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1. China’s Response to Türkiye’s Volatile Authoritarianism

Author:
Ceren Ergenç and Kenan Göçer
Publication Date:
05-2023
Content Type:
Working Paper
Institution:
Carnegie Endowment for International Peace
Abstract:
This paper investigates Türkiye’s evolving relations with China’s Belt and Road Initiative (BRI), a large-scale program of infrastructure investment and project financing proposed by Chinese President Xi Jinping in 2013. The paper digs deeply into cases from two sectors—transportation and energy—focusing on how heightened and changing local expectations among Turks for these prospective BRI projects have shaped choices and outcomes, including China’s. In so doing, it explores how these shifting Turkish perceptions affect the implementation of BRI projects in Türkiye. This paper has several goals: it seeks to understand the reasons behind these local changes, the role of the state and private sector in Türkiye in these changes, and the way China has responded so far. Of course, domestic factors are not the only ones that shape the implementation of BRI projects in Türkiye or elsewhere; regional and global trends have had an impact too.
Topic:
Foreign Policy, Infrastructure, Authoritarianism, Belt and Road Initiative (BRI), and Investment
Political Geography:
China, Turkey, Middle East, and Asia

2. How China’s Foreign Aid Fosters Social Bonds With Central Asian Ruling Elites

Author:
Nargis Kassenova
Publication Date:
12-2022
Content Type:
Working Paper
Institution:
Carnegie Endowment for International Peace
Abstract:
China has become a global power, but there is too little debate about how this has happened and what it means. Many argue that China exports its developmental model and imposes it on other countries. But Chinese players also extend their influence by working through local actors and institutions while adapting and assimilating local and traditional forms, norms, and practices. With a generous multiyear grant from the Ford Foundation, Carnegie has launched an innovative body of research on Chinese engagement strategies in seven regions of the world—Africa, Central Asia, Latin America, the Middle East and North Africa, the Pacific, South Asia, and Southeast Asia. Through a mix of research and strategic convening, this project explores these complex dynamics, including the ways Chinese firms are adapting to local labor laws in Latin America, Chinese banks and funds are exploring traditional Islamic financial and credit products in Southeast Asia and the Middle East, and Chinese actors are helping local workers upgrade their skills in Central Asia. These adaptive Chinese strategies that accommodate and work within local realities are mostly ignored by Western policymakers in particular. Ultimately, the project aims to significantly broaden understanding and debate about China’s role in the world and to generate innovative policy ideas. These could enable local players to better channel Chinese energies to support their societies and economies; provide lessons for Western engagement around the world, especially in developing countries; help China’s own policy community learn from the diversity of Chinese experience; and potentially reduce frictions.
Topic:
Foreign Policy, Foreign Aid, and Elites
Political Geography:
China, Central Asia, and Asia

3. A Historical Evaluation of China’s India Policy: Lessons for India-China Relations

Author:
Vijay Gokhale
Publication Date:
12-2022
Content Type:
Working Paper
Institution:
Carnegie Endowment for International Peace
Abstract:
The violent clash in the Galwan valley in eastern Ladakh in 2020 fundamentally altered the dynamics of the India-China relationship. China’s increasing transgressions and attempts at coercion in the border areas since 2008–2009 have put the boundary question to the center of the India-China relationship. The salience of this question has also increased because the geopolitical backlash to China’s actions in 2020 has been greater than in previous instances, and because India’s policymakers and strategic community are no longer willing to give Beijing the benefit of the doubt regarding its intentions and actions. This has prompted a comprehensive relook in India at the past, present, and future of the relationship. While much of this has focused on the relationship from the Indian perspective and on trying to understand India’s China policy, the current chill in ties has highlighted the necessity of understanding China’s India policy. Thus, using Chinese sources, this paper analyzes the drivers of that policy and the options available to Indian policymakers to engage with, adapt to, and mold it. This paper argues that from the time of Mao Zedong’s rise to the helm of the Chinese Communist Party and the founding of the People’s Republic of China in 1949, China’s India policy has been shaped by its view of the larger great power strategic triangle of China, the Soviet Union (later Russia), and the United States. As this triangle has evolved, this has had a direct effect on the India-China relationship. For much of the past seventy years, China was the weakest corner of the triangle and therefore driven by goals of security and status. In that context, it saw India—another large, developing country in Asia—as a competitor for security and status alike. As a result, China always looked at India through the lens of its own relations with the Soviet Union and the United States. It did not view India on its own merits, or credit it with agency, but as unequal as well as untrustworthy. China’s objective during the Cold War was to keep India as neutral as possible. In the post–Cold War period, the goal evolved to limit through containment and coercion India’s capacity to harm China’s strategic goal of hegemony. This paper analyzes China’s India policy in three phases. In the first phase between 1949 and 1962, China viewed the United States as its primary adversary and its core objective was to keep India neutral and away from the U.S. camp on matters of concern to Beijing. Flowing from this was the secondary objective of utilizing India’s influence in the developing world to build “Asian solidarity” to stem U.S. inroads into Asia.
Topic:
Foreign Policy, Bilateral Relations, Territorial Disputes, and Military
Political Geography:
China, India, and Asia

