笨狼發牢騷
發發牢騷，解解悶，消消愁
The China Reckoning
How Beijing Defied American Expectations
The United States has always had an outsize sense of its ability to determine China’s course. Again and again, its ambitions have come up short. After World War II, George Marshall, the U.S. special envoy to China, hoped to broker a peace between the Nationalists and Communists in the Chinese Civil War. During the Korean War, the Truman administration thought it could dissuade Mao Zedong’s troops from crossing the Yalu River. The Johnson administration believed Beijing would ultimately circumscribe its involvement in Vietnam. In each instance, Chinese realities upset American expectations.
With U.S. President Richard Nixon’s opening to China, Washington made its biggest and most optimistic bet yet. Both Nixon and Henry Kissinger, his national security adviser, assumed that rapprochement would drive a wedge between Beijing and Moscow and, in time, alter China’s conception of its own interests as it drew closer to the United States. In the fall of 1967, Nixon wrote in this magazine, “The world cannot be safe until China changes. Thus our aim, to the extent that we can influence events, should be to induce change.” Ever since, the assumption that deepening commercial, diplomatic, and cultural ties would transform China’s internal development and external behavior has been a bedrock of U.S. strategy. Even those in U.S. policy circles who were skeptical of China’s intentions still shared the underlying belief that U.S. power and hegemony could readily mold China to the United States’ liking.
Nearly half a century since Nixon’s first steps toward rapprochement, the record is increasingly clear that Washington once again put too much faith in its power to shape China’s trajectory. All sides of the policy debate erred: free traders and financiers who foresaw inevitable and increasing openness in China, integrationists who argued that Beijing’s ambitions would be tamed by greater interaction with the international community, and hawks who believed that China’s power would be abated by perpetual American primacy.
Neither carrots nor sticks have swayed China as predicted. Diplomatic and commercial engagement have not brought political and economic openness. Neither U.S. military power nor regional balancing has stopped Beijing from seeking to displace core components of the U.S.-led system. And the liberal international order has failed to lure or bind China as powerfully as expected. China has instead pursued its own course, belying a range of American expectations in the process.
That reality warrants a clear-eyed rethinking of the United States’ approach to China. There are plenty of risks that come with such a reassessment; defenders of the current framework will warn against destabilizing the bilateral relationship or inviting a new Cold War. But building a stronger and more sustainable approach to, and relationship with, Beijing requires honesty about how many fundamental assumptions have turned out wrong. Across the ideological spectrum, we in the U.S. foreign policy community have remained deeply invested in expectations about China—about its approach to economics, domestic politics, security, and global order—even as evidence against them has accumulated. The policies built on such expectations have failed to change China in the ways we intended or hoped.
THE POWER OF THE MARKET
Greater commercial interaction with China was supposed to bring gradual but steady liberalization of the Chinese economy. U.S. President George H. W. Bush’s 1990 National Security Strategy described enhanced ties with the world as “crucial to China’s prospects for regaining the path of economic reform.” This argument predominated for decades. It drove U.S. decisions to grant China most-favored-nation trading status in the 1990s, to support its accession to the World Trade Organization in 2001, to establish a high-level economic dialogue in 2006, and to negotiate a bilateral investment treaty under U.S. President Barack Obama.
Trade in goods between the United States and China exploded from less than $8 billion in 1986 to over $578 billion in 2016: more than a 30-fold increase, adjusting for inflation. Since the early years of this century, however, China’s economic liberalization has stalled. Contrary to Western expectations, Beijing has doubled down on its state capitalist model even as it has gotten richer. Rather than becoming a force for greater openness, consistent growth has served to legitimize the Chinese Communist Party and its state-led economic model.
Trade in goods between the United States and China exploded from less than $8 billion in 1986 to over $578 billion in 2016.
U.S. officials believed that debt, inefficiency, and the demands of a more advanced economy would necessitate further reforms. And Chinese officials recognized the problems with their approach; in 2007, Premier Wen Jiabao called the Chinese economy “unstable, unbalanced, uncoordinated, and unsustainable.” But rather than opening the country up to greater competition, the Chinese Communist Party, intent on maintaining control of the economy, is instead consolidating state-owned enterprises and pursuing industrial policies (notably its “Made in China 2025” plan) that aim to promote national technology champions in critical sectors, including aerospace, biomedicine, and robotics. And despite repeated promises, Beijing has resisted pressure from Washington and elsewhere to level the playing field for foreign companies. It has restricted market access and forced non-Chinese firms to sign on to joint ventures and share technology, while funneling investment and subsidies to state-backed domestic players.
Until recently, U.S. policymakers and executives mostly acquiesced to such discrimination; the potential commercial benefits were so large that they considered it unwise to upend the relationship with protectionism or sanctions. Instead, they fought tooth and nail for small, incremental concessions. But now, what were once seen as merely the short-term frustrations of doing business with China have come to seem more harmful and permanent. The American Chamber of Commerce reported last year that eight in ten U.S. companies felt less welcome in China than in years prior, and more than 60 percent had little or no confidence that China would open its markets further over the next three years. Cooperative and voluntary mechanisms to pry open China’s economy have by and large failed, including the Trump administration’s newly launched Comprehensive Economic Dialogue.
THE DETERRENT OF PRIMACY
A combination of U.S. diplomacy and U.S. military power—carrots and sticks—was supposed to persuade Beijing that it was neither possible nor necessary to challenge the U.S.-led security order in Asia. Washington “strongly promot[ed] China’s participation in regional security mechanisms to reassure its neighbors and assuage its own security concerns,” as the Clinton administration’s 1995 National Security Strategy put it, buttressed by military-to-military relations and other confidence-building measures. These modes of engagement were coupled with a “hedge”—enhanced U.S. military power in the region, supported by capable allies and partners. The effect, the thinking went, would be to allay military competition in Asia and further limit China’s desire to alter the regional order. Beijing would settle for military sufficiency, building armed forces for narrow regional contingencies while devoting most of its resources to domestic needs.
The logic was not simply that China would be focused on its self-described “strategic window of opportunity” for development at home, with plenty of economic and social challenges occupying the attention of China’s senior leaders. American policymakers and academics also assumed that China had learned a valuable lesson from the Soviet Union about the crippling costs of getting into an arms race with the United States. Washington could thus not only deter Chinese aggression but also—to use the Pentagon’s term of art—“dissuade” China from even trying to compete. Zalmay Khalilzad, an official in the Reagan and both Bush administrations, argued that a dominant United States could “convince the Chinese leadership that a challenge would be difficult to prepare and extremely risky to pursue.” Moreover, it was unclear whether China could challenge U.S. primacy even if it wanted to. Into the late 1990s, the People’s Liberation Army (PLA) was considered decades behind the United States’ military and those of its allies.
Against this backdrop, U.S. officials took considerable care not to stumble into a confrontation with China. The political scientist Joseph Nye explained the thinking when he led the Pentagon’s Asia office during the Clinton administration: “If we treated China as an enemy, we were guaranteeing an enemy in the future. If we treated China as a friend, we could not guarantee friendship, but we could at least keep open the possibility of more benign outcomes.” Soon-to-be Secretary of State Colin Powell told Congress at his confirmation hearing in January 2001, “China is not an enemy, and our challenge is to keep it that way.”
Even as it began investing more of its newfound wealth in military power, the Chinese government sought to put Washington at ease, signaling continued adherence to the cautious, moderate foreign policy path set out by Deng. In 2005, the senior Communist Party official Zheng Bijian wrote in this magazine that China would never seek regional hegemony and remained committed to “a peaceful rise.” In 2011, after a lively debate among China’s leaders about whether it was time to shift gears, State Councilor Dai Bingguo assured the world that “peaceful development is a strategic choice China has made.” Starting in 2002, the U.S. Defense Department had been producing a congressionally mandated annual report on China’s military, but the consensus among senior U.S. officials was that China remained a distant and manageable challenge.
For Beijing, the United States’ alliances and military presence in Asia posed unacceptable threats to China’s interests.
That view, however, underestimated just how simultaneously insecure and ambitious China’s leadership really was. For Beijing, the United States’ alliances and military presence in Asia posed unacceptable threats to China’s interests in Taiwan, on the Korean Peninsula, and in the East China and South China Seas. In the words of the Peking University professor Wang Jisi, “It is strongly believed in China that . . . Washington will attempt to prevent the emerging powers, in particular China, from achieving their goals and enhancing their stature.” So China started to chip away at the U.S.-led security order in Asia, developing the capabilities to deny the U.S. military access to the region and driving wedges between Washington and its allies.
Ultimately, neither U.S. military power nor American diplomatic engagement has dissuaded China from trying to build a world-class military of its own. High-tech displays of American power in Iraq and elsewhere only accelerated efforts to modernize the PLA. Chinese President Xi Jinping has launched military reforms that will make Chinese forces more lethal and more capable of projecting military power well beyond China’s shores. With its third aircraft carrier reportedly under construction, advanced new military installations in the South China Sea, and its first overseas military base in Djibouti, China is on the path to becoming a military peer the likes of which the United States has not seen since the Soviet Union. China’s leaders no longer repeat Deng’s dictum that, to thrive, China will “hide [its] capabilities and bide [its] time.” Xi declared in October 2017 that “the Chinese nation has gone from standing up, to becoming rich, to becoming strong.”
THE CONSTRAINTS OF ORDER
At the end of World War II, the United States built institutions and rules that helped structure global politics and the regional dynamics in Asia. Widely accepted norms, such as the freedom of commerce and navigation, the peaceful resolution of disputes, and international cooperation on global challenges, superseded nineteenth-century spheres of influence. As a leading beneficiary of this liberal international order, the thinking went, Beijing would have a considerable stake in the order’s preservation and come to see its continuation as essential to China’s own progress. U.S. policy aimed to encourage Beijing’s involvement by welcoming China into leading institutions and working with it on global governance and regional security.
As China joined multilateral institutions, U.S. policymakers hoped that it would learn to play by the rules and soon begin to contribute to their upkeep. In the George W. Bush administration, Deputy Secretary of State Robert Zoellick memorably called on Beijing to become “a responsible stakeholder” in the international system. From Washington’s perspective, with greater power came greater obligation, especially since China had profited so handsomely from the system. As Obama emphasized, “We expect China to help uphold the very rules that have made them successful.”
In certain venues, China appeared to be steadily, if unevenly, taking on this responsibility. It joined the Asia-Pacific Economic Cooperation organization in 1991, acceded to the Nuclear Nonproliferation Treaty in 1992, joined the World Trade Organization in 2001, and took part in major diplomatic efforts, including the six-party talks and the P5+1 negotiations to deal with nuclear weapons programs in North Korea and Iran, respectively. It also became a major contributor to UN counterpiracy and peacekeeping operations.
Yet Beijing remained threatened by other central elements of the U.S.-led order—and has increasingly sought to displace them. That has been especially true of what it sees as uninvited violations of national sovereignty by the United States and its partners, whether in the form of economic sanctions or military action. Liberal norms regarding the international community’s right or responsibility to intervene to protect people from human rights violations, for example, have run headlong into China’s paramount priority of defending its authoritarian system from foreign interference. With a few notable exceptions, China has been busy watering down multilateral sanctions, shielding regimes from Western opprobrium, and making common cause with Russia to block the UN Security Council from authorizing interventionist actions. A number of nondemocratic governments—in Sudan, Syria, Venezuela, Zimbabwe, and elsewhere—have benefited from such obstruction.
