Review of Study – China’s Growing Influence in International Organizations.

A new study by The Economic Strategy Institute (ESI), commissioned by the U.S.-China Economic and Security Review Commission, called “The Evolving Role of China in International Institutions”, takes a thorough look into China’s growing influence in international organizations.  The report contains two truisms, ten trends, seven recommendations, and a number of case studies on China’s operations within a number of international organizations, including the World Bank, the International Monetary Fund, APEC, the Pacific Basin Economic Council, the United Nations and the G-20.

What frames the findings of this ESI study are its two truisms.  1) “The one over-arching objective which informs and drives (China’s) conduct is the need for stability.  Chinese leaders need – above all else – to ensure the existence of a benign and conducive global environment for China to continue to grow economically at a fast but sustainable pace — in short, to continue its ‘peaceful rise.’”  Above all else, according to the ESI, is the need for stability – China needs a stable global environment in which it can successfully pursue the very high growth rates that it absolutely requires.

The second ESI truism has to do with the ever changing nature of the world.  2) “Institutions will either evolve to reflect the reality of the world in which they operate, or they will gradually drift toward irrelevance.  Not long ago, the G-8 was one of, if not the most important institutions on the global stage. Today, it has been supplanted and largely subsumed by the G-20. China’s growing economic and strategic might was one of the driving forces behind this dramatic shift in the G-8/G-20 constellation, and it would be naïve and unrealistic to think that the G-8/G-20 will be the only institutions profoundly impacted by China’s rise.”

Post Global Financial Crisis –

China as we all know is a major trade and investment player internationally, an important source of aid and development assistance, and an increasingly attractive model of economic development for other countries.  The recent global financial crisis has made China even bolder in its dealings within international organizations.  Beijing’ economic development model shielded China from the global financial crisis, and has now supplanted that of the United States in the eyes of many developing nations.  The ESI study argues that America’s economic weakness and China’s post financial crisis recovery means that in the years and decades to come international organizations “will evolve differently, and in some respects, away from the U.S.-influenced philosophical foundations upon which they were built.”

“New organizations, built upon a different set of assumptions and philosophies, will come into being and in some instances challenge the relevance of their predecessors.  China did not have a seat at the table when the rules were written for the first-generation international institutions, but China has a seat at the table today, and it’s getting bigger.  It will use its rising influence to shape, to the extent it can, the rules of the game.”

Some Negative Trends –

The ESI study argues that overall, “China has become more effective in utilizing international organizations to advance national interests, and to extract what it needs from these institutions.”  This is a result of China’s greater maturity and a steadily increasing activism and assertiveness in international organizations in recent years.

“This growing assertiveness can be measured on several levels: in its ability to shape policies and positions within organizations, in its ability to use these organizations as platforms to project both hard and soft power, and in its ability to promote national interests. It is also noteworthy to point out that China has grown remarkably direct, and in some instances, almost confrontational in articulating its positions.”

Furthermore, China has evolved into a highly effective player in international organizations.  “Both in terms of its ability to advance its own agenda, as well as its ability to deflect objectionable proposals from other quarters, China is a shrewd, savvy, and successful operator.”  Examples mentioned by the ESI study include China’s ability to shift the G-20 agenda away from issues it prefers not to discuss, and China’s success in the Copenhagen Climate Summit, the outcome of which was almost entirely in line with China’s objectives.

Finally, with some institutions (for example, APEC), China is an active participant not out of desire to achieve a particular objectives or to support the institutional mission, but rather to monitor the agenda and to deflect (when need be) proposals or initiatives that it finds objectionable.  Therefore, activism and participation by China does not necessarily denote support, and in fact can sometimes signal the exact opposite.

“China would have ambivalent feelings about APEC ever becoming a forceful and powerful vehicle for fostering trade and investment cohesion with the Asia Pacific.  Given the prominent role the US plays in APEC, China would much prefer to see an alternative structure (one which does not include the United States) play this role.  Therefore, within APEC, China can be content to play a defensive game on issues or agenda items which advance the APEC role on trade and investment, thereby ‘taking time off the clock’ while institutions like ASEAN + 3 have an opportunity to solidify their position and role.”

Some Positive Trends –

However, the ESI study also finds positive aspects of China’s increased and more effective participation in international organizations.  “China’s growing role not only supports its strategic interests, but, it should be acknowledged, is also frequently constructive and helpful for the organizations in which it participates.”  The ESI found that when China wants, it can be very thorough, exceedingly well-prepared and well organized about executing its responsibilities as an institution member, especially when it comes to administrative issues.  “Importantly, from a tactical point of view, China’s constructive engagement in these organizations is shrewd because it heightens Chinese credibility, which further strengthens China’s influence and its ability to achieve its objectives.”

Furthermore, China’s greater engagement in international organizations is having a direct effect on China as well.  According to the ESI study, “as China becomes more integrated into the system of international institutions, there are some respects in which the policies and practices of the institution are able to impact – at least in small ways — the way China operates.  To be clear, international institutions have not and will not cause any bold or dramatic policy shifts in China, but some modest examples do exist of China moving towards practices which reflect the operating ethos of the organizations in which it participates.”

Finally, China has demonstrated an impressive ability to learn throughout all the institutions in which it participates.  This can best be attributed in large part to the high quality individuals and officials that China sends to participate in these institutions.  “China has, in recent years, chosen to send its best and brightest — extremely smart, capable, articulate and frequently Western-educated individuals to represent its interests.”

Recommendations for US –

The 96-page report describes strategies the U.S. should adopt to deal with the Chinese in international organizations.  Overall, the United States needs to realize that its period of influence has ended, and that China has stopped listening to its lectures on such issues as the manipulation of its currency.  For example, China has already had a direct influence in the IMF and G-20 on the issue of its currency.  Furthermore, the ESI suggests that the U.S. should accept the inevitable rise of China, and be more pragmatic: “When China’s rising influence within a particular organization puts it in a position to deflect U.S. interest, look elsewhere.”

The full report, “The Evolving Role of China in International Institutions,” cat be found at the U.S.-China Commission web-site:

http://www.uscc.gov/researchpapers/2011/TheEvolvingRoleofChinainInternationalInstitutions.pdf