China’s charm offensive

President Xi Jinping during the G20 summit in Hangzhou, China in 2016. (Gil Corzo via Shutterstock)

Last year was a watershed moment for China. It marked the 10th anniversary of President Xi Jinping’s ascent to power. And during the 20th National Congress of the Chinese Communist Party (CCP), held in October, President Xi secured a third term as the party’s top leader – defying a long-standing two-term limit put in place after Mao Zedong died in 1976. The glory of the start of President Xi’s second decade as leader was tainted by two key events, however: the COVID-19 lockdowns – and the enormous economic damage they caused – and the Ukraine war.

As it struggles to respond to and recover from both events, Beijing has launched an international charm offensive featuring intense diplomacy and more moderate rhetoric. But President Xi’s goal is a cynical one: to temporarily stabilize China’s external relations so as to create a better environment for boosting economic growth. Western policymakers should not, therefore, be fooled by China’s more cooperative behavior or be lulled into a false sense of security. The key word describing Beijing’s shift is “temporary”; the change is merely tactical. It has not altered the long-term objectives of President Xi’s foreign policy: to seize a much larger role on the world stage and to recast international norms and institutions in its favor. And as soon as President Xi deems China to have recovered sufficiently from the losses suffered in the last three years, he will return to the assertive, confrontational path he has followed over most of the last decade.

Things fall apart

Last year was a rough one for China. Beijing had hoped that tensions with the United States would be reduced when President Joe Biden took office in January 2021. But the opposite happened: Competition between the two states intensified as Washington passed tough new measures covering export controls, regional security, human rights, and support for Taiwan’s defense. At the same time, it also reinforced its network of alliances and partnerships to more effectively counter Beijing. Such moves prompted China to strengthen its strategic alignment with Russia. During Russian President Vladimir Putin’s February visit to China for the Winter Olympics, he and President Xi declared there was “no limit” to the two countries’ relationship – a pledge President Putin immediately tested by invading Ukraine a few weeks later. Russia’s unprovoked aggression triggered international outrage and sanctions, putting China in an awkward position and casting doubt on the wisdom of President Xi’s choice of friends. Beijing’s moral ambiguity on the war, moreover, as well as its ongoing trade support for Russia, led to growing anger and discontent toward China in European capitals and elsewhere.

Western policymakers should not be fooled by China’s more cooperative behavior.

At home, meanwhile, Beijing’s “zero-Covid” policy, which featured prolonged lockdowns in major cities across the country (among other stringent measures), sparked intense resentment among the population, leading to widespread protests. The government’s inability to adjust its policy in the face of the more contagious but less fatal omicron variant led to even more draconian physical restrictions, tremendous economic costs, and profound human misery. As both domestic consumption and foreign demand fell, China’s annual GDP growth rate slowed to 3%, according to official statistics – the slowest rate since the beginning of China’s economic opening in 1979. Among other problems, the slowdown caused a budget crunch for Beijing: While government revenue increased by only 0.6% in 2022, government spending grew by 10 times that rate (6.1%). Thanks to measures such as vaccination, testing, and emergency benefits for people affected by the pandemic, spending on public health expanded even more rapidly, at 17.8%.

China’s economic slowdown has had multiple effects on Beijing’s foreign policy. The budget shortfall deprived Beijing of a key tool: its ability to use economic aid, loans, and business deals to expand its strategic influence around the world. With cash running low – its foreign reserves fell from a peak of $13.9 trillion in 2014 to $3.1 trillion in January – the country was forced to cut its spending abroad. The squeeze was most evident in the Belt and Road Initiative, President Xi’s signature foreign policy program. In the several years leading up to the pandemic, China’s overseas lending had already started to slow due to the lack of commercial viability and debt sustainability challenges associated with the initiative’s projects. Last year, however, the slowdown worsened. For example, Chinese investment in sub-Saharan Africa decreased by 65% in 2022.

Making nice

Important as these reductions were, an even more important shift took place in the tenor and tactics of President Xi’s foreign policy. Forced to prioritize domestic economic growth, he recognized that China needed to stimulate trade. And to do so, he knew it needed a more stable international environment and better relations with the rest of the world, especially the developed economies.

Chinese President Xi Jinping attends a welcoming ceremony held by Saudi Crown Prince and Prime Minister Mohammed bin Salman Al Saud at the royal palace in Riyadh, Saudi Arabia, Dec. 8, 2022. (Photo by Xie Huanchi/Xinhua via Getty Images)

President Xi was also alarmed by the Biden Administration’s efforts to tighten the international network of countries working to contain, isolate, and compete more effectively with China. Beijing watched the strengthening of the Quad (a security arrangement linking Australia, India, Japan, and the United States), as well as the Australia-U.K.-U.S. nuclear submarine deal and the rapprochement between Japan and South Korea, two powerful longtime enemies, with great concern. Beijing knows that its choice to align with Moscow on the cusp of the Ukraine war badly damaged its relationship with Europe. And it recognizes that the powerful and effective coalition Washington built to support Ukraine could augur a similar effort in the event that China decides to use force to seize Taiwan.

