A Turn in China’s Economic Statecraft and a Quest for the Legitimacy to Rule
3. The Importance of Participating in Multilateral Institutions for China
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international expansion are widely said to be for the CCP to preserve its legitimacy to rule, David Shullman identified economic and information influence as the two key targets that the CCP should create growth space for to satisfy this end.14 The BRI embodies both targets if we look at how it creates the market need for labors, especially facilitating the trend of companies shifting their downstream supply chain in South-East Asia’s emerging economies, creates market output for Chinese capitals and goods in various BRI construction projects, translates economic influences into the controlling of strategic assets15 in developing countries to alter their political preferences, and utilizes “sharp power” tool kits (media, intellectuals, private communities) both abroad and domestic to manipulate information space for positive propagandas. To take this influence further and more permanently, the international institutions are only inevitable fighting grounds for the clash of the Western-led democratic model and the Chinese-led authoritarian model. Although China’s intention for its assertive behaviors abroad is still to be determined,16 we cannot deny that China is strategically using its economic power and growing leadership role in multilateral institutions to advance its geopolitical interests that stem domestically. Moving forward to the discussion on China’s participation in multilateral institutions, the author will borrow Hafner-Burton and later scholars’ concepts on network analysis and clarify the issue areas that China is advancing through multilateral institutions and international frameworks.
3. The Importance of Participating in Multilateral Institutions for China
From a network approach perspective, ‘a structural analysis of networks equates the power of a particular node to its position in the network, defined by its persistent relationships with other
14 David O. Shullman. (2019, October 4). Protect the Party: China’s growing influence in the developing world.
Brookings. https://www.brookings.edu/articles/protect-the-party-chinas-growing-influence-in-the-developing-world/
15 Jonathan E. Hillman. (2018, April 2). Game of Loans: How China Bought Hambantota. Center for Strategic and International Studies. https://www.csis.org/analysis/game-loans-how-china-bought-hambantota
16 Audrye Wong. (2019, October 4). China’s economic statecraft under Xi Jinping. Brookings.
https://www.brookings.edu/articles/chinas-economic-statecraft-under-xi-jinping/
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nodes.’17 Serving as an approach to measure constructivists’ concepts on socialization and logic of appropriateness, a network actor that persists a strong position might have the advantage in the socialization and norm diffusion process through the property that networks provide: information space that fosters learning. When the power to influence is based on different types of social transactions that relates to each other, an actor’s position in the network which those transactions created is the most important to decide whether it wields the power.
Now, the reason why multilateral institutions are perfect platforms for China to advance its interests that span globally is simple: In networks, actors’ behaviors are interdependent, and different levels of network relations influence each other. The elements of network influence are defined by Hafner-Burton, Kahler and Montgomery as the power to “access”, “brokerage” and
“exit”. While examining the case of China, this thesis finds that “access” and “brokerage”
accurately describes China’s strategy to advance in multilateral institutions.
On the one hand, when China and developing countries create network ties of material product transmission through debt and infrastructure investment (could be asymmetric), or even further create non-material product transmission18 by disturbing developing countries’ strategic advantages, China gains leverage power that translates into brokerage position in higher systemic levels. For instance, scholars are concerned that China is promoting its imperial-like "China-model"19 of international institution that is alternative to the current Western-liberal model, which could be explained by Hafner-Burton's elaboration on the metropole gaining exclusive ties to the periphery thus creating bargaining power in the institution network level.20 On the other hand,
17 Emilie M. Hafner-Burton, Miles Kahler and Alexander H. Montgomery, International Organization, Vol. 63, No. 3 (Summer, 2009), pp. 559-592.
18 Ibid.
19 Jonathan E. Hillman. (2020, March 13). A ‘China Model?’ Beijing’s Promotion of Alternative Global Norms and.
Center for Strategic & International Studies. https://www.csis.org/analysis/china-model-beijings-promotion-alternative-global-norms-and-standards#_ftn2; Greg C. Bruno. (2020, May 27). Is a China-led world order inevitable? Asia Times.
https://asiatimes.com/2020/05/is-a-china-led-world-order-inevitable/
20 Martha Finnemore, and Kathryn Sikkink. 1998. “International Norm Dynamics and Political Change.”
International Organization 52 (4): 887–917.
