By Simon Reich:
President Obama arrived in Beijing Monday to participate in this week’s meeting of the Asia-Pacific Economic Cooperation (APEC) forum. He will have talks with China’s president Xi Jinping on the fringes of that forum this week.
It has been almost 18 months since the two men last met, a quite tumultuous period for both at home and a somewhat fractious one in terms of US-Sino relations.
18 months is a long time
President Xi has been at the forefront of efforts to institute far-reaching reforms at home, the latest of which was a carefully timed announcement of a landmark deal to coincide with the APEC meeting that will give global investors easier access to China’s $3.9 trillion stock market.
But while domestic criticism of Xi’s reforms has been as modulated as ever, the now new-ish regime has had to avoid upsetting the People Republic of China’s (PRC) delicate balancing act between its need for growth and endemic fear of the social dislocation that such growth may engender. China, we are often told, values stability above all else.
Nowhere has this tension been more evident than in the protests in Hong Kong. However polite and violence free, the PRC’s leadership is inevitably concerned that any disruptive influences could spread to the mainland and inspire a resurgence of demands for greater political representation.
President Obama, of course, has faced a challenging set of domestic issues and a cacophony of criticism, both from the newly resurgent Republicans and many Democrats who shy away from being associated with him.
Even the improving American jobs situation, steady growth figures and a buoyant stock market have failed to stem a poor assessment of the president, with his performance ratings mired in the low 40s. And the Middle East once again dominates the President’s foreign policy agenda, as the rumblings over “the Russian question” and fears about Ebola continue.
Charming the neighbors
Both countries are in the midst of a “charm offensive”.
China has been seeking to reassure its Asian neighbors about its regional goals. Efforts at rapprochement with Japan over the disputed Diaoyu/Senkaku islands seem to have resulted in a negotiated truce, even if there has been no resolution. Likewise, China’s signing of a liberalizing trade pact with South Korea, bringing sweeping cuts to tariffs, has been widely applauded. The APEC announcement of its support for a Free Trade Area of the Asia-Pacific (FTAAP) suggests Xi is winning this offensive. All three deals indicate that moderate heads are prevailing in a heavily armed region often seen as the most likely candidate for a catastrophic interstate war.
President Obama, of course, has spent the last 18 months engaged in his own charm offensive. He has attempted to assuage America’s European allies in the aftermath of the damaging NSA revelations, and to ensure that key partners in the Middle East align with the US in the conflict with the Islamic State. In Asia, the US is currently negotiating a separate Trans-Pacific Partnership (TPP) – a rival to the FTAAP that excludes China.
Yet many of these issues will be put aside for a short while as the two leaders meet.
US-China: a special relationship
Certainly, our historic trade and military ties to Europe have led to many describing the US as “a European nation”.
But if Martians were to land on earth and objectively study America’s foreign policy interests, our alien visitors might soon conclude that Asia, and China in particular, is America’s most important bilateral relationship. They might scoff at America’s obsession with developments in the Middle East, all the more so as our dependence on that region’s oil declines. Indeed, events in the new century have tilted America’s perspective westward – and with it what President Obama eventually termed the American “rebalancing towards Asia” that officially commenced in 2011.
America and China share much in common. They have never been more economically intertwined, and arguably in many ways never before more vulnerable to each other. Their global current account balances – critical to the health of the global economy – have narrowed. But America’s bilateral trade imbalance with China remains stubbornly large and continues to grow.
The world’s two largest national economies also have the world’s two largest military budgets. And although the US official military budget dwarfs China’s there are still plenty of factors to keep American generals up at night. The PRC is continually seeking ways to offset America’s superior military technology. And it remains unclear just how big its military expenditure actually is.
Noteworthy in the expansion of China’s power, of course, is the massive growth in its economy over the last two decades. After all, this is a country where analysts consider a slowdown to a possible 7% growth rate next year as worrisome. But this concern was emphatically reinforced by the effective way that most Asian nations avoided the worst effects of the Great Recession, while the economies of the US and Europe struggled.
There has also, however, been increased friction with the PRC concerning its territorial claims over large tracts of the South China Sea, its unilateral declaration of an Air Defense Identification Zone in the East China Sea and Beijing’s disconcerting tendency to stick to the principle of sovereignty in coalescing with Russia, and against the US, at the United Nations.
All told then, America has a sticky and complicated relationship with China. We badly need each other but cannot find a way to exist in a state of domestic bliss.
Contradictory views on the American side
This is by no means entirely the fault of the Chinese. The fundamental American problem is that there are at least two contending views of China among America’s policy makers, academics and military. The US tends to pursue each track simultaneously: the Chinese must be either confounded or amused by the inherent contradictions in US policy.
The first and often most prominent is the American view of the Chinese as predators who seek territorial expansion and economic domination. According to this view the Chinese are “rising competitors” who make strenuous efforts to sign aid, trade and finance deals in Africa and Latin America – deals that supply China with much needed natural resources.
Chinese sponsorship of a new development bank to rival the World Bank is just the kind of evidence that proponents of this view regard as evidence that supports their views. The Chinese will stand on the sidelines, so this argument goes, watching the US fight wars that drain America’s resources until the Chinese feel comfortable mounting a challenge to the US’s position as the world’s dominant power.
This alarmist position does find its way – in moderated form – into such policy measures as a series of American bilateral military agreements with partners such as Indonesia and Australia. The American navy’s aircraft carriers, for example, patrol the Western Pacific as a reminder to the Chinese of America’s presence.
If that were our only strategy towards the Chinese, things would be simple. But people in Beijing must be confounded by the fact that we combine what the Chinese portray as an encirclement military strategy with a second economic one of engagement.
According to this more optimistic view, US military superiority will last for decades. So we buy China’s goods. We accept their purchases of our government bonds. We allow – even encourage – American firms to invest in their economy. We purchase shares in their companies such as Alibaba when they let us. And we even let them buy our most desirable real estate and send their children to elite US universities in record numbers. Yes, we do occasionally rebuff their attempts to buy firms that produce key national security assets and we “name and shame” them over their efforts at cyber-espionage and human rights abuses.
But when all is said and done, current US policy and its two – sometimes contradictory – prongs is still a pretty ambivalent way to treat a country that minimally obstructs the US in the pursuit of its goals and is a potentially major adversary.
The American wager on China
So is the US confused? Is it a case of the left hand not knowing what the right hand is doing? Or is there some greater logic afoot in this game of sticks and carrots, of push and pull, one that predates the Obama administration?
Since Richard Nixon went to China in the 1970s, the United States has sought the opening of the Chinese economy to the West. President Clinton reinforced that effort with his support for China’s entry to the World Trade Organization and his signing of a major trade bill with China in 1999.
Clinton made a big bet. It is one deeply embedded in American theories of political development dating back over five decades: that capitalism, and with it economic development, will create a middle class who will demand democratic political representation. This was the way that democracy evolved in the UK and the US, and the American presidents of the last five decades – from Reagan to Obama – have believed it is true of China. Give China the means to develop economically and, eventually, and it will join the list of democratic, peaceful nations.
To date, the leadership of the PRC has proven stubbornly resistant to that pattern. China’s preference for authoritarian capitalism has been effective and remained peaceful. There is no evidence to support the alarmist view that China wants to change the economic rules or military balance of a system from which, at this point, it is the world’s greatest beneficiary. But there is equally no doubt that America’s leadership – Democrat and Republican – are doing their most to create a vibrant and wealthy Chinese middle class to foment change. They can only hope that this new middle class will enhance the prospects for political reform. This week’s meeting is just the latest episode in one of the unfolding, formative developments of the twenty-first century.