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China’s Strategic Advocacy for RCEP:

Three-fold Motivations Analysis

Kim Tae-Kyung

Ph.D. Student at Seoul National University

clean3080@gmail.com

Paper prepared for the International Studies Association Global South Caucas Conference,

Singapore, January 8-10, 2015

mailto:clean3080@gmail.com

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China’s Strategic Advocacy for RCEP: Three-fold Motivations Analysis

Kim Tae-Kyung (Ph.D. Student at Seoul National University)

1. Introduction

Asian regionalism have captured significant academic interests since the 1990s in which

economic interdependence in Asia have become salient, as Japan has first led regional

economic integration with vast amounts of foreign investment, contributing to a web of

intricately interdependent economies, increasingly engaging in region-wide production and

trade networks (Pempel 2005). Japanese investments and transport of production facilities in

the region have provided the base of regional economic cooperation. However, since its rise

in the 2000s thereby surpassing the Japanese economy of 2010, China took over Japan’s

position as a regional economic leader and became a regional hub for trade and production

that has accelerated economic integration, taking lead on sustainable growth. The

sophisticated interconnectedness of the “Asia factory” is manifested by booming bilateral

FTAs in the region, currently evolving into a dual track of regional trade agreement

negotiations of Trans-Pacific Partnership (TPP) and Regional Comprehensive Economic

Partnership (RCEP). What Baldwin(1993) states as a “domino effect” of bilateral FTAs

seemed to materialize in East Asia, naturally binding a variety of existing FTAs into a

regional trade pact (RCEP) or even a regional trade regime bridging to a new global trading

system (TPP).

Asian regionalism is salient in the sense that the wealth and prospect of the region is deeply

involved with the structural competition between the United States, the existing global

hegemon, and China, the arising power that has gradually taken on more of a global role. The

dueling regional integration initiatives—TPP, expedited by the United States’ participation in

2008, and RCEP, initiated by ASEAN in 2011 and endorsed by China-- illustrate that the

United States and China have entered a competitive stage revolving around the leadership for

Asian integration. With TPP and RCEP in parallel process, the regional states, some

participating in both while others only in either one of the two) have been keen on

maintaining prudent and balanced positions towards the competing regional economic

frameworks, even as some (Petri and Plummer 2012; Petri, Plummer and Zhai 2012; 2014)

contend for future complementarity of both trade liberalization initiatives. In analyzing the

rivaling trade liberalization schemes of TPP and RCEP, what needs to be considered first is

the political and security dimension in which the major proponents of the frameworks

conflict strategically.

In this backdrop, this paper focuses on RCEP negotiations and especially on China’s strategic

motives for promoting RCEP processes. Compared to TPP, not much analyses on RCEP have

been done, which in part is due to the fact that RCEP is relatively new phenomenon since its

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start.1 The reason for focusing on China’s motives and strategies for RCEP is as following:

RCEP as a cooperative institution among diverse actors with common interests, albeit

conflicts in their extent or scope, needs a hegemonic provider of public goods that may

resolve the “collective action problem”. Mancur Olson(1971) notes that the collective action

problem arises when individual players with distinct preferences face dilemmas that cannot

be handled by individuals, thus requiring a collective cooperation among individuals. The

conditions in need of cooperation, however, do not necessarily lead to the cooperation that is

needed, because, according to Olson(1971), the cost-benefit calculations of individual actors

regarding contribution they have to make for building up cooperative mechanisms diverge

and minor players cannot afford the cost so prefer to free-ride. Only major actors with

affordable assets (considerable capabilities) can contribute to the making of cooperative

mechanism.

Literature on international economic regime as well as hegemonic stability theories also

stresses the role of hegemonic powers in fostering the institutional developments for

cooperation among states (Kindleberger 1973; Gilpin 1975; Krasner 1976; Keohane 1984).

According to them, whether the “public goods” are associated to free market or security

building a cooperative institutions needs a hegemonic player that willingly takes on the role

of providing positive and negative incentives for other states to participate. Drawing on their

claims, it can be surmised that RCEP also needs a hegemonic player to offer seed money and

underwrite the rules to be in full effect. This explains why China’s motives and strategies on

RCEP should be examined. Key questions that this paper aims to explain include: what has

enabled the launch of RCEP as a response to TPP?; why has China promoted RCEP as its

regional integration framework?; and how has China activated the RCEP negotiations

towards finalizing as a pact scheduled for 2015 and guided it to fit for a regional integration

initiatives?

This paper sees China as being affirmative to embrace the regional hegemonic role in its

pursuit of RCEP. Assuming that China will continue to grow to undertake more of a regional

hegemonic role in promoting RCEP, this paper claims that RCEP formation is attributed more

to political explanations than to economic analyses. In analyzing China’s motives and

strategies for RCEP promotion, the paper begins with the review of literature on Asian

regionalism in four categories: first, focus on economic interests, second, global production

network analyses, third, stress on the role of economic crises, and lastly, the norms and

identities explanations. Then, as an alternative explanation to these examined literature, it

explains China’s three-fold motives for the pursuit of RCEP: first and the most important, the

apt and proper response to the strategic re-positioning of the United States in the Pacific,

second, the effort to respond to various, evolving domestic preferences and ideas concerning

China’s foreign policy, and third, the strategic adaptation in the process of continued

interaction with the regional neighbor states. And lastly, the methods and the whole-structure

1 The ASEAN member states and its FTA partners reached a consensus on building up RCEP in

ASEAN Ministerial Meeting on August, 2011, which was endorsed in the 19th ASEAN Summit in

November, 2011, and finally declared a launch of RCEP negotiations in the 21st ASEAN Summit in

November, 2012.

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of regional policies, equipped with a set of concepts, concrete plans, and leverages, with

which China has recently pushed its RCEP initiatives will be examined prior to the

concluding summary.

2. Literature Review

An amount of literature centers on the question why states seek to build on the existing

bilateral FTAs to expand regional trade agreements in Asia. Expansion of bilateral FTAs,

followed by recent developments in relation to regional trade liberalization has led to

dynamic debates regarding the cause and the effect of Asian economic regionalism. The

existing literature can be outlined as four categories which include: first, the explanations

focusing on economic concerns of states as fundamental motives to seek regional trade

liberalization agreements, second, global production networks analyses which consider

growing intricate interdependence as a main factor of regional liberalization trends, third,

perspectives stressing the role of crises on regional integration initiatives, and lastly, studies

on norms and identities cultivating the regional cooperation.

