The Impact of China’s Emerging Global Role on U.S. Policy

The Impact of China’s Emerging Global Role on U.S. Policy STEPHEN J. YATES Senior Policy Analyst The Heritage Foundation

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hina’s role in the world has been a topic of research and inquiry for much of the last two centuries. Traditionally, Chinese people have viewed their nation as the “Middle Kingdom”—meaning the center of civilization, with emperors addressed as the “son of heaven” to whom neighboring barbarians were to pay tribute. By the middle and late nineteenth century, however, the outside world and many Chinese people viewed China in much less dignified terms. China had been defeated in wars with Japan and European powers, and lost control over significant port cities. Rather than a global or regional leader, China was viewed as a quaint civilization, trapped in history, underdeveloped, with a magnificent supply of goods and enormous potential market for the trade industry. Since the late nineteenth century successive Chinese governments have pursued the worthy goals of economic modernization and national unity. Failure in making progress toward these goals inevitably led to the downfall of the Ch’ing Dynasty and the Nationalist government on the mainland. These twin goals have remained at the core of the Communist government’s strategy since its establishment in 1949. Like its predecessors, the Communist government of today sees economic modernization and national unification as its primary means to selfpreservation and restoring China to a position of power and influence in the world. Just as China itself has undergone a major transformation since the midnineteenth century, so has the American view of China and China’s role in America’s Summer/Fall 1999 – Volume VI, Issue 2

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Stephen J. Yates Asia strategy changed. Two persistent American interests in China have been commerce and missionary work. For both endeavors China’s enormous population holds out great hope. Strategically, however, China has gone from a neutral trading partner to an ally against Japanese aggression to a foe in the global struggle against communism to the more recent goal of constructive strategic partnership. Such dramatic swings in policy are understandable, given that China remains a remote and mysterious land to most Americans. Owing to recent history, China’s dominant image in the United States is that of massive throngs waving little red books while hailing the late Chairman Mao in Tiananmen Square, or tanks crushing the student movement a generation later in the same square. Both images remain powerful in the American political debate over policy towards China, but they paint an incomplete picture of China today and its role in American policy making. China has changed tremendously since the 1970s—politically, economically, and strategically. While political power remains concentrated at the top of the Communist Party, central government policy is made by committee, rather than according to the dictates of one man. Moreover, the extent to which the central government micromanages the lives of individuals, however intolerable, is much less comprehensive today than it once was. The economy has emerged from the austerity of state planning and heavy industry and instead is led by internationally competitive light manufactures. Strategically, China has moved from a position of the near total self-reliance and isolation to one of comprehensive interdependence. American policy has largely followed these changes in China. In 1979 the United States switched diplomatic recognition from Taipei to Beijing as the legal government of China and normalized trade relations by extending most favored nation (now called normal trade relations) trade status to China. Under this framework the United States secured a strategic counterweight against Soviet expansion, and for China the door to investment and trade with the world’s wealthiest nation opened. But the foundation for this stable and mutually beneficial framework was short-lived. By the end of the 1980s market reform and openness to the outside world unleashed powerful social forces within China that would soon challenge the leadership capacity and legitimacy of the Communist Party. As domestic and international markets began to influence prices, staple goods became more expensive and manufactured goods lost some of their value. This meant that Chinese people had to pay more for what they needed while their exports earned less from foreign trade. Rampant inflation translated social pressure on the people into political pressure on the government, and international competition exposed the weakness of China’s over-employed state-owned enterprises. Government failure to address these problems fueled public demonstrations, culminating in the 36

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The Impact of China’s Emerging Global Role on U.S. Policy student-led demonstration in Tiananmen Square in 1989—perhaps the greatest challenge to Communist Party legitimacy in China to date. The brutal government crackdown in Tiananmen Square on June 4, 1989 was the first in a series of important events that began to undermine the strategic rationale for close relations between United States and China. The crackdown itself seemed to belie the notion that China, once exposed to the outside world, would change in ways more compatible with Western- As China in the early 1990s restyle democracy. And the sembled neither Soviet failure nor American-led sanctions regime imposed in its wake American success, it was clear that was viewed by China as a China’s role in the envisioned new violation of sovereignty and world order would be problematic. (as it surely was) a political attack on the government. But the events that would fundamentally change the way the United States and China view one another and envision China’s global role were yet to come—the fall of communism in Eastern Europe, the Gulf War, the collapse of the Soviet Union, and the development of democracy on Taiwan. Needless to say, the United States and China interpret the significance of these events quite differently. To the United States the fall of communism, victory in the Gulf, Soviet collapse, and Taiwan democracy all seemed to vindicate American ideals and foreshadow the dawning of what President George Bush called a “new world order.” The Gulf War restored American pride in its military, demonstrated the value of high-tech weaponry, and led most Americans to believe that it was possible for large-scale interventions abroad to succeed. The peace dividend from Cold War victory would be the spread of American-style freedom and prosperity. As China in the early 1990s resembled neither Soviet failure nor American success, it was clear that China’s role in the envisioned new world order would be problematic. China was significantly troubled by these developments. This new world order would be shaped not by China, or even the United Nations, but by the sole remaining superpower wielding dominant political, economic, technological, military, and social power throughout the world. The fall of communism exposed China’s political system as an ideological fraud, and the collapse of the Soviet Union frightened Chinese leaders both because of its rapidity and the social and economic turmoil by which it was followed. China’s leaders were determined to avoid a similar fate, out of self-interest and also in the interest of preserving national unity and social welfare. The Gulf War and Taiwan democracy seemed linked more in the minds of China’s leaders than in the United States. The Gulf War proved the American determination and ability to form an international coalition to invade a sovereign

