ROLE OF ECONOMIC DIPLOMACY IN THE FOREIGN POLICY OF THE PEOPLE'S REPUBLIC OF CHINA

Abstract

This article analyzes the concept of economic diplomacy in the foreign policy of the People's Republic of China (PRC) and its systemic role in expanding Beijing's global and regional geopolitical influence. The theoretical framework integrates Joseph Nye’s concept of soft power and 'co-optation', John Mearsheimer’s theory of offensive realism and hegemonic power, L. Poulsen’s theory of bounded rationality, and the discourse on debt-trap diplomacy. The authors investigate how China deploys a hybrid foreign policy model that combines the attractive rhetoric of mutually beneficial cooperation under the Belt and Road Initiative (BRI) with coercive economic instruments and targeted sanctions, drawing on cases like rare earth export controls to Japan and trade suspensions with Lithuania. The research examines the regional dimensions of China's economic diplomacy, focusing on South Asia and the Middle East. In South Asia, the study explores the strategic creation of alternative energy and logistical routes to bypass the Malacca Strait, China's infrastructure investments in Gwadar (Pakistan) and Hambantota (Sri Lanka), and its policy of reducing India's regional dominance by drawing states like the Maldives, Nepal, and Myanmar into its orbit. In the Middle East, the paper analyzes China’s 'business first' approach, its energy security investments (CNPC, SINOPEC), and its growing diplomatic role as a mediator between Saudi Arabia and Iran. It also deconstructs the 'debt trap diplomacy' narrative, contrasting it with empirical perspectives on debt restructuring and refinancing in Pakistan, Angola, and Ethiopia. The article concludes that China's economic diplomacy is a highly effective, multifaceted instrument that successfully transforms economic capabilities into strategic, military, and geopolitical advantages on a global scale.

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Received: 05.02.26 / Revised: 01.03.26 / Accepted: 15.03.26 / Published: 30.06.26