2.1. Economic drivers for PTAs

Traditional trade theories highlight that disparate opportunity costs for the production of

goods of individual states determine the comparative advantage in the production among

economies, and affect the states’ pattern of trade based on their comparative advantage. States

will specialize in the production of goods in which they have lower opportunity costs than

other countries,2 and will outperform others in trade of those goods they specialize in

production. Neoclassical trade theories consistently claim that free trade based upon the

theory of comparative advantage profits all the economies involved in all times. In this sense,

regional arrangements, expanding the scope and the extent of participating economies

participating in free trade, have been claimed to result in welfare effects of the union

members, on the condition that worldwide multilateralism is stuck with the Doha Round

(Gantz 2013, 190-200).

However, economic theoretical studies diverge on the welfare effects deriving from

preferential trade agreements (PTAs): some support PTAs as a “building block” towards

multilateralism, defending “open regionalism” (Summers 1991; Bergsten 1997), by contrast,

others downgrade PTAs as a “stumbling block” that obstructs multilateralism and welfare

gains for the union as a result of trade diversion (Bhagwatti 1995; Bhagwatti and Panagariya

1996; Panagariya 1999; Lamy 2012). As Manger(2012) acknowledges, economic debates on

PTAs remain in conflict, some upholding regionalism while others disapproving it at the

same time, failing to offer good analytic explanations for current Asian regionalism.3 The

2 http://www.economicswisconsin.org/guide/glossary.htm

3 Manger(2012) claims that even as the growing number of literature is keen on strategic explanation,

there is still much room for economic explanation if increasing vertical intra-industry trade in the

global economy is considered. He notes that the current trend of increasing North-South PTAs is

http://www.economicswisconsin.org/guide/glossary.htm

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analyses emphasizing economic preferences in free trade provide insufficient explanations for

the current phenomenon of Asian economic cooperation in which governments other than

business sectors have led the PTAs, notwithstanding that not much economic gains have been

expected from them (Ravenhill 2010; Lee 2012). As noted in the cases of Japan-Mexico FTA,

and the US-Singapore FTA, the current trend of preferential trade pacts between the

developed economies and the developing countries are more associated with non-economic

motives of states, demonstrating strategic characters of trade liberalization (Wesley 2008). In

this regard, state interactions in favor of non-economic motives should be considered in

assessing recent Asian regionalism, with competing regional trade arrangements of RCEP and

TPP.

2.2. Global Production Networks

Promotion of regional trade agreements in the region is also appreciated in the context of

increasing regional interdependence spurred by development of global production networks

(GPN) (Elms and Low 2013). Production fragmentation worldwide became salient in the

Asian region in particular, which in turn presses the Asian countries to be proactive in joining

FTAs, lowering various trade barriers to cater on the multinational firms’ demands to be

attractive as a part of global value chains (Manger 2012; Nakagawa 2013; Kawai and

Wignaraja, 2013; 2014; Baldwin and Lopez‐Gonzalez 2014). Increasing needs for adjustment

to changing production environments and related trade liberalization trends have compelled

regional states to competitively contract FTAs and, as a result, the emerging web of diverse

FTAs has entailed more interconnectedness in the region (Pempel 2005). Overlapping and

complicated bilateral FTAs in East Asia have been considered to pose the so-called “spaghetti

bowl” effect, calling for a more integrated version of the divergent FTAs.

The position of China, being a hub of complicated trade and production networks in East Asia,

is viewed from both rather conflicting perspectives in the region. Some see China’s rise as

threatening thereby resulting in concerns about the competitiveness for the neighbor states,

whose positions in the global value chains are particularly similar to China. In contrast, others,

including Ravenhill(2008), note that alleged Chinese threat on neighboring economies has

not been offset by its vast amounts of imports from other Asian economies based on

continuous growth mainly by processing trade. Meanwhile, Ravenhill(2008; 2010) also notes

that “Asia factory” with China as its hub, is still more dependent on extra-regional economies

as the United States and Europe remain to be final destinations of exports, which leads to

downgrade the premise of GPN analyses on increasing regional interdependence.4

attributed to deepening of vertical intra-industry trade and coalitions building related with it—

domestic industry sectors that participate in the vertical trade, endorsing the PTAs in line with the

multinational lead firms’ preferences, at the expense of other sectors that hurt from opening market

access. 4 Ravenhill(2010, 182) stresses that taking consideration of double-counting arising from the trade in

parts and components across the region, in addition, from Hong Kong and Singapore’s role as

entrepots, the adjustment of market share of East Asia trade in the world should be made.

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Analyses on regional global production networks in East Asia as potentials and prerequisites

to champion and sponsor regional integration initiatives provide partial explanations to

regional trade liberalization in that they do not help in appreciating the competition between

TPP and RCEP for “templates” towards regional integration (Petri and Plummer 2012; Petri,

Plummer and Zhai 2012). As noted in above economic explanations, states’ strategic concerns

that motivate rivalry for regional frameworks should be put into consideration to understand

why growing region-wide production networks result in competing designs for their

integration.

2.3. Regional economic crises

As Emmers and Ravenhill(2011) note, the Asian financial crises and the global financial

crises have had, though different in concrete responses, major impacts on evolvement of

Asian regionalism. After the Asian financial crises, the failures of ASEAN and APEC’s

efficient operation in dealing with crises led to the development of a new institution, ASEAN

Plus Three (APT). Global financial crises, in contrast, did not reach any particular dominant

institutional building, even though there were competitive proposals including the ‘East Asia

Community (EAC)’, and the Asia-Pacific Community (APC)’, which respectively reflected

Japan and Australia’s strategic responses to shifting power distributions in East Asia and the

world. To be of note, Emmers and Ravenhill(2011) argue that new challenges have

contributed to modify practices of the resilient “ASEAN way”, particularly in the direction

towards building a collective regional structure, for which the existence of hegemonic actors

is requested. APT’s role in creation of the Chiang Mai Initiative (CMI) and Asia Bond Market

Initiatives (ABMI) fairly illustrates that the matter of provision of regional public goods has

become recognized as more important in Asian regionalism since the Asian financial crises.

