FPI Analysis: Next Steps in the U.S.-Chinese Peacetime Competition

November 14, 2012

As the United States concludes its 2012 presidential and congressional elections, the People’s Republic of China is now beginning its own major political transition.  The Chinese Communist Party (CCP) just met in Beijing for its 18th Party Congress to formally install the country’s so-called “fifth-generation” leaders into key party posts—most notably, current Vice President Xi Jinping, who is being named the CCP’s new General Secretary and is expected in early 2013 to succeed President Hu Jintao as the country’s head of state for the next ten years.  However, China’s change in leadership is occurring at a time of great uncertainty not only about the country’s domestic situation, but also about the future direction—and potential assertiveness—of Chinese foreign policy.

As President Obama prepares for his second term and Vice President Xi readies to assume China’s presidency, Washington and Beijing remain locked in a long-term peacetime strategic competition with fundamentally different—and potentially irreconcilable—views about the international order and its future.  It is imperative that U.S. policymakers and lawmakers not only accept this reality, but also fully grapple with its implications.  As Congressman J. Randy Forbes, Chairman of the House Armed Services Subcommittee on Readiness, explained:

“… while there are plenty of opportunities for cooperation with China, there are also elements of our relationship that are and will remain competitive....  This isn’t to say that conflict between our countries is inevitable.  But if U.S. leaders are expected to marshal the diplomatic and military resources necessary to engage in this long-term competition, they must first be willing to speak more candidly about Beijing’s growing capabilities and strategic intentions.”

Indeed, it is clear that the United States and China remain deeply divided on many critical economic, human rights, diplomatic, and security issues.  U.S. policymakers and lawmakers should recognize that, by itself, a strategy of engagement with Beijing cannot fully bridge the two country’s deep divisions.  Rather, Washington must craft and refine an approach that seeks to actively advance not only America’s vital interests, but also its core values in the Asia-Pacific—a strategy that aims to soberly capitalize on opportunities for genuine cooperation, while at the same time squarely facing up to areas of disagreement and sources of potential conflict.  In partnership with the new U.S. Congress, the second Obama administration should therefore pursue the following elements of an integrated long-term strategy towards China:

  • Encourage China—as it further allows the Yuan’s value to appreciate—to fully respect intellectual property rights, reverse massive government subsidies to state-owned enterprises, and roll back other anti-competitive practices.
  • Prioritize human rights promotion as an integral aspect of America’s public agenda with China, especially at the presidential level but also at the agency levels, and pursue more concrete policy goals.
  • Press Beijing not to block the U.N. Security Council and other traditional international institutions from taking strong stands or actions against threats to international peace and security, but when China obstructs, do not hesitate to work with like-minded partners outside these forums to advance U.S. interests and values.
  • Make consistently clear to Beijing through U.S. defense strategy, force structure and posture, and alliance policies that China’s developing military capabilities in the conventional, nuclear, space, and cyber realms should not be used to undermine the Asia-Pacific’s longstanding regional security and stability.

Economy and Trade:  Opportunities and Risks

RECOMMENDATION:  Encourage China—as it further allows the Yuan’s value to appreciate—to fully respect intellectual property rights, reverse massive government subsidies to state-owned enterprises, and roll back other anti-competitive practices.

Despite three decades of dynamic expansion, the Chinese economy is now showing signs of strain.  In the third quarter of this year, the growth of China’s gross domestic product (GDP) fell below official expectations, dropping for the seventh quarter in a row.  Corruption in China has become a high-profile issue due to the scandalous ouster of CCP Politburo member Bo Xilai, whose wife was implicated in the murder of a British citizen, and recent Western news reports detailing the massive wealth that Chinese elites have secretly amassed.  As wealth disparities between the urban rich and rural poor widen, protests and other forms of social unrest are becoming more visible.

It remains unclear how China’s new ruling class will attempt to meet these mounting challenges.  No doubt, the Chinese Communist Party will seek to maintain tremendous influence over the country’s economy and the lives of its citizens.  Yet at the same time, the Chinese government will face growing internal pressure to implement further economic reforms, if it is to sustain strong levels of economic growth in the future.  This tension in China presents a potential opportunity for U.S. policymakers and lawmakers seeking to encourage positive changes to Chinese economic and trade policies.

While politicians in Washington often focus narrowly on the need for China to allow the Yuan to fluctuate, Beijing, in fact, has already begun to modestly respond to U.S. complaints, and permitted its currency to appreciate—indeed, the Yuan has risen 31 percent in value against the dollar since June 2005.  Instead, it is important that the United States pay greater attention to other critical bilateral economic issues.