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when China participate and merge their interests into existing network values and assume more critical positions in institutions for more decision-making power, they enhance their node centrality and gain what scholars call "social power" that 'not only allow a node... to access benefits from other network members, it may also let that node shape the flow of information among nodes and alter common understandings of relative capabilities, common interests, or norms.'21
That network power favors those pursuing non-conventional strategies in international politics has also been discussed by Stacie Goddard in her research on revisionists embedded in institutions. Borrowing her categorization of revisionists, this thesis believes that China is implementing the strategy of a “bridging-revisionist” that has both high access and high brokerage power in the networks. She defines bridging revisionists as states that are ‘deeply embedded in existing institutional networks, yet have strong and exclusive relations with network subgroups’
and those that seek “rule-based revolution” within the dominant order.22 China conveniently fits in this description for its expansion of membership in major MDBs since the 1980s, increasing its share of contribution in the regular UN peacekeeping budget, and ensuring Chinese nationals to assume high rank roles in UN bodies. Moreover, China’s engagement in infrastructure investment in developing countries through the BRI and leadership exertion by representing developing countries in major institutions indicate that it possesses certain exclusive relations with the developing countries as a network subgroup.
Both the access and brokerage power are strong for China; however, the competing nature of possessing multiple interests and identities from the entanglement of networks sometimes means the cost of advancing a specific interest gets higher. It is also for this reason that this thesis
21 Ibid.
22 Stacie Goddard. (2018). Embedded Revisionism: Networks, Institutions, and Challenges to World Order.
International Organization. 72. 1-35. 10.1017/S0020818318000206.
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believes existing institutions deserve more research attention when analyzing the strategy of bridging revisionists, since to reduce the cost of advancing their interests and ‘to ease these cross-pressures, bridging revisionists will seek to transform existing institutions in ways that better accommodate their multiple networks.’23 Thus, although this thesis may seem to be focusing on the discussion of cases on China’s institutional-strategy to advance their BRI projects through MDBs, it is far more than that. Institution-building from a bridging revisionist angle requires a comprehensive understanding of the actor’s target interest area inside and outside existing institutions and its grand-strategy for approaching multilateral institutions.
A. Aligning institutional agendas with BRI interests
As mentioned in the previous chapter, Ikenberry indicated the challenges faced by the Liberal International Order (LIO) depends on the power dynamic (network position) between a seemingly isolating hegemon (the U.S.) and a rising power assuming greater international leadership (China), and that China is facing a dense array of layered institutions (network levels) that would prompt China to make complex institutional choices.24 Rounding up several scholars’ view on China’s intention towards existing institutions, there is little evidence that China is attempting to overthrow the existing global order, but rather seeking rule-based revolution within. Also backed by CSIS scholar Jonathan Hillman’s statement prepared for a U.S. Congress hearing session, the platform for competing on global norm and standard setting is likely to remain in existing institutions, and that the attention should be given to China’s strategy in those institutions which they exert influence to participate, obstruct, or oppose organizational behaviors.25
23 Ibid.
24 G. John Ikenberry, Darren Lim, D. 2017, 'China's emerging institutional statecraft: The Asian Infrastructure Investment Bank and the prospects for counter-hegemony', Brookings Institution, Project on International Order and Strategy, April.
25 See 20.
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Those calling for the U.S. government to retrieve domination and leadership in international institutions to counter China’s revisionist values have suggested that identifying China’s prior issue areas in the existing order and their point to cut in is key to understanding their strategy layout.
While the media often prefers shocking titles that might exaggerate the intention of China’s institutional approach, CSIS scholar Jude Blanchette pointed out that China’s seemingly aggressive moves ‘doesn’t have to mean that China wants to take over the globe,’ but rather most likely that ‘the Party is renegotiating its role in the world’ and that she gets very nervous while thinking about it.26 The trend of research has illustrated that the source of worrisome comes from the option of following a Chinese-model which China is providing for the developing countries and making it legit in international institutions that could eventually erode the territory of liberal values led by the Western-model. The infiltration of Chinese values is coming from multiple angles and varied scope, whether it is as subtle and chronic as co-hosting events for infrastructure development related platforms, or as obvious and strategic as China leveraging its financial advantage to announce the suspension of debt-repayment from 77 low-income countries in early June 2020 aligning with the G-20’s debt relief program. Those exertions of China’s leverage on multiple issues are perfect examples for creating access and making use of its brokerage position.
The BRI is a large-scale and long-term foreign agenda that China established to strengthen its centrality for an abundance of reasons. For one, there is evidence that shows China’s actions to align its BRI related interests with multiple regional and global institutions or frameworks that could help raise the agenda’s legitimacy, in order to propel
26 Greg C. Bruno. (2020, May 27). Is a China-led world order inevitable? Asia Times. https://asiatimes.com/2020/05/is-a-china-led-world-order-inevitable/
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wider collaboration and embed its value into the global order. Self-held forums and joint announcements made to promote the positive value of BRI could be seen across organizations and regions.
