Research on the determinants and effects of China’s economic diplomacy is still in its infancy but is expected to gain in importance with China’s ongoing rise in the global economy. The author reviews the literature on the linkages between the bilateral political climate, economic diplomacy and international trade. The existing scholarly work suggests that the state of bilateral political relations plays an important role for trade with China. Since research suggests that political tensions adversely affect diplomatic activities between countries and that diplomatic exchanges promote trade, economic diplomacy is a likely channel linking the bilateral political climate to trade. Foreign governments’ positions on Taiwan and Tibet, for example, can determine the geography of state visits, the network of embassies and bilateral trade volumes. The chapter proceeds with a discussion as to why economic diplomacy should be more pivotal in economic exchange with China than with Western market economies.
Andreas Fuchs and Marina Rudyak
This chapter discusses the political, economic, and humanitarian motives driving Chinese aid. Concerning the political drivers, the Chinese government uses aid as a foreign policy tool, which should help the country to create a favorable international environment for China’s development, support the country’s rise to global power status, influence global governance, and reward countries that abide by the One China Policy. Moreover, aid has increasingly been used to promote trade with developing countries and loans are extended in exchange for natural resources. Finally, China emphasizes that it gives aid in order to help other developing countries to reduce poverty and improve people’s livelihoods, a claim supported by the data as poorer countries receive more support. While the mixture of political, economic and humanitarian goals does not set China apart from the so-called “traditional” Western donors, China differs in the detailed content of its interests and the explicit emphasis on “mutual benefit” in the pursuance of its goals.