In particular, the second Obama administration should work with the new U.S. Congress to strongly encourage China—which remains one of the world’s largest sources of counterfeit goods—to better enforce international rules and norms regarding intellectual property (IP) rights.  Chinese IP violations have a long history of damaging key sectors of the U.S. economy.  As the U.S.-China Economic and Security Review Commission reported to Congress in November 2012:  “Unless China abandons its practice of illegally obtaining U.S. technology and enhances its enforcement of intellectual property laws in China, the United States will continue to suffer revenue and job losses in some of its critical export industries: business software, motion pictures, communications, information processing hardware, music and entertainment software, aerospace, and many capital goods industries, such as machine tools and transportation equipment.”  In the 2011 report, the Commission projected that, “if China were to adopt an intellectual property system equivalent to that of the United States,” U.S. employment could add as many as 2.1 million jobs over time.

Washington should also press Beijing to roll back heavy subsidies and other protections for Chinese state-owned enterprises, which prevent U.S. and other foreign companies from effectively competing in certain sectors of China’s economy.  As the Heritage Foundation’s Derek Scissors wrote, “The most important way China undermines our comparative advantage is by blocking American exports.  The PRC reserves large parts of its market for state-owned enterprises.  Beijing demands that its state-owned firms dominate domestic markets in coal, telecom, railways, and so on. These firms can’t go bankrupt. This means that American products can only do so well in the Chinese market, whether they’re better or not.”

The Moral Dimension:  Human Rights and Democracy Promotion

RECOMMENDATION:  Prioritize human rights promotion as an integral aspect of America’s public agenda with China, especially at the presidential level but also at the agency levels, and pursue concrete policy goals.

The 18th Communist Party Congress now underway in Beijing shows no signs that China’s new leaders are contemplating political reform.  Yet, judging by the comments of China’s social media users, the Chinese people deeply desire a greater say in their own governance.

The highly-publicized May 2012 flight of blind dissident Chen Guangcheng to the American embassy in Beijing—and ultimately New York City—demonstrated both the plight of Chinese dissidents and the role the United States plays in their defense.  According to the State Department, China has tens of thousands of political prisoners, including Nobel Peace Prize laureate Liu Xiaobo, whose wife, Liu Xia, has been confined to house arrest.  As part of intensified security during the 18th Party Congress, other dissidents have been confined to house arrest or sent out of Beijing. Yet others have been harassed or beaten. 

While China rejects criticisms of human rights conditions as interference in its domestic affairs, it presses neighboring countries not to provide refuge to Tibetans and Uighurs.  Central Asian countries and Cambodia have been pressured by Beijing to repatriate Uighur refugees—in violation of international law. 

Although the Obama administration has publicly noted the “deterioration” of human rights in China, it has not made the issue a priority.  The U.S.-China Human Rights Dialogue has been ineffective.  The United States should not only incorporate human rights promotion into every government-to-government dialogue with China, whether at the presidential or agency level, but also set clear benchmarks for progress and impose consequences for abuses. 

The escalating self-immolations by Tibetans—more than 60—require immediate and urgent attention.  Washington should enlist other democratic allies in a coordinated response to the self-immolations as well as the consolidation of Tibetan democracy-in-exile and the Dalai Lama’s plans for the future of his position. 

Diplomatic Cooperation and Competition

RECOMMENDATION:  Press Beijing not to block the U.N. Security Council and other traditional international institutions from taking strong stands or actions against threats to international peace and security, but when China obstructs, do not hesitate to work with like-minded partners outside these forums to advance U.S. interests and values.

China’s economic and military growth is fueling an increasingly assertive foreign policy in Asia and globally.  Indeed, Beijing’s obstructionist posture in traditional international institutions continues to effectively shield rogue regimes from international scrutiny.  For example, China joined Russia in the U.N. Security Council to block a February 2012 resolution backed by the United States, European Union, and Arab League to impose a political process by which dictator Bashar al-Assad halt his indiscriminate campaign of violence against Syrian internal opposition groups and step down from power. 

To take another example, China continues to oppose efforts to get the Security Council to impose harsh economic sanctions on Iran’s continuing efforts to acquire nuclear weapons-making capability in violation of its international nonproliferation obligations.  As the U.S.-China Economic and Security Review Commission stated in its 2011 report to Congress:  “Continued Chinese support for North Korea and Iran demonstrates China’s willingness to place its national interest ahead of regional stability by providing economic and diplomatic support to countries that undermine international security.” 

If China works to prevent the U.N. Security Council and other traditional international institutions from taking strong stands or actions against threats to international peace and security, the United States not hesitate to work outside these institutions with like-minded allies and partners.

