work many times. China should practice the correct concept of justice and interests, take justice as the first priority, and take advantage of both justice and profit.21 On the one hand, China insists on providing foreign aid to developing countries, and strives to do what it can to prioritize justice, promote justice and benefit, rather than bending solely on profit. For example, in recent years, the 10 major cooperation projects in China-Africa cooperation have tried to promote Africa’s independent and sustainable development in various fields to achieve ultimately mutual benefit, win–win and common development. On the other hand, when participating in global governance, China is always realistic of its developing country status. According to the principle of consistency of responsibilities, rights and capabilities, China tries its best to carry as much international responsibility as possible. For example, in recent years, China becomes an important contributor in participating in international peacekeeping operations and promoting the peaceful resolution of the Syrian crisis and the North Korean nuclear crisis. Its efforts have been recognized by the United Nations and many countries. Second, the “Community of shared future of mankind” is embodied as a community of responsibilities. The philosopher Chen Lai described the value of Confucianism as follows: “Benevolence is above everything else, responsibility precedes rights, obligations precede freedom, community is above individuals, harmony is above conflict, and the unity of heaven and man is above the dichotomy of subject and object”. It is pointed out that the rights discourse based on individualism in modern society is limited, and it needs the benevolence principle, civility spirit, responsibility consciousness and community standard of Confucianism to overcome their shortcomings.22 The ethics of global governance today also reflect the crisis of individualism and nationalism based on rights. Whether it is human rights or sovereignty, if it can’t be integrated with the spirit of benevolence and justice of “mutual respect for each other” and the responsibility of “the world is for all”,

21 Xi

[7]. [8].

22 Chen

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the morality of international relations cannot never be guaranteed, and fairness and justice in global governance cannot never be realized. “Community of shared future of mankind” matters as a community of shared future at the highest level. It is the presentation of Chinese cosmopolitanism of “peace among all nations” in the world today, and the highest ideal of Chinese civilization moving towards universalism. As Lu Jiuyuan, a famous Confucian scholar in the Song Dynasty, said, the East Sea and the West Sea, all have the same mind. The premise of the construction of world ethics is the mutual understanding between people in the world. Therefore, we should fundamentally abandon the antagonistic thinking of modern Western nation states. Human beings live together in one world. The existence of all is prior to the existence of any certain individual, and the harmonious coexistence of human beings will benefit everyone. The ethics of “home-countryworld” in the traditional Chinese order has always been committed to the elimination of the thinking of us-them opposition, and advocates the coexistence of everyone. The benevolence theory founded by Confucius is the “existence in the world” which is constantly followed by Chinese people in practice.23 Therefore, “unity and great harmony” is always the world ideal that human beings strive for, but we can’t ignore the reality and unrealistically aim high, for example, completely deny the fundamental position of nation-state in international politics, and deny the existing rules and orders of global governance. The “community of shared future of mankind” is not to build a “world government” above nation-state, but to practice the way of benevolence and justice in more cross-country communication actors based on the benevolence and understanding between people, and to promote global fairness and justice. The thought and historical practice of “debate of inside and outside” constitutes a rich legacy of the order in China. How to creatively transform and critically adopt it? Different from “benevolent government and Tianxia”, in the eyes of contemporary scholars, “debate of inside and outside” has strong hierarchical implications, which is difficult to be accepted by the international community. Just like the thinking embodied in the tributary system, China today still thinks of itself as the center of the world, and disparages others who are different from their own civilization as “Yidi”. This has been analysed in previous part of the paper. In the following part, the author will critically propose the enlightenment of the “debate of inside and outside” on the construction of the global ethical consensus of “differentiated equality”. First of all, the historical “Yi-Xia differentiation” has both civilizational and ethnic implications. In order to avoid misunderstanding, and to better develop the civilizational implication of tolerance and discard the ethnic colour of “Yi-Xia segregation”, China today should properly pick “debate of inside and outside” over “Yi-Xia differentiation”, and clarify the ambiguity in “debate of inside and outside”. First, the approach from inside to outside reflects Chinese civilization’s view of benevolence and justice in handling external affairs. “Beginning with the nearest” is the embodiment of the Confucian self-discipline spirit of “being strict with oneself and generous to others”. Should China today pursue the approach from the inside to the outside, it 23 Sun

[9].

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must be strict with self-discipline, treat other countries and civilizations with an open and inclusive attitude, be moral and responsible, and reject any pretext of exceptionalism. The credibility of the United States as a global leader has been increasingly questioned, because it lacks self-discipline, stubbornly insists on American exceptionalism, and ignores the interests of allies and other countries. The inconsistency between the words and deeds of the United States has opposes the benevolence of Chinese civilization “beginning with the nearest”, and sends China an alarm for self-examination. Second, the “debate of inside and outside” is centered on “China”. The “China” here cannot be equated with China in reality, but the value ideal of carrying a propriety civilization. When China in reality adheres to the principles of propriety and benevolence, it will be recognized by neighbouring countries and become “China”. Conversely, when China in reality violates the benevolent and civilized way of governing the country, it will also be regarded as “Yidi” by neighbouring countries, which means “China is also a new Yidi”. Therefore, the so-called “central” status implied in “China” is worldly recognized, not self-claimed. If we do not understand the connotation of “China”, China in reality will dream of owning “the Court of Heaven” and “all nations paying tributes to China”, and even develops a very disturbing “egoism disguised as cosmopolitanism”.24 In the same fashion, hegemons would also practice hegemony in the name of “center” and “Tianxia”. For example, since traditional Chinese Tianxia order has raised intensive discussions within the circle of international relations, some American scholars have argued that the United States is the real “center”, and the global order is actually “American Tianxia”.25 Secondly, when China proposed a new concept of global governance of “coconsultation, co-construction and sharing”, it emphasized the equal participation of multiple parties of governance and democratic consultation, and strived to build a more representative, inclusive, open and fair governance system. This should be the bottom line ethics of global governance, but it is not sufficient. In reality, the disparity in the comprehensive strength of various countries and actors determines that it is impossible to play the same role in global governance, both subjectively and objectively. Therefore, equality in formality does not mean equality in reality. What is more important is how to enable them to play a role consistent with their own strength and construct the “differentiated equality” ethics of global governance. The concentric circle structure derived from “debate of inside and outside” has always been regarded as an unequal hierarchical system. However, in the recent new research on the tributary system, there have been many positive views of the historical practice of differentiated equality. David Kang pointed out that the tributary system was based on a normative social order that combined legal authority and material power. It contained China’s credible commitment that it would not exploit secondary countries should they accept its authority. These countries voluntarily accepted the formal inequality with China but to enjoy a substantially high degree of autonomy. David Lake believed that the tributary system was an authoritative hierarchy that was

24 Ge

[22]. [13].

25 Zhao

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different from the status hierarchy, which means that the subordinates not only recognized the different status and roles of the countries, but also accepted these differences as fair and natural.26 Qian Qirong studied the different role positioning in the Tianxia order from the perspective of psychological culture. He believed that actors needed to perform role positioning through interactive relationships and according to their own strength (military, economic, and cultural)–the confirmation of core actors required non-core actors’ recognition, and the consideration of non-core actors was mainly based on the four factors of facing military deterrence, seeking political status, obtaining security guarantees, and ensuring economic and cultural exchanges. The confirmation of non-core actors depends on the division of the circle of core actors, and is based on geographical proximity, intimacy of relationships, acceptance of core culture, and core actors’ judgment for their own security.27 This shows that we can deduce the “differentiated equality” ethics fit for today’s global governance from the civilizational heritage of the tributary system. “Common but differentiated responsibilities” can be regarded as an embodiment of the “differentiated equality” ethics. On the basis of respecting the bottom line ethics of pluralism and equality, the rights and obligations of different actors are treated differently, and greater responsibilities are fulfilled. Actors can gain higher authority and respect and become core actors, thereby driving and leading other non-core actors to better fulfill their responsibilities for global governance.

4 How to Enrich the Implication of Chinese Civilization in BRI As a Chinese plan for global governance, BRI initiative has attracted worldwide attention since its inception. The well-known American political scientist Francis Fukuyama mentioned in a speech at Tsinghua University in 2015: “Assuming that the BRI would eventually succeed, it would be the international achievement of the Chinese model. This means that my theory of the end of history could not stand”.28 Fukuyama clearly saw that BRI has world historical significance. As we have argued that civilizational changes have rather important significance for the making of postCold War world history order, and the Chinese Tianxia order has rich civilization implications, and in theory, it has many new inspirations for the construction of ethical consensus on global governance. So, in the practice of global governance, how does BRI promote the civilizational significance of the Chinese world view and correct the injustice of the modern world order? According to Marx, the world market developed by the bourgeoisie has glued the histories of various countries into one world history, which was born in Europe. How should we understand the modern world order dominated by maritime civilization? 26 Quoted

from Ren [16]. [10]. 28 Wang and Zang [4]. 27 Qian

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First of all, it mastered the advanced productive forces forged in science and technology, and created superstructures that were more advanced than those of the feudal society, such as the liberal rights with individual rationality as the core, and the Westphalian international system based on the sovereign equality of the nation-states, and the international law with the purpose of promoting free trade. Such modern world order undoubtedly embodies the high achievements of modern Western civilization and its tremendous contribution to the world. However, the seemingly liberal and just modern world order cannot hide the profound injustice in nature. For modern European civilization with the secularization of Christianity at its core, Marx criticized it for breaking all human-like connections, turning the human world into an atomic, antagonistic and individualized world. Marx’s criticism of modern Western civilization was concentrated in politics in the injustice of the modern world order based on the nation-state, and in “the countryside’s subordination to the city, the uncivilized and semi-civilized countries’ subordination to the civilized countries, peasant people’s subordination to the bourgeois people, so that the East’s subordination to the West”.29 This subordination in world history means that the old and new imperialist maritime civilizational countries such as Britain and the United States has dominated the world order through military conquest, economic exploitation, and cultural penetration. The “core-periphery” attribute of the modern world system has been the result of capitalist expansion throughout the world. BRI seeks to revise the injustice of the modern world order. The so-called revision is not a complete denial, rather refers to the “sublation” according to Hegel. It is an critically adopted innovation, showing the significance of China’s call for new globalization. The Chinese civilization believes in “tolerance generates greatness”. When it was prosperous and strong, China has always adhered to the principles of openness, mutual benefit and inclusiveness, and sincerely learned from others. In dealing with the modern world order, BRI should inherit the inclusive and learning qualities of Chinese civilization, and learn more and cooperate more. For instance, free trade in the modern world order is supported by strong international law, which exemplifies the merit of common law practice and rational rulemaking in the AngloSaxon civilization, and is particularly worthy of learning by the norm-setters of BRI.30 China is a continental country that is moving towards the ocean. In the process of promoting BRI, it is necessary to thoroughly study useful experiences of maritime civilization in terms of global governance, and respect common rules and values shared by humanity. In particular, China should cautiously handle its relations with the United States and jointly promote the effective global governance. For example, the reason why official propaganda does not refer to BRI as a strategy but as an initiative, is to avoid the world’s misunderstanding of BRI as another “Marshall Plan” dominated by China, which is to challenge the existing world order dominated by the United States.

29 Makesi Engesi Xuanji, Diyijuan [The Selected Works of Karl Marx and Friedrich Engels, Volume

1], (Beijing, Chinese People Press, 2012), 405. 30 Zhan [21].

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However, BRI must criticize and correct the injustice of the modern world order and bring about new types of civilization. On the one hand, BRI is certainly not a restoration of the historical tributary system, especially not one centered on today’s China with the mentality of “Yi-Xia segregation”.31 Chinese international relations scholars should devote themselves to clearing up misunderstandings about the traditional Chinese world order at home and abroad, and discovering more universal civilizational values. BRI can promote civilizational values of Chinese Tianxia order, and surpass the nationalist ethics of the nation-state with the universal ethics of “benevolent Tianxia”. At the same time, drawing on the morality and loose network characteristics of the tributary system, BRI can promote moral ethics in international relations, provide high-quality public goods, and promote communication and mutual learning among participants, rather than emphasize China’s absolute centrality. On the other hand, BRI cannot repeat the path of empires in world history. It is not a rise of hegemony and the reconstruction of a new empire, but a path of “surpassing the Cold War and overcoming neoliberalism, a breakthrough of the hegemonic system and its new form in modern times”.32 In the existing researches on BRI, scholars have paid special attention to China’s domestic excessive production capacity and its global financial expansion. However, if the “core-periphery” capitalist approach is still lingering around, the underdeveloped regions will be regarded as sites of dumping and raw materials. This obviously does not conform to the moral ethics of the “benevolent Tianxia” of Chinese civilization, nor can it exceed the historical limits of capitalist modernity and bring about new types of civilization. As a socialist country, China should not only explore the civilizational implications of the “benevolent Tianxia” in the world order of China, but also adhere to socialism and contribute to realizing fairness and justice in global governance. In the construction of BRI, the 21st Century Maritime Silk Road is located in nearby East and Southeast Asia, the important region of trading partners and neighbouring countries that largely encompass the sphere of tributary system. In this region, the influence of the Westphalian system and the tributary system has long existed and struggled with each other. To lead the East Asian order, China must first clarify the misunderstanding of the essence of the tributary system, that is, it implies the hierarchical system and the superiority of civilization with China as the center. It is on this basis that foreign scholars advocate that China’s BRI is to restore the “Great China” in history, continuously expand and annex new territories, and try to conquer civilize the barbarians who endanger the border, or use the superior Chinese Civilization to assimilate other people.33 This misunderstanding regards the tributary system as the reconstruction of a new empire of conquest. Therefore, in the construction of BRI, especially the “Community of shared future in East Asia”, China must prove 31 Wang Yiwei proposed that the higher version of B$R should override the thinking of tribute system. This opinion misunderstood the civilization Connotation of tribute system. See Wang Yiwei, “Yidaiyilu 2.0: Zaizao Zhongguo, Zaizao Shijie” [The higher version of B&R: Rebuild of China and World], Wenhui Bao, Apr 14th 2017. 32 Wang Hui, “Yidaiyilu Zouchu Lishizhongjielun Yinying” [B&R walks out from the shadow of end of history], Huanqiu Shibao, Apr 8th 2015. 33 Jacques [6].

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in real practice that it will not conquer and assimilate, so to clear doubts of other countries, enhance mutual trust among civilizations, especially exercise restraint and reduce conflicts. China should always take this as a warning that China in reality is not the same “China” as the center of civilization in Tianxia order. However, China should strive to explore the civilizational implication of the Chinese Tianxia as the ideal of the world, start from its own by strengthening the civilizational attraction without imposing it on others. Otherwise, the voice of “when China rules the world” is not only the propaganda of “China Threat Theory” abroad, but also the upsurge of arrogant nationalism in China. Secondly, the “differentiated equality” ethics presented in the Chinese Tianxia order can be better demonstrated in the idea of “ amity; sincerity; mutual benefit and inclusiveness” in China’s peripheral diplomacy. As mentioned earlier, “debate of inside and outside” means that on the basis of respecting the bottom line ethics of pluralism and equality, it is claimed that different actors enjoy different rights and obligations and perform “common but differentiated” responsibilities. The “differentiated equality” ethics in neighbouring partnership manifest that China should treat others with virtues, obtain the recognition of others based on the attraction of civilization, and respect the differences with others. In terms of neighbourhood policy, President Xi remarked: “we must build a community of shared destiny with our neighbours, uphold the idea of amity; sincerity; mutual benefit and inclusiveness, adhere to neighbourliness as a good neighbour and companion, adhere to good neighbourliness, foster an amicable; secure and prosperous neighbourhood, and deepen common mutually beneficial cooperation and connectivity with neighbouring countries”.34 This is precisely the embodiment of the core attraction of the traditional Chinese culture circle in the Chinese foreign policy. On the one hand, China should inherit and promote the Chinese world view that Tianxia is higher than country and culture is beyond nationality. In dealing with neighbouring affairs, it should avoid the thinking pattern of nationalism and national state, flexing muscles and showing off its culture. Instead, China should uphold the spirit of “benevolence” that respect its neighbours with virtue and propriety. A line in Zuozhuan reads: “benevolence and being good to neighbours are treasures for the country”,35 which fulfils “amity and sincerity”; On the other hand, China should strive to provide public goods needed for neighbours’ development, such as the Asian Infrastructure Investment Bank, the ChinaPakistan Economic Corridor, and Eurasia Bridge, to help develop their economies and maintain regional stability. Instead of imposing its own culture and development experience on neighbouring countries, China should embrace the diverse cultures and development patterns of other countries and seek common ground. Another line in Shangshu reads: “with tolerance comes big virtue”,36 which fulfils “mutual benefit and inclusiveness”. In the days of the Tang Dynasty, China was at its highest level of openness and inclusiveness, “only concerning one’s own lack of virtues, but 34 Xi

Jinping, Xi Jinping Tan Zhiguolizheng [Xi Jinping on Governance], 444. Yingong Liunian [The Zuo’s interpretation of Spring and Autumn Annals, 6th year of Yingong]. 36 Shangshu Junchen [The Book of History, Junchen]. 35 Zuozhuan,

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not worrying no attractions”.37 According to its history, culture and comprehensive strength, China should first build a strong base of “virtue” in regional development and become a country respected by neighbouring countries, break the hegemonic logic of expansion of the West and strive for common prosperity to build a “Community for Shared-Future in East Asia”. In recent years, scholars were paying more and more attention to the necessity of reshaping Asian concepts in the construction of the “Community of shared future in East Asia”. New regionalism’s shaping of Asian ideas is more reflected in the integration of interests and the balance of power in the region, but its role in the construction of regional community consciousness is very limited.38 The reshaping of Asian ideas should not exclude certain “ideal type”, such as Tianxia. After all, the East Asian community in history was not an imagination. Facing the complicated colonial history and hidden turbulent undercurrent of nationalism in East Asia from the 19th through the twentieth century, how China draw on the essence of China’s traditional world order and explore the civilizational implication of “benevolent Tianxia” will be a major test for China’s BRI.