4. Localization and China’s Tech Success in Indonesia

Author:
Gatra Priyandita, Dirk Van Der Kley, and Benjamin Herscovitch
Publication Date:
07-2022
Content Type:
Working Paper
Institution:
Carnegie Endowment for International Peace
Abstract:
On average, Indonesians distrust China and many Chinese firms. Yet Huawei and to a lesser extent ZTE have successfully positioned themselves as trusted cybersecurity providers to the Indonesian government and the Indonesian nation. This has been no easy feat given long-held Indonesian animosity toward China. Many Chinese companies have faced protests over concerns they were taking local jobs. Huawei and ZTE have suffered no such fate. Nor has there been a broad coalition of Indonesian voices against using Chinese technology in critical telecommunications infrastructure. In short, Indonesians care a lot more about Chinese cement plants than they do about Huawei involvement in 5G networks. Gatra Priyandita Gatra Priyandita is an analyst at the International Cyber Policy Centre at the Australian Strategic Policy Institute, where he leads a project researching cyber-enabled intellectual property theft. He is a political scientist by training and specializes in the study of foreign policy and security in Southeast Asia. He holds a PhD in political science from the Australian National University. This is a vastly different conversation to those happening in rich liberal democracies. Huawei and ZTE have been able to achieve success in Indonesia, despite a sense of ambivalence among the Indonesian political and defense establishment about Chinese intentions and growing Western scrutiny over the use of Chinese technology in broadband networks. As other papers in this series have demonstrated, Huawei and ZTE needed to localize their strategies. Like elsewhere in the world, available evidence suggests that part of Huawei’s and ZTE’s value proposition is cheaper prices (compared to those of competitors) for high-quality technology. But that is only part of the story. Huawei has positioned itself as Indonesia’s cybersecurity provider of choice by offering enormous cybersecurity and other related training programs across the country for groups ranging from senior government officials to students in rural Indonesia. Much of this training is technically focused on practical vocational skills with a hope that students one day will become customers. In addition, the company offers an attractive maintenance and upkeep package. Since the mid-2000s, Chinese information and communications technology (ICT) firms have created training centers in partnership with local Indonesian telecoms companies and universities to train the next generation of Indonesian engineers and tech specialists. Government agencies are also increasingly targets of training and capacity-building programs, with Huawei claiming that 7,000 government officials have participated in its training programs. The Indonesian government, corporations, and ordinary citizens alike have welcomed Huawei and ZTE as essential partners in their efforts to build both the infrastructure and human capital necessary to prosper in the twenty-first century’s digital economy. What Huawei and ZTE offer is knowledge transfer, not technology transfer. The technology is still being built in China by Chinese firms. Huawei’s role in training relates instead to capacity building. Indonesians will install, maintain, and use the networks. China will build the hardware. There is also evidence that China has had some rhetorical success in pushing its version of cyberspace governance. Beijing’s preferred cyberspace governance language was inserted into a memorandum of understanding between Indonesia’s National Cyber and Crypto Agency and the Cybersecurity Administration of China. However, it is difficult to see how the memorandum has influenced Indonesia’s cybersecurity governance in practice. One of the concerns often leveled by rich liberal democracies is that reliance on Chinese tech will end up aligning the political interests of countries like Indonesia with those of China. Other key worries are China’s pervasive espionage and the enduring (though as yet unrealized) risk that Chinese companies with a dominant role in an ICT ecosystem could be used by Beijing to apply coercive political pressure. Despite Indonesia’s embrace of Huawei and ZTE, political leaders in Jakarta have not simply disregarded the hard security questions posed by upgrading ICT equipment, especially when foreign suppliers are involved. Indonesian officials simply rate the need for development and cybersecurity-related capacity building higher than the risk of using Chinese ICT hardware in their critical infrastructure systems. If rich liberal democracies are concerned about this trend, then they need to offer workable alternatives that place Indonesia’s enormous digital development needs at the heart of any value proposition. It is unlikely that Indonesia will stop using Chinese hardware in its infrastructure, but alternatives could prevent overreliance.
Topic:
Foreign Policy, Science and Technology, Cybersecurity, Telecommunications, and Localization
Political Geography:
China, Indonesia, and Asia

