THE 1947 Marshall Plan conjures to mind certain ideals of foreign policymaking--bipartisan constancy of purpose, political perseverance and vision. Adherence to these ideals secured both American strategic interests and free-market and democratic political values in Western Europe. Though it is less appreciated for doing so, U.S. China policy has followed a similar course. Indeed, Washington has persevered in a far-sighted China policy through seven administrations--from Richard Nixon to George W. Bush, although this achievement did not come without periodically robust domestic debate. Even when presidents from Ronald Reagan, through Bill Clinton, to George W. Bush initially considered significantly altering the contours of the relationship with Beijing, each quickly realigned policy according to long-established principles once the costs of change to American interests became apparent.

Washington's policy toward the People's Republic of China (PRC) has exhibited three principal features: first, to define and articulate the key strategic interests that bind the two nations together (while remaining mindful of frictions where they exist); second, to weave the fabric of economic interdependence that binds the two countries together (thereby making conflict progressively more expensive for both peoples); and finally, to cultivate bureaucratic and cultural ties that promote stability between the nations and progressive change within China (by fostering mutual understanding and the economic and social changes underpinning humane governance--with creation of a middle class being central).

The Bush Administration came into office asserting that Bill Clinton's policy of working toward a "constructive strategic partnership" with Beijing was naive. It initially labeled the PRC a "competitor." Today, President Bush presides over a more cooperative relationship with Beijing than Bill Clinton was ever able to secure, and the prospects for progressive political change in China have improved. Indeed, Washington's relationship with Beijing approximates those which it enjoys with many of its traditional "allies", such as France, Japan, the Republic of Korea, Canada, Mexico or Turkey. How did we arrive at this juncture, and how might both sides move further forward?

To address these questions, and to better understand the transformation of the Sino-American relationship, we ought to think of it as resting on a three-legged stool, each leg representing security, economic and cultural ties, respectively. During the 1970s and 1980s, our stool would have had a long security leg, a very short economic leg and a somewhat longer cultural leg, making for a very unstable stool indeed. But during the 1990s, our stool's security leg was shortened drastically while the economic and cultural legs continually lengthened. The September 11 attacks once again lengthened the security leg, giving rise to our current arrangement, in which each leg is now of approximately the same length and strength--that is, a much more stable stool on which to rest the Sino-American relationship. But this is a story that deserves to be told literally as well as metaphorically.

The Search for a Strategic Foundation

THE PRE-9/11 circumstance: It is commonly accepted that the dissolution of the Warsaw Pact and the 1991 collapse of the Soviet Union eroded the Nixon-Mao security rationale for productive U.S.-China relations by eliminating the common Soviet enemy. Even before these tectonic shifts, some of the glue holding the relationship together had weakened. In part because of President Reagan's initial pro-Taiwan proclivities and in response to Soviet overtures to improve relations with Beijing, China adopted an "independent foreign policy" to reduce dependence on Washington in 1982, and in the United States, Americans became increasingly aware of human rights abuses in the PRC (culminating in the 1989 Tiananmen Square violence) as well as China's transfers of weapons of mass destruction-related technology to Saudi Arabia, Iran, Pakistan and other countries in the 1980s. The benefits of expanding and generally positive Sino-American economic and cultural contact were insufficient to compensate for these developments.

After 1989, therefore, without a compelling security rationale to discipline demands made on Washington policymakers, all aspects of China policy seemed equal--economic, human rights and security concerns all had their proponents. With no discernible cost in doing so, every resolution or piece of legislation germane to China that Congress considered in the 1990s became a Christmas tree upon which the ornaments of accumulated dissatisfactions with the PRC were hung. Consequently, the White House could not durably define its hierarchy of priorities for Beijing. Unable to figure out what Americans really wanted, and believing that they could never be satisfied anyway, Chinese leaders gave Washington precious little.

In this environment, security considerations fostered mistrust, rather than the limited cooperation of the 1970s and 1980s. A spate of books and articles appeared asserting that each nation was the other's looming strategic challenge, both reflecting and reinforcing public opinion in both countries. In China, there was China Can Say No (1996) and Unrestricted Warfare (1999); in the United States, there was The Coming Conflict With China (1997) and The China Threat (2000). The China Threat case was most credibly made by University of Chicago professor John J. Mearsheimer, who maintained that even if China became democratic, its size and rate of growth made conflict with America inevitable.

