“Keep a cool head and maintain a low profile. Never take the lead – but aim to do something big.”
–Deng Xiaoping
It is perhaps unsurprising that since China’s rise in the late 1970s, it has broadly followed the foreign policy contours of another ascending power that burst upon the international stage two centuries before – the United States of America. Under the dominating genius of Alexander Hamilton, America perfected a mercantilist international stance, desperately trying to avoid political fights with then Great Powers France and England, trading with everyone, exhibiting the lowest of political profiles, all in an effort to secure its tremendous economic potential.
From Hamilton to Deng Xiaoping
Since the days of the equally impressive Deng Xiaoping, Beijing has followed a similar strategy throughout the world. Even now, as Paramount Leader Xi Jinping finally alters the terms of Deng’s engagement with China’s nearby Asian neighbors, opting for a more aggressive and interventionist approach, Beijing continues to hew to its old mercantilist foreign policy the farther from China one gets.
That the policy has remained largely unaltered for 35 years is evidence of its tremendous success. In 1979 as Deng rose to ultimate power, China found itself a poor, isolated country, just getting back onto its feet following the ravages of the Cultural Revolution of the 1960s-1970s. While the internal Chinese market was even then a source of great hope for China’s future, economic success – after all of the Maoist failures – seemed an implausibly distant dream. This was the domestic context in which China’s mercantilist foreign policy was born.
China’s stupendous economic growth has been significantly bolstered by its low-key foreign policy, which has placed the avoidance of disputes and war – never beneficial for a country benefiting from rapid catch-up growth – at its core. China’s mercantilist foreign policy found a further lease on life, as securing long-term supplies of raw materials to feed its ravenous manufacturing industries became a centerpiece of both Chinese economic and foreign policy thinking.
Mercantilism at work in the Middle East
Nowhere has this been more apparent than in China’s regional strategy toward the Middle East. Beijing has adopted a policy without pretense, where in place of talking high-mindedly of sharing values in some sort of mystical way as the Americans never cease being fond of doing, China is straightforwardly about securing long-term oil supplies – and pursuing security for that supply – as the one and largely only goal of its foreign policy in the region.
China’s realist mercantilism in the Middle East amounts to a foreign policy without masks, a clear-cut exercise wherein economic advantage – specifically securing long-term supplies of raw materials to keep the Chinese juggernaut on the road – is the beginning and end of its wish list.
However, if the mercantilist strategy is simple enough, the tactics to achieve the end goals are daunting. First, China talks to absolutely everyone in the region – with the exception of Islamic State (IS) – playing no favorites whatsoever between the four great regional powers: Turkey, Saudi Arabia, Egypt, and Israel, perhaps being the only country in the world to truly get on with all four of them. Above all else, and ruefully noting the catastrophic American example, Beijing wants to avoid becoming entangled in the cesspool of Middle Eastern regional politics.
If President Obama’s Pivot to Asia ever becomes a working reality – for all the heartburn it will cause China closer to home in the East Asian and South China Seas – paradoxically such a chess move actually makes things much easier for China in the Middle East. Implicit in the Asia Pivot is America’s yearning to de-emphasize both the Middle East and Europe, concentrating instead on Asia.
For the second rule of China’s mercantilist strategy is that its foreign policy is like water: it flows to the path of least resistance, in this case away from its established and still stronger American rival. This is the reason China has made such a big push into Africa and other emerging market countries; precisely because the Americans had few interests there. In this conflict-free zone, Beijing can quietly secure its raw material goals away from the limelight. Doing more in the Middle East works well as a strategic counter-move to the Obama administration’s newfound focus on Asia.
Third, China’s mercantilist policy in the region is heavy on economics, but very light on politics. For example, Beijing has largely accommodated but also restrained the US and Europe over facing up to Iran, just as it has largely accommodated but also restrained Russia over its support for the murderous Assad regime in Syria. In both cases, China has managed to successfully walk a very fine tactical line, remaining a valued part of outside Great Power coalitions, all the while being seen inside the region as a necessary force for caution.
The zenith of mercantilist success
There is no doubt that China’s present mercantilist policy has been a great success. Beijing has globally overtaken the US as the world’s largest global importer; at the same time more than half of all China’s oil imports come from the Middle East (2.9 million barrels per day). This increasing economic focus is mirrored in the overall regional trade numbers: China’s trade with the region has increased from only $20 billion in 2004, to $230 billion a decade later in 2014; it is estimated to ascend to $500 billion by 2020.
If the region as a whole matters more and more to China’s economy, it is the Gulf States that increasingly form the locus of China’s interests there. Fully 70% of all its regional oil comes from Saudi Arabia and the other Gulf states, with Riyadh amounting to Beijing’s single biggest source of imported oil in the world. Conversely, the Israeli technology sector has become an increasingly important magnet for Chinese overseas investment; free trade talks between the two are set to begin this year.
Is China’s regional success sustainable?
China’s increasing role in the Middle East has managed not to inspire animosity, in what remains the most volatile setting in the world. A recent Pew survey found that China’s favorability rating across the Middle East was higher than that of the United States.
But with America looking to lessen its role in the Middle East, and with the region itself still far from being able to establish a stable regional balance of power, how can China hope to navigate the rocky seas ahead with the same mercantilist strategy of minimalist involvement for maximalist gains?
China alone cannot fill the American security vacuum in the decade ahead, even if it wished to (which it emphatically does not). But like all successful mercantilists – as was true for the American Republic which was shielded from Napoleon by the British navy – China has largely been a strategic free-rider in the region. With America bound to do less in the medium-term, will there be enough stability in the Middle East for Beijing to ensure its security of supply regarding its vital oil interests there? If not, will it ramp up its political and strategic involvement in the most dangerous place in the world?
In a more tumultuous Middle East, won’t the other great regional powers force China to take sides? A failure to do so could find Beijing placing its economic interests in peril. Either way, a China forced to do more strategically in the Middle East or a China buffeted about by a lack of security in the Middle East will face new and daunting challenges. In the end, the changing structure of the regional order will put an end to China’s wildly successful mercantilist foreign policy.