MULTILATERALISM INCREASINGLY IMPORTANT FACET OF CHINA'S

C O N F I D E N T I A L SECTION 01 OF 03 SHANGHAI 000413 SIPDIS DEPT FOR EAP/CM, EAP/RSP, EAP/EP NSC FOR LOI E.O. 12958: DECL: 9/23/2033 TAGS: CH ECIN ECON EFIN PREL XC SUBJECT: MULTILATERALISM INCREASINGLY IMPORTANT FACET OF CHINA'S DIPLOMATIC APPROACH, SAY SHANGHAI SCHOLARS CLASSIFIED BY: Christopher Beede, Political/Economic Chief, U.S. Consulate General, Shanghai, Department of State. REASON: 1.4 (b),(d) ¶1. (C) Summary: Shanghai scholars regard China's increasingly active role in multilateral fora as the product of Beijing's integration into the global economic system and response to the 1997 Asian financial crisis. China's sharper focus on national interests and the elevation of its international image to the level of a material interest have further propelled multilateral engagement. Because institutions with overlapping missions can result in policy inertia or conflicts of interest, Beijing has concluded that specific issues ought to determine a multilateral grouping's mission. China has a particularly strong interest in discrete multilateral groupings on its periphery that stand to help China manage relations with its neighbors and to tackle transnational issues that could disrupt domestic peace and stability. END SUMMARY. ¶2. (U) Poloff met with several Shanghai experts on East Asian and international security affairs in August and September to discuss Chinese views towards multilateralism. The scholars included: Chen Dongxiao, Vice President, Shanghai Institute for International Studies (SIIS); Wu Xinbo, Deputy Director, Center for American Studies (CAS),Fudan University; and Ren Xiao, CAS Deputy Dean, Fudan University. -------------- FROM OUTSIDER TO INSIDER -------------- ¶3. (C) Shanghai scholars consider China's increasingly active multilateral diplomacy to be the result of several factors. Chen Dongxiao regards Beijing's enmeshing into the global economic system as the first stage of China's international involvement, a phase that began in the 1980s and culminated with China's accession to the World Trade Organization (WTO) in 2001. In recent years, China's international profile on economic issues has only grown; its International Monetary Fund (IMF) voting rights have increased, and Beijing has played a key role in formulating ideas for World Bank/IMF accountability reform. At the recent G8 Summit, Chen continues, President Hu Jintao, in a first for a Chinese leader, offered ideas for transforming the global economic system for the new century. Although China's higher profile multilateral successes have been economic, China has been equally active in the security sphere. Chen claims that Beijing is now "generally regarded as part of the solution, not the problem" -- qualifying this statement by noting that, on non-proliferation, on anti-terrorism, and within the Six-Party Talks, China's role is "at least viewed more favorably" than in the past. -------------- FROM CRISIS TO OPPORTUNITY -------------- ¶4. (C) Ren Xiao, on the other hand, points to the 1997 Asian financial crisis as the chief catalyst for regional integration in East Asia and the realization in Beijing that China could contribute positively to regional development. The crisis, during which several East Asian currencies abruptly lost their value, demonstrated that Western institutions "did not have all the answers," Ren observes, and, further, that cooperation within the region could offset the negative effects of future crises and even generate gains for all. Additionally, China's generous aid -- volunteered to prop up the failing currencies -- illustrated for China's neighbors the kind of constructive role Beijing might be capable of playing regionally, Ren points out. That experience helped bring about the ASEAN Plus Three (the Association of Southeast Asian States, plus China, Japan and Korea) mechanism, as well as China's decision to work towards a free trade agreement (FTA) with ASEAN states over the following SHANGHAI 00000413 002 OF 003 ten years. -------------- FROM IDEOLOGY TO INTERESTS -------------- ¶5. (C) Chen also argues that, over the past few decades, China has achieved a better understanding of what constitutes "the national interest." During the Mao years, "war and revolution" carried the day, but former leader Deng Xiaoping's reform and opening up policy announced in 1978 was responsible for the emergence of a framework for measuring national interests. Chen believes that material interests as a goal of foreign policy can be overstressed, to the detriment of "common interests China shares with the world," but that they nevertheless provide a better, more quantifiable yardstick for success. ¶6. (C) Wu Xinbo distinguishes between material interests -- for example, ensuring stability in the region and securing energy resources -- and "ideational interests," which include encouraging international perceptions of China as a responsible stakeholder. Both are goals of Chinese foreign policy, Wu claims, though the latter has more recently become a topic of debate. According to Wu, China is not concerned with its image merely for the sake of prestige, nor as a means of arresting potential opposition from other states to Beijing's pursuit of material interests. Rather, Beijing recognizes that China's global image is an element of its "soft power," that Chinese soft power remains relatively weak, and that enhancing this influence helps China augment its overall power. Regional and international multilateral fora, Wu concludes, are key venues for achieving this