A New China Strategy

Kenneth Lieberthal. Foreign Affairs. Volume 74, Issue 6. November/December 1995.

The people’s Republic of China has been in the news this year for a number of disturbing reasons. It has mounted muscular military actions to back its diplomacy regarding Taiwan and the South China Sea, allegedly transferred M-11 missile technology to Pakistan, sold nuclear technology to Iran, conducted nuclear weapons tests, and augmented its military budget when most other countries have been cutting back in the wake of the Cold War. It has continued the repression of political dissidents, displayed gross insensitivity in its handling of the U.N.-sponsored Fourth World Conference on Women and Nongovernmental Organization Forum, and become a prickly interlocutor at many international negotiations. One of the most important issues now confronting Asia is how an increasingly strong China will act in the region.

Beijing recognizes the importance of expanding its economic links with the rest of the world. The People’s Republic of China (P.R.C.) has sustained very rapid economic growth: since 1978, the per capita GDP of more than one-fifth of the globe’s population has roughly quadrupled. China’s foreign trade grew more than 16 percent per year from 1978 to 1994, with imports exceeding exports for all but six of those years. Concurrently, it has overseen huge changes in its economy, social development, and political dynamics.

These domestic changes, generally welcomed abroad, have nurtured many of the problems that now cause concern. They have vastly reduced the compliance of the country’s officials with Beijing’s directives, making it difficult for China’s leaders to implement international agreements they have signed on such issues as intellectual property rights, and they have made the military a far stronger domestic player, with potentially worrisome consequences abroad. They have undermined faith in communism, and China’s leaders have turned to nationalism to tighten discipline and maintain support. Most important, these changes have strengthened the P.R.C. to such an extent that it is becoming a major regional and global actor.

A strong China will inevitably present major challenges to the United States and the rest of the international system. In the past, the rise of a country to great power status has always forced realignment of the international system and has more than once led to war. One of America’s most important diplomatic challenges, therefore, is to try to integrate China into Asia and the global political system. America’s leverage, however, is modest. Given the limits on its will and resources, the United States must think through the type of China that will best serve its long-term interests in East Asian peace, stability, and open economic development, and then develop a strategy to promote those objectives. Especially during the 1990s, Washington has been sidetracked by short-term irritants and has failed to undertake this sort of analysis.

On balance, China is likely to act constructively in the future if it is secure, cohesive, reform-oriented, modernizing, stable, open to the outside world, and able to deal effectively with its problems. A secure and cohesive China will feel less need to build up its military and demonstrate its toughness, it will not confront the world with large refugee flows and internal warfare, and it will not invite external intervention because of political fragmentation. A reform-minded and modernizing China will continue to advance toward a market-driven system guided by law rather than by corrupt families and will better meet the material needs of its citizens, eventually creating a middle class with a moderating influence. An effectively governed China will be able to feed, clothe, and satisfy the basic needs of more than 1.2 billion human beings, thus relieving the international system of major potential burdens. A stable China requires a political system that is responsive enough to keep up with the rapid social change engendered by reform and modernization. An open China will be more prosperous, expose its citizens to international thinking and practices, and have strong incentives to participate constructively in the international system.

Many in the United States disagree with this vision. Some hope that a Soviet-type collapse will produce a liberal democratic polity and a reduced Chinese threat. Far more likely, however, is that political disintegration would result in large-scale bloodshed, famine, and substantial migration. The remnants of this nuclear power could become rogue proliferators of nuclear and other military technologies and weapons. In short, although a strong, dynamic China will challenge American patience, skill, and interests, a failed China would produce even less welcome problems.

The United States has pressing interests in a cooperative relationship with China that would inhibit Asia’s division into competing camps. Cooperative Sino-American relations ought, indeed, to permit America to maintain a robust, effective military force in Asia at relatively low cost and reduce the chances of North Korean nuclear development and destabilization of the Korean peninsula. Such a relationship would also enhance stability and prosperity across the Taiwan Strait and enable American businesses to participate in the modernization of the huge continental Chinese economy. Finally, cooperation would facilitate U.N. security operations in areas as diverse as Iraq and Bosnia and strengthen international agreements in such areas as trade, nuclear proliferation, and the environment.