Though crises as catalyst for regional economic integration has been highly noted (Pempel

2005), crafting regional cooperative mechanisms requires that specific agents respond to the

stimulus, which may include elements such as crises, by way of medium, to result in

outcomes (Solingen 2012). Crises did affect the regional integration patterns, but, as noted

above in divergent responses from the two major economic crises on the regional institution

building, what directly relates to the regional cooperation is how agents respond in dealing

with the crises.

2.4. Norms and Identities

Norms and identities exert a central role in constructing the forms and contents of cooperative

institutions. In Southeast Asia, “the ASEAN way” is derived from distinctive historical and

cultural backdrop, in which the colonialist past and the post-colonial strife for modernization

characterized the fundamental mentality and practices of East Asia countries (Acharya and

Johnston 2007). As demonstrated by the formation and evolution of the ASEAN (Acharya

2004; Khong and Nesadurai 2007; Aggarwal and Chow 2010), economic nationalism in the

context of post-colonial Asia has greatly influenced Asian state decision makers’ preferences

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on non-interference, and respect for sovereignty regardless of types of political institutions.

Even though since the Asian financial crises collective approaches are much frequently

proposed and encouraged in support of promoting efficiency of ASEAN-related institutions,

the long-term enduring norms of the ASEAN way still hold within the region (Aggarwal and

Chow 2010).

Analyses on norms and identities are of great significance in Asian regionalism in that they

help to apprehend how the norms centering on ASEAN, consisting of small countries in face

of major regional powers, have been persistent in diverse regional cooperative mechanisms

(Acharya 1997; Ba 2009). Stressing the ongoing processes among regional agents, the

analyses explain that ideas and norms of ASEAN with lesser power survive and affect the

regional integration processes. Having undeniable strength in explaining the distinctive

features of Asian regionalism, they also remain partial explanations as more often than not

that major powers override the ASEAN way in pursuit of their strategic objectives. As the

region has learned from the crises, the normative base of ASEAN should be coupled with

relevant provision of public goods of surveillance as well as incentives, enabling cooperative

institutions in force.

3. China’s Three-fold Motivations for RCEP Promotion

As examined above, the existing literatures, which emphasize the maximization of economic

interests by trade liberalization, or focus on the increasing weight of global value chains

networks, or stress regional responses to major economic crises, or appreciate the role of

norms and identities, remain as insufficient explanations to the recent dynamics of Asian

regionalism, which are unfolding the structural competition between the United States and

China regarding authority as well as power in the region. They do not offer enough

persuasive explanations for the specific questions such as: why negotiations on regional

arrangements go on in a dual track of TPP and RCEP?; why China does not join TPP but

participate in RCEP as its road to the Free Trade Area of the Asia-Pacific (FTAAP), which

encompass the Asia and the Pacific?; and what are China’s motivations and methods in

promoting RCEP as its regional integration initiatives?

In exploring the competing Asian regional integration initiatives, raised and pursued by the

two distinct major powers, political and security analyses should come forefront on the

present regional structures, in which a rising power of China continues to enhance its

comprehensive capabilities and seeks more influence on the region, while the existing global

hegemon of the United States undertakes the strategic re-posturing, reassuring its regional

presence. Especially, in examining RCEP under negotiations, China’s initiative role in

underwriting the launch of regional arrangement is most importance in both analytic and

political concern. The reason to focus on China’s engaging role in RCEP is associated with

the problem of collective action that, briefly stated in the introduction, is salient particularly

in East Asia in building up a version of regional arrangement in force.

Southeast Asia’s comparatively high level of regional diversity, subject to a vast spectrum of

people, geography, colonial experience, ethnic complexity, and national perspectives (Sil and

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Katzenstein 2009, 196) has been attributed to be an impasse for effective regional integration,

as demonstrated in cases of multiple ASEAN-related institutions characterized by informality

and flexibility (Pempel 2005; Acharya and Johnston 2007; Aggarwal and Chow 2010).

ASEAN’s failure in effective management against the 1997 Asian financial crises highlighted

the character of East Asia regionalism that falls far short of formal and binding regional

integration. “All talk without action” characterizes the ASEAN-based institutional

cooperation which displays that the deficit of any powerful stakeholders underwriting the

cooperation obstructs regional integration in terms of crisis management (Emmers and

Ravenhill 2011). Arase(2010) aptly points out that, in implementing the East Asian

regionalism where ASEAN centrality persists, hegemonic provisions of material incentives

combined with normative foundations has become more indispensable as the region have

learned from historical lessons. Post-Asian financial crises period has shown some

developments in the region recognizing the crucial role of hegemonic provisions; however,

rivalry between Japan and China for regional leadership role has also restrained effective

regional cooperation (Chung 2013). What is noteworthy is that over time, a hegemonic role

has been noted central in catering to diverse regional demands, often contradicting among

states, and in integrating them into single regional initiatives.

Then, is China willing to undertake this hegemonic role in the region? What do China’s

active efforts for RCEP finalization tell about it? What does China have in mind in promoting

RCEP as its regional initiatives, in face of TPP backed by the United States? The literature of

policy making based on Putnam(1988)’s two-level game approach provides an analytical

framework on what structures China’s foreign policies and how China’s future policy making

would be implemented to take effect. Two levels involving state’s decision making influence

on its policy paths, which, Putnam(1988) argues, consist of external structural circumstances

and internal domestic politics. In terms of a state’s policy making, both levels of development

impact policy decisions and their implementation – at times in ways that are combined,

independent or even contradicting. Here I present three drivers that motivate China to finalize

RCEP as a regional integration framework. First, as external forces structuring China’s RCEP

promotion, the United State’s rebalance in the Asia-Pacific is noted as a paramount driver.

Second, China’s domestic preferences and inner debates on regional posture in face of

American rebalance in the region are examined as intervening factors of the policy decision.

Last but not the least, China’s ongoing interactions with regional neighbor states are

explained in that the actual processes, in which China and regional states strategically engage

with each other, not only reflect their own interests but also influence other’s perceptions and

behaviors, and further impact policy coordination towards more feasible and justifiable

alternatives for the audience outside China.

Analyzing China’s motives for building up RCEP, which is still under negotiations, will

surely accompany uncertainties as there is not yet a finalized pact and much remains in grey

area. However, examining three-fold motivations of China to pursue RCEP as its viable

regional framework will offer a good starting point in appreciating RCEP’s future path.

