March 16, 2019

Foreign Policy

Diplomacy that is constructive in nature

By Yang Danzhi | China Daily | Updated: 2019-03-14 07:12


In its almost seven-decade-old diplomatic history, the People’s Republic of China has witnessed tremendous changes in international relations. In the initial stages, the essential task of China’s diplomacy was to fit into the world order as an independent sovereign country, and to safeguard its rights and interests while helping international relations to move toward a more equitable and reasonable direction.

Over the past nearly 70 years, China has weathered many a storm in international relations while making great achievements. In fact, New China’s diplomatic history can be broadly divided into three main parts.

Foreign policy aimed at safeguarding core interests

First, China is determined to safeguard its core interests, unswervingly follow the path of peaceful development, and committed to moving in the right direction. As the 2011 White Paper on China’s peaceful development said, China’s core interests comprise its sovereignty, security, territorial integrity, the stability of its political system and society as defined by the Constitution, and the basic guarantee of sustainable economic and social development. As a matter of fact, Chinese diplomacy’s main task is to safeguard the country’s core interests.

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The White paper also said China has always followed (and will continue to follow) an independent foreign policy and the path of peaceful development. China pursues an independent foreign policy and follows the path of peaceful development so that it can promote cooperation and peace around the world-especially by using them to settle regional and global disputes-and foster quality development and social harmony at home.

Second, to keep pace with the times and increase its say in global affairs, China has gradually developed an all-round, multi-layered and three-dimensional diplomatic pattern.

In the early 1980s, China sought to establish good relations with countries and create a regional and global environment that would help promote its opening-up policy. It also looked to the West for help to speed up its modernization drive. China has not only engaged with the outside world but also pursued opening-up and win-win cooperation on the basis of mutual respect and consultation, while seeking common ground and shelving differences.

A worldwide web of friendly nations

China has also been advocating building mutual trust and deeper cooperation with other countries in security issues, and resolving international disputes through peaceful negotiations. In doing so, it has won the admiration of the international community and established diplomatic relations with 178 countries.

Third, China has made continuous efforts to make the regional and global governance mechanisms fairer and equitable. In the mid of 1950s, it developed the Five Principles of Peaceful Coexistence-mutual respect for each other’s territorial integrity and sovereignty; mutual non-aggression; mutual non-interference in each other’s internal affairs; equality and cooperation for mutual benefit; and peaceful coexistence-which has had a profound influence on the world.

Engagement with other nations to make world a better place

And thanks to the rapid growth in its comprehensive national strength over the past decades, China has intensified its engagement with the international community and increased its contributions to global mechanisms and initiatives for the betterment of humankind. In particular, since the 18th National Congress of the Communist Party of China in November 2012, China’s diplomacy has made a series of major achievements in theory and practice guided by the principle of building a community with a shared future for mankind.

Moreover, China also pursues common development with African countries based on the spirit of sincerity, results, affinity and good faith, and guided by the principle of amity, sincerity, mutual benefit and inclusiveness. In the new era, Chinese diplomacy has also been enriched by new concepts and visions, such as the right approach to justice and interests, new type of international relations and win-win cooperation.

China has proactively promoted the construction of global and regional mechanisms such as the Shanghai Cooperation Organization, the Lancang-Mekong cooperation mechanism and the Regional Comprehensive Economic Partnership, and initiatives such as the Belt and Road Initiative to boost regional cooperation and strengthen multilateral cooperation.

It is therefore clear that China’s diplomacy has advanced with the times and strived to create an atmosphere for peace and development not only in the region but also in the rest of the world. And irrespective of the difficulties and challenges it faces in the future, Chinese diplomacy will forge ahead on the path of peace and development to make greater achievements.

The author is a researcher at the National Institute of International Strategy, Chinese Academy of Social Sciences. The views don’t necessarily represent those of China Daily.

Navigating ASEAN’s economic priorities

February 14, 2019

Navigating ASEAN’s economic priorities

By  Kaewkamol Pitakdumrongkit, RSIS

Southeast Asian economies may face major economic headwinds this year amid US–China trade tensions and US Federal Reserve interest rate increases. To help weather the impact, ASEAN member states should prioritise progress on regional economic initiatives.

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Some observers think that the 90-day truce between Washington and Beijing could beget better relations between the two powers. But they may be overestimating China’s ability to make concessions that fulfil what the Trump administration wants. Buying more American products is easy, but implementing measures to address ‘unfair’ trade practices to a degree that satisfies the United States is more difficult to achieve within 90 days. More rounds of tariff escalations or other trade-restricting measures could be in the offing.