For all these reasons, late last year, President Xi decided to tamp down Beijing’s provocative behavior and win back as many friends as he could. Starting in October, China launched a diplomatic charm offensive. As Wang Yi, China’s top diplomat and a Politburo member, put it, the country set out to “achieve a new peak of top leader diplomacy and host a series of diplomatic events.” To that end, Beijing drastically increased its budget for diplomatic activities by 12.2% to $8 billion a year and, having missed three years of in-person diplomacy due to the pandemic, Chinese officials set out vigorously to reengage with the world. In November, President Xi and President Biden held their first face-to-face meeting since 2017, on the sidelines of a G-20 meeting in Bali, Indonesia. The next month, President Xi traveled to Saudi Arabia to meet the country’s crown prince, and the Chinese government facilitated a peace deal between Riyadh and Tehran. Since October, German Chancellor Olaf Scholz, French President Emmanuel Macron, European Commission President Ursula von der Leyen, and Brazilian President Luiz Inácio Lula da Silva have visited Beijing.

Even as it focuses on advanced economies, China has not abandoned its developing-country base. Although it has less freedom to use its economic resources to sweeten ties, it remains a key player in the field of international development finance, especially given the fact that other sources of funding have recently dried up. China hosted two major development forums this spring; in May, it will also host the China-Central Asia Summit, and a third Belt and Road Initiative forum is scheduled for later this year.

Difficult as it might seem, Beijing also hopes to find ways to improve bilateral ties with the United States, including the resumption of working-level mechanisms such as the military-to-military dialogues that were suspended following the visit by Nancy Pelosi, then Speaker of the U.S. House of Representatives, to Taiwan last July. China also hopes that President Xi will visit Washington in November en route to the Asia-Pacific Economic Cooperation summit in San Francisco that same month. Thanks to the balloon incident earlier this year, however, the likelihood that he’ll be invited to the United States seems low.

While Beijing may have changed the mood music, it can do little – without making profound shifts to its ambitions and system of government – to address the fundamental conflicts of national interests that separate it from many other countries.

Indeed, the most striking aspect of China’s new approach to foreign policy is the amount of wishful thinking it entails. Beijing might genuinely want to mend ties with the rest of the world, but the damage it has done in recent years through its highly confrontational “wolf warrior” diplomacy and with other provocative behavior will not be easy to erase from the minds of world leaders. In fact, while its tone has changed, China has done little to alter the incendiary conduct – from military maneuvers and island building in the South and East China Seas, to its unfair trade practices, to its military and economic coercion of Taiwan – that has earned it so much ill will. The controversial comments made in April by Lu Shaye, China’s ambassador to France, challenging the sovereignty of the former Soviet Union states in eastern Europe was a vivid reminder of the difficulty China is having in changing its behavior.

No matter how much Beijing thinks it can improve relations with the United States, moreover, the reality remains that the bipartisan consensus in Washington that China represents America’s most consequential strategic challenge is as strong as ever. While Beijing may have changed the mood music, it can do little – without making profound shifts to its ambitions and system of government – to address the fundamental conflicts of national interests that separate it from many other countries. For that reason, the most China can hope for is to buy itself enough time to allow its economy to recover.

Xi Jinping, President of the People's Republic of China, arrives at the 2022 G20 Summit. (Salma Bashir Motiwala/Shutterstock)

Expect escalation

As President Xi begins the second decade of his reign, no one should harbor any illusions about his actual grand strategy. He remains the same leader who abandoned China’s longtime policy of keeping a low international profile in favor of a much more assertive course. President Xi continues to hold on to his vision of the “rejuvenation of the Chinese nation,” which means the reclamation of what he sees as China’s rightful – and much larger and more dominant – place in world affairs.

While the setbacks that COVID-19 and the Ukraine war have caused for China are significant, they are also temporary. Unless China’s economy fails to rebound (which seems unlikely), Beijing will continue to push in the direction President Xi has led it over most of the past 10 years. The mishaps of 2022 will soon be buried by the dust of history, and Beijing will return to its original trajectory as quickly as it can.

The implication for the United States is obvious – in the mid to long term, great power competition with China will only escalate. Winning that contest will depend on national strengths and resilience. So the United States should use the opportunity created by China’s current problems to consolidate its advantage and broaden its lead.