Chinese Economic Diplomacy: Decision-making actors and processes

Chinese Economic Diplomacy

Author            :       Shuxiu Zhang

ISBN                :       978-1-138-19586-8

Publisher       :       Routledge Taylor & Francis Group

Year                 :       2016

Price               :       $155.00 (Amazon)



Reviewed by Conrad John Masabo, PhD Student, International Graduate Programme in Politics (IGPP), East China Normal University (ECNU), Shanghai, PRC

The role of China in the global economy continues to be one of the major topics economists, political scientists, specialists in international relations, geopolitics, and strategic studies address. Given China’s ascendance to nearly the top of the global ladder as the second largest economy in the world behind the United States, interest in understanding both internal and external forces accounting for such success has been more in demand than ever.

Chinese Economic Diplomacy: Decision-making actors and processes, provides one of the entry points to discovering China’s secrets to her success story. It provides a step by step nuanced understanding on how China negotiated her place in the existing international order by examining the processes associated with China’s entry into the World Trade Organisation (WTO), and the United Nations Framework Convention on Climate Change (UNFCCC). In portraying these occurrences it also provides a harnessed understanding of the interplay between internal and external forces in determining the economic policy outcome. For example,  in  Chapter eight, ‘The dragonomic diplomacy decode’, which is one of the  synthesis chapters of study, it is argued  that,  “this finding is consistent with the study assumption that the institutional macrostructure of the Chinese political system goes hand-in-hand with, at times external, instruments of influence in determining China’s preference formation” (p. 210). This is opposed to the mainstream argument, which “… assumes a static decision-making process in China” (p. 71). As explicitly put, “… international agencies have some capacity to affect China’s preferences…. China’s economic diplomacy decision-making in the twenty first century is no longer a stand-alone domestic process…. (p. 210). As such, China’s economic diplomacy is today, arguably shaped by a collective system involving domestic and international agencies” (p. 164).

The book has three parts within which the study is presented in eight chapters. With such an arrangement, the book is friendly not only for experts and specialist readers, but also for general readers interested in understanding economic diplomacy and Chinese economic diplomacy in particular, to follow the debates logically. The first three chapters provide some fundamental concepts, theories, a framework of analysis, a methodological stance, and an overview of key actors and processes involved in Chinese economic diplomacy decisions.

Reading the chapters in this part, one should be able to understand why China is often classified as “a nation that value of saving face, reputation-dressing and reputation-maintenance …” (p. 37). In particular, the chapters in this part of the book expose readers to a number of issues such as: key concepts in the study of economic diplomacy (pp. 4-14),  some lenses to understand the drivers of the process of foreign policy (economic diplomacy) making —the structure of the international system, interdependence theory, rationalist theories [bounded and unbounded rationality] (pp. 25-32), a framework for negotiation approach—shuttle diplomacy proximity talks, informal negotiation practices, and side-payment bargaining, the methodology of undertaking such study (pp. 49-55), determinant factors for Chinese foreign policy—calculation of cost and benefits, the power of information and the reputation factor of  how they interplay the institution macrostructure of the central government, not only to the various theories and theoretical lenses but also an introduction into the Chinese political structures  (pp. 63-69); the evolution of Chinese economic diplomacy: the exclusionist era: 1949-197,  the transition era: 1972-2002,  and the revisionist era: 2003 -2012 (pp. 71-81). Through this, though a synoptic survey of the evolution of Chinese (economic) diplomacy, the author brings to the forefront important key points, and thus one who reads this part can, at least from a theoretical base defend the fact that “modern Chinese decision-making for economic diplomacy has evolved from ‘vertical’ to ‘horizontal’” (p. 81) forms of engagement in decision making processes.

The second part of the book is also made of three chapters, two of which present Chinese negotiation dynamics within the existing international order, the WTO and UNFCCC, and the third one provides a wrap-up of the functioning of the international order. In presenting these cases the three major suggested drivers of Chinese (economic) diplomacy—calculation of cost and benefits, the power of information, and the reputation factor  are examined to attest to the extent to which they shaped the negotiation and the outcome. In a particular way, the book portrays how information and reputation can sometimes alter the cost-benefit analysis as was the case of Clean Development Mechanism (CDM) within the UNFCCC.  The author demonstrates how the information supplied was able to alter the cost analysis (p. 102).  However, as the author argues, the influence of the UNFCCC Secretariat was absorbed partly because it was linked with the cost analysis. Thus, it can be argued that, “the likelihood of acquiring foreign technology and attract foreign investment is a key reason for China’s altered preferences concerning the CDM initiatives” (p. 112). On other end she also demonstrates how the threat and reputation factor came to play in the negotiation (p. 103).  However, in examining the power of information, the author makes it evident that for information to influence China’s basic policy approach (cost analysis), international bodies have to deliver salient and timely information to China (p. 108). Failure to do so may lead to incomplete information as was the case of to the especially that of WTO (p. 135).

