Beijing Mixes Business and Politics?
Image Credit: Embassy of Equatorial Guinea

Beijing Mixes Business and Politics?


One of the cardinal rules of Chinese diplomacy is that China doesn’t mix business with politics. The precept fits in nicely with the primacy that China places on sovereignty, respecting the right of a country  – or at least the leaders of the moment – to determine how things ought to work. And, of course, it also provides Beijing with the opportunity to rationalize its lack of enthusiasm for tough foreign policy action in places such as Iran, Syria, Sudan, or Zimbabwe as a matter of principle.

Of course, as I have written elsewhere, doing business in any country – particularly when you supply a country with arms as Beijing has done in both Sudan and Zimbabwe – is in fact mixing business with politics. And the ongoing competition between Beijing and Taipei to purchase diplomatic relations with small, often poor, states is nothing if not the blatant mixing of business with politics. So on the face of it, the claim is rather silly. Moreover, there have been more subtle cases in the past – such as when Beijing postponed a purchase of Airbus planes after then-President Sarkozy agreed to meet with the Dalai Lama in 2008 and its rare earth export slowdown to Japan in the wake of the East China Sea dispute in 2010, to name a few – that suggest Beijing hasn't been unwilling to exert a bit of economic leverage to punish a perceived political transgression.

In fact, it appears that Beijing’s willingness to mix business with politics is increasingly an open secret. In the midst of China’s dispute with the Philippines over control of a shoal in the South China Sea, Beijing has called on Chinese travel agencies to suspend tours to the Philippines. There have also been some fruit shipments blocked from the Philippines to China, although this problem apparently began before the standoff in the South China Sea.

A similar theme is playing out this month across a couple of oceans. The state-supported Global Times has called for Beijing to suspend some economic cooperation with the United Kingdom in retaliation for Prime Minister David Cameron meeting with the Dalai Lama. The Ministry of Foreign Affairs has chimed in by saying that the meeting “Seriously interfered with China’s internal affairs, undermined China’s core interests, and hurt the feelings of the Chinese people.”

And of course, Tokyo felt Beijing’s political sting when it hosted the World Uyghur Congress, an exile group opposed to China’s policies in Xinjiang that is considered by Beijing to be a terrorist organization. Beijing cancelled a meeting between Foreign Minister Yang Jiechi and Hiromasa Yonekura, the chairman of the Japanese business group Keidanren, to demonstrate its displeasure with Tokyo.

Despite Beijing’s massive economic weight, however, its efforts to throw that weight around are unlikely to succeed. The problem for Beijing, as I see it, is three-fold.

First, on the rare occasion that anyone listens to China’s protestations and does what Beijing wants, it seems that Beijing doesn’t then return the favor. (See, for example, President Barack Obama postponing a meeting with the Dalai Lama before his trip to Beijing in 2009, and China’s ungenerous treatment of the U.S. president in return.) Once countries see that China takes without giving back, no one will want to give any more.

Second, it's very difficult to use economic leverage to get other states to adopt your interests as their own when they really don’t want to. Here Beijing can look to the United States for instruction. At a recent meeting I attended, when a senior Burmese official was asked whether the U.S. sanctions had any impact on the country’s decision to transition to democracy and open the economy, the official said – rather unsurprisingly, I think – that they really hadn’t, because the sanctions had been around for years.

Third, Beijing may simply be in danger of overestimating its economic leverage. In the case of the Philippines, for example, even though China is the Philippines’ third largest trading partner, the Chinese are not among the top three tourist groups visiting the Philippines and Filipino Tourism Secretary Ramon Jimenez Jr. seems unfazed by China’s pullout. He has simply suggested that the Philippines will look to Japan and other “traditionally stronger markets” to make up the difference.

China has long mixed business with politics in a most unattractive fashion; it just hasn’t been willing to admit it. Will it make a difference if Beijing finally fesses up? My guess is that greater honesty won’t make much of a difference outside China, where everyone is pretty well aware of the gap between Chinese rhetoric and Chinese actions on the ground. The opportunity rests within China itself. If China’s leaders can take the first step to acknowledging honestly what it is they are doing, they may be able to take the second step and realize that what they are doing is not, in fact, yielding what they want. That, at least, might put them a step ahead of the United States, where we are still waiting for Cuba to see the error of its ways.

