Does China-led development bank make Beijing renegade or mainstream?

The answer may be 'both.' In maritime Asia, China wants to exert more strength and control. On the international scene, it wants to be seen as good citizen. 

It was Napoleon Bonaparte who prophesied that “when China wakes she will shake the world.”

Some new tremors have been registered in recent weeks, prompting officials and pundits on both sides of the Pacific to puzzle anew over the scale and intent of Beijing’s global ambitions. Are the Chinese happy to play by the international rules of the road – written after World War II by the United States and its allies – or are they trying to upend the global board game?

It depends where you look. China has profited mightily from the global economic system and seems more interested in boosting its own role as a leading member than in overthrowing it. But closer to home, there are signs that Beijing is now ready to use its wealth and strength to try to alter fundamentally the balance of power in Asia.

The question is being raised in part because of a harmless sounding institution that will lend money to developing Asian countries to build railroads, bridges, ports, and telecoms networks, the new Chinese-founded Asian Infrastructure Investment Bank (AIIB).

US officials at first portrayed it as a frontal Chinese challenge to the existing international financial system (the US-dominated World Bank family already includes the Asian Development Bank.) 

Washington urged its major allies to boycott the new institution, but all of them except Japan joined up, prompting one senior US official to warn Britain – the first to jump ship – against “constant accommodation of China, which is not the best way to engage a rising power.”

Shift in US attitude on AIIB

US officials are now taking a more conciliatory stance, urging the AIIB to work with the World Bank.

In Beijing, government leaders are at pains to insist that they have no intention of changing the way the world has worked for the past 70 years.

“If we compare the international order … to a big ship … what we are thinking is absolutely not to overturn the ship, but to jointly make efforts with other countries to steer this big ship in a steadier and better manner along a correct direction,” Foreign Minister Wang Yi insisted to reporters last month.

In global affairs, China may be satisfied simply with more of a say in setting the direction. But in its backyard of maritime Asia, Beijing seems to have grander designs, Chinese and foreign scholars agree.

“China always has it in its heart to lead in Asia,” says Shen Dingli, an international affairs analyst at Fudan University in Shanghai. “China aspires to change the status quo in the region, which has America leading, Japan supporting and China accepting. And China has no intention to conceal that now.”

The creation of what is expected to be a $100 billion AIIB, and its success in attracting more than 50 nations as founding members, “is a very interesting and resonant moment,” adds Hugh White, a strategic expert at Australian National University in Canberra. “By establishing and taking the lead role in this bank, China will reinforce its ambitions for regional leadership.”

Wealthy China reaches satisfied state

On the broader international stage there are few indications that China wants to radically change the rules. For the past 35 years, its leaders have enthusiastically embraced a market-oriented economy and free trade. The country has joined all the institutions that embody the post-war system such as the United Nations, World Bank, International Monetary Fund and the World Trade Organization.

And China has flourished, rising towards the top of the system. “China is broadly satisfied with the way the international economic order works, and why shouldn’t it be?” says Prof. White.

Beijing has also played an active role in applying international treaties on such issues as arms and nuclear control – China is part of the international group negotiating with Iran – and climate change.

Beijing has also begun to step up and modestly contribute to peace and humanitarian affairs. China now sends troops to UN peacekeeping efforts. In the fight against Ebola in West Africa, according to state media last month, China contributed $120 million in aid and doctors. (The US spent $1 billion on Ebola, according to Reuters.) China has also joined international anti-piracy naval patrols off the Horn of Africa and this week, for the first time, used its naval vessels to rescue non-Chinese citizens from a crisis, evacuating foreigners from Yemen.

Yet there is a sense here that the world does not sufficiently recognize China’s great power status. In the Asian Development Bank, China has less than half Japan’s voting power, despite having a larger economy. And the US Congress has blocked reform at the IMF that would give China a voice more commensurate with its weight in the world economy.

Failure to change that, US Treasury Secretary Jacob Lew said recently, “could result in a loss of US shareholding at a time when new players are challenging US leadership in the multilateral system.”

East Asia power game

China may be challenging US leadership, but Chinese analysts insist the nation is not threatening the international order. President Xi Jinping’s style is “pushing towards the bottom line without breaking it,” argues Shi Yingong, a prominent Chinese analyst and government adviser.

That is a much trickier proposition in the seas surrounding China, where analysts point to myriad signs that Beijing is pushing to supplant Washington as the pre-eminent strategic player. “Near its shores,” says Hung Ho-Fung, an analyst at Johns Hopkins University in Baltimore, “China is trying to redraw the map with the goal of replacing the US in maritime East Asia.”

In recent years, China has been increasingly assertive in its claim to the disputed Diaoyu islands, known as the Senkaku in Japan. It declared an Air Defense Identification Zone (ADIZ) over the islands in November 2013 and Chinese planes and vessels patrol near them regularly. Chinese state media here keeps up a robust and critical tone against Japan-related topics. 

Chinese dredgers, meanwhile, have been building up disputed coral reefs in the South China Sea with the apparent aim of installing airstrips on them and buttressing Beijing’s claim to almost all of the sea against rival claimants such as the Philippines and Vietnam.

China has also been building up its naval and air forces with the weapons it would need to counter US power projection into the western Pacific and to keep the US Navy out of any conflict that might erupt there.

In that context, the AIIB could be seen as the economic dimension of China’s regional strategy. “It is a challenge to the status quo in a way,” says Prof. Shen. “But it is a benign challenge. Until now we have accepted US primacy because of the stability, prosperity, and peace it has brought to the region. But if China can provide the same things, it will be accepted by everybody.”

Beijing’s call for a “new model of great power relations” between China and the US is a clear signal that President Xi is seeking to change the regional order, says White. “China does not want to rule the world, but it does want to take a much bigger leadership role in Asia … and it won’t settle for less than a relationship of equality with the US,” he argues.

It would be surprising if it were otherwise, White adds. “China is not aiming to do with its power anything different from what the US and Britain did as their power grew.”

But with the US insisting on maintaining the current regional order in Asia, China’s ambitions carry risks even if Beijing is careful, cautions Robert Farley, who teaches military strategy at the University of Kentucky in Lexington.

“Even if China did not want to break the order, that does not mean it might not break down on its own because of tensions,” he warns. “Any system has to allow for competition and jockeying, or it can break down.”