China has also set out to build its own set of regional and international institutions—with the United States on the outside looking in—rather than deepening its commitment to the existing ones. It has launched the Asian Infrastructure Investment Bank, the New Development Bank (along with Brazil, Russia, India, and South Africa), and, most notably, the Belt and Road Initiative, Xi’s grandiose vision for building land and maritime routes to connect China to much of the world. These institutions and programs have given China agenda-setting and convening power of its own, while often departing from the standards and values upheld by existing international institutions. Beijing explicitly differentiates its approach to development by noting that, unlike the United States and European powers, it does not demand that countries accept governance reforms as a condition of receiving aid.
The assumptions driving U.S. China policy look increasingly tenuous.
In its own region, meanwhile, Beijing has set out to change the security balance, incrementally altering the status quo with steps just small enough to avoid provoking a military response from the United States. In the South China Sea, one of the world’s most important waterways, China has deftly used coast guard vessels, legal warfare, and economic coercion to advance its sovereignty claims. In some cases, it has simply seized contested territory or militarized artificial islands. While Beijing has occasionally shown restraint and tactical caution, the overall approach indicates its desire to create a modern maritime sphere of influence.
In the summer of 2016, China ignored a landmark ruling by a tribunal under the UN Convention on the Law of the Sea, which held that China’s expansive claims in the South China Sea were illegal under international law. U.S. officials wrongly assumed that some combination of pressure, shame, and its own desire for a rules-based maritime order would cause Beijing, over time, to accept the judgment. Instead, China has rejected it outright. Speaking to a security forum in Aspen, Colorado, a year after the ruling, in July 2017, a senior analyst from the CIA concluded that the experience had taught China’s leaders “that they can defy international law and get away with it.” Countries in the region, swayed by both their economic dependence on China and growing concerns about the United States’ commitment to Asia, have failed to push back against Chinese assertiveness as much as U.S. policymakers expected they would.
TAKING STOCK
As the assumptions driving U.S. China policy have started to look increasingly tenuous, and the gap between American expectations and Chinese realities has grown, Washington has been largely focused elsewhere. Since 2001, the fight against jihadist terrorism has consumed the U.S. national security apparatus, diverting attention from the changes in Asia at exactly the time China was making enormous military, diplomatic, and commercial strides. U.S. President George W. Bush initially referred to China as a “strategic competitor”; in the wake of the September 11 attacks, however, his 2002 National Security Strategy declared, “The world’s great powers find ourselves on the same side—united by common dangers of terrorist violence and chaos.” During the Obama administration, there was an effort to “pivot,” or “rebalance,” strategic attention to Asia. But at the end of Obama’s time in office, budgets and personnel remained focused on other regions—there were, for example, three times as many National Security Council staffers working on the Middle East as on all of East and Southeast Asia.
This strategic distraction has given China the opportunity to press its advantages, further motivated by the increasingly prominent view in China that the United States (along with the West more broadly) is in inexorable and rapid decline. Chinese officials see a United States that has been hobbled for years by the global financial crisis, its costly war efforts in Afghanistan and Iraq, and deepening dysfunction in Washington. Xi has called on China to become “a global leader in terms of comprehensive national strength and international influence” by midcentury. He touts China’s development model as a “new option for other countries.”
Washington now faces its most dynamic and formidable competitor in modern history. Getting this challenge right will require doing away with the hopeful thinking that has long characterized the United States’ approach to China. The Trump administration’s first National Security Strategy took a step in the right direction by interrogating past assumptions in U.S. strategy. But many of Donald Trump’s policies—a narrow focus on bilateral trade deficits, the abandonment of multilateral trade deals, the questioning of the value of alliances, and the downgrading of human rights and diplomacy—have put Washington at risk of adopting an approach that is confrontational without being competitive; Beijing, meanwhile, has managed to be increasingly competitive without being confrontational.
The starting point for a better approach is a new degree of humility about the United States’ ability to change China. Neither seeking to isolate and weaken it nor trying to transform it for the better should be the lodestar of U.S. strategy in Asia. Washington should instead focus more on its own power and behavior, and the power and behavior of its allies and partners. Basing policy on a more realistic set of assumptions about China would better advance U.S. interests and put the bilateral relationship on a more sustainable footing. Getting there will take work, but the first step is relatively straightforward: acknowledging just how much our policy has fallen short of our aspirations.
Did America Get China Wrong?
The Engagement Debate
Furthermore, reexamining U.S. China policy does not require one to endorse Trump’s foreign policies. There are commendable elements of the Trump administration’s approach to Asia (even if much of it remains inchoate or incomplete), but an “America first” attitude to trade, alliances, human rights, and diplomacy runs the risk, as we wrote, of being “confrontational without being competitive.” Analysts at home and abroad should take care to separate a much-needed debate on U.S. China policy from critiques of Trump.
We share the views of Wang Jisi and Joseph Nye that the foundations of American power are strong. The United States boasts top-notch universities, innovative companies, favorable demographic trends, strong alliances, and plentiful energy resources, all of which provide a sound basis to protect and advance U.S. values and interests. We further agree that Washington should address endemic political dysfunction, fiscal irresponsibility, and income inequality at home, which threaten the United States’ future at least as much as any foreign power does.
Our objective in writing “The China Reckoning” was to interrogate the old consensus and spark a debate about the assumptions that have guided U.S. China policy, not to propose specific prescriptions. Analysts and policymakers need to refocus their lenses and grapple with new realities. We hope that our essay and these responses will mark a meaningful step in that direction.
China's New Revolution
The Reign of Xi Jinping
THE REVOLUTION BEGINS
Xi began his revolution as soon as he took power. For more than three decades, the Chinese political system had been run by a process of collective leadership, whereby decision-making authority was shared among officials in the Politburo Standing Committee, China’s top ruling body. But Xi quickly moved to centralize political authority in his own hands. Within the first few years of his tenure, he assumed leadership of all the most important committees overseeing policy, such as those concerning cyber issues, economic reform, and national security. He secured public pronouncements of loyalty from top officials, such as People’s Liberation Army generals and provincial party secretaries, as well as from the media. And he has used an anticorruption campaign to root out not just self-serving officials but also his political enemies. In July 2017, for example, Sun Zhengcai, a rising star within the CCP who served as party secretary of the municipality of Chongqing, was charged with corruption and removed from office; months later, a senior official announced that Sun had plotted with others to overthrow Xi.
At the 19th Party Congress, Xi further cemented his hold on CCP institutions and consolidated his personal power. His name and his ideology—“Xi Jinping Thought on Socialism With Chinese Characteristics for a New Era”—were enshrined in the party’s constitution, an honor previously granted only to Mao. More allies of his were added to the CCP’s 25-member Politburo and its seven-member Standing Committee, such that more than half of each group is now composed of Xi loyalists. Then came the change that left open the possibility that Xi could serve as president indefinitely.
Xi has matched the dramatic growth of his personal power with an equally dramatic intensification of the CCP’s power in society and the economy. The China scholar David Shambaugh once noted, “If one of the hallmarks of the Maoist state was the penetration of society, then the Dengist state was noticeable for its withdrawal.” Now, under Xi, the pendulum has swung back toward a greater role for the party. No element of political and economic life has remained untouched.
In the political sphere, the CCP has taken advantage of new technology and put greater pressure on the private sector to restrict access to forbidden content online, sharply diminishing the vibrancy of China’s virtual public square. Even privately shared humor can trigger police action. In September 2017, authorities detained a man for five days after he sent a joke about a rumored love triangle involving a government official to a group over the messaging app WeChat. The government is also developing a massive biometric database that, thanks to state-of-the-art voice- and facial-recognition technologies, could be married to its vast telephone and video surveillance network and used to identify and retaliate against party critics. By 2020, Beijing plans to have rolled out a national system of “social credit,” integrating information from online payment and social media apps into a database that would allow it to punish or reward citizens based on their supposed trustworthiness. Those whose behavior falls short—defaulting on a loan, participating in a protest, even wasting too much time playing video games—will face a range of consequences. The government might slow their Internet connections or restrict their access to everything from restaurants to travel to jobs, while giving preferred access to those who abide by the CCP’s rules.
For the first time, China is an illiberal state seeking leadership in a liberal world order.
On the economic front, Xi has defied expectations that he would accelerate market-based reforms. He has strengthened the position of state-owned enterprises, assigning them a leading role in economic development campaigns, and he has empowered the party committees that sit inside every Chinese firm. In recent years, those committees had only ill-defined roles, but thanks to a new requirement under Xi, management must seek their advice—and, in some cases, their approval—for all major decisions. The CCP has called for similar rules to apply in joint ventures with multinational corporations. Even private companies are no longer outside the party’s purview. In 2017, Beijing announced plans to expand an experiment in which the party takes small stakes in media and technology companies, including such giants as Alibaba and Tencent, and receives a degree of decision-making power.
AMBITIONS ABROAD
While Xi has limited political and economic openness at home, on the international stage, he has sought to position himself as globalizer in chief. At a meeting of the Asia-Pacific Economic Cooperation in November 2017, for example, he proclaimed, “Opening up will bring progress, and those who close down will inevitably lag behind.” Such rhetoric is misleading. In fact, one of the most distinctive elements of Xi’s rule has been his creation of a wall of regulations designed to control the flow of ideas, culture, and even capital between China and the rest of the world.
Although restrictions on foreign influence are nothing new in China, they have proliferated under Xi. In January 2017, Beijing enacted a stringent new law requiring nongovernmental organizations in China to register with the Ministry of Public Security, obtain permission for every activity they engage in, and refrain from fundraising within China. By March 2018, only 330-odd groups had registered, about four percent of the total that had been operating in China before the law. Meanwhile, Beijing has begun the process of formally blocking foreign-owned virtual private networks that allow users to circumvent China’s so-called Great Firewall.
A similar pattern has emerged in the economic realm. In 2015, in order to prevent China’s currency from depreciating and its foreign reserves from plummeting, Beijing placed strict controls on Chinese citizens’ and corporations’ ability to move foreign currency out of the country. That same year, the government launched its “Made in China 2025” program, a self-sufficiency drive that sets out ten key industries, from materials to artificial intelligence, in which Chinese firms are expected to control as much as 80 percent of the domestic market by 2025. To ensure that Chinese companies dominate, the government not only provides large subsidies but also puts in place a variety of barriers to foreign competition. In the electric car industry, for example, it has required Chinese automakers to use batteries made in Chinese factories that have been operating for more than a year, effectively eliminating the major Japanese and South Korean competitors.
Meanwhile, Xi has moved China further away from its traditional commitment to a low-profile foreign policy, accelerating a shift begun by his predecessor, Hu Jintao. Under Xi, China now actively seeks to shape international norms and institutions and forcefully asserts its presence on the global stage. As Xi colorfully put it in a 2014 speech, China should be capable of “constructing international playgrounds”—and “creating the rules” of the games played on them.
