Chairman Mao Zedong said that power comes out of the barrel of a gun, and he knew a thing or two about power, both hard and soft. If you have enough guns, you have respect. Money is the same: if you have enough cash, you can buy guns, and respect.
Israel and Saudi Arabia are examples of the limits of such respect. Both countries are rich and in some ways very powerful, but people in other countries with no cultural connections don't look at Israel, or Saudi Arabia and think: “Gee, I want to live like that and watch their movies!”
But we, the rest of us, everyone who is not American, we all want to watch American movies. I am from South Africa, and I’ll confidently represent the entire Third World and the rest of the First World assure you that it’s true. We don’t want to watch Israeli or Saudi or Chinese movies, nor buy Chinese sneakers. Nor, with the exception of a few eccentrics such as myself, do we want to live in Chinese cities. The Saudis and Israelis do not seem to care about this, but China does, hence the endless hand-wringing about soft power.
The essence of Joseph Nye’s articulation of of soft power is the power to attract, to co-opt and to seduce. China now has enough cash to open Confucius Institutes, fund movies, TV stations, and schools, open art zones, buy aircraft carriers and islands, but China has not made itself an attractive place to live or work or dream.
Until Chinese political leaders would rather their daughters went to Peking University over Harvard, until Chinese people would rather buy Mengniu infant milk formula over the equivalent brand from New Zealand, until Beijing and Shanghai become as pleasant to live in as New York and L.A., China will find its soft power ambitions thwarted.
As the ancient American saying has it, you can put lipstick on a pig, but it’s still a pig—doesn't matter how much you spend on the lipstick.