	Background and Analysis

Having progressed on a steady path since the late 1970s on multiple global economic and political endeavors, the robust international engagement of the People's Republic of China (PRC) since 2000 caught many by surprise and prompted spirited American disagreement and debate over the PRC's foreign policy motivations and objectives. The fact that much of this international engagement has expanded while the United States has been preoccupied with its military involvement in Iraq and Afghanistan also has brought about a period of American introspection. As a result, Congress and other U.S. policymakers are focusing attention on the critical implications China's increasing international engagement could have for U.S. economic and strategic interests. China's policy direction is that much harder to predict when some of these key policy objectives are seen to clash, and experience suggests that abrupt shifts in policy, shifts which remain unexplained in many cases, still occur with a fair degree of regularity in the PRC system. In Africa, Asia, and Latin America, where China is most active, access to energy resources and raw commodities to fuel China's domestic growth plays a dominant role in Beijing's activities. To this end, PRC leaders have sought to reassure other countries that China's economic development is an opportunity for, rather than threat to, its neighbors. Increasing International Stature and Competing with U.S. These include
Asia Pacific Economic Cooperation (APEC) forum, where China has been a full member since 1991 (the United States is also a member) ASEAN Regional Forum (ARF) —established in 1994, where China is increasing its participation (the United States has been criticized in recent years when Secretary of State Condoleezza Rice skipped some ARF meetings, instead sending lower-level officials) Forum for East Asia and Latin American Cooperation (FOCALAE) —established in 2001, where China is a full member (the United States is not a member) Organization of American States (OAS )—where China was invited to be a permanent observer in 2004 (the United States is a full member)

				Through New Multilateral Institutions

Finally, China has sought to devise new multilateral organizations to support its own interests and expand its international influence. Many concerned observers focus on the competitive strengths that PRC soft power has in relation to the United States, pointing out that the PRC international approach is particularly strong in areas where the U.S. political system and U.S. values make it less competitive. And the unrestricted nature of PRC investments resonates with many foreign governments. Unlike U.S. corporations investing overseas, who lack this close government patronage and in addition must answer to their shareholders, PRC state-owned companies have the luxury of being able to take a longer-term, strategic view—one more closely integrated with national priorities—without having to demonstrate short-term profits. Other projections tend to minimize or overlook other limitations and complications that confront China's overseas activities. The Complications of an International Presence

Even with a "win-win" strategy, acquiring and maintaining an enhanced international presence brings with it certain complications. Whichever of the above policy directions the PRC is traveling and whatever its ultimate intentions, its international engagement and growing economic clout pose demanding challenges and questions for U.S. policymakers.
Since the late 1990s, China's robust international engagement has caught many by surprise and prompted growing American debate over the PRC's motivations and objectives. This international engagement has expanded while the United States has been preoccupied with its military involvement in Iraq and Afghanistan. Congress and other U.S. policymakers are becoming increasingly concerned that China's expanded international engagement could have its "soft power" projection and affect U.S. economic and strategic interests.
Experience suggests that abrupt, unexplained shifts in policy occur with some regularity in the PRC system. Still, it is possible to point to some fundamental objectives that appear to be motivating Beijing's foreign policy. These include an imperative to promote and enhance China's economic development, particularly its voracious need for energy resources and raw materials to sustain its double-digit annual growth; an effort to separate the island of Taiwan, over which the PRC claims sovereignty, from its 23 remaining official relationships; and a desire to increase China's international stature and compete more successfully with perceived U.S. supremacy. To achieve these ends, China in recent years has crafted a multitude of bilateral agreements and partnerships, joined and become more active in existing multilateral organizations, and become a founding member of new multilateral institutions in which the United States is not a member.
Of alarm to some, China's policy approach has several competitive "soft power" advantages over the United States. The "unrestricted" nature of Beijing's overseas loans and investments is attractive to foreign governments wanting swifter, more efficient, and less intrusive solutions to their development problems than western lenders will offer. And Beijing's large state-owned companies, with deep pockets and no shareholders to answer to, can afford short-term losses in pursuit of longer-term, more strategic gains.
But China's approach also has structural limitations in areas where the United States is strong. Beijing's foreign development policy operates from a much narrower base, with China's "win-win" approach tackling easy issues first and postponing difficult issues, perhaps indefinitely. Acquiring and maintaining an international presence also brings certain complications that are new to the PRC, including multiple opportunities for international misunderstanding, resentment, and cultural backlash. Finally, unlike the United States, China lacks the advantage of a substantial private-sector investment presence overseas.
Whatever policy options the United States adopts, China's growing international political and economic clout poses demanding challenges and questions for U.S. policymakers. This report will be updated periodically as events warrant.