Chinese Medicine Approach to Diplomacy

The unforeseen effects of Chinese medicine

When it comes to investment pledges, $46bn is a sum that really grabs people’s attention. That is what China is supposedly ploughing into Pakistani energy and transport projects, according to plans unveiled during last month’s visit to Islamabad by President Xi Jinping. Delegates at the Asian Development Bank’s annual meeting in Baku, Azerbaijan, this week, could talk of little else. The ADB, historically run by Japan, could not dream of such firepower. Last year it lent about $13bn across the entire region.

It is easy, of course, to talk big. Much of Beijing’s promised investment in Pakistan — which would, among other things, help that country’s chronic energy problem by doubling electricity capacity — may not see the light of day. (To put it another way, the lights may never actually come on.) Still, if even a fraction of the sums bandied about turn up as roads, railways and power stations, Beijing will be making its formidable economic firepower felt.

China’s efforts to extend its influence go far beyond Pakistan. It is setting up the Asian Infrastructure Investment Bank, a rival to the ADB that will have initial capital of at least $50bn. Beijing’s “one belt, one road” initiative, which aims to improve land and maritime links between western China through Asia to Europe and north Africa, are gradually leaving the realm of fantasy and turning into concrete (lots of concrete) plans. To start things off, Beijing has dipped into its considerable foreign currency reserves for some small change: $62bn.

China’s efforts to splash the cash mark a new phase in its diplomacy. To call it soft power might be a misnomer. Its authoritarian system still lacks the necessary attraction, although many of the countries in which Beijing seeks to invest are not exactly models of democracy themselves. The definition of soft power provided by Joseph Nye, the Harvard professor who coined the phrase, is “the ability to get what one wants by attraction and persuasion rather than coercion or payment”. Billions of dollars look like payment. Yet loans and investments are not bribes. Part of US soft power — as well as Hollywood and the attraction of lofty ideals — was created by institutions such as the International Monetary Fund and World Bank, which spread Washington’s view of capitalism and opened foreign markets for US business.

Whether we call it soft power or not, China is attempting something new. One Chinese official in Baku called it “Chinese medicine”. You might not know how it works, but that does not mean it will have no effect. Beijing’s efforts have been spurred partly by the limits of its hard diplomacy. China’s build-up of military strength and its more assertive stance over disputed territory has rattled the neighbours.

Scott Kennedy and David Parker from the Center for Strategic and International Studies acknowledge the potential of China’s new strategy to win influence. The “one belt, one road” initiative, they say, can “entrench Sino-centric patterns of trade, investment and infrastructure” and strengthen Beijing’s diplomatic leverage. The case of the AIIB does not look a million miles away from soft power either. The UK felt compelled to join in spite of Washington’s pressure. Of course, London may have been motivated in part by the prospect of financial gain for British companies. Yet that does not tell the whole story. In all, 57 countries have joined.

Of course, there are risks. Building vast projects in foreign lands is not guaranteed to please. In Sri Lanka, China’s overweening presence was one of the reasons for the dramatic defeat in January’s election of Mahinda Rajapaksa, the president who had openly courted Beijing. Even the generals who ran Myanmar tired of what they saw as China’s relentlessly extractive and exploitative form of capitalism.

The fact that so many western countries are now in the AIIB could help to restrain Beijing from such excesses.Prof Nye says that the AIIB now will not be “a Chinese political slush fund”. If the UK and others help ensure its projects are more sustainable and sensitive to local needs, they will — whether involuntarily or not — be playing their part in making the bank a more effective tool of diplomacy. Call it Chinese medicine if you will. But from Beijing’s point of view, having western governments help burnish China’s image in Asia must sound pretty close to a definition of soft power.

This article comes from the Financial Times.