Ian Bremmer: China’s foreign policy has to change due to the economic crisis

Ian Bremmer recently outlined why China has a reduced appetite for aggressive behavior and is actively working to ease tensions with key global partners. During a conversation with Rahul Kanwal, News Director at Aajtak and India Today, Bremmer highlighted that China’s pivot towards cooperation is primarily driven by its struggling economy—the worst it has seen in decades.

China, the world’s second-largest economy, faces substantial economic challenges. Many provincial governments are effectively bankrupt, and one important area of the economy, the real estate sector, which generates around 30% of government revenue and holds about 70% of consumer wealth, is in a state of crisis. This not only affects China’s domestic economy but also has potential ripple effects on the global economy, given China’s significant role in international trade and investment.

While manufacturing remains a vital sector, it too poses challenges. Weak domestic consumption has left factories producing more than the domestic market can absorb, creating a surplus that is stirring political tension with trading partners globally. This economic fragility has pushed Beijing to adopt a more cautious, cooperative stance in its international relationships.

“I was just in Beijing a week ago, and I’ll tell you it’s the worst economy I’ve seen the Chinese perform in decades. The leadership is aware of it,” said Bremmer, president of Eurasia Group.

China’s foreign policy is changing as a result of these economic pressures. Beijing is actively working to ease tensions with its major allies and is becoming less inclined to act confrontationally.

“This is a time when the Chinese are highly aware of not wanting confrontation geopolitically around the world. That’s led to more engagement, um it’s led to less willingness to be assertive and aggressive and respond with perceived slights with tit for tat. It’s also absolutely the reason why Xi Jinping decided this was the time to reach out to India and to have a very successful bilateral,” said Bremmer.

The recent encounter between Indian Prime Minister Narendra and the first meeting between Chinese President Xi Jinping and Modi, which involved bilateral discussions in roughly five years, demonstrated this change. Although the meeting suggests a thaw in relations, analysts warn that this shift may only last temporarily.

“I don’t think the Chinese have changed their overall long-term strategy,” Bremmer explains. “But for the near term… I think this isn’t just a matter of a few months. I think this is probably a few years because China’s problems are structural.”

China’s economic challenges are reshaping its approach within BRICS, the bloc of Brazil, Russia, India, China, and South Africa, which recently expanded to include Argentina, Egypt, Iran, and the UAE. BRICS, as a platform for Global South cooperation, is increasingly important for China as it seeks to navigate its economic challenges and maintain its international influence. However, the diverse ties of BRICS members with Western nations complicate unified policy within the group.

A key topic in BRICS is reducing reliance on the US dollar, which dominates global trade and finance. Although the idea of using alternative trade currencies—such as trading in local currencies or even creating a BRICS-based currency—has been discussed among member countries, significant shifts in the global financial system remain unlikely in the near term. The dollar’s dominance has held steady since the 1990s, supported by established trade networks, widespread international reserves, and high levels of trust from global investors, even as currencies like the Chinese yuan have gained some prominence in recent years.

For China, the focus remains on stabilizing its economy, taking precedence over assertive foreign policy. Economic pressures drive a more pragmatic international stance, including in BRICS, where China seeks cooperation without increasing tensions. This cautious approach allows China to prioritize financial stability while engaging with global partners on shared goals like trade and development.

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