Xi’s most notable gambit on this front is his Belt and Road Initiative, a modern incarnation of the ancient Silk Road and maritime spice routes. Launched in 2013, the undertaking now encompasses as many as 900 projects, more than 80 percent of which are contracted to Chinese firms. But the effort goes far beyond mere infrastructure. In Pakistan, for example, the plan includes not only railroads, highways, and dams but also a proposal to develop a system of video and Internet surveillance similar to that in Beijing and a partnership with a Pakistani television channel to disseminate Chinese media content. The Belt and Road Initiative has also given China an opportunity to advance its military objectives. Chinese state-owned enterprises now run at least 76 ports and terminals out of 34 countries, and in Greece, Pakistan, and Sri Lanka, Chinese investment in ports has been followed by high-profile visits from Chinese naval vessels. Beijing has also announced that it will be establishing special arbitration courts for Belt and Road Initiative projects, thereby using the plan to promote an alternative legal system underpinned by Chinese rules.
Indeed, China is increasingly seeking to export its political values across the globe. In Ethiopia and Sudan, for example, the CCP is training officials on how to manage public opinion and the media, offering advice on what legislation to pass and which monitoring and surveillance technologies to use. Perhaps the most noteworthy effort is China’s campaign to promote its vision of a closed Internet. Under the banner of “cyber-sovereignty,” Beijing has promulgated the idea that countries should be allowed to, as one official document explained, “choose their own path of cyber development, model of cyber regulation and Internet public policies.” It has pushed for negotiations about Internet governance that would privilege states and exclude representatives from civil society and the private sector, and it hosts an annual conference to convince foreign officials and businesspeople of its view of the Internet.
China also dangles access to its massive domestic market to coerce corporations to play by its rules. In 2017, for example, Apple was convinced to open a data center in China in order to comply with new rules requiring foreign firms to store certain data inside the country (where it will presumably be easier to monitor). That same year, the company removed from its app store hundreds of programs that helped people get around the Great Firewall.
Ironically, for all the talk of sovereignty, part of Xi’s more assertive foreign policy involves unquestionable violations of it. The government’s Confucius Institutes and Confucius Classrooms, which purvey Chinese language and culture abroad, have come under increasing scrutiny in the United States and elsewhere for spreading CCP propaganda, although they probably pose a lesser threat to U.S. interests than is commonly thought. More challenging is China’s effort to mobilize its overseas communities, particularly students, to protest visits by the Dalai Lama, inform on Chinese studying abroad who do not follow the CCP line, and vociferously represent the government’s position on sensitive issues such as Hong Kong and Taiwan. This effort contributes to a climate of intimidation and fear within the Chinese overseas student community (not to mention the broader university community), and it threatens to tar all Chinese students as representatives of the Chinese government. Of even greater concern, Chinese security officials have on several occasions abducted former Chinese nationals who are now citizens of other countries. After a Chinese Swedish bookseller was snatched from a train in China and detained earlier this year, the state-supported Global Times editorialized, “European countries and the U.S. should educate their newly naturalized citizens that the new passport cannot be their amulet in China.”
There may be more pushback against Xi than is commonly thought.
RETHINKING XI
Many observers view Xi as an economic reformer who has been thwarted by powerful opposition, as the best hope for positive global leadership, as overwhelmingly popular among the Chinese people, and as committed to stability abroad in order to focus on affairs at home. In fact, such assessments miss four fundamental truths about him.
First, Xi is playing a long game. His preference for control over competition often leads to policies that appear suboptimal in the short run. For example, his centralization of power and anticorruption campaign have slowed decision-making at the top of the Chinese political system, which in turn has led to paralysis at local levels of governance and lower rates of economic growth. Yet such policies have a long-term payoff. Chinese leaders tolerate the inefficiencies that come with nonmarket policies—say, slow Internet connections or money-losing state-owned enterprises—not only because the policies enhance their own political power but also because they afford them the luxury of making longer-term strategic investments. Thus, for example, the government encourages state-owned enterprises to invest in high-risk economies in support of the Belt and Road Initiative, in order to gain controlling stakes in strategic ports or set technical standards, such as railway track gauges or types of satellite navigation systems, for the next wave of global economic development. Decisions that may appear immediately irrational in the context of a liberal political system and a market economy often have a longer-term strategic logic within China.
Second, although he harbors ambitions on the global stage, Xi has only rarely demonstrated true global leadership, in the sense of showing a willingness to align his country’s interests with—or even subordinate them to—those of the broader international community. With a few exceptions, such as when it comes to UN peacekeeping contributions, China steps up to provide global public goods only when doing so serves its own short-term interests or when it has been pressured to do so. Moreover, it is increasingly seeking to ignore established norms and set its own rules of the road. In 2016, when the International Court of Arbitration rejected Chinese claims to wide swaths of the South China Sea, Beijing simply dismissed the ruling and carried on with its land-reclamation and militarization efforts there.
Third, Xi’s centralization of power and growing control over information make it hard to assess how much consensus there really is in China about the direction in which he and the rest of the Chinese leadership are taking the country. There may be more pushback against Xi than is commonly thought. In academic and official circles, a wide-ranging debate over the merits of many of the regime’s policies rages, even if it is less robust than during previous times. Many of China’s wealthiest and most talented citizens, concerned about the state’s heavier hand, have moved their money and families abroad. Chinese lawyers and others have condemned many of Xi’s initiatives, including the recent move to eliminate term limits. Even his signature Belt and Road Initiative has generated criticism from scholars and business leaders, who argue that many of the proposed investments have no economic rationale.
Finally, Xi has eliminated the dividing line between domestic and foreign policy. There may have been a time when the political and economic implications of China’s authoritarian system were confined largely to its own society. But now that the country is exporting its political values—in some cases, to buttress other authoritarian-leaning leaders, and in others, to undermine international law and threaten other states’ sovereignty—China’s governance model is front and center in its foreign policy.
CHALLENGE AND RESPONSE
At the heart of Xi’s revolution is a values-based challenge to the international norms promoted by the United States. The Trump administration must now advance an equivalent challenge to China—one that begins with a forceful assertion of enduring American principles. This means not only maintaining a strong military presence in the Asia-Pacific but also demonstrating a continued commitment to free trade and democracy. At the same time, the United States must mount a vigorous defense at home. Because it can no longer count on China to continue the process of reform and opening up, it should stop sacrificing its own economic and political security. In the past, Washington tolerated a degree of intellectual property theft and unequal market access because it believed that China was making some progress toward market principles and the rule of law. With that logic off the table, there is no reason the United States shouldn’t adopt more restrictive policies toward China.
Keeping up with Xi’s many new initiatives is not easy, and it is tempting to respond to each one as it arrives. In March, for example, reports that Djibouti—home of the U.S. military’s only permanent base in Africa—was planning to give China control over a port prompted senior U.S. officials to sound alarm bells and press Djibouti to reverse course. Yet the United States offered no constructive alternative, such as an economic development package. More important, nor did it put forth a broader U.S. strategy to address China’s ambitions in Africa and other places covered by its Belt and Road Initiative. (As events played out, Djibouti awarded management of the port to a Singaporean company.) Such a reactive and piecemeal approach will do little to respond to the longer-term challenge posed by Xi’s revolution. At the other extreme, although it may be tempting to react to Xi’s changes by demanding that Washington come up with an entirely new China strategy, what is actually required is not an outright rejection of the past four decades of U.S. policy but a careful rethinking of that policy so as to incorporate what works and reevaluate what does not.
An effective China policy must rest on a robust demonstration of the United States’ commitment to its own principles. Despite U.S. President Donald Trump’s protectionist impulses and praise for autocrats, recent moves suggest that the White House has not entirely forsaken its commitment to liberal values in Asia. On his trip to the region in November 2017, the president articulated his support for a “free and open Indo-Pacific” and revived the quadrilateral partnership with Australia, India, and Japan, a dormant grouping of like-minded Pacific democracies that could start pushing back against Chinese aggression in the region. Indeed, the administration’s National Defense Strategy calls for placing a renewed emphasis on alliances to counter “revisionist powers.”
As a useful first step toward making good on its word, the administration should elaborate on the substance of the renewed quadrilateral partnership and establish how it will work in conjunction with other U.S. partners in Asia and elsewhere. One potential area of collaboration centers on high-stakes security issues. That could mean undertaking joint freedom-of-navigation operations in the South China Sea, providing alternative sources of investment for countries with strategically important ports, or supporting Taiwan in the face of Beijing’s increasingly coercive strategy.
Trump should also reopen discussions about the Trans-Pacific Partnership. Although he withdrew the United States from the deal days after his inauguration, more recently, he has expressed a willingness to consider a modified version of it. A revived agreement would not only promote market-based reforms in countries with largely state-dominated economies, such as Vietnam, but also provide a beachhead from which the United States could advance its own economic interests over the long term.
To compete with the Belt and Road Initiative, the United States should draw on its strengths in urban planning and technology. In the field of “smart cities,” many of the world’s top corporations and most innovative start-ups are American. Washington should partner with developing countries on urban planning for smart cities and help finance the deployment of U.S. firms’ technology, just as it did in 2014, when it worked with India on an ambitious program to upgrade that country’s urban infrastructure. Part of this endeavor should include support for companies from the United States—or from U.S. allies—to help build up developing countries’ fiber-optic cables, GPS, and e-commerce systems. Doing that would undercut China’s attempt to control much of the world’s digital infrastructure, which would give the country a global platform for censorship and economic espionage.
China’s push to shape other countries’ political systems underscores the need for the Trump administration to support U.S. institutions that promote political liberalization abroad, such as the National Endowment for Democracy, the International Republican Institute, the National Democratic Institute, and the Asia Foundation. These institutions can partner with Australia, Japan, and South Korea, along with European allies, to help build the rule of law in quasi-authoritarian states and buttress nascent democracies. Legal, educational, and structural reform programs can provide a critical bulwark against Chinese efforts to project authoritarian values abroad.
Of course, strength abroad begins with strength at home. China’s willingness to subordinate its short-term economic interests for longer-term strategic gains means that Washington must redouble its investment in science and technology, support the universities and national labs that serve as a wellspring of American innovation, and fund the development and deployment of new technologies by U.S. firms. Without such support, U.S. companies will be no match for better-funded Chinese ones, backed by Beijing’s long-term vision.
China is eager to restrict opportunities for outsiders to pursue their political and economic interests within its borders, even as it advances its own such interests outside China. Accordingly, it’s time for the Trump administration to take a fresh look at the notion of reciprocity—and do unto China as China does unto the United States. U.S. policymakers have long considered reciprocity a lose-lose proposition that harms relations with China without changing its behavior. Instead, they have acted under the assumption that if the United States remains true to its democratic values and demonstrates what responsible behavior looks like, China will eventually follow its lead. Xi has upended this understanding because he has stalled, and in some respects reversed, the political and economic reforms begun under Deng and has transformed the United States’ openness into a vulnerability.
Reciprocity could take a number of forms. In some cases, the punishment should be relatively light. For example, the Trump administration could bar China from establishing additional Confucius Institutes and Confucius Classrooms in the United States unless China permits more American Centers for Cultural Exchange, organizations funded by the U.S. government on Chinese university campuses. Currently, there are fewer than 30 such centers in China and more than a hundred Confucius Institutes and over 500 Confucius Classrooms in the United States. U.S. universities, for their part, could refuse to host Confucius Institutes or forge other partnerships with Chinese institutions if any member of their faculty is banned from travel to China—a punishment Beijing has often meted out to critical scholars.