Of course, should the People’s Republic hold together and continue its economic development, yet still perceive major threats to its security and internal stability, it will more likely become a nationalistic bully on the regional level and an obstructionist on global issues. Some in the United States anticipate these developments and are calling for America to prepare the ground for a policy of containment. But a containment strategy would represent a major policy failure. It would divide Asia (with few countries other than Vietnam likely to commit wholly to the U.S. position), strengthen narrow nationalisms, and reduce prosperity, security, and the prospects for peace throughout the region. It would be a costly strategy, all the more so because it could easily become the catchall justification for otherwise disparate decisions such as normalizing relations with Vietnam and selling F-16s to Indonesia. Worse, containment would likely enhance the positions of the most nationalistic, militaristic elements in China. It is in America’s interest, therefore, for the Clinton administration to reduce the emotionalism of the United States’ China policy, develop a strategic approach that focuses on the essentials of a mutually beneficial relationship, and build both public and congressional support to implement such a strategy.

Difficult Partner I: China

The nature and extent of the reforms under way in China almost assure continuing problems in Sino-American relations. The loosening of the monolithic structure that existed before the ascendancy of paramount leader Deng Xiaoping makes the P.R.C. attractive to investors and reformers and also explains many of the problems facing American policymakers.

Aspects of China’s current political and economic system complicate relations between the two countries. China’s economy is far from a free market; in addition, its legal framework is weak, its regulatory environment opaque, its military secretive, and its politics authoritarian. In virtually every one of these dimensions, although long-term trends appear headed in the right direction, in the short term China wants the world to accept its “Chinese characteristics” as part of the price of having the country join international councils. Though a new player, China wants to be a rule setter and not just a rule accepter.

Many Chinese intellectuals and officials, moreover, now believe that the world’s willingness to bend the rules to accommodate China has noticeably diminished during the 1990s. They see that the opportunity for easy progress, exemplified by World Bank actions in the 1980s that sought to jump-start reform of China’s economy and promote its growth, has shriveled, replaced by concerns about the consequences of a strong China. They maintain that China must now stand up for itself, often in prickly, narrowly nationalistic fashion, and push hard for the world to accept it on its own terms. While tactical compromises are possible, after nearly 150 years of humiliation at the hands of the great powers China must act in accordance with its new sense of strength, resolve, and self-confidence. Because the United States often takes the lead in arguing against accepting China’s violations of international standards, these intellectuals feel it is especially important to resist Washington’s zeal in defining the terms on which China interacts with the major powers. Significantly, Beijing is allowing intellectuals to express such sentiments, even as it prohibits open discussion of the popular demand for Japan to pay war reparations.

The political succession now under way poses additional risks to Sino-American relations. Deng’s imminent demise marks a material change, as he has personally played a key role since the 1970s in protecting this bilateral tie from attack. Time and again, frustration over American positions and actions has driven some Chinese, especially in the military, to advocate a hard line. In each such instance, Deng has intervened to set China’s strategic sights on a basically cooperative relationship that would serve China’s long-term goals of rapid economic development and closer integration into the community of nations.

Now it appears that no contender among China’s leaders has the courage to dismiss the military’s strongly held views and demand that China keep to a cooperative course with the United States. The resulting dynamic was fully evident in the aftermath of the United States’ recent decision to grant a visa to Taiwanese President Lee Teng-hui. Chinese President Jiang Zemin initially fashioned a relatively mild response, consisting of the postponement of U.S.-China talks on the production of fissile material and on missile technology control, but little else. The military leadership quickly weighed in with a recommendation for a tougher line, though, arguing that the United States was effectively supporting the division of China.

After several hastily called Politburo meetings, Jiang adopted the approach advocated by the People’s Liberation Army—harsh rhetoric directed at the United States, cancellation of bilateral meetings, recall of the Chinese ambassador to Washington for consultation, demands that Washington abjure all future visas for Lee, tougher language concerning Lee personally, and missile tests and other military exercises in the Taiwan Strait. Other measures, such as the arrest of American human rights activist Harry Wu and the publicized expulsion of two American military observers taken into custody near the Taiwan Strait in August, also quite possibly formed part of the Chinese response.

As they contend for the succession, moreover, China’s leaders realize that they govern a society wracked by the tensions that accompany rapid change and unresponsive to socialist ideological appeals. With socialism no longer credible, politicians are anxious to burnish their nationalist credentials. This shift has in turn heightened sensitivity to issues like Taiwan, to territorial claims such as those in the South China Sea, and to military views on national sovereignty and integrity. The strains that have made nationalism politically attractive also stoke worries in Beijing about potential domestic instability. America’s efforts to foster dissent via such activities as Radio Free Asia are therefore viewed as particularly threatening and pernicious.