Moreover, categorized analyses involving three-fold motivations will contribute to assessing

not only RCEP’s developments but also China’s strategic plays in vibrant interaction with

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external major powers, regional neighbors, and domestic audiences as well. In the perspective

of strategic responses accompanying negotiations and compromises, tuned by continuous

interactions, the outcomes are a construct by way of processes rather than a determined path

by structural conditions. As it will be clarified afterward, China’s pursuit of RCEP centering

on the “ASEAN way” underscores the importance of analyses on process dependent on a

series of interactions: China’s regional integration initiatives cannot be successful at the

expense of regional neighbors’ interests, as well as of its domestic preferences. Furthermore,

the design of the regional strategies in the first place has been initiated as a counterweight to

the United States’ regional re-positioning.

3.1. China’s response to the US strategic re-positioning in the Asia-Pacific

Deepening Asian economic cooperation has induced strategic concerns of states outside the

region, especially the United States. The relative decline of American global hegemony is a

compelling factor that has made Asian regionalism more conspicuous. China’s rise in the

mid-2000s ushered strategic vigilances among Southeast Asia countries, which rendered the

United States’ “pivot to the Asia-Pacific” legitimate as a balancing act (Cha, 2011). The

United States has redefined its new regional presence in terms of “rebalancing” in the Asia-

Pacific, and underscored its own strategic engagement in the region as a facilitator for more

stable and deeper Asia’s integration into the global order (Clinton, 2011a; White House 2012).

American strategic responses to the alleged China “threat”, shoring up its traditional allies

and new partners in the region, have been supported and proposed by international relations

studies on balancing of power or supremacy, although concrete strategies regarding China on

the extent of applying soft/hard measures in engagement/containment differ depending on

schools and scholars. What is conspicuous is that American strategic initiatives, prompted by

these analyses of changing power distributions affecting the region and eventually, the world,

has justified its regional re-posture for the purpose of boosting its declining hegemony, joined

by Southeast Asian states’ invitation of the extra-regional hegemon in an effort to make a

room for maneuver against China’s mounting influence.

The crux of American rebalancing in the Pacific lies with the rules-based trade liberalization

regime, TPP. Michael Froman, the United States trade representative, has made clear about

the strategic importance of trade, saying “influence follows trade” (Froman 2014). Economic

diplomacy of the United States goes hand in hand with military strategies5– the two fields

5 The State Secretary of the United States Hillary Clinton(2011b) stressed on economic statecraft of

the United States, stating that “(…)our problems have never respected dividing lines between global

economics and international diplomacy. And neither can our solutions. That is why I have put what I

call economic statecraft at the heart of our foreign policy agenda.” Clinton has raised the economic

statecraft for dual purposes: both harnessing global economic forces to advance America’s foreign

policy and employing the tools of foreign policy to shore up our economic strength. Devising better

offensives that level the playing field including unfair subsidies and regulatory regimes, lax labor and

environmental standards, and sub-market export financing, on the one hand, and using economic tools

to solve national security objectives on the other, the United States has emphasized its pivot to Asia,

updating its foreign policy priorities (Bureau of Public Affairs, U.S. Department of State 2012).

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join to construct a whole structure of “rebalance” in the region. The Obama administration

has announced the American pivot, first, as a more focused-on military strategy stressing new

operational concepts such as Air-Sea Battle (Diyer 2012) combined by changes in force

structure, but then advanced it, as a broader regional strategy in which national security

concerns closely interlaced with vital economic issues are dealt with in a more

comprehensive fashion. First, by building a regional trade liberalization regime on the basis

of TPP negotiations, the United States seeks to bridge its economy to fast-growing “Asia

factory” and to direct regional integration towards “free and fair trade”, with ambition for

developing the 21st century trading system. Second, by reassuring American military presence

in the Pacific, the United States aims for shoring up its traditional alliances and partners,

promoting stability of the region which abides by international laws (Panetta 2012). These

intertwined objectives constitute the United States’ channeling efforts to integrate the region,

in favor of its own strategic interests.

Strategic explanations for the TPP are only more substantiated as the power shift involving

regional and global arena has become more evident. A number of literatures on the American

decline have stressed the importance of the United States’ progressive action against the

expected hegemonic waning, advancing diverse policy recommendations in line with

strategies to deal with the uncertainties (Mearsheimer 2010; Brooks, Ikenberry and Wohlforth

2012; Kirshner 2012; Drezner 2013; Goldstein 2013).6 The demands for a more proactive

strategic positioning of the United States reflected in the economic field has generated TPP

setting high standards, leveling the field in the so-called “Singapore Issues” of investment,

anti-competition rules, trade facilitation, and transparency in government procurement, in

favor of American national interests. Higgott(2004) claims that since the Bush administration,

America has “securitized the economic globalization”, which is largely structured by its

hegemonic position in the globe. This strategic turn in pursuing external economic

cooperation appears to continue in the Obama administration in the form of securing the

hegemonic benefits using the TPP platform.

Not surprisingly, the American strategic re-positioning in the Pacific induces reaction on the

Chinese side, sensitive to its stable regional postures. TPP, which Solis(2014) notes to

represent American strategic goals, precludes the economies that have not been subject to

high standards, which requires openness across issues, leading to a regional divide among the

states into those that have already consented to join the processes and others that are reluctant

6 This “act first before others do” spirits dominate the American circle of policy makers and academic

advisors, which demands more explanations for the role that strategic adaptations of actors can play in

interacting with the structural changes. The power of strategic actions to affect the pace and impact of

dreaded structural changes, if not reversing the dominant trends, is implicit in the debates. In time of

uncertainties, the capability of imagining, designing and implementing a more proper architecture

contributable to both changing national interests and international recognition is strongly called for in

the United States. The same can be surmised to be true for China, seeking strategies for better

adaptation to the changing environment. This explains the current “security dilemma” between the

United State and China on the basis of misperception and distrust (Lieberthal and Jisi 2012). This

strategic distrust of the two powers in turn calls for scholarly debates on perceptions of two titans as

well as of other states’ on them.

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to consent. The United States, Bhagwatti(2011) argues, differentiates the preferred union of

TPP participating economies, by means of TPP, as a preferential trade agreement which

discriminates others outside the bloc by its definition, thus fragments regional cooperation.

Issue coverage and depth of integration strengthened in the TPP negotiations are interpreted

by China as manifest obstacles that prevent it from joining and strengthens China’s doubt on

the United States’ intention of containment.

