2018: CHANGING WORLD PATTERN AND CHINESE DIPLOMACY

SU GE

Co-Chairman, Pacific Economic Cooperation Council and Chairman,China National Committee for Pacific Economic Cooperation

In 2018, complex and profound changes kept happening to the world pattern. As revealed by close examination, evolution of balance of world forces had entered a historical process from quantitative change to qualitative one. Some of the changes had not come about all of a sudden, but were necessary results of accumulative evolution of various interwoven factors.

As peace and development remained to be theme of the times, international pattern was in a state of major development, major change and major readjustment but deficits in peace, development and global governance stood out. As unstable and uncertain factors in international situation were on the increase, major-country contradictions and contests intensified. Regional hotspot issues were tempestuous. As traditional security issues mingled with untraditional ones, security challenges to the international community remained serious and complicated. The dark clouds of Cold War mentality, regional disturbance and terrorism lingered on while risks like climate change and waves of refugees continued to appear.Unilateralism and protectionism greatly impacted on the multilateral trade system, continuing to widen economic and financial divides and affecting the prospect of world economic growth.

“AMERICA FIRST”IS BEGGAR-THY-NEIGHBOR

The international pattern undergoes unprecedented change unseen for over the past century: developing countries and emerging economies rise as a group, their role and influence ever increasing. In comparison, the relative strength of the US and West is on continued decline.

As the depth and speed of change in international situation exceed the psychological anticipation of US politicians,causing serious strategic anxiety on the part of the latter. Against changing domestic and international backdrops,Donald Trump assumed US presidency in 2017, giving rise to significant readjustment on US foreign strategy and its practice in policy, with concussions to all parties in the international system to varying degrees. In spite of being the dominant player in the international order since the end of the Second World War, the United States has now brought one uncertainty after another to the international order.

Pursuing an “American First” policy,President Trump kept “pulling out”from international organizations and international agreements. Four days into his presidency in January 2017, he openly declared US withdrawal from the Trans-Pacific Partnership Agreement(TPP). Afterwards, he announced US withdrawal from the Paris Agreement on Climate Change in June of the year, the main reason being that he believed the agreement would cause a huge loss of US jobs somewhere down the road.

In October 2017, US State Department declared US withdrawal from the UNESCO by December 31, 2018, one of the reasons for which, according to an analysis, was to clear up overdue fees at a value of US$500 million. In December 2017, Trump decided for US withdrawal from an UN agreement on globally resolving issues on refugees and migrants. It happened when the United Nations was about to hold a conference on global migrant affairs. Believing that the UN revision of the agreement was not “in agreement” with US policy on migrants and refugees, the US side decided to “take back border control”.

In May 2018, President Trump announced that the US would withdraw from the Iran Nuclear Agreement and place severe economic sanctions on Iran, arousing strong reaction from the international community. In June 2018,the US declared to withdraw from the UN Human Rights Council, alleging that the latter was “biased” against Israel.

The Beijing Summit of the Forum on China-Africa Cooperation (FOCAC) was successfully held in September 2018. Chinese President Xi Jinping attended the opening ceremony and delivered a keynote speech titled “Work Together for Common Development and a Shared Future”. In the summit, leaders of China and African countries decided to jointly promote the close synergy among the Belt and Road Initiative, the AU Agenda 2063 and the UN 2030 Agenda for Sustainable Development. The picture shows Xi Jinping and foreign leaders posing for a group photo ahead of the opening ceremony. (Photo source: Xinhua News Agency)

It is not difficult for one to see that though the issues for US withdrawals may vary, a core issue is that the US is reluctant to take up its due responsibilities and pay the high cost for global governance. When its interest is in conflict with that of other countries, it is only natural for the “America Firsters”to resort to the approach of beggar-thyneighbor.

In October 2018, the North America Free Trade Agreement (NAFTA) was renamed US-Mexico-Canada Agreement(USMCA). The agreement covered a total trade volume of US$ 1.2 trillion per year, seeming to be more in favor of the US. It also included a “poison pill” article, attempting to stop its member countries from entering into free trade agreements with“non-market economies”.