5. Russia’s National Security Narrative: All Quiet on the Eastern Front

Author:
Eugene Rumer and Richard Sokolsky
Publication Date:
05-2022
Content Type:
Working Paper
Institution:
Carnegie Endowment for International Peace
Abstract:
The two defining features of Russian President Vladimir Putin’s foreign policy have been an increasingly adversarial relationship with the West and an increasingly close partnership with China. These drivers have been the salient feature of official Russian national security documents for the past three decades. Since the end of the Cold War, the U.S. national security community has viewed Russian strategic thinking as misguided because it failed to see China as the real threat to Russia. This view ignores the Kremlin’s preoccupation with Europe as the most important strategic theater where its interests are at stake, and where they are threatened by the West’s superior capabilities and ambitions. This view also ignores how unimportant—relative to Europe—the Asia-Pacific is for Russia. Russia’s partnership with China is secured, however, by a set of coherent and complementary strategic rationales, which supersede frequent concerns in the Russian strategic community at large about China and its growing capabilities and intentions vis-à-vis Russia. Those concerns appear to have little impact on Russian policy. Notwithstanding those concerns in Russia’s unofficial national security discourse, China’s footprint on its foundational national security and foreign policy documents is invisible—and China, as a source of military threat to Russia, does not appear to be part of the Kremlin’s calculus. The North Atlantic Treaty Organization (NATO) has long been the pacing challenge of Russian military modernization, and the main contingency for which it has been preparing has been future conflict in the European theater. For the Putin regime, there is no alternative to Russia’s “no limits” partnership with China. Moreover, even if Putin were no longer on the scene, a successor regime would have powerful economic, geopolitical, demographic, and military-strategic incentives to maintain this partnership. An adversarial relationship with China would pit Russia against two superior powers in two widely separated geographic theaters. The war in Ukraine has cemented the Russian-Chinese partnership for the foreseeable future.
Topic:
Foreign Policy, National Security, Bilateral Relations, Partnerships, and Russia-Ukraine War
Political Geography:
Russia, China, Eurasia, and Ukraine