The Belt and Road Forum (BRF) was first held in May 2017, with 29 foreign heads of state and government leaders attending the forum along with organizational leaders including UN Secretary-General Antonio Guterres, then World Bank President Jim Yong Kim, and then Managing Director of the International Monetary Fund Christine Lagarde.
According to scholar Shannon Tiezi’s article on The Diplomat, China held the forum not only to showcase BRI’s bilateral achievements but also to promote its vision of deepening
“policy connectivity” with a number of key organizations, especially regional development organizations such as ASEAN and Eurasian Economic Union.27 The BRF also brought additional results such as getting 30 leaders to sign a joint communique on committing to facilitate open economy, inclusive trade, and reject protectionism, adding value that aligns with the development strategy of the Western world to the BRI. A point worth mentioning is that China chose to hold this forum right when the US, the long-time hegemony guiding global development strategy, had elected the Trump administration, leading a worldwide debate whether the US is turning to protectionism and unilateralism, a timing that is perfect for China to promote and assume its leadership role in global governance.
The second BRF in 2019 is more of a rebranding event with substantial actions made for BRI rather than obvious political propaganda compared to the first forum. Over 6 years of implementing BRI projects and lending to developing countries, accumulated criticism of China creating debt traps for developing countries and infrastructure projects not
27 Shannon Tiezzi. (2017, May 16). What Did China Accomplish at the Belt and Road Forum? The Diplomat.
https://thediplomat.com/2017/05/what-did-china-accomplish-at-the-belt-and-road-forum/
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conforming to standards of other development institutions has pushed China to make some substantial efforts in making the BRI a project that could be integrated into existing norms and standards. For example, the Chinese government released the Debt Sustainability Framework for Participating Countries of the Belt and Road Initiative on April 25, 2019,28 the same date the forum started. The fact that the framework was composed largely based on the Joint World Bank-IMF Debt Sustainability Framework for Low-Income Countries29 has indicated that although the BRI is said to be a method to export the Chinese model of global governance, the BRI cannot escape existing norms and create a completely contradictory model to the currently functional institution, but to build an institution that has Chinese centrality while at the same time aligning with some global standards.
Looking at the growing numbers and titles of the attendees to the second BRF, observers could also assume that the BRI has been taking bigger steps towards aligning its interests with core participating regions such as ASEAN countries, Central Asia, and Europe,30 constituting the 21st Century Maritime Silk Road and the Silk Road Economic Belt as parts of the BRI. The fact that Southeast Asian countries are actively increasing their participation with the BRI has indicated a stronger tie China is trying to create to consolidate its South China Sea influence, and also making a move against the US-led FOIP (Free and Open Indo-Pacific). Although there have been tensions surrounding the South China Sea disputes between Southeast Asian countries and China, the former has also been gaining significant economic benefit from BRI projects. China’s strong economic statecraft here has kept those ASEAN countries holding a rather inclusive
28 Ministry of Finance of People’s Republic of China. (2019, April 25). Debt Sustainability Framework for Participating Countries of the Belt and Road Initiative. http://m.mof.gov.cn/czxw/201904/P020190425513990982189.pdf.
29 Christine Lagarde. (2019, May 7). How to Ensure the Effective and Sustainable Financing of International Development. IMF. https://www.imf.org/en/News/Articles/2019/05/07/sp050719-how-to-ensure-the-effective-and-sustainable-financing-of-international-development
30 Shannon Tiezzi. (2019, April 29). Who Is (and Who Isn’t) Attending China’s 2nd Belt and Road Forum? The Diplomat. https://thediplomat.com/2019/04/who-is-and-who-isnt-attending-chinas-2nd-belt-and-road-forum/
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strategy and not yielding to the US camp during the ongoing competition between China and the US for dominance in the Indo-Pacific region.31
China is also forwarding its agenda by utilizing channels it created in the existing institution ecosystem, such as AIIB. Although discussions on the AIIB have mostly been on whether it is taking over the function and authority of existing MDBs, this thesis holds the opinion of China using AIIB more as a tool to increase its centrality in the network. In other words, China’s degree of centrality in the global governance network is pursued through multiple nodes created by China, including the AIIB, to reduce the cost of advancing their interests globally. Therefore, the alignment of interests could be observed through actions AIIB took to participate in or influence other MDBs’ agenda. The types and amount of AIIB’s partnership documents are as below:
Figure 2.1 AIIB’s Partnership Documents
MoU and Other Partnership Related Documents of the AIIB
Agreement Type MoU with MDBs MoU with non-MDBs Joint Declaration
Amount 9 3 2
Source: Made by the author with reference to the AIIB Official Website:
https://www.aiib.org/en/about-aiib/who-we-are/partnership/index.html)
As shown in the list above, AIIB has signed MOUs to cooperate with MDBs ranging across Asia, Europe, Africa, and America starting from 2016. The MOU content includes acknowledgement of common interests in development areas, and to further strengthen strategic cooperation through information and knowledge sharing, communication and coordination, and co-financing projects in areas of common interests32. Moreover, the
