China's Strategic Hedging

China has sought to gain regional influence by utilizing a mix of energy investments and military modernization efforts. China's overall efforts aim to bring about three broad goals. First, China seeks to hedge its economic growth potential against the threat of energy source disruption. Second, it seeks to limit or deny access to areas of operations within the first island chain, effectively expanding their core strategic zone of interest within the South China Sea. Third, China wants to establish the Taiwan Strait as a ‘no-go’ zone preventing U.S. interference in the event of another Taiwan crisis. This type of hedging behavior can enhance a second-tier state's power without directly challenging the system leader. China has experienced some success in this approach but at a high cost. Its use of strategic hedging as an insurance policy carries a high financial and diplomatic premium.