China’s Institutional Statecraft – OpEd


One of the pivotal events of the 21st century is the meteoric rise of China, leading it to emerge as a global superpower. Since it began its modernization efforts under Deng Xiaoping, China has become the world’s second-largest economy as well as one of the largest military spenders in the world, surpassed only by the United States. 

The resulting increase in stature has allowed China a greater stake in how the world is organized. Moreover, it has made China realize that it can reshape the regional and global environment, according to its interests. A major aspect of this endeavor is China’s increased role in international governance through regional and multilateral institutions.  

After the Second World War, the US was the sole undisputed hegemon. This distinction allowed it to make and regulate the international order in line with its values and interests. However, as the US influence in the world wanes, China is remaking the international political landscape in two major ways; by increasing its sway in major world organizations and by creating new international institutions. 

One of the foremost examples of the former is, China’s increasing sway in the World Bank Group and the IMF. China holds the third largest voting share i.e. 5.05% in the International Bank for Reconstruction and Development (World Bank), greater than that of the United Kingdom, France, and Germany. Moreover, Chinese nationals occupy 2 out of 35 management positions in World Bank leadership. This mirrors the situation in IMF where China has the 3rd largest quota, trailing behind the US and Japan. Although, the 16th General Review of Quotas that is to be completed by December 2023 will, in all likelihood, propel China to become the second largest shareholder in the IMF. 

In addition, China has also been steadily increasing its influence within the United Nations, through a combination of increased donations as well as placing individuals within strategic posts in the UN. Of the 15 specialized agencies and related organizations of the UN, China occupies key leadership positions in 9 of them. Incidentally, all these organizations are those which are related to Chinese domestic and international policies, such as UN Industrial Development Organization (UNIDO) and International Atomic Energy Agency (IAEA). Moreover, China, in partnership with Secretary-General Ban Ki-Mon, established the Peace and Development Fund (UNPDF) in 2016. The $200 million fund, operated in collaboration between China and the Secretary-General, is to be used for UN projects related to the maintenance of international peace and security. Although, criticism abounds regarding the transparency of the fund, and some consider it a blatant way for China to curry favor and lobby for its initiatives. 

China’s consideration of itself as “Zhongguo” or the Middle Kingdom, around which the world gravitates, has led it to form new multilateral institutions as well. Chief amongst them is the Shanghai Cooperation Organization and its predecessor, the Shanghai Five. In terms of geographical location and population, it is the largest regional organization in the world, with its members contributing 30% of the global GDP. Most analysts agree that the organization is largely a Chinese initiative and that it has played a critical role in furthering Chinese interests in the Eurasian region. These include the resolution of border disputes (Agreement on Deepening Military Trust in Border Regions), combating the three evils of terrorism, separatism, and extremism (Joint efforts against ETIM), and economic cooperation (SCO Interbank Consortium). 

China’s institutional building also extends into the realm of finance and banking with the nation establishing new Multilateral Development Banks (MDBs) such as New Development Bank, formerly referred to as BRICS Development Bank and most significantly Asian Infrastructure Investment Bank (AIIB). The former is a joint project between the five BRICS nations that originates from a desire to provide an alternative to existing financial institutions which are seen to be privileging the West. Moreover, the bank is considered an important tool in enhancing the Chinese mission of internationalizing the Renminbi (RMB), a prospect aided by the IMF’S inclusion of the Yuan in its Special Drawing Rights in 2016.  On the other hand, AIIB is entirely a Chinese enterprise and is the second-largest multilateral development institution in the world. The bank currently has 106 members from around the world, including some of the key allies of the US. The reason for its popularity is the bank’s doctrine of non-interference in the internal affairs of other countries. This means that AIIB loans are not contingent on uncompromising social and environmental considerations. 

China is also making a foray into the realm of international justice with its founding of the China International Criminal Court (CICC). The CICC based in the Chinese cities of Xian and Shenzhen will deal with disputes arising from international commercial transactions related to BRI. This is in line with the stated Chinese policy to “advance the construction and improvement of international commercial courts.” The formation of these courts is seen as an attempt to shift the locus of any China-related dispute proceedings away from European Courts where China may be at a disadvantage. 

Altogether, China’s institutional statecraft can be traced back to President Xi Jinping. At the 19th National Congress of the Communist Party in 2017, the Chinese president declared, “China has now become a great power in the world. It is time for us to take a central place on the world stage.” Whether Xi’s international maneuvering is just a realization of China’s newfound global power or belies a more covert attempt to take charge of the international system, remains to be seen. 

Sharjeel Siddiqui

Sharjeel Siddiqui is an intern at the Islamabad Policy Research Institute and a student of International Relations at the National Defence University, Islamabad.

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