Elizabeth C. Economy is C.V. Starr Senior Fellow and Director for Asia Studies at the Council on Foreign Relations. She is an expert on Chinese domestic and foreign policy and U.S.-China relations and author of the award-winning book, 'The River Runs Black: The Environmental Challenge to China's Future.'  She blogs at Asia Unbound, where this piece originally appeared.

June 6, 2012 at 18:28

Good piece. Missed a big example though: China’s reaction to Norway after the independent Nobel Peace Prize Committee awarded Liu Xiaobo the prize in 2010. If i’m not mistaken, bi-lateral diplomatic and economic ties still haven’t fully recovered.

John Chan
May 30, 2012 at 08:24

PLAN was not involved in the Scarborough Shoal episode, only the unarmed Chinese civilian law enforcement agencies are involved; Philippines was the only nation using gunboat navy to harass the unarmed Chinese ships in that episode.

Gaddafi bought arms from multiple sources in order to maintain Libya’s independence; China sold arms to the Libya government only. On the other hand USA sells arms to a part of China (Taiwan) without China’s permission, that is the real example of interfering other nation’s internal affairs uninvited.

Are you saying US does not produce surveillance equipment? And US made surveillance equipment does not sell around the world? Or are you a sour grape because the American companies cannot compete with ZTE and Huawei?

China PR projects achieve its purposes, it tell the world the progress China has made and the goals it wants to achieve, as well as promote Chinese culture and civilization to the world to made the world a real global village. Your bad mouthing only proves that the anti-China clique is threatened by its success.

BS means falsehood, lie, fabrication, or distortion, they fits your comment well; what does it say about you then?

May 29, 2012 at 04:00

What a piece of FUD. So, to remain purely politics, a country should not deal in arms. That means those who buy arms are also mixing business with politics involuntarily. This is another piece of propaganda that will backfire in the face of those who know the facts. It’s no secret that business is a powerful asset to politics and vice versa. Stop acting like a kid forgodsake. Post something more factual and useful please.

May 28, 2012 at 19:48

This whole article is a waste. The Chinese have never said they won’t mix politics with business, they said they won’t interfere in other country’s INTERNAL affairs. Using business to influence other countries’ FOREIGN affairs has never been even an “open” secret and China has never pretended it to be so either.

May 28, 2012 at 00:03

Why do you think we laugh at Chinese leadaership when Hu Jintao stated, “China is peaceful $ harmonious” when watching the actions of the PLAN with the Philippines at present?

Laugh at China’s policy of “Non-interference in the internal affairs if other country” rhetoric; especially, when three largest arms manufacturers in China were caught offering hand-held rocket launchers and hand-held missiles to Qaddafi in 2011 June?

Iv’e read the report from the UN regarding China’s involvement in arms sales to Bashir in Sudan where civil war is on the brink once again in Northern ans Southern Sudan.

The involvement of ZTE & Huawei in installing surveillance equipment in Iran to monitor their people!

Yet, for all that Beijing leadership does that is laughable regarding their bad PR problem, the CCP still continues to spends billions on CCTV broadcasts and build Confucious Institutes in the hope of building up their ‘Soft Power’ appeal?

That last one is what’s truely laughable about the hypocrisy of mainland China’s leadership BS!

May 27, 2012 at 11:50

On the point about China not reciprocating, I disagree with the author. China DOES in fact “reciprocate” in political and economic ways to perceived political or economic friendliness. The qualification is that these reciprocation apply only to countries already considered friendly to China. Obama’s delaying of his meeting with the Dalai Lama Was not only not considered any meaningful favor to China by its leaders and people, but it was also being conducted by the leader of the one country China perceives as being fundamentally opposed with its rise. “China did not reward Obama because of the DL postponement” is not a good example of how China fails to reciprocate. Look instead at how it endeavors to reward countries like Cambodia for its support.

Also, China’s economic weight is actually effective when used carefully and strategically. It was not for nothing that Western commentators went insane over China’s “embargo” of rare earth metals to Japan, and it was not because of rhetoric that Japan eventually conceded to original point and let the dispute about a fishing captain resolve itself in China’s favor.

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