Unfortunately, a policy of engagement is

doomed to fail. If China becomes an economic
powerhouse it will almost certainly translate
its economic might into military might
and make a run at dominating Northeast Asia.
Whether China is democratic or deeply
enmeshed in the global economy or autocratic
and autarkic will have little effect on its
behavior, because democracies care about
security as much as non-democracies do, and
hegemony is the best way for any state to
guarantee its own survival.¹

Popular opinion in both countries reflected such sentiments. Survey data collected by the Pew Research Center for the People and the Press in March 1999 indicated that "keeping close watch on China as [a] world power", was the "top priority" for 52 percent of respondents. That same year, the Chicago Council on Foreign Relations reported that 56 percent of American foreign policy "leaders" regarded China as a "critical threat." As for Beijing, in May 1995, China Youth Daily found that 87.1 percent of PRC respondents believed that the United States "was the country 'least friendly' to China." Subsequent events, such as the accidental 1999 bombing of the PRC Embassy in Belgrade and the April 2001 collision of U.S. and PRC military aircraft near Hainan Island, only further darkened popular Chinese images of the United States--and vice versa. Popular sentiment created what Daniel Yankelovich calls the "boundaries of the permissible" for political leaders in both societies--vaguely-defined limits that politicians are loath to cross. In the United States--at least until 9/11--it was safer to paint China in dark hues, to stress China as a threat rather than a future strategic partner.

The post-9/11 circumstance: George W. Bush came into office talking about China as a "competitor" and asserting that he would do "whatever it takes to help Taiwan defend herself." After September 11, however, American priorities and threat perceptions changed--the sense of challenge from China declined as dangers from other quarters mounted. The Pew Research Center charted a 13 percent decline (by January 2003) in the number of respondents concerned about keeping a "close watch" on China. As Americans became more preoccupied with terrorism and weapons of mass destruction, President Bush convincingly re-established a sense of hierarchy among U.S. foreign policy goals--with "security" as the touchstone--that could discipline his own fractious administration (to some extent), Congress and the domestic interest groups that previously had pulled Washington's China policy from pillar to post. Beijing, in turn, perceived a window of opportunity to pursue its goals for domestic development without excessive threat from the United States. The United States increasingly had other, more compelling security problems, ranging from Al-Qaeda's global network, to Afghanistan, Iraq, Iran and North Korea.

Having seen the second plane hit the South Tower of the World Trade Center live on CNN on September 11, then-President Jiang Zemin quickly seized the opportunity to make contact with President Bush. Like Russia's Vladimir Putin, Jiang saw in the tragedy a chance to improve cooperation with Washington. Since 9/11, Beijing has supported UN anti-terror resolutions (including an affirmative vote for UN Resolution 1441 in November 2002 concerning Iraq), encouraged Pakistan's President Musharraf to cooperate with Washington on the war in Afghanistan, pledged $150 million (though less has been delivered) to the rebuilding effort in Afghanistan, and provided tactically significant information helpful to the U.S. war effort there. Moreover, Beijing has not been disruptive despite its concerns regarding the growing U.S. ground presence in Central Asia and Japan's broadening security role--a role dramatically expanded in July 2003 when the Japanese Diet voted to send forces to assist in Iraq's reconstruction. Finally, months prior to the U.S. invasion of Iraq, Jiang let Bush know that China would not exercise its veto in the UN Security Council, regardless of its public rhetoric.

President Bush has responded constructively. Unlike Bill Clinton, who did not travel to China in his first term and eschewed a genuine summit with Jiang until his second term, Bush met President Jiang four times in the 13 months following September 11--twice in China, once at his Texas ranch, and shortly thereafter at the Los Cabos, Mexico meeting of the Asia-Pacific Economic Cooperation (APEC). More recently, during the ongoing transition from Jiang Zemin to Hu Jintao in 2002-03, President Bush met Hu on three different continents: in China, in the United States and, most recently, in Europe at the G-8 summit in Evian, where he invited the new Chinese president to visit the United States in the near future. All in all, Hu Jintao's gravitas at home has not been hurt by his treatment by Washington.