In response, as the TPP negotiations sped up since the United States’ joining the club in 2008

followed by Japan’s in 2011, the RCEP processes have gained momentum. Promoting the

ASEAN centrality as its core norm, RCEP was officially launched by China’s behind-the-

scene efforts, driving the China-Japan-Korea FTAs on the one hand, and pushing for the

ASEAN-led, at least in rhetoric, regional integration design on the other. China upholds

RCEP, encompassing both Northeast Asia and Southeast Asia as an apt and right framework.

It claims RCEP is inclusive for all Asian states and some of Indo-Pacific members,

countering TPP’s exclusive membership of “like-minded” economies that includes the 21st

century trade issues in negotiations.

3.2. China’s domestic debates on its regional and global role

Given the United States’ strategic re-posture in Asia-Pacific as an external force that

structures China’s RCEP promotion as a counterweight to TPP, Chinese domestic debates,

relating to its renewed identities and roles coordinated in close association with the changing

self-image, has influenced China’s foreign policies as more of an intervening factor. Recent

literature of China’s foreign policy making sheds light on growing diversity and increasing

impact of domestic players. Yufan Hao(2012) outlines Chinese domestic forces that affect

decision making process as the party, People’s Liberation Army (PLA), bureaucratic forces,

affiliated institutes, media, netizens, etc. Central party’s core circles, comprised of seven

members of the Standing Committee of the Political Bureau of the Central Committee of the

Communist Party of China (CPC), represent the party’s grand strategic worldviews and

policy directions, leading to ultimate decisions regarding regional diplomacy. Growing PLA’s

influence, supported by Chinese military modernization, both in military concepts and in

force structures, is highlighted in particular, as military officials more often than before

pronounce Chinese readiness in responding to outside threats, especially from the United

States, sometimes from regional neighbors in ally with the United States regarding territorial

disputes issues.7 Diverse bureaucratic departmental interests also play a major role in

7 At the Shangri-La Dialogue in Singapore in June 2014, Chinese Lieutenant General of the People’s

Liberation Army Wang Guanzhong commented on the critics of U.S. Secretary of Defense Chuck

Hagel about Chinese regional behaviors. Wang said that “[f]irst, as a Chinese proverb goes, it is not

polite not to reciprocate. Second, this dialogue is meant to be a forum for everyone to discuss and

speak out. (…) I feel that the speeches of Mr. Abe and Mr. Hagel have been pre-coordinated. They

supported and encouraged each other in provoking and challenging China, taking advantage of being

the first to speak at the Dialogue. (…) And I personally believe that his speech is a speech with tastes

of hegemony, a speech with expressions of coercion and intimidation, a speech with flaring rhetoric

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designing and implementing foreign policies, and competing, sometimes colliding interests

among offices impede effective policies, which will be settled by above interference if the

matter has significance (Jiang 2010a; 2010b). Media and netizens have impact on such cases

associated with mass nationalist feelings that party officials, sensitive to the legitimacy of the

party-state system, have concerns about possible social instability.

As for trade liberalization deals, domestic preferences range relevant departmental interests

associated with their constituents, for example, Ministry of Foreign Affairs (MFA), Ministry

of Commerce (MOFCOM), and many related government bureaus, affiliated research

institutes, societal institutions, etc. According to Jiang(2010a), the spectrum of Chinese

domestic forces from protectionist to liberalist shows more of professionalization in ‘post-

WTO’ period, leading to more complicated coalition building and sophisticated bargaining.

Reaffirming Lampton(2001)’s framework of “fragmented authoritarianism”, Jiang(2010b)

demonstrates that Chinese FTA policies reflect more on its domestic constituents, in which

the divide between protectionist and liberalizing forces has grown deeper while protectionist

forces representing agriculture, services, and conservative National Development and

Reforms Commission (NDRC) relatively strengthens vis-à-vis liberals in Ministry of

Commerce, industry sectors. Along with protectionist-liberal spectrum, Jiang’s explanation

on relationships between MFA and MOFCOM needs to be taken note of.

For China, FTA policies, “as a major component of China’s ‘good neighborly foreign policy’

and ‘economic diplomacy’, fall in between foreign economic policy and foreign policy”

(Jiang 2010b, 241). In this regards, “[i]f the top leadership’s primary objective on an FTA is

to promote national political interests and if the leadership is willing to be closely involved in

the policy making” (Jiang 2010b, 249), FTA policy is highly dictated by political strategic

motivations led by MFA. However, when MOFCOM takes the seat of driver of FTA,

pragmatic considerations on domestic preferences, especially industry sectors come forward.

Holslag(2010)’s analysis on China’s infrastructure building in the region also helps to

understand many provincial efforts to attain economic development by way of participating

in the central policy project pushing for regional connectivity, although the central initiatives

still remain as prerequisites for regional diplomacy. As illustrated in China’s road diplomacy,

provincial or municipal administrative elites also take some part in the regional initiatives

implementation under the central leadership. Various domestic influences on FTA promotion

show that societal preferences do intervene with the central decision making by upholding

and complementing the central party’s regional integration strategies.

Along with the material interests of domestic players, the spirited debates, mainly by party-

affiliated academic institutes, on China’s identities and its global and regional role also play a

larger role in shaping China’s regional integration initiatives. Proponents of Chinese

International Relations Studies (Qin 2007; Ren 2008; Zhang 2009) suggest that foreign

that usher destabilizing factors into the Asia-Pacific to stir up trouble, and a speech with

unconstructive attitude. (…) China has never initiated disputes over territorial sovereignty and the

delimitation of maritime boundary. China only takes countermeasures against others’ provocation.”

http://www.iiss.org/en/events/shangri%20la%20dialogue/archive/2014-c20c/plenary-4-a239/wang-

guanzhong-2e5e

http://www.iiss.org/en/events/shangri%20la%20dialogue/archive/2014-c20c/plenary-4-a239/wang-guanzhong-2e5ehttp://www.iiss.org/en/events/shangri%20la%20dialogue/archive/2014-c20c/plenary-4-a239/wang-guanzhong-2e5e

13

policies with Chinese characteristics should be acknowledged as China’s adaptation to the

international order manifests such creativity and innovation that is not only particularistic but

also contributes to alternatives to the existing IR literature, dominated by western experiences

and thinking. Highlighting Chinese uniqueness derived from China’s historical legacy in

relation to inter-state relations, they posit that China’s socialization path in the global order

might not be the same as the western IR theories prospect (Johnston 2003; Schweller and Pu

2008; Foot and Walter 2013). China’s slogan of “peaceful rise”, officially approved as

China’s grand strategy, represents the perspectives of Chinese analysts, strategists, and

scholars that believe harmonizing China’s rise with regional prosperity, in turn achieving

conducive environment for China’s sustainable growth is viable as well as urgent. It is worth

noting that the Chinese strategic thinkers and intellectuals, often backed by governmental

support, has been actively developing their own version of diplomatic principles and related

policies, in response to outside perceptions of China expecting it will be eventually integrated

into the given world order by socializing process or pose threat to global stability out of

dissatisfaction with its current status in discordance with its capabilities (Mearsheimer 2000).