6. Networks and Competitive Advantage in a Contested World

Author:
Jennifer Kavanagh
Publication Date:
11-2022
Content Type:
Working Paper
Institution:
Carnegie Endowment for International Peace
Abstract:
In an increasingly multipolar world and amid challenges from China, Russia, and elsewhere, the United States faces a complex set of foreign policy demands and the real risk of becoming overextended. Networks—of states, businesses, and individuals—offer policymakers a way to prioritize and reduce global commitments while advancing core U.S. interests. Leveraging the right networks in the right ways can extend U.S. influence, support the economic and physical security of Americans, and compete with adversaries at sustainable cost. Today’s policymakers understand the power of networks but need more guidance on how to build and employ them as tools of competition in a contested world rather than a world of open borders and markets. Influence networks—networks primed to spread and amplify U.S. power, enhance U.S. competitiveness, and protect national interests—have three characteristics. They are attraction networks, organized around places and issues where countries and corporations are already interacting, meeting common needs with customized resources. China’s Belt and Road Initiative (BRI), for instance, is organized around a shared need for infrastructure across the Global South and embeds Chinese influence by tailoring agreements to each partner’s local conditions. The United States has used attraction effectively in the F-35 Joint Strike Fighter program, but most U.S. foreign investment has been centralized and top-down. They are gated networks with clear criteria for entry, access, and exit. Gates capture network power and direct it toward specific goals. The European Union (EU) has used gated economic markets to build significant regulatory power and geopolitical relevance. The United States has tended toward universalism but employs gates in some security networks, like the North Atlantic Treaty Organization (NATO), and is turning toward gates in economic networks with friendshoring initiatives in some industries. Finally, they are distributed networks that have robust ties between members throughout the network, allowing influence to flow quickly along more pathways and facilitating collective action. The United States has often relied on less resilient hub-and-spoke networks to retain control. U.S. Indo-Pacific security alliances are hub-and-spoke, while NATO is more distributed, enabling more rapid, coordinated responses and wider spread of U.S. influence. Networks with these characteristics can help policymakers tackle their hardest problems. For example, better use of influence networks can support U.S. efforts to prioritize and fully resource the more significant challenge posed by China by pushing forward changes that advance European security autonomy and by building and mobilizing needed, distributed networks in the Indo-Pacific theater. Influence networks can inform U.S. strategies for building ties to hedging states that offer access to key resources or strategic locations—for example, by focusing on shared local needs of potential partners and U.S. comparative advantages and by creating distributed business or civil society partnerships. Finally, influence networks provide ways to approach the Russia-China relationship that support U.S. security and economic interests, including avoiding the isolation of either. These examples begin to illustrate how influence networks can improve U.S. strategies toward foreign policy challenges by offering policymakers a way to prioritize commitments, capitalize on U.S. strengths, and avoid overextension that harms U.S. interests. Additional exploration and application of these networks will investigate these and other foreign policy challenges in more depth.
Topic:
Foreign Policy, Networks, Strategic Competition, and Multipolarity
Political Geography:
Russia, China, and United States of America

7. Negotiating Local Business Practices With China in Benin

Author:
Folashade Soule
Publication Date:
04-2022
Content Type:
Working Paper
Institution:
Carnegie Endowment for International Peace
Abstract:
Commercial negotiations between Benin and China demonstrate how both sides navigate the dynamics of Africa-China business-to-business relationships. In Benin, Chinese and local Beninese officials engaged in drawn-out negotiations on a deal to construct a business center aimed at deepening business links between Chinese and Beninese merchants. Strategically located in Cotonou, Benin’s principal economic city, the center aims to promote investment and wholesale businesses by serving as a hub for China’s business-to-business relations not just in Benin but regionally in West Africa, especially in the large and growing neighboring market of Nigeria. This paper relies on original research and fieldwork conducted in Benin from 2015 to 2021 and the author’s access to draft and final contracts from the negotiations, which allow for a side-by-side comparative textual analysis, as well as initial field interviews and follow-up interviews with key negotiators, Beninese businessmen, and former Beninese students in China. The paper shows how Chinese and Beninese authorities negotiated the establishment of the center and, above all, how Beninese authorities made Chinese negotiators adapt to local Beninese labor, construction, and legal norms and put pressure on their Chinese counterparts. This strategy meant that negotiations took longer than usual to complete. China-Africa cooperation is often characterized by speedy negotiations, an approach that in some cases turns out to be harmful—since this can allow vague and unfair clauses to be featured in final contracts. The negotiations over the Chinese business center in Benin is a good example of how well-coordinated negotiators that take their time and work in coordination with various counterparts throughout the government can help facilitate better outcomes in terms of high-quality infrastructure and compliance with prevailing construction, labor, environmental, and business norms, while also preserving a good bilateral relationship with China.
Topic:
Foreign Policy, Development, Bilateral Relations, and Business
Political Geography:
Africa, China, Asia, and Benin