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Strategic Roadmap for the BRI Construction

Strategic Thinking on the Rulemaking Under the BRI Honghua Men

As a core strategic design of China for a new era, the BRI is vital to the success of China’s reform and opening-up as well as the prospect of world peace and development. The initiative resolutely carries out China’s innovative concepts about a new type of international relations and a global community of shared future. China has joined the competition for a bigger seat at the table in an inclusive and open manner since the outbreak of the 2008 financial crisis, reflecting China’s strategic ability to get a head start. The fruitful results of the BRI by far owe to the positive support and participation of more than 100 countries and regions as well as international organizations. China is fostering a pattern in cooperation with the countries involved based on the principles of extensive consultation, joint contribution and shared benefits, making the initiative the biggest platform for shared development and win–win cooperation. From concept and vision to rule negotiation and strategic guidance, China is perfecting both the domestic and international guarantee mechanisms and seizing the initiative and leadership. This demonstrates its strategic maneuverability from top-level design to organizational implementation. In short, the proposal and implementation of the Belt and Road Initiative epitomizes Chinese policymakers’ exceptional strategic capability to secure for China a rule-maker’s seat and expand its say in the international community. With the BRI rolling out all over the world, its rulemaking has become a major issue that the countries involved is paying closer attention to, and is considered as a touchstone for the long-term success of the initiative. In view of this, this article intends to study how to promote the BRI rulemaking process. The basic approach is to: analyze the strategic positioning of the BRI, summarize the questions and challenges facing the BRI, and review China’s opportunities and status quo in the

H. Men (B) School of Political Science & International Relations, Institute for China & World Studies, Tongji University, Shanghai, China e-mail: [email protected] © The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2021 H. Men and X. Xiao (eds.), Report of Strategic Studies in China (2019), https://doi.org/10.1007/978-981-15-7732-1_7

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rulemaking. Based on the above research, the article aims to propose specific countermeasures and suggestions on how China can be a rule-maker and expand its say regarding the BRI.

1 Strategic Positioning of the BRI The proposal of the Belt and Road Initiative is closely related to changes in both domestic and foreign situations, and the initiative is a complementary expression of China’s national ideal and the world ideal in the new era of socialist construction. Since the outbreak of the 2008 global financial crisis, the world political and economic landscape has been undergoing profound changes, while China has seen an unprecedented rise in its international status and a new stage of engagement with the world. China is now standing at a new historical starting point. The Chinese nation that has suffered a lot since modern times has achieved a historic leap from standing up to getting rich and to growing stronger. Socialism is demonstrating great vigor and vitality in China and opening up new horizons for development. Socialism with Chinese characteristics has expanded the approach to modernization for developing countries. Meanwhile, as the world is experiencing a major transformation, China’s involvement in globalization appears to be unprecedented in both depth and breadth, evidenced by its increasingly prominent leading role. China’s confidence and responsibilities as a great power are fully reflected in its efforts to improve global governance, protect regional and global security and handle relations with other major power. Guided by its world ideal, China strives to contribute the Chinese wisdom and provide the Chinese solution to global issues. In an era of uncertainty, China has become a major contributor to world stability as well as a strong driver and a strategic leader of world peace and development. The proposal of the Chinese dream of the great national rejuvenation, followed by the world dream of a global community of shared future, is an idealistic expression of China’s vision for the future. And the Belt and Road Initiative is a realistic expression based on a combination of the above ideals. Given this, it is believed that: First, the BRI is an attempt of China to explore its international cooperation model. Policymakers in the world attach great importance to international cooperation, which is regarded as the core path to achieve national goals. As Chinese President Xi Jinping notes: “In today’s world where countries are interdependent and global challenges are emerging one after another, no country is able to stand alone or solve the problems facing the world on its own. Only by aligning our policies and integrating the economic factors and development resources on a global scale can we create synergy for world peace and joint development.”1 The world is undergoing sharp changes, with the rise and fall of major powers accelerating. If emerging powers want to sustain the leapfrog development, they have to upgrade the international cooperation model. In the new era, China has not only enhanced 1 Xi

[1].

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its national strength and international influence, but also transformed its industrial structure which is now different from that in other developing countries.2 It has the strategic opportunity to serve as a bridge between developing and developed countries. The Belt and Road Initiative seeks to create a new model of international cooperation based on the alignment of development plans of the countries involved. With a focus on economic and trade cooperation, especially connectivity, it strives to promote liberalization and facilitation of trade and investment and multiple forms of win–win cooperation between governments, enterprises, social institutions and civil society organizations, in a bid to build a broad-ranging, cross-sectoral cooperation platform involving multiple stakeholders.3 As Xi Jinping points out, the Belt and Road Initiative, which spans different regions, development stages and civilizations, is an open and inclusive cooperation platform and a global public goods jointly created by all parties. Focusing on the Eurasian continent, the initiative is open to all like-minded friends. It is not intended to exclude or be directed against any party. Within the BRI framework for international cooperation, all participants are expected to follow the principles of extensive consultation, joint contribution and shared benefits, work together to meet the challenges facing the world economy, create new opportunities, seek new drivers and expand new space for development, draw on each other’s advantages for mutual benefit, and move towards a global community of shared future.4 The Belt and Road Initiative embodies the strategic thinking that China advocates shared development driven by macro-policy coordination and market in an open and inclusive manner. China pursues a new model of international cooperation, that is, to build a global community of shared interests and future, while actively fulfilling its responsibilities as a major power. Since China deeply recognizes the global shock as a result of its rise, it has reaffirmed its vision to pursue peaceful development, and offered to give other countries a lift. China is also happy to develop friendly partnerships with other countries on an equal footing, share development dividends and cede certain non-strategic interests as it is growing into a responsible major power.5 Second, the BRI reflects China’s pursuit of new regional cooperation mechanisms. The BRI is a pan-Asian strategy that involves land and sea, focuses on Asia, radiates China’s neighboring countries and regions, and influences the whole world,6 reflecting China’s vision of building an open and inclusive mechanism for regional cooperation. As a regional economic concept, the BRI is designed to promote common development of all participants and it is underpinned by the Eurasian economic integration. With a focus on Asian countries and on the basis of connectivity, this initiative is a regional arrangement in the form of building

2 Zhang

[2]. [3]. 4 See Footnote 1. 5 Men [4]. 6 Research Group on the Provincial and Ministerial Officials’ Class for Further Studies of the Party School of the CPC Central Committee [5]. 3 Wang

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land and maritime economic cooperation corridors. It is characterized by diversified cooperation mechanisms. The aim is to build a global community of shared future.7 On the other hand, the initiative shows that China has positioned itself as a global power. Instead of limiting its interests to Asia, China has been expanding its international influence across the globe, especially in Asia, Europe and Africa, and seeking institution-based cooperation globally. Additionally, given the existing dilemma of China’s geopolitical and economic pattern, this initiative also intends to improve the geopolitical environment of China, which in turn will naturally expand the original regional cooperation mechanisms that are limited to the economic filed.8 Li Xiangyang believes that the BRI is a development-oriented regional economic cooperation mechanism built on the ancient Silk Road. Characterized by diversified cooperation mechanisms and based on the principle of upholding the greater good and pursues shared interests, the ultimate goal of this initiative is to enable connectivity and build a global community of shared future.9 At the moment, the initiative mainly pursues a more flexible model of regional economic cooperation. Efforts are being made to align bilateral development strategies and build multilateral free trade guarantee systems and investment protection systems. Rule-based governance is an increasingly visible trend. It is imperative to negotiate and define new international cooperation rules in the future. The Belt and Road Initiative is a major strategy for China to build economic cooperation with other countries by land and sea, and then achieve economic integration in the Asia–Pacific region. It is also an important measure taken by China in the new era to cope with difficulties at home and abroad, and expand its say in international rulemaking. There is a pressing need to discuss with the countries along the routes about building a range of cooperation mechanisms including trade in goods, investment facilitation, financial risk prevention, mutual assistance in economic development, and coordination of currency and exchange rate.10 Third, the BRI is China’s opening-up strategy toward a new era. Since 1978, with reform and opening-up as the main path, China has been on the fast track of comprehensive economic and social development, along with an active integration into the international system as a cooperative, responsible, constructive and predicable power. As a matter of fact, opening-up is China’s core strategic approach to dealing with the world. The opening-up strategy has substantially contributed to the positive engagement between China and the world, and has become an essential feature of peaceful development that China is pursuing.11 Putting opening-up at the core of China’s development strategy has delivered a lot benefits. Such opening-up policy itself has a complex historical background and linear evolution. Being unique and logical, the opening-up is both a gradual evolution and a step-by-step leap, with

7 Ma

[6]. [7]. 9 Li [8]. 10 Chen [9]. 11 Men [10]. 8 Zhou

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both quantitative and qualitative changes combined.12 The BRI is clearly an epochmaking achievement of China’s opening-up strategy. Its proposal and implementation meets the objective need of China to adopt a more aggressive opening strategy. As a new platform for international economic cooperation to support China’s all-round opening strategy, the BRI seeks to shape an open global economic system centered on China and backed by its surrounding areas through strategic alignment. This fully reflects some of the Eastern wisdom, i.e. acting in an open, inclusive, flexible and pragmatic manner.13 Fourth, the BRI reflects China’s pursuit of shaping the international rule system. Since the outbreak of the 2008 financial crisis, the international rules have entered a period of restructuring, with the struggle for the international cooperation leadership and rulemaking power becoming extremely fierce. And China cannot stay out of it. Emerging powers like China are facing an increasing number of economic and trade barriers and unfavorable rules. So there is an urgent need to strengthen regional economic cooperation and reshape global economic and trade rules to break the limits imposed the US and Europe. Against this backdrop, the proposal and rapid development of the BRI is a good answer to this need.14 The Decision of the CPC Central Committee on Major Issues Concerning Comprehensively Promoting Law-based Governance clearly states that, “We must actively participate in the international rulemaking, promote the law-based handling of foreign-related economic and social affairs, expand China’s voice and influence in international legal affairs, and safeguard China’s sovereignty, security and development interests through legal means.” The BRI is a realistic choice for China to reshape the international economic and trade rules under new circumstances. It can bring China more economic and trade partners, make it possible for China to expand its economic influence, and provide a specific path to reshape the international economic and trade rules in a way that aligns with its interests. As the BRI spans Asia, Europe and Africa, and involves a wide range of regions and countries, only by setting relatively stable standards and norms can China make connectivity truly happen. Or the initiative can only be a combination of cooperation projects, making it difficult to achieve overall cooperation across regions.15 The new paradigm of successful economic cooperation between China, the advocate of the initiative, and the countries along the routes will undoubtedly take a place in global economic rulemaking in the future, which can help China have the initiative in hands and make its voice heard.16 At present, the most striking feature of international rule rebuilding is that the US, the EU and China, the three largest economies and trading partners in today’s world, have become the most important rule-makers. As the leader of international economic and trade rules after World War II, the US has been doing its utmost to maintain its dominance. The EU has been negotiating economic and trade rules including those about investment with 12 Hu

[11]. [12], Jin [13], Xia [14]. 14 Liu [15]. 15 Zhang [16]. 16 Jiang [17]. 13 Yu

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the US and China through centralized and unified governance of its member states’ legislative power of foreign investment. China has begun to take the lead in founding regional institutions such as the Asian Infrastructure Investment Bank (AIIB) and the BRICS New Development Bank (NDB). And it has proposed the BRI to gradually undermine the European and American leadership in international economic and trade rulemaking, and is striving to shape a new rulemaking model under the guidance of a new concept of global governance.17 Fifth, the BRI is China’s ideal pursuit and realistic path to an emerging world power. This initiative is a long-term, far-sighted comprehensive strategy with a global vision, Chinese wisdom and profound meaning. It is essentially designed to secure for China a leading role in the international community, and in this sense it has a far-reaching historical significance.18 Regarded as China’s grand strategy towards a world power, the BRI stresses the organic combination of China’s openness, regional cooperation and global development, demonstrating that China has developed a roadmap to a comprehensive global power.19 China has closely partnered with many countries through the BRI, and has achieved connectivity through infrastructure construction, based on which China is carrying out broad-ranging cooperation in finance, trade, investment and other fields. As a result, China has helped its partners to develop, enhanced regional and global interaction, and injected vitality into the economic recovery and strong growth of the world. On this basis, China has a clearer global strategic positioning: it is a participant, beneficiary, builder of and a contributor to the international system, an advocate of international cooperation, a practitioner of peaceful development, a driving force for shared development, a champion of multilateralism, and a constructive participant and energetic leader of global economic governance.20 China calls for concerted efforts to advance the great process of building a global community of shared future, and advocates a new type of international relations. And such relations are built on China’s commitment to follow the path of peaceful development, become a new global power, pursue greatpower diplomacy with Chinese characteristics, and work towards a better world via win–win cooperation.

1.1 The BRI and China’s Voice in International Rulemaking Entering the second decade of the twenty-first century, the world economy is undergoing a profound transformation. Countries and regions are competing for leadership of international rulemaking and cooperation. And the struggle among major powers for economic rulemaking dominance is particularly fierce. The RCEP, the TPP and the BRI, among others, are products of the above competition in a certain sense. Amid 17 Zhang

[18]. Footnote 6. 19 Ma [19]. 20 See Footnote 4. 18 See

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a new round of regional economic cooperation led by the US and other Western developed countries, the developing world represented by emerging powers is facing enormous challenges as well as opportunities that they cannot afford to miss. At a time when international rules are at a new historical turning point, China needs to take a more activist, assertive part in rule setting.21 The Belt and Road Initiative has given China a great opportunity to participate in the reshaping of international economic rules. The new paradigm of successful economic cooperation between China, the advocate of the initiative, and the countries along the routes will undoubtedly take a place in global economic rulemaking in the future, which can help China have the initiative in hands and make its voice heard. The establishment of AIIB and other international institutions led by China can be considered as an attempt to improve the existing global governance rule system, make up for the inadequate financial support for developing countries by the existing international cooperation mechanism, and help emerging powers gain more power to reshape the international economic and trade rules.22 The BRI can be used as an important vehicle to promote the international rule building because its core content is related to the reshaping of such rules. As President Xi Jinping stressed, China should enhance coordination of economic policies and alignment of development strategies, work towards coordinated development, pursue international cooperation through the Belt and Road Initiative to create synergy of policy coordination and strategy alignment, support efforts to build an open world economy, promote the construction of free trade areas (FTAs), improve liberalization and facilitation of trade and investment, and enhance complementarity and synergy around the development strategies of relevant countries and cooperation plans developed by international and regional organizations.23 The BRI pursues an open and non-exclusive cooperation model. Under the BRI framework, China will not directly challenge the existing international institutions, norms and values dominated by developed economies in the US and Europe, but rather it will respect the shared values, interests and experience of developing countries along the routes in an attempt to create regional orders and institutional arrangements, and duly complement and reform the existing institutions.24 China seeks to standardize the consensus-based cooperation model through a “chorus” rather than a “solo”, and continue to learn lessons from international cooperation so as to set unified international standards at the right time,25 and take the power in hands to make international rules. The improving economic and trade rules under the BRI will project new wisdom for international economic rules. At the same time, the flourishing bilateral economic and trade ties and FTA construction under the BRI will

21 Li

[20]. Footnotes 14, 16. 23 Xi [21]. 24 Kennedy and Parker [22]. 25 See Footnote 15. 22 See

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bring multilateral economic and trade rules, ultimately contributing to the integration of international economic rules.26 The BRI is a key approach to improving China’s position in the global economic governance system. Essentially, the existing international economic and trade rules are reshaped by developed countries. Thanks to its corridor model characterized by flexibility, maneuverability and applicability, the BRI is engaging more countries to align their development strategies willingly. Effectively bypassing the high-standard regional trade agreements defined by the US and Europe, the BRI strives to provide regional economic and trade rules that serve the interests of emerging countries. In the field of international finance, the AIIB, the Silk Road Fund and other institutions see innovation in financial support, voting mechanism and operation mechanism. They can gather valuable international experience, provide reference for the reform of the International Monetary Fund (IMF) and other organizations, and take a proactive approach to meeting the challenges from developed countries that are leading the revision of financial rules. Meanwhile, the BRI has to coordinate a range of dispute settlement mechanisms. Its thinking and solutions can enhance regional coordination and deepen consensus, and its experience can give China a voice in negotiating rules with other countries and international organizations. With the progress of the BRI, Chinese rules and standards on design, engineering construction and operations management are going global. This can not only further improve the manufacturing level of Chinese enterprises, but also lay a solid foundation for the long-term win–win cooperation, which is a viable option for China to participate in global governance by utilizing its own advantages.27 Besides, as a development-oriented international cooperation initiative and practice, the BRI seeks to negotiate and set international rules in an open and inclusive manner, which is essential for a more loose and effective international economic community. As a rule-oriented international cooperation initiative and practice, the BRI is designed to promote trade and investment liberalization and facilitation, as part of the basic direction of its strategic implementation. China can steadily push forward rule-based cooperation with the countries along the routes. Given this, the BRI should be underpinned by the existing mechanisms, whether multilateral or bilateral. The development and improvement of more mechanisms is also a must. And building cooperation mechanisms in trade, investment, industry and finance should be a top priority. The BRI values the idea of opening to and sharing benefits with the world, and pursues regional cooperation based on the principles of “connectivity, good faith, mutual benefit and inclusiveness”. It emphasizes the promotion of macro-policy coordination and strategy alignment through inter-governmental cooperation, attaches importance to policy and market information sharing, and seeks consensus-building through bilateral cooperation and multilateral coordination. Under the BRI, countries involved are expected to follow a common development path that is market-oriented, government-driven and enterprise-led. An institution-based restraint model, with

26 Zeng 27 Hua

and Dang [23]. and Wang [24].

