Reappraising Relations with China: From Strategic Ambiguity to Recognising Mutual Interests


Re-emergence of China

The re-emergence of China is one of the most transformative processes of our time. As a re-emerging country ourselves, it is vital for us to understand the implications of both China’s and our own rise for global governance, the globalized economy and regional stability.The key elements shaping China’s foreign policy on these three strategic issues are now becoming evident. First, China has articulated its national goals and analysis of global trends that it will respond to and seek to influence. The Chinese have a focus on Asia where two thirds of future global growth is going to take place. Second, the Chinese emphasis on access to more natural resources is being replaced by access to new markets. This is being spearheaded by investment in infrastructure, as China shifts from being the ‘factory of the world’ to a services- and knowledge-based economy, again, with an emphasis on Asia. Third, China’s military focus primarily responds to the US “re-balancing to Asia” (which involves the stationing of 60 per cent of America’s aircraft carriers, nuclear submarines and combat aircraft in the Pacific), by developing new weapons to keep these American assets at bay rather than seeking to match firepower. Analysts differ in their assessments of the intention of the Chinese because these responses are different from the approach adopted by the United States during its own rise in the last century. Today, a very different international system is framing China’s relationships with other countries.China’s overriding objective continues to be to bring its population into the middle class. Its key concern is signs of strain in the economy as the country moves towards the final phase of its re-emergence before becoming the only country to age before it becomes rich, that is, around 2050. President Xi Jinping is seeking to maintain the momentum of growth by expanding trade and investment, creating new regional institutions, and strengthening the military.

China’s Foreign Policy Goals

The Central Conference on Work Relating to Foreign Affairs, the Chinese Communist Party’s highest-level meeting on foreign relations, held at the end of November 2014, has established “the guidelines, basic principles, strategic goals and major mission of China’s diplomacy in the new era”. Its assessment was that China has to respond to five global trends: multipolar world, globalization, peace and development, reform in the international system, and growing prosperity in the Asia-Pacific region. The Chinese leadership sees these long-term trends as providing an opportunity for China’s further overall development. Its overriding objective is the realization of the “two centenary goals”: doubling the 2010 GDP and per capita income of both urban and rural residents, and achieving the renewal of the nation by the 100th anniversary (year 2049) of the Communist Party gaining power.

The elements of this vision are:“We should advance multilateral diplomacy, work to reform the international system and global governance, and increase the representation and say of China and other developing countries… [be] keenly aware of the protracted nature of contest over the international order… [be] mindful of the complexity of the evolving international architecture… [and] also recognize that the growing trend toward a multi-polar world will not change.””We should promote neighbourhood diplomacy, turn China’s neighbourhood areas into a community of common destiny, and continue to follow the principles of amity, sincerity, mutual benefit and inclusiveness in conducting neighbourhood diplomacy, promote friendship and partnership with our neighbours, foster an amicable, secure and prosperous neighbourhood environment, and boost win-win cooperation and connectivity with our neighbours.””We have advocated the building of a new type of international relations underpinned by win-win cooperation, put forward and followed a policy of upholding justice and pursuing shared interests and championed a new vision featuring common, comprehensive, cooperative and sustainable security. We should strengthen unity and cooperation with other developing countries and closely integrate our own development with the common development of other developing countries.”

Interplay Between Geopolitics and Economics

China is increasingly making use of economic tools, including cross-border investment, trade treaties and regional integration, to establish relative geopolitical power. Its “new model of major country relations” applies not only to relations between the major powers but also applies to “major developing powers” (kuoda fazhanzhong de guojia) and seeks to “promote neighbourhood diplomacy, turn China’s neighbourhood areas into a community of common destiny”.  China is not relying on keeping commodity prices low and securing preferential access to markets. Instead, it is reviving the ancient concept of the Silk Road – which connected the Chinese empire to Central Asia and the Middle East – on commercial terms, with a proposed investment of $40 billion for building a network of railroads, pipelines, highways, and canals. The infrastructure will be financed and built by Chinese banks and companies to facilitate more trade between China and much of Asia, and secondarily with Europe and the rest of the world. China, for instance, has extended in the past decade $12.5 billion more in loans to Sub-Saharan Africa than the World Bank – $67.2 billion between 2001 and 2010 as compared with the World Bank’s $54.7 billion.

China is establishing new multilateral institutions. It has worked with the BRICS countries to set up a bank and credit facility that will supplement, and challenge, the International Monetary Fund and the World Bank. It has also established the Asian Infrastructure Investment Bank, to supplement and challenge the Asian Development Bank. These efforts have gained added support because of the reluctance of the United States to share power in these multilateral institutions and also because of the greater Chinese emphasis on infrastructure financing, which is now the priority of countries in Asia.

