Book Review: Orchestration: China’s Use of Economic Statecraft from Europe to Asia

  • Published
  • By Author: James Reilly; Reviewer: Lt Col Sze W. Miller, USAF

Orchestration: China’s Use of Economic Statecraft from Europe to Asia, by James Reilly. New York: Oxford University Press, 2021. 284 pp. ISBN 978-0197526347.

 

Dr. James Reilly, an associate professor in the Department of Government and International Relations at the University of Sydney, has written a timely study on Chinese economic statecraft. The narrative surrounding the People’s Republic of China’s rise and its ambition for global influence has strained relations between China and the West. China has adopted an increasingly aggressive military posture toward its neighbors, which threatens the peace and stability established by the US-led international system. In the current geopolitical environment, the US policy-making establishment is often hyperfocused on China’s growing military capabilities as a threat to US security. Nevertheless, the relative strengths of the US and Chinese economies underpin the strategic rivalry discourse. It cannot be a coincidence that in the decade since the global financial crisis China has emerged as a peer competitor offering an alternative and attractive economic model. China’s state-capitalist economic system has proven its longevity and looks far more threatening than the economic appeal of the Soviet Union during the height of the Cold War.

Orchestration, examines China’s use of economic statecraft to advance its foreign policy objectives and ultimately China’s pursuit of power. In his introduction, Reilly convincingly presents his theory on China’s orchestration strategy, which he equates to a form of indirect governance. The act of orchestration occurs when the Chinese government encourages commercial actors to take on projects on behalf of the central government that would mutually benefit all parties involved. How China implements orchestration tactics is threefold. First, top Chinese leaders create key initiatives and delegate implementation to line ministries. The second tactic requires the “use of tournaments to attract and reward multiple agents” (p 14). In practice, this tactic encourages line ministries to create investment funds that reward companies for adhering to specified foreign policy objectives. Lastly, the government attempts to align and mobilize corporate actors with similar interests to act. Reilly’s methodology in evaluating China’s effectiveness in employing orchestration tactics through his case studies rests on three criteria—process tracing, implementation coherence, and China’s ability to “alter agent’s behaviors that undermined China’s foreign policy objectives” (p 16). Reilly admits that China’s orchestration tactics are imperfect, and various countries react differently to China’s tactics. China is not immune to the principal-agent problem. The agents (corporate and domestic actors) might not necessarily carry out the tasks requested by the principal (Beijing) or truthfully report back to the principal when policy goals are not being met.

Chapter one examines China’s history of economic statecraft as both an aid donor to less developed countries (Africa in the 1960s) and as the largest aid recipient from the United States and Japan in the 1980s and 1990s. As a result, those formative experiences have shaped China’s views on how best to leverage its growing economic power.

Chapter two explains why and how China conducts economic statecraft. China’s unprecedented command over its centrally planned economy allows it to maximize its economic power by consolidating economic resources through a coherent, well-orchestrated strategy. Subsequent chapters (three, four, five and six), present four case studies (Western Europe, Eastern Europe, North Korea, and Myanmar) that illustrate China’s employment of economic statecraft.

The strengths of this book are the meticulously researched case studies and examples that Reilly has woven into his chapters as supporting evidence to illustrate China’s orchestration tactics. The book provides vivid examples of Chinese attempts to influence a particular country, whether through risky loans to fund large-scale infrastructure projects (port construction in Greece, mining development in North Korea, dam construction in Myanmar) or other financial instruments in exchange for political concessions. The author provides an exhaustive investigation into the inner workings of the Chinese government using original Chinese and translated government documents, statistics, media coverage, public opinion polls, and interviews to piece together the complex role in which the Chinese government incentivized state and nonstate actors to work together to further China’s foreign policy goals. 

Chapter three is the strongest and most engaging chapter as it examines China’s use of economic statecraft in Western Europe during the 2008–2009 global financial crisis. This period of relative weakness in the West gave China a window to exploit. At that time, Europe was desperate for capital investment, and China saw this crisis as a great opportunity. Chinese political leaders quickly summoned Chinese banking leaders and heads of state-owned enterprises together and sent them to Europe to investigate how they could collectively assist the Europeans. As a result, China mobilized its economic resources and made a policy to continue holding and buying Euro-denominated bonds to stabilize the Euro. Although the central government nudged Chinese corporations to act, Chinese financial institutions lent support primarily for their own self-interest. In exchange, China was able to extract concessions from France, Germany, and the United Kingdom. One example was the authorization of Chinese renminbi-dominated financial products in Europe.

Chapter five, which considers China’s economic statecraft in North Korea, is the weakest in the book. Source data, which is hard to obtain in North Korea, is at the heart of the challenge here. Therefore, a direct link between Chinese orchestration tactics and influence in North Korea is difficult to assess. Most readers would have a basic understanding that China has been North Korea’s most important economic partner and conduit to the rest of the world since the Cold War. This one-sided bilateral relationship makes North Korea incredibly dependent on China. With or without China’s intentional use of economic statecraft, one can conclude that North Korea would continue to be heavily influenced by China. Despite North Korea’s unattractive business environment, China’s mobilization of its commercial actors has engendered some positive market-based reforms in the North Korean economy. Even so, it has failed to achieve the foreign policy goal of persuading North Korea to give up its nuclear weapons program, despite Chinese sanctions.

Understandably, China’s global economic reach makes it impossible to examine every aspect of Chinese economic statecraft worldwide. However, readers and practitioners of national security might be equally interested in exploring China’s presence and the breadth of its influence operations in the developing economies of Africa and Latin America—two regions where American interest and investment are somewhat lackluster. Both Africa and Latin America have benefited from Chinese investments nested under China’s signature Belt and Road Initiative. Understanding Chinese intentions and foreign policy goals in these regions will be critical to avoiding future miscalculations between China and the West. 

Reilly uses the term orchestration in a rather benign way in describing the process in which the Chinese government identifies corporate actors within its system and convinces them to act in ways that would advance the nation’s perceived collective interest. His explanation suggests that Chinese corporations have leeway and can either comply or not with the government’s orchestration techniques. However, the current Chinese business environment is fraught with government crackdowns, as Xi Jinping is seemingly on a quest to remake Chinese society in the name of collective prosperity. Given this new business environment, one might question how much autonomy Chinese state-owned enterprises and private corporations have in decision making. Beyond this, in an era in which Chinese companies (such as property giant Evergrande) have clearly been shown to have overreached, it seems likely the Chinese government will reassess promoting risky loans to developing countries, which may reduce the influence of economic statecraft worldwide.

 

Lt Col Sze W. Miller, USAF

Lieutenant Colonel Miller is a course director for the Department of Strategy and Security Studies, Global College of Professional Military Education, Air University.


 

Disclaimer

The views and opinions expressed or implied in JIPA are those of the authors and should not be construed as carrying the official sanction of the Department of Defense, Air Force, Air Education and Training Command, Air University, or other agencies or departments of the US government or their international equivalents.

Disclaimer

The views and opinions expressed or implied in JIPA are those of the authors and should not be construed as carrying the official sanction of the Department of Defense, Department of the Air Force, Air Education and Training Command, Air University, or other agencies or departments of the US government or their international equivalents. See our Publication Ethics Statement.