By Phillip C. Saunders, National Defense University Press, October 2006

China’s leaders have achieved remarkable success in building a booming economy and holding their political system together for 15 years after communism collapsed in Eastern Europe and the Soviet Union. Although prospects for continued growth are good, Chinese leaders confront an international system dominated by the United States and a globalized world economy where sophisticated multinational corporations possess technology and management skills decades ahead of their Chinese competitors. China also faces a host of domestic challenges, ranging from the environmental degradation produced by headlong growth to social tensions created by rising inequality between coastal and interior provinces and between rural and urban workers. A senior public security official recently admitted that there were more than 74,000 mass protests involving 3.7 million people in 2004.

The party’s response emphasizes efforts to alleviate social pressures by reducing the tax burden on rural residents and devising economic policies that will produce more balanced growth with fewer negative side effects. This represents an adjustment from previous policies focused on maximizing growth rates, but Chinese leaders will still emphasize the importance of continued rapid economic growth for maintaining domestic stability and attaining long-term policy goals. A prolonged economic downturn or slowdown in growth would aggravate social problems and likely stimulate increased protests.

Economic imperatives and strategic challenges are leading China to expand its international activities into different regions of the world. This paper analyzes the rationale and drivers for China’s increased global activism; examines the tools China is employing and how they are being used; assesses the empirical evidence about priorities and patterns in China’s global activities; and considers whether these activities reflect an underlying strategic design. The paper concludes with an overview of likely future developments and an assessment of the implications for the United States.

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