goal of increasing national power. -------------- ISSUES DETERMINE THE MISSION -------------- ¶7. (C) Chen argues that China takes a "pragmatic approach to multilateralism," which has led Beijing to conclude that specific issues ought to determine a multilateral grouping's mission. Regionally and globally, there has been "a mushrooming of multilateral institutions," but not necessarily of solutions, Chen observes. This is due in part to a lack of focus, but also because institutions with overlapping missions result in policy inertia or conflicts of interest. Thus, Chen reasons, the best institutions are those whose mandates are targeted to specific problems. Even if an institution is not that effective, Chen notes, Beijing still regards membership as beneficial because China can make more progress on a given issue than if China were to "go it alone." ¶8. (C) The scholars caution critics against underestimating the importance in Asia of simple exchanges of views. Wu recognizes that the United States measures a multilateral institution's worth by the results it produces, but in Asia, "talk in and of itself is considered useful." Chen agrees this is important to keep in mind, particularly since many of China's neighbors are wary of its growing strength. Beijing must approach its new leadership role carefully, Chen concludes, and the "ASEAN Way" -- taking steps to achieve consensus among states through prior consultation -- offers China the best way to make progress in multilateral fora. -------------- PERIPHERAL GROUPINGS A PRIORITY -------------- ¶9. (C) These Shanghai scholars claim that China has a strong interest in establishing discrete multilateral groupings on its periphery. Ren believes this focus is part of Beijing's overall strategy -- "wending zhoubian," or "stabilizing the surrounding areas" -- intended to help China manage relations with its neighbors and tackle transnational issues that could disrupt domestic peace and stability. For this reason, China prefers SHANGHAI 00000413 003 OF 003 ASEAN Plus Three and the ASEAN Regional Forum (ARF) as the primary methods for tackling Southeast Asian challenges such as Burma, and works through the Shanghai Cooperation Organization (SCO) to counter terrorism and instability in its northwest border areas. Chen observes that cultivating strategic relationships with Japan and India, two major powers on China's periphery, will also be a central part of Beijing's strategy in the coming years, though as yet there is little to be done in a multilateral context. ¶10. (C) Ren regards ASEAN Plus Three as a prime example of a regional grouping of appropriate size keenly focused on a few discrete issues. At the same time, Ren argues, the "Plus Three countries" have benefited as much from the configuration as has ASEAN. Since 1999, a tripartite meeting has taken place among the Chinese, Japanese, and South Korean heads of state, immediately preceding the annual ASEAN Summit. In fact, Ren reports, the Northeast Asian leaders had intended to meet this year as well, but the sudden resignation of Japanese Prime Minister Yasuo Fukuda has left Japan without an obvious representative, so the meeting has been postponed. The trilateral innovation has proven so popular with all three countries, Ren notes, that some have raised the possibility of holding additional meetings outside the ASEAN framework. In Ren's view, the attractiveness of the trilateral dialogue stems from its filling a perceived regional niche. Northeast Asia lacks an established multilateral forum, and the prospects for a Northeast Asian Peace and Security Mechanism (NEAPSM) emerging from the Six-Party Talks remain unclear. ¶11. (C) In contrast, Ren continues, Beijing is skeptical of groupings like the Asia-Pacific Economic Cooperation (APEC) forum, which has "gradually lost steam" since its 1989 founding. Open to all economies bordering the Pacific Ocean, encompassing non-state entities such as Taiwan and Hong Kong, and boasting an agenda that initially included a Pacific FTA, APEC was quite an ambitious undertaking, Ren admits. The problem is that APEC has been "simply too big" to accomplish anything meaningful. After years of relative inactivity, many member economies gradually came to question its grand agenda, Ren asserts, and subsequently lost interest. -------------- COMMENT -------------- ¶12. (C) The view from Shanghai suggests Beijing would like to see a proliferation of smaller, and thus more easily manageable, multilateral mechanisms that are regionally based and, at least nominally, focused on one or two specific Chinese foreign policy objectives. In practice, the mechanisms may produce only slow concrete progress and bear the risk of devolving into mere talk shops. Still, their efforts can only serve to reinforce China's individual efforts to address common challenges and realize its material interests. To the extent China's multilateral partners come to see Beijing as a willing consultant and a listener, such fora also stand to burnish Chinese soft power. ¶13. (C) In prior discussions with Ren Xiao and other Shanghai scholars as well, Poloff has noticed these interlocutors talk about "engagement with the region," and only in the course of conversation does it become clear they are specifically referring to the ASEAN Plus Three mechanism. Though perhaps merely the product of linguistic differences, the conflation of one with the other may offer some confirmation that these Shanghai scholars indeed regard ASEAN Plus Three as the principal venue for Chinese regional multilateral engagement. CAMP