Recent analyses (Horsburgh, Nordin and Breslin 2014) focusing on Chinese innovation with

regard to international strategies shed light on the new possibility that does not tilt to either

side of dichotomy of universalism/particularism, acknowledging the evolutionary process of

Chinese policy making. For instance, in analyzing the Chinese aid policies, Warmerdam(2014)

points out the importance of experimentation in Chinese government policy design, in which,

Heilmann(2008) states as the point-to-surface mechanism, successful experiments in local

pilot areas (point) extend to the national level (surface), satisfying the goals initially set as a

national agenda and established as official policy. Similarly, Sohn(2011) offers a good

analysis on China’s multilateralism in the developing world based on the feedback model, in

which good feedbacks on policy implementation contribute to consistent policy path onwards.

Sohn(2011) explains that China’s multilateralism initiatives have drawn good appreciations

within foreign policy bureaus, based on which further drives on multilateral cooperation in

other areas than Africa, where the first trial of China’s multilateralism has been initiated, have

been possible. Shanghai Cooperation Organization (SCO) is also noted as a success in

China’s engagement with the world, which has introduced more multilateralism initiatives.

In short, domestic intervening factors on China’s RCEP promotion can be summarized as

two-fold. First, domestic economic preferences represented by more professionalized

bureaucrats and national commissions are reflected on China’s regional initiatives. Second,

vibrant scholarly debates in close association with the government’s decision making bodies

and active feedbacks from relevant foreign policy organs in experiment-based policy making

processes contribute to China’s regional diplomacy. As Jiang(2010b) notes, political and

strategic aspects of China’s FTA promotion attributes to the fact that China has used FTA

policy in a much broader framework of regional integration, interconnecting regional

initiatives with economic diplomacy.

3.3. China’s interactions with Asian neighbor states

14

With appreciation of Chinese striving efforts to innovate in various foreign policies,

combined with more apt and proper strategic worldviews and diplomatic concepts reflecting

the Chinese characteristics, it is not difficult to understand that China’s RCEP promotion is

part of the outcome of strategic thinking on regional leadership with the Chinese character in

face of the United States’ rebalance toward the region. As RCEP is promoted for regional

integration, the interactions with the regional neighboring states need to be considered in

China’s RCEP strategies as well as the first structural dimension of rivalry with the global

American hegemony and the second domestic preferences and debates on Chinese grand

strategies. The third dimension of relations with the regional states plays a significant role in

actually selecting and determining the path of RCEP negotiations, where direct interactions of

regional states’ diplomatic officials and the Chinese counterparts take place. Here I first

examine how the normative unfold the developments prior to the official launch of RCEP

negotiations and then explain China’s role in the RCEP formation using the analytic frame of

Fiammenghi(2011) on the security curve.

The backdrop of the launch of RCEP initiatives show that the RCEP has been concluded as a

result of convergence of the two disparate approaches regarding regional integration. One

was the East Asia Free Trade Area (EAFTA) recommended by East Asia Vision Group in

2001, which was reviewed by the APT, and the other was the Comprehensive Economic

Partnership in East Asia (CEPEA) upheld by Japan in 2006 and complemented by Track II

study backed by East Asia Summit (EAS). Joint working groups of experts, launched for

missions of assessing the feasibility of EAFTA and CEPEA in parallel processes, submitted

their reports respectively to APT and EAS meeting. In 2011, ASEAN has concluded the

debates on EAFTA and CEPEA, endorsing a “Framework for Regional Comprehensive

Economic Partnership”, which defines RCEP as a project of combining ASEAN plus one

FTAs, contracted by ASEAN with its six partners. This officially puts ASEAN centrality into

RCEP, harmonizing the two conflicting EAFTA and CEPEA designs rather than taking sides

of either one. What Acharya(1997; 2004) notes as the normative power of the ASEAN way

makes a compelling case for the launch of RCEP framework, as the institutionalized process

of annual meetings in various levels among ASEAN plus one, APT and EAS has lent weight

to ASEAN centrality.

The role of Southeast Asia in defining the form and content of regional integration is

explicitly noted by Ba(2009). Ba(2009) agrees on some of major tenets of new regionalism

literature, which includes the emphasis on global-regional relations, where globalization

impacts on a variety of regional and national adaptations, and the focus on local agency in

account of regionalism, bringing the local actors of lesser power into analyses on East Asia

regional integration. Ba(2009) argues ASEAN has had a limited but explicit role, at least at

minimum, in the formation of East Asian cooperative meetings, institutions, and pacts, as the

early conception of ASEAN and its institutional processes by way of normative discourses

has enabled ASEAN to have their say in the East Asia integration. At least “as a normative

concept, ‘Southeast Asia’ enjoys greater acceptance and legitimacy as an organizing principle

among its component units than does East Asia” (Ba 2009, 350).

Ba(2009)’s analyses do not deny that major powers exert significant influence in formation

15

and evolution of regional frameworks but offer a good explanation to the puzzle on why

China endorses the ASEAN way as a key element in fostering regional integration. China, in

response to American rebalance in the region, has been compelled to construct its own

regional integrative designs, and in incorporating the region, initiatives that build on the

existing multiple cooperative mechanisms centering on ASEAN have been highly plausible

and persuasive. Out of strategic concerns that ASEAN states may tilt towards the United

States, leaving China’s external environments vulnerable, in addition to ASEAN’s certain

institutional power led by its enduring norms, China has no other alternatives but to uphold

the ASEAN way and further develop the ASEAN-led, at least in rhetoric, Asian regionalism.