China has also promoted new regional security initiatives. The Shanghai Cooperation Organization includes Russia and four Central Asian states, with India and three others as observers, and Turkey and two others as dialogue partners. The objective is to build a new Asia-Pacific security structure that would exclude the United States. Speaking at a conference in May 2014, Xi pointed out: “It is for the people of Asia to run the affairs of Asia, solve the problems of Asia, and uphold the security of Asia.”2  This, too, is a “new type” of regional security arrangement.

China has a clear focus on Asia. Its stated aim is to pursue a “neighbourhood policy featuring amity, sincerity, mutual benefit and inclusiveness.” This approach has the potential to undermine the global rule based system because of the scale and speed of the initiatives.  President Xi has also sought to reassure China’s neighbours. Last month he initiated a dialogue with Japan’s Prime Minister Shinzo Abe after an almost two-year freeze. President Xi also signed agreements with US President Barack Obama, improving a tense relationship after months of secret negotiations. In commitments to curb greenhouse gas emissions China agreed for the first time to stop increases in its carbon dioxide emissions by around 2030 or earlier while the United states agreed to emissions reduction; this issue that had pitched the two countries as adversaries in the United Nations. Two new agreements were also signed designed to avert military confrontations in Asia, one on notifying each other of major activities, such as military exercises, and the other on rules of behaviour for encounters at sea and in the air. Shortly before the summit, the two sides completed deals to issue 10-year tourist and business visas and to drop tariffs on semiconductors and other information-technology products, which backers say could cover $1 trillion in trade. The effect of balancing economics and geopolitics has been to at least temporarily halt the downward trajectory of relations between these two major powers.

The statements made by the two leaders at the summit on November 2, 2014, are important in indicating the emerging trend of co-existence of economic cooperation and geopolitical conflict in the multipolar world. “Our relations are now standing at a new historical point,” Xi said at the meeting, calling their cooperation a “new model” for relations and expressing his readiness “to work with you in this direction.” Obama responded by noting the “important differences that we have both practically as well as our vision for our respective countries and our conduct in foreign policy,” before adding that the countries “are working together whenever they can.”

China’s economic, financial and trade policies do not have a purely anti-US overtone as the two countries are economically intertwined. It is also actively supporting the trend towards the Asian Century, and the shared prosperity of the region, which challenges the United States. This vision of shared prosperity has the support of countries in the region and requires India as it becomes the engine of global growth to carefully study the measures, mechanisms and management to shape a parallel vision, without becoming competitive as its strengths are in different areas.

China’s Military Goals

China considers the Western Pacific most closely related to its national security; the United States’ 2014 Defense Review Report also places stress on its strategy of strategic balance in the Asia Pacific. Speaking at the 13th Forum for National Security of China, Zhao Nanqi, held on November 22, 2014, vice-chairman of the Chinese People’s Political Consultative Conference (CPPCC), said that the Western Pacific is “an intersection of four major strategic powers, namely China, America, Russia and Japan, with a very complicated strategic situation. To safeguard the national security of China, it is very important for us to have an in-depth study and analysis of the strategic situation in the Western Pacific, see the security pattern in the West Pacific clearly, and have in our hands the initiative of safeguarding peace and stability in the Asian-Pacific region.”5  China’s naval modernization is focused on the choices that other Asian countries are likely to make in aligning with it or with the United States; China is not going to risk a conflict which will cause huge damage to both. The ongoing Chinese military build-up is very different from Imperial Germany’s naval build-up before the First World War, which was perceived as a direct challenge by Britain not only to its role as the holder of the balance but even to the security of the British Isles. China’s focus remains “offshore defence” and the South China Sea, and it is not developing capabilities for global power projection or posing a threat to the US homeland.

As the 2014 US-China Economic and Security Review Commission points out, China is pursuing a missile-centric strategy with the purpose of holding US aircraft carriers at high risk if they operate in China’s ‘near seas’, thus hindering their access to these waters in the event of a crisis. According to the Commission, given China’s growing navy and the US Navy’s planned decline in the size of its fleet, the balance of power and presence in the region is shifting in China’s favour.”6  The report specifically mentions the Chinese DF-21D missile, a precision-guided, land-launched, anti-ship ballistic missile (ASBM) designed to reach surface targets at ranges greater than 900 nautical miles. Within five to eight years, China will have about 82 submarines in the Asia Pacific area compared with about 32 to 34 of the United States. China has also tested the WU-14 warhead launched by an intercontinental ballistic missile, which can glide and dive from the upper atmosphere at a speed that may be 10 times that of the velocity of sound, reaching around 12,800 km an hour — good enough to breach existing anti-missile defences. China’s military modernization directly challenges American naval supremacy in the Western Pacific.

