Late last year, China’s President Xi Jinping celebrated his 10th year in office by defying a longstanding two-term limit after Mao Zedong died in 1976. The glory of Xi’s power play was tainted by two events: the economic damage caused by the COVID-19 lockdowns and the Ukraine war.
As it struggles to recover, Beijing has launched an international charm offensive. Xi aims to create enough calm to allow China’s economy to rebound. But Western policymakers shouldn’t be fooled — the change in tone is temporary. Xi hasn’t altered his long-term intentions: to seize a larger role for China on the world stage and to recast international norms and institutions in its favor. And as soon as he deems China recovered, he’ll return to the combative path he’s followed for years.
To understand why Beijing is suddenly playing nice, recall how rough last year was for China. Beijing hoped tensions with Washington would be reduced when President Biden took office, but the opposite happened. In response to the intensified competition with the United States, China strengthened its alignment with Russia — a “no limits” partnership that Moscow immediately tested by invading Ukraine. Russia’s aggression triggered international outrage, putting China in an awkward position and casting doubt on Xi’s judgment. Beijing’s moral ambiguity on the war and its trade support for Russia led to growing anger in Western capitals.
Meanwhile, Beijing’s “zero COVID” lockdowns caused profound misery at home. As both domestic consumption and foreign demand fell, China’s annual gross domestic product growth rate slowed to 3 percent, according to official statistics — the lowest rate since the beginning of China’s economic opening in 1979. The restrictions sparked massive protests and left Beijing with a budget crunch: While government revenue increased by only 0.6 percent in 2022, government spending grew by 10 times that rate (6.1 percent).
The budget shortfall deprived Beijing of a key foreign-policy tool: the ability to use aid, loans and business deals to expand its influence. With cash running low, the country was forced to cut its overseas spending. The squeeze was most evident in the Belt and Road Initiative, Xi’s signature foreign policy program. Last year, Chinese investment in sub-Saharan Africa decreased by 65 percent.
To turn things around, Xi set out to improve China’s relations with the West. Beijing increased its budget for diplomatic activities by 12.2 percent, and Chinese officials set out vigorously to reengage with the world. In November, Xi held his first face-to-face meeting with Biden since 2017. The next month, Xi traveled to Saudi Arabia, and the Chinese government facilitated a peace deal between Riyadh and Tehran. In recent months, China has hosted visits from the leaders of Brazil, France, Germany and the European Commission.
China is also working the developing world. Despite its budget crunch, it remains a key financier of international development, especially since other funding sources have dried up. China hosted two major development forums this spring; in May, it also convened the China-Central Asia Summit, and a third Belt and Road Initiative forum is scheduled for later this year.
Beijing even hopes to improve its ties with Washington. However, the likelihood that it will succeed seems low thanks to the balloon incident earlier this year. Indeed, the most striking aspect of China’s new foreign policy is the wishful thinking it entails. Beijing might genuinely want to mend ties, but the damage it has done through its “wolf warrior” diplomacy and other provocations won’t be easy to repair. Especially since China has done little to stop the incendiary conduct— from military maneuvers at sea to unfair trade practices to its coercion of Taiwan — that has earned it so much ill will.
Meanwhile, the bipartisan consensus in the United States about China’s strategic challenge remains as strong as ever. Without making profound shifts to its ambitions and system of government, China cannot resolve the conflicts of national interest that separate it from the United States and many others.
And that’s not going to happen. Xi remains the leader who abandoned China’s longtime policy of keeping a low international profile. He aims to “rejuvenate the Chinese nation,” which means reclaiming a larger and more dominant place in world affairs.
This means for the United States that great power competition with China will only escalate. Winning that contest will take national strength and resilience. So Washington should use the opportunity created by Beijing’s current problems to consolidate its advantage and broaden its lead.