Against this background, Beijing has furiously debated America’s true intentions toward China. Coloring this debate is the deep resentment of Chinese leaders over what they consider hypocritical, arrogant, and ignorant moral posturing by American officials and media on such internal matters as human rights. The debate in Beijing is not fully resolved, but most of the positions being advanced would make things difficult for Washington, even though not all are mutually compatible. Some argue that the United States is a declining power that will try desperately to prevent the rise of a major new power like China; others maintain that the United States is so accustomed to dictating principles and policies that it will insensitively and insultingly intervene in China’s domestic affairs. Some assert that the American government is sufficiently responsive to business entreaties that China can protect its interests by holding out the lure of a potentially huge market, while others claim that President Clinton is not willing to protect the U.S.-China relationship from those who would destroy it and that he might in fact be anti-Chinese himself. Still others believe that the president and Congress collude in a good cop-bad cop duet to squeeze concessions out of Beijing through periodic requests that it help the White House protect Sino-American ties from congressional wrath.

Spinoffs of the decentralization and market-oriented reforms that the United States has long desired are also making the P.R.C. more difficult to deal with. Chinese officials at all levels now focus on making money, often displaying questionable business ethics. Beijing has given provincial and local leaders considerable leeway to enrich their localities and has even called on national ministries (including the defense forces) to pursue commercial deals to cover part of their budgets. Not surprisingly, officials outside the top leadership are violating Sino-American agreements on intellectual property rights and market access. This phenomenon may explain some of the weapons sales that the United States finds objectionable.

Difficult Partner II: America

A major portion of the difficulties in Sino-American relations stems from dynamics within Washington. The 1989 Tiananmen Square incident jaundiced American views of China and made China policy a political tool for many groups in the United States. America’s seeming inability to set Tiananmen aside, even when all other Group of Seven (G-7) industrialized nations had done so, and its related insistence on treating China’s political leaders as morally unfit have made most of those leaders deeply resentful.

The contradiction between fundamental values and concrete national interests has troubled American foreign policy since the beginning of the republic. The Cold War enabled the United States to sidestep the issue; anticommunism was perceived as having sufficient moral weight to permit America to engage in almost any form of realpolitik to combat the Soviet empire. It is not surprising that this underlying tension has resurfaced with the end of the Cold War. Beijing now seeks realpolitik with the United States, the kind of relationship it feels it enjoyed from 1971 to early 1989 under five American presidents of both political parties. China’s leaders are baffled and alarmed by Washington’s unwillingness to play that game.

The Clinton administration’s foreign policy process and the politics of China policy inside the Beltway contribute to tensions. The administration has what it considers to be a friendly, constructive policy toward China, which it terms “comprehensive engagement.” The policy acknowledges China’s increasing strength and seeks to nurture the P.R.C.’s admission into the international community—on the condition that Beijing obeys the norms that currently prevail in that arena. The administration is willing to engage China virtually across the board to promote Beijing’s acceptance of these norms. In this way, Washington hopes to facilitate Beijing’s entrance into global leadership forums without upsetting the current system.

Although the Clinton administration adopted these goals in 1994, it never worked out a set of priorities to achieve them. As a result, each government agency is pursuing its own China policy, with little coordination among them. While the Office of the U.S. Trade Representative threatens sanctions over market access and intellectual property rights, the Department of Commerce goes all out to increase U.S. investment in China; while the Department of State thrashes China for human rights violations and nuclear proliferation, the Department of Defense works hard to develop military-to-military ties. The Chinese search in vain for an underlying rationale to explain this welter of conflicting efforts.

Failure to set priorities has led an approach that was intended to be friendly to produce the threat or application of sanctions during the past two years in every major sphere of the relationship—trade, military, and human rights. Even if China’s actions have fallen short in all of these areas, the United States’ threat of sanctions in all areas nearly simultaneously has simply overwhelmed the relationship . The fact that in almost every instance the other G-7 countries have not supported America’s threats has made Washington’s claim that it is acting on behalf of widely accepted international norms ring hollow.

