BEIJING (Reuters) - Last week hosting the Americans. Next week visiting Russia. China’s busy diplomacy amid the economic crisis reflects growing sway that some say has brought the moment for Beijing to don the cape of a full super-power.
Many Chinese observers think the woes besetting the wealthy West will help Beijing win a bigger global role, but that expectation comes tethered to warnings China should not oversell its strength - above all, not imagine dislodging U.S. dominance or the dollar any time soon.
“The leadership is fully aware that the United States will continue to dominate despite the financial crisis,” said Zheng Yongnian, director of the East Asia Institute of the National University of Singapore, who often travels to China.
“China does see opportunities to accelerate its rise, but it’s still far from becoming an overall super-power.”
That caution will be on display next week when Chinese President Hu Jintao visits Russia for the first summit of the “BRIC” nations, Brazil, Russia, India and China.
The four fast-growing countries may discuss ways to reduce reliance on the United States, but it is Moscow, not Beijing, that has been most vocal about diversifying away from U.S. government bonds and making the Chinese yuan a global reserve currency.
Just last week, when U.S. Treasury Secretary Timothy Geithner was in Beijing to reassure his hosts about the safety of their vast dollar holdings, Chinese leaders made it clear they, too, wanted to see a strong U.S. economy.
China, however, knows well that the game has changed. Its growing prominence is rubbing against its ingrained preference for a muted international role.
The line of foreign governments looking to Beijing for an economic boost has raised the question of how far China should use its vast savings and continued growth during the global slump to advance broader national goals.
“There was initially some uncertainty about the strategic impact of the financial crisis,” said Yan Xuetong, a prominent international relations expert at Tsinghua University in Beijing.
“But now we’re seeing clearly that the crisis will lift China’s international status ... With countries asking China for its money, it’s found its international influence has also expanded.”
The discussion is also about the right limits for China’s ambitions. The rejection of Chinese company Chinalco’s tie-up with global miner Rio Tinto (RIO.AX) last week underscored the pitfalls Beijing faces in extending its reach.
Some nationalists say the economic slump marks the end of American preeminence. But most analysts close to the government stress China remains tied to the much bigger U.S. market and does not have the strength to challenge Washington.
Beijing hopes to boost economic and resource security, regional influence and diplomatic reach without riling the United States and its allies, said Zheng.
“China will continue to climb up the ladder,” he said. “But it does not want revolutionary change in the international system.”
China is instead pursuing a more oblique strategy of expanding its web of bilateral and international economic lifelines to nations in trouble.
“China’s focus in countering the crisis will be on its regional neighbors,” said Qin Yaqing, Vice President of China Foreign Affairs University in Beijing and a government adviser.
At the high tide of the global financial turmoil last September, Premier Wen Jiabao said China’s biggest contribution to the world would be ensuring its own economy continued to grow.
That domestic focus remains a cornerstone of policy. But since then, Beijing has also unveiled a flurry of currency swaps, loan-for-oil deals and funding pledges that have shown the government does not want to stand on the sidelines.
That has meant further diluting Deng’s long-dominant dictum, laid down during post-1989 isolation and the collapse of the Soviet bloc, that China must “bide its time and nurture its strength,” keeping its head down.
“There was already an intense debate about whether China should take on a more proactive diplomatic face in the world. With the crisis, it’s become necessity,” said Gregory Chin, an expert on Chinese foreign policy at York University in Canada.
“They couldn’t continue to lie low, in the old Deng Xiaoping strategy of maintaining a low profile.”
Beijing’s first foray in direct crisis assistance came in December when it opened a currency swap line to South Korea. By the end of March it had extended swaps to five other nations, from Indonesia to Argentina, for a total of 650 billion yuan ($95 billion).
China has also vowed nearly half that much in loan-for-oil deals since February, giving $45 billion of credit to Russia, Brazil, Venezuela and Angola in return for long-term crude supplies.
On top of these bilateral deals, China has also pledged to invest $50 billion in special bonds for the International Monetary Fund (IMF) and offered $38.4 billion to an Asian regional liquidity fund.
All that money can help trade and ultimately convert into political sway, Chinese experts and former officials have said.
“China can now apply its (foreign) reserves while Western economies are weak and helpless to extend aid to other countries in dire straits and thereby win partners,” Zhen Bingxi, a former Chinese diplomat in Washington, recently wrote in the Chinese journal, International Studies.
There has also been more ambitious talk in Chinese foreign policy circles about a “G2,” with Beijing and Washington working as twin rudders of international growth and rule-making.
For now, however, Beijing is likely to remain wary of embracing Washington closely, even if the opportunity arises. Beijing sees U.S. power as injured but still too dominant to match. Deng’s dictum of laying low still has some currency.
“American economic dominance has been badly wounded, but its economic strength and overall national strength will remain far in the lead for the next 10 to 20 years,” Yuan Peng of the China Institute of Contemporary International Relations in Beijing wrote in a recent paper.