Washington should also consider constraining Chinese investment in the United States in areas that are out of bounds for U.S. businesses in China, such as telecommunications, transportation, construction, and media. That might take the form of limiting Chinese stakes in U.S. companies to the same level that Beijing permits foreign firms to have in Chinese companies. More provocatively, the United States could tacitly or explicitly support other Asian countries’ efforts to militarize islands in the South China Sea in an effort to raise the costs for China of doing the same. Reciprocity need not be an end in itself. Ideally, in fact, a reciprocal action (or even just the threat of one) would bring China to the negotiating table, where a better outcome could be reached.
While Xi poses new challenges for the United States, he also offers a distinct new opportunity: the chance for Washington to hold him publicly accountable for his claim that China is prepared to assume greater global leadership. In 2014, the Obama administration achieved some success in leveraging Xi’s ambitions when it pressured China to adopt limits on its carbon emissions and to increase substantially the amount of assistance it provided African countries struck by the Ebola crisis. Similarly, the Trump administration successfully pushed China to adopt tougher sanctions to try to rein in North Korea’s nuclear program. More such moves should follow. The administration should call on China to play a bigger role in addressing the global refugee crisis, particularly the part of it taking place in the country’s own backyard. In bordering Myanmar, more than 650,000 refugees from the Rohingya ethnic minority have fled to Bangladesh, overwhelming that impoverished country. China has offered to serve as a mediator between the two countries. But it also blocked a UN Security Council resolution to appoint a special envoy to Myanmar and has downplayed concerns about the plight of the Rohingya, focusing more on protecting Belt and Road Initiative projects from the violence in Myanmar. The United States and others should say it loud and clear: with global leadership comes greater global responsibility.
WILL XI SUCCEED?
Does China’s third revolution have staying power? History is certainly not on Xi’s side. Despite a weakening of democratic institutions in some parts of the world, all the major economies—save China—are democracies. And it is possible to map out, as many scholars have, potential paths to a Chinese democratic transition. One route is through an economic crisis, which could produce a demand for change. China’s economy is showing signs of strain, with Chinese household, corporate, and government debt as a proportion of GDP all having skyrocketed since the 2008 global financial crisis. Some Chinese economists argue that the country faces a sizable challenge from its rapidly aging population and massively underfunded pension system, coupled with its persistently low birthrate, even after the end of the one-child policy.
It’s also conceivable that Xi could overreach. At home, discontent with his repressive policies has spread within large parts of China’s business and intellectual communities. The number of labor protests has more than doubled during his tenure. Moreover, although often forgotten in China’s current political environment, the country is not without its champions of democracy. Prominent scholars, activists, journalists, retired officials, and wealthy entrepreneurs have all spoken out in favor of democratic reform in the recent past. At the same time, Xi’s move to eliminate term limits stirred a great deal of controversy within top political circles. As Chinese officials have admitted to the press, there have even been coup and assassination attempts against Xi.
Abroad, Beijing’s aggressive efforts to expand its influence have been met with frequent backlashes. In just the past year, widespread protests against Chinese investments have erupted in Bangladesh, Kazakhstan, Kenya, and Sri Lanka. As China presses forward with its more ambitious foreign policy, more such instances will undoubtedly crop up, raising the prospect that Xi will been seen as failing abroad, thus undermining his authority at home.
Nonetheless, there is little compelling evidence that Xi’s revolution is in danger of being reversed. Many of his accomplishments have earned him widespread popular support. He has survived past crises, such as a major stock market crash in 2015, and at the 19th Party Congress, his consolidation of institutional power and mandate for change were only strengthened. For the foreseeable future, then, the United States will have to deal with China as it is: an illiberal state seeking to reshape the international system in its own image. The good news is that Xi has made his revolutionary intentions clear. There is no excuse now for the United States not to respond in equally unambiguous terms.
How China Sees America
The Sum of Beijing’s Fears
Nevertheless, U.S. interests in relation to China are uncontroversial and should be affirmed: a stable and prosperous China, resolution of the Taiwan issue on terms Taiwan's residents are willing to accept, freedom of navigation in the seas surrounding China, the security of Japan and other Asian allies, an open world economy, and the protection of human rights. The United States must back these preferences with credible U.S. power, in two domains in particular. First, the United States must maintain its military predominance in the western Pacific, including the East China and South China seas. To do so, Washington will have to continue to upgrade its military capabilities, maintain its regional defense alliances, and respond confidently to challenges. Washington should reassure Beijing that these moves are intended to create a balance of common interests rather than to threaten China. That reassurance can be achieved by strengthening existing mechanisms for managing U.S.-Chinese military interactions. For example, the existing Military Maritime Consultative Agreement should be used to design procedures that would allow U.S. and Chinese aircraft and naval vessels to operate safely when in close proximity.
Second, the United States should continue to push back against Chinese efforts to remake global legal regimes in ways that do not serve the interests of the West. This is especially important in the case of the human rights regime, a set of global rules and institutions that will help determine the durability of the liberal world order the United States has long sought to uphold.
China has not earned a voice equal to that of the United States in a hypothetical Pacific Community or a role in a global condominium as one member of a "G-2." China will not rule the world unless the United States withdraws from it, and China's rise will be a threat to the United States and the world only if Washington allows it to become one. For the United States, the right China strategy begins at home. Washington must sustain the country's military innovation and renewal, nurture its relationships with its allies and other cooperating powers, continue to support a preeminent higher-education sector, protect U.S. intellectual property from espionage and theft, and regain the respect of people around the world. As long as the United States addresses its problems at home and holds tight to its own values, it can manage China's rise.
Autocracy With Chinese Characteristics
Beijing's Behind-the-Scenes Reforms
Bureaucratic reforms among local leaders were critical but not sufficient. Below them are the street-level bureaucrats who run the daily machinery of governance. And in the Chinese bureaucracy, these inspectors, officers, and even teachers are not merely providers of public services but also potential agents of economic change. For example, they might use personal connections to recruit investors to their locales or use their departments to provide commercial services as state-affiliated agencies.
Career incentives do not apply to rank-and-file public employees, as there is little chance of being promoted to the elite level; most civil servants do not dream of becoming mayors. Instead, the government has relied on financial incentives, through an uncodified system of internal profit sharing that links the bureaucracy’s financial performance to individual remuneration. Although profit sharing is usually associated with capitalist corporations, it is not new to China’s bureaucracy or, indeed, to any premodern state administration. As the sociologist Max Weber noted, before the onset of modernization, instead of receiving sufficient, stable salaries from state budgets, most public agents financed themselves through the prerogatives of office—for example, skimming off a share of fees and taxes for themselves. Modern observers may frown on such practices, considering them corrupt, but they do have some benefits.
Before Deng’s reforms, the Chinese bureaucracy was far from modern or technocratic; it was a mishmash of traditional practices and personal relationships, inserted into a Leninist structure of top-down commands. So when Chinese markets opened up, bureaucratic agents naturally revived many traditional practices, but with a twentieth-century capitalist twist. Within the vast Chinese bureaucracy, formal salaries for officials and public employees were standardized at abysmally low rates. For instance, President Hu Jintao’s official salary in 2012 was the equivalent of only about $1,000 a month. An entry-level civil servant received far less, about $150 a month. But in practice, these low salaries were supplemented by an array of additional perks, such as allowances, bonuses, gifts, and free vacations and meals.
And unlike in other developing countries, supplemental compensation in China’s bureaucracy was pegged to financial performance: the central government granted local authorities partial autonomy to spend the funds they earned. The more tax revenue a local government generated and the more nontax revenue (such as fees and profits) that party and state offices earned, the more compensation they could provide to their staff members.
What emerged was essentially a variant of profit sharing: public employees took a cut of the revenue produced by their organizations. These changes fueled a results-oriented culture in the bureaucracy, although results in the Chinese context were measured purely in economic terms. These strong incentives propelled the bureaucracy to help transition the economy toward capitalism.
A profit-oriented public bureaucracy has drawbacks, of course, and throughout the 1980s and 1990s, Chinese complained endlessly about arbitrary payments and profiteering. In response, from the late 1990s on, reformers rolled out a suite of measures aimed at combating petty corruption and the theft of public funds. Central authorities abolished cash payments of fees and fines and allowed citizens to make payments directly through banks. These technical reforms were not flashy, yet their impact was significant. Police officers, for example, are now far less likely to extort citizens and privately pocket fines. Over time, these reforms have made the Chinese people less vulnerable to petty abuses of power. In 2011, Transparency International found that only nine percent of Chinese citizens reported having paid a bribe in the past year, compared with 54 percent in India, 64 percent in Nigeria, and 84 percent in Cambodia. To be sure, China has a serious corruption problem, but the most significant issue is collusion among political and business elites, not petty predation.
Although none of these bureaucratic reforms fits the bill of traditional political reforms, their effects are political. They have changed the priorities of government, introduced competition, and altered how citizens encounter the state. Above all, they have incentivized economic performance, allowing the CCP to enjoy the benefits of continued growth while evading the pressures of political liberalization.
Substituting bureaucratic reform for political reform has bought the CCP time. For the first few decades of China’s market transition, the party’s reliance on the bureaucracy to act as the agent of change paid off. But can this approach forestall pressure for individual rights and democratic freedoms forever? Today, there are increasing signs that the bureaucracy has come close to exhausting its entrepreneurial and adaptive functions. Since Xi took office in 2012, the limits of bureaucratic reform have become increasingly clear.
Substituting bureaucratic reform for political reform has bought the CCP time.
The Xi era marks a new stage in the country’s development. China is now a middle-income economy with an increasingly educated, connected, and demanding citizenry. And the political pressures that have come with prosperity are, in fact, beginning to undermine the reforms that propelled China’s rapid growth.
The cadre evaluation system has come under particular stress. Over time, the targets assigned to local leaders have steadily crept upward. In the 1980s and 1990s, officials were evaluated like CEOs, on their economic performance alone. But today, in addition to economic growth, leaders must also maintain social harmony, protect the environment, supply public services, enforce party discipline, and even promote happiness. These changes have paralyzed local leaders. Whereas officials used to be empowered to do whatever it took to achieve rapid growth, they are now constrained by multiple constituents and competing demands, not unlike democratically elected politicians.
Xi’s sweeping anticorruption campaign, which has led to the arrest of an unprecedented number of officials, has only made this worse. In past decades, assertive leadership and corruption were often two sides of the same coin. Consider the disgraced party secretary Bo Xilai, who was as ruthless and corrupt as he was bold in transforming the western backwater of Chongqing into a thriving industrial hub. Corrupt dealings aside, all innovative policies and unpopular decisions entail political risk. If Xi intends to impose strict discipline—in his eyes, necessary to contain the political threats to CCP rule—then he cannot expect the bureaucracy to innovate or accomplish as much as it has in the past.
Moreover, sustaining growth in a high-income economy requires more than merely constructing industrial parks and building roads. It demands fresh ideas, technology, services, and cutting-edge innovations. Government officials everywhere tend to have no idea how to drive such developments. To achieve this kind of growth, the government must release and channel the immense creative potential of civil society, which would necessitate greater freedom of expression, more public participation, and less state intervention.
Yet just as political freedoms have become imperative for continued economic growth, the Xi administration is backpedaling. Most worrying is the party leadership’s decision to remove term limits among the top brass, a change that will allow Xi to stay in office for the rest of his life. So long as the CCP remains the only party in power, China will always be susceptible to what the political scientist Francis Fukuyama has called “the bad emperor problem”—that is, extreme sensitivity to leadership idiosyncrasies. This means that under a leader like Deng, pragmatic and committed to reform, China will prosper and rise. But a more absolutist and narcissistic leader could create a nationwide catastrophe.