31 Ken Moriyasu &Tomoya Onishi (2020 July 15). Asia greets US shift on South China Sea with hope and doubt.
Nikkei Asia https://asia.nikkei.com/Politics/International-relations/South-China-Sea/Asia-greets-US-shift-on-South-
China-Sea-with-hope-and-doubt?fbclid=IwAR0FZuLIaaOf37e7aF_X37VIvwO-hsI2zPs4gBe-h3Hp02k7ZZUzEW7MCmQ
32 As seen as contents of MOUs signed with two key AIIB partners, ADB and World Bank. AIIB, ADB sign MOU to strengthen cooperation for sustainable growth - News - AIIB. (2016, May 2). AIIB. https://www.aiib.org/en/news-events/news/2016/AIIB-ADB-sign-MOU-to-strengthen-cooperation-for-sustainable-growth.html;
World Bank and AIIB Sign Cooperation Framework- News - AIIB. (2017, April 23). AIIB.
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ADB in 2016 and 2019 respectively. According to Chinese media Xinhua News, the Co-financing Framework Agreement for Sovereign Operations between AIIB and ADB will“guide overall co-financing arrangements between the two institutions going forward”33 and China Daily also reported on the Co-Financing Framework Agreement between AIIB and WB that “The agreement paves the way for the two institutions to jointly develop projects”34 in the following years. As the two key partners with AIIB to advance the BRI’s interest, ADB and WB not only bear the most common area of interest but also work for the development of regions overlapped with AIIB, making them competitive and complementary to each other. Aligning the interests between those two MDBs and the AIIB creates the issue linkages and legitimacy that AIIB needs, leading to a stronger centrality and better position for China to make future leverage.
Another major alignment of interest and value with existing institutions through the BRI is the establishment of the Disaster Risk Reduction (DRR) project, Silk-roads Disaster risk Reduction (SiDRR), in 2016, following the three landmark climate change and sustainable development related agreements as described by Lei Yu et al35 that UN members adopted in 2015, including the Sendai Framework for Disaster Risk Reduction 2015-2030, the 2030 Sustainable Development Goals, and the Paris Agreement. The SiDRR has adopted the objectives of the Sendai Framework36 and created an international
https://www.aiib.org/en/news-events/news/2017/World-Bank-and-AIIB-Sign-Cooperation-Framework.html
33 xuxin (2019, March 21). ADB, AIIB sign agreement on cofinancing arrangement for further cooperation - Xinhua | English.news.cn. XINHUANET. http://www.xinhuanet.com/english/2019-03/21/c_137912998.htm
34 Y. Zheng. (2016, April 25). AIIB to co-finance projects with World Bank and ADB - Business - Chinadaily.com.cn.
CHINADAILY. https://www.chinadaily.com.cn/business/2016-04/15/content_24562786.htm; World Bank and AIIB Sign First Co-Financing Framework Agreement. (2016, April 13). World Bank.
https://www.worldbank.org/en/news/press-release/2016/04/13/world-bank-and-aiib-sign-first-co-financing-framework-agreement
35 L. Yu, C. Peng, A.D. Regmi et al. An international program on Silk Road Disaster Risk Reduction–a Belt and Road initiative (2016–2020). J. Mt. Sci. 15, 1383–1396 (2018). https://doi.org/10.1007/s11629-018-4842-4
36 Ibid.
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DRR platform for Belt and Road countries that “aims to achieve the substantial reduction of disaster risk and losses in lives, livelihoods and health and in the economic, physical, social, cultural and environmental assets of persons, businesses, communities and countries over the next 15 years.”37 The creation of the SiDRR not only expresses China’s will to socialize into existing frameworks, but also inevitably provides an alternative set of rules and practices that will also potentially cause socialization the other way around.
More recently, China has held the International Conference on SiDRR and Sustainable Development in May 2019, with the Chinese Academy of Sciences, China Association for Science and Technology, United Nations Environment Programme
More recently, China has held the International Conference on SiDRR and Sustainable Development in May 2019, with the Chinese Academy of Sciences, China Association for Science and Technology, United Nations Environment Programme