Sino Strategies: China's Influence & its Implications for the U.S.

In many ways, China’s top priorities are national and economic security. Beijing’s foreign policy initiatives, economic and business development strategies, and global engagement all revolve around protecting China’s domestic interests or promoting the country’s economic growth and stabilization. While China is not necessarily unique in this prioritization, the People’s Republic is distinct in its approach due to the fact that it is home to over 15% of the world’s population and governed, essentially, by one man. Recently, Beijing continues to take steps to reinforce China’s national and economic security. 

National Development Concerns

Much of China’s national and economic security strategy revolves around domestic economic development and financial security. Reducing local government debt is a central component of this strategy. Local government debt is a significant and growing risk to China’s economic stability, rising from 62% of GDP in 2019 to 76% in 2022. As the Chinese property market faces its own crisis, Beijing certainly recognizes the risk that local government debt presents for national security, with Premier Li Qiang urging officials from the People’s Bank of China, Ministry of Finance, and local governments to increase efforts to reduce these risks and clear outstanding payments.

Additionally, China’s domestic economic security strategy also relies on further energizing the nation’s central region. Indeed, at a symposium President Xi highlighted the central region’s pivotal role as the country’s important grain production base, energy and raw material base, modern equipment manufacturing and high-tech industry base, and comprehensive transportation hub. He called for synergy in promoting high-quality development and writing new chapters of energizing the central region in the process of advancing Chinese modernization.

Global Integration Aspirations

To bolster its economy, in addition to the domestic policies and incentives being implemented, Beijing is committed to achieving global integration of the People’s Republic. To this end, the PRC’s strategy includes expanding regional and multilateral currency and financial cooperation, increasing broader use of China’s currency in international trade and investment, and improving the role of China’s currency in global securities pricing. China signaled its desire to enhance financial cooperation and economic opening to the rest of the world at the China Development Forum 2024, a conference held in Beijing from March 24 to 25 which featured appearances from Premier Li Qiang, President Xi, World Bank President Ajay Banga, and IMF Managing Director Kristalina Georgieva, among roughly 400 guests. 

The Chinese strategy also includes attracting more foreign investment, especially from Western companies and U.S. enterprises. Indeed, President Xi Jinping met with American business leaders at the Great Hall of the People in Beijing on March 27 – following a similar meeting that took place in November 2023 in San Francisco – as foreign direct investment in China sunk to its lowest level in 30 years in 2023. Beijing will seek to balance its efforts to attract foreign direct investment and its national security strategy, which include methods that have discouraged foreign investment including revamped anti-espionage laws and other regulations viewed as stifling foreign business expansion.    

Implications for the U.S.

1. U.S. Policy Implications

For U.S. policymakers, China’s national security concerns could indicate that the PRC would be willing to work with the U.S. on mutual challenges and work to align with American interests to mitigate the likelihood and potential impact of financial sanctions.  The U.S. could collaborate more closely with Western allies in Europe and Asia to align their interests and develop an approach to working with the PRC, given the country’s economic and national security concerns.

2. U.S. Business Implications

Much of the messaging emanating from the CDF and the March 27 meeting are directed at American businesses and Western companies more broadly. China’s commitment to attracting foreign investment, especially from the U.S., likely implies economic incentives and opportunities beyond those advertised by the PRC government. Nevertheless, U.S. businesses must weigh the incentive benefits against the risks associated with entering China’s economy, which has been marked by instability and high levels of debt. 

3. U.S. Consumer Implications

China’s national and economic security agenda impacts American consumers. From the fact that Chinese economic instability could impact global economic stability to the fact that Chinese foreign policy efforts will likely continue to align with efforts to reinforce and even accelerate the domestic economy, U.S. consumers may expect to benefit from more high-technology innovations coming out of the People’s Republic, from advanced electric vehicles and solar panels to artificial intelligence (AI) software solutions and AI-based appliances.