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both harsh and mild measures combined, should also be in place, so that the cooperation between China and the countries along the routes can be subject to institutional restraints instead of enforcement measures. In doing so, the cooperation can continue in a standardized and flexible manner.28 This reflects the cooperation principles of consultation on an equal footing, mutual benefit, harmony and inclusiveness, marketbased operation, and seeking convergence of interests and the broadest common ground for cooperation.29 The BRI governance structure represents a typical diversified cooperation mechanism, under which FTAs, sub-regional cooperation, economic corridors and industrial parks co-exist and evolve together.30 China’s goal is not to establish a rule system dominated by one single power, but rather to create a new type of international relations centered on win–win cooperation, with an emphasis on consultation on an equal footing, joint development and mutual benefit among the participating countries.31 In the meantime, the Chinese government has made clear the open, inclusive and mutually beneficial nature of this initiative on different occasions, stressing that as an advocate rather than a leader, China will not seek its own sphere of influence via rulemaking, and it will push forward the initiative in line with market logic.32 With the deepening of the initiative, policy coordination is moving towards institutionalization based on connectivity and joint development, and the leading role of China is increasingly respected and supported by the countries along the routes. A new model of international rulemaking is taking shape. The BRI is based on the principles of extensive consultation, joint contribution and shared benefits. Thanks to connectivity via transport channels, this initiative mainly builds land and maritime economic cooperation corridors across Asian countries. It is characterized by diversified cooperation mechanisms, with an aim to build a global community of shared future, which reflects China’s long-term strategic goal of shaping a global market mechanism.33 China has been leading and driving the development of relevant international rules, which is mainly reflected in: First, China is actively using the existing multilateral international cooperation mechanisms, reflecting its reliance on global system of international rules. The sophisticated global system with the United Nations as its core has been in operation for many years, so it can provide an important institutional reference for the BRI rulemaking. China emphasizes its reliance on and support for the UN system, based on which it will promote innovation in international rules in the economic and trade fields. Besides, the international cooperation model in the context of the BRI is quite different from the previous ones. As the existing West-led rule system is facing a real challenge, China is considering using the traditional international rule system in a creatively manner. 28 See

Footnote 15. Communique of the Leaders Roundtable of the Belt and Road Forum for International Cooperation”, People’s Daily, May 16, 2017, front page. 30 See Footnote 9. 31 See Footnote 16; Wang [25]. 32 Hong and Sun [26]. 33 See Footnote 7. 29 “Joint

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Second, China is leading the preparation of new multilateral development mechanisms in infrastructure, finance and other areas where it has an advantage, and is working on innovation of international rules. The BRI rulemaking is on course in a range of areas from infrastructure to financing, with a prototype of international framework taking shape. Many financial institutions like the AIIB, the NBD, the Silk Road Fund and the SCO Development Bank are built under the leadership of China to promote the BRI, together with the support from the Energy Development Fund, the China-ASEAN Investment Cooperation Fund and the China-CEE Investment Cooperation Fund, etc. A systematic institutional arrangement covering infrastructure and financing has taken initial shape. Compared with the IMF, the World Bank, the Asian Development Bank (ADB) and the European Bank for Reconstruction and Development (EBRD), the above governance institutions are characterized by equality and efficiency in their formation process. As inclusive and legitimate institutions, they reflect China’s right of initiative and leading position, protect the voice of developing countries, and cover the shortage of public goods as a result of the decline of Western countries. They exist side by side with the West-led international institutions such as the World Bank and ADB, while each has its own strengths and they can inspire each other.34 Third, China is exploring the establishment of FTAs, an issue of common interest to both North and South countries. In recent years, with the second generation of trade policies about intellectual property rights (IPRs), competition policies, investment, environmental regulations, labor market protection and financial services increasingly becoming the key topics of FTA negotiations, European and American countries are working on the development of higher and stricter standards on environmental governance, IPRs, competition policies, state-owned enterprises and industrial policies through negotiations of the TPP, the TTIP and similar arrangements, in a bid to continue to be the international rule-makers. As a result, the contradictions between North and South have become increasingly prominent. Since China is acutely aware of the importance of competition, it has been working on strategic deployment in certain fields. The Third Plenary Session of the 18th Central Committee of the CPC held in November 2013 proposed: “We should accelerate the implementation of the free trade zone strategy based on the surrounding areas to build up a global network of high-standard free trade zones/areas”. In “Several Opinions on Accelerating the Implementation of the Free Trade Zone Strategy” issued in December 2015, the State Council clearly stated: “China’s free trade zone strategy should be based on the surrounding areas and radiate the countries along the Belt and Road”, and proposed to build FTAs based on extensive consultation with relevant countries and form a grand market under the Belt and Road Initiative, thereby making the initiative a smooth and open road to commercial cooperation. Until now, the FTAs are mainly located in China’s neighborhood and have not radiated to Central Asia and Central and Eastern Europe. And the integration level of these FTAs is generally not high, with a focus on the traditional field of trade in goods. The openness level of trade in services and investment is relatively low, and the second generation of 34 Wang

[27],Liu and Yao [28].

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trade policies is scarcely involved. Since the implementation of the BRI, China has stepped up its effort to revise and improve the FTA rules with relevant countries. In particular, the updated version of the China-ASEAN Free Trade Agreement has seen substantial progress, and the RCEP negotiations have pushed regional cooperation relations to a higher level.35 Undeniably, China’s regional trade negotiations with ASEAN, Central Asian countries and others still focus on how to align the rules on trade in goods rather than trade in services and other non-traditional fields. For example, China has only negotiated certain rules on trade in goods with the RCEP negotiating states, and made little progress in negotiating rules on trade in services, trade facilitation, investment and the environment, all of which require coordination between China and the countries involved under the BRI.36 Since the overall level of trade arrangements is relatively low at present, it is of great significance to build a FTA network under the BRI. In addition, although the initiative mainly focuses on economic issues, it also involves politics, culture and many other fields, which is different from those traditional FTAs.37 How to promote overall negotiations has become a key issue for all parties. Fourth, China is building stronger domestic safeguard mechanisms to better help it take part in the international rulemaking. To improve those safeguard mechanisms, China has made a lot of efforts, including setting up a leading group of the CPC Central Committee for the BRI, creating the Department of Eurasian Affairs of the Ministry of Commerce and a PPP working mechanism for the BRI, and unveiling projects on connectivity under the BRI. In addition to proposing the BRI, China was also planning to build China (Shanghai) Pilot Free Trade Zone, which is a strategic decision after careful consideration. The State Council clearly stated in “Several Opinions on Accelerating the Implementation of the Free Trade Zone Strategy”: “China (Shanghai) Pilot Free Trade Zone and others are China’s open-minded trials to adapt to new trends in economic development and new changes in international economic and trade rules with an aim to promote reform and development. The common difficulties and focal issues in the FTA negotiations can be first tried in Shanghai and other places. Stress tests in designated areas can help gather experience in preventing and mitigating risks to explore the best model for opening-up and provide practical basis for negotiations.” These pilot zones in Shanghai, Tianjin, Fujian and Guangdong are working on institutional innovation. China is building up a foreign investment management system with negative list management as the core, a trade regulatory system with a focus on trade facilitation, a financial innovation system with the goal of capital account accountability and liberalization of the financial services sector, and an interim and ex-post regulatory system centered on the transformation of government functions, which has provided a solid theoretical and practical foundation for China to participate in the negotiation of international rules.38 35 Zhang

[29]. Footnote 14. 37 Chen and Wang [30]. 38 See Footnote 17. 36 See

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Based on the above measures and efforts, China is well positioned to have a stronger voice in international rulemaking. China’s vision of developing an open and inclusive world economy through win–win cooperation is turning into a reality. Its innovation of rules on infrastructure and financial cooperation mechanisms has drawn wide attention from the international community, reflecting a striking contrast with the ideas and rules of the Western countries. New breakthroughs are achieved in the existing international economic rules. And more innovations are expected to be made in trade, investment, energy, finance, dispute settlement and other fields.39 Besides, the low-level institutional arrangements of the Belt and Road development have also attracted much attention from the international community. There have been no unified institutional arrangements or permanent management institutions yet. A limited scope of economic rules has been involved, while the standards and implementing degree of the rules are low. This model can ensure the continuity of cooperation and reduce the transaction costs thanks to the extensive cooperation content and the minimum binding force, enabling cooperation to be rapidly advanced at a time when other countries are facing a huge financing gap in infrastructure construction. The BRI was launched against the backdrop in which national conditions vary greatly and there are deficits in social infrastructure, laws and regulations as well as a regional integrated cooperation framework. As a result, China lacked strong institutional support in handling the partnerships with the countries along the routes, managing the increasingly close economic and trade exchanges, and settling trade and investment disputes. In the earlier stage, instead of presetting an all-embracing rule system, China can enhance communication and cooperation to gradually establish and improve rules for international cooperation. But when there is a need to strengthen international rule setting in order to safeguard the fruits of functional cooperation, the low standards and soft constraints of the current economic rules will become a major obstacle.40 Given this, China must plan ahead.

2 Questions and Challenges Facing the BRI The international community has been looking at and questioning the BRI when it was first put forward. China regards the initiative as its diplomatic priority of vital significance, and its attitude has almost become a yardstick to measure the bilateral relations with its counterparts.41 The BRI was proposed at a time when the disputes over the islands in the East and South China Seas were intensifying and China’s acts to protect its legitimate rights were regarded as “aggressive”. China was misunderstood by the international community who believed a rising China would change the current world pattern. On the one hand, the frictions between China and other major powers, especially the US, remain unchanged; on the other 39 See

Footnote 26. Footnotes 7, 15. 41 Ye [31]. 40 See

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hand, China’s relations with developing countries are facing challenges, which are generally considered to be the cornerstone of Chinese diplomacy. By supporting the infrastructure of roads, airports and ports with the countries involved in the BRI, China hopes to enhance trade and investment cooperation, promote the economic and social development of these countries, build a new type of relations featuring win–win cooperation, help ease the anxiety of these countries about China’s rapid economic growth and expanding influence, so as to clear off the soil for the China threat theory. In this sense, the BRI is essentially designed to solve problems.42 In view of this, it is necessary to take stock of the questions and challenges faced by China in the Belt and Road development and to explore the international context in which China can take an active part. After the BRI was proposed, China has reiterated that this is a win–win strategic initiative based on the principles of peace, cooperation, equality, inclusiveness, joint contribution and shared benefits. However, due to certain factors such as geopolitics, strategic considerations and practical interests, there are still doubts and anxieties about the initiative within and outside the region. Especially since 2018, Western countries’ rhetoric about the necessity to take countermeasures against the BRI can be heard from time to time. German Foreign Minister Sigmar Gabriel claimed at the 54th Munich Security Conference that China wants to use its Belt and Road investment to promote a value system which is totally different from that in the West. He denounced the Belt and Road Initiative as an obstacle to democracy and freedom. French Prime Minister Edouard Philippe echoed that Europe “cannot cede the rule-making power of the New Silk Road to China”. Doubts are gathering in the international community. We believe that the questions about China’s BRI can be summarized as several versions of the China threat theory, among which the China expansion theory, the China challenge theory and the China hegemony theory are highly popular. Some Western countries regard the BRI as a national strategy of China to disrupt the existing rules and orders and secure regional and global leadership. They believe China is seeking hegemony by reshaping the international rules. Some countries politicize economic issues and regard the initiative as China’s national strategy for expansion, an important carrier for China to unload overcapacity and look for new markets and demands for its own companies, and an important mean to challenge the existing international order led by the Western world. Some American scholars have compared the Belt and Road Initiative with the Marshall Plan of the US, both of which are an approach to becoming a world power.43 Some Japanese scholars agree with this view and believe that China will use its great amount of foreign exchange assets and capital to handle excess capacity and export high technology, in an effort to internationalize its currency renminbi, hence a Chinese Marshall Plan.44 India deems the initiative as a strategic move by China to include the countries along the 42 Miao

[32]. [33]. 44 ASHU IR, Inc., “Focusing on the ‘Concept of the 21st Century Silk Road Economic Belt’, Focusing on APEC”, see https://www.newsclip.be/article/2014/11/09/23757.html; Sanae Uragami, 43 Ma

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Indian Ocean coast to its sphere of influence, which poses a direct strategic challenge to India’s hegemony in South Asia and its status of security provider in the Indian Ocean region.45 According to some Westerners, the BRI is intended to rebuild a modern tributary system with China as the suzerain and its neighbors as the tributary states. The initiative is used as a springboard for regional and ultimately global hegemony. This is a popular theory in Japan. For example, Seiichiro Takagi believes that the BRI is fundamentally to build a new regional order centered on and led by China by means of financing the infrastructure construction of developing countries. Yoshinobu Yamamoto thinks that the BRI seeks to build an infrastructure network within the region and shape a China-led international order through policy coordination, trade facilitation and monetary stability, while enhancing China’s international status and global influence to make it an international rule-maker.46 American scholars have also discussed a lot in this regard. For example, James Holmes, a professor of strategy at the US Naval War College, noted that China gives economic benefits to its neighbors through the BRI in exchange for their political obedience, which was a common practice in the history of Chinese dynasties.47 At the same time, the China threat theory has derived many new versions involving economy, military and strategy, among which those about values and international rules are the most eye-catching. In terms of values, German Foreign Minister Gabriel’s accusations against China are a typical example. In terms of international rules, relevant arguments are also growing. For example, Douglas H. Paal and Matt Ferchen, research fellows at the Brookings Institution, believe that on many important aspects of the existing international order that China is, in fact, more of a rule-taker than a rule-maker. China largely does not aim to directly and fundamentally overturn the existing international rules governing trade and relations among sovereign states; instead it seeks to actively shape its economic and security environment in a way that aligns with its new status and what it sees as a changing international power structure.48 Some American scholars believe that the AIIB will become an important instrument for China to pursue and defend its own interests and compete for a voice in the international order. It will reform some of the existing rules and mechanisms of the international community, enhance China’s agenda-setting power, amplify China’s influence and authority in the existing international institutions and order while weakening the influence of the US, and spread the principles, rules and norms of new international institutions, thereby forming the basis for rivalry.49 Many Western analysts even argue that China’s fundamental purpose of the BRI development is to acquire the energy resources from relevant countries and pursue maximum profits without considering local environments and “China’s Version of the Marshall Plan: the AIIB and the Belt and Road Initiative - Chinese Media”, Focus-Asia, https://www.focus-asia.com/outline/400750/. Quoted in Shen and Huang [34]. 45 Lin [35]; Zhang and Li [36]. 46 See Li [37]. 47 See Footnote 9. 48 Douglas H. Paal and Matt Ferchen, “After OBOR: A Renewed Vision for Engagement with China and Asia”, see https://www.carnegietsinghua.org/2017/05/17/zh-pub-70031.

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public welfare. The initiative will threaten the ecological security and social stability of the countries involves. So it is a practice of neo-colonialism. In the meantime, the China-US confrontation theory is highly concerned by all circles. The US tends to regard the BRI as China’s strategy to pursue a balance of power between sea and land. China is expanding its land power by increasing connectivity and enhancing economic and trade cooperation. It is also expanding its sea power beyond the Western Pacific, southward to the South Pacific and westward to the Indian Ocean, in order to compete with the US forces in these waters. This can be seen as an important measure of China to scramble for world supremacy with the US. Both China and the US have put forward a range of initiatives and arrangements worldwide. Although the specific approaches are different, the intention of taking countermeasures is obvious.49 According to some Americans, the BRI is essentially to implement an integration strategy in Central and South Asia and other regions where the US lacks leadership and the regional cooperation mechanisms are not mature enough, with an aim to build an economic and political community spanning from East Asia to Western Europe in which the principle of mutual respect and trust advocated by China will prevail. This shows China’s ambition to regain its Middle Kingdom status.50 Some American scholars argue that competing with the US over rulemaking is one of the important goals of the BRI. The AIIB, the World Bank and the ADB share a same main objective, i.e. infrastructure development, which may challenge the leading position of the US in this regard in Asia. Certainly this is unacceptable to the US, thus the confrontation with China is inevitable. The rivalries between China and the US around order, pattern and rulemaking are becoming increasingly evident, with the fight for rulemaking as a core component. The above questions are not only the reason for the challenges facing the BRI, but also the direct consequences of related challenges which are mainly reflected in: First, countries involved are uncertain about the BRI, which may bring about political risks and challenges. These countries want to gain real benefits from the initiative, on the one hand, and are worried about their new dependence on China, on the other. Such concerns will lead to strategic swings and affect the smooth implementation of the initiative. Many of these countries are in a period of political transformation, including experiencing system transition, exploring democratic reform and suffering social unrest, and may face longer-term political instability, which will pose a systemic risk to the BRI. They are mostly small and medium-sized countries, so they are very sensitive to sovereignty and often adopt a balanced foreign policy51 in response to China’s expanding influence. Some countries are worried about the influx of Chinese goods and the impact of Chinese companies on their emerging industries that are relatively backward, and they are also concerned that Chinese companies will focus more on tangible construction than technology sharing, which may create an environment of unfair competition. Some Southeast Asian countries that have territorial disputes with China are concerned about the strategic intent 49 Mao

[38]; Song [39]. [40]. 51 See Footnote 16. 50 Shannon

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behind China’s military expansion and cooperation. Related maritime disputes, division of sea power and island disputes will constitute a long-term obstacle. These countries prefer to hedge their bets and pursue a swing strategy to seek economic cooperation with China and a security shelter from the US, thereby preventing the BRI from taking root.52 Second, the ongoing frictions between major powers have taken geopolitical competition to a higher level, with strategic risks and challenges existing for a long time. Since the BRI is regarded as China’s ambition to seek the status as a world power, it will necessarily draw the attention of other major powers. Along the Belt and Road, there are some of world’s main origins of natural resources and strategic hubs that major powers have always been vying for.53 So the big-power competition and containment will be there for the long run, and strategic challenges are inevitable. The BRI involves the political and economic spheres of influence of global powers and major regional powers, including the US, Russia, Japan, Germany, France and India. They are likely to judge or even publicly oppose the BRI, which in turn may spark concerns among the countries involved in the initiative. Facing this possible severe challenge, China should properly tackle the head-on confrontation with these powers to pave the way for the long-term smooth implementation of the BRI.54 The US has a growing doubt about China’s strategy. It has been paying close attention to the challenges to the international rule system and the rebalancing of regional influence since the BRI was implemented. Since the US regards the initiative as a huge challenge to its dominant position in Asia and the rest of the world, it has transitioned from instigating Japan, the Philippines, Vietnam and other countries to have territorial disputes with China in the East and South China Seas to publicly advocating a Free and Open Indo-Pacific (FOIP) strategy, with the goal of restraining the BRI and competing with China.55 Although Russia has been actively aligning the Eurasian Economic Union (EEU) strategy to the BRI, Russia remains highly vigilant of the intimate contacts between China and the Central Asian countries. India has always taken a negative attitude towards the BRI which, in India’s opinion, will encircle India geographically and politically. India has launched the Project Mausam to target its rivals and frequently put obstacles in China’s way in the South Asia and Indian Ocean regions. Japan has changed its attitude towards the BRI and expressed its willingness to strengthen cooperation with China, yet it remains strategically vigilant of China and will compete with China in the economic field. There is a sharp distinction between European countries’ attitude to the BRI. NonEU member states in Central and Eastern Europe (CEE) and South Europe generally have a positive attitude, while the attitude of Western European countries is turning bad in fear of the negative impact of the BRI on the investment system in Europe and the political solidarity among EU member states. They have begun to emphasize the differences in values and the strategic competition between China and Europe. The 52 See

Footnote 6. [41]. 54 See Footnote 16; He [42]. 55 Zhimin [43]. 53 He

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above factors lead to an increase in the geopolitical competition across Europe, Asia and Africa, and strategic challenges will long exist in the future. Third, there are many security risks along the Belt and Road, with security challenges existing persistently. Regarding the external security environment, China finds itself in a particular stage where the global power structure is adjusting painfully, the multilateral mechanisms in Asia–Pacific are changing in disorder, and China’s neighbors as a whole are responding to its rise.56 While the BRI brings opportunities, the infrastructure projects are mostly located in areas of insecurity and political instability, along with both traditional and non-traditional security risks such as geopolitical competition among major powers, territorial and island disputes and political unrest in individual countries in traditional terms, as well as economic and financial security, terrorist threats, epidemic outbreaks and organized transnational crimes in non-traditional terms.57 In particular, there is a complicated situation along the Belt and Road. Some regions have been in turmoil for years, with ongoing terrorism and ethnic and religious disputes and conflicts. Such security risks will affect investor confidence and project implementation, and widen the gap in interests, possibly leading to a deadlock.58 Fourth, economic and social risks are common along the Belt and Road, indicating high uncertainty. There are high risks in many countries along the Belt and Road. These countries differ from each other in terms of economic system, institutional arrangements, cultural characteristics, living habits, religious beliefs as well as economic and social development levels. Against this backdrop, coordination is difficult, and trade and investment risks are huge. In particular, the political situation in some countries is unstable, most of which are geopolitical “shatter belts” home to rampant terrorist forces. This may pose a major challenge to the investment environment and the economic security of the region, and lead to low returns on investment or even affect domestic economic security.59 The lack of multilateral free systems for trade security and effective mechanisms for investment cooperation in these zones has greatly restricted the depth and breadth of regional cooperation as the BRI is advancing. Some countries along the routes are facing profound political, economic and social transformation. There are a variety of short- and medium-term problems in the investment environment as well as risks relating to market fluctuation, currency exchange, labor and public relations, and operating decision. As we see, regional and international cooperation has been encumbered by poor operating environment, a low level of regional development and market size, and lagging economic integration, etc., which in turn will create more barriers to trade flow. Due to excessive reliance on external markets, there is a greater risk of being affected by economic fluctuations outside the region. In addition, in the process of carrying out the infrastructure projects, the Belt and Road strategy is facing risks relating to economic climate, market environment, geopolitics, religious conflicts and terrorist threats. In 56 Hu

and Dandan [44]. Footnote 19; Fu and Xu [45]. 58 Xiao and Ma [46]. 59 Li and Wang [47]. 57 See

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order to mitigate these risks as much as possible, China needs to follow the principle of doing what is possible while promoting regional cooperation under the BRI. To cope with the above risks and challenges, China must coordinate and set the cooperation rules with relevant countries. Rulemaking is the right approach to preventing and resolving risks.