Again, when it comes to joining the WTO, it has been made evident that the cost-benefit analysis was at the centre of determining to what to ascend and to what to not. Although the Government Procurement Agreement (GPA) promised China’s desire to fight systematic corruption within its bureaucracy, when further demands were placed on China, their framing in response was “if there’s no trust why should they be transparency?” (p. 122). In this regard, the book reminds us of another often missed variable, trust in international negotiation. Thus given the four Chinese modes of negotiating trade in services —cross-border supply, consumption abroad , commercial presence, and movements individual, “Beijing’s experience as a member-state of the WTO, it viewed the system as ill equipped to oversee the regulatory standards of trade in services” (p. 127).  Given the fact that it is hard to disentangle Chinese domestic politics from trade policy, it is thus evident that the commitment of China to the GPA will always be a moderate, tendency which can be explained in terms of cost-benefit analysis.  While this remain mutatis mutandis, internal policy fragmentation on issues relating to decisions regarding the WTO were also another barrier for smooth ascendency.  But, when it comes to the influence of the international system the book also provides a nuanced explanation. However it must be understood that, “for Chinese policymakers, it matters who produces the information used to inform its preference formation” (p. 155) rather than just the piece of information itself.

The last part of the book consists of two chapters. They provide syntheses of the Chinese economic diplomacy negation approach as well as the economic diplomacy model which is referred to as ‘dragonomic diplomacy’. In discussing the negotiations approach,  the chapter opens with an important remark: “economic diplomacy is typically characterised not only by negotiation preferences formulated before a negotiation round, but as by the final decision making at the negotiation table — such  is the making of  a compromise outcome” (p. 171). Three features that characterise Chinese economic diplomacy negotiation—shuttle diplomacy proximity talks, informal negotiations practices, and side-payment bargaining are examined in the Chinese context and more specifically, how they manifested in the UNFCCC and WTO negotiations as well as the in the international system as whole. For example, the central route and peripheral route strategies of shuttle diplomacy are examined in the light of the UNFCCC and WTO negotiations. In unmasking how such approaches were employed, the author reminds us that, “…even though preferences over the desired outcome are fixed, the actors’ beliefs are not, and their uncertainties  about the accuracy of these beliefs cause them to renew their beliefs infinitively as new information is encountered” (p. 174). This is a bounded rationality versus an unbounded rationality dialogue. Having provided such a critique, the two factors shaping the Chinese economic diplomacy negotiation approach are, “how informative international agencies are, and the level of perceived credibility they have in the eyes of Chinese decision-makers” (pp. 177-178). With regard to informal negotiation practices, three forms of such practices are discussed, namely: the informal consultations, roundtable discussions, and inter-personal corridor or lobby dialogue outside the main meetings (pp. 178-179). These, in the case of China’s foreign policy making state craft, are the most effective modus operandi   in the framework where the international agencies secretariats are limited to administrative activities.  And the last is the side-payment bargaining though; its functioning of this depends largely on trust.

The last chapter that follows presents another synthesis of this study.  It largely examines four indicators for measuring cost benefit analysis, with regards to information and reputation within dragonomic diplomacy. These are inertia, absorption, transformation, and retrenchment.  Having analysed them, it is found that there are other factors to put into consideration, namely social instigators, trust, personal reputation, and expectations. Once on ground, it is hoped that the paradigm shift for cooperation at national levels will happen. This will be reflected in various levels of Chinese economic policy adoptions, namely: the discovery stage, adoptions, discovery, definition, determination, negotiation and deliberation in deliberation for common good (pp. 221-223).

The book is timely and worth reading since what is contained in the book is of greater importance, and opens the reader to diplomacy, economic diplomacy and policy making processes in China. However, it could have been improved. Limiting the discussion to two cases, provided a keen examination of the economic policy, however, also it acted as a kind of shortfall. One wonders what motivated limiting the discussion on these cases, and also wonders whether the conclusion drawn can be applicable in understanding the various Chinese economic engagements with the external world beyond the parameter of UNFCCC and WTO. It also leaves some questions about whether China’s engagement with the world beyond the selected cases also qualifies to include economic diplomacy or not. The inclusion of Chinese negations dynamics with other countries under the so called bilateral relations, and how the Chinese government decides where to invest, could have improved the book’s ability to serve as standalone key text to Chinese economic diplomacy. But although these are missing, the book still deserves the attention of any person interested in diplomacy, economic diplomacy, Chinese foreign policy, Chinese politics, and international relations.