Xi has been variously described as an aspiring reformer and an absolute dictator. But regardless of his predilections, Xi cannot force the genie of economic and social transformation back into the bottle. China today is no longer the impoverished, cloistered society of the 1970s. Further liberalization is both inevitable and necessary for China’s continued prosperity and its desire to partake in global leadership. But contrary to Friedman’s prediction, this need not take the form of multiparty elections. China still has tremendous untapped room for political liberalization on the margins. If the party loosens its grip on society and directs, rather than commands, bottom-up improvisation, this could be enough to drive innovation and growth for at least another generation.
CHINA AND DEMOCRACY
What broader lessons on democracy can be drawn from China? One is the need to move beyond the narrow conception of democratization as the introduction of multiparty elections. As China has shown, some of the benefits of democratization can be achieved under single-party rule. Allowing bureaucratic reforms to unfold can work better than trying to impose political change from the outside, since over time, the economic improvements that the bureaucratic reforms generate should create internal pressure for meaningful political reform. This is not to say that states must delay democracy in order to experience economic growth. Rather, China’s experience shows that democracy is best introduced by grafting reforms onto existing traditions and institutions—in China’s case, a Leninist bureaucracy. Put simply, it is better to promote political change by building on what is already there than by trying to import something wholly foreign.
A second lesson is that the presumed dichotomy between the state and society is a false one. American observers, in particular, tend to assume that the state is a potential oppressor and so society must be empowered to combat it. This worldview arises from the United States’ distinct political philosophy, but it is not shared in many other parts of the world.
In nondemocratic societies such as China, there has always been an intermediate layer of actors between the state and society. In ancient China, the educated, landholding elite filled this role. They had direct access to those in power but were still rooted in their communities. China’s civil service occupies a similar position today. The country’s bureaucratic reforms were successful because they freed up space for these intermediate actors to try new initiatives.
Additionally, observers should drop the false dichotomy between the party and the state when reading China. The American notion of the separation of powers is premised on the assumption that officeholders possess only one identity, belonging either to one branch of government or another. But this doesn’t hold in China or in most traditional societies, where fluid, overlapping identities are the norm. In these settings, whether officials are embedded in their networks or communities can sometimes matter more than formal checks and electoral competition in holding them accountable. For example, profit-sharing practices within China’s bureaucracy gave its millions of public employees a personal stake in their country’s capitalist success.
Challenging these unspoken assumptions sheds light on why China has repeatedly defied expectations. It should also prompt the United States to rethink its desire to export democracy around the world and its state-building efforts in traditional societies. Everyone everywhere wants the benefits of democracy, but policymakers would be dearly mistaken to think that these can be achieved only by transplanting the U.S. political system wholesale.
As for other authoritarian governments keen to emulate China, their leaders should not pick up the wrong lessons. China’s economic success is not proof that relying on top-down commands and suppressing bottom-up initiative work. In fact, it’s the exact opposite: the disastrous decades under Mao proved that this kind of leadership fails. In Deng’s era, the CCP managed a capitalist revolution only insofar as it introduced democratizing reforms to ensure bureaucratic accountability, promote competition, and limit the power of individual leaders. The current Chinese leadership should heed this lesson, too.
The Future of U.S.-Chinese Relations
Conflict Is a Choice, Not a Necessity
The rise of China is less the result of its increased military strength than of the United States’ own declining competitive position, driven by factors such as obsolescent infrastructure, inadequate attention to research and development, and a seemingly dysfunctional governmental process. The United States should address these issues with ingenuity and determination instead of blaming a putative adversary. It must take care not to repeat in its China policy the pattern of conflicts entered with vast public support and broad goals but ended when the American political process insisted on a strategy of extrication that amounted to an abandonment, if not a complete reversal, of the country’s proclaimed objectives.
China can find reassurance in its own record of endurance and in the fact that no U.S. administration has ever sought to alter the reality of China as one of the world’s major states, economies, and civilizations. Americans would do well to remember that even when China’s GDP is equal to that of the United States, it will need to be distributed over a population that is four times as large, aging, and engaged in complex domestic transformations occasioned by China’s growth and urbanization. The practical consequence is that a great deal of China’s energy will still be devoted to domestic needs.
Both sides should be open to conceiving of each other’s activities as a normal part of international life and not in themselves as a cause for alarm. The inevitable tendency to impinge on each other should not be equated with a conscious drive to contain or dominate, so long as both can maintain the distinction and calibrate their actions accordingly. China and the United States will not necessarily transcend the ordinary operation of great-power rivalry. But they owe it to themselves, and the world, to make an effort to do so.
The Real China Model
It's Not What You Think It Is
Visitors impressed by the gleaming infrastructure and rising wealth of China’s first-tier cities may be tempted to conclude that such prosperity is the result of authoritarianism. But since the Chinese Communist Party took power in 1949, single-party rule has coincided with abject failure as well as dramatic success. Mao’s effort to catch up with the United Kingdom’s industrial output in seven years culminated in the world’s largest man-made famine: 30 million peasants starved to death within three years.
It is important to note that even Chinese policymakers cannot come to a consensus on what the China model is. In Beijing, elites are still debating whether it was Maoism or Dengism, central planning or decentralization, public investment or private capital, that played a larger role in China’s development—and what the right balance ought to be going forward. Despite urging other countries to learn from “Chinese wisdom” and “the China solution,” Xi never specifies what this means. It is not surprising that China’s attempts to share lessons from its development with other countries are often reduced to showing off model sites, invoking Confucianism, or idealistically portraying the party as “meritocratic." More worrying, by centralizing power and clamping down on freedom, the current regime is moving away from directed improvisation, which has enabled China's adaptability over the past four decades, and toward top-down control, which failed during the Maoist era.
There are certainly valuable lessons to draw from China’s development—the country achieved an unprecedented duration of sustained economic growth and lifted hundreds of millions of people out of poverty in the process. But it is crucial to draw the right lessons. Autocracy alone was not the key to China’s impressive growth. Rather, it was the introduction of some democratic qualities through bureaucratic reforms and Beijing’s willingness to allow and direct local improvisation that enabled the nation’s economic dynamism. Instead of relying on top-down commands, the country leveraged local knowledge and resources, promoted diversity, and motivated people to contribute their ideas and effort. These characteristics should be familiar to any democracy; China just incorporated them into single-party rule.
Stop Obsessing About China
Why Beijing Will Not Imperil U.S. Hegemony
Slowing this spiral requires both sides to take a clear-eyed look at the real balance of power. China must recognize that its economy and military are not strong enough to support grand ambitions for territorial conquest and regional hegemony. Its best option, therefore, is to become a responsible stakeholder in the existing international order. The United States, on the other hand, must recognize that China is nowhere close to achieving regional hegemony, let alone to challenging U.S. global primacy. The most sensible path, therefore, is to maintain deep economic, diplomatic, and cultural ties with China while taking sensible steps to keep it in check.
Instead of spending trillions of dollars building a 355-ship navy, for example, the United States should strengthen existing power relationships in East Asia by helping China’s neighbors develop defensive military capabilities and deploying U.S. antiship and surface-to-air missile launchers on allied shores along the East and South China Seas. Instead of rushing into a 1930s-style tariff war, the United States should punish Chinese trade violations and espionage through a reformed WTO, regional free trade pacts, and targeted export controls and investment restrictions. Rather than reflexively opposing China’s international initiatives, as the United States did with the Asian Infrastructure Investment Bank, Washington should join and shape them from within, as China did with the World Bank. Instead of combatting Chinese sharp power by imitating Beijing and shutting down media, cultural exchanges, and private organizations, the United States should use its free press and open civil society as soft power tools to expose and discredit Chinese meddling. Instead of countering China’s Belt and Road Initiative by spending billions of dollars on dubious infrastructure abroad, Washington would do better to spend those funds on infrastructure, scientific research, and job training at home.
The main threat to U.S. primacy is not China’s rise but geopolitical hyperventilating that emboldens Beijing while encouraging reckless U.S. foreign adventures and domestic underinvestment. The United States' longstanding policy of engagement may not have democratized China, but it has preserved U.S. primacy and made the world a more peaceful place. To let exaggerated fears undermine this achievement is a tragic misstep that will ultimately leave the United States less secure, powerful, and prosperous.
Was Letting China Into the WTO a Mistake?
Why There Were No Better Alternatives
In fact, in the 15 years following China’s accession, the United States enjoyed broad freedom to apply tariffs on imports from China. As part of China’s accession, the United States had the right to apply a special China safeguard if imports from China were found to be disrupting U.S. markets. (This is known as Sec. 421.) There were a total of seven such cases filed under this provision. Five made it past the U.S. International Trade Commission but only one resulted in U.S. tariffs—specifically, against Chinese tires. The case of the tire tariffs, in retrospect, looks to have been a policy failure, however, because the United States mostly resorted to importing tires from other countries at somewhat higher prices. The evidence is thus clear that the United States was not particularly constrained in its ability to apply bilateral tariffs; it just wisely chose not to.
What about China’s willingness to follow WTO rules? The United States has filed 12 WTO complaints that have resulted in rulings against China. In all of these cases, China has taken some action to comply. In none of them has there been an Article 22 suspension request, in which a party threatens trade sanctions due to a failure to comply. This indicates that the WTO has had success in holding China to its commitments.
The problem with the U.S. Trade Representative’s January 2018 report—in which it claimed that the United States had erred in letting China into the WTO—is that the commitments China made in 2001 do not cover all of the behaviors that are now of concern. Neither China’s WTO accession protocol nor the structure of the organization in 2001 was sufficient to ensure ideal Chinese economic behavior in the decades that followed. This is an indictment of the subsequent failure to pass new multilateral rules, however, rather than of the decision to admit China to the global system. China continues to pose economic policy challenges, but there is no indication these would be any easier to resolve were China unbound by WTO rules.
Course Correction
How to Stop China's Maritime Advance
DARE TO ACT
In order to alter China’s incentives, the United States should issue a clear warning: that if China continues to construct artificial islands or stations powerful military assets, such as long-range missiles or combat aircraft, on those it has already built, the United States will fundamentally change its policy toward the South China Sea. Shedding its position of neutrality, Washington would stop calling for restraint and instead increase its efforts to help the region’s countries defend themselves against Chinese coercion.
In this scenario, the United States would work with the other countries with claims in the sea to reclaim land around their occupied territories and to fortify their bases. It would also conduct joint exercises with their militaries and sell them the type of weapons that are known to military specialists as “counterintervention” capabilities, to give them affordable tools to deter Chinese military coercion in and around the area. These weapons should include surveillance drones, sea mines, land-based antiship missiles, fast-attack missile boats, and mobile air defenses.
A program like this would make China’s efforts to dominate the sea and the airspace above it considerably riskier for Beijing. The United States would not aim to amass enough collective firepower to defeat the People’s Liberation Army, or even to control large swaths of the sea; instead, the goal would be for partners in the region to have the ability to deny China access to important waterways, nearby coastlines, and maritime chokepoints.
Beijing will not compromise as long as it finds itself pushing on an open door.