3 Becoming a Rule-Maker and Securing a Voice The BRI is closely related to China’s position as an international rule-maker. President Xi Jinping pointed out that the Belt and Road Initiative is of great significance for exploring new economic growth poles, enhancing the endogenous driving force for all countries, and promoting global economic growth, and can help to promote economic globalization towards inclusive development. Its main path is to build an open cooperation platform, safeguard and develop an open world economy, jointly create an open environment for development, and promote a system based on fair, equitable and transparent economic and trade investment rules. China should emphasize the principles of fairness, equality, inclusiveness, transparency, openness and mutual benefit, serve as an advocate and leader in the rulemaking process, and explicitly or implicitly take an proactive and leading role, so that it can become an international rule-maker and have its own voice. More specifically: First, condense and enrich China’s international cooperation theory, and maintain conceptual innovation and strategic leadership. The BRI reflects China’s theoretical pursuit of international cooperation, which is based on China’s innovation in strategic thinking. At present, China is building a strategic framework for peaceful development centered on integration, transformation and shaping. How to shape the future of the world through peaceful development and win–win cooperation has become a strategic focus of China to enrich its peaceful development and make a plan after its rise. The central leadership, with Comrade Xi Jinping as the core, has a profound understanding of the impact of China’s rise on the world. As the Chinese believe that “In success, one tries to let others be benefited,” China pursues a mutually beneficial strategy, emphasizes cooperation based on the convergence of interests with other countries, actively takes as many international responsibilities as it can, and seeks to work with other countries towards a global community of shared interests, responsibility and future. China calls for building a community of shared future, proposes new initiatives such as shaping a new type of major power relations and the Belt and Road Initiative, follows the principle of upholding the greater good and pursuing shared interests, and aligns its development strategies to those of its neighbors and developing countries to deepen mutual trust and cooperation.60 China’s ideas of international cooperation are based on its own reform. It hopes to integrate into the international community gradually and promote international cooperation by coordinating internal and external efforts. This reflects the 60 Men

[48, 49].

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due care of a latecomer and the great aspiration of a major power. China seeks to build a global community of shared future based on the premise of common interests with the goal of a win–win situation, while actively undertaking its responsibilities as a great power. China deeply recognizes how its rise would impact the world, so it has reaffirmed its determination to pursue peaceful development and its willingness to give other countries a lift. China is also happy to develop friendly partnerships on an equal footing, share development dividends, and cede certain non-strategic interests, in an effort to become a responsible major power. As a major initiative put forward by China to promote international cooperation and achieve mutual benefit, the BRI seeks to realize coordinated international development through alignment of national policies and plans, and drive economic globalization via new ways of cooperation.61 China must leverage the BRI to promote a new round of globalization with Chinese elements and wisdom, continue to maintain conceptual innovation and strategic leadership, and widely engage other countries in the development. Meanwhile, China should focus on how to boost its own growth as well as that of the countries involved in the BRI, pay more attention to the joint development with its neighbors, promote endogenous development strategies,62 and ensure cooperation and coordination between countries. China should also embed its unique development concept, work towards a governance system for the BRI, and build a discourse system with Chinese characteristics under the BRI. Second, take the negotiation and formulation of international rules as the starting point to properly cope with risks, actively build institutions, and work towards a global community of shared future. The negotiation and formulation of international rules under the framework of the BRI start with risk response, take the approach of institutional development, and aim to build a global community of shared future. China must pay attention to a series of existing or potential risks, and set up new cooperation mechanisms to prevent possible risks and lay a solid foundation for cooperation. A sustainable BRI is inseparable from a well-established system of international rules. The rule setting will be based on the existing frameworks for international cooperation along the routes. China will fully leverage the existing cooperation platforms, and complement the existing institutions through institutional innovation according to the actual needs of the Belt and Road development, in a bid to promote regional governance towards fairness, equity and transparency.63 An important mission of the BRI is to explore a development-oriented international rule system. China does not deny the dominant position of developing countries in the initiative, but the rules must be built on universal consensus and the principles of openness and inclusiveness. President Xi’s views on global governance have a lot of implications for the Belt and Road development. He said that global economic governance should be based on equality, better reflect the new realities of the world economic landscape, increase the representation and voice of emerging markets and

61 See

Footnote 2. and Liu [50]. 63 See Footnote 58. 62 Huang

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developing countries and ensure that all countries have equal rights, equal opportunities and equal rules to follow in international economic cooperation. Global economic governance should embrace openness. It should be based on open concepts, open policies and open mechanisms so as to adapt to the changing situation. It should be open to constructive suggestions and the recommendations and aspirations of different quarters of society. It should encourage active participation and integration of various parties, reject exclusive arrangements and avoid closed governance mechanisms and fragmentation of rules. Global economic governance should be driven by cooperation. Countries need to step up communication and coordination, accommodate each other’s interests and concerns, and work together to discuss the rules, build mechanisms and meet challenges. Global economic governance should be a mechanism of sharing. It should be about participation by all and benefits for all. It should encourage the sharing of interests and win–win prospects.64 Under the BRI, China is leading the revision of regional economic and trade rules, in a bid to agree on the rules with other countries in a fair, just and equitable manner as well as engage more countries in the modification of and compliance with these rules, then allowing it to take part in reshaping global economic and trade rules. In order to avoid confrontation with regional economic organizations composed of developed countries, China should modify intra-regional rules in key fields rather than completely reshape the rules. It should unify intra-regional rules in certain fields with the countries involved in the BRI before reshaping global economic and trade rules. The countries along the routes may accept the revised rules to varying degree due to the differences in their politics, economy, culture, ethnic groups and other aspects. In this sense, China should pay close attention to the actual difficulties of these countries while improving the economic and trade standards in the region, which is the key to its successful reshaping of the intra-regional rules under the BRI.65 The development of cooperation mechanisms between China and the countries along the routes is a systematic project that needs careful design. In the short term, China should focus on the soft mechanisms and work with its partners in less sensitive areas that can deliver quick results. In the medium term, China should uphold the principle of win–win cooperation, accelerate the construction of FTAs, and build platforms for China to trade with countries along the Belt and Road. In the long run, it is necessary to set up broad-ranging cooperation mechanisms and focus on pattern/order building, enabling a leapfrog development from the regional level to the pattern/order level.66 At present, FTA negotiations are in full swing. China can work with the countries along the Belt and Road to build a network of bilateral or multilateral and regional or sub-regional high-standard FTAs. In doing so, China can effectively reduce bilateral or multilateral trade and investment barriers, expand the convergence of interests step by step, explore the economic and trade cooperation rules in the interests of 64 Xi Jinping, “A New Starting Point for China’s Development, A New Blueprint for Global Growth – Keynote Speech at the Opening Ceremony of the B20 Summit”, People’s Daily, September 4, 2016, front page. 65 See Footnote 14. 66 Huang [51].

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developing countries, and secure the institutional power in global economy and trade rulemaking.67 China should launch negotiations on the China-EU FTA, speed up the implementation of a market-oriented FTA strategy, and shift the focus of the China-EU cooperation from trade to investment and R&D. China should promote the construction of regional FTAs, including the China-ASEAN FTA, the ChinaGCC FTA, the China-Japan-South Korea FTA and the China-Australia FTA, and strive to reach a free trade agreement with Sri Lanka as soon as possible, in order to lay a solid foundation for the Free Trade Area of the Asia–Pacific (FTAAP). It should also work harder to build domestic FTAs, set up pilot zones in Shanghai, Tianjin, Fujian and Guangdong, and enhance the cooperation and coordination mechanisms.68 As a role model, China (Shanghai) Pilot Free Trade Zone has a rich experience in trade regulation with trade facilitation as the content, financial cooperation based on financial liberalization, and foreign investment management with negative list as the core. China can use such experience to better reshape the regional economic and trade rules based on connectivity with the internal and external rules of the countries along the Belt and Road. China should fully promote the construction of FTAs through key breakthroughs and multi-level integration, in order to build up a regional integration network with a reasonable layout, wide coverage and radial distribution.69 Meanwhile, China should start with financial rule rewriting to gradually unify the intra-regional rules under the BRI. The AIIB has developed a voting mechanism and a consensus-based negotiation model that balances China’s influence and the voice of its members. Its decision rules appear to be fairer than the IMF’s “onevote veto” rule, which has significantly expanded China’s influence and voice in the international financial rulemaking, and have initially broken the limits of the current rules dominated by the IMF and the World Bank. China should take this opportunity to keep promoting the innovation of AIIB rules on multilateral financial governance, in preparation for the future struggle between emerging countries and developed ones over the dominance of reshaping the international financial rules.70 Besides, China should work towards a dispute settlement mechanism that meets the actual needs of emerging countries. Most of the 65 countries along the Belt and Road are developing countries that are weak in coping with external economic impact, are deeply affected by internal religious and ethnic problems, and have a less sophisticated legal system than that of China. This situation can easily cause conflicts between their domestic laws and the international laws, which may influence China’s cooperation with these countries in the long run. In this regard, China should set up a dedicated arbitration body to settle such disputes, contributing to the rule setting and enforcement under the BRI. Third, properly handle relations with major powers through alignment of strategies. Competition among major powers has existed for ages. As a general policy, China should better align its strategies to those of other major powers to 67 Lu

and Li [52]. et al. [53]. 69 Zhang [54]. 70 See Footnote 14. 68 Sun

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promote positive interaction and synergy and prevent rat race and joint containment. The US, Japan and Europe have a long history of investment in certain countries along the Belt and Road. China should rationally deal with the established powers, improve its own strategies through competition, and seek an all-win situation through cooperation. The BRI requires the recognition, support and participation of key powers, especially those major powers having a stake along the routes. To this end, in the process of further implementing the BRI, China should strive to find the common interests with some key powers by aligning each other’s strategies. China should also give its counterparts certain rights to know, to speak and to make decision, which in turn can effectively reduce the multilateral resistance and political risks arising out of the BRI development. At the same time, China should coordinate the BRI-related mechanisms with the international ones dominated by key powers to avoid vicious competition.71 China should welcome other major powers to join the BRI development with a constructive attitude. In this process, it should coordinate strategic conflicts, promote pragmatic cooperation and deliver shared benefits, aiming to grow into a stakeholder for all major powers. China can use the connection between the BRI and the EEU as an example to optimize its relations with major powers. China and Russia are each other’s most important strategic collaborative partners. Deepening the comprehensive strategic partnership of coordination between China and Russia is a strategic priority in the overall situation of foreign relations for both countries. President Xi Jinping noted: “The relationship between China and Russia is one of the most important bilateral relationships in the world. It is also the best relationship between major countries. A strong and high performance relationship like this not only serves the interests of our two countries, but also provides an important safeguard for maintaining international strategic balance as well as peace and stability in the world.”72 It is groundbreaking that China and Russia signed two joint declarations on connecting the Silk Road Economic Belt with the Eurasian Economic Union as well as on deepening comprehensive strategic partnership of coordination and advocating win–win cooperation in May 2015, hoping to connect the development strategies of both countries to deepen substantive cooperation. Setting the China-Russia strategic link as an example is of great significance for others to follow. Through the bilateral and multilateral mechanisms as well as the existing cooperation platforms between China and relevant countries, China can promote the connection and cooperation between the Silk Road Economic Belt and the EEU and the SCO, and lay a new basis for coordinated development among these institutions.73 Fourth, raise China’s voice in rulemaking, tell China stories well, and guide the objective understanding and rational support of the BRI. In the contemporary international relations, a country’s voice and discourse system in the international community has been a research focus of academic and political circles, and it has gradually become a national strategy as well. This voice means how strong a country 71 He

[55]. [56]. 73 Tang [57]. 72 Xi

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can dominate world opinion, shape international rules, lead international institutions, influence international values, and decide the distribution of global benefits, reflecting its national governance capacity, values and international influence.74 The BRI serves as an important platform where China can expand its voice on a global scale and demonstrate how it sees the world. To achieve this, China must tell its stories well, proactively handle the questions and challenges from the international community, help the international community better understand the strategic value of the BRI, and call for positive response of the world to China’s aspiration under the BRI. In this process, China should tell good stories, have its own voice, clarify the essence, goals and values of the Belt and Road strategy, and guide the countries along the routes to correctly understand the far-reaching significance of the strategy from the perspective of mutual benefit and interdependence. It should also actively answer questions from the participating countries, correct the international community’s wrong perceptions about the strategy, enhance positive interactions in the communication process, leave no room for speculation and eliminate the prejudice, so that the participating countries and the international community can truly understand the stories behind China’s Belt and Road strategy and fully embrace it.75 In order to secure for a stronger voice in the international community, China must join hands with key stakeholders in the Belt and Road development and enable the world to correctly understand rather than politicize the initiative.76 To build a BRI discourse system, China should focus more on the interests and ideological identity of the participating countries than its own interests and concerns, as well as have global concerns of the twenty-first century in mind. On this basis, China can develop a fact-based communication plan for the BRI to completely acquire its voice over the strategy. In doing so, China is well positioned to handle a variety of theories involving its threat, hegemony or expansion, and show how it can create opportunities for and contribute to the world and rise as a responsible power. China can guide correct understanding of, in-depth studies on and rational support for its BRI by seeking recognition from the international community of its values like openness, inclusiveness and win–win cooperation.

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29. Zhang Guojun, “The Status Quo and Promotion Strategy of Free Trade Zone Construction between China and the Economies along the Belt and Road”, Journal of Commercial Economics, Vol. 10, 2017, pp. 140–143. 30. Chen Weiguang and Wang Yan, “Joint Development along the Belt and Road: An Analytical Framework Based on Relationship Governance and Rule Governance”, World Economics and Politics, Vol. 6, 2016, pp. 93–112. 31. Ye Hailin, “A Study of Modi’s ‘Issue-by-Issue’ Diplomacy with China - Also on India’s Attitude to the Belt and Road Initiative from this Perspective”, Contemporary Asia-Pacific Studies, Vol. 6, 2017, pp. 24–47. 32. Miao Ji, “The Belt and Road Initiative: Expectation Management, Risk Aversion, and Strategic Responses”, Forum of World Economics & Politics, Vol. 3, 2017, pp. 1–26. 33. Ma Jianying, “U.S. Understanding of and Response to China’s Belt and Road Initiative”, World Economics and Politics, Vol. 10, 2015, pp. 104–132. 34. Shen Laijin and Huang He, “Japan’s Understanding of the Belt and Road Initiative and Its Implications to China”, Socialism Studies, Vol. 2, 2017, pp. 149–153. 35. Lin Minwang, “India’s Perception of the Belt and Road Initiative and China’s Policy Choices”, World Economy and Politics, Vol. 5, 2015, pp. 42–57. 36. Zhang Li and Li Ping, “India’s Perception of the Belt and Road Initiative and China’s Responses”, South Asian Studies Quarterly, Vol. 1, 2016, pp. 18–23. 37. Li Chengri, “China-Japan Strategic Competition and Abe’s Reaction to the Belt and Road Initiative”, Journal of Zhengzhou University, Vol. 6, 2017, pp. 84–88. 38. Mao Yue, “Looking into India’s Diplomatic Mindset from its Understanding of and Response to the Belt and Road Initiative”, International Forum, Vol. 1, 2017, pp. 34–41. 39. Song Ruichen, “The U.S. Understanding of the Belt and Road Initiative and China’s Strategic Choices: Based on the Analysis of the Views of Scholars at the Brookings Institution and the Council on Foreign Relations”, Global Review, Vol. 6, 2017, pp. 57–74. 40. Shannon Tiezzi, “China’s ‘New Silk Road’ Vision Revealed”, The Diplomat, May 9, 2014. 41. He Maochun, et al., “Obstacles to the Belt and Road Strategy and Countermeasures”, Journal of Xinjiang Normal University, Vol. 3, 2015, pp. 36–45. 42. He Fangbin, “How the Countries along the Routes Understand the Belt and Road Initiatives and the Implications”, Qinghai Social Sciences, Vol. 4, 2017, pp. 26–35. 43. Zhimin Wang, “Analysis of Multiple Interactions in the Promotion of the Belt and Road Strategy”, Social Sciences in Chinese Higher Education Institution, Vol. 6, 2015, pp. 49–63. 44. Hu Junchao and Wang Dandan, “A Study of Country-Specific Risks along the Belt and Road”, On Economic Problems, Vol. 5, 2016, pp. 1–6. 45. Fu Mengzi and Xu Gang, “New Silk Roads: Progress, Challenges and Countermeasures”, China International Studies, Vol. 3, 2017, pp. 87–96. 46. Xiao Xi and Ma Cheng, “Risks in the Belt and Road Initiative and China’s Responses: An Analysis from the Perspective of Social Network”, Probe, Vol. 2, 2016, pp. 55–62. 47. Li Zhongwu and Wang Xiaoying, “How to Mitigate Risks under the Belt and Road Strategy”, Commercial Times, 2017, Vol. 9, pp. 124–125. 48. Men Honghua, “Building a New Type of International Relations: China’s Responsibilities”, World Economics and Politics, Vol. 3, 2016, pp. 4–25. 49. Men Honghua, “New Concept, Ideas and Strategies of the Party Central Government for National Governance: An International Research Agenda” World Economics and Politics, Vol. 1, 2017, pp. 5–29. 50. Huang Haibo and Liu Zhenyuan, “Strategic Direction and Practice Approach of the Belt and Road Initiative: A Comparison between China and the United States”, Southeast Academic Research, Vol. 2, 2017, pp. 99–108. 51. Huang Qingbo, “Analysis of Trade Pattern Restructuring between China and the Countries along the Belt and Road”, Intertrade, 2017, Vol. 1, pp. 54–58. 52. Lu Wei and Li Dawei, “Diversified Development Strategies for the Rise of Great Powers under the Belt and Road Initiative”, China Soft Science, Vol. 10, 2016, pp. 11–19.

