Feb. 17 (Bloomberg) -- U.S. Secretary of State Hillary Clinton has touted her approach to diplomacy as “smart power.” That’s nothing new for China, which has employed economic, political and cultural persuasion under President Hu Jintao to build its image as a responsible world leader.

Now China’s gains as a regional partner and potential counter to U.S. influence are threatened by a slowdown in growth that may reduce its economic clout. At the same time, President Barack Obama’s pledge to reverse Bush-era policies that diminished America’s authority creates added competition for China’s “soft power” -- a phrase coined by Harvard professor Joseph Nye.

The changes may expose China’s communist government to more scrutiny as the country’s leaders launch a reported 45 billion yuan ($6.6 billion) program to expand the reach and impact of its state-run media.

“If you want to promote something, you have to make sure the thing you’re promoting is acceptable to other countries,” says Zheng Yongnian, director of the East Asian Institute at National University of Singapore. “Soft power means other parties accept your values.”

While China has clocked nearly 10 percent annual growth for three decades and is now the world’s third-largest economy, the influence its money can buy has been offset by distrust among some nations of its political system.

In the past six years, China has helped drive multilateral negotiations to reduce nuclear proliferation in North Korea and Iran, and promoted itself in Africa with a promise in 2006 to provide $5 billion in loans and credits and to double development aid by this year. In Southeast Asia, it is working to create a free-trade zone that would eliminate levies covering 93 percent of its imports from the region.

Hu, 66, has also focused on cultural soft power, telling party leaders in an October 2007 speech that it is “a factor of growing significance in the competition in overall national strength.”

Record TV Viewers

The government has established 295 Confucius Institutes in 78 countries to teach Chinese history and language, and it spent an estimated $70 billion to host the 2008 Summer Olympics, which attracted a record 4.7 billion television viewers worldwide.

China’s new place at the global table is underscored by the appointments of Margaret Chan as head of the World Health Organization in 2006 and Justin Lin as chief economist of the World Bank last year: They are the first Chinese to hold top positions in such prominent international organizations.

Still, positive views of China’s influence have slipped six percentage points in the past year, according to a BBC World Service survey of public opinion in 21 countries released Feb. 6. China’s positive rating fell to 39 percent, while its negative rating rose seven points to 40 percent.

Meanwhile, views of the U.S. as a positive influence increased to 40 percent from 35 percent in the poll, conducted following Obama’s election between November 21, 2008, and February 1, 2009. America’s negative rating declined to 43 percent from 47 percent. The margin of error varied by country.

Policy Overhaul

Obama, 47, has promised to reverse the decline in America’s image with a policy overhaul that includes closing the Guantanamo Bay detainee prison and renewed leadership on climate change.

The new president “has dramatized the basic values in the American dream that were somewhat tarnished over the past eight years,” Nye, a former U.S. assistant secretary of defense, said in an e-mail. “That in itself has done a lot for American soft power, but it will have to be followed up with policies that are successful.”

The most pressing problem for both countries now is the global financial crisis, which at first seemed a boon to China by exposing the failures of Western liberal capitalism, according to Nye. Now it weighs on the country’s previously unsinkable upward trend.

Job Losses

Growth may fall to 6.7 percent this year, according to the International Monetary Fund, from 13 percent in 2007 and 9 percent last year. More than 20 million people have lost their jobs and represent a threat of unrest as exports contract and prices in the property market slump.

The government plans to hand out $6.6 billion to Xinhua News Agency and China Central Television, or CCTV, to expand abroad, the South China Morning Post reported last month.

English-Language Daily

CCTV will start Russian and Arabic channels this year to supplement Spanish and French programming. Xinhua, the state- run wire service, will add to its more than 100 foreign bureaus, and China will get its second official English- language daily, Agence France-Presse reported Jan. 14.

“Enhancing our communication capacity domestically and internationally is of direct consequence to our nation’s international influence and international position,” said Li Changchun, a member of the Communist Party’s top ruling body, in a December speech.