The neighboring environment of China is much more complicated compared with that of other big countries. There are 29 countries surrounding China, of which 15 border on it. As a country with a long history, China has maintained wide exchanges and contact with its neighboring countries, which have different social systems, different cultures, varied religions and nationalities and are uneven in development. The area is one where the interests of many big countries converge. In the Cold War period, many "hot spots" emerged in this area, some of which have not been totally resolved till now.

The basic policy of China's diplomacy with surrounding countries is to stick to the principle of treating neighbors with goodwill and considering them as partners. In 2002, China boosted its neighborly and friendly relationship with surrounding countries on a higher level with an aim to maintain stability of the surrounding area and improve regional cooperation.

Actively advancing the construction of the Shanghai Cooperation Organization (SCO). In June 2002, China, Russia, Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan signed the Charter of SCO, an agreement on the establishment of an anti-terrorist organ in the region and other important documents in the SCO Summit Meeting in St. Petersburg, Russia. This contributed to pressing forward the economic cooperation while building up security cooperation, a move expanding the regional and international influence of the SCO and making it an important force in defending regional stability and accelerating common development.

Energetically promoting the regional cooperation in East Asia and pushing the "10+1" and "10+3" mechanisms to make new breakthroughs. The signing of the Framework Agreement on Comprehensive Economic Cooperation Between China and the Association of Southeast Asian Nations (ASEAN) and the launching of the process to establish a China-ASEAN free trade zone are a milestone in regional cooperation in East Asia. In politics, the two sides signed the Declaration on the Conduct of Parties in the South China Sea, further stabilizing the situation of the South China Sea area. In security, they issued the Joint Declaration on Cooperation in the Field of Non-traditional Security Issues, enlarging the cooperative range and starting anti-terrorist cooperation. China's plans to cut or write off debts owed to China by Asian countries were welcomed by its neighbors. During the first three quarters of 2002, China's imports from ASEAN, Japan and the Republic of Korea increased respectively by 27 percent, 20.5 percent and 13.6 percent, enhancing China's role in driving the regional economy. With less worry about China's rapid economic growth and more trust, most surrounding countries began to accept the "China opportunity" theory.