U.S., China and Thucydides

June 25, 2013 Topic: Global Governance Regions: ChinaUnited States

U.S., China and Thucydides

Mini Teaser: How can Washington and Beijing avoid typical patterns of distrust and fear?

by Author(s): Robert B. Zoellick

• All these adaptations need to be supported by deeper, more diverse and more liquid markets for savings, credit and investment—while ensuring safety, soundness and effective crisis management. China needs to shift from being a nation of savers with minimal returns to becoming a nation of investors who play a role in China’s private-sector development.

• Finally, China, the United States and others need better frameworks to encourage cross investment while managing national security and other sensitivities. 

In a sense, China’s twenty-first-century leaders can look to the logic of Deng Xiaoping and Zhu Rongji: employ the markets, rules, competition, opportunities and standards of the international economy to foster China’s structural reforms and advancement.

The United States also needs structural reforms—especially in pension and health-care systems, tax reform, public-private partnerships for infrastructure, and education connected to skills and jobs. U.S. entitlement programs now cost every man, woman and child in America $7,400 each year—more than China’s income per person.

China and the United States each have good, self-interested reasons to pursue structural reforms and global rebalancing. Yet cooperation can boost mutual prospects and the likelihood of success. Moreover, the effectiveness of Chinese and U.S. reforms will boost global economic conditions and enhance the likelihood of structural reforms elsewhere.

My sense is that the U.S.-Chinese economic dialogues—whether under the headings of “strategic,” joint commercial, G-20, APEC, WTO or other forums—have become too stilted, defensive and unimaginative.

China’s new growth agenda and America’s recovery offer an opportunity. Both parties need to explore win-win connections. Not all ideas will prove workable. But a new type of relationship could seek creative openings and solutions.

Moreover, as two major economic powers, developed and developing, the United States and China need to consider how their cooperation can catalyze improved regional and global systems.

For example, moves to open up China’s service sector—which are in China’s own interest—could be deployed to boost the service-sector liberalization negotiations in the World Trade Organization. The WTO Information Technology Agreement (ITA) in the 1990s proved to be a great boon to global sourcing, supply chains, logistics systems, innovation and consumers. WTO members are now discussing a second ITA to update the old product list and add services. China and the United States should be driving this effort. There are other opportunities, too, from trade-facilitation measures to rules for more open government procurement. Pressures will increase to clarify the rules of fair competition for state-owned enterprises. A few years ago, sovereign wealth funds demonstrated that steps toward increasing transparency and encouraging best practices could counter anxieties while improving performance.

The United States and China also need to be discussing the future international monetary system. That system has to adjust to both global shifts and the consequences of today’s extraordinary monetary policies. The world needs to be on watch for the risk of competitive currency devaluation. As China internationalizes the renminbi and moves toward an open capital account, a new era of great-power relations will require the major economies to manage the evolution toward a system of multiple reserve currencies.

China and the United States have experience and perspectives on development that could assist other countries—whether through natural-resource development, agriculture, expanded manufacturing and supply chains, service-sector development, infrastructure or investment. China and the United States should have common interests in inclusive growth, good governance, transparency and anticorruption, trade and avoiding boom-and-bust cycles. This new era could foster cooperation with multilateral institutions and private-sector networks.

Environmental topics need to be explored, too—from biodiversity and wildlife conservation to low-carbon development.

Indeed, if the United States and China are at odds on topics that require cooperation across national borders, the international system is unlikely to act effectively; conversely, if China and the United States can cooperate, even if just step by step, others are likely to join.

The economic agenda for a new type of great-power relationship could be extensive. Of course, there will be sensitivities and differences to manage, but the expanded network of economic ties—governmental, private, transnational and multilateral—can be a source of problem-solving ideas, creativity and even some cushion to absorb differences.

ON SECURITY issues, however, whether bilateral or multilateral, China and the United States do not have such a network. This gap can be traced in part to a structural difference. In China, the People’s Liberation Army (PLA) reports to the Central Military Commission, a party institution with only one or two civilians. Thus, China’s senior foreign-policy officials, up to the level of state councilor, usually aren’t able to intervene on security topics until after the PLA has acted and sometimes only after damage to China’s foreign relations has already occurred.

