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Assessing China's Global Influence Strategy during the Xi Jinping Era and Its Implications economic security

Author Jihyun Jung, Jaichul Heo, Hongwon Kim, Hanna Lee, Byung Kwang Park, and Hyunwook Cheng Series 23-28 Language Korean Date 2023.12.29

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Since gaining membership to the WTO, China has expanded its global influence based on its expanded economic power, extending to trade. In response to strategic competition with the United States and efforts by major countries to contain its growing influence, China has increasingly felt the need to establish a global order that it can lead or where it can enhance its influence. Consequently, China is actively pursuing a state-led strategy to strengthen its influence across all dimensions. The expansion of China’s global influence has intensified competition and conflict with advanced countries such as the United States, while also strengthening ties among developing and emerging countries. This situation increases external uncertainties for South Korea, necessitating appropriate responses. Therefore, this study analyzes, evaluates, and forecasts China’s strategies for enhancing its global influence in economic, diplomatic, and security aspects, and explores potential response strategies for South Korea.

In Chapter 2, we examine the changes in and characteristics of China’s global influence index, as analyzed by major global institutions, to assess the degree of change in global influence during the Xi Jinping era. We then analyze the relationship between these changes and China’s national goals and foreign strategy shifts, identifying China’s strategies to expand its influence amidst intensifying conflicts with the United States and stronger economic security initiatives.

Chapters 3 to 5 focus on analyzing and evaluating China’s strategies to enhance its global influence in economic, diplomatic, and security fields during the Xi Jinping era.

Chapter 3 analyzes and evaluates the strategies to strengthen influence in the economic sector, divided into trade and finance. In trade, China’s strategies have led to growth as an exporter of intermediate goods through trade sophistication, securing a supply chain advantage, strengthening trade security through export controls, expanding regional economic cooperation networks such as the RCEP, increasing trade and investment with Belt and Road Initiative partner countries (exporting standards), and securing overseas markets/resources. However, there are also limitations, such as reliance on foreign core technologies, low-level FTAs centered on developing countries, increasing side effects of the Belt and Road Initiative, emerging competing platforms, and stronger actions on the part of advanced countries to contain and counter China’s trade, investment, technology, industry, and international standards activities.

In the finance sector, China’s strategy has shown some achievements in international monetary and financial system reform and role expansion, and in establishing a yuan liquidity supply network through bilateral/multilateral currency and financial cooperation. However, institutions like the AIIB and NDB still require extended periods of time to grow into alternative multilateral institutions that can take the place of established ones like the IMF and ADB. Additionally, efforts such as forming offshore yuan markets, capital account liberalization, and establishing an international payment system have made progress, though China’s capital account liberalization has not yet reached the level of advanced countries. As a result, cross-border yuan capital transactions increased rapidly during the Xi Jinping era. China’s Cross-Border Interbank Payment System (CIPS) is gradually expanding its number of members and transaction volume. Meanwhile, policies such as leading participation in international financial standard-setting and yuan oil transactions have yielded limited success, and the proposal to expand the use of SDR as a reform measure for the international monetary and financial system has not been widely accepted internationally.

Chapter 4 analyzes China’s strategies to enhance its influence in diplomacy, focusing on global partnerships, international development cooperation, and climate change negotiation responses. In global partnerships, China is expanding its influence through bilateral, small/multilateral cooperation systems, and public diplomacy. A notable feature is the global partnership strengthening strategy targeting Taiwan, with a focus on cooperation with developing countries and neighboring Asian countries, and the pursuit of public diplomacy leveraging strengthened economic power and rich cultural assets, though the effects have been minimal.

In development cooperation, China’s strategy has achieved significant results in expanding the provision of public goods to recipient countries, utilizing the Belt and Road Initiative platform, and leveraging regional cooperation mechanisms. A significant proportion of recipient countries have positively assessed these policies, noting contributions to trade and investment growth, infrastructure gap reduction, and economic/technological development, as well as improved political relations. As China advances the development goals of recipient countries and achieves sustainable development goals, its influence in international development cooperation governance and related international standards fields is growing.

In the field of climate change response, China has strengthened communication with developing countries through BASIC and LMDC groups within global climate governance, consolidating developing countries’ positions and enhancing negotiation power to assert their interests. However, strengthening China’s influence in climate governance requires China to expand its active responsibility for carbon neutrality.

Chapter 5 analyzes China’s strategies to enhance influence in the security sector, divided into resource security and maritime security. In resource security, China’s strategy has generally been successful in securing a supply chain for key minerals through the development and control of owned minerals and active overseas mineral investment. According to our evaluation, China is enhancing its own resource security in direct response to U.S. sanctions, strengthening cooperation with third countries other than the U.S., and promoting technological independence.

In maritime security, China is building a strong navy capable of far-seas operations, expanding maritime security activities, and constructing naval bases at strategic high-value locations. Domestically, it is strengthening maritime jurisdiction, law enforcement capabilities of the coast guard, and enhancing its ability to comply with international law in maritime disputes, thereby strengthening its legal warfare capabilities. The use of maritime militia as a grey zone strategy disrupts the actions of conflict countries, and stronger law enforcement measures by its coast guard have strengthened China’s influence in the South China Sea.

Chapter 6 comprehensively summarizes the contents of this study and presents implications for policy. Based on a comprehensive analysis of the characteristics, evaluation, and prospects of China’s global influence strengthening strategy, the study summarizes impacts and prospects by field, and examines the responses of major countries to China’s strategy to strengthen its influence in each field, suggesting response strategies for the Korean government.

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