Fiammenghi(2011)’s work that integrates Archer(1982; 1995)’s theory into the realist IR

theory on power and security, helps more analytic explanation to China’s regional diplomacy.

By combining the theories of balance of power and of hegemonic stability, Fiammenghi(2011)

proposes “the security curve”, in which a major power seeks maximization of power until it

reaches the threshold of security that causes a balancing coalition, placing its security at risk;

however, if it transcends the threshold of absolute security, other states bandwagon to the

hegemon, giving up on balancing. In incorporating the two distinctive IR realist theories into

an integrated “security curve” design, he takes note of state interactions transferring the

structure. Drawing on Archer’s framework that structure-agent interactions over time produce

alterations in the structural constraints as a result of strategic actions, Fiammenghi(2011, 145)

claims that “aware of the shape of the curve (time 0), a would-be hegemon may attempt to

engage in different modes of interaction vis-à-vis other states, in an effort to change the

security externalities deriving from the accumulation of power (time 1)”, which makes “a

modified structure” (time 2) where “the hegemon can sidestep structural constraints in

various ways.” The regional or global hegemon can use three strategies of deception,

ideology, and subsidization, Fiammenghi(2011, 148) argues, in downsizing the risks posed by

crossing the security threshold and biding times to move towards the absolute security

threshold. Fiammeghi(2011)’s stress on strategic thinking and policies on the hegemonic side

to deviate balance and amass a vast concentrated capabilities for a while, offers a better

theoretical base in understanding what China will think and do.

China’s RCEP promotion makes a good case for Fiammenghi(2011)’s conjecturing on the

hegemon’s strategies to move forward towards the absolute threshold, deviating from the

security threshold. Deferring to ASEAN in building up its regional integration initiatives,

China seems to offer subsidies as Fiammenghi(2011) assumes. It becomes more definite

when examining the whole set of regional diplomacies China has been developing recently,

with RCEP as its key component.

4. China’s Regional Framework in favor of RCEP Realization

Kemburi and Li(2014) point out that Beijing’s increasing employment of economic tools in

promoting national objectives can be explained on the basis of an economic statecraft concept.

They introduce Lasswell’s classification of techniques of statecraft devised to impact a target

state in explaining Chinese foreign policies and maintain that China has vigorously applied

16

some features of economic statecraft in the last decade, especially to induce and reward

certain policies it prefers. They argue that the Chinese economic statecraft has not yet been

exercised in coercive manners, however, it might be increasingly tempted to use its economic

clout in more punitive ways to accomplish its strategic interests. What Kemburi and Li(2014)

see as the Chinese economic statecraft has been widely acknowledged as economic

diplomacy (Jiang 2010a; 2010b; Holslag 2010), which helps to understand the methods that

China introduces in its strengthened efforts to design coherent regional diplomacy in more

structured way.

Since Xi Jinping took office in late 2012, the Chinese government has clearly emphasized the

importance of its neighborhood policies and brought more sophisticated rationales, and

cultivated policy plans related to them. As the first peripheral diplomacy work conference

held in October 2013 signifies,8 China has been obviously intent on developing a more

friendly neighborhood environment conducive to its peaceful rise (Yan, 2014) and on offering

to the region more concrete plans for realizing constructive relations with the neighbors. In

the background of spirited debates inside the Chinese government and affiliated academic

circles about the direction for China to take on as a major developing country, the Chinese

leadership has begun to define more clearly what China’s identity is in the changing external

environments, what it aspires for in regional relations, what it sees as the region with priority,

what it will contribute to the region to integrate it as its ideals, and so on. It is highly noted in

discussions at the central conference on peripheral diplomacy in October 2013, and the

central conference on foreign affairs in November 2014 as well as speeches of leaders such as

Xi Jinping and Li Keqiang and key officials including foreign minister Wang Yi, vice foreign

minister Liu Zhenmin, etc. since 2013.

Burgeoning interests in “soft power” approach in China’s foreign policies, though drawing

some concerns about its unbalanced state-society relations, which might circumscribe the

Chinese capability for genuine “soft power” policies as the concept was initially theorized

from the democratic American experience (Nye 2014), are closely interconnected with what

China has recently announced as its policy goals in the region. In May 2014, President Xi

asserted that Asia’s problem should be solved by Asians at the Conference on Interaction and

Confidence Building Measures (CICA), which is a group of more than 20 mostly Asian

countries (Xinhua, 2014b). What is stated as the “Asian new security concept”, consisting of

common, comprehensive, cooperative and sustainable security, is of significance as it is

China’s first-time announcement that distinctly defines the region from security dimension.

Also the term of “Asian community of common destiny” is consistently quoted by high

officials to refer to the cause of regional cooperation in comprehensive areas, including

economic, political and security domains (ASEAN-China Center 2013; Ministry of Foreign

Affairs of the People’s Republic of China 2014a; 2014b; Xinhua 2014d). What is to be noted

is that the new concept has been given a strong boost by a series of grand investment projects

and infrastructure construction plans.

8 The seminar has been highlighted in that it was the highest-level meeting on foreign affairs since

1949, with attendance of all the members of the Politburo’s Standing Committee and all Politburo

members (Yan 2014).

17

Infrastructure deficit in Southeast Asia has demanded strenuous efforts to address the

problem and China’s initiative for championing a region-wide connectivity by way of

construction of rails and roads has been welcomed by the neighbor states. To boost the

existing economic cooperation up to the regional integration initiatives, China has adopted

the concept of the “Silk Road Economic Belt” and the “21st Century Maritime Silk Road”,

with ambition of revitalizing the historic silk roads for modern trading routes. Moreover, with

the creation of an Asian Infrastructure Development Bank (AIIB), Chinese leadership’s push

for huge construction projects contributing to Asian Connectivity has pulled positive regional

responses, signaling that China is more prepared than they were for undertaking the

hegemonic role by providing regional public goods.9 China has proposed to inject US$50

billion in implementing the AIIB, which is proposed to play a constructive role in helping

development paths of regional states.