Turning to Taiwan, President Bush and his subordinates have publicly and privately reassured the Chinese leadership that the administration "does not support" (indeed they sometimes said they "opposed") unilateral moves by Taipei toward Taiwan independence. This message gained credibility in Beijing's eyes shortly after the October 2002 Crawford Summit for two reasons: First, when meeting a Taiwan dignitary in October 2002 at the Los Cabos APEC meeting, President Bush in effect rebuked Taiwan President Chen Shui-bian for roiling the waters of the Taiwan Strait with his "one country on each side of the Strait" comment of the preceding August. As one PRC analyst put it: "The United States has made it clear that it would not support Taiwan independence or 'one side, one country', in sharp contrast to the assertion made by Bush as soon as he assumed office." Second, Beijing seems reassured by the fact that America is looking for no additional trouble in the Taiwan Strait, given its problems elsewhere, and expects Taipei to show restraint.

North Korea's increasingly destabilizing behavior (including its October 2002 statement that it had been conducting a uranium enrichment program in violation of the 1994 Agreed Framework and other undertakings, its January 2003 declaration of withdrawal from the Non-Proliferation Treaty and its April 2003 threats to conduct a "physical demonstration" of a weapon or export nuclear-related materials) also have fostered more robust U.S.-China security cooperation. As Kim Jongil's regime has become progressively more bellicose, the relationship between Pyongyang and Beijing (previously described as "close as lips and teeth") has become one in which Chinese teeth increasingly are willing to bite North Korean lips. One bite occurred in early 2003, when Beijing temporarily interrupted the oil flow to North Korea. Another occurred in March when China's then Vice-Premier, Qian Qichen, traveled to the North Korea to urge Pyongyang to be less incendiary and engage in talks with Washington--the North did so in Beijing this April. And, yet another occurred when Chinese Vice Foreign Minister Dai Bingguo personally delivered a letter from President Hu to Kim Jong-il in mid-July 2003.

here has been another development that has contributed to making U.S.-China relations more "normal." Increasingly, Washington's relations with traditional allies such as France, Germany and Turkey have been strained, in part due to disagreements over how to legitimize and prosecute specific battles in the war on terror, how to rebuild failed states after conflicts with the United States and how to counter WMD proliferation most effectively. Moreover, some U.S. allies chafe at Washington's dominance and willingness to circumvent multilateral organizations (for example, the UN Security Council or NATO). There is friction with Tokyo and Seoul over regional security strategies and the basing of U.S. military forces on their soil--one could reasonably call the U.S.-ROK alliance "troubled." The net of all this is that the disagreements with China no longer stand out so starkly for Americans.

The way in which both China and America now discuss their relationship reflects these developments. In his January 29, 2002 State of the Union Address, President Bush said, "Our first priority must always be the security of our nation.... In this moment of opportunity, a common danger is erasing old rivalries. America is working with Russia and China and India, in ways we have never before, to achieve peace and prosperity." And in China, there also is new thinking percolating in intellectual circles that may increasingly influence elite views. Tsinghua University Professor Pang Zhongying put it this way:

We can well imagine what kind of situation
would occur if the United States were not present
in Asia. Japanese rearmament would certainly
be an outcome.... Therefore, China
needs to consider seriously the question of
what role America should play in Asian security.
This leads to the next question: how might
a future-oriented security cooperation
between Beijing and Washington play a role in
fixing China's security deficit problem?²

The Stealth Strengthening of Economic and Cultural Ties

AT THE SAME time that the security rationale for the relationship has become more robust in both nations, the economic and cultural legs of the Sino-American relationship have continually strengthened in ways that few Americans fully appreciate. As if by stealth, globalization and interdependence have made the United States and China increasingly important to one another, especially against the backdrop of anemic economic growth elsewhere. The United States is China's largest export market, sucking up over one-third of China's exports (by U.S. count), and China is the number four trade partner for the United States. In the first four months of 2003, total bilateral U.S.-China trade grew about 30 percent over the same period a year earlier, with U.S. exports to China growing 36.6 percent and Chinese exports to the United States expanding about 30 percent. This trade performance contrasts with relatively anemic growth in American exports to the European Community and Japan, which, taken together, rose only about 3 percent in the first four months of 2003 (in comparison to the same period in 2002), though the absolute size of these exports is much larger than those to the PRC. The U.S. trade deficit with China is a challenge discussed below that could become a prominent issue in U.S. electoral politics in 2004.

