Deng Xiaoping’s Use of Positive Economic Statecraft: The Importance of Securing Long-Term Partnerships with Major International Financial Organizations (IFOs)

Although the contributions of Deng Xiaoping’s Reform and Opening Up policy to the rise of China have been a focus of research in recent decades, his personal influence warrants in-depth study. The ultimate success of the reforms depended upon the skill with which Deng handled foreign affairs, in terms of convincing both Japan and the United States of China’s good intentions and of the potential opportunities an open China market offered. In order to encourage foreign investment in China, Deng not only made personal visits to Japan in 1978 and the United States in 1979, but in the 1980s also actively sought to resume Beijing’s membership in the International Monetary Fund (IMF) and World Bank (WB), and to join the Asian Development Bank (ADB). These moves, constituting a coherent suite of diplomatic measures to secure international support for Deng’s reform efforts, should be evaluated together. By offering both extrinsic and intrinsic incentives for first the WB and then the ADB to invest in reforming China, Deng won over the economic experts from these financial institutions. Their personnel not only offered him valuable policy advice on implementing domestic economic reforms, but—together with their reports—became effective advocates abroad for his Reform and Opening Up policy. Ultimately, Deng succeeded in creating an international environment conducive to China’s economic development.