The United States should turn to allies and partners that already have close security ties in Southeast Asia for help. Japan could prove especially valuable, since it already sees China as a threat, works closely with several countries around the South China Sea, and is currently developing its own defenses against Chinese encroachment on its outer islands in the East China Sea. Australia, meanwhile, enjoys closer relations with Indonesia and Malaysia than does the United States, as does India with Vietnam—ties that would allow Australia and India to give these countries significantly more military heft than Washington could provide on its own.
Should Beijing refuse to change course, Washington should also negotiate new agreements with countries in the region to allow U.S. and other friendly forces to visit or, in some cases, be permanently stationed on their bases in the South China Sea. It should consider seeking access to Itu Aba Island (occupied by Taiwan), Thitu Island (occupied by the Philippines), and Spratly Island (occupied by Vietnam)—members of the Spratly Islands archipelago and the first-, second-, and fourth-largest naturally occurring islands in the sea, respectively. In addition to making it easier for the United States and its partners to train together, having forces on these islands would create new tripwires for China, increasing the risks associated with military coercion.
This new deterrent would present Beijing with a stark choice: on the one hand, it can further militarize the South China Sea and face off against countries with increasingly advanced bases and militaries, backed by U.S. power, or, on the other hand, it can stop militarizing the islands, abandon plans for further land reclamation, and start working seriously to find a diplomatic solution.
KEEPING THE PEACE
For this strategy to succeed, countries in the region will need to invest in stronger militaries and work more closely with the United States. Fortunately, this is already happening. Vietnam has purchased an expensive submarine fleet from Russia to deter China; Taiwan recently announced plans to build its own. Indonesia has stepped up military exercises near its resource-rich Natuna Islands. And despite President Rodrigo Duterte’s hostile rhetoric, the Philippines has not canceled plans to eventually allow the United States to station more warships and planes at Philippine ports and airfields along the eastern edge of the South China Sea.
But significant barriers remain. Many countries in the region fear that China will retaliate with economic penalties if they partner with the United States. In the wake of Trump’s withdrawal from the Trans-Pacific Partnership trade agreement, Southeast Asian countries are increasingly convinced that it is inevitable that China will dominate the economic order in the region, even as many are concerned by that prospect. This growing perception will make countries in the region reluctant to enter into new military activities with the United States for fear of Chinese retribution. The only way for Washington to prevent this dangerous trend is to offer a viable alternative to economic dependence on China. That could mean reviving a version of the TPP or proposing a new and equally ambitious initiative on regional trade and investment. The United States cannot beat something with nothing.
Washington should also do more to shape the domestic politics of countries with claims in the South China Sea by publicly disseminating more information about China’s activities in the sea. Journalists and defense specialists currently have to rely on sporadic and incomplete commercial satellite images to understand China’s actions. The U.S. government should supplement these with regular reports and images of China’s weapons deployments, as well as of Chinese navy and coast guard ships and Chinese state-backed fishing vessels illegally operating in other countries’ exclusive economic zones and territorial waters.
Countries in the region will also be more likely to cooperate with Washington if they can count on the United States to uphold international law. To that end, the U.S. Navy should conduct freedom-of-navigation patrols in the South China Sea regularly, not just when Washington wants to make a diplomatic point.
Critics of a more muscular deterrent argue that it would only encourage China to double down on militarization. But over the last few years, the United States has proved that by communicating credible consequences, it can change China’s behavior. In 2015, when the Obama administration threatened to impose sanctions in response to Chinese state-sponsored theft of U.S. commercial secrets, the Chinese government quickly curbed its illicit cyber-activities. And in the waning months of the Obama administration, Beijing finally began to crack down on Chinese firms illegally doing business with North Korea after Washington said that it would otherwise impose financial penalties on Chinese companies that were evading the sanctions against North Korea.
Moreover, greater pushback by the United States will not, as some have asserted, embolden the hawks in the Chinese leadership. In fact, those in Beijing advocating more militarization of the South China Sea have done so on the grounds that the United States is irresolute, not that it is belligerent. The only real chance for a peaceful solution to the disputes lies in stopping China’s momentum. Beijing will not compromise as long as it finds itself pushing on an open door.
And in the event that China failed to back down from its revisionist path, the United States could live with a more militarized South China Sea, as long as the balance of power did not tilt excessively in China’s favor. This is why China would find a U.S. threat to ratchet up military support for other countries with claims in the sea credible. Ensuring that countries in the region can contribute to deterring Chinese aggression would provide more stability than relying solely on Chinese goodwill or the U.S. military to keep the peace. Admittedly, with so many armed forces operating in such a tense environment, the countries would need to develop new mechanisms to manage crises and avoid unintended escalation. But in recent years, ASEAN has made significant progress on this front by devising new measures to build confidence among the region’s militaries, efforts that the United States should support.
Finally, some critics of a more robust U.S. strategy claim that the South China Sea simply isn’t worth the trouble, since a Chinese sphere of influence would likely prove benign. But given Beijing’s increasing willingness to use economic and military pressure for political ends, this bet is growing riskier by the day. And even if Chinese control began peacefully, there would be no guarantee that it would stay peaceful. The best way to keep the sea conflict free is for the United States to do what has served it so well for over a century: prevent any other power from commanding it.
A Counterproductive Cold War With China
Washington's "Free and Open Indo-Pacific" Strategy Will Make Asia Less Open and Less Free
Unfortunately, neither Washington nor Beijing is progressing in any of these areas, and this portends serious future problems for Asia. Under Chinese President Xi Jinping, Beijing has increased domestic repression, more assertively employed its economic and military power to pressure and intimidate Asian nations over sovereignty disputes, and explicitly (albeit somewhat vaguely) presented its economic development experience—and by implication its political system—as an example for other developing states to emulate. All these actions provide ammunition for those seeking to justify a confrontational, zero-sum approach to China, including proponents of FOIP. Hence, Beijing certainly needs to moderate its behavior to more credibly convince other Asian states, and the United States in particular, that it genuinely seeks the “win-win” outcomes it constantly espouses.
Yet Beijing is far less likely to compromise if Washington adopts an unqualifiedly adversarial stance. Given China’s size, influence, and overall strength, only the foolhardy would expect such a U.S. posture to chasten Beijing into compliance, rather than push it to use its considerable, and in some respects growing, economic, military, and political leverage in the hope of greatly reducing American influence in the region and beyond. In fact, a highly confrontational U.S. stance would almost guarantee that China itself adopts a zero-sum policy and eventually does seek to dominate the Indo-Pacific.
Despite its serious domestic political and economic problems, the United States is still the region’s strongest and, arguably, most influential power and, therefore, bears a unique responsibility and capacity to alter today’s ominous trends. Washington must abandon quixotic efforts to sustain a rapidly disappearing status quo by treating Beijing as a foe. FOIP is a self-destructive concept that must be discarded in favor of more constructive alternatives.
China and the International Monetary System
Does Beijing Really Want to Challenge the Dollar?
THE EMERGENCE OF THE SDR
The international monetary system created at the end of World War II was based on fixed exchange rates and a strong link between the dollar and gold. By the early 1960s, the economist Robert Triffin had identified a major weakness in this system: the country that issued the global reserve currency (in this case, the United States) had to supply the world with liquidity in its currency—but to do so, it had to run balance-of-payments deficits, which would erode the world’s confidence in the currency. Over the course of the decade, the so-called Triffin dilemma became a widely recognized reality. In 1969, to address the problem, the IMF created the SDR to supplement the U.S. dollar as a source of international liquidity; in 1970, it made its first allocation of SDR 9.3 billion. (The value of the SDR fluctuates with the value of the currencies on which it is based.)
The new synthetic currency was a marginal factor in the international monetary system—and it became only more so over time. Indeed, from the 1970s to the 1990s, the share of SDRs in global nongold reserves declined from nine percent to between one and two percent. By the early years of this century, the SDR seemed mostly irrelevant.
That trend underwent a dramatic reversal in the aftermath of the global financial crisis. Many observers, such as the political economist Eric Helleiner, credited Zhou’s comments for the revived interest. But did Zhou’s views really represent a radical break from China’s earlier approach to the reform of the global monetary system? History suggests otherwise.
CHINA JOINS THE CLUB
By the time the People’s Republic of China joined the IMF in 1980, the original Bretton Woods system had gone through tumultuous changes. The United States had broken the link between gold and the U.S. dollar in 1971, rendering moot the original purpose of the SDR—that is, to supplement the dollar under a fixed exchange rate. In 1978, the IMF set forth the objective of making the SDR a principal reserve currency; the next year, it made a second allocation of about SDR 12 billion.
In its first years as a member of the IMF and the World Bank, Beijing showed itself to be a modest, cooperative newcomer. When it came to the SDR, China tended to rely on reports and studies issued by the IMF’s staff, largely agreeing with their recommendations. But over the years that followed, Beijing began to lobby for the allocation of more SDRs, a more equitable distribution of the synthetic currency, and an expanded use of the SDR more generally.
Why did China push for these policies? In the early 1980s, Chinese representatives at the IMF contended that Western official development assistance was not meeting the growing financing needs of most poorer countries. China argued that more SDR allocations could reduce those countries’ need to borrow abroad, help them expand their imports, and let their economies grow. Around a decade later, in a 1992 speech at the IMF, China’s representative to the organization, Che Peiqin, made a similar case. Che argued that countries in sub-Saharan Africa and eastern Europe had seen a considerable decline in the ratio of nongold reserves to imports. Without easy access to the international capital markets, they struggled to restore their reserve ratios, at the expense of imports and growth. It would be in the interest of all, Che argued, to make more official resources available to those states.
After the Asian financial crisis of 1997–98, foreign direct investment in developing economies was slowing, the balance of payments among many poorer countries was taking a hit, and such countries were facing high costs to borrow in international markets. So China again called for more SDR allocations. Increasing the allocation of SDRs, Beijing argued, would help stabilize the international financial system by providing a safeguard against liquidity crises among developing countries.
The distribution of SDRs was another focus of Chinese policy. According to the IMF’s Articles of Agreement, new allocations of SDRs would be distributed according to members’ IMF quotas, meaning that developed countries, which hold the biggest quotas, would get more SDRs than would developing countries. China took issue with this distribution, and on several occasions, Beijing’s representatives to the IMF called for the organization to redistribute some of the SDRs so that they would benefit developing countries.
The first two drivers of China’s interest in SDRs—liquidity and distribution—thus took preference over what today’s observers regard as the core of Chinese policy: expanding the role of the SDR in the international monetary system.
Yet that third theme was present as far back as 1986. In a speech at the IMF in that year, China’s representative, Huang Fanzhang, argued that because creditworthy countries (generally developed ones) could augment their reserves by borrowing in the market without having to undertake specific adjustment measures, they could delay correcting the imbalances that had led to the borrowing until they had reached a point where they had to take tough measures. Huang also pointed out that financial markets tend to overreact, oscillating between overlending and panicking. That meant that the SDR held great potential to improve the management of international liquidity: by increasing the share of the SDR in international reserves, the reserve-generating process would become less volatile, since it would be less dependent on private capital markets.
In 1989, China’s representative to the IMF, Dai Qianding, called on the agency to broaden the use of the SDR by permitting private entities to employ it and by simplifying the processes by which it could be used. In the long term, Dai told the IMF, “there is no firm assurance in relying on a national currency as an international reserve asset,” so it was appropriate to explore making the SDR the international monetary system’s principal reserve asset. In 1994, Wei Benhua, the Chinese representative at the IMF, went further. “We must make efforts in moving toward the objective of making the SDR the principal reserve asset of the international monetary system,” he said.
