This chapter presents the book’s third case study, exploring how state transformation shapes China’s international development financing (DF) policymaking and implementation. DF is often seen as an instrument of economic statecraft, strategically deployed to advance China’s geopolitical interests. Contrarily, we show that authority and policymaking is fragmented and contested among central agencies, producing weak oversight for implementing state-owned enterprises, which have primarily pecuniary motives and scant regard for official Chinese diplomatic goals. DF projects thus emerge not from a ‘top-down’ strategy but in a ‘bottom-up’ way, reflecting the agency of buccaneering SOEs and recipient-country elites. The outcomes of DF projects – and whether they benefit China’s international relations – depend on how the specific interests on both sides intersect, as we show through comparative case studies of hydropower development in Cambodia and Myanmar. In Cambodia, Chinese DF was managed by a dominant-party regime in ways that bolstered its domination, generating warmer ties with Beijing. In Myanmar, however, socio-political fragmentation meant that similar projects exacerbated social conflict and even sparked renewed civil war, prompting a crisis in bilateral relations.

This chapter introduces the book and its main arguments. It first discusses the International Relations debate over China’s rise, and its limitations. The debate is polarised between those depicting China as a revisionist actor, or as supporting the status quo. The debate is at an impasse because evidence exists on both sides. What is needed is a framework that can account for both sorts of behaviour. This requires rejecting the assumption that China is a monolithic actor pursuing a coherent grand strategy. In reality, since the late 1970s, the Chinese party-state has become fragmented, decentralised and internationalised, greatly expanding the range of actors involved in China’s foreign affairs. Because these actors are only loosely coordinated within a Chinese-style regulatory state, this produces a wide range of international outcomes that do not necessarily reflect top leaders’ intentions. The chapter also outlines the structure and contents of the rest of the book.

This chapter presents the book’s first case study: the South China Sea (SCS). Typically, the SCS is seen as a geopolitical struggle for sovereignty and territory, prompting military tensions and power balancing, and as a major security flashpoint that could spark World War III. This chapter shows that Chinese conduct in the SCS is shaped less by a detailed strategy determined in Beijing and more by struggles for power and resources within the transformed Chinese party-state. Reflecting the model described in Chapter One, Chinese conduct is only loosely guided by the poorly-defined nine-dash line and an injunction to balance the maintenance of stability and the protection of maritime rights, which are often contradictory objectives. This has created wide latitude for maritime actors – including the navy, coastguard agencies, the national oil companies and the Hainan provincial government and associated fishing interests – to promote their sectional interests, with often very negative consequences for China’s wider diplomatic objectives. Xi Jinping’s efforts to rein in competing actors has only partially succeeded. Although China’s position in the SCS has overall strengthened, it has done so in a rather unplanned manner and consequently at considerable cost.

This chapter presents the book’s second case study: Chinese efforts to manage ‘non-traditional’ security issues in the Greater Mekong Subregion. It focuses on the challenges of illegal narcotics and associated criminal activity, particularly banditry on the Mekong river, to which China has become more exposed through its ‘reform and opening up’. Contrary to widespread assumptions that ‘Westphalian’ China is leery of undermining sovereignty, we show that Chinese agencies have actually moved to tackle these problems at source by sponsoring opium-substitution programmes and transboundary law-enforcement projects in Laos and Myanmar. The outcomes of these interventions depend on how Chinese party-state transformation dynamics interact with socio-political conflicts in these target states. On the Chinese side, opium-substitution has been hijacked by local cadre-capitalists in Yunnan province, skewing implementation towards their sectional interests. This has intersected with predatory social relations in Myanmar and Laos to undermine drug-suppression efforts. Conversely, Chinese central government agencies have had greater success in corralling neighbouring counterparts into a transnational policing network, recently cemented into a new international organisation, the Lancang-Mekong Law Enforcement and Security Centre.

The concluding chapter draws out the implications of our findings for scholars and policymakers. First, it identifies key patterns in our findings and proposes hypotheses for further research. Inductively, it suggests that the degree of Chinese policy coherence reflects whether coordinating mechanisms are deployed and effective, and whether powerful domestic interests align. It argues that our conceptualisation of the Chinese party-state does not necessarily mean that Chinese behaviour is unproblematic – but that it may emerge for reasons not anticipated by traditional models. And it emphasises the crucial importance of partner/recipient countries in shaping the outcomes of Chinese overseas engagements. Secondly, the chapter draws out recommendations for policymakers in China and elsewhere. We argue that responding to China’s rise as though it was a strategically guided monolith is clearly mistaken, requiring a more nuanced and sophisticated approach. We also urge Chinese policymakers to be more open about the limitations of Chinese governance and to attempt more decisive state reforms. In a final postscript, we offer some thoughts about what light the state transformation framework can shed on the COVID-19 pandemic.