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China’s soft power hits the brick wall of economics

Lost in the Nobel hoopla yesterday was this fascinating New York Times story by Michael Wines about the ways in which China’s economy and foreign economic policy are vexing its neighbors. China has long claimed to be just another developing nation, even as its economic power far outstripped that of any other emerging country. Now, it is ...

By Daniel W. Drezner, a professor of international politics at the Fletcher School of Law and Diplomacy at Tufts University and co-host of the Space the Nation podcast.

December 11, 2009, 5:08 PM

Lost in the Nobel hoopla yesterday was this fascinating New York Times story by Michael Wines about the ways in which China's economy and foreign economic policy are vexing its neighbors.

Lost in the Nobel hoopla yesterday was this fascinating New York Times story by Michael Wines about the ways in which China’s economy and foreign economic policy are vexing its neighbors.

China has long claimed to be just another developing nation, even as its economic power far outstripped that of any other emerging country.

Now, it is finding it harder to cast itself as a friendly alternative to an imperious American superpower. For many in Asia, it is the new colossus.

“China 10 years ago is totally different with China now,” said Ansari Bukhari, who oversees metals, machinery and other crucial sectors for Indonesia’s Ministry of Industry. “They are stronger and bigger than other countries. Why do we have to give them preference?”

To varying degrees, others are voicing the same complaint. Take the 10 Southeast Asian nations in the Association of Southeast Asian Nations, known as Asean, a regional economic bloc representing about 600 million people. After a decade of trade surpluses with Asean nations that ran as high as $20 billion, the surplus through October totaled a bare $535 million, according to Chinese customs figures, and appears headed toward a 10-year low. That is prompting some rethinking of the conventional wisdom that China’s rise is a windfall for the whole neighborhood.

Vietnam just devalued its currency by 5 percent, to keep it competitive with China. In Thailand, manufacturers are grousing openly about their inability to match Chinese prices. India has filed a sheaf of unfair-trade complaints against China this year covering everything from I-beams to coated paper.

Read the whole thing — Wines does a nice job of contrasting China’s policy responses in 2008 to what it did a decade earlier. To sum up: those dogs that were not barking previously are starting to growl.

This problem is not going away anytime in the near future. The problem for the rest of the Asia/Pacific is that their comparative advantages (labor costs, process innovations) are also China’s comparative advantages. Unless China starts acting as an important consumer market as well — which admittedly might be happening as I type this — then China’s mantra of being a "responsible power" is going to meet a greater level of static very, very soon.

UPDATE: The Chicago Council on Global Affairs’ Tom Wright has a report on how the financial crisis has affected China’s soft power in the Asia/Pacific region that buttresses the Wines story.

Daniel W. Drezner is a professor of international politics at the Fletcher School of Law and Diplomacy at Tufts University and co-host of the Space the Nation podcast. Twitter: @dandrezner