While not overstating the case, the information technology industry is one area in which growing Sino-American interdependence is made manifest. American information products increasingly are being manufactured in China. By 2000, the PRC had become the world's third largest producer of information hardware, behind only the United States and Japan. Although there is debate over what really should be considered "high-tech", the American Electronics Association reported in its "Tech Trade Update 2003", published this past June, that China overtook Mexico and Japan in 2002 as the number one source of such products.

With respect to human resources, a 1999 study by AnnaLee Saxenian, distributed by the Public Policy Institute of California, reported that "Chinese or Indian immigrants led 24 percent of all Silicon Valley firms", and that "foreign-owned firms accounted for 14 percent of the region's total employment." The National Science Foundation estimated in a 2001 report that "China is among the top six countries of origin of foreign-born scientists and engineers employed in the United States." Saxenian concluded:

[T]he 'brain drain' from developing countries
such as India and China has been transformed
into a more complex, two-way process of
'brain circulation' linking Silicon Valley to
select urban centers in India and China....
[T]he professional and business links between
California and these distant regional
economies are developing rapidly.

This interdependence raises legitimate questions in American society and government. How concerned, for example, should the United States be about dependence on China for key advanced technology products and personnel? Similarly, are the human, technology and capital flows that are the lifeblood of interdependence helpful or harmful to future U.S. economic competitiveness?

Then there is the relentlessly growing bilateral U.S.-China trade deficit. China's surplus with America reached a little over $103 billion in 2002, about 45 percent more than Japan's trade surplus with the United States that year. In the first quarter of 2003, the U.S. trade deficit with China was 79 percent larger than that for the comparable period of the prior year--and 52 percent more than Japan's trade surplus with the United States during the first quarter of the preceding year. The trade deficit has combined with ongoing and serious intellectual property violations (including the apparent lifting of an automobile design) and the sheer growing competitive power of industry on the mainland (one newspaper headline screamed "Computer Giant in China Sets Sights on U.S.") to create the potential for congressional reaction and an electoral issue. The National Association of Manufacturers has defined rising health care costs and China as its two biggest headaches.

Turning to financial power, China is the world's second largest holder of foreign exchange reserves (after Japan), with about $346 billion (as of the end of June 2003). Where this money is parked is increasingly important. In September of 2002, then-Minister of Finance Xiang Huaicheng told me that the PRC's current holdings of U.S. debt instruments (corporate, state, municipal and U.S. Treasury) were worth about $150 billion--and this figure excluded disguised private PRC citizen holdings and Chinese foreign direct investment in the United States. China's ownership of U.S. Treasury securities is also growing. As of November 2002, China held $96.8 billion and, by January 2003, increased those holdings to $105.1 billion (nearly 9 percent of all foreign holdings of U.S. Treasury securities). By April 2003, China reportedly held $119.4 billion of U.S. Treasury securities.

It is not just America that benefits from growing interdependence with China. Domestic employment generation is a paramount concern to Beijing. The combined effects of WTO entry, population expansion, urbanization and dismemberment of the state-dominated economic system require the creation of hundreds of millions of jobs over the next few years in the PRC. For Chinese leaders and citizens alike, it is more than a footnote that U.S. firms are becoming a rapidly growing, though still modest, source of employment in their country. As of 2002, for example, Avon had 20,000 sales representatives in China, while Motorola had 13,000 employees and the Coca-Cola network supported more than 414,000 Chinese jobs. Wal-Mart is China's eighth-largest trade partner.