The president’s performance has worsened the problem. Clinton does not have strong beliefs about China policy, and his White House has not imposed discipline on American foreign policy officials. The president’s own public vacillation and about-faces on China, often in response to popular and congressional pressure, have sharply reduced his credibility and increased the collateral damage from some of his most important actions. For example, Clinton’s May 1994 decision not to link most-favored nation trade status renewal to human rights demands abruptly reversed months of presidentially sanctioned efforts to highlight that linkage and his own commitment to the human rights issue. He could have managed this policy differently during these critical months, placing human rights in the context of a broader strategic relationship. The substance of the final decision was right, but by dropping the linkage as a “bad idea” after advocating it, the president undermined his credibility.

Clinton added to the damage with his handling of the decision to issue a visa to Lee Teng-hui and allow him to visit his alma mater, Cornell University, this past June. The visa issue straddled the line between upgrading official relations with Taiwan, which would have violated previous Sino-American agreements, and expanding America’s definition of private U.S.-Taiwan ties, which are permitted by unofficial understandings with Beijing. The president probably could have played this issue successfully either way, so long as he was consistent and principled. Instead, he first allowed the State Department to declare that issuing a visa would violate past policy, then permitted Secretary of State Warren Christopher to assure Chinese Foreign Minister Qian Qichen personally that administration policy was to deny the visa, and finally bowed to a nonbinding congressional resolution, announcing that he would issue the visa after all. This course of events embarrassed Qian, who had assured his Politburo colleagues that the administration would not grant Lee a visa. The handling of the Lee case undercut those in Beijing who argue that China should take the Clinton administration at its word.

This decision also suggested to Beijing that Clinton, unlike George Bush, is not willing to protect Sino-American relations from tampering by Congress. Some in Congress would destroy the relationship if given the opportunity to do so, and Congress has at times acted in stunning disregard of the fundamental requirements of SinoAmerican diplomacy: earlier this year Congress demanded that the United States accredit an ambassador to the Dalai Lama’s exile government in India and recognize Tibet’s independence. Evidence of White House unwillingness to expend the political capital necessary to sustain the Sino-American relationship against congressional assault has made it seem risky to Beijing’s leaders to stake their personal credibility on pursuing cooperation with the United States.

Many facets of the approach to China inside the Beltway are, therefore, making the Chinese nervous, uncertain, suspicious, and obstreperous. Despite Washington’s generally constructive goals, an increasing number of Beijing’s leaders believe that America wants to isolate China by excluding it from such international groups as the World Trade Organization. They think that the United States wants to weaken China by denying it the right to purchase sophisticated American technologies, by threatening sanctions, and by supporting antigovernment forces within the country. Some even interpret American policy as seeking to divide China by promoting gradual independence for Taiwan and Tibet and intruding into China’s resumption of active sovereignty over Hong Kong.

Worrisome Contingencies

Large-scale political unrest in China is a possibility. Despite enormous success in achieving rapid economic growth, there are fundamental strains in the society. Inflation, over 20 percent in recent years, is dangerously high, and corruption is widely resented among the populace. Tens of millions of “floaters” have flocked to the major cities, differentiation of wealth is growing, many state enterprise workers fear the effects of further development of the market economy, control over individuals through their work units has eroded, and massive urban construction projects are displacing hundreds of thousands, causing tensions. If the political succession to Deng Xiaoping does not go smoothly, these underlying pressures may erupt into enormous street demonstrations and protests.

Such an eventuality is unlikely to produce a Soviet-type disintegration of the Chinese political system. But the ensuing measures to restore order would almost certainly include the extensive use of armed police and military units, with substantial loss of life. That sequence of events in China might well galvanize Congress to demand major economic sanctions, and these demands could prove politically impossible for the White House to set aside, especially during a presidential election campaign. Sanctions would have a series of deleterious longterm effects: they would make China a far less attractive place for American business and cause a great deal of American capital to the country, disrupt all contact between the American and Chinese militaries and increase the perception of threats on both sides, and convince China’s leaders that the United States really does wish to encourage the overthrow of the government in Beijing.

Creeping Taiwanese independence poses a second potential danger. China feels that Taiwan is moving toward independence in small steps and has decided that it must demonstrate its resolve to prevent Taiwan from going too far. The resulting P.R.C. military exercises in the Taiwan Strait this past summer may backfire by increasing the vote for the Democratic Progressive Party in Taiwan in the March 1996 elections and by adding pressure on Congress to sell Taiwan a theater missile defense system. Although a formal Taiwanese declaration of independence and request for diplomatic recognition from the United States and other countries is unlikely, Taiwan’s leaders have pursued intermediate forms of international recognition vigorously.

