Is China’s Soft-Power Bubble about to Burst?

"The Beijing Consensus may have hit the wall, necessitating some fundamental rethinking if China wants to maintain its commercially driven power of attraction and persuasion."

In Soft Power: The Means to Success in World Politics, Joseph Nye emphasizes the importance of utilizing noncoercive means for achieving desirable strategic outcomes. For great powers, reliance on persuasion, attraction and co-optation are ultimately more sustainable means of maintaining hegemony than outright demonstration and exercise of force. After all, as the Harvard academic correctly points out, great powers will have “to set the agenda and attract others in world politics, and not only force them to change by threatening military force or economic sanctions.” This is the essence of authoritative leadership.

Historically, as Edward Luttwak shows in The Grand Strategy of the Byzantine Empire, soft power was an essential element of the Byzantine Empire’s remarkable (millennium-old) staying power, despite the fact that it was, in military and economic terms, only a shadow of the Roman Empire under the rule of Trajan, Hadrian, Pius and Aurelius (AD 98-180). Throughout its repeated cycles of rise and decline, soft power was also at the heart of Imperial China’s enduring tributary system in East Asia, which reached its zenith under the Tang dynasty (AD 618-907). In Day of Empire, Amy Chua shows how it was primarily China’s civilizational prestige and gigantic economic resources that undergirded its status as the preeminent power in the region until the advent of European colonialism.

Modern China, specifically towards the latter years of Deng Xiaoping’s rule and thereafter, also leveraged commercial diplomacy to enhance Beijing’s influence across the region. As far as China is concerned, commercial diplomacy took two interrelated forms. First, rapid capitalist expansion encouraged China to actively employ the diplomatic apparatus of the state to expand China’s trade and investment relations globally, particularly with respect to the industrialized world as well as resource-rich countries in Africa and Latin America. Second, over time, a prosperous China began to actively leverage its newfound wealth—thanks to a successful neomercantilist strategy based on currency manipulation and an aggressively export-oriented industrial base—for facilitating specific strategic goals overseas.

While the first stage of its commercial diplomacy was more reflective of the policies of Deng Xiaoping and Jiang Zemin, the second stage of commercial diplomacy was more apparent during the late–Hu Jintao and Xi Jinping administrations.

With the 2008 Great Recession severely undermining the economic foundations of Western powers, China’s commercial diplomacy evolved into an increasingly overt challenge to the Bretton Woods System (BWS). Dissatisfied by the outcome of Structural Adjustment Programs (SAPs) and policy prescriptions of the World Bank and the IMF, under the so-called “Washington Consensus,” many developing countries welcomed the emergence of China as an alternative global creditor.

The problem, however, is that China’s proactive commercial diplomacy has gone hand in hand with territorial assertiveness and rapid military modernization, raising concerns over the motivations of Beijing’s global economic initiatives. It has become increasingly difficult to distinguish between soft and hard power and stick to the long-held (naïve) narrative that China is simply interested in a no-strings-attached, “win-win” economic interaction with the rest of the world, particularly immediate neighbors along the First Island Chain.

In fact, as Nye himself explained, soft power is primarily sourced from and driven by the social and cultural dynamism of a nation, rather than the machinations of its state apparatus. In China’s hybrid Confucian-Communist system, soft power continues to be understood as a deliberate state policy. China’s global influence is primarily a reflection of its proactive diplomacy rather than its sociocultural capital. But as China’s (state-dominated) economy begins to evince serious vulnerabilities, Beijing’s ability to win friends and disarm rivals by employing aggressive commercial diplomacy will become increasingly untenable.