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Chain Risks and Solutions for Infrastructure Investment of BRI G. E. Tianren and Ming Zhang

The BRI has entered a new development phase. President Xi Jinping pointed out on the 5th anniversary of the BRI, “We have completed the overall layout of the BRI in the past 5 years, and we will be focusing on the implementation details in the following years. On the key milestone of the 5th anniversary of the BRI, it is necessary for us to look back on the past and into the future. We have achieved remarkably in BRI. China has greatly reduced its trade investment restriction and remarkably improved its trade investment convenience. We have not only opened our markets in coastline and river-line areas but also in border and inland areas. A new era of Open-up has come with interactions between inland and coastline areas and mutual benefit between east and west China. By 2018, goods trade volume between nations of the BRI and China has accumulated to over 5000 million USD, direct outbound investment over 60 million USD, and China has created over 200 thousand jobs locally for those countries. China outbound investment has become an important engine for increasing international outbound direct investment.1 For China and the world, the successful implementation of the BRI displays its indisputable value of the initiatives. However, BRI is still faced with chain risks. BRI is under impact of complex situations both domestic and international, and they actively re-shape the world pattern as well. The double dynamic feature of BRI makes the implementation path highly dynamic, resilient and uncertain. However, many researches fail to take heed of 1 Xinhua

Press: President Xi Jiping Attended the 5th Anniversary Seminar for Promoting “the Belt and Road” and Delivered Key Note Speech, https://www.yidaiyilu.gov.cn/xwzx/xgcdt/63963.htm, logon time: August 29, 2018. G. E. Tianren (B) School of Political Science and International Relations, Tongji University, Shanghai, China e-mail: [email protected] M. Zhang Institute of World Economics and Politics, Chinese Academy of Social Science, Beijing, China © The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2021 H. Men and X. Xiao (eds.), Report of Strategic Studies in China (2019), https://doi.org/10.1007/978-981-15-7732-1_8

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this and they still regard potential risks of implementing the initiatives as statistic. They fail to notice especially the interactions and interconnections between chains of risks. Chain effects of those risks have not been properly discussed and no systematic thinking about measures to deal with chain risks have been done. From the long run, BRI will be going through a continuous test and adjustment process from the top design to the accurate implementation. Rome is not built in a day. BRI will be implemented in a steady way in the long run, therefore we need work on how to effectively identify and mitigate the possibility of micro risks evolving into macro risks and to prevent risks chain conduction triggered by emergent events. Chain Mechanism of BRI Infrastructure Investment Risks The basis to successful implementation of the BRI is the economic and trace interconnection, whose main foothold is to start with infrastructure investment. This is also how the BRI distinguishes itself from the international development plans of Europe and The United States. However, to start with infrastructure investment means lower investment return rate. Most infrastructure investment has a lower investment return rate. Usually it takes a long time for infrastructure such as airports, highspeed railways, highways, harbors and tunnels to take back their investment through collecting fees. Infrastructure investment in developing and high-risk areas has even higher risks. Most countries of BRI is developing countries, varying dramatically in economic development, political system, culture, and history as well as religious beliefs. The area is one of the key areas for geopolitical conflicts and for global main political powers competition. That means, the outbound direct investment from China’s BRI will be facing great challenges in investment security. For example, if radical political power shift happens, whether foreign investment will be nationalized by its new government is a big risk. Another example, if wars happen between countries along BRI and destroy infrastructure or factories, who will be responsible for compensation? The third example, some countries along BRI have a long history of frequent sovereign default records, how overseas investment security for Chinese enterprises can be guaranteed if these countries declare sovereign default again even if they had been having government guarantee for their projects? In another word, infrastructure investment first for the BRI means low investment return rate and high risk in terms of the investment areas and objects. Because of low return rate and high risk of the investment, no foreign or private investment is willing to invest in infrastructure. Therefore, the Chinese government must fully rely on policy funds to invest. Private investment decisions are made under market mechanism, which means, whether to invest mainly depends on the investment profit and cost. Therefore, even if the Chinese government promotes public–private partnership for investment, there will still be no investment interest from private sectors, under the assumption of low return rate and high risk of the infrastructure investment for BRI. Countries along BRI are mainly developing countries or new emerging countries, who themselves are in poor need of abundant funds for investment. This is also why Asia countries are having big gap for infrastructure investment. If private sectors and overseas countries do not invest abundant funds, Chinese government must raise funds for investment. The investment from

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Chinese government through its National Development Bank (NDB), Asian Infrastructure Investment Bank (AIIB) and the Silk Road Fund will possibly become the main fund source for BRI. This increases the risks of imbalanced fund from Chinese government. The high ratio of funds from the Chinese government in BRI leads to political doubts and negative public opinions from other countries. Some examples show that the countries being invested might not appreciate the beneficent investment, however they might show more doubts and resistance towards the fund source countries. Chinese government and investment bodies should be aware of and be well prepared for this. For example, BRI is compared as The Chinese Marshall Plan inappropriately for the following two reasons. First the Marshall Plan has been closely related with the US-Russia confrontation and it has distinct ideological feature. However, BRI have nothing to do with ideology. Second, the US implementing the Marshall Plan had a dominant role in the world, which is something that China does not have until now. Therefore, the comparison of BRI as the Chinese Marshall Plan is inappropriate and easily set the Chinese government into a negative position. Other voices say that BRI is a strategy of the Chinese government to control other countries. For instance, debt problems and land lease extension in Sri Lanka, Djibouti and Pakistan are considered as measures of Chinese to control these countries. This is obvious something far from truth, however, it still leaves doubts in public opinion for the positive results of BRI. One critical concern is that Chinese government is using BRI to shift their excessive production capacity, which is considered to be harmful to the industrial development of the host countries. It is an obvious fact that to shift excessive production capacity through BRI is not only inappropriate but also dangerous: first this will easily be detested and resisted by the host countries; second, excessive production capacity itself is hard to output to other countries; third, if output to other countries, it will have harmful impact on domestic industrial development. These concerns may possibly increase risks of infrastructure investment, further deteriorates the ratio imbalance of Chinese government funds, has a negative impact upon domestic reform and industrial transition and upgrade, and even may lead to industrial hollowness in China market. Doubts from the US and countries along BRI increase greater external political risks for the successful implementation of BRI and domestic industrial structure upgrade. Historical experience has shown clearly that China, as the second largest economic entity, should avoid direct confrontation with the US to gain our space for further development. Avoiding confrontation will benefit China economic development in the long run. Currently the US and China share common ground in many issues like anti-terrorism, global economic renaissance and North Korea issues. Sino-US relationship should focus on mutual benefit for cooperation and double win, avoiding distraction from domestic extremist voices. In a word, the unbalanced government fund ratio in BRI will most probably increase doubts from the US and the countries along BRI, accelerate economic and trade politicization and investment security risks, impede domestic industrial structure adjustment and increase domestic industrialization hollowness risks.

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In a summary, infrastructure investment first for BRI will most probably bring chains of risks. Due to low return rate and high risks of infrastructure investment, there is difficulty for private sector investment and public–private partnership investment, thus the risks of unbalanced ratio of Chinese government funds in BRI is increased. Due to the fact that infrastructure investment is mainly funded by the Chinese government, this further brings pan-politicization risks of economy and trade and deteriorates political doubts from the US and the countries along BRI and further leads to unbalanced domestic industrial structure and industrialization hollowness risks. In the long run, potential risks in BRI may be further deteriorated due to Sino-US trade conflicts. Sino-US relationship adjustment may most probably impede domestic industrial structure upgrade and interfere domestic reform and development. This is worthy of our high attention, which requires our appropriate counter measures. The following will be our detailed analysis against risks and measures to handle with risks. Chain Risks of Infrastructure Investment in the BRI Currently the interconnection between infrastructures is the key focus and priority of BRI. Infrastructure investment has the following features: big scale, long period, and low return rate, which in some circumstances will bring positive impact upon economic growth. For example, behind the rapid growth of Chinese economy in the past 30 years, there is the long, continuous and large-scale support of infrastructure investment. Why Chinese infrastructure investment keeps increasing in a rapid pace despite of very low investment return rate? There are two reasons: first infrastructure is regarded as public products and general resource configuration can be improved through speeding element flow to promote economic growth. This is why local governments are willing to invest in their financial funds. Second, once infrastructure is put into use, lands and real estates around the infrastructure will be remarkably added value, which then make local governments gain remarkable profits from their investment. That means, from economic point of view, despite of low return rate of infrastructure investment, its positive output can indirectly compensate for its low return rate. Therefore, there is no difference between the domestic part in the interconnected infrastructure construction of BRI and those normal domestic infrastructure constructions. Its external positive impact can be well released to promote regional economic development and to increase finance incomes of local government in an indirect way. However, the interconnected infrastructure construction in foreign countries in BRI, especially those infrastructure constructions with lower return rates, the external benefits are hard to directly converted into their domestic social and economic gains. Currently Chinese government improves the return rate of infrastructure investment mainly through government subsidies to enterprises, which brings difference between actual investment return rate to project-generated return rate. Therefore, we need further look into the non-economic benefits of these infrastructure projects. However, from non-economic point of view, infrastructure investment in the BRI brings non-economic overflow effects to China, countries and areas being invested. However, a public misleading opinion, that says excessive production capacity of

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China can promote domestic industrial transformation and employment, does not stand itself. Some scholars have been very optimistic. They pointed out that the infrastructure investment in overseas countries can consume large quantity of excessive production capacity, safeguard domestic economic development, employment population and social stability,2 increase the economic development and stability of mid and western areas of China,3 and improve regional influence and energy resource safety.4 However, in fact, excessive production capacity is hard to be consumed in overseas countries due to its higher cost. As to promoting domestic employment and social stability, more factors need to be considered. Even worse, these “optimistic” misleading opinions bring negative feelings to the countries being invested and bring harms to the long and healthy development of BRI. Another misleading opinion says that China can improve the insufficient public product supply capability caused by the stagnate economic development of the US, Japan and Europe through leading the public product supply in the countries along BRI, thus push the interconnection and coupling of development strategies of countries along BRI and form a China-centric cooperation network. This opinion is obviously misleading without any supporting facts. The Low return rate of infrastructure investment not only reduces the attraction from potential investment capitals especially private capitals, but also enables bigger investment loss risks of existing investment. As to the opinion about improving the insufficient public product supply of the US, Japan and Europe or other pollical entities, this will gain bring serious political doubts as well as the unbalanced fund risks of the Chinese government. Therefore, there still is no proof to support that there are non-economic investment gains from the infrastructure investment in BRI. What’s more, the so-called “strategic gains” are hard to be converted into actual gains in the short run. On the contrary, it increases the risks of unbalanced fund ratio of Chinese government. 1. Risks of Unbalanced Fund Ratio of Chinese Government As mentioned above, due to the low return rate and high risks of infrastructure investment in BRI, Chinese government, as the main initiator of “the B and R” initiatives, has become the main funding source of BRI, actively or passively. That is to say, the Chinese government has shouldered main risks of infrastructure investment. On one hand, private investment and main investment from overseas countries occupy a smaller ratio in the overall investment, which forces the Chinese government to become the main funder. On the other hand, as mentioned above, private capitals show lower interest in infrastructure investment because of the large scale, long period and low return rate of infrastructure investment. From the third perspective, countries 2 Jacob

Stokes, “China’s Road Rules: Beijing Looks West Toward Eurasian”, https://www.foreig naffairs.com/articles/asia/2015-04-19/chinas-road-rules. 3 Nadege Rolland, “China’s New Silk Road”, https://www.nbr.org/research/activity.aspx?id=531. 4 Atlantic Council, “Global Energy Forum, Session 2: China’s One Belt One Road Strategy, Continental and Oceanic Energy Superhighways?”, https://www.atlanticcouncil.org/news/transcripts/ses sion-2-china-s-one-belt-one-road-strategy.

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along BRI are mainly newly emerging or developing countries, which lack sufficient funds and capability for large-scale infrastructure construction. Internationally fewer countries show real zest and real money to take active moves to support the initiatives, which forces China to take a bigger investment ratio. With giant fund gap, the Chinese government establishes Asian Infrastructure Investment Bank and Silk Road Funds and invest in BRI through policy finance organizations such as National Development Bank. However, because of the low investment return rate and the investment environment of countries along BRI, unbalance fund rate of Chinese government in BRI will in no doubt assert pressure upon the return rate and reserve of China’s foreign exchange. Yin Yong, the then-vicepresident of China People’s Bank, said, according to the data of Asia Development Bank, from 2016 to 2020, the demand gap in infrastructure investment in Asia–pacific countries amounts to 503 billion USD, however the investment supply is only 196 billion USD per year.5 As per the data published in World Investment Report 2014 by the United Nation Trade and Development Conference, the percentage of continuous investment including infrastructure in global private capitals is only 0.9%.6 Chinese government alone cannot afford such a big fund gap. Therefore, both efforts from the Chinese government and other countries, as well as other multi-entities, are required to handle the big fund gap for overseas infrastructure construction. From the political perspective, Chinese government, as one of the main funders of BRI, shows its responsibilities as a great nation. However, besides the funds, China should not neglect the true attitudes of the countries whom China is considering investing. Currently there are three scenarios for infrastructure investment of BRI: first, the countries are in shortage of funds to put in infrastructure construction; second, some countries place their investment hope in other countries; third, some other countries are participating in the investment in a conservative way. For the Chinese government, for the second and third scenarios, we should have full awareness and should not encourage blind investment. Otherwise our investment and efforts might not be fully appreciated. While for the first scenario, we need consider how to attract the countries and other entities to invest in the infrastructure construction so that China will not bear the investment risks alone and attract unnecessary strategic doubts and risks. Another important fact is that the investment is settled in USD, which accelerates the decreasing of foreign exchange reserve and speeds up the devaluing expectation of CNY though China is the main funder of infrastructure investment in the BRI. According to our investigation in key projects in the BRI initiatives, assuming that there will be no global critical financial crisis, wars and policy change in the near future, China needs at least 7 years to tunnel profits of direct investment in BRI back to China and convert it into foreign exchange reserve. Therefore, the extraordinarily long investment return cycle put up big challenges to the continuous support of 5 China the Belt and Road Network: Vice President of the Central Bank: Big capital gap in “the Belt

and Road” initiatives, we need strengthen the development of financial leverage, https://www.yid aiyilu.gov.cn/ghsl/gnzjgd/23,212.htm. 6 Qiu and Fu [1].

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China’s foreign exchange reserve, which also increases bigger uncertain risks to the investment construction of the BRI. 2. Risk of Pan-politicization of Economic Issues Because the Chinese government has become the main funder and the first phase of funding comes from Chinese state-owned enterprises, this easily arouse political doubts from countries being invested. They are worrying that the unbalanced fund ratio of the Chinese government will lead to the deterioration of pan-politicization of economic issues. Some big regional countries are even worrying about the change of traditional regional political order. Among countries along BRI, most of them are developing countries, with great varieties in their economic development, political systems, culture and history and even religious belief. Some countries and areas are sensitive with terroristic activities and regional political conflicts and international power competition. Therefore, investment risks in these countries are higher. This brings serious challenges to investment security to Chinese funds and risks that are hard to predicted and estimated. Specifically, there are higher risks of violating contracting terms in developing countries, and higher risks of trade protection and pan-politicization in developed countries. In terms of risk types, there are in general terms violent risks and nonviolent risks. Potential risks such as breaching obligations, trade protection and national security protection belong to non-violent risks, for example, under some special circumstances, some countries or enterprises may violate contractual obligations and terminate cooperation to seek for personal, sectional or their countries’ maximized profit. These potential risks may possibly lead to termination or stagnation of investment. However, the trade protectionism in some developed countries often sets investment obstacles on purpose or directly interfere with the investment in excuse of “national security” so as to politicize economic issues. Violent risks mainly include domestic social and political conflicts and terrorist activities etc. For example, Libya civil war and Yemen Civil War has brought critical challenges to Chinese investment. While as the civil wars are escalating into a new level, these domestic conflicts may develop into regional or even international conflicts, which impose serious negative influence upon the investment in BRI. Terrorist activities has been threating safety of mid Asia, south Asia, east-south Asia and middle east for years and this also has been a great challenge to BRI. What’s more, regional competition among great powers along BRI will impose the biggest safety pressure to the investment and bring the most serious regional political risks. In another word, because the countries along BRI are usually areas being closely watched by the great powers such as US, Russia and India, the regional political risks are structural, random and long-term and they cannot be radically changed due to short-term policy adjustment or relationship improvement. For example, India has regarded Sri Lanka as its backyard for long, so Chinese investment in India Ocean ports is regarded as a “besiege” of India. Regional political concerns of the US in Middle East and Europe and those of Russia in Mid Asia also make them be deeply “alert” of BRI. The above-mentioned concerns impose greater structural political

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challenges to the investment risks in Chinese’s BRI. In summary, whether there are violent or non-violent risks, short-term or regional political risks, the unbalanced fund ratio of the Chinese government in BRI will most probably lead to the panpoliticization of economic issues in the infrastructure investment construction of BRI, thus deteriorate investment risks. 3. Off-Balance Risks of Domestic Industrial Structure The second consequence brought by the unbalanced fund ratio of the Chinese government in BRI is the deterioration of domestic industrial structure imbalance risks, which makes the adjustment of domestic industrial structure more difficult. First, the structural adjustment of Chinese economics is in a critical phase, will the implementation of BRI impact the industrial transformation upgrade? The lessons from the economic transformation of Taiwan is still clear before us. Currently the industrial structure of Taiwan is lagging behind, comparing with that of “Four Little Dragons”. Why the industrial structure adjustment of Taiwan is slower? Mostly because Taiwan enterprises have been too much successful in the mainland China. If enterprises like Foxcomm have not achieved such as big success in the mainland China, Taiwan might have been forced to adjust their industrial structure long before. Therefore, a “story” achieving external success might delay its domestic industrial structure adjustment. Therefore, in the long run, delayed reform, long-pending reform and the idea of expanding reform space through delaying reform is not reasonable because it might miss the appropriate opportunity. Second, because BRI shift Chinese government investment to other countries, will this bring domestic industrial hollowness? In the history, industrial hollowness had impacted economy of the US and Japan. Since the WWII, manufactory industry of the US has expanded globally, which is caused by the development of international enterprises as well as industrial shift. Some scholars believe that the financial recession and deficit of the US are all related to the industrial hollowness of the US.7 In Mid 1980th, after signing the square agreement, Japan’s currency JPY has increased its value very quickly. The manufacturing base of Japan began to shift overseas, thus asserting a negative impact upon Japan’s employment, technical capability and industrial structure. In the process of promoting BRI, China also needs to be fully cautious about industrial hollowness risks. Besides the above mentioned two points, there is some misunderstanding in China about production capacity cooperation in BRI. First international production capacity cooperation is not shifting excessive production capacity but shift highquality production capacity. The international production capacity cooperation China is involved does not allow us to shift obsolescent and polluted production capacity to oversea countries. Instead we use high-quality capacity to meet the demands of infrastructure construction of other countries and to seek for cooperation. Obsolescent production capacity is hard to transport, with its higher cost, low profit and big risks. Second, international production capacity cooperation is not to dump products, but to output industrial capacity and capability. To be more specific, it is to output the 7 Joe

et al. [2].