CHALLENGING WHAT’S IN THE BASKET
Since 1980, the SDR basket had included the currencies of the five IMF members with the largest exports of goods and services between 1975 and 1979: the U.S. dollar, German mark, French franc, Japanese yen, and British pound sterling. (The mark and the franc were replaced by the euro after the introduction of that currency.) In the 1980s and 1990s, China went along with the method and basket used by the IMF to decide the value and the interest rate of the SDR.
But China’s position began to change in the years that followed. In 2005, a statement China submitted to the IMF criticized the IMF for using “backward-looking indicators” in developing the SDR basket and suggested that the institution discuss China’s rapid growth as an exporter. The implication was clear: the IMF should consider the RMB for inclusion in the SDR basket. By 2009, after Zhou’s statement, Chinese representatives at the IMF again argued that in order to improve the liquidity and attractiveness of the SDR as a reserve asset, IMF staff should study how to broaden the role of the SDR, expanding and realigning the currencies in the SDR basket.
In 2010, in a review of the SDR basket, the IMF rejected the RMB’s attempt to enter. But China did not give up. At the G-20 summit in St. Petersburg in 2013, Chinese President Xi Jinping again called on the IMF to reform the SDR basket, and in 2015 the Chinese government intensified its push. Finally, in November 2015, the IMF decided to accept the RMB into the SDR basket, assigning it 10.92 percent of the total weight, below the U.S. dollar and the euro, but above the yen and the pound sterling.
CURRENCY POLITICS IN CONTEXT
Contrary to widely held impressions, then, Zhou’s 2009 statement was not a major departure from China’s long-standing positions regarding the SDR or the dollar-led order. Instead, it represented a reprisal of ideas that Beijing had pushed for decades: namely, that the international monetary system was burdened by its dependence on private capital markets and a few national currencies, the dollar chief among them.
What was notable about Zhou’s statement was not its content but its timing. In the late 1990s, when the IMF decided to allocate more SDRs for the first time since the early 1980s, China’s economy was the world’s seventh largest, ranking behind Italy’s. By 2009, however, China’s GDP had become the third largest in the world, after the United States’ and Japan’s. More important, the global financial crisis, which originated in the United States, had dealt a heavy blow to the prestige of many developed countries: China stood almost alone as the world’s remaining major engine of growth. So when Zhou had something to say about reforming the international monetary system, the world listened—even though Chinese representatives had been saying similar things for quite a while and even though others, such as a commission of economists led by the American Joseph Stiglitz, were making similar proposals about the SDR.
NATIONAL IDENTITY AND CHINA’S SDR POLICY
China’s long-standing support for the SDR can’t be neatly explained in terms of its economic interests. For years, the Chinese government advocated new SDR allocations and a more equitable SDR distribution, arguing that those changes would help developing countries deal with their balance-of-payments problems. From the early 1980s to the early 1990s, when China had limited export capacity and was itself a developing country, this position could have benefited China. But since the early 1990s, China has been a massive exporter, with a current account surplus to match. Its support for the expansion of the SDR thus seems to have diverged from its own economic interests. It is also unclear how China’s economic goals are being served by Beijing’s calls to make the SDR a more reliable and stable source of international liquidity, thereby eventually making it the world’s principal reserve asset. In fact, there is good reason for Beijing to eschew a bigger role for the SDR. A more important SDR would spell a decline in the dollar’s role and value, and that would cost China, which is a major holder of dollar assets.
Nor is this all. In order for the RMB to enter the SDR basket, it would need to meet the IMF’s standards of being “widely used” and “freely usable.” China had to take some big steps toward financial liberalization to get it there. Some analysts cautioned that these radical adjustments would bring considerable risks to China’s financial system. Others pointed out that the RMB’s inclusion in the SDR basket would neither turn the RMB into a major reserve currency nor make the SDR a substitute for the U.S. dollar.
After Beijing began to push for the RMB’s entry into the SDR basket in the first decade of this century, the prevailing opinion in China remained cautious. Although some argued that the SDR would gain more relevance once it included China’s currency, many commentators continued to point out the SDR’s limitations, and influential observers, such as the former central bank governor Dai Xianglong, predicted that the future of the international monetary system would involve a number of national currencies rather than a suprasovereign one such as the SDR.
If Beijing’s SDR policy seems inexplicable in light of the country’s material interests, it makes a good deal of sense when China’s national identity is taken into account. When Beijing joined the IMF in 1980, it identified as a member of the developing world, and it stuck to that identity in international forums. Indeed, according to research by the political scientists Harold Karan Jacobson and Michel Oksenberg, Chinese officials at both the World Bank and the IMF were under instructions from Beijing not to raise demands that might be seen as costly to any developing country. Supporting the SDR as a tool of economic development went hand in hand with China’s identification with the global South.
Since the late 1990s, another identity has gradually taken hold in the Chinese imagination: that of a major power. Beijing’s performance during the Asian financial crisis played a big part. As its neighboring countries’ currencies took a dive in 1997 and 1998, China faced tremendous pressure to devalue the RMB. It refused to do so, and although Chinese exports suffered heavily, Beijing drew praise from around the world, affirming its self-perception as a “responsible great power.” Then came the years after 2007, when China hosted the Olympics, sent its first astronauts to walk in space, and preserved the growth of its economy as the United States fell into its worst financial crisis in decades. Joining the SDR basket may have involved financial risks, but it also promised an intangible reward in the form of international prestige. In late 2015, when the IMF finally approved the Chinese currency’s entry into the SDR basket, it was warmly celebrated in China. For China’s leaders and for the Chinese public, the news was a clear sign of China’s rising international status.
China’s advocacy of a greater role for the SDR in the international monetary system since the global financial crisis, then, has not been as revolutionary as it seems. Nor is it necessarily meant to challenge the dollar-dominated order. Beijing’s SDR policy has been more about affirming China’s national identity than about advancing its material interests.
Playing the Taiwan Card
Trump Is Needlessly Provoking China
On Friday, U.S. President Donald Trump signed into law the Taiwan Travel Act, a bill that gives the president political cover to significantly shift U.S. policy toward Taiwan in a manner that would deeply rile Beijing. The legislation, which congressional Republicans introduced a year ago, and which both houses passed unanimously this February, argues that it “should be U.S. policy” to allow American officials at all levels to travel to Taiwan to meet with their Taiwanese counterparts and for high-level Taiwanese officials to enter the United States “to meet with U.S. officials, including officials from the Departments of State and Defense.” By signing the bill, Trump signaled to Beijing that he would consider allowing high-level U.S.-Taiwanese contacts of a sort normally reserved for nations with official diplomatic ties.
With the passage of the TTA, there is a very real possibility that at some point Trump might play the Taiwan card in a way that risks military conflict with China.
Adding to Beijing’s fury, the Trump administration announced a $1.4 billion arms sales package for Taiwan in June 2017, and then in December Congress passed (and Trump signed into law) the National Defense Authorization Act for 2018. This legislation calls for the United States to invite Taiwan to participate in joint U.S.-Taiwanese military exercises and to “consider the advisability and feasibility of reestablishing port of call exchanges between the United States navy and the Taiwan navy.” The “suggestions” are not binding for the Department of Defense. But either move would be unprecedented and would be seen by Beijing as incendiary. China, unable to predict what the Pentagon will actually do under Trump, has felt the need to warn and threaten the United States in anticipation of worst-case possibilities. In late December, a Chinese diplomat visiting Washington vowed that “the day a U.S. Navy vessel arrives in Kaohsiung is the day that our People’s Liberation Army unifies Taiwan with military force,” an unusually explicit warning of a sort not heard in a decade or more.
Now with the passage of the TTA, and given the recent and possibly pending personnel changes in the Trump administration, there is a very real possibility that at some point Trump might play the Taiwan card in a way that risks military conflict with China. While there would probably be jubilation in Taiwan if Trump were to radically upgrade U.S. relations with the island nation, it would be wiser for Tsai to resist the temptation to accept such a change. She should recognize that doing so would turn Taiwan into a pawn in Washington’s struggle with Beijing. The Trump administration is too unfocused and chaotic to be a reliable partner, and Trump’s nativist political base would likely reject the United States going to war on Taiwan’s behalf. Taiwan would best be served if Tsai were to return to her cautious roots and keep Taiwan’s comprehensive, long-term security foremost in her mind.
China vs. America
Managing the Next Clash of Civilizations
Americans see government as a necessary evil and believe that the state’s tendency toward tyranny and abuse of power must be feared and constrained. For Chinese, government is a necessary good, the fundamental pillar ensuring order and preventing chaos. In American-style free-market capitalism, government establishes and enforces the rules; state ownership and government intervention in the economy sometimes occur but are undesirable exceptions. In China’s state-led market economy, the government establishes targets for growth, picks and subsidizes industries to develop, promotes national champions, and undertakes significant, long-term economic projects to advance the interests of the nation.
Chinese culture does not celebrate American-style individualism, which measures society by how well it protects the rights and fosters the freedom of individuals. Indeed, the Chinese term for “individualism”—gerenzhuyi—suggests a selfish preoccupation with oneself over one’s community. China’s equivalent of “give me liberty or give me death” would be “give me a harmonious community or give me death.” For China, order is the highest value, and harmony results from a hierarchy in which participants obey Confucius’ first imperative: Know thy place.
This view applies not only to domestic society but also to global affairs, where the Chinese view holds that China’s rightful place is atop the pyramid; other states should be arranged as subordinate tributaries. The American view is somewhat different. Since at least the end of World War II, Washington has sought to prevent the emergence of a “peer competitor” that could challenge U.S. military dominance. But postwar American conceptions of international order have also emphasized the need for a rule-based global system that restrains even the United States.
Finally, the Americans and the Chinese think about time and experience its passage differently. Americans tend to focus on the present and often count in hours or days. Chinese, on the other hand, are more historical-minded and often think in terms of decades and even centuries.
Of course, these are sweeping generalizations that are by necessity reductive and not fully reflective of the complexities of American and Chinese society. But they also provide important reminders that policymakers in the United States and China should keep in mind in seeking to manage this competition without war.
WE'RE NUMBER ONE
The cultural differences between the United States and China are aggravated by a remarkable trait shared by both countries: an extreme superiority complex. Each sees itself as exceptional—indeed, without peer. But there can be only one number one. Lee Kuan Yew, the former prime minister of Singapore, had doubts about the United States’ ability to adapt to a rising China. “For America to be displaced, not in the world, but only in the western Pacific, by an Asian people long despised and dismissed with contempt as decadent, feeble, corrupt, and inept is emotionally very difficult to accept,” he said in a 1999 interview. “The sense of cultural supremacy of the Americans will make this adjustment most difficult.”
In some ways, Chinese exceptionalism is more sweeping than its American counterpart. “The [Chinese] empire saw itself as the center of the civilized universe,” the historian Harry Gelber wrote in his 2001 book, Nations Out of Empires. During the imperial era, “the Chinese scholar-bureaucrat did not think of a ‘China’ or a ‘Chinese civilization’ in the modern sense at all. For him, there were the Han people and, beyond that, only barbarism. Whatever was not civilized was, by definition, barbaric.”