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Stephen J. Yates state and impose its will—a trend further entrenched by NATO intervention in Kosovo. To China this is ominously similar to potential American-led intervention in future conflicts over Taiwan—conflicts which China sees as inevitable if Taiwan moves toward formal declaration of independence. To China, the development of democracy on Taiwan makes moves toward independence, cross-Strait conflict, and American intervention more likely. The Gulf War taught Taiwan that, with membership in the UN, a small state could secure American-led international protection against an aggressive neighbor who claimed to be its sovereign. The war taught China that, if it ever had to face the American military in the Taiwan Strait, its massive conventional military force would be no match for the high-tech weaponry on display in the Gulf. While at the end of the 1990s Americans are perhaps less euphoric about Cold War victory and less optimistic about establishing a new world order, tensions created by competing interpretations of events at the beginning of the decade continue to dominate policy between the United States and China. China’s substantial military modernization is aimed at arresting Taiwan’s “moves toward independence” and deterring U.S. intervention (or at least diminishing its effectiveness). China’s drive to deepen economic and diplomatic ties around the world is similarly aimed at diminishing the attractiveness and effectiveness of any future sanctions campaign against China, and undermining the possibility of any coalition being formed to intervene on Taiwan’s behalf. The U.S. is admired for its wealth and technology but feared because of its propensity and capacity to meddle in China’s internal affairs. American policy is also the product (or prisoner) of events at the start of this decade. There remains a feeling that in the wake of Cold War victory, America should do more to shape international rules and norms. Many still feel that American-style freedom and prosperity should be spread and protected with greater vigor, and seem to support economic and military interventions that promise to further these goals. These internationalists are divided, however, over whether politics or economics should take the lead in this campaign. Most internationalists appear to support a policy of peaceful evolution—economic freedom gradually leading to political freedom. A growing number of internationalists disagree, however, favoring instead a policy of withholding access to American capital and markets as leverage with which to pry open oppressive political regimes. It should also be noted that a substantial number of Americans believe that, in the wake of the Cold War, the U.S. should focus its resources domestically and curtail its international involvement (not to speak of intervention). America’s preferred role for China is caught in transition, from Cold War strategic partner to one yet to be defined. Since 1996, the Clinton Administration has sought to establish (or at least move toward establishing) a “constructive strategic partnership” with China. The rationale seemed to be that with its enormous population, high economic growth rate, modernizing military, and UN 38

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The Impact of China’s Emerging Global Role on U.S. Policy Security Council veto, China undoubtedly will exert great influence in shaping the international environment and determining the success or failure of American policy in the twenty-first century. It is therefore imperative for the United States to work now to establish a partnership with China, to foster favorable developments within China and to facilitate future international policy success. This strategy envisions China’s global role as a facilitator of the U.S. agenda. China becomes key to the American strategy of deterring aggression, halting proliferation of weapons of mass destruction, maintaining regional stability, and promoting economic and political liberalization. Though it is remotely possible that China could accept such a role, it is doubtful that they would welcome it, and equally doubtful that they could deliver. China’s recent crackdown on the China Democracy Party and Falun Gong meditation sect make clear that China will oppose any American effort to promote political liberalization in Asia. Increasing awareness of China’s weak financial system and the elusiveness of profits in China’s vast potential market undermine any notion of China exercising economic leadership. And China’s ineffectiveness in curtailing North Korea’s nuclear and missile development, opposition to theater missile defense, and perceived threat to India’s security make China an unlikely partner in furthering America’s strategic objectives. While America’s preferred global role for China is likely to remain ambiguous for the near future, especially through our election cycle, China’s own vision for its global role is becoming increasingly clear. China sees itself as the primary guardian of classical sovereignty, balance against U.S. dominance, conduit for low-tech Asian exports to the U.S., model for socialist economic reform, and the world’s leading potential market. Each of these roles is key to China’s primary objectives of economic modernization and national unity. The classical definition of sovereignty is one where nation-states are the primary actors in world affairs. Nation-states are the building blocks but also the supreme authorities. Their sovereign authority and territorial integrity are inviolable and inseparable. In such a world view no other state, international entity, or individual has the right to interfere in the exercise of sovereign authority. While global communications, transportation, and commerce have eroded strict adherence to this classical definition of sovereignty in much of the world, China remains ferociously committed to it. China seems to view the current permissive environment towards international interventions—from human rights criticism to trade sanctions to military invasion—as part of a Western plot to impose on the rest of the world its system of political values, designed to undermine, if not topple, unsympathetic governments. China sees respect for classical sovereignty as crucial to self-preservation and blocking international support for Taiwan, and finds common cause with Russia, Yugoslavia, and other states that fear becoming victims of U.S. interventions. With Russia economically and politically weak, China sees itself as the only Summer/Fall 1999 – Volume VI, Issue 2