Proving its greater resolve connected with its already acknowledged capability, the Chinese

leadership seems to advance regionalism with Chinese characteristics. In 2013-2014, the

Chinese leadership has notably advanced its regional integration initiatives in full packages of

concepts, policy plans, and leverages. Central to the regional integration initiative is RCEP as

a regional trading pact, posing a counter-weight to the TPP-led United States’ rebalancing in

the region. What buttress RCEP towards regional integration are the initiatives of “Silk Road

Economic Belt”, “Maritime Silk Road” in support of Asian connectivity, which function as

action plans interrelated with RCEP. As a goal or guiding concepts, “Asian New Security

Concept”, and “Asian Community of Common Destiny” are also raised. In addition, a series

of investment promises starting with AIIB has followed as material leverages for regional

cooperation. China, by advocating for an Asian identity as a base fostering integration on the

one hand, and by sticking to economic incentives to facilitate its envisioning regional

integration goals on the other hand, has been framing a more coherent structure for its

regional policies.

In this sense, high note needs to be taken of recent Beijing APEC meeting and the central

conference on foreign relations right after that. First, what Xi Jinping affirmed in the recent

APEC meeting has a great significance in better understanding of prospective evolvement of

Chinese regionalism. At APEC CEO Summit, Xi called for the creation for FTAAP, stating

that China will invest $1.25 trillion abroad over the next 10 years, and import more than $10

trillion in goods in the next five years (Roberts 2014). Xi confirmed that “[a]s its overall

national strength grows, China will be both capable and willing to provide more public goods

for the Asia-Pacific and the world, especially new initiatives and visions for enhancing

regional cooperation,” and proposed that the region redouble efforts to forge a partnership of

9 Xi Jinping, presiding over the eighth meeting of the Central Leading Group on Financial and

Economic Affairs on November 6, 2014, clarified that “’One Belt and One Road”’ is a huge and

inclusive platform, which aims to combine the rapidly expanding Chinese economy with the benefits

of all parties involved.” The AIIB, on which a memorandum of understanding was signed in Beijing

on October 24, by a total of 21 Asian countries willing to join, functions to finance infrastructure

constructions along the belt and road (Xinhua 2014a).

18

mutual trust, inclusiveness and win-win cooperation and jointly build an open economy

(Xinhua 2014b). On the gigantic sum of investment it pledged for years to come, China

added its promise for $40 billion investment in setting up a Silk Road Fund in support of

infrastructure and resource development, with ambition to “break the connectivity bottleneck”

in Asia (Shengnan 2014). Xi emphasized in the dialogue on connectivity partnerships prior to

APEC Leader’s Meeting that, along with a priority to upgrade connectivity in Asia by way of

rails and roads, advancement in systems and regulation as well as personnel exchanges is also

pursued.10

Along with the grand promises on the region that China demonstrates its definite resolve in

undertaking the hegemonic role, the central work conference on foreign relations outlines that

China’s grand strategies and its regional diplomacy as the first priority. Drawing on the

continued progresses of railways and roads construction (Holslag 2010), the concepts of

revitalized Silk Road have been put forward and this evolutionary process of Chinese policy

designs based on experiments is greatly notable (Sohn 2011). On the basis of demonstrated

effects of policy experiments during some periods, Chinese decision makers build on the

existing policies to develop more refined and succinct strategy concepts, which in turn

promotes relevant policies based on newly defined concepts. This process of policy making is

currently demonstrated in the highest level work conference laying down the guidelines,

basic principles, strategic goals and major mission of China’s diplomacy (Xinhua 2014c).

With readjustment in foreign policy (Yan 2014), greater significance has already been given

to the diplomacy with the neighboring countries in China, even prioritizing it before relations

with the United States. Prior to the peripheral diplomacy work conference, foreign minister

Wang Yi stated the periphery as a priority for foreign relations work in September 2013, and

after the Central Work Conference on Foreign Relations held in November 2014, Xi Jinping

has given a speech heralding a major shift in China’s foreign diplomacy. Changing the order

of the general framework for foreign relations, Xi Jinping has made clear that relationship

with neighborhood is elevated to the first priority over that with the United States and other

great powers. .

In this context, the RCEP design is promoted by China on the ground of newly elaborated,

broader regionalism initiatives. Designed as a counterweight to the balancing act of the

United States, which strategically uses its hegemonic power to hold the status quo, RCEP will

be likely to develop distinct institutional designs proper for addressing the problems that

initiate China and the other Asian states to cooperate in the first place. The type of problem

that inclines China to cooperate and integrate with the region is two-fold: one is to build up

regional cooperation to deal with the strategic distrust between the United States, the other is

to interact with the regional states in order to realize the first strategic objectives, on the basis

of traditional cooperation history that has placed the ASEAN way as regional norms.

Considering China’s position as world number two, which is outweighed by the incumbent in

10

In the dialogue, Cambodian Prime Minister Hun Sen anticipated that connectivity cooperation with

China would contribute to the ASEAN’s realization of an economic community in 2015 (Shengnan

2014).

19

many aspects, the soft power approach to the regional integration combined with vast

material incentives is very logical (Chan 2012). Rising China in the context of the

strategically defending US hegemony has no other option than developing on loose, informal,

and inclusive regionalism that assures regional states common development and common

prosperity.

5. Conclusion

As noted above, China’s RCEP promotion is based on three-fold motivations. First, China

pursues RCEP as a key component of its regional integration design as a strategic response to

TPP initiated by the United States as an economic component of rebalance in the Pacific.

Second, China engages in RCEP negotiations while reflecting more on diverse domestic

preferences that relatively strengthen their voice as well as heated debates on China’s

identities and regional roles. Third, China develops on the regionally acknowledged norms

evolved by long-term cooperative processes, making its regional initiatives legitimate and

successful. The three factors that affect China’s RCEP pursuit are closely associated with

political and strategic concerns on the Chinese side rather than economic incentives. In

addition, in all three dimensions, processes by continuous interactions have great significance.

Against the United States’ rebalance in the Pacific, combining economic diplomacy with

military strategies, China has devised to counter it by RCEP with other soft measures and

material incentives. Though different in methods mobilized, both major powers have made

strategic actions based on strategic thinking so as to adapt to evolving external environments.

While American strategists consider methods to slow down relative decline in hegemony on

the basis of given resources and possible options, Chinese strategists also strive to devise

methods that deviate balancing coalitions against China’s rise and keep sustainable growth

towards a hegemon. For now, China needs to offer considerable amount of subsidies to the

region in order to achieve regional leadership showing the capabilities as well as the resolve

for regional hegemonic provider. In this regard, RCEP is an example of China’s taking on the

role of regional hegemon, highly interrelated with its grand strategies prioritizing the Asia.

20

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