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J1^4 \/ I \^l^lk«/ •«# I I I «i#ii i«f II i^/ivf Ik «^ I III II biViiw wr I v/i.'iL Library ofthe Marine Corps L STRATEGIC STUDIES INSTITUTE FOR NATIONAL STRA NATIONAL STRATEGIC STUDIES INSTITUT^R n||GN/ 3000193385 nT^n ,u.«rtL fRATEGIC STUDIES INSTITUTE FOR NATIO GIC STUDIES INSTITUTE FOR NATIONAL STRATEGlK iSTIT ^"^E FOR NATIONAL STRATEGIC STUDIES INSTITUTE EGsMiIoiIoJDaaLl SS STRATEGIC STUDIES INSTITUTE FOR NATIONAL STRAItGiC STUDII "'" '""'' NATIONAL STRATEGIC STUDIES INSTITUTE FOR NATIONAL STRAT Nat"nlVDlfl^?ul3S^W^ STUDIES INSTITUTE FOR NATIONi "^ INSTITUTE FOR NATIONAL STRATEGIC STUDIES INS China's Global Activism: and Strategy, Drivers, Tools by Phillip C. Saunders u 411 .16 S18 2006 The National Defense University (NDU) educates nnilitaryand civilian leadersthroughteaching, research, and outreach in national security strategy, national military strategy, and national resource strategy; joint and multinational operations; information strategies, operations, and resource management; acquisition; and regional defense and security studies. The Institute for National Strategic Studies (INSS) is a policy research and strategic gaming organization within NDU serving the Depart- ment of Defense, its components, and interagency partners. Estab- lished in 1984, the institute provides senior decisionmakers with timely, objective analysis and gaming events and supports NDU educational programs in the areas of international security affairs and defense strategy and policy. Through an active outreach pro- gram, including conferences and publications, INSS seeksto promote understanding of emerging strategic challenges and policy options. NDU Press of INSS publishes books, monographs, reports, and occasional papers on national and international security affairs, defense policy, and military strategy, primarily the output of university research and academic programs. In addition, it produces7o/ntForce Quarterly, a professional military and security journal published for the Chairman ofthe Joint Chiefs of Staff. China's Global Activism: Strategy, Drivers, and Tools China's Global Activism: Strategy, Drivers, and Tools by Phillip C. Saunders ALFREDM.GRAYMARINECORPS RESEARCHCENTER ATTNCOLLECTIONMANAGEMENT (C40RCL) 2040BROADWAYST QUANTICOVA 22134-5107 Institutefor National Strategic Studies Occasional Paper 4 National Defense University Press Washington, D.C. Press October 2006 :ityd-a^gy-Zp u Opinions, conclusions, and recommendations expressedorimpliedwithin aresolelythoseoftheauthor and do not necessarily represent the views ofthe Defense Department or any other agency of the Federal Government. Clearedforpublic release; distribution unlimited. Portions ofthis work maybe quoted or reprinted without permission, provided that a standard source NDU creditlineis included. Presswould appreciateacourtesycopyofreprintsorreviews. Firstprinting, October2006 Secondprinting, June 2007 NDUPresspublicationsaresoldbytheU.S.GovernmentPrintingOffice.Fororderinginformation,call(202)512-1800orwritetotheSuperinten- dentofDocuments,U.S.GovernmentPrintingOffice,Washington,D.C.20402.ForGPOpublicationson-line,accesstheirWebsiteat:http://www. access.gpo.gov/su_docs/sale.html. ForcurrentpublicationsoftheInstituteforNationalStrategicStudies,consulttheNationalDefenseUniversityWebsiteat:http://www.ndu.edu. Contents Acknowledgments vii Sources and Methodology viii Executive Summary 1 Introduction 3 Grand Strategy, Economic Development, and Foreign Policy Priorities 3 Drivers ofChinas Increasing Global Activism 6 Tools for Chinese Global Influence 10 Data on Chinese Regional Priorities 18 Is Chinas Increased Global Activism the Product ofa Global Strategy? 