Large and growing cultural and educational ties reinforce the bilateral relationship considerably. Not only is the number of Americans studying the Chinese language modestly rising (but still inadequate), but large numbers of Chinese are also studying and receiving training in America, not to mention the West more broadly (63,211 in 2001-02). The People's Daily (in its February 3, 2003 online edition) reported, "81 percent of the members of the Chinese Academy of Sciences and 54 percent of the members of the Chinese Academy of Engineering are returned overseas students." Many of these students become financial and intellectual bridges linking the two societies together. One such example is the American company Asiainfo, founded by Chinese students who were educated in the United States. In 1995, it won a contract to expand China's largest commercial Internet network, and by 1997 "controlled more than 70 percent of China's Internet node servers, with points in all 31 provinces and all autonomous regional capitals and self-governing cities."³

Chinese officials and intellectuals frequently and explicitly acknowledge this economic interdependence. It is commonplace at meetings on Sino-American relations convened in the PRC to begin with the host acknowledging that China's economic well-being has become tightly intertwined with American prosperity. The fashion among Chinese intellectuals is to talk about "win-win", rather than "zero-sum", thinking. Important as they are, however, stronger security, economic and cultural foundations are not the whole story. Despite post-9/11 developments, each nation also remains strategically ambivalent about the other.

Mutual Strategic Apprehension and Uneasy Security Cooperation

WHEN THE history of this period is written in ink instead of pencil, it may be that the present will be remembered as the moment when China jettisoned the chip on its collective shoulder, the victim mentality engendered by the "hundred-plus years of humiliation", and threw its lot in with the international system as a maintainer, not a disrupter. Pang Zhongying, the earlier-mentioned Tsinghua University professor, echoed sentiments expressed by President Jiang Zemin in 2001:

China has parted with the period of humiliating
history. We have placed the humiliating
history on one side. We can say the Chinese
people have stood up for the second time....
China always feels that it has been humiliate
and that the world order is very unfair....
But now we have entered an order and joined
a world system not initiated by China.

In late 2001, China entered the WTO, the last major international governmental organization of which it was not a member. That same year, Beijing was selected as the host city for the 2008 Olympic Games, and Shanghai was chosen as the site for the 2010 World Expo. Finally, the 2002 State of the Union Address and the National Security Strategy of the United States (NSS) both explicitly recognized China as one of the great powers and acknowledged Chinese cooperation with America in a global struggle against the forces of chaos.

Yet, just as China seems poised to join the world order with dignity, equality and U.S. acceptance, some U.S. actions after 9/11 and many aspects of the September 2002 NSS raise a troubling question for the PRC. Is America in the process of abandoning much of what constitutes the post-World War II order? Just as China was walking in the front door of international organizations, was the United States exiting through the back door? Many Chinese are worried about an America bent on hegemony and which has no intention of allowing its power to be restrained or regulated as part of an international order. Beijing, for instance, worries that Washington is organizing a counter-proliferation embargo of North Korea without UN sanction.

Four elements of the NSS are particularly troubling to the Chinese. For starters, deterrence has been knocked off the strategic pedestal it occupied throughout the Cold War. Pre-emption (or, more accurately, preventive war) has become a prominent feature of declared U.S. security policy. As the NSS put it,

The inability to deter a potential attacker, the
immediacy of today's threats, and the magnitude
of potential harm ... do not permit that
option [sole reliance on deterrence]. We cannot
let our enemies strike first.

This raises a host of questions. When is a threat judged to be imminent enough to justify pre-emption? Is intelligence information generally adequate to provide the confidence required to make such judgments? Who does the judging? Where do traditional concepts of sovereignty fit? And, how should the right to self-defense be interpreted in current circumstances?

A second troubling aspect for Beijing is that the NSS proclaims a "distinctly American internationalism", proclaiming further that "the aim of this strategy is to help make the world not just safer but better." The strategy's goals are political and economic, as well as more narrowly security, in character. The prospect of diluting the protection offered by sovereignty in the name of advancing political liberalization and market economics is, needless to say, troubling to Beijing.

Another disquieting aspect of the emerging U.S. security strategy relates to international organizations and regimes. From Beijing's perspective, Washington displays a troubling pragmatism with regard to these institutions. Take, for example, the use of the phrase "coalitions of the willing." This concept (and recent U.S. behavior) suggest a smorgasbord approach to international order, where Washington will identify and select the organizations, treaties, regimes or countries that support its objective of the moment. The United States operated under the signboard of the UN in Bosnia, NATO in Kosovo and principally with Britain in Iraq. This suggests to China that its pivotal role in some international organizations (particularly the UN) may be short-circuited by an opportunistic U.S. policy backed up with enormous military and economic power. There is a dissonance for the Chinese when Washington tells Beijing to institutionalize domestically even as Washington seems to be deinstitutionalizing internationally. "The U.S.", as one very senior Chinese diplomat put it to me recently, "calls for democracy within countries and is antidemocratic in its behavior abroad."

