Yang Yi, Admiral of the People’s Liberation Army, discussed different means available for Chinese diplomacy. According to his article, there are three major conflicts that China faces. One is the conflict between Chinese-style socialism and the Western cold war mentality; two is resistance to a rising China by monopolistic countries trying to restrain China; and three is conflicts between the accelerated development of China and the interests of other developing countries.
In his opinion, whether the three conflicts can be resolved is the key to China’s ability to maintain stability and to avoid military conflicts. Yang recommends a balanced diplomacy consisting of full participation in international affairs to influence direction, prompt responses without following others, and proactively changing the "rules of the game" by applying incentives and penalties, i.e. using the carrot and stick approach.
Source: Huanqiu, July 28, 2010