24 Outlook and Implications 27 Conclusion 30 Notes 30 Appendix: Regional Data Asia 35 Total Exports Destined for China from Asia—1993, 1998, 2003, 2004 36 Chinese Infrastructure Projects in Asia 37 PRC FDI to Asia Excluding SARs 38 Asia Percent ofTotal PRC FDI 38 Africa 39 Total Exports Destined for China from Africa—1993, 1998, 2003, 2004 40 Chinese Infrastructure Projects in Africa 41 PRC FDI to Africa 42 Africa Percent ofTotal PRC FDI 42 — Latin America 43 Total Exports Destined for China from Latin America—1993, 1998, 2003, 2004 44 Chinese Infrastructure Projects in Latin America 45 PRC FDI to Latin America Excluding FDI Havens 46 Latin America Percent ofTotal PRC FDI 46 The Middle East 47 Total Exports Destined for China from Middle East—1993, 1998, 2003, 2004 48 Chinese Infrastructure Projects in the Middle East 49 PRC FDI to Middle East 50 Middle East Percent ofTotal PRC FDI 50 The Former Soviet Union and South Asia 51 Total Exports Destined for China from the Former Soviet Union and South Asia 1993, 1998, 2003, 2004 52 Chinese Infrastructure Projects in the Former Soviet Union and South Asia 53 PRC FDI to the Former Soviet Union and South Asia 54 Former Soviet Union and South Asia Percent ofTotal PRC FDI 54 Europe 55 Total Exports Destined for China from Europe—1993, 1998, 2003, 2004 56 PRC FDI to Europe 57 Europe Percent ofTotal PRC FDI 57 About the Author 59 VI Acknowledgments My analysis for this project draws heavily upon a wealth ofdata collected by a team ofcontractors and research assistants overa6-month period. I wouldliketo acknowledge their specific contributions. Daniel Melleby served as research coordinator for the project. He played a critical role in identifying data sources and collection methods, writing the research protocol to ensure consistency ofdata collection and analysis across different regions, collecting data for some key items, training and organizing the regional researchers, and conducting quality reviews ofthe collected data. He created many ofthe graphics and maps in the report and provided timely and extremely helpful comments on the first draft. This paper could not havebeen completed without his contributions. Henry Yep worked as an intern and research assistant on the project. His contributions included help- ing identify data sources and methods, collecting much ofthe Asia data and centrally collected data to vali- datethedata collection profile, creatinga variet)'ofgraphics and tables, andprovidingcommentsonthedraft report. He was also invaluable in preparingthe report (andespeciallyitsgraphics) forpublication. Tanya Hoke worked as an intern and research assistant on the project. Her contributions includedhelp- ing to identify data sources and methods and collecting much ofthe Asia data to validate the data collection profile. She also found the graphics software used to create the maps in the appendix. Tamara Shie provided administrative support for the contractors, research assistants, and internswork- ing on the project. She collected some ofthe Asia data, commented on the draft report, and drafted the text boxes IslandFever, Train in Vain?andAnatomyofa State Visit. Hercogentanalysis ofChinese activitiesinthe South Pacific informed the argument. Contractors/research assistants who collected data and performed analysis on Chinese activities in individual regions included Arturo Hines (Europe); Reza Marashi (Middle East); Sonia Nagda (South Asia/ Former Soviet Union); Nicholas Samuelson (Latin America); and Ross van Horn (Africa). Lora Saalman also assisted with the collection of Africa data. Catherine O'Keefe collected and analyzed data on Chinese trade. Sonia Nagda, Reza Marashi, and Rossvan Horn providedconciseanalysison Chinese activities in their regions that informed the papers arguments. Reza Marashi and Ross van Horn also provided useful comments and proofreadingassistanceon the first draft. Institute for National Strategic Studies (INSS) intern Brian Harding came late to the project but provided timely research assistance at critical moments. He drafted the text box Language and Soft Power. INSS interns Daniel Michaeli and Erik Quan proofread the manuscript; INSS research assistant Steven Duke assisted with final editing and proofreading. I would like to thank INSS Director Stephen J. Flanagan and INSS Research Director James Schear for