On the financial front, in December 2018 the US Federal Reserve raised interest rates from 2.25 to 2.50 per cent and forecast the possibility of further increases in 2019. The Fed did so to ensure there will be room for it to use monetary policy and decrease interest rates to fight the next US recession.

Additional hikes could trigger capital pull-outs from Southeast Asian countries as investors move funds to seek higher yields in the United States. If not well-managed, such capital outflows may instigate financial instability in the ASEAN region.

Regional economies must brace themselves for future economic and financial turbulence. While they are unlikely to be able to avoid such headwinds, ASEAN member states can nevertheless cushion the impact through regional initiatives: the ASEAN Economic Community (AEC) 2025, ASEAN–Hong Kong Free Trade and Investment Agreements (AHKFTA and AHKIA), Regional Comprehensive Economic Partnership (RCEP) and Chiang Mai Initiative Multilateralization (CMIM).

Policymakers should prioritise the complete implementation of the AEC 2025. This is a regional economic integration project by the 10 ASEAN member states designed to achieve five objectives: a highly integrated and cohesive economy; a competitive, innovative and dynamic ASEAN; enhanced connectivity and sectoral cooperation; a resilient, inclusive, people-oriented and people-centred ASEAN; and a global ASEAN.

Advancing the AEC 2025 will enable businesses to better tap into the integrated market of over 600 million people, rendering regional economies more resilient to the incoming headwinds.

Southeast Asian governments should also ratify the AHKFTA and AHKIA signed in November 2017 so that these treaties can enter into force in early 2019 as expected. The agreements will enhance cross-border flows of goods, services and investment between ASEAN and Hong Kong.

The agreements will not only allow firms to enjoy greater access to goods and services markets and better investment protection, but also enable ASEAN nations to further tighten trade and investment ties with China. The latter will help Southeast Asian economies to recuperate from any damage that future Washington–Beijing trade spats may inflict on them.

ASEAN authorities should also concentrate on wrapping up RCEP talks. If concluded, this 16-economy free trade bloc will encompass a market of 3.6 billion people that contributes to a third of global GDP. It will cover 29 per cent of global trade and 26 per cent of the world’s foreign direct investment flows.

Concluding the negotiation will create more opportunities for businesses to deepen their supply chains, and provide RCEP economies with another means to diversify their economic relations and cushion against the negative effects of future US–China trade war spats.

Finally, ASEAN nations together with China, Japan and South Korea (ASEAN+3) should advance the CMIM, a regional financial safety net under the ASEAN+3 framework. Launched in 2010, the scheme provides financial support through a network of currency swaps to help ASEAN+3 nations weather their balance-of-payments difficulties.

Because future Fed rate hikes could trigger investor panic leading to financial instability and capital flights in certain regional economies, the CMIM can provide financial assistance to alleviate such problems.

Admittedly, the above initiatives face their own challenges. A major hurdle for implementing the AEC 2025 is a lack of coordination among domestic ministries and agencies. Individual ASEAN countries must sort out how to improve coordination among the involved authorities. Certain domestic hurdles must also be cleared for a successful ratification of the ASEAN–Hong Kong treaties.

Planned elections in Australia, India, Indonesia and Thailand in 2019 may delay the conclusion of RCEP negotiations in the first half of 2019. Politicians in these nations will likely prioritise their electioneering over international matters. And if the momentum of RCEP talks picks up in the second-half of the year, the parties’ different positions and preferences will still need to be reconciled to seal the deal.

Regarding the CMIM, while a laudable agreement was signed in December 2018 to create more favourable conditions that will enable the regional financial safety net to better assist in a crisis, efforts to advance other aspects of the CMIM have been lacklustre in recent years.

For one, its size has remained the same at US$240 billion since 2012. With this amount, the scheme can at best provide simultaneous lending support to a few small- and medium-sized economies should they come under a crisis. The participants must push for an expansion of the CMIM’s size.

US–China trade tensions and Fed rate hikes will likely generate undesired effects for Southeast Asian economies this year. Despite the challenges of the above initiatives, ASEAN countries must collectively pursue them to navigate through the coming economic headwinds. Time is running out and policymakers must act fast.

Kaewkamol Pitakdumrongkit is Deputy Head and Assistant Professor at the Centre for Multilateralism Studies, S Rajaratnam School of International Studies (RSIS), Nanyang Technological University, Singapore.