The China Challenge

February 14, 2020 Topic: Security Region: Asia Tags: ChinaMilitaryXi JinpingGeopoliticsTechnology

The China Challenge

The United States needs to compete with China within international institutions and country-by-country. It is hard to beat something with nothing. America should promote better ideas and practices and offer attractive partnerships, instead of retreating and bullying.

THE AMERCAN political class has finally come up with a bipartisan policy: denouncing China. After three years of fulmination, injurious tariffs, and costly Chinese retaliation, the Trump administration announced that China will buy more products, although no one is sure how the pledges, with Chinese caveats, will work out. Each side can rely on its own statistics. China also agreed to improve policies in a few other areas that are in its interest, although with many gaps. In return, the United States will, for at least awhile, hold off on more self-defeating taxes on imports. This package is “Phase One.” “Phase Two” is, well… to come later.

What is the result of Donald Trump’s deal-making? According to Chad Bown of the Peterson Institute for International Economics, Trump’s tariffs will still cover almost two-thirds of all U.S. imports from China, with an average rate of 19.3 percent, compared to 3.0 percent before. Most of the Chinese goods are intermediate products, so Trump’s taxes just raise costs for American producers. China’s retaliatory tariffs target almost 57 percent of U.S. exports, with an average tariff of 20.5 percent, up from 8 percent pre-Trump. China, unlike the United States, has been lowering tariffs and trade barriers with the rest of the world.

This deal pretends to be a China policy. As Evan Feigenbaum of the Carnegie Endowment first pointed out, the United States has an attitude toward China, not a policy. America has been wasting time, squandering international capital, and failing to achieve real results.

In describing effective diplomacy, Alexander Hamilton once counseled, “mildness in the manner, firmness in the thing.” “Strut is good for nothing,” advised America’s first practitioner of economic statecraft. Instead, Hamilton recommended “combin[ing] energy with moderation.” Or as James Baker, my former boss at Treasury, the State Department, and the White House, would say, “Pick your shots” and “Get things done.”

A realistic U.S. policy should begin with an honest accounting of what past work with China has accomplished. Then Americans must recognize China’s current two-track approach to the international system. To focus its efforts, Washington should identify the particular frustrations and fears that have formed the new confrontational attitude. Finally, the United States can determine how best to achieve practical results and strategic advantage over different timeframes.

ALMOST FIFTEEN years ago, I gave a speech to the National Committee on U.S.-China Relations titled: “Whither China: From Membership to Responsibility?” The speech grew out of the first of the twenty-first-century strategic dialogues, which I conducted with Dai Bingguo, who rose to become China’s State Councilor for foreign relations. I was replying to a seminal article in Foreign Affairs, “China’s Peaceful Rise to Great Power Status,” by Zheng Bijian, a senior adviser to China’s leaders beginning with Deng Xiaoping.

By the time of my speech, seven U.S. presidents from both parties had worked for over thirty years to integrate a poor and economically-isolated China into the international system that America had designed and led.

China’s leaders and its hard-working people had pursued an incredible modernization within an international system that had enabled China’s success. By 2005, I pointed out, China had emerged from seclusion and joined the world—including the United Nations Security Council, World Trade Organization (WTO), International Monetary Fund (IMF), and World Bank. From agreements on ozone depletion to nuclear weapons, China had become a player at the table.

But having largely accomplished the aim of integrating China, the question for the United States, I explained back then, concerned Beijing’s conduct: “How will China use its influence?” I urged China to look beyond membership in the international system “to become a responsible stakeholder in that system.”

The speech stressed the “norms,” not just the “forms,” of international integration. I pointed out that many countries hoped China would pursue a “peaceful rise,” but that none would bet their future on it. I warned that the United States would not be able to sustain the open international economic order—and domestic support necessary for that regime—unless China cooperated in sharing responsibilities and using its power constructively.

Some commentators later treated my call as some kind of a concession—though it is hard to understand why the United States would not have wanted China to assume more responsibilities within a U.S.-led system, especially with the implicit signal that the United States would be the umpire of China’s choices. I suspect that some didn’t like that I combined my urging of responsible action with a tone of respect for China. And my idea opened the door to Chinese views and suggestions for addressing common challenges.