Finally, the United States unmistakably declares its intention to defend its solo position atop the pyramid of interstate power. As the NSS puts it: "Our forces will be strong enough to dissuade potential adversaries from pursuing a military build-up in hopes of surpassing, or equaling, the power of the United States."

For its part, despite the post-9/11 rapprochement, America's strategic apprehensions about China
include concerns about whether China will be a cooperative actor in the strategy outlined above and whether the Chinese government will do all it can to stem the spread of WMD and the means of their delivery.

There are positive signs. Certainly, China has not shown interest in taking the lead in opposing the United States in areas removed from its immediate region and border, preferring to let Russia and America's traditional allies do the heavy lifting with respect to these "secondary" issues. Iraq is a case in point. Since August 2002, Chinese officials and scholars were telling me privately, "For China, Iraq is not a very big issue", an observation supported by the fact that only 0.6 percent of China's oil imports were from Iraq. Beijing would not sacrifice Sino-American cooperation in order to directly confront Washington over Baghdad, though it was also unwilling to explicitly endorse the U.S. use of force in Iraq in a second UN resolution. Beijing's interests were best served when the second resolution was withdrawn without a vote.

With respect to WMD and counter-proliferation, China is implementing more vigorous domestic export control measures, but there will be leaks and occasional intentional transfers that will alarm Washington and cause conflict. Demonstrating both the risks of the relationship as well as how far it has come, in May 2003, the U.S. Department of State placed export sanctions worth about $200 million on North China Industries (NORINCO) for alleged exports of missile technology to Iran. Beijing issued a pro-forma protest, but that was all. The relationship has reached a point where friction in one corner need not jeopardize all.

Yet, Beijing and Washington may clash over how to deal with a problem even when they both agree that there is a challenge that requires cooperation. The current North Korean nuclear challenge is a case in point. There is little doubt that both the United States and China agree that Pyongyang should not possess nuclear weapons. In a January 10, 2003 telephone call between Bush and Jiang, the then-president of China made this point. The problems come not in this shared objective, but in the relative priority each attaches to it and the means by which each side believes the goal can best be attained. (Moreover, until possibly recently, Beijing seemed to believe that Kim Jong-il was not as far along in his nuclear projects as U.S. intelligence seemed to think.) For Washington, having no nuclear weapons on the Korean Peninsula is its first, second and third priority.

This is not to say that preventing North Korea's acquisition of WMD is not important to Beijing. Indeed, this objective may be of growing importance as PRC leaders contemplate the effects on Chinese security of a proliferation domino process that could spread from North to South Korea, through Japan, and possibly on to Taiwan. Moreover, North Korea's threats in the April 2003 three-way meeting with China and the United States greatly heightened the PRC's concerns and increased its willingness to consider a broader range of ways to bring Pyongyang onto the non-nuclear path.

Nonetheless, preventing either war or socio-political collapse in North Korea remains a very high priority for Beijing. Either outcome would spew untold numbers of refugees into China and eliminate an historically valuable buffer. Moreover, South Korea, a state with which the PRC is seeking to safeguard and improve its increasingly important diplomatic and economic ties, is also opposed to a breakdown in the North induced by the application of external pressure. Also, the Chinese claim to have other sources of information about North Korea that lead them to a different interpretation of Pyongyang's behavior. China contends that the best way to halt the nuclear program is for Washington to negotiate directly with Kim, providing Pyongyang the security guarantee and economic wherewithal that Beijing suspects is the goal of North Korea's threats in the first place. In contrast, many in Washington quite plausibly suspect that Pyongyang is holding out the mirage of productive negotiations long enough to acquire a major nuclear deterrent, a course from which it cannot be peacefully deflected.