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whole industry into different countries and help those countries establish complete industrial system and manufacturing capability. This process is a natural process, because the industrial system and manufacture capability itself is market creation. In general, domestic industrial shift and international production capacity cooperation cannot be separated. International market brings new demands and the mid and west areas of China also need the industrial shift and production capacity cooperation from the east areas of China. Therefore, excessive international capital output may most possibly expand the gap of demand for domestic capitals, then accelerate the pace of domestic industrial structure losing balance and increase domestic industrial hollowness risks. 4. Risks of Doubts from the US and the Countries along BRI The third consequence of imbalance fund ratio of Chinese government in BRI is the doubt and interference to the construction of BRI from the US, its alliance, and countries along BRI. The history is rooted in traditional thinking and has an inertia impact upon politics in the real world. The conservative forces in the US and the UK are influenced by their historical ideology and are cautious about the peaceful emerging of China. Sino-US relationship has shown a continuously vibrating instability and the structural conflicts between China’s emerging and US’s dominance leads to the inevitable strategic competition between the US and China. Currently with the rapid development of China’s economics, the US policy toward China has gone through radical change. The US holds doubts towards BRI and its intention and motive to interfere has started. Therefore, the US attitude towards BRI makes the countries along BRI hesitant, which leads to the complex co-existence of both expectation and doubts towards BRI. Based on the above-mentioned judgement, the continuous and deep promotion of BRI will deteriorate the strategic confrontation between China and the US, which increases the politicization risks of infrastructure investment in BRI. About this, there are the following representative opinions: one is taking BRI as Chineseversion Marshall Plan whose aim is to re-build the regional political and economic orders dominated by China; another is taking BRI as China’s response to the US’s Asia–pacific re-balancing and China is building China-version re-balancing through advancing westward; the third is taking BRI as China’s measures to reduce the regional influence of the US and to enhance China’s diplomatic and political influence. The above three opinions all regard BRI as the key focus of Sino-US competition. Behind any opinion there is benefit conflict. In fact, the US government has promoted US-version BRI through multi measures and put up Indo-Pacific Strategy, and has started more fierce regional political competition with China in terms of economics and trade, Korean nuclear, Taiwan Trait, South Sea and Hongkong issues. The US government has adopted a selective response strategy toward BRI. Firstly, they collectively neglect the initiatives. They seldom or never mention in public the active aspect of the initiatives; on the other hand, in specific areas which China is helpful for them, they cautiously express welcome and cooperation intent. In general, the US government takes BRI as China’s strategic measures against its regional benefit or even global benefit. The attitude of the US government toward

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BRI in no doubt makes the concerns of the countries along BRI more complex. For example, Russia has been holding doubts toward China’s BRI initiative when they first started, because BRI impose potential threats or challenges to the influence of Russia in Mid Asia. However, with the changing of international situation, Russia began to realize the importance of BRI and it started to actively participate in BRI construction. Another example, India has been in denial of BRI initiative too and it refuses to participate in BRI construction. India has never trusted China’s Interconnection Plan and has been in continuous doubt for the detailed operation plans of BRI.8 However, in the first two years after Asia Investment Bank is established, it has released 4.3 billion US loans accumulatively. Among them, over 1 billion flowed to India9 and India becomes the most benefited from BRI. Therefore, India stays closer to the US in terms of military security while chooses to cooperate with China in terms of economics. The doubts for BRI, no matter from the US, the countries, or great powers along BRI, are basically concerns for potential political and military influence of China in such a China-dominated investment construction, or even more, deeper concerns over China’s regional influence expansion and political value output. These concerns may possibly turn into specific actions or become important potential risks for infrastructure investment of BRI under some special circumstances. This deteriorates the pan-politicization of economic problems as well as leads to high risks of infrastructure investment or even accelerates the pace of domestic industrial structure losing balance, further intervenes domestic economic reform pace and delays opportunities of domestic industrial transformation and upgrade. We should be very cautious about the potential chain risk mechanism which turns international political risks into domestic economic risks and worsens social risks. Key Measures to Handle Chain Risks How to deal with chain risk of infrastructure investment in BRI? The best measures are to assert systematic control over chain risks from both the source and the process. Because risks caused by low return rate of infrastructure investment are of chained mechanism, specific and systematic measures are to be taken step by step to prevent systematic risks from simultaneous breakout and mutual triggering. BRI have strategic goals: domestically help promote domestic industrial transformation and upgrade, and internationally promote global economic new order under the background of Sino-US trace conflicts. The key to achieve the two goals is if China can accurately mitigate risks and effectively handle challenges under so much uncertainty, that is, if China can turn risks and challenges into development opportunities. To handle the low return rate of infrastructure investment, we can attract funds from other countries and private sectors to share risks jointly through innovative investment and fund raising. To address the problem of unbalanced fund ratio of the 8 Peter

Cai, “Why India Is Wary of China’s Silk Road Initiative”, see https://www.huffingtonpost. com/peter-cai/india-china-silk-road-initiative_b_11894038.html. 9 Phoenix Business Daily, Foreign media: India has become the most benefited country of AIIB and has accepted over 1 billion USD loans”, https://finance.ifeng.com/a/20180319/16035232_0.shtml.

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Chinese government, we can cooperate with influential enterprises of invested countries, third parties and international financial organizations to increase the penalty cost of the invested countries. If there are multi parties to participate in the investment and fund raising, the problem of unbalanced fund ratio of the Chinese government will be addressed. To prevent foreign exchange reserve loss, we can reduce China’s foreign exchange consumption through promoting CNY international consuming. To reduce doubts from the invested countries and developed countries, we will turn bilateral cooperation into multi-lateral so that more parties will get involved to share responsibilities as well as profits. As to production capacity shift, Chinese government should actively accelerate its domestic industrial structure adjustment so that BRI can become the media or promoter of domestic industrial transformation and upgrade. Excessive low-quality production capacity cannot be shifted elsewhere, that means, China is helping the countries being invested to establish their own high-quality production capacity through BRI. The following will propose detailed effective solutions to chain risks. 1. Innovate PPP mode to improve investment profit To address low return rate of infrastructure investment, innovate investment and fund collection cooperation mode. For example, innovate PPP to improve investment profit, revitalize private capitals to make it profitable and involve more countries into BRI. The core of innovating PPP mode is to ensure and improve investment profit of infrastructure programs. To be more specific, try to undertake the task from the following aspects. First, return or reduce taxes. A good infrastructure investment will bring active overflow effects in the areas being invested and this will bring to the local government more tax income such as income tax and accession tax. If the overflow tax income is returned to private investors, the return rate of infrastructure investment will be improved a lot, which will increase the enthusiasm of investors’ participating in infrastructure investment. Second, the government provides certain warrant in high risk programs, based on clear risk sharing mechanism. Countries along BRI have great variety in political situation, infrastructure investment may come across unexpected risks such as government shift, cost increasing and estimated profit reduction etc. In PPP cooperation, private investors will take every possible measure to mitigate risks and they may also shift risks to public sectors. Therefore, it is important to establish risk sharing mechanism between public and private capitals. The government shall provide certain support to those private investment that cannot gain reasonable profit to reduce investment risks of private capitals. Third, bundle cross-country infrastructure construction with business programs along BRI. Since the return rate of infrastructure investment is very low, bundle it with those business programs with higher return rate so as to improve the overall investment return rate. In this way, the fund collection competitiveness of infrastructure construction can be increased.

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Fourth, invest directly in CNY to reduce exchange rate fluctuation risks of USD and currency of the countries being invested so as to promote CNY internationalization and mitigate currency risks of domestic private capitals in BRI infrastructure construction.10 Fifth, bring the dominant role of AIIB into full play to promote the securitization of cross-country infrastructure assets and establish corresponding security transaction mechanism so as to set up platforms for private capitals to participate in BRI infrastructure construction. 2. Improve AIIB Operation Mechanism to Attract more Participants To mitigate potential risks of unbalanced government funding in B&R initiatives, start from financial organizations to improve AIIB operation mechanism, use this as a breaking point to attract more countries to become members of AIIB and more capitals into the construction of AIIB. To improve AIIB operation mechanism, the core is to strengthen the cooperation and operation mechanism construction of AIIB. To be more specific, start from the following five aspects: First, work on more reasonable loan standard, considering the variety of loaning countries in Asia as well as the concerns from funding countries in Europe and other regions. However, it certainly should copy the so-called “highest standard” of the World Bank, IMF and ADB. Some countries with low administration capability and frequent corruption are more likely to overestimate the economic effects brought by large infrastructure projects, however underestimate the long-term social cost of paying back the loans. It might be difficult to collect loans from these countries.11 Therefore, AIIB shall lay down its loan standard cautiously. Second, establish a compact and transparent organization for AIIB. A large organization with complicated process and harsh standard is usually the problem of traditional financial development organizations. If AIIB can be compact, efficient, and transparent, it can not only prevent corruption but also potential conflict of interests between member countries of AIIB. In this way AIIB can be widely recognized because it does not have all the problems of traditional financial organizations. Third, keep good relationship with other financial development banks such as World Bank and ADB. Some opinions think that AIIB is to compete with World Bank and ADB or even the international economic orders led by the US. AIIB overlaps with World Bank and ADB in terms of functions and funding scope, however, they can cooperate in fund raising and technology consultancy through mutual funding, market cooperation and field coordination to mitigate competition and achieve double win. Fourth, position “Knowledge” Bank higher than a funding raising organization. The weak political system and poor administration in developing countries are the main reason for their slow economic development and lack of capitals is usually a secondary reason. AIIB, while providing financial support, shall focus more on 10 Lin

and Wang [3]. Rogoff, “Will China’s Infrastructure Bank Work?”, https://www.theguardian.com/business /2015/apr/07/will-chinas-infrastructure-bank-work. 11 Kenneth

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sharing the best methods and technology of Asia’s infrastructure construction across countries. This will be helpful to collect loans and to carry out projects in an effective and continuous way. Fifth, accelerate CNY internationalization. China’s Special Drawing Rights (SDR) in ITF enables a golden opportunity for CNY internationalization. Therefore, to promote CNY internationalization in BRI can alleviate domestic and international foreign exchange reserve pressure, and reduce USD exchange risks and currency mismatch risks. 3. Establish Overseas Investment Profit Protection Mechanism in BRI The principle of BRI initiative is joint discussion, joint construction and joint sharing. This means not only sharing achievement, but also responsibilities. To establish overseas investment profit protection mechanism in BRI can be an important carrier of investment cooperation between countries along BRI and an important guarantee to protect overseas investment. The core of establishing overseas investment profit protection mechanism in BRI is to provide security guarantee for the investment in BRI through institutionalized measures. To be more specific, we can start from the following four aspects: First, establish overseas investment insurance system. The US started overseas investment insurance system in implementing Marshall Plan and established in 1969 The Overseas Private Investment Corporation (OPIC) led directly by Department of States. The system regulates that all America citizens, corporations, partnerships or other entities, or foreign corporations, partnerships and entities at least 95% owned by America citizens, corporations, partnerships or other entities can apply for insurance from OPIC for their qualified investment in the countries and areas which have signed bilateral investment protection agreements with the US. The insurance OPIC covers includes foreign exchange insurance, expropriation insurance and war insurance. The three categories of insurance can be applied together or separately. Once political risks being accepted for insurance happen, corporations accepted for insurance can get 90% compensation from OPIC while OPIC obtains their subrogation right and can ask for compensation from the countries being invested according to the subrogation right articles in the bilateral investment protection agreements. Second, work on domestic investment protection laws. Though domestic laws cannot be enforced outside China through Chinese legal enforcement force, it provides bargaining powers in handling overseas interests conflicts between countries. What’s more important, along with the enhancing capability of China in participating in making rules for international affairs, domestic laws are helpful to China for judicial remedy or taking measures for international issues. Internationally, keep pushing bi- or multi-lateral legal agreements to provide effective and efficient judicial remedy for the legal rights of involved parties both domestic and international. Third, bring into full play China’s influence in multi-lateral organizations. China, as BRI initiator, enjoys a bigger saying in AIIB and Silk Road Fund. In addition, China also has a higher influence in multi-lateral organizations such as Shanghai

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Cooperation Organization and APEC. Bring into full play China’s influence in multilateral organizations to promote free trade and reduce potential trade investment barriers for China’s overseas investment. Fourth, enhance security powers. Sea security powers construction can be enhanced from nation level and private level. From nation level, strengthen antiterrorism and anti-piracy military cooperation with countries along BRI to combat the “Three Forces” along BRI; from private level, China can learn from overseas private security protection mode of the US to support a group of international security enterprise so as to provide security ensuring service. Ensure all activities comply to laws of the host countries and international laws and ensure irresponsible activities out of disorders and messy administration of private security service companies won’t happen. 4. Push Creative Industrial Shift to Mitigate Industrial Hollowness Risks Push China’s creative industrial shift through BRI can avoid problems that happened in the history of developed countries when they accomplished their industrial shift to developing countries, that is, domestic industrial hollowness. The core to carry out China’s creative industrial shift is to ensure the feasibility of production capacity cooperation in BRI. To be specific, we can start from the following four aspects: First, avoid the old path developed countries had followed in their industrial shift. Based on the dynamic evolving of economic development, one one hand help developing countries realize their self-sustained development; on another hand, promote domestic innovation. Second, sustain the core competitiveness of domestic advantageous industry. Keep sustaining domestic advantageous industry especially the core competitiveness of enterprises within domestic industries to prevent regional industrial hollowness while shift China high-quality excessive production capacity. We should learn from the re-industrialization strategy of developed countries. From the perspective of domestic industrial shift and international production capacity cooperation, industries of higher industrial ladder in East China coastal areas should shift to mid and west areas of China or overseas areas (international production capacity cooperation) according to industrial ladder shift theories. However the total production capacity and capital is comparatively fixed, international production capacity cooperation may affect domestic industrial shift. Therefore how to balance between the two aspects is very important. Third, be cautious about which industry we choose to shift the production capacity. We need be very cautious about the shift of production capacity of manufacturing industry because it is non-substitutable. For example, we can choose to shift the production capacity of export-substitution manufacturing industry which cannot be manufactured domestically and that of the advantageous manufacturing industry that can utilize non-substitutable manufacturing elements of host countries. Fourth, be cautious about the choosing of host countries which China will be cooperating in production capacity. We can consider the following three aspects: economic development, industrial basis, and risk control level. In terms of economic development, China can choose those developing countries with less developed economics.

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China can provide these countries development experience as well as shift some high-quality excessive production capacity. In terms of industrial basis, China shall first choose those host countries with certain level of manufacturing development, corresponding infrastructure and talents, and healthy public service. In terms of risk control level, China shall first choose those countries with controllable risks such as with healthy political ecology and social stability to carry out our international production capacity cooperation. 5. Improve Sino-US Strategic Trust and Eliminate Strategic Doubts of Countries along BRI Doubts of the US and countries along BRI are results long accumulated due to their distrust of China, especially the US. To eliminate their doubts, start from the following three aspects: First, actively initiate public diplomacy to improve the understanding of the BRI among countries along BRI and to eliminate noises about “China Threat” and “China Pillage”. Strategically China shall have clear short, mid and long-term public diplomacy goals and methodology for countries along BRI. China can focus on the planning and execution of cooperative and competitive public diplomacy and be well prepared for any public diplomacy for conflicts and confrontations while keeping on the coordination roles of normal and crisis public diplomacy. Second, cooperate with related international organizations. AIIB and the Silk Road Fund are the frontier entities of the BRI, and they are also regarded by the US as tools for China to fight for saying for international orders. It is true that AIIB is competitive with ADB and World Bank in some ways. However, AIIB should not and cannot replace ADB and World Bank completely. They are more complementary than competitive. To bring AIIB into full play and to cooperate well with ADB and the World Bank will be helpful to develop business and to reduce conflicts, then to enhance mutual trust between China and the US, between China and countries along BRI. Third, cautiously handle conflicts with adjacent areas. The sea conflicts between China and east and south Asia countries not only impacts the relationship between China and countries along BRI, but also provides opportunity for intervening of the US. China should expand its conflict control mechanism in adjacent areas and limit the impact of bilateral issues to its minimum. From a broader macro background, besides the above mentioned specific strategy, to promote the success of the BRI in the following 5 years, China should pay more attention to Sino-US relationship adjustment, opportunities and challenges brought by the change of global economic situations. No doubt, the BRI will embrace its brilliant success in the following five years through systematic solutions to address chain risks, through institutionalization to attract more countries, enterprises and organizations into the BRI, through focusing on domestic industrial transformation and upgrade and through improving international investment efficiency. As an initiative promoting long-term economic globalization, the BRI will enter a sustaining and stable development phase if it successfully overcomes hardships and obstacles

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in the following five years. The bottom-up promotion will become successful and smooth. Therefore, the BRI will change the development history of human beings because of its “Co-construction and co-sharing” theories and write a “growth story” about a developing country breaking globalization paradox.