Furthermore, the US had on several occasions questioned the rules of the World Trade Organization (WTO).President Trump had time and again criticized the WTO for being “unfair to the US”. In late August 2018, when he was interviewed by Bloomberg News,Trump remarked once more that if the WTO did not change its behaviors to the better and continued to put the US on the losing end, the US would consider withdrawing from it. The US seemed to be certain that the WTO no longer played a desirable role and made up its mind to change the rules of international trade, attempting to reconstruct the global trade pattern that would maximize its own interest.

In November 2018, the APEC Economic Leaders' meeting held in Papua New Guinea, for the first time in history, failed to produce an APEC economic leaders' declaration. One of the reasons behind it was that the US had attempted to force its positions into the declaration whereas the Chinese position was to support necessary reform on the WTO conditioned that the reform should be development-oriented and ensure policy space for developing countries.

REORGANIZATION OF INTERNATIONAL RELATIONS

First, China-US relations had been tempestuous. The Trump Administration came up with reports such as National Security Strategy of the United States of America, National Defense Strategy and Nuclear Posture Review,which from three different aspects accelerated the implementation of “Indo-Pacific strategy”. By so doing, the US, as“chief of the alliance”, cozied up to India while enhancing security alliance with Japan and Australia.

In regard to military security, it strengthened integration and linkage between its military forces in the West Pacific and in the East Indian Ocean as well as its military deployments in surrounding areas.

On the issue of South China Sea, the US Navy continued with its “freedom of navigation” operations, extending the target area from the Nansha Islands to the Xisha Islands and sending not only warships to cruise the territorial waters of the Chinese islands and reefs but also warplanes to directly fly over those islands and reefs.

On the Taiwan issue, some of the people in the US kept testing the bottom line of the Chinese mainland, revealing the intention to “play the Taiwan card”. At the same time, some people in the US made irresponsible remarks on stability situation in Xinjiang region. In the area of social and cultural exchange,the US placed certain restrictions for Chinese scholars to enter US science and technological field. According to a media report, the US had tightened up certain visas to China.

Second, US-Russia relations continued to be tense. After his election as US president, President Trump had on several occasions tried to ease relations with Russia. At the 2017 G7 Summit, he suggested to allow Russia to return to the “G-7 Group”, only to encounter opposition at home and from the allies. In July 2018, he had first official meeting with President Putin in Helsinki, which not only met with opposition within the US but also aroused conjectures and misgivings within the NATO.

Handicapped by anti-Russian domestic forces, the Trump Administration had no other option but to pursue a more hardline policy to Russia so as to alleviate pressure from domestic forces that questioned Trump's “collusion with Russia”. Against this background, the US increased its economic sanctions,military deployment and strategic pressure on Russia. Russia retaliated by passing a law against unfriendly conducts of the US and other countries and publishing a state of the union address to show a hardline posturer, putting advanced weaponry on display as a countermeasure.

At the same time, Russia-Europe relations went through piling tests. The dispute between Russia and the UK over“spy poisoning”went on and induced chain reaction, Russia-Europe relations dropping to a new low. Though German and French leaders made respective visits to Russia, Russia-Europe relations remained sensitive and fragile. In view of fierce confrontation between Russia and Ukraine in the Kerch Strait, Trump temporarily called off a planned meeting with Putin at the G20 Summit at the year's end.

Third, the US hit out in all directions with its sanctions. Trump's economic and trade frictions were not targeted on only China, his club being wielded to longstanding US allies and friends as well, including Canada, Mexico, the Republic of Korea, Japan, India and some of the EU countries. Trump's decisions for withdrawing from the TTP, scrapping the NAFTA to start all over again and abandoning talks on Trans-Atlantic Trade and Investment Partnership(TTIP), all standing for persistence in his own way intensified differences and contradictions between the US and its European allies, Canada and Japan.

