Topics Discussed and Key Points:
● The evolution of China’s outbound foreign direct investment
● Is China’s outbound FDI being used primarily for political or economic reasons?
● Where outbound FDI is headed in the next five years
● Differences between China’s bilateral and multilateral free trade agreements
● How partner nations have changed their approach to China over the years
● The future of the Belt and Road Initiative
● How U.S-China relations will evolve under the Biden administration
● Where opportunities for the U.S. to collaborate with China lie
Today on The Negotiation, we speak with Professor Min Ye, an author and an Associate Professor of International Relations at the Frederick S. Pardee School of Global Studies at Boston University. Her expertise includes Chinese political economy, China and India comparison, East Asian international relations, and globalization with focuses on transnational immigration and foreign investment.
Min Ye gives a broad overview of how globalization, state capitalism, and outbound foreign direct investment have evolved in China in the last few decades. She describes China as a “latecomer economy in Asia”. When the country opened itself to doing business internationally in the late 1970s, it embraced outbound FDI because it had to fast-track its technology and manufacturing sectors and make exports earn foreign exchange as quickly as possible.
Due to the COVID-19 crisis, alongside shaky U.S.-China relations, outbound FDI may see a change in strategy to adapt to the reorganization of global supply chains. Also, there will be a greater focus placed on China’s digital, health, and ecological sectors.
With regard to free trade agreements of any kind, Min Ye explains that China will always take the most pragmatic approach that is conducive toward globalization. “It depends,” she says, “on China’s internal readiness and the external environment.”
Asked about the future of the BRI, Min Ye says that, after eight years of laying the foundation for this massive global infrastructure development strategy—and not to mention on the heels of the pandemic—China is now much clearer on what they can and cannot accomplish. She expects “a sharper focus and a clearer context” going forward, including a more risk-conscious strategy, a willingness to cooperate more amiably with recipient governments, less of a need to “create political and social impact”, and a greater focus on digital infrastructure—which is to be the BRI’s core.
Finally, Min Ye believes that, with a less hostile approach, the U.S. will be able to better cooperate with China under the Biden administration, especially today when the two countries are sharing pressing concerns around public health, climate, business, and data security.
“Because I understand that domestic politics in Asia typically shape their regional economic policies, I created this framework called ‘Critical Juncture’: When a crisis occurs, domestic leadership and policy networks interact across countries and that leads to new institution-building in the region.”
“[With regard to bilateral and multilateral free trade agreements,] Chinese elite thinking and policy establishments do have strong convictions toward globalization. But their perspective on globalization is very pragmatic, so it doesn’t really prioritize one way or another. [...] It depends on China’s internal readiness and the external environment.”
“In dealings with China, style matters hugely. I feel like Americans suddenly forgot that it’s about creating relationships when you work with China.”