their strong support and their insightful and timely comments on multiple drafts. Col. Anne Moisan, USAF, Don Mosser, and Deborah Jefferson found space for researchers and processed their contracts. INSS colleagues James Przystup, Renata Louie, Jay Cope, and Robert Oakley graciously shared their expertise. Dr JeffreySmotherman ofNDU Presswas responsible forcopyediting. Severalexperts commented on drafts: Ellen Frost (InstituteofInternational Economics);EricaS. Downs (Brookings Institution); LeifRosenberger (U.S. Pacific Command); David Helvey (Office ofthe Secretary of Defense); LTC Heine Klinck (U.S. Defense Attache Office Beijing); Bernard Cole (National War College); and Cynthia Watson (National WarCollege). Others helped to locate data sources: Mikkal Herberg (National Bureau ofAsian Research); David Zweig (Hong Kong UniversityofScience and Technology); Jason Kindopp (EurasiaGroup); and Eric Heginbotham (RAND). Thanks to all fortheirassistance. Linnea Claire Saunders and Miles Campbell Saunders tried their best to ensure this report was never finished; Julie Hayne madesuretheydidnotsucceed. — Phillip C. Saunders VII Sources and Methodology Much ofthe underlying data for this report was compiled by a team ofcontractors and research assis- tantsworkingunderthe supervision ofDr. PhiUip C. Saunders and research coordinatorDaniel Melleby. The researchers were assigned to different regions and followed a detailed research protocol designed to ensure data comparabihty across regions. Some data (such as Chinas trade statistics and outbound foreign direct investment) was collected centrallyfor all regions. Sources for most specific statistics and references are cited usingendnotes. Trade datais fromthe UnitedNations CommodityTrade Statistics Database (UNCOMTRADE) online, available at <http://unstats.un.org/unsd/comtrade/default.aspx>. Chinese trade data from this source is derivedfrom Chinese customs statistics anddoes notaccuratelyaccountforgoodsimportedandre-exported through HongKong. Chinese inbound foreign direct investment (FDI) was obtained from various editions ofthe Almanac ofChinas Foreign Economic Relations and Trade and the China Statistical Yearbook. Chinese outbound FDI data for 1992-2004was obtained from the China Commerce Yearbook (formerlythe Yearbook ofChinas For- eign Economic Relations and Trade prior to 2004) published annuallyby the Ministry ofCommerce. Except for aggregate totals, most outbound figures and percentages exclude FDI in Chinas special administrative regions Hong KongandMacao and FDI transiting FDI havens Bermuda, the Cayman Islands, andtheVirgin Islandsto otherdestinations. Information on Chinese diplomatic agreements and leadership travel was compiled from a variety of sources. The starting point was various editions ofthe Ministry ofForeign Affairs annual book Chinas For- eign Affairs (Beijing: World Affairs Press). Both Chinese and English editions were used. This source was supplementedbytargetedForeign BroadcastInformation Service (FBIS), Lexis, andGoogle searches. Aggregate total data for Chinese foreign assistance is taken from the 2003-2005 editions ofthe China Statistical Yearbook. Researchers also used targeted FBIS andLexis searches to collect details ofChinese assis- tanceto particularcountriesandforparticularprojects. Chinese infrastructure data was collected from comprehensive searches in Lexis-Nexis and the Open Source Center/FBIS. The year listed next to a project signifies either when the project was initiallyproposed orthedateoftheprojects completion. Values ofChinese infrastructure investments and foreign assistance were occasionally cited in curren- cies other than U.S. dollars. OANDA.com (http://www.oanda.com/convert/fxhistory) was used to provide historic currency conversion rates between the cited currency and the U.S. dollar on the date ofthe open source articlewhich citedthe nondollaramount, oras close to itaspossible ifan exchange rate was notavail- ableonthatparticularday. AJlvaluations areincurrent,notconstant, dollars. VIII