Europe faces many a problem of its own, including the difficult Brexit of the UK, social upheavals in France and the rise of parties on the far right in Germany, France, Italy and other countries. At the same time, US-Europe relations became focus of attention for public opinion now and then. During his visit to Europe, Trump openly made known his dissatisfaction with the UK and France,widening the cracks between the US and the EU in economic and security areas for the being. As Japan deeply felt that it could not save the situation of its economic decline by relying on the US only, it did its best to save the TPP.Eventually it helped produce Comprehensive Progressive Trans-Pacific Partnership (CPTPP) and reached a free trade agreement with Europe that cleared up all tariffs. Of course, the US and its allies had“split but not divided”,contradictions between them not being irreconcilable.

Fourth, international economic risks were on the increase. In its report World Economic Outlook published in October 2018, the IMF predicted that for both 2018 and 2019, global economic growth would be 3.7%, 0.2 percentage point below its predictions in July, the main reason for which was increased external pressure and financial challenge for emerging economies and remarkable escalation of trade tension. Raise in US interest rate, a strong US dollar and fluctuation in financial market could put pressure on emerging markets and developing economies.

Seriously concerned about the trend of US trade frictions with China, the IMF downscaled growth expectation indexes for some of the major economies:the US economic growth expectation for 2018 was 2.9%, but that for 2019 was downscaled to 2.5%; China's economic growth rate might drop to 6.2% in 2019 whereas the figure for 2018 was 6.6%and that for 2017, 6.9%; GDP growth in the Euro zone might be slowed to 1.9%whereas that for 2018 was 2.9%; that for the UK would also go slow. Owing to multiple factors, economic outlooks for emerging economies and developing ones could not be optimistic.

Fifth, regional hot spots varied in shape. First, a turn-around appeared in the Korean nuclear crisis. Compared to 2017 when all was set for a showdown,the Korean peninsula situation turned around significantly. DPRK-ROK and China-DPRK summits happened respectively. On June 2018, the DPRK leader and his US counterpart met in Singapore, signing a historical document.Though confrontational situation in the peninsula at ease, the possibility of a reversal to progress cannot be ruled out.

Second, the Middle East situation could hardly be eased. Owing to the involvement of major countries like the US and Russia and quite a number of external forces, though the situation in Syria improved, it was still difficult to see the light of peace. The contradictions between the US and Iraq continued to intensify. The Trump Administration's withdrawal from the Iran nuclear agreement intensified contradictions,and placed under sanctions once again,Iran had threatened also to withdraw from the deal and to relaunch its nuclear program. The assassination of Saudi journalist Jamal Khashoggi continued to simmer, posing certain challenge to regional international relations.

Third, the Latin American situation was in unabated fluctuation. Jair Bolsonaro, “Brazilian edition of Trump”and a right-wing political figure won the general elections with a clear majority and became new president of Brazil;Mexican left-wing candidate Andrés Obrador won presidential election with an overwhelming majority and became the first left-wing president in the country since the 1980s; the economic and security situation in Venezuela continued to deteriorate, with an outflow of people to neighboring countries.

US READJUSTS ITS CHINA STRATEGY

The new edition of National Security Strategy of the United States of America made major readjustment: the focus of US foreign strategy was no longer dealing with terrorism but switched to traditional major country contest. The report believed that the US national security interest faced three kinds of challengers, namely “revisionist states”, “rogue regimes” and “transnational threat groups”. China and Russia were categorized into the first group, both being“revisionist states” attempting to change the status quo. Though the allegation of“China threat” made a great noise, the report pointed out that on a number of issues the US needed to cooperate with China, especially on the nuclear issue of Korean peninsula.

The negative, anti-China sentiment was on the rise in the White House, the US Capitol and both of the two major parties. In political security area, at the beginning of 2018, both houses of the US Congress went through the process of examination and passed Taiwan Travel Act, which being signed into law by the US president lifted the ban on official exchange between Taiwan and the US. In the mid-year, the US Congress passed FY 2019 Defense Authorization Act, which included several contents concerning China like placing a ban on inviting China to take part in the Rim of the Pacific joint military exercises. In August 2018, US Defense Department published an annual report on military and security developments involving China (or China Military Power Report),which not only continued to play up“China military threat” but also made irresponsible accusations on China for its normal construction on islands and reefs in the South China Sea, alleging that the country was developing longrang strike capability and preparing to“reunify Taiwan by force”.