References 1. Qiu Zhaoyi, Fu Liqin, “Domestic Private Capital and Cross-nation Infrastructure Construction in the Belt and Road Initiative”, China Opening Herald, No. 6, 2016, pp. 35–38. 2. Joe Ryan, Seymour Melman, Zhou Yebin, “Industrial Hollowness and Financial Breakdown of the U.S.”, Business Weekely, No. 11, 2009, pp. 46–48. 3. Lin Lefen, Wang Shaonan: “the Belt and Road” Construction and CNY Internationalization, World Economics and Politics, No. 11, 2015, pp. 72–90.

Reshaping Views on China: A Study on Chinese Soft Power in the Context of BRI Shu Li and Liang Wu

It was in 2013 that President Xi Jinping proposed the Belt and Road Initiative (BRI) to the world. Over the past six years since BRI was pronouced, China has become more proactive in its engagement with the world and also impressed people around the world dynamically with its open and confident attitude and a vibrant image, and hence gained active supports and responses from the international community. With the progress of all-sided cooperations, the initiative gradually produces some desirable effects, and it is getting more attention. However, the mainstream media in international communication, in thrall to the politicians of the United States, tend to make a negative evaluation of the initiative, and focus their reportage exclusively on the obstacles and challenges China faces in the course of promoting a new international order to be established. A pack of allegations and false accusations such as “plundering”, “hegemonism”, “damaging”, “threatening” and “colonialization” have been planted by them on BRI and seriously affected how the public of the countries along the BRI route perceive China, in effect hindering the overseas implementation of the initiative and tarnishing China’s state image in the world. Some western commentaries, especially those in the United States, assume that the essence of BRI is to kick the United States out and establish a brand-new international strategic pattern centered round China, reshape the international political, economic, and cultural order and expand China’s global influence. In fact, people holding this kind of speculations ignore the important fact that China’s blueprint for the initiative has never excluded the United States and its Western allies from the plan; instead, China hopes to maximize the utility of relocating resources to the benefit of all countries in the world and to achieve that end, all countries need to join efforts as a joint endeavor to address the unexpected new challenges on the path. Unfortunately, those distortive allegations have made great damages on the Chinese national image that is still in the shaping. S. Li (B) · L. Wu National Institute of Innovation and Development, Tongji University, Shanghai, China e-mail: [email protected] © The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2021 H. Men and X. Xiao (eds.), Report of Strategic Studies in China (2019), https://doi.org/10.1007/978-981-15-7732-1_9

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In response to the actual damages made on China’s reputation, BRI, as a state-level cooperation initiative proposed by China, is both a representative research sample and a rare platform to observe whether Chinese national image can be recognized and understood by other countries, and how it can be effectively and positively shaped by China itself. Therefore, the implementation of China’s solution represented by BRI depends not only on a large amount of capital and technical investment, but also on a public recognition of international community. Therefore, it is an exigent mission to integrate the international and domestic new-style communication forces and build up the soft power of the Belt and Road discourse.

1 Theoretical Framework of the National Image: Domestic Construction and International Recognition Conceptually speaking, the theory of national image mainly explores the impression of the political elite and the public of one country on another country. Many scholars have made contribution to the study of the concept of national image itself. Among them, some scholars believe that the so-called national image refers to a comprehensive impression made by a country and its public during its interaction with other countries in the political, economic, cultural, military, and scientific and technological fields. The formation of a national image is affected not only by macro factors such as national strength and culture, but also by micro factors such as the milieu of personal contact and personal characteristics. It can be stated that the process of forming a national image consists in a combination of domestic variables and social construction. If viewed from each perspective, the concept of national image and its formation should have different interpretations and paths, but in general, they all start with theoretical researches and end up in practice and policy. Although theoretically considered, the political, economic, cultural, and social elements that make up the national image can be dismantled, screened and judged one by one, in fact, as components of the overall national image, those elements are not isolated from each other. In concrete practice, countries will find it difficult to separate the elements in the construction and dissemination of national image, and they must be considered in a systematic framework as a whole. In terms of its goals and functions, the construction and dissemination of the national image is directed at foreigners. For foreign people to truly take in the ideas and wishes that a government wants to express, it is necessary not only to impart information in person-to-person and face-to-face manner, but also to make the best of international communication as an exchange to understand, learn and influence the public opinion of target countries and to reduce misunderstandings of their governments and people about the intending country as much as possible. In this way, reversals or even retrogression in the relations between the target and intending countries can be avoided, the positive image among the public of these countries can be established, and the national and international interests are further promoted. Of

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course, the internal shaping of the national image is also an important subject, but it is relatively not as difficult to put into practice. Therefore, in the international public opinion environment, countries are trying to build their own good national image, which enables them to obtain greater benefits with fewer hitches in other countries and international organizations at a lower cost. When the national image of a country is mainly constructed and disseminated to the outside world, it can be said that the national image in that context is the “international image”. Based on this concept, the research shows that the international image of a country is the dialectical unity of the “national image” and its “image in other countries”, as the two sides of a coin. Therefore, it is not only necessary to actively shape the native image, but also to obtain the understanding and recognition of other countries. In other words, only by forming an image that correlates at home and aboard as an organic whole can one country’s international image be positive, allsided and convincing. Based on the above analysis, the core issue of this article is to review China’s international image in two dimensions: at first, do “other countries” understand and accept China’s international image? Secondly, how should China actively shape a sound international image.

2 Empirical Research on China’s National Image and Other Countries’ Views of China 2.1 Public Opinions on China in the Countries Related to BRI Foreign media and international public opinion environment directly reflect the degree of acceptance and recognition of China’s national image by other countries, and BRI largely represents the new global governance plan proposed by China. Therefore, a study of media’s attitudes towards China in relevant countries can give a glimpse of the image of China in the eyes of other countries. According to statistics, there are 65 countries along the Belt and Road, including 13 East Asian and Southeast Asian countries (with Mongolia and ASEAN countries included), 18 West Asian countries, 8 South Asian countries, 5 Central Asian countries, 7 CIS countries and 16 Central and Eastern European countries. Meanwhile, the scope of the Belt and Road countries is much broader than that of the countries along the route. As of August 2019, China has signed 195 Belt and Road cooperation documents with 136 countries and 30 international organizations. In order to study the media’s reports and public opinion on China related to BRI specifically, the research team preferentially selected 16 countries as representatives in the world, including the United States, Russia, Japan, the United Kingdom, France, South Korea, India, Germany, Singapore, Thailand, Vietnam, Canada, Israel, Australia, Nigeria, Egypt and other countries. In selecting those countries, factors

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such as the different regions and the influence of their international public opinion were comprehensively considered. At the beginning of the research design, 40 influential traditional media, We Media and think tanks were identified in the above 16 countries, based on foreign materials and related reports. In specific research, the main classifications include media types (traditional mainstream media, mainstream online news sites, political and economic elite social media accounts, major think tanks), political tendencies (left, right, neutral), attitudes to China (pro China, anti-China, vague attitude), media scale (number of audience/readers, whether it is global media), media nature (professional, comprehensive), and capital relations. Based on classifications above, the key media in each country are analyzed to form an objective understanding of specific key media, and a basic understanding of overseas news media’s China-related reports. By selecting the list of corresponding media articles in the past three years and sorting them out by time, a sample of 100 news reports was selected for coding analysis, and a database was initially formed. From the analysis of the existing coding analysis, the “anti-China tendency” of mainstream international public opinion represented by the US can be obviously observed, and the attitude towards BRI is not optimistic. None of the 40 mainstream traditional media, online platforms, social network accounts of political and economic elites, and major think tanks in the United States is clearly friendly to China. Additionally, more than half of them are clearly anti-China. Relevant research also shows that whether mainstream media publish articles and interviews with Chinese leaders has nothing to do with their attitude toward China. Eight of the top 10 mainstream traditional media in the comprehensive ranking have published articles and interviews with Chinese leaders in the past three years, including the Wall Street Journal, Washington Post, Los Angeles Times, New York Times, etc. Among them, only Boston Globe and Star Tribune have no records of such articles. But except the two media’s neutral attitude toward China, five of the remaining eight are more clearly “anti-China”. In terms of web-based news websites, it can be observed that seven of the top 10 US media in terms of circulation and page views are clearly unfriendly to China. Compared with the United States, the attitudes of its allies are different. Although not generally friendly to China, most media in Britain, Germany, Canada, Australia, South Korea, and Japan remain neutral on most China-related issues. Although they rarely praise, they are not completely full of criticism. Among them, more than 13 of the 20 mainstream media in Japan are basically neutral on China-related issues. The anti-China vanguards are mainly Yomiuri Shimbun and NTV News. Although France is one of the Western allies of the United States, its media’s attitudes towards China have been greatly divided. Although 40% of the major media have anti-China attitudes, 25% of the media are friendly to China, which is in accordance with their general perception of China. India is the closest of all the allies in their attitude towards China to the United States. More than one-third of mainstream media have a clear anti-China tendency, and the media that are friendly to China are almost impossible to find.

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On the friendlier side are, in turn, Southeast Asian countries, African countries, and Russia. The media in Vietnam, Singapore, Thailand, Egypt and other countries generally have less negative sentiment towards China. Only a small number of media in Thailand and Singapore are clearly anti-China. Although a quarter of the media in Nigeria are anti-China, there are also the same number of media that are clearly pro-China. The Russian and Egyptian media are generally friendly to China. More than a quarter of the media are clearly friendly, and all the remaining media are at least neutral. Such a proportion is already an ideal result in the current overall communication of international public. Based on the analysis of existing data, the media of the countries related to BRI are not optimistic in their attitudes towards China. China’s rapid development and construction achievements since the reform and open-up have not been justly and fully affirmed. From the United States and its allies, to Southeast Asia, Africa, and Russia, their attitude ranges from pro-China to anti-China. The attitude of the media of the countries related to BRI towards China is still affected by their geopolitics and ideology, showing a more obvious tendency spectrum. Under such circumstances, it can be stated that in the process of further promoting BRI, the international public communication still has much room for improvement.

2.2 Inadequate Information Exposure About BRI and Counter-Measures to Address Negative Public Opinion With “One Belt One Road” and “Belt and Road Initiative” as keywords, and Google search tool for the “Belt and Road” related news from September 2013 to April 2019, the sample analysis can corroborate that related news is generally on the rise. Especially since the Belt and Road Forum for International Cooperation was held in May 2017, the heat has begun to surge. Before the forum was held again in April 2019, the heat has grown rapidly. It presents the following characteristics: First, from the perspective of global search, China and Southeast Asian countries rank first in the world for their attention to BRI, and other developed countries and some developing countries are also more concerned about this. From September 2013 to April 2019, the heat of reporting the Belt and Road generally showed an upward trend. From 2013 to 2015, the Belt and Road attracted relatively little attention worldwide. It started to increase in June 2015, and the heat surged in May 2017. Then in April 2019, it surged again. Second, the more projects the countries and regions have, the more attention is paid to the relevant information of the Belt and Road. In Saudi Arabia, Kazakhstan, Russia, and Southeast Asia, the Belt and Road is in a hot search status, indicating that these countries and regions have a greater demand for information on the Belt and Road projects.

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Third, in the relatively poor communication environment the amount of information is comparatively lower in exposure. The Belt and Road projects that Chinese companies actually participated in cover six continents in the world, with a total of close to 3120, but the coverage of media reports is very limited, not in proportion. Only 215 projects with relevant media reports were found, accounting for only 6.89% of the total. Most projects are carried out in a “done-without-saying” or “do-more-say-less” way. Fourth, through statistical comparison between the number of projects under construction or completed in the Belt and Road cooperating countries and the number of news reports, it was found that Saudi Arabia, Kazakhstan, and other countries that signed the Belt and Road cooperation agreements had various types of construction projects and proceeded faster. In return, there are also more corresponding news reports. In contrast, in Africa, South America, Oceania and other places, although there are many projects under construction, the amount of related reports is very small, and the types of reports are mostly newsletters, and many manuscripts are repeatedly issued with few items deeply reported. The contrast between the strong information demand and the relatively weak information supply has led to the obvious “information hunger” in the countries along the Road. The information channels for countries to obtain relevant projects on the Belt and Road are still quite inadequate. Almost all the local business men and politicians complain about information insufficiency. The research team selected 25 major state-owned enterprises that participate in the construction of the Belt and Road as a sample. After sampling and analyzing the overseas communication of the state-owned enterprises in overseas social media and traditional media, it can be found that each company demonstrates quite different strength of overseas communication. The general dissemination effect is not satisfying, and they lack problem-solving mechanisms for dealing with negative news. As a result, the actual implementation of the Belt and Road project is inconsistent with the image of international public opinion. In addition, in order to detect the value trends of foreign media reports on the Belt and Road project, the research team analyzed ten western mainstream media including the Associated Press, BBC, Reuters, Financial Times, and Wall Street Journal, and obtained 5,748 pieces of news related to the state-owned enterprises, 2202 pieces of which are related to Reuters. In 2018 alone, there were 455 pieces, but nearly half of the news covered nothing but environmental pollution, debt, backward output capacity, financial corruption, and lack of transparency of the project. Faced with a large number of speculative and negative reports from foreign media, China’s offshore enterprises rarely responded effectively. Quite a few companies held the view that “facts speak louder than words”, and believed that the success of the project was based on actual operation. Therefore, they were not willing to invest too much resource in media relations and public relations. Consequently, they have almost given up the right to speak publicly, and there is generally a lack of response to negative information. They are prone to neglect the social responsibility for building the national image.

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3 Views of Other Countries and Changes in China’s National Image: Case Study of US Public Opinion BRI, as a new concept, has wide connotations and an extensive significance to China and the whole world. One important role it undertakes is to help China build up a positive national image. It is hoped that it will promote China to enter the world with a new outlook and make the world accept China’s national image. However, this does not proceed without hitch. From the perspective of the United States, BRI is an attempt to reshape the international political ecology, to establish an international political structure headed by China, and to challenge America’s hegemony in the world. It can be observed that the different attitudes from the former US President Barack Obama to the current President Trump on BRI have directly influenced the tendency of US and even Western public opinion on the initiative and the image of China. The United States has enjoyed a powerful voice in the world’s public opinion field since the WWII, which has an important impact on BRI and the image of China. Defaming or even banning the initiative will have a significant impact on the relevant countries’ decision-making and public perception. Therefore, it is imperative to sort out the manifestations of this about-face, to cope with it effectively through the construction of the Belt and Road and institutionalized cooperation, to tell Chinese stories so as to make them better heard and reshape the image of China.

3.1 BRI to the Obama Administration When the concept of BRI was just put forward, the United States did not raise a clear objection. Judging from the statements of the Obama administration officials, they did not consider this initiative as an important issue at that time, so their attitude was anything but hostile. Actually they brushed it aside. From 2014 to 2016, the prime focus of American public opinion had been on critiquing China’s so-called negligence of “democracy”, “freedom”, and “human rights”. With a further look at the focus of American public opinion from 2014 to 2016, it can be found that “China” was not the most important issue to U.S. When the Western media such as those of the United States referred to China, all the arguments focused on its so-called neglect of “universal values” such as “democracy”, “freedom”, and “human rights”, making those criticisms to some extent like a daily grind but there is no real openly offensive action. Therefore, in the pre-Trump Administration, China’s issues more often appeared as a card on the table. Public opinion in both countries seems to be accustomed to a paradigm: some American politicians, when in need to show their tough stance of foreign policy, would publicly voice their provocative speech against China, which was often referred to as “playing the Chinese card”, but did not hinder political, economic and trade communications between the two countries.

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3.2 BRI to the Trump Administration After Donald Trump took office, the United States’ attitude toward BRI began to turn cold and frigid, although it was still a process of cumulative changes. At the first Belt and Road Forum for International Cooperation held in 2017, Trump sent Matt Pottinger, a senior Asian affairs official at the White House, to lead the US delegation. At the forum, Pottinger declared that US companies were ready to participate in the Belt and Road related projects and would provide a lot for related projects, saying that the United States has a long and successful track record in global infrastructure development. However, this positive statement did not endure long, and the anti-China voices of senior US political officials and the State Council started to mingle, pressing ChinaUS relations to gallop in a negative direction. Less than half a year after the closing of the first forum, Jim Mattis, the ex-Secretary-of-Defense of United States, said at a Senate hearing that there are many “belts” and “roads” in the globalized world, but no one country can directly issue an order of “one belt and one road”. Since then, the rhetoric of American political circles toward China has become increasingly tough and unified. Trump began to affirmatively express opposition to BRI at the Pacific Rim Leaders’ Summit at the end of 2017 and criticized the Belt and Road related projects as “a country-led initiative with many conditions attached”. In order to curb China’s Belt and Road Initiative and global planning solutions, the United States has formulated a series of tit-for-tat measures to respond, including throwing out the concept of the “Indo-Pacific Strategy” and reorganizing the relevant financial institution system to support the infrastructure development and construction in the Pacific region countries like India. It can be seen that its core is to provide developing countries with a US version of solution, replacing and eliminating the influence of the Belt and Road in the countries along the Road.

3.3 Wonted Opinions and Cases of US Public Opinion Criticism on BRI As far as criticism on the Belt and Road is concerned, the remarks of Bernald Adolph Schriever, Pentagon’s senior official in the Asia–Pacific region, in his 2017 speech, best speaks of the bigotry—“The results of BRI, we have seen, are essentially showcasing predatory economics.” Subsequently, Rex Tillerson, the then US Secretary of State, compiled a list of China’s Belt and Road related projects, claiming that China’s infrastructure projects did not promote local employment in recipient countries. Instead, they increased “huge debt” for those countries. After such a statement was formally issued, there was one more set topic for the press at the moment in the realm of Western media: how BRI made the countries along the Road bear huge debts, and then have to agree to other requirements offered by China in the event of failing to repay. It was even matched by accusations that

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the governments of the countries along the Road fell into rampant corruptions when receiving China’s aid, and it prompted China to “oppress” local governments to agree to various “inequality treaties”. US media have preset positions and issues in China-related reports. Turning a deaf ear to facts, they are liable to advertise their distorted and preconceived views, which becomes their run-of-the-mill practice in recent years and nothing new to the world. Cases in point include breaking news to such incidents as the British smuggling container truck that happened at the end of October 2019. In the migrant smuggling case, 39 people died in appalling agony. When the world were mourning their death and appealing to discover the true culprit(s) and destroy the chain of stowaway profiteering across the Eurasian continent, CNN published an article that was entitled “Why would people from China, the world’s second-biggest economy, risk their lives to enter the UK?” In the article, it was presumed that the 39 people who died tragically were all Chinese, and then the author began to make a pretentious analysis thereby. According to that article, the emigrants from China were not just the poor but also from all classes. The reason why those immigrants risked their lives to leave China was inequality in the social development or even political oppression there.1 However, the fact is that none of the 39 victims came from China. They were all Vietnamese. After that, the author of this article, Amy Lewis, continues to write other articles, and CNN has not made corrections and statements, let alone apology.