Challenges in the Asia-Pacific’s Security Environment

RECOMMENDATION:  Make consistently clear to Beijing through U.S. defense strategy, force structure and posture, and alliance policies that China’s developing military capabilities in the conventional, nuclear, space, and cyber realms should not be used to undermine the Asia-Pacific’s longstanding regional security and stability.

The United States and China are engaged in a peacetime strategic competition, one that has an obvious military dimension.  On the one hand, it is not surprising that China, in its capacity as a rising power in the Asia-Pacific, is actively seeking to quantitatively and qualitatively improve its military might.  On the other hand, it is clear that the scope, direction and pace of Chinese military modernization pose serious risks and challenges to the United States and its regional allies and partners.  As the Office of the Secretary of Defense (OSD) reported to Congress in May 2012, Beijing “is pursuing a long-term, comprehensive military modernization program designed to improve the capacity of China’s armed forces to fight and win ‘local wars under conditions of informatization,’ or high-intensity, information-centric regional military operations of short duration.”

It’s not entirely clear how much China spends annually on its military.  While Beijing officially claims that it is spending roughly $106 billion on its military budget, the U.S. Department of Defense estimates that total Chinese military-related spending totaled between $120-to-180 billion in 2011.  That said, some argue that, given China’s general lack of transparency on military matters, even the Pentagon’s estimate is too conservative and low.

But what is clear is that the Chinese military is working to develop not only traditional power-projection capabilities—as illustrated by test flights of prototype J-20 and J-31 next-generation stealth fighters this year, and the recent launch of its first aircraft carrier for training purposes—but also disruptive and potentially destabilizing aspects of its offensive arsenal.  As the Pentagon explains, Beijing is continuing to aggressively invest in its nuclear weapons and delivery vehicles, as well as in “advanced cruise missiles, short and medium range conventional ballistic missiles, anti-ship ballistic missiles, counterspace weapons, and military cyberspace capabilities which appear designed to enable anti-access/area-denial (A2/AD) missions, or what PLA [People’s Liberation Army] strategists refer to as ‘counter-intervention operations.’”  One major challenge for the United States and its regional partners is therefore the possibility that China may someday attempt to use its evolving power-projection and counter-intervention capabilities to militarily—and decisively—advance one or more of its controversial territorial or maritime claims in Northeast Asia (e.g., Taiwan or the Senkaku/Diaoyu Islands) and Southeast Asia (e.g., disputed waters or islands in the South China Sea).

As a hedge, it is imperative that the United States continue to “forward deploy” and modernize its armed forces in the region.  Indeed, the forward deployment of the U.S. military has played—and will continue to play—a vital and indispensible role in helping to defend regional peace, stability, the free flow of trade and commerce, and America’s influence, interests, and values.  Indeed, the U.S. military’s continued and visible presence in the region helps to reassure allies and partners, while at the same time deterring and dissuading potential antagonists from taking provocative actions.  It is therefore critical that President Obama work with Congress not only to reverse $500 billion in indiscriminate “sequestration” spending cuts to national defense over the next decade, but also to fully resource efforts to modernize U.S. military capabilities—including air and naval forces—that will continue play key roles in the U.S.-Chinese peacetime strategic competition in the Asia-Pacific.

In addition, the United States should strengthen ties with traditional U.S. allies in the Asia-Pacific—including Australia, Japan, South Korea, and the Philippines—and move to expand cooperation with emerging partners like Singapore, India, and Vietnam.  In particular, Washington should seek to move its alliances and partnerships away from the longstanding “hub-and-spoke” model towards more “networked” approach that is based not just on shared strategic interests, but also, where possible, on shared values.  Part of this approach should involve efforts to pursue complementary trilateral or “mini-lateral” engagement and, to the extent possible, informal or formal multilateral security arrangements.  It will also require Washington to actively help to build the military capacities of allies and partners, and their ability to share intelligence, surveillance and reconnaissance (ISR) and conduct common operations.

Conclusion

As Xi Jinping and other members of China’s fifth-generation of leaders move to assume power, America’s long-term strategy towards China faces a potential inflection point.  To be certain, Washington should not balk at engaging with Beijing.  But engagement should be pursued without sentiment or illusion.  Indeed, candor about China will be necessary if the second Obama administration and the new U.S. Congress hope to succeed in soberly capitalizing on opportunities for genuine cooperation with the rising generation of Chinese leaders, while at the same time squarely facing up to areas of bilateral disagreement and sources of potential conflict.

Mission Statement

The Foreign Policy Initiative seeks to promote an active U.S. foreign policy committed to robust support for democratic allies, human rights, a strong American military equipped to meet the challenges of the 21st century, and strengthening America’s global economic competitiveness.
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