Anti-ship cruise missiles already exist, but they travel at about one-tenth the speed of a ballistic missile, possess far less kinetic energy, and are proportionately less lethal. According to the latest Pentagon report,7  the Chinese ASBM will have a range of at least 1,000 miles, whereas a long-range cruise missile has a range of about 600 miles. Chinese military planners expect that the missile’s manoeuvrability will allow it to hit and put out of action or destroy large-deck aircraft carriers while they are at sea and far from the Chinese mainland. As a result, even the next generation US naval fighter aircraft will lack the range to safely return to their carriers if launched further than 600 miles from their intended target. This unprecedented missile range and accuracy would allow China to finally achieve its oft-stated goal: denying major US naval forces a significant portion of the Western Pacific. The US Navy currently has no defence against the ASBM, nor does it have one under development. If the United States cannot counter and overcome the ASBM, US influence in South-East Asia is likely to decline.

Balancing Economic Influence and Military Strength

“We should be fully aware that the global economic adjustment will not be smooth sailing; but we also need to recognise that economic globalisation will not stop,” President Xi said. He further added: “We should be fully alert to the grave nature of international tensions and struggle; but we also need to recognise that peace and development, the underlying trend of our times, will remain unchanged.”8  Xi’s speech at The Central Conference on Work Relating to Foreign Affairs on 29 November 2014, attended by the Politburo, military and officials, was widely covered in the Chinese official media, suggesting its significance. It had three key messages. First, it underlined that China is now a great power and needs a foreign policy and related international influence to support it. Xi noted that China can no longer, and does not need to, “hide its light” as Deng Xiaoping had cautioned. Second, he highlighted the fact that significant changes are taking place in China’s neighbourhood and a new world order is emerging; the global shift to a “multipolar” world is a trend. Third, Xi pointed out that a country’s global influence is based on the strength of the economy rather than the size of its military, and economic growth will depend on new institutions and rules to secure national interests, because “peace and development” remain “the underlying trend of our times”9 . New institutions in Asia, and new global rules, are the basis of Xi’s optimism for a more enabling international environment for China’s peaceful development.

Xi also referred to the “grave nature of international tensions and struggle” as well as to steps America has taken to “rebalance” its military might towards the Asia Pacific. At the same time, in November 2014, Xi and Obama announced a number of agreements, including on climate change and on confidence-building measures between the two armies that seek to transform the nature of their bilateral relations. China is close to achieving the ability to control its near seas and protect its access to resources. It is now seeking cooperation on matters of mutual interest and agreements to avert military confrontations like the United States had with the USSR during the Cold War, reflecting the recognition by the United States of the growing military capability of China.

China’s Strategic Interests

Like every other major power in modern history, China has been looking beyond its borders to find massive quantities of natural resources and is now aggressively seeking markets for its internal transformation. Like the Dutch, Portuguese, Spanish, British and American efforts earlier to secure fuel, minerals and food, China is deploying whatever it needs in the economic, political, and military spheres to secure these resources. Like the others, its military seeks to secure the sea lanes while its diplomats protect the country’s interests abroad.

The 2012 edition of the United States Department of Defense Annual Report to Congress stated that “China’s leaders are placing a priority on fostering a positive external environment to provide the PRC with the strategic space to focus on economic growth and development. At the same time, Chinese leaders seek to maintain peace and stability along their country’s periphery, expand their diplomatic influence to facilitate access to markets, capital, and resources, and avoid direct confrontation with the United States and other countries.”

The South China Sea is crossed by more than half the world’s total trade and has vast energy and mineral reserves completely claimed by China and in part by neighbouring Vietnam, Malaysia and the Philippines. The Chinese economy is also dependent on the large number of imports and exports which pass through the Persian Gulf and Strait of Malacca. While its policy in the South China Sea is to challenge the United States, in the Indian Ocean China is seeking staging facilities that do not exclude the presence of India.

A multipolar world is more democratic with milder, even beneficial, consequences for economies, people, and the environment around the world as compared with the world in the 20th century. In 2013, China’s trade amounted to $3.87 trillion as against America’s $3.82 trillion. The rapid growth of Japan in the 1950s and 1960s consumed about nine per cent of the world’s oil, and today China uses roughly 11 per cent. As China industrialized at a breakneck pace, it bought up staggering quantities of everything from oil to copper to iron ore to wheat. Global commodity prices skyrocketed — with oil in particular rising to a record $140 per barrel in 2008; this is in contrast with the earlier industrialization of the West in the second half of the 20th century when commodity prices came down in real terms. Meanwhile, China’s state-owned companies went on an investment spree in Latin America and Africa, in an attempt to secure mines, cropland, and raw materials raising economic growth and incomes in these countries.