3.4 Changes in U.S. Public Opinion Fields Leading to Impaired Image of China During the Obama Administration, China was interpreted as the following image in the United States and even in the Western world as a whole: a fast-growing Asian giant, lacking basic respect for “universal values”, with its people repeatedly “brainwashed” and its generally low living standards; in China, there is no “free speech” at all. The image is so ingrained that westerners who come to China to study and travel are often dumbfounded and feel that their values collapse. It is difficult for them to imagine that China, which has been told to be “authoritarian, dangerous and backward”, turns out to be a country where modernization and digital convenience, governance capacity and security of most cities have far surpassed those of many western countries. Unfortunately, the number of the westerners who can make it to China to experience it themselves is small in proportion. Their experience and feelings cannot be quickly spread in the Western world. It is almost impossible to rely on them to reverse China’s international image because the mainstream Western media rarely reported China’s rapid development. In the deep-rooted Western discourse 1 CNN,

“Why would people from China, the world’s second-biggest economy, risk their lives to enter the UK?” https://edition.cnn.com/2019/10/24/uk/essex-truck-deaths-chinese-gbr-intl/index. html, Oct. 25, 2019.

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systems, China repeatedly appears in western publicity as “Fu Manzhou” even in the twenty-first century. It can be said that in the Obama Administration and the period before, although China has not been taken so seriously as the largest or even the only rival of the United States, it has been demonized as much as possible, and this methodology in western publicity has become even more dexterous now. One to two years after Trump took office as president and launched a trade war with China, China’s image in the United States and the Western world has changed again as compared to that before: “arrogant” China relies on “stealing US core technology” to develop rapidly and becomes the number one enemy of the United States. The loss of employments and the decline of manufacturing industry in the United States are ascribed to Chinese who have stolen jobs and opportunities, and earned the wealth that the Americans should have. That concocted image is superimposed upon the traditional “authoritarian” impression to form a completely distorted portrait of China. Therefore, in a world that is gradually becoming unilateralized and deglobalized, Chinese people are being treated unfairly all over the world. Facing with these complex and challenging new circumstances, even if it is wronged, China cannot detach itself arbitrarily from the world and close up the country again. “Self-seclusion” will cause China to lose its vast global market, to lose the opportunity to have meetings of minds with the world’s top experts and industry elites, and eventually forgone the great route of reform and open-up that have yielded phenomenal achievements in the over 40 years. At this stage, China needs to deepen reforms and expand its open-up with more exertion than ever before. It also needs to tell Chinese stories more cogently and rebuild and spread a good international image.

4 Reasons for the Distortion of BRI and China’s National Image In addition to the stereotype of “strong west and weak east” in international public opinion, the increasing risks and uncertainties in international political and economic realms in recent years are also an important reason for BRI to be demonized.

4.1 “Debt Trap” Anxiety Caused by the Uneven Global Development In the process of advancing BRI, China has always faced an important issue. That is, most of the target countries for cooperation and investment are underdeveloped countries in the third world, including Southeast Asia, Central and Western Asia and Africa. At the beginning, Chinese companies’ investments were often locally welcomed. However, since infrastructure projects tend to have slower profit return

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and longer cycle, coupled with changes in local political and economic conditions, profitability cannot be guaranteed. In this case, the target countries are prone to be affected by the public opinion in the West about the so-called “debt trap”. In 2017, China Gezhouba Group acquired the Budhi Gandaki hydropower project in Nepal with an installed capacity of 1200 MW and a value of US $2.5 billion. But in the more than two years after that, incessant problems occurred frequently. Less than half a year after the contract was finalized in 2017, the then Nepalese government tore up the contract. It did not decide to return the project to the Gezhouba Group until the new government came to power in February 2018. As for the follow-up operation, the future remained uncertain. Officials from the Ministry of Energy of Nepal have told the South China Morning Post that the government faces strong pressure and accusations from the opposition, including the re-granting of the project to the Gezhouba Group without a competitive bidding process, as well as the immense financial and debt pressure on a small country like Nepal to form political control over it. This situation is not alone, similar cases include Malaysia’s East Coast Railway, Myanmar’s Deepwater Port and Pakistan’s railway construction loans.

4.2 Western Misgivings for Changes in the Geopolitical Status Quo Although BRI is not China’s “hegemony” plan, one of its important manifestations is that it will partially disturb the existing world order dominated by the United States and its Western allies. As BRI aims to cooperate with the countries along the road and share the yields of economic development, it will certainly have an important impact on this geopolitical status quo. For once a small country has good infrastructure built and gains investment projects and economic development, it will greatly improve its positioning in the surrounding area. For fear of breaking the deck, Western media hunt down and intercept BRI. Take the port co-constructed and developed by Sri Lanka and China as an example. The port of Hambantota is a maritime port located at the southern tip of Sri Lanka. The first phase of the project was constructed and managed by the Sri Lanka Port Authority but eventually mired in debt because Sri Lanka government borrowed heavily to build it but failed to operate it effectively. In the framework of BRI, China Merchants Group invested a 99-year lease in Hambantota Port in July 2017. This is a win–win partnership, but it has been attacked unanimously by the Western media, especially by the American media. For example, the New York Times criticized China from a military and political perspective in an article named “How China Got Sri Lanka to Cough up a Port”: “The transfer gave China control of territory just a few hundred miles off the shores of its rival, India, and a strategic foothold along a critical commercial and military waterway.” “The global investment and lending program amounts to a debt trap for vulnerable countries around the world, fueling corruption and autocratic behavior in struggling democracies.” “The case is one of the most

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vivid examples of China’s ambitious use of loans and aid to gain influence around the world—and of its willingness to play hardball to collect.”2 Similar attacks at first aimed to raise suspicion about BRI, then invented the so-called “solid evidence” of China’s supporting a “corrupt regime”, and finally ended up with clichés of China’s “intervening” in Southeast Asian affairs and its “military threat” in the South China Sea.

4.3 Across-the-Board Repudiation of BRI Resultant of the Poor Political Opinion Environment in the West The repudiation of BRI by the United States and other Western countries largely comes from their domestic political public opinion environment. There are various factors including history, culture and ideology that are constantly influencing the public opinion, but what should not be ignored is the bitter and grudging sentiment in the psychology of western countries to accept China’s rapid development in recent years, which has led to their forestalling denial of BRI. This inclination shows a more obvious sign of gaining increasing enforcement, that is, the United States has officially launched and gradually escalated the intensity of the trade war with China since March 2018. In order to fight for the support of the “silent majority”, Trump’s cabinet has gradually aimed at scapegoating China since 2017, and has begun brewing a “301 investigation” into China. The fundamental reason for the United States launching a trade war is to consolidate its domestic consensus, because the bi-partisanship in the United States has completely split up after Trump came to power. The public opinion is also divided into two distinct camps with the deepening investigation that “members of the Trump Campaign conspired with the Russian government in its election interference activities” and the extreme trend towards “choosing sides” has emerged. At this moment, China is almost the only issue by which a cross-party consensus can be reached, thus the last straw to clutch at. Therefore, with the thorough tearing-apart of the domestic politics and public opinion in the United States, the escalating trade war will not be closed, for a tough attitude towards China has become a new canon of “political correctness” in the United States. Even though some American elites are friendly to China, they are unable to speak up. In result, to some extent, it is difficult to distinguish which is the cause and which the effect: “the ever-increasing complexity of the trade war” or “unfriendliness of American public opinion on China”. In fact, the two factors correlate with each other, for it is always the “opinion”, not the “truth” that is prone to spread. Truth is far more difficult to tamper with than opinions, and opinions are always susceptible to various influences. Trump cabinet’s extremist system of expressions has given the “lost majority” a voice in the Internet Administration. American politicians and celebrities have found that being tough on 2 New

York Times, “How China Got Sri Lanka to Cough Up a Port”, https://www.nytimes.com/ 2018/06/26/world/asia/china-sri-lanka-port-hans.html, June 25, 2018.

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China can successfully divert domestic grievances, and the public love to hear stories like “Evil China Stealing the Development Achievement of the United States”. Such stories further give the elites reasons to solidify their tough stance on China, and eventually hinder China’s image from making international communication and turn it into a negative stereotype in the Western world.

5 Building the Soft Power of the BRI Discourse Now that it is exigent and imperative to reconstruct and disseminate China’s international image, we must observe the objective reality and the law of dissemination. In today’s world, the process of China’s peaceful development has become an indisputable fact. China has gradually turned from a dancer partner to one of the leading dancers in the international arena. It has turned from being a secondary member of the world family to one of the leading characters. The trade war launched by the United States exactly confirms this change. On the one hand, the “Chinese road” and “Chinese model” have become increasingly hot topics in the international community. On the other hand, the “China’s proposition” and “China’s action” have also increasingly affected the development and the change of the world. Therefore, the key is how to explain to the world more effectively that China’s development is a gospel of world development, and how to communicate with the world on an equal and mutually beneficial terms. China’s soft power is an important help to promote the construction of the Belt and Road. The implementation of BRI has been constrained by public opinion. If the misunderstandings of the initiative or stereotypes about China in other countries are not reversed, Chinese companies will have to carry on under very difficult circumstances, BRI may be resisted, and China’s international image will be seriously damaged. Therefore, it is extremely urgent to expand the Belt and Road agenda to include resources to efficiently integrate domestic and foreign media, universities, enterprises, think tanks and social organizations, and other emerging communication forces, and to use multiple communication channels such as big data, social media, advertising, movies, and literature to build the soft power of the Belt and Road discourse. It must be seen that, as a manifestation of a country’s soft power, China’s influence in controlling the right to speak internationally is still not tantamount to the status it should have as the second largest economy in the world. Chinese media, universities, research institutes and think tanks must also tap their own strengths and take it as their duty to construct international influence, gain the right to speak commensurate to the status of China as a great nation, tell Chinese stories to the world and rebuild a good international image for China. Given that the world’s public opinion generally agrees with China’s “powerful nation” image and expects China to take more responsibility, the focus of the Belt and Road international communication can shift from shaping the image of a “powerful nation” to creating and telling “good nation” stories to

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assure the world that the rising China will coexist in peace with the world and seek common development. First, multiple communication forces should be integrated to build a belt and road soft power system supported by multidisciplinary props. BRI is a far-sighted plan, and by connotation is also a political and strategic design, which comes in the field of international politics, whereas the international communication of BRI belongs to a category of journalism and communication; moreover, studies of discourse fall in the realms of linguistics. With such multidisciplinary background, the construction of the Belt and Road soft power system features a wide range of perspectives, multiple fields, multiple angles, comprehensiveness and so on. At present, China lacks cross-disciplinary integration study on the dissemination of BRI, and has not yet established a seamless whole-process system from theory to practice. By contrast, before the United States pronounces a major national (international) policy, it will usually conduct a comprehensive analysis of its political significance, strategic purpose, international influence, communication highlights, even viable agendas, work flows, routes, and communication language. Therefore, China should break the boundaries bewteen disciplines as soon as possible, integrate research and communication forces such as think tanks, research institutes, universities, and media, build a complete “Belt and Road” external communication research system, and make a top-level design from theory to practice. Second, social media platforms should be used effectively to build a threedimensional publicity matrix. A good image of a country ultimately depends on effective communication to the outside world, which in turn promotes its recognition and understanding by other countries. We should give full play to the disseminating role of the overseas social media, gradually achieve global coverage, and establish a full media matrix of overseas communication including corporate official websites, official We Media publishing platforms, overseas mainstream media and local media news reports, etc. so that we can enhance content-based interaction with foreign media and the local public. To shape the image of Chinese enterprises and Chinese people that is congenial to the local people, we can use overseas social media accounts for in-depth communication, for example, Chinese enterprises tell their lively stories about their brands, and employees can share their work experiences on personal social media accounts. Third, media topics for BRI should be set selectively. BRI is to convey to the world the concepts of peaceful development, openness, tolerance, and mutual benefit and win–win cooperation with other countries. However, the old-style Chinese media communications used to focus on politics (Chinese political system, Chinese road, Chinese model) and economic construction (infrastructure, trade reciprocity, product exhibition) and some other like areas, which have a stamp of “utilitarianism” stuck on. PR Newswire’s “2017 White Paper for Overseas Dissemination of Chinese Enterprises” shows that the themes of Chinese companies’ overseas news releases, including central enterprises, are relatively concentrated on “new products/services” and “exhibition information”, while “social responsibility” accounts for only 2%, and “environment” only 0.3%. To achieve real

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people-to-people communication, the agenda of the Belt and Road dissemination should add a lot more subjects of humanitarian concerns, more corporate social responsibility and national responsibility, such global issues as poverty eradication, public health, public welfare and environmental protection. Public service advertisements should also be targeted to seek the “maximum common denominator” concerns to the public. Given that the world’s public opinion generally agrees with China’s “powerful country” image and expects China to take more responsibility, the focus of the Belt and Road international communications can shift from shaping the image of a “powerful country” to showcasing a “better lifestyle”. Fourth, timely and forceful measures should be taken to respond to the malicious remarks of anti-china media. In the United States and other Western countries, there have been media that are extremely unfriendly to China for a long time. China has a long-term confrontation with them from the official level to the public arena. As early as the 2008 Beijing Olympic Torch Relay, overseas students voluntarily organized Anti-CNN protests and actions boycotting other anti-China media groups against their series of slanders spattered on China, during which one of famous online phrases was “Don’t be too CNN”. In the face of a harsh international public opinion environment, China’s official media, like “Russia Today” (RT) TV station, must firmly anchor in the center of Western public opinion, and fight back against the Western anti-China media’s vicious slandering in a way most viable in the west. Only when a “regular force” is stationed in constant preparation can the anti-Chinese media be timely refuted and get the slap in the face when they show their Achilles heel. Fifth, internet companies and products going aboard should be vigorously supported from diverse angles. As an unofficial force, Internet companies can go abroad to participate in the construction and dissemination of the national image, which can effectively strengthen the building of international communication capabilities and tell Chinese stories in a Chinese-Western way. Internet companies and their products, regardless of from China or other countries, are naturally endowed with the strength to use new ideas, new strategies and new methods to impact the younger generation silently and subtly. Products such as Tiktok have made a breakthrough in the global competition in the field of short video, and already make considerable influence. At the same time, Internet companies can carry abroad not only culture and entertainment products, but also lifestyles, habits and concepts. Therefore, we should give greater support to overseas Internet companies in terms of technology, funding, policy supervision and guidance, helping them indigenize and scalize their products, so as to take root and sprout overseas, and partake in shaping China’s positive national image locally. Sixth, china should establish an overseas media database and keep track of it, classifying and identifying different media. Under the circumstances that the construction and dissemination of the national image mainly rely on the media, one of the difficulties in carrying out related work is inadequate understanding of the opponents. Therefore, it is necessary to build contact with professional practitioners with rich media communication work experience and background in international political relations, establish and continuously update

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overseas medium databases, carefully classify and distinguish media of different countries and attributes, and observe their attitudes and positions towards China. Based on this, follow-up analysis should be carried out, with different corresponding strategies formulated, different methods, including joint voice, conversion efforts, exposure criticism, continuous suppression, etc., adopted in light of different situations, and different measures taken on media access policies and access to information resources. At the same time, because international public opinions about China often explode abruptly, the parties involved, including overseas companies, are prone to be caught off guard and let go the first-moment opportunity to make a voice and fight back. Experts from the media and academia should be organized to jointly compile a communication corpus that is directly related to BRI, and use it in the form of internal manuals as a reference to regular training for employees of offshore enterprises and institutions. It not only needs to cover the types of events and scene presets that may evoke international public opinion, but also needs to prepare a variety of plans about how to respond promptly and appropriately upon the advent of such international public opinion, to minimize the impact of vicious public opinion. Seventh, a good international image requires the institutionized media cooperation of BRI. From the perspective of the influence of public opinion on political and economic exchanges, in the process of sustainably deepening BRI, it is necessary not only to pay special attention to changes in the content and tendencies of foreign, especially Western media’s reports on China, but also to be alert to the setting of issues and their spillovers. In this process, it is inevitable to establish a stable and normalized mechanism to promote medium cooperation, lay a solid foundation for future international cooperation, and increase cultural exchanges and enhance mutual trust and recognition. Adequate channels and foundations for unofficial exchanges will help strengthen the exchange and understanding with the participating countries and their people, encourage each other share more lively and attractive stories and promote better connection and integration. On the super platform of the Belt and Road, open access to the international discourse should be enhanced by deepening international exchanges and cooperation, and the integration of domestic and international media can be strengthened especially by the virtue of media organizations and the continuous development of modern technology. Thus, the communication and cooperation among international media can be further expanded, which will also become an important bridge between China and countries and nations of different civilizations and cultures. For the established media cooperation organizations, they should take the initiative to regularly organize relevant meetings and forums, set a targeted agenda and promptly address issues of major concerns of related countries, not only to fully integrate the relevant international media agencies in cooperation mechanisms within the Belt and Road framework, but also to make similar mechanisms work effectively in an concerted effort to promote the continuous progress of the Belt and Road construction. The fundamental goal of national image construction and overseas communication is to lay a solid foundation for advancing and modernizing Chinese national governance system and governance capacity in order to further actively participate

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in global governance. The key objective of the national image construction is to promote the idea of building “a global community of shared future for mankind”, thereby raising China’s international voice. BRI is an important support and practical starting point for the realization of the community of shared future for mankind. Only with a deep understanding of the connotation of the idea and a comprehensive understanding of the positive results of the Belt and Road can we enhance our own confidence and convince the world via external communication of national image. To build up China’s national image and effectively disseminate it, it is necessary to strengthen the top-level design, innovate a cogent discourse, and lead the world trend with firm confidence, strong will, and effective strategies. We should make good use of the broad platform of the Belt and Road to make it a showcase for China to shape our own positive national image effectively and positively.