8. The Road from Galwan: The Future of India-China Relations

Author:
Vijay Gokhale
Publication Date:
03-2021
Content Type:
Working Paper
Institution:
Carnegie Endowment for International Peace
Abstract:
China and India struggle to comprehend each other’s international ambitions. The misperceptions that follow lead to a lack of trust, border skirmishes, and potentially worse. On June 15, 2020, Indian and Chinese troops engaged in a brawl that left twenty Indian soldiers dead while causing an unspecified number of Chinese casualties. The clash is a part of a broader border standoff along the Galwan River between the two forces on the Line of Actual Control that is yet to be resolved. The Indian strategic community is broadly in agreement that this border dispute marks an implacable decline in India-China ties. They argue that the very basis of relations that emerged after former Indian prime minister Rajiv Gandhi’s visit to Beijing in 1988 has been shaken, if not destroyed. Yet, how did the two countries manage to reach this nadir in ties, and furthermore, what does the Galwan clash signify for the future of Sino-Indian relations? This paper argues that, long before the present border dispute occurred, Sino-Indian relations had been steadily declining due to rampant misperceptions of the other side, contributing to a lack of trust. The most fundamental misperception between the two countries is the inability to comprehend each other’s international ambitions, yielding the fear that their foreign policies are targeted against the other. This paper traces the impact and development of these misperceptions on Sino-Indian ties through three different phases before considering the future of the relationship after the Galwan dispute.
Topic:
Foreign Policy, Bilateral Relations, Territorial Disputes, and Borders
Political Geography:
China, South Asia, India, and Asia

9. China’s Digital Yuan: An Alternative to the Dollar-Dominated Financial System

Author:
Rajesh Bansal and Somya Singh
Publication Date:
08-2021
Content Type:
Working Paper
Institution:
Carnegie Endowment for International Peace
Abstract:
Central bank digital currencies (CBDC) are digital tokens issued by central banks. In a way, they are the digital version of cash; their value is guaranteed by a central bank. Unlike money held in credit cards and mobile wallets, CBDCs are not a mere representation of physical money stored elsewhere. Instead, they are a complete replacement for currency notes. While several countries are developing their digital currencies, China is well positioned to take the lead with the digital yuan. This paper highlights ways in which China can use its digital yuan to internationalize the renminbi (RMB) and gradually chip away at the hegemony of the dollar. The first part of the paper focuses on the dollar’s dominance in the global financial system and the privileges the United States accrues as a result of the dollar being the world reserve currency. The United States has a tight grip on the world’s payment rails, especially in the case of cross-border transactions. For example, the Society for Worldwide Interbank Financial Telecommunications (SWIFT)—the largest cross-border payment clearinghouse in the world—has to comply with and implement unilateral U.S. sanctions. These sanctions seriously hinder trade and damage the economies of the countries affected by them, as was the case with Iran, which lost $150 billion worth of revenue as a result of U.S. sanctions.1 Once a country is cut off from SWIFT’s network, it becomes extremely difficult for it to trade with the rest of the world. Thus, via the dollar’s dominance and its geopolitical muscle, the United States is positioned to maintain a tight grip on the world’s financial system. In an increasingly multipolar world, this outdated, decades-old system of the dollar as the apex currency and the United States’ position of power that allows it to pursue its own geopolitical interests has become outdated. The U.S. dollar’s hegemony has been challenged by economies like those of the European Union (EU), Russia, and China. Of all the countries, China finds itself in a dominant position to gain from this transition. In order to challenge the dollar’s hegemony and internationalize its currency, China will have to move away not just from the dollar but also from the payment rails dominated by the dollar. The best way to simultaneously do both would be to introduce a new payment rail like CBDCs. This paper analyses the way the launch of China’s CBDCs could greatly enhance its currency internationalization prospects. Considering China’s growing economy and influence over the world, the paper argues that China’s CBDC launch could bring a period of momentous change in the global financial system. In order to challenge the dollar, China will have to build the payments infrastructure required to facilitate the use of its digital yuan. It will also have to incentivize other countries to adopt its digital currency. China’s ability to successfully promote its currency using CBDCs will depend heavily on the country’s ability to relax capital controls and maintain the world’s trust in its institutions. China’s geopolitics will play a key role here. In the last decade, some of China’s major geopolitical efforts have set the stage for its CBDC launch. As China continues to use its foreign policy and technological capabilities to grow its influence in the global financial system, the launch of the digital yuan could be a significant step forward in this direction. This paper examines the reasons for China’s past efforts at currency dominance and explores ways in which the country can use its CBDC to further internationalize its digital yuan.
Topic:
Foreign Policy, Finance, Economy, Central Bank, and Currency
Political Geography:
China and Asia

