Project

Rising China and New Civilization in the Asia-Pacific

Working Paper

Decision Making During Crises: Prospect Theory and China’s Foreign Policy Crisis Behavior after the Cold War

  • 2012-05-04
  • Kai He

ISBN  

EAI Fellows Program Working Paper Series No.33

Author
  

Dr. Kai He is an Assistant Professor in the Department of Political Science at Utah State University (USU). Before USU, he also taught at Spelman College and Georgia State University. He received his Ph.D. in Political Science from Arizona State University in 2007. His research interests include international security, international political economy, Asian security, Chinese politics, and social science research methods. He is the author of Institutional Balancing in the Asia Pacific: Economic Interdependence and China's Rise (Routledge, 2009). He has also published articles in European Journal of International Relations, Security Studies, Journal of Contemporary China, The Pacific Review, Asian Security, Asian Perspective, and International Relations of the Asia Pacific. He is a recipient of the 2009-2010 Princeton-Harvard China and the World Program Postdoctoral Fellowship. He worked in the Woodrow Wilson School of Public and International Affairs at Princeton University during the 2009-2010 academic year.

 

 


 

 

Abstract

 

Through examining four notable foreign policy crises with the United States since the end of the Cold War: the 1993 Yinhe ship inspection incident, the 1995-6 Taiwan Strait crisis, the 1999 embassy bombing incident, and the 2001 EP-3 midair collision, I introduce a prospect theory-based model to systematically explain China’s foreign policy crisis behavior after the cold war. I suggest that Chinese crisis behavior is shaped by three factors that frame the domain of actions of Chinese decision makers during crises: the severity of crisis, leaders’ domestic authority, and international pressure. When Chinese leaders are framed in a domain of losses, e.g., under a condition of high severity of crisis, low leadership authority, and high international pressure, a risk-acceptant behavior, either military coercion or diplomatic coercion, is more likely to be adopted. When Chinese leaders are framed in a domain of gains, e.g., under a condition of low severity of the crisis, high leadership authority, and low international pressure, a risk-averse behavior, either conditional accommodation or full accommodation, is more likely to be chosen. China’s leadership transition might increase the possibility for China to choose risk-acceptant policies during future foreign policy crises. Other countries, especially the United States, should pay more attention to shape Chinese leaders’ domain of actions to a constructive direction through both people-to-people and state-to-state channels.

 

*Paper prepared for the EAI Fellowship (2011-2012) seminars at the East Asia Institute (Seoul), Beijing University (Beijing), and Fudan University (Shanghai) in May-June 2012.

 

The rise of China is one of the most dynamic political phenomena in world politics in the 21st century. Although U.S.-China relations have been relatively stable since the end of the cold war, the two countries are far from establishing a high level of strategic trust and mutual confidence. The United States and China have experienced several major foreign policy crises in the past 20 years, such as the 1999 bombing of the Chinese embassy in Belgrade and the 2001 EP-3 aircraft collision off the coast of China. Some scholars even suggest that the United States faces an inevitable conflict with a rising China. Due to the mutual deterrence effects of nuclear weapons, large-scale military conflicts should be avoided between China and the United States. However, because of diverse strategic interests and different ideologies, diplomatic and military crises still seem unavoidable in future US-China relations. If the two countries cannot manage foreign policy crises effectively and peacefully, escalating conflicts—even war—may occur unexpectedly between the two nations. Therefore, it is imperative for policy makers to understand China’s dynamic behavior in foreign policy crises, i.e., when China will take risks to escalate conflict and when China will avoid risks to seek accommodation during crises.

 

China has experienced four notable foreign policy crises with the United States since the end of the Cold War: the 1993 Yinhe ship inspection incident, the 1995-6 Taiwan Strait crisis, the 1999 embassy bombing incident, and the 2001 EP-3 midair collision. China adopted four different policies in these four crises. In the Yinhe ship inspection incident, China fully accommodated to U.S. demand of entirely inspecting Yinhe, a Chinese container ship that was accused to carry materials for chemical weapons to Iran, even though China believed that the United States did not have any legal right to conduct such an inspection. In the 1995-6 Taiwan crisis, China’s policy was militarily coercive in nature through a series of military and missile tests across the Taiwan Strait as retaliation for U.S. permission of then Taiwanese President Lee Ting-hui to visit the United States in 1995. In the 1999 embassy bombing incident, China’s policy was also coercive, but only diplomatically through cutting off diplomatic and military contacts with the United States. In the 2001 EP-3 incident, China adopted a conditional accommodation policy to defuse the crises in which China released the 24 EP-3 crews after receiving a vague “apology letter” from U.S. government. Why did the Chinese leaders behave differently across these four crises?

 

Most of the existing literature focuses on tracing through these crisis events, identifying the crisis management deficiencies between the United States and China, and presenting the implications of these crises to regional security. In-depth, systematic studies on China’s post-cold war crisis behavior, however, are limited partly because these crises are not full- fledged, military-involved events and partly because data access to more current events is relatively difficult.

 

In this research, I borrow insights from prospect theory, a Nobel-prize-winning behavioral psychology theory, to systematically examine China’s foreign policy crisis behavior after the cold war. I introduce a legitimacy-prospect model to explain the variation of China’s behavior across different crises. I suggest that there are four types of foreign policy behavior during crises: military coercion (the 1995/6 Taiwan crisis), diplomatic coercion (the 1999 embassy bombing incident), conditional accommodation (the 2001 EP-3 incident), and full accommodation (the 1993 Yinhe incident). While the two coercive policies are risk-acceptant behaviors, the two accommodation policies are risk-averse in nature.

 

I argue that Chinese crisis behavior is shaped by three factors that frame the domain of actions of Chinese decision makers during crises: the severity of crisis, leaders’ domestic authority, and international pressure. When Chinese leaders are framed in a domain of losses, e.g., under a condition of high severity of crisis, low leadership authority, and high international pressure, a risk-acceptant behavior, either military coercion or diplomatic coercion, is more likely to be adopted. When Chinese leaders are framed in a domain of gains, e.g., under a condition of low severity of the crisis, high leadership authority, and low international pressure, a risk-averse behavior, either conditional accommodation or full accommodation, is more likely to be chosen.

 

The remainder of this paper proceeds as follows. First, I discuss the theoretical and empirical deficiencies of current research on China’s foreign policy crisis behavior. Second, I introduce the prospect theory-based legitimacy-prospect model and proposed major hypotheses of China’s foreign policy crisis behavior. Third, I examine the four foreign policy crises China experienced after the cold war to test the validity of the legitimacy-prospect model. In conclusion, I suggest that China’s leadership transition might increase the possibility of China to choose risk-acceptant policies during future foreign policy crises. Other countries, especially the United States, should pay more attention to shape Chinese leaders’ domain of actions to a constructive direction through both people-to-people and state-to-state channels...(Continued)