China in 2010: economic power, but more diplomatic isolation

China in 2010: economic power, but more diplomatic isolation

Beijing: China solidified its financial might in 2010, becoming the world’s second-largest economy, but it was often inflexible and isolated on the political stage -- an intransigence typified by the Nobel peace prize drama.

As Beijing’s global clout steadily mounted, its relations with key world powers became more complicated and could be further strained in 2011, experts say, with the communist leadership’s political stance hardening.

After surpassing France, Britain and Germany in the race to global economic supremacy thanks to years of double-digit growth, China unseated Japan for the world number two spot behind the United States.

The international community sought China’s input on pressing issues, especially within the Group of 20, which looked to find a way to rebalance the skewed global economy.

Its currency policy and accusations that the yuan was undervalued dominated world summits, its two interest rate hikes in less than three months moved global markets and it earned a bigger say in the International Monetary Fund.

“Decisions made in China have repercussions around the world. Because China does now have a much larger economy, its global political clout has increased," Tom Orlik, an analyst at Stone & McCarthy Research Associates, said.

But this year, the ruling party faced two major headaches -- soaring consumer prices and a wave of strikes in the country’s industrial heartland in the south -- both of which have the potential to stoke mass social unrest.

At its annual meeting in October, the party confirmed Vice President Xi Jinping’s march towards the presidency of the world’s most populous nation, but appeared divided over the thorny issue of political reform.

That debate gained greater significance when jailed dissident Liu Xiaobo, who has long advocated reform of the country’s one-party system but was virtually unknown at home and abroad, won this year’s Nobel peace prize.

Beijing was furious, calling members of the Oslo-based Nobel committee “clowns". It blacked out foreign TV coverage of the ceremony honouring Liu, calling it an example of “political theatre".

“Is there a ‘plot´ among the Western countries against China?" the Global Times, a nationalistic state newspaper, asked.

In the more than two months since the Nobel announcement, the constant stream of invective, threats and pressure has painted a picture in the West of an obstinate, bull-headed China -- not exactly how Beijing planned to use its “soft power" to conquer Western public opinion.

“The reactions of the Chinese authorities... only served to reinforce a feeling of increasing mistrust vis-a-vis Beijing," Valerie Niquet, director of the Asia Centre at the French Institute for International Relations, said.

“The perception of China on the international stage see-sawed," she said, adding that the West was “more worried, faced with a China that seems to be choosing ideological withdrawal and nationalistic affirmation".

On the diplomatic stage, 2010 was for China a year marked by “setbacks in its relations with most major powers", said Jonathan Holslag, of the Brussels Institute of Contemporary Chinese Studies.

“The difficulties with the US showed that there were big differences in interests and expectations that might not be overcome," Holslag said. “In the long run, China does not like American predominance in Eastern Asia."

For Niquet, the year saw a “marginalisation of China on the world stage, especially in Asia", where Beijing sent shivers through regional capitals with its uncompromising response to a territorial spat with Japan.

Its hardline stance on the arrest of a trawlerman whose boat collided with Japanese coastguard vessels in disputed waters sparked fears over the way its other territorial claims in the South China Sea would be pressed.

China was also criticised over its weak response to North Korea’s shelling of a South Korean island in November.

While Beijing has yet to condemn its long-time yet wayward ally Pyongyang despite intense international pressure, Japan, South Korea and the United States solidified their three-way alliance, Niquet said.

China’s offer to host emergency talks was rejected by Washington, Seoul and Tokyo, who instead met without Beijing.

“The shelling on the Korean peninsula did China a great disservice," said Hu Xingdou, a professor of economics and China policy issues at the Beijing Institute of Technology.

“In contrast to last year when China was widely praised for its role during the financial crisis, it was largely criticised this year over the Korean crisis."

Analysts predicted 2011 could be a tough year.

“Relations with the West will continue to be sour. I think China will invest a lot of in restabilising relations with neighbouring countries," Holslag said.

“There is a growing group of officials and experts who believe that competition might become inevitable and that China should stand strong," he said.

“Yet, at the top level, leaders are still very much aware that China very much needs the rest of the world."