In sum, the tools that the United States appears willing to contemplate employing to achieve its nonproliferation priority (sanctions, embargoes and the threat of force) would, Beijing believes, compromise a central Chinese security objective. What Beijing fears the most is just what some persons in the Bush Administration say they want: "The Chinese could cut them off, and in six months North Korea would be in dire circumstances." One senior Chinese businessperson explained the PRC's dilemma to me in March 2003 as follows: "We can either send food to North Korea or they will send refugees to us--either way, we feed them. It is more convenient to feed them in North Korea than in China."

Looking over the long term, PRC leaders tend to believe that the most enduring approach to producing change in North Korea is to encourage it to traverse the same route of economic and social reform that China itself has traveled in the last 25 years. Even a notable skeptic of China's role in Asian security, Deputy Secretary of Defense Paul Wolfowitz, had the following to say in Singapore on May 31, 2003:

[U]nder the leadership of Deng Xiaoping,
China pointed the way for how a failed communist
system can undertake a process of
reform without collapsing. That is the course
North Korea needs to pursue if it is to avoid
the kind of collapse that is viewed with apprehension
throughout the region.

The larger point to be made here is that even when Beijing and Washington agree on a policy objective (such as no nuclear weapons on the Korean Peninsula), cooperation can prove difficult because of differing priorities and conflicting assessments.

Where Do We Go From Here?

FOUR FACTORS have provided a stronger and more balanced foundation for U.S.-China relations than has existed since 1989: the necessities of the war on terror, the binding forces of globalization, Chinese preoccupation with domestic challenges and Beijing's growing economic and international influence. Nevertheless, Beijing and Washington remain strategically ambivalent about one another. All of this has resulted in a relationship not so different from that which Washington has with many of its allies (although human rights in the PRC remain a singular concern to Americans, and Taiwan remains a potential flashpoint).

Beijing, however, is reticent to confront Washington directly. The guiding impulse for Chinese policy remains the 28 carefully selected characters that Deng Xiaoping uttered not long after June 4, 1989, as China faced pressure and sanctions from around the world: "adopt a sober perspective; maintain a stable posture; be composed; conserve your strength and conceal your resources; don't aspire to be the head; do something eventually." This is a China with which America can work productively. Nonetheless, Deng's formulation leaves U.S. policymakers worried both about passivity in the short run and assertiveness in the long run.

In these current circumstances, the United States and China can, and should, advance their mutual interests in five areas:

* North Korea's drive for nuclear weapons is the critical security concern in East Asia for the United States. It is a bell-wether issue that requires even greater Sino-American cooperation than the significant level already achieved. The PRC played a key role by bringing the United States and North Korea together in Beijing in April 2003 and by its subsequent efforts to do so again. As of this writing, a second round of talks has been scheduled for late-August in Beijing, this time involving not only the United States, the PRC and North Korea, but South Korea, Japan and Russia as well. Beijing has sought to prod both Washington and Pyongyang to talk and has encouraged North Korea to do so in a "multilateral" setting. Beijing has used a mix of diplomatic and economic inducements and sanctions in its dealings with Pyongyang, reflecting the PRC's increasing alarm at North Korea's behavior. If the Bush Administration can develop a strategy acceptable to South Korea that holds out the prospect of both inducements and sanctions for Kim Jong-il, it may well win more support from Beijing. However, if talks with North Korea fail to occur or fail to deflect Pyongyang from its present course, Washington will expect more muscular action from the PRC. This will be a genuine test of Sino-American relations.

* With respect to Taiwan and cross-Strait relations, Jiang Zemin hinted at the October 2002 Crawford summit that Beijing might remove some of its missiles from their threatening postures near Taiwan were the United States to show parallel restraint in its military links with Taipei. This suggestion has been reiterated to visiting Americans by several Chinese leaders. Without endorsing this vague proposal, it provides Washington an opening for a dialogue with Beijing that should be seized. Relieved of cross-Strait militarization, Washington, Beijing and Taipei could foster greater economic and cultural cooperation.