China does not have a national-security-council system to integrate security, foreign, defense, and even economic and political considerations. As a result, there is no institutional Chinese counterpart for what would elsewhere be described as “pol-mil” discussions (for political-military).

At times, China and the United States have had military-to-military exchanges, but these are not at the appropriate levels. And China turns the discussions off and on to register displeasure, inhibiting the in-depth exchanges and the trust that need to be forged. Moreover, a new type of great-power security relationship necessitates more than discussions among militaries.

Some Chinese officials and scholars recognize the need for a fuller integration of Chinese views on security and foreign-policy topics. The Chinese system might, for example, look to a member of the Politburo Standing Committee of the Chinese Communist Party (CCP) to pull together defense, foreign-policy, security and economic topics, drawing together the PLA, officials of the government and the Communist Party. Or the CCP leadership might rely on subcommittees.

However structured, a political-military discussion between China and the United States could supplement a renewed strategic dialogue. The current dialogue has taken up important topics, but too briefly, too infrequently and with limited engagement at the highest levels, where strategic decisions are likely to be made.

The most effective Sino-American strategic exchanges—Kissinger-Zhou, Brzezinski-Deng—have been small and involved many hours of conversation to develop a deeper understanding of worldviews, interests and conceptual frameworks.

A true high-level strategic discussion, including pol-mil dimensions, should foster a dialogue on historical perspectives, geographical considerations, economic dimensions, technological shifts, political constraints, perceptions of changing conditions, national interests and a search for mutual interests. It should also assist China and the United States to manage differences.

In such a dialogue, the United States should offer a clearer explanation why U.S. policies are not based on a “containment” strategy, as some Chinese seem to think. The United States should also explain its strategic concept of relations with China and why “hedging” policies by the United States and others are a reasonable reaction to worrisome Chinese behavior.

Importantly, the United States and China have mutual interests that they should at least understand and perhaps foster together.

For example, these interests might include:

• Freedom of the seas and maritime security, which are important for China’s international economic interests, regional stability and U.S. linkages, as a maritime and Pacific power, with Eurasia.

• Open skies and access to outer space, so as to facilitate movement of people, goods and information—which are important to our economies and security.

• Access to reasonably priced energy sources, including the development, transit and safe use of resources. This interest is served by security stability in the Persian Gulf, multiple energy sources and pipelines, sea-lane security, technological development and energy efficiency.

• Development of other resources, in conjunction with social and environmental safeguards, while managing disputes over territories and ownership.

• Establishing a sense of security for other partners in the Asia-Pacific region, so as to avoid destabilizing and potentially threatening military competition or miscalculation.

• Nonproliferation of weapons of mass destruction, especially to states or terrorists that will endanger regional and global peace and stability.

• Countering violent Islamic radical movements while encouraging Islamic leaders who seek peaceful development with respect for religious beliefs.

The identification of interests should be complemented by a sharing of assessments of threats to these interests and also perspectives on how to deal with the threats.

Yet these mutual interests—and even deep economic interdependence—could be overwhelmed by a failure to deal with differences in the Asia-Pacific region. The challenge for U.S. and Chinese leaders is to use global cooperation as an incentive to reduce regional friction, rather than to permit regional tensions to undermine global cooperation.

China has an interest in the security of its coastal approaches and in gaining influence in the western Pacific. The United States has a network of alliance and partner countries that value the stability and economic security provided by America’s presence. These alliance ties are important to America’s regional and global standing, which has reassured others. Therefore, China’s relations with some neighbors, including Japan, cannot be separated from U.S. relations with China or U.S. relations with its allies. At the same time, these U.S. partners—like the United States itself—value their economic, political and cultural ties to China.

TODAY, CHINA’S Asian allies are few, poor, unreliable and often isolated, while America’s allies are prosperous and expanding. If China’s assertion of influence is interpreted as a threat to others, China will inevitably evoke a counterreaction. To avoid creating its own encirclement, China has an interest in building ties with U.S. allies and friends, not in increasing their fears. The United States and China together have an interest in fostering regional integration, within a global system, without threats that weaken confidence or escalate tensions.

Image: Pullquote: The current dialogue has taken up important topics, but too briefly, too infrequently and with limited engagement at the highest levels, where strategic decisions are likely to be made.Essay Types: Essay