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Stephen J. Yates power capable of balancing against U.S. dominance. Fearful that the U.S. might exercise undue influence in international organizations, and especially regional fora, China seeks active participation in such institutions to build solidarity with those who like China oppose at least an element of the U.S. agenda, and to keep the U.S. from using these institutions in ways counter to China’s particular interests. The more China succeeds in this endeavor, the more control it has over America’s Asia agenda, the more the U.S. needs China’s acquiescence, and the more concessions China can expect to extract from the United States. Clinton’s attempt at establishing a constructive strategic partnership proved the efficacy of such a role for China, and should call into question whether the United States and China are indeed strategic partners or competitors. China’s role as primary conduit for low-tech Asian exports to the U.S. is critical not only to its modernization drive, but also to its desire to exert greater power and influence. Serving as an export hub to the U.S. brings with it the political baggage of a large trade deficit, but its benefits far outweigh the costs. It allows surplus labor to be absorbed by jobs created by foreign investment, instead of domestic revenues, and increases the domestic tax base. It allows the government to take a slower approach to reforming state-owned enterprises and for the transfer of foreign managerial and manufacturing technologies. And most importantly, though perhaps counterintuitive, it increases foreign dependence on China’s continued economic growth and stability. The more the U.S., Japan, Korea, Taiwan, and others rely on China as an export manufacturing hub (with no viable substitute), the greater stake they have in protecting and promoting China’s continued economic development. China has been more capable than others in using this interdependence to its strategic and political advantage. As one of the last and the largest remaining government “under the leadership of the Communist Party,” China stands out as a leading example of economic reform without loss of political power. China’s approach to reform is noticeably distinct from that of the former Soviet Union in pace, scope, and success (at least to date). China holds its model of stable gradualism out as a counter to the dominant international trend toward democracy and as an invitation to those who seek economic modernization without having to sacrifice their lives (as in Romania) or their power (as in the Soviet Union). Finally, China’s role as the world’s leading potential market is critical to its drive toward development and influence. As long as China continues to successfully hold out the lure of its future potential, it will continue to extract favorable trade and investment arrangements with those eager to buy a share of that potential. Because of its status as a developing economy with a large endowment of underemployed resources, China has been able to win preferential terms in deals concluded with multinational corporations and organizations. As long as these corporations remain convinced of China’s economic future, China will continue 40

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The Impact of China’s Emerging Global Role on U.S. Policy to exercise influence over the policies of foreign governments via the lobbying efforts of these firms. To China, it is important to remain a potential, as opposed to realized, market. China would be far less internationally competitive today if it had to comply with the rules and norms of developed economies. Therefore its benefits and influence are maximized by remaining the world’s leading potential market instead of joining the ranks of the G-8. The United States will likely continue to face difficulty in further developing its strategy towards China, as long as the international environment remains ambiguous. The Cold War is over, but we do not yet know what characteristics and objectives best define the current era. The U.S. maintains enormous power to influence, but limited power to dictate its terms, in international relations. In many ways, it is up to the United States to decide where it wants to go. The challenge is to reconcile U.S. objectives with those China has clearly expressed, and then craft policies most likely to maximize U.S. interests, welcoming, but not relying upon, China’s cooperation. The United States should welcome the emergence of a prosperous, free, and powerful China onto the world stage, though it would be naïve to expect such qualities to develop quickly and painlessly. There is no guarantee that China’s continued economic development will bring with it democracy. There is also no guarantee that China’s economic growth will continue at today’s impressive rates, or that it won’t at some point choose to use its military muscle against Taiwan or the United States. But what is nearly certain is that China is likely for some time into the future to have a government whose interests are significantly distinct from our own, whose actions offend our values, and whose potential for good or for ill continues to capture a large measure of our attention. Prudence should be our guide. Don’t oversell the potential benefits of improved relations with China, and don’t assume that military conflict is inevitable. Be prepared for the worst, while working for the best. Determined American leadership with a clear purpose is critical if the United States and China are to co-exist in a world where peace, freedom, and prosperity flourish. WA

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