My choice of words also led to an amusing irony: It turned out that the Chinese struggled to translate the term “stakeholder.” The uncertainty about the diplomatic implications of the word prompted a useful debate within China about the meaning of the U.S. idea—and stirring debate is a result dear to all speechwriters.

To make such a policy effective, U.S. officials needed to remain in close touch with developments in China and the wider region—with the help of allies and private sector partners. American policy needed to work the details as well as discuss strategy. We used to call this diplomacy.

TODAY’S LOGIC of constant confrontation with China rejects the approach I had outlined. It rejects the idea that China can play a constructive role within the system that America constructed. It rejects the idea that China can make contributions. It even rejects the idea that China can, or even would, act in ways that complement U.S. interests.

Be aware: If U.S. policy assumes China cannot do any of those things within the system America designed, then the United States will, in effect, be prodding China into championing a parallel, separate system, with very different rules.

I understand many of today’s complaints, but we are at serious risk of losing sight of American aims and how best to achieve them. One of the founding principles of constant confrontation is an assumption that cooperation with China failed. This is the premise that underpins the Trump administration’s 2017 National Security Strategy.

Let us test that assumption.

China was once an outright enemy of the United States, sponsoring revolutions, spreading chaos, and backing proxies, such as North Korea and North Vietnam, which were at war with America. Today, we are strategic competitors, but China moderated and modified dangerous behaviors as Beijing worked to take part in the U.S.-led order.

Consider the world’s most dangerous weapons. Until the late 1980s, China was the world’s leading proliferator of nuclear weapons and missiles. Then China started to adjust to global norms governing exports of weapons of mass destruction and related technologies. It ceased nuclear tests in the 1990s and signed the Comprehensive Test Ban Treaty—while waiting for U.S. action before ratifying. China joined the Biological and Chemical Weapons Conventions. China now abides by the Missile Technology Control Regime as well.

Although China once had been a partner of Iran, it worked with the United States to sanction and halt Iran’s nuclear program. Although China fought against the United States in the Korean War, it has worked with Washington to press North Korea to freeze and reverse Pyongyang’s nuclear weapons program.

Between 2000 and 2018, China supported 182 of 190 UN Security Council resolutions imposing sanctions on states violating international rules, prodded by vigorous U.S. efforts.

China is the second-largest funder of the UN and UN peacekeeping missions; it has deployed 2,500 peacekeepers, more than all the other permanent five Security Council members combined. As Tom Christensen detailed in his book, The China Challenge, the United States spurred China to help end the genocide in Darfur, Sudan—a cause I identified in the 2005 speech.

China is the largest contributor to global growth. It cut its global current account surplus from about 10 percent of gdp to around zero—meaning that its demand has fueled worldwide expansion.

For the past fifteen years, China had been the fastest-growing destination for U.S. exports—until the Trump administration embraced protectionism and sparked worldwide retaliation. China no longer undervalues its exchange rate. It reduced reserves by about $1 trillion.

During the global financial crisis, China had the largest and quickest stimulus to counteract what could have been another depression. As former Secretary of the Treasury Hank Paulson related, when Russia allegedly approached China in 2008 with the idea of dumping dollars to harm the United States, China did not think this was a good idea.

Of course, many of these steps were in China’s self-interest, but they were helpful to others around the world, too. That is what effective economic integration has accomplished.

When I served at the World Bank, China cooperated closely with us. It made early repayments and contributions to the Bank’s International Development Association, which funds the poorest countries. China supported our initiatives—ranging from support for the rule of law and fighting corruption to open data systems and plans for climate change.

China advanced extra monies to add to the IMF’s financial capacity. China’s new Asian Infrastructure Investment Bank (AIIB) has embraced global standards for governance, procurement, and environmental practices; the AIIB co-finances World Bank and Asian Development Bank projects. My friends at Mercy Corps have worked with humanitarian counterparts in China to help victims of disasters.