10. India’s Fog of Misunderstanding Surrounding Nepal–China Relations

Author:
Vijay Gokhale
Publication Date:
10-2021
Content Type:
Working Paper
Institution:
Carnegie Endowment for International Peace
Abstract:
India’s postindependence ties with Nepal were predicated on the intimate cultural and historical links between the two countries. As India’s first prime minister, Jawaharlal Nehru, noted, “though Nepal was an independent country, it was very closely allied to India in culture and tradition and we did not look upon it as a foreign country.” New Delhi also regarded China as an “interloper” in Nepal in 1950 who threatened India’s security and interests in the region, ignoring at least a century of Sino-Nepali history centering around Tibet. This paper argues that New Delhi’s close relationship with Nepal, bound in history and culture, and the misperception about China’s relations with Nepal before 1950 have contributed to a skewed understanding of Sino-Nepali relations. The Working Paper looks at the impact that New Delhi’s misperceptions of Sino-Nepali relations, termed the “fog of misunderstanding,” has had in the context of the triangular relations between China, India, and Nepal. The paper is divided into four sections arranged chronologically. The first section looks at the historical Sino-Nepali relationship from the mid-eighteenth to the mid-twentieth centuries. It establishes that this early relationship was centered on Tibet. While the Gorkha kings of Nepal sought to preserve their trade privileges in the region, the Chinese were concerned about the security of their southwestern frontier. Notably though, Beijing’s concern with security does not appear to have extended into any desire to conquer Nepal. This section also touches upon British India’s policy toward Nepal in the nineteenth century, and the subsequent approach that the government of independent India took in the first few years, without an adequate appreciation of Kathmandu’s history with China. As a consequence, India developed a suspicious attitude toward Beijing’s desire to re-establish ties with Kathmandu after the Chinese Civil War, and shaped its policy toward Nepal with this factor in mind. The second section delves into Indian and Chinese policies toward Nepal in the period from 1955 until the end of the monarchy in 2008. It showcases how, during this long period, the three kings of Nepal sought to leverage their ties with China in order to maintain some semblance of balance and how China, in turn, followed a limited but strategic approach that was centered on the kings. The fog of misunderstanding continued to shroud India’s attitude to Nepal-China relations during this period and, consequently, India’s Nepal policy lacked a working template to manage relations with a smaller neighbor sandwiched between India and China in a way that would preserve New Delhi’s influence in a positive way. In contrast to China’s political approach, New Delhi fluctuated between the monarchy and an assortment of democratic political parties, suggestive of a provincial approach in New Delhi’s dealing with Kathmandu. As a result, China’s approach ensured that its main objective in Nepal, namely the security of its southwestern frontier, was secured with a relatively low-risk and low-cost strategy. The third section deals with the aftermath of the fall of the Nepali monarchy, 2008 to 2016. During this important period, New Delhi had a fresh opportunity to reset ties by providing the support to democratic forces in Nepal, that could have resulted in a transformation of the Indo-Nepali ties. However, India appeared to hew to its traditional policy. China, on the other hand, quickly built new ties with the post-monarchical dispensation. India’s perceived actions as a result of the adoption of the new constitution of Nepal plunged Indo-Nepali ties to a nadir. It seems to have pushed Kathmandu to strengthen its relationship with China. This section of the paper also outlines the changing nature of China’s policy and objectives in Nepal, especially in the second decade of the twenty-first century, and its possible implications on the future course of the triangular relationship, as well as for India-Nepal relations. It postulates that under President Xi Jinping, China’s policy toward Nepal has shifted from protecting its periphery to a broader goal of bringing Nepal under its strategic control. This section highlights the political and economic levers that Beijing is using to build a preeminent position in Nepal. The paper concludes with an assessment of options available to all three countries going forward, and India’s options in Nepal in the face of China’s new policy in the region. It suggests that a decisive reset in policy toward Nepal is required to restore healthy relations that are based on mutual respect and mutual sensitivity. New Delhi may need to re-orient its thinking toward Nepal in the context of triangular relations, including on the boundary issue and the 1950 Treaty of Peace and Friendship that have been long-standing irritants in the India-Nepal relationship. Nepal, for its part, should also reflect carefully on whether its leveraging of China might become counterproductive in the light of changing strategic balance in its vicinity, and the implications of giving up the policy of balance for one that tilts decisively toward Beijing. The paper concludes that there is sufficient scope and opportunity for course correction by India, and that through sustained efforts India may be able to preserve its influence and security in Nepal and counter China’s expanding footprint.
Topic:
Security, Foreign Policy, Bilateral Relations, and Geopolitics
Political Geography:
China, South Asia, India, Asia, and Nepal