Chinese Economic Statecraft in Indonesia/East Timor: A Historical and Regional Perspective

From inside China’s Belt and Road Initiative (BRI), two southern tier nations offer contrary perspectives as to the efficacy of Beijing’s economic statecraft, namely Indonesia and East Timor. While obviously asymmetric in practically every respect, nevertheless a careful study of these two nations’ bilateral links with China over long and short times offers salutary lessons on infrastructure financing in particular. Several interconnected inquiries are interposed. In a nation known for its competing political elites and support bases, how successful has China been in micro-managing its relations with Jakarta over trade and investment deals even carrying through to a post-authoritarian order? How has newly independent albeit aid-dependent Timor-Leste been able to parlay the China connection? Mixing documentary with primary research in situ, the inclusion of the East Timor case adds a missing link in the growing literature on the BRI.

The Asian Infrastructure Investment Bank: A Qualified Success for Beijing's Economic Statecraft

In 2013, China's growing economic capacities motivated Beijing to launch a multilateral bank to advance its diplomatic agenda. Scholars are still debating precisely what Beijing seeks to accomplish through the Asian Infrastructure Investment Bank (AIIB). This article surveys the key literature on the AIIB, identifying twenty scholarly interpretations of Beijing's strategic goals. The purpose of this research is to understand Beijing's initial design for this bank and evaluate whether this new multilateral development bank can function as an effective instrument for Beijing's economic statecraft. Over its first five years, as an economic tool for Beijing, the AIIB has performed quite remarkably well. The bank not only operates smoothly, generating a reasonable amount in net income for its shareholders, but also serves Beijing's strategic purposes in expanding China's regional influence, enhancing its international status, and ascending toward global leadership.

Carrots, not Sticks: A Historical Analysis of Beijing's Economic Statecraft Towards Hong Kong

This analysis offers a historical assessment of “economic statecraft” in Beijing's approach to Hong Kong from 1997 to 2020. It discusses how the concept of “economic statecraft” can be applied to Beijing–Hong Kong relations given the nature of the “one country, two systems” framework, and looks at some differing perceptions about economic statecraft in Hong Kong. It argues that, during this period, economic tools were in general used by Beijing relatively sparingly, and in the form of inducements rather than coercion. In conclusion, the analysis suggests that the contested interpretations of Beijing–Hong Kong economic relations demonstrate that “economic statecraft” is to a certain extent in the eye of the beholder.

Grand Strategy and the Tools of Economic Statecraft

Economic statecraft provides great powers with a set of valuable tools they can employ in pursuing grand strategies, but the importance of its contribution is often overlooked. This chapter provides a conceptual framework for understanding how policymakers can leverage the tools of economic statecraft to achieve major objectives in pursuit of their grand strategies, including: bargaining, balancing, generating power and prosperity, signaling and norms promotion, and influencing nonstate actors. It then maps how economic sanctions, foreign aid, strategic commercial policy, and institutionalized economic cooperation can best contribute to the realization of these objectives. The analysis reveals that the flexibility of economic sanctions and foreign aid in achieving numerous objectives helps explain why great powers rely so heavily upon them.

“Aboard Our Development Train”

Chapter 10 focuses on the economic and financial components of China’s grand strategy to build regional order. It argues that the Global Financial Crisis helped Beijing depart from a defensive blunting strategy that targeted American economic leverage to an offensive building strategy designed to build China’s own coercive and consensual economic capacities. At the core of this effort was China’s Belt and Road Initiative, its robust use of economic statecraft against its neighbors, and its attempts to gain greater financial influence through building or promoting alternatives to SWIFT messaging system, new credit-rating agencies, and the US dollar.

PEDDLING OR PERSUADING: CHINA'S ECONOMIC STATECRAFT IN AUSTRALIA

With the globalization of Chinese capital, economic statecraft has become an increasingly prominent component of China's foreign policy. In this article, I examine China's use of economic inducements in developed democracies, a topic of growing concern for policymakers, focusing on the case of Australia. I show how Beijing's attempts to coopt public voices and influence Australia's foreign policy using non-transparent political donations and academic funding generated a strong backlash. At the same time, economic interdependence has provided a buffering effect, with key domestic actors in Australia advocating for cooperative relations, although this effect can in turn be limited by Beijing's coercive economic tactics. My findings underline the reputational costs of certain approaches to economic statecraft, the value of building supportive coalitions, and the challenges faced by China's authoritarian state capitalist model. They also highlight the impacts of globalized Chinese capital in developed democracies, including the resilience and vulnerabilities inherent in democratic political processes.

US–China commercial rivalry, great war and middle powers

This paper examines whether the recent trade war between the US and China would lead to a great power war. In so doing, we rely on two theoretical frameworks, mercantilism and power transition theory, that are likely to link trade war to a military confrontation. Evidence shows that the trade war per se is not a sufficient condition for an all-out war between the US and China. Unlike mercantilists argue, first, we identify the importance of domestic coalitions before trade war being escalated to a military conflict. Second, we find that trade war as economic statecraft is a viable means to suppress a challenger’s capability, which may stop or delay the power transition process. The findings provide implications for middle power countries where strategic choices are required between the two major powers.