In economic and trade area, the US Senate passed Foreign Investment Risk Review Modernization Act (FIRRMA)in June 2018, giving the Committee on foreign investment in the US (CFIUS)more extensive reviewing power, clearly pinpointed to China. In July, the US Congress passed Export Control Reform Act, asking the Bureau of Industry and Security of the US Commerce Department to work out an export control regime with 14 categories of cutting-edge technologies, strengthening blockade on technological export to China. By the year's end, Canada arrested a leader of Huawei Technologies upon the request of the US. As a commentator pointed out, behind this base conduct there was concealed strategic intention of some of the US forces to contain China's development, particularly that of high technology.

After several rounds of “offerings”,the US Government provoked a “trade war” on China, which went on in gradual escalation. As the US was bent on a“trade war”, Chinese diplomacy waged a reasonable, advantageous and restrained struggle. The Chinese side was very firm on the position that China did not want a trade war, but was not afraid to fight one and had to fight it when necessary. Its attitude was clear that for a trade war, it would fight to the very end and for trade talks, its door was always open. On matters of core interest,China firmly upheld its principles and bottom line. However, for the list put forward by the US, China made realistic assessment of it and dealt with it quite flexibly, being neither obsequious nor arrogant.

The Diplomatic events at home in 2018 have further demonstrated China's profound changes and remarkable achievement during the past four decades since the launch of the reform and opening-up policy. The picture shows the opening ceremony of the China International Import Exposition held in Shanghai on November 5th, 2018.

In a trade war, there is hardly a winner. If the US kept up with a trade war on China, it would also hurt US economy. By the end of August, the US Congress held a hearing on imposing tariffs to US$200 billion worth of Chinese export products to the US, at which more than 300 representatives of industrial associations and enterprises made statements, most of them speaking against it. In early September, 150 US industrial associations jointly wrote a letter to the US Trade Representative, pointing out that imposition of tariffs would not only severely damage the global supply chain but also seriously hurt the interest of US businesses and consumers.

As a Chinese saying goes, it costs 800 casualties of one's own at best to take 1000 enemy ones. After the “trade war”began, US international trade deficits were not significantly reduced whereas many foreign investors began or considered to pull out from US stock market and debt market. The US did not benefit from a trade war on China as it had expected to.

On December 1, 2018, light at the end of tunnel eventually appeared at the G-20 Summit. President Xi Jinping had a working dinner with US President Donald Trump in Buenos Aires at the latter's invitation. In candid and friendly atmosphere, both of the heads of states had in-depth exchange of views and reached important consensus, charting the course for properly resolving problems between the two countries and pushing China-US relations and China-US economic and trade relations to develop in a healthy and steady way. Both sides agreed to ensure success of China-US relations featuring coordination,cooperation and stability; both leaders reached the consensus to stop mutual imposition of new tariffs and instructed their economic teams to step up negotiations toward the cancellation of all tariffs imposed in the year so as to reach a specific mutually-beneficial agreement; both sides also agreed to enhance cooperation on bilateral, regional and international issues. As such, China-US“trade war” came to a temporary truce.

As the two largest economies in the world, it is natural for differences and contradictions in economic and trade area to exist between China and the US.It will take concerted long-term efforts between both sides to ultimately resolve them in a proper way. To effectively advance China-US relations with a defining feature of coordination, cooperation and stability, the only correct option is to enhance dialogue and communi-cation and accommodate legitimate concerns of one another. At the same time, however, China should entertain“bottom line” thinking, to make proper assessments and distinctions of contradictions and differences that may recur.

CHINESE DIPLOMACY PROGRESSES IN STABILITY

Between June 22 and 23, 2018, the Central Conference on Work Relating to Foreign Affairs was held in Beijing,whose most important outcome was to establish the guiding role of Xi Jinping Thought on Diplomacy of Socialism with Chinese Characteristics for a New Era. Under the guidance of Xi Jinping Thought on Diplomacy, the majorcountry diplomacy with distinctive Chinese features had started comprehensively.

