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Directions in China's Foreign Relations-Implications for East Asia

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Directions in China's Foreign Relations-Implications for East Asia Parliament of Australia Department of Parliamentary Services Parliamentary Library RESEARCH BRIEF Information analysis and advice for the Parliament 5 December 2005, no. 9, 2005–06, ISSN 1832-2883 Directions in China’s foreign relations—implications for East Asia and Australia China’s economic dynamism and rising international influence constitute one of the most important elements of international relations in the early 21st century. This paper provides a survey of major issues in China’s foreign relations, with a special emphasis on China’s relations with and role in East Asia. After a brief overview of economic developments and political issues, the paper discusses China’s overall approaches in foreign policy and its relations with the United States, Japan, the Korean Peninsula, Southeast Asia and the Southwest Pacific. The paper’s final section reviews issues and challenges in Australia’s relations with China. Dr Frank Frost Foreign Affairs, Defence and Trade Section Contents Maps Executive Summary................................................... 1 Acknowledgements ................................................... 4 Introduction ........................................................ 5 The domestic setting: economic dynamism and political authoritarianism ............ 6 Continuing economic growth .......................................... 6 Is high growth sustainable? Issues and challenges ......................... 8 The political context: President Hu Jintao and ‘authoritarian populism’ .......... 10 Socio-economic change and political order............................. 11 Possible political directions: autocracy, democracy or disorder ............ 13 State-directed and popular nationalism ................................ 14 China’s foreign relations: major issues and trends ............................ 16 China’s multidirectional foreign policy.................................. 17 Maximising access to energy and resources ............................ 19 www.aph.gov.au/library Defence force modernisation .......................................20 The United States relationship ........................................22 Dialogue and discussions in 2005....................................24 China–US economic relations ......................................25 China, the US and Taiwan .........................................28 Recent developments ..........................................29 Bilateral relations and China’s defence modernisation .....................31 Human rights and democracy.......................................32 Future China–US relations: ‘Zero sum’ or ‘positive sum’ approaches? .........34 China and Japan ..................................................35 Recent developments.............................................38 China and the Korean peninsula .......................................40 South Korea ...................................................41 North Korea ...................................................42 Recent development: the Six Party Talks and the 19 September 2005 ‘statement of principles’ .......................................44 China and Southeast Asia............................................45 China and East Asia multilateral cooperation..............................49 China and the Southwest Pacific.......................................51 China and Australia: Issues and implications ..............................54 Australia–China relations since 1972 .................................54 1972–1989 ..................................................54 1989–1991 ..................................................55 1991–1997 ..................................................55 Since 1997 ..................................................56 The future of Australia-China relations: key questions.....................58 Australia, China and the United States ..............................58 The Taiwan issue .............................................62 Australia, China and Japan ......................................63 Managing a complex relationship..................................65 Concluding comment .................................................66 Endnotes ..........................................................68 Directions in China’s foreign relations—implications for East Asia and Australia Source: Source: Perry-Castaneda Library Map Collection, University of Texas at Austin Directions in China’s foreign relations—implications for East Asia and Australia Source: Source: Perry-Castaneda Library Map Collection, University of Texas at Austin Directions in China’s foreign relations—implications for East Asia and Australia Executive Summary China’s economic dynamism and rising international influence constitute one of the most important elements of international relations in the early 21st century. This paper provides a review and assessment of China’s foreign relations, with special emphasis on the implications for East Asia and for Australia. The paper begins by considering briefly the domestic context for China’s recent foreign policy approaches. China has attained high growth rates (over 9 per cent per annum) for the past twenty years, driven particularly by high domestic savings, large inflows of foreign direct investment and economic reforms which have included a large role for the private sector. A major element in growth is China’s rapid rise as an exporter of manufactured goods. China’s growth has raised living standards for many millions of people, the maintenance of which is a central focus for foreign relations. Continuing growth requires careful management and efforts to confront ongoing problems, including the need to continue to reform state-owned enterprises, strengthen the banking system, reduce infrastructure ‘bottlenecks’, improve the legal framework, and manage the socio-economic impact of income inequalities (particularly between urban and rural areas), demographic issues and China’s severe environmental problems. China’s remarkable economic transition is being led and managed by the Chinese Communist Party’s ‘fourth generation’ of leaders (headed by President Hu Jintao and Premier Wen Jiabao) who are seeking to combine high growth with reductions in socio-economic inequalities. Under their leadership, the Party is pursuing ongoing reform while remaining determined to continue to be the dominant political force. Rapid change has been accompanied by many instances of localised public protest that have been acknowledged as a serious issue by government authorities. One key ongoing question will be how China’s political system evolves; whether towards a refinement of single party rule, a more pluralistic model or a more diffuse and less effective model of authoritarian rule. China’s process of socio-economic change has also been accompanied by expressions of nationalism, both by the government and at the popular level: the Party remains wary of expressions of nationalism that go beyond approved boundaries and is determined to maintain its control over policy-making, including in foreign relations. China’s overall foreign policy is designed to support and advance the country’s path to growth. China has sought to gain benefit from the process of globalisation, symbolised by its entry into the World Trade Organisation in 2001. To ensure a stable national environment, China has improved relations with its neighbours and major partners including India, Russia and the European Union. China has also increased greatly its multilateral engagement, both in existing groups and in new forums it has established (such as the Shanghai Cooperation Organisation). A principal focus in foreign relations is to secure the resources needed for continued growth, which is increasing the profile of China’s relations with resource- producing countries in the Middle East, Africa and Latin America. 1 Directions in China’s foreign relations—implications for East Asia and Australia The capacity and sophistication of China’s conduct of foreign relations have been upgraded markedly and China has also greatly enhanced its ‘soft power’, through social, cultural and educational links, especially in East Asia. China’s economic growth is also facilitating a program of modernisation of its military forces to introduce new equipment and improved operational capacities. A major focus of these developments has been to increase China’s capacities in the vicinity of Taiwan. China’s single most important international relationship is with the world’s dominant superpower, the United States. Since relations were normalised in 1979, China and the US have developed many areas of cooperation and a most important economic relationship, while simultaneously having areas of difference and dispute. Relations have been notably closer since the terrorist attacks on ‘September 11’, 2001, and China has given support in a number of areas of US policy on counter-terrorism. However relations with the US face significant challenges. The economic relationship is vital to China but China’s success in exports has helped produce a sharp imbalance in trade which has fuelled US concerns about some of China’s practices (such as its inadequate protection for intellectual property rights) and the value of its currency, which the US has argued is ‘unreasonably’ low. The two countries have differing approaches to the status of Taiwan, with China claiming sovereignty and the ultimate right to enforce this, and the US asserting that while it does not recognise Taiwan as an independent entity in de jure terms,
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