The difference from the time when the present global institutions and rules were established in the 1950s is significant in three important respects, which are also relevant for India. First, the speed and scale of the transformation is unprecedented. The spurt in global demand between 1990 and 2010 because of China’s re-emergence involved three times the population that shifted to cities in the West and into the middle class between 1950 and 1970. And the consequent requirement of huge additional demand for natural resources has led to restructuring markets, pushing up commodity prices, transforming resource-rich economies through investment and trade, just as it is changing China itself. India’s own re-emergence will bring into the urban middle class in the next 10 years a population equal to that of the United States and Europe with the related requirement for natural resources and markets.

Second, just as Europe developed a number of ports to facilitate trade and the United States constructed the Eire and Panama Canals to make transport easier between its East and West coast, China is establishing ports in Pakistan and Myanmar to access its landlocked Western and South-Eastern areas, as they are distant from the ports on the East coast. In Sri Lanka, Hambantota being built by China is designed to be one of the biggest ports in Asia. It takes advantage of Sri Lanka’s location north of one of the world’s busiest shipping lanes. Over 80 per cent of the world’s seaborne oil passes through these waters along with almost one-third of global trade. These factors make these three countries – Pakistan, Myanmar and Sri Lanka – important strategic partners for China and India’s relations with these countries will remain an issue for China unless there is an understanding on mutual interests.

Third, just as the United States shaped the post-World War II international order to secure its interests with the establishment of the Bretton Woods Institutions, China is establishing Asia-centred financial institutions. Asia will soon have two-thirds of the global GDP. China has also begun to oppose global rules it finds detrimental to its interests; human rights is an example. So far, it has not proposed an alternative global vision and it would be interesting to see how it approaches the global sustainable development goals now under negotiation. At the multilateral level India and China have a history of coordinating their positions with success as they have common interests.

India must now prepare for the Asian Century

The re-emergence of India will follow the pattern adopted by China, and earlier by the West, in seeking natural resources and markets. A further increase in commodity prices, environmental considerations and changes in lifestyles will, however, result in a lower level of demand and, therefore, less competition. Even more important, India will benefit from the infrastructure established by China to support its own needs which have now begun to stabilize. The related trajectories of rising demand in one country and stabilizing demand in another, in a multipolar world, suggests that it is in the mutual interest of both, and of developing countries in general, to maintain these flows within agreed frameworks that would supplement global rules. There is a natural common ground between India and China in the pursuit a new international economic order and the democratization of international relations in multilateral institutions and global governance regimes.

Technological cooperation could be another area where India and China can work together in sectors such as renewable energy and information technology to develop global leadership, as they both move into the knowledge economy to support economic growth. China had earlier suggested that its hardware competence and India’s excellence in software can be combined for mutual benefit; we should follow up to see if there is continued Chinese interest in this regard. China is amongst India’s largest trading partners, with an adverse balance in favour of China making it an investment source, particularly for high speed railways.

On strategic issues, it is time to include the navies in the on-going India-China bilateral military exercises and dialogue, as a confidence building measure. This is especially important given the trend of Chinese submarines conducting long-range patrols into the Indian Ocean and seeking to defend trade routes, even as our own ships venture into the South China Sea. Recognising mutual interests in the Indian Ocean and in the South China Sea should also be explored, rather than the chess game that is now going on, which adds to the tensions, and where the real beneficiaries are the countries of the region playing-off India and China against each other.

Lastly, we need to boldly move beyond Nehru’s China policy and suggest a time-table to conclude negotiations for demarcating the border in Aksai Chin and recognising the McMahon Line. The border tension is proving expensive for us as we focus on high cost infrastructure development. It is also an aberration in centuries of peaceful existence. As Chinese leaders contemplate how to deal with the perceived “containment and encirclement of China” by the United States in the South China Sea, reliance on and cooperation with India is of high importance for China, and both countries have agreed to pursue the settlement of the boundary question as a ‘strategic objective’.

When Prime Minister Narendra Modi characterised relations with China in terms of moving ahead – “INCH (India and China) towards MILES (Millennium of Exceptional Synergy),”  it reflected the pragmatism of two re-emerging countries with a shared destiny, as they both aspire to be $20 trillion economies in 2050, and both recognise that for that to happen peace and development will be the critical factor.


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