Miscommunication between Taipei and Beijing may produce initiatives by Taiwan that would trigger a military response from China. While America is not rigidly bound by the Taiwan Relations Act to protect Taiwan at all costs, political pressure in Washington to move in that direction would be strong, especially if this occurred in the context of political crisis and resulting repression on the mainland.

The third explosive contingency would be a major destabilization of Hong Kong. That would transpire only if political instability on the mainland drew Hong Kong into the fray. The scenario would entail active support of some mainland elements by Hong Kong’s citizens, followed by flows of political refugees across the Chinese border and repression in Hong Kong by Chinese security forces. Given the amount of American investment in Hong Kong and the generally high regard in which Americans hold its citizens and society, such developments would intensify the calls in Washington to act against the victorious political forces in Beijing.

Revamping Constructive Engagement

Sino-American relations are in danger. Without sacrificing its fundamental interests, the United States must revamp its bilateral and multilateral approaches to create a more stable relationship with China.

The United States should engage other countries in Asia (particularly Japan) and Europe in the effort to articulate and convey to China’s leaders the conduct expected of major powers. It must not allow others to make Washington the sole enforcer of these norms, especially in sensitive areas such as human rights. The United States should use its influence in Asia and in international organizations to encourage others to work toward China’s integration into Asian and global organizations and activities. Even though most Asian countries regard China warily and worry about the “China threat,” America should play a leading role in promoting regional initiatives that seek engagement, rather than containment.

A containment strategy toward China would likely engender precisely the type of Chinese behavior that will prove most upsetting to the regional and international systems. Furthermore, the emphasis given here to constructive integration does not mean that the United States should ignore Chinese activities that threaten the international order—quite the opposite. The objective is to leave China with a clear understanding of the kinds of behavior that will produce widespread international opposition. It is the lack of such clarity in recent years when the United States has often stood alone in threatening and applying sanctions—that may have encouraged the Chinese to test the limits of international tolerance.

America should retain its current robust military presence in East Asia. These forces may reduce regional tensions, including those that can produce regional arms races. Playing this role effectively, of course, requires that America retain basically healthy diplomatic relations with all major countries in the region. America may also have to impose some additional restrictions on its arms sales.

Bilaterally, the United States should adopt positions that move the diplomatic relationship with China in a less emotional direction. As ardently as Americans might wish to see democracy appear in China and a liberal, law-driven system develop there, America lacks the resources to impose these desires; it is worth bearing in mind that China’s population is over 300 times larger than that of Haiti. America should always stand internationally for democracy and human rights, but these should become far less central elements in American bilateral policy toward China.

The United States must treat with respect whatever leaders the Chinese system produces and make domestic Chinese issues less of an object of American bilateral diplomatic priorities. Pursuing this approach, the United States would likely find it easier to discuss with China bilateral problems in trade, security, and other spheres. Regular high-level meetings between American and Chinese leaders would enhance the mutual trust and understanding that is critical to realistic negotiation and problem solving.

The top priority on the American side should be the development of a long-term, concrete strategy toward China based squarely on these guidelines. The president must be able to explain it to Congress and the public and then implement it in a coordinated, disciplined, and consistent fashion. This policy should protect America’s immediate interests and promote the fundamental goal, important to America as a global power, of China’s constructive integration into the international arena.

One senses that Chinese leaders, like their American counterparts, do not have a strategic approach to this bilateral relationship. This may reflect a combination of Deng Xiaoping’s fading from the scene, contention among potential successors, uncertainty over how to exercise the country’s rapidly increasing power, and a growing military role in defining foreign policy responses. China’s failure to think about the long run also risks missteps and tragedy.

Five years from now the mid-1990s may be viewed as a historic turning point during which China’s engagement in the international arena went seriously awry, despite the country’s domestic reforms. Given the nature and magnitude of changes coursing through China, even a carefully considered American approach will encounter significant frustrations and disappointments—and might ultimately fail to secure its goals. But to date American policy has fallen far short of the basic requirements for success, and each side’s shortcomings are affecting the other’s posture. America and China may still stumble along in a troubled but manageable relationship, but in the absence of realistic strategies on either side, the chances that they will stumble into mutual hostility are growing unacceptably high.