First, to stabilize major-country relations. In face a complex situation of the US readjusting its China policy and waging a trade war, China kept its composure and calmly dealt with the situation, firmly defending its national interest and persisting in advancing globalization and multilateralism. Led by heads of states of China and the US,general orientation of the bilateral relationship was set for mutually beneficial cooperation. Between China and Russia,both heads of states had several meetings over the year, conducting strategic communication on a series of major international issues and continuing to deepen the comprehensive partnership for strategic collaboration and to play an important role in safeguarding world peace and stability. China-Europe relations became still closer, China's relations with the UK, France and Germany improving in stability.

Second, to improve relations with neighboring countries. Between March and June, 2018, Kim Jong-un, Chairman of the Workers' Party of Korea, made three visits to China at the invitation of General Secretary Xi Jinping. Both heads of states had several meetings over the year, China-DPRK traditional friendship being consolidated and China continuing to play a key role on the issue of Korean peninsula.After the resolution of Doklam standoff in 2017, China helped materialize two visits by Indian Prime Minister Modi to the country in 2018, leaders of both countries further deepening strategic communication and giving impetus to building mutual strategic trust. China-Japan relations made a dramatic breakthrough, marked by Premier Li Keqiang visiting Japan for the first time in May 2018 and Prime Minister Shenzo Abe visiting China in October, meeting with President Xi Jinping. On the occasion of the 40th anniversary of the signing of China-Japan Peace and Friendship Treaty, improvement of China-Japan relations was of positive significance for promoting regional economic growth and even that of the world at large. As China and the ASEAN celebrated the 15th anniversary of the establishment of their strategic partnership, their mutual political trust reached a higher level, bringing about more development opportunities and more extensive space for cooperation.China continued to coordinate bilateral relations between Pakistan and Afghanistan, continuing to contribute to peace, security and development of the Central Asian region.

Third, to lay a solid foundation for relations with developing countries. For Chinese diplomacy, 2018 marked the year of South-South cooperation, from China-Latin America Forum to China-Arab States Cooperation Forum and on to China-Africa Cooperation Forum,China achieved full coverage of collective dialogue with developing countries.The Ministerial Meeting of China-Latin America Forum made a special statement on supporting and partaking in the Belt and Road construction;the Ministerial Meeting of China-Arab States Cooperation Forum came up with a declaration of action on joint Belt and Road construction. In 2018, the China-Africa Cooperation Forum Beijing Summit was successfully held in Beijing,at which leaders of China and African countries assisted the grand occasion together, discussed cooperation, sought common development and decided to closely interface the Belt and Road with African Union Agenda 2063 and United Nations Agenda for Sustainable Development 2030. The Summit made eight initiatives for industrial promotion,infrastructure connectivity, trade facilitation, green development, capacity building, health care, people-to-people exchange, and peace and security. Chinese leaders also made visits to a number of developing countries in Asia and Latin-America, promoting continued indepth development of friendly cooperation.

Fourth, to manage multilateral diplomacy. In 2018, China hosted four home-field multilateral diplomatic events, including the Boao Forum for Asia, the Qingdao SCO Summit, the China-Africa Cooperation Forum Beijing Summit and the China International Import Expo. It took part in four away from home multilateral diplomatic events, including the 10th BRICS Leaders' Meeting held in South Africa,the APEC Economic Leaders' Meeting held in Papua New Guinea, the East Asia Summit held in Singapore and the G-20 Summit held in Argentine. All of the above multilateral events, homefield and away from home, further underscored the great changes and results China had made in forty years of reform and opening-up and demonstrated China's firm determination in deepening reform and opening-up,in resolvedly persevering with the orientation of globalization, continuing to make contributions to global governance and also in providing world development with Chinese approach,Chinese wisdom and Chinese dynamics for common development.

As the world undergoes unprecedented change on international pattern unseen for the past century, China has entered into the historic intersection period in achieving its two centennial goals. This decisive period happens to be one of high incidence of various international and domestic contradictions.Facing a chaotic and changing situation with pressures and challenges from various quarters, China must, as a late comer to the center of world arena, entertain indomitable ideal and conviction and persevere with persistent strategic focus. It will forge ahead, braving wind and rain.