Normative economic statecraft

Abstract

Arguably, two of the greatest questions in 21st-century world politics are how the preexisting institutions of the international system will be able to accommodate a rapidly rising China, and how China is going to wield its expanding global power and influence. Unsurprisingly, these have also been two of the hottest topics in Chinese studies over the past decade. Until the global financial crisis in 2008 and the Chinese leadership change in 2012, China was commonly seen as a nonrevisionist power gradually integrating into the Pax Americana system, while securing its own national interests. Since then, views of China’s rise have undergone a transformation. Today, China’s actions on the global stage invite more wary commentary, even apprehension. Yet, compared both to former and current Great Powers, what stands out about China’s use of power and influence is neither its militarism nor its ‘soft power’. China wields its power most actively, and arguably also most effectively, by using the purse, i.e., through trade, investment, and lending. China’s signature foreign policy project, the Belt and Road Initiative (BRI), is a case in point. This chapter provides an overview of state-of-the-art research revolving around China’s use of economic and financial means to serve foreign policy objectives with normative implications, defined here as normative economic statecraft. The chapter’s overview of China’s use of economic statecraft reveals its breadth and diversity. China also indirectly challenges existing international norms of economic governance by its alternative modus operandi. As China does not always proclaim its challenge to existing norms, this paper suggests an analytical distinction between stated and concealed normative objectives. Much of China’s challenge to global economic governance norms is concealed. Research on China has revitalized old debates on economic statecraft and geoeconomics, and reoriented their focus from economic coercion (e.g., sanctions) to economic inducements, and alternative institutions and norms. This subfield of China studies thus has a scholarly impact beyond the area studies specialization.