The chief concerns of U.S. policy under the 1979 Taiwan Relations Act, and the Shanghai Communique seven years earlier, have been the twin concepts of the level of tension in the Taiwan Strait and a "peaceful resolution" of the Taiwan issue. For the first time in the last 54 years, China's leaders have, in effect, offered to discuss their force dispositions in proximity to the island. The White House has been largely unresponsive. Although the administration obviously has other things on its mind, it must be able to walk and chew gum at the same time.
Silence in the face of a possibly meaningful Chinese proposal certainly does not encourage Beijing's new leaders to assume risks on new initiatives.

* The U.S. trade deficit with China is an important component of America's mounting global trade deficit. Little recognized, but critically important, is the fact that China has a small trade surplus with the world as a whole and an even smaller global current account surplus, all of which suggest that the problem is more to be found in the low rate of American savings than in unfair PRC trade practices, though those do exist.

All this notwithstanding, as the United States enters the 2004 general election season, Beijing's large bilateral trade surplus will likely become a political target of opportunity. Some in the United States are calling for Beijing to revalue the Chinese currency (the RMB) to make PRC exports less competitive. China is unlikely to do so anytime soon. Instead, the Bush Administration should continue to follow Secretary of the Treasury John Snow's lead in encouraging Beijing to progressively expand the band within which the RMB trades. This is consistent with encouraging the PRC to increasingly use market mechanisms rather than administrative fiats, and it would avoid an essentially politically determined revaluation that would shock relative prices in the international supply chain. At this point, a more market-determined RMB almost certainly would appreciate. Washington, however, should be careful about what it hopes for. If the RMB appreciates, it may affect Beijing's willingness to hold U.S. debt instruments, potentially affecting America's interest rates. Beyond this, Beijing would be well advised to drop some of its impediments to American exports, with those in the agricultural sector being among the most important.

* France made a far-sighted move by inviting China's new president, Hu Jintao, to attend the Evian G-8 meeting in June 2003. With the United States hosting the next G-8 meeting, Washington should be seeking ways to upgrade China's role in the organization, thereby giving the PRC a further stake in the international system. One well-connected Chinese scholar put it this way at a recent meeting: "It is possible for China to join the G-8, and if the United States makes the offer that would be helpful." While some Americans and some in other G-8 countries might argue that not being a democracy makes China's full membership premature, China's mortaring global economic role fits well with the economic origins of the organization. A way should be found to involve China meaningfully in the work of the G-8.

* The understandable tightening up of the U.S. visa issuance process is having an unintended consequence as it is currently being implemented: it disrupts the flow of Chinese students and businesspersons because inadequate consular resources are being provided to U.S. missions abroad. While comprehensive figures are not yet available, a great quantity of anecdotal information supports this contention.⁴ To paraphrase one astute European observer, "The U.S. is killing itself with its visa policies; education [is one of America's] greatest assets. [Our country] is happy to fill the vacuum...." Washington needs to protect this channel of American influence and source of domestic economic and intellectual dynamism, even as it protects the security of its citizens.

In short, the United States and China have arrived at a juncture in bilateral relations that is nearly as normal as the relations between two great powers get. There is genuine potential in this moment. As they try to seize it, Americans must balance the impulse to treat China as it is with the foresight to recognize China for what it may become.

¹Mearsheimer, The Tragedy of Great Power Politics (New York: W.W. Norton & Co., 2001), p. 4. Mearsheimer's perspective was echoed in the Pentagon's Quadrennial Defense Review, released in the fall of 2001, that described China as an emerging "military competitor with a formidable resource base" in East Asia.

²Pang Zhongying, "Some Points on Understanding China's International Environment", In The National Interest, vol. 1, no. 6, October 23, 2002 (www.inthenationalinterest.com).

³Irene Wu, Johns Hopkins-SAIS dissertation draft, "Restructuring of China Telecom 1999 and 2002", April 25, 2003, pp. 19-20. Wu cites U.S. Department of State, "China: Creating Domestic Competition in Telecom", May 24, 1999.

⁴ See, for example, Wang Jisi, "A View From China", Foreign Policy (July/August 2003).

David M. Lampton is George and Sadie Hyman Professor and Director of China Studies at the School of Advanced International Studies, Johns Hopkins University. He also directs the Chinese Studies Program of The Nixon Center. This article was developed from the Shorenstein Lecture, delivered at Stanford University, February 28, 2003. A fully documented version of this article may be found at www.nationalinterest.org.

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