To this day, the Chinese take great pride in their civilizational achievements. “Our nation is a great nation,” Chinese President Xi Jinping declared in a 2012 speech. “During the civilization and development process of more than 5,000 years, the Chinese nation has made an indelible contribution to the civilization and advancement of mankind.” Indeed, Xi claimed in his 2014 book, The Governance of China, that “China’s continuous civilization is not equal to anything on earth, but a unique achievement in world history.”
Americans, too, see themselves as the vanguard of civilization, especially when it comes to political development. A passion for freedom is enshrined in the core document of the American political creed, the Declaration of Independence, which proclaims that “all men are created equal” and that they are “endowed by their Creator with certain unalienable Rights.” The declaration specifies that these rights include “Life, Liberty and the pursuit of Happiness” and asserts that these are not matters for debate but rather “self-evident” truths. As the American historian Richard Hofstadter wrote, “It has been our fate as a nation not to have ideologies, but to be one.” In contrast, order is the central political value for Chinese—and order results from hierarchy. Individual liberty, as Americans understand it, disrupts hierarchy; in the Chinese view, it invites chaos.
DO AS I SAY . . . AND AS I DO?
These philosophical differences find expression in each country’s concept of government. Although animated by a deep distrust of authority, the founders of the United States recognized that society required government. Otherwise, who would protect citizens from foreign threats or violations of their rights by criminals at home? They wrestled, however, with a dilemma: a government powerful enough to perform its essential functions would tend toward tyranny. To manage this challenge, they designed a government of “separated institutions sharing power,” as the historian Richard Neustadt described it. This deliberately produced constant struggle among the executive, legislative, and judicial branches, which led to delay, gridlock, and even dysfunction. But it also provided checks and balances against abuse.
The Chinese conception of government and its role in society could hardly be more different. As Lee observed, “The country’s history and cultural records show that when there is a strong center (Beijing or Nanjing), the country is peaceful and prosperous. When the center is weak, then the provinces and their counties are run by little warlords.” Accordingly, the sort of strong central government that Americans resist represents to the Chinese the principal agent advancing order and the public good at home and abroad.
In some ways, Chinese exceptionalism is more sweeping than its American counterpart.
For Americans, democracy is the only just form of government: authorities derive their legitimacy from the consent of the governed. That is not the prevailing view in China, where it is common to believe that the government earns or losses political legitimacy based on its performance. In a provocative TED Talk delivered in 2013, the Shanghai-based venture capitalist Eric Li challenged democracy’s presumed superiority. “I was asked once, ‘The party wasn’t voted in by election. Where is the source of legitimacy?’” he recounted. “I said, ‘How about competency?’” He went on to remind his audience that in 1949, when the Chinese Community Party took power, “China was mired in civil war, dismembered by foreign aggression, [and] average life expectancy at that time [was] 41 years. Today [China] is the second-largest economy in the world, an industrial powerhouse, and its people live in increasing prosperity.”
Washington and Beijing also have distinctly different approaches when it comes to promoting their fundamental political values internationally. Americans believe that human rights and democracy are universal aspirations, requiring only the example of the United States (and sometimes a neoimperialist nudge) to be realized everywhere. The United States is, as Huntington wrote in his follow-on book, The Clash of Civilizations, “a missionary nation,” driven by the belief “that the non-Western peoples should commit themselves to the Western values . . . and should embody these values in their institutions.” Most Americans believe that democratic rights will benefit anyone, anywhere in the world.
Over the decades, Washington has pursued a foreign policy that seeks to advance the cause of democracy—even, on occasion, attempting to impose it on those who have failed to embrace it themselves. In contrast, although the Chinese believe that others can look up to them, admire their virtues, and even attempt to mimic their behavior, China’s leaders have not proselytized on behalf of their approach. As the American diplomat Henry Kissinger has noted, imperial China “did not export its ideas but let others come to seek them.” And unsurprisingly, Chinese leaders have been deeply suspicious of U.S. efforts to convert them to the American creed. In the late 1980s, Deng Xiaoping, who led China from 1978 until 1989 and began the country’s process of economic liberalization, complained to a visiting dignitary that Western talk of “human rights, freedom, and democracy is designed only to safeguard the interests of the strong, rich countries, which take advantage of their strength to bully weak countries, and which pursue hegemony and practice power politics.”
THINKING FAST AND SLOW
The American and Chinese senses of the past, present, and future are fundamentally distinct. Americans proudly celebrated their country turning 241 in July; the Chinese are fond of noting that their history spans five millennia. U.S. leaders often refer to “the American experiment,” and their sometimes haphazard policies reflect that attitude. China, by contrast, sees itself as a fixture of the universe: it always was; it always will be.
Because of their expansive sense of time, Chinese leaders are careful to distinguish the acute from the chronic and the urgent from the merely important. It is difficult to imagine a U.S. political leader suggesting that a major foreign policy problem should be put on the proverbial shelf for a generation. That, however, is precisely what Deng did in 1979, when he led the Chinese side in negotiations with Japan over the disputed Diaoyu/Senkaku Islands and accepted an eventual, rather than an immediate, solution to the dispute.
Ever more sensitive to the demands of the news cycle and popular opinion, U.S. politicians take to Twitter or announce alliterative, bullet-point policy plans that promise quick solutions. In contrast, Chinese leaders are strategically patient: as long as trends are moving in their favor, they are comfortable waiting out a problem. Americans think of themselves as problem solvers. Reflecting their short-termism, they see problems as discrete issues to be addressed now so that they can move on to the next ones. The American novelist and historian Gore Vidal once called his country “the United States of Amnesia”—a place where every idea is an innovation and every crisis is unprecedented. This contrasts sharply with the deep historical and institutional memory of the Chinese, who assume that there is nothing new under the sun.
Indeed, Chinese leaders tend to believe that many problems cannot be solved and must instead be managed. They see challenges as long term and iterative; issues they face today resulted from processes that have evolved over the past year, decade, or century. Policy actions they take today will simply contribute to that evolution. For instance, since 1949, Taiwan has been ruled by what Beijing considers rogue Chinese nationalists. Although Chinese leaders insist that Taiwan remains an integral part of China, they have pursued a long-term strategy involving tightening economic and social entanglements to slowly suck the island back into the fold.
WHO'S THE BOSS?
The civilizational clash that will make it hardest for Washington and Beijing to escape Thucydides’ trap emerges from their competing conceptions of world order. China’s treatment of its own citizens provides the script for its relations with weaker neighbors abroad. The Chinese Communist Party maintains order by enforcing an authoritarian hierarchy that demands the deference and compliance of citizens. China’s international behavior reflects similar expectations of order: in an unscripted moment during a 2010 meeting of the Association of Southeast Asian Nations, then Chinese Foreign Minister Yang Jiechi responded to complaints about Chinese assertiveness in the South China Sea by telling his regional counterparts and U.S. Secretary of State Hillary Clinton that “China is a big country and other countries are small countries, and that’s just a fact.”
By contrast, American leaders aspire to an international rule of law that is essentially U.S. domestic rule of law writ large. At the same time, they also recognize the realities of power in the Hobbesian global jungle, where it is better to be the lion than the lamb. Washington often tries to reconcile this tension by depicting a world in which the United States is a benevolent hegemon, acting as the world’s lawmaker, policeman, judge, and jury.
Washington urges other powers to accept the rule-based international order over which it presides. But through Chinese eyes, it looks like the Americans make the rules and others obey Washington’s commands. General Martin Dempsey, former chairman of the Joint Chiefs of Staff, became familiar with the predictable resentment this elicited from China. “One of the things that fascinated me about the Chinese is whenever I would have a conversation with them about international standards or international rules of behavior, they would inevitably point out that those rules were made when they were absent from the world stage,” Dempsey remarked in an interview with this magazine last year.
YOU CAN GO YOUR OWN WAY
The United States has spent nearly three decades as the world’s most powerful country. During that time, Washington’s massive influence on world affairs has made it crucial for elites and leaders in other nations to understand American culture and the U.S. approach to strategy. Americans, on the other hand, have often felt that they have the luxury of not needing to think too hard about the worldviews of people elsewhere—a lack of interest encouraged by the belief, held by many American elites, that the rest of the world has been slowly but surely becoming more like the United States anyway.
In recent years, however, the rise of China has challenged that indifference. Policymakers in the United States are beginning to recognize that they must improve their understanding of China—especially Chinese strategic thinking. In particular, U.S. policymakers have begun to see distinctive traits in the way their Chinese counterparts think about the use of military force. In deciding whether, when, and how to attack adversaries, Chinese leaders have for the most part been rational and pragmatic. Beyond that, however, American policymakers and analysts have identified five presumptions and predilections that offer further clues to China’s likely strategic behavior in confrontations.
First, in both war and peace, Chinese strategy is unabashedly driven by realpolitik and unencumbered by any serious need to justify Chinese behavior in terms of international law or ethical norms. This allows the Chinese government to be ruthlessly flexible, since it feels few constraints from prior rationales and is largely immune to criticisms of inconsistency. So, for example, when Kissinger arrived in China in 1971 to begin secret talks about a U.S.-Chinese rapprochement, he found his interlocutors unblinkered by ideology and brutally candid about China’s national interests. Whereas Kissinger and U.S. President Richard Nixon felt it necessary to justify the compromise they ultimately reached to end the Vietnam War as “peace with honor,” the Chinese leader Mao Zedong felt no need to pretend that in establishing relations with the capitalist United States to strengthen communist China’s position vis-à-vis the Soviet Union, he was somehow bolstering a larger socialist international movement.
Just as China’s practical approach to international politics arguably gives China an edge over the United States, so, too, does China’s obsessively holistic strategic worldview. Chinese planners see everything as connected to everything else. The evolving context in which a strategic situation occurs determines what the Chinese call shi. This term has no direct English translation but can be rendered as the “potential energy” or “momentum” inherent in any circumstance at a given moment. It comprises geography and terrain, weather, the balance of forces, surprise, morale, and many other elements. “Each factor influences the others,” as Kissinger wrote in his 2011 book, On China, “giving rise to subtle shifts in momentum and relative advantage.” Thus, a skilled Chinese strategist spends most of his time patiently “observing and cultivating changes in the strategic landscape” and moves only when everything is in optimal alignment. Then he strikes swiftly. To an observer, the result appears inevitable.
War for Chinese strategists is primarily psychological and political. In Chinese thinking, an opponent’s perception of facts on the ground may be just as important as the facts themselves. For imperial China, creating and sustaining the image of a civilization so superior that it represented “the center of the universe” served to deter enemies from challenging Chinese dominance. Today, a narrative of China’s inevitable rise and the United States’ irreversible decline plays a similar role.
Traditionally, the Chinese have sought victory not in a decisive battle but through incremental moves designed to gradually improve their position. David Lai, an expert on Asian military affairs, has illustrated this approach by comparing the Western game of chess with its Chinese equivalent, weiqi (often referred to as go). In chess, players seek to dominate the center of the board and conquer the opponent. In weiqi, players seek to surround the opponent. If the chess master sees five or six moves ahead, the weiqi master sees 20 or 30. Attending to every dimension in the broader relationship with an adversary, the Chinese strategist resists rushing prematurely toward victory, instead aiming to build incremental advantage. “In the Western tradition, there is a heavy emphasis on the use of force; the art of war is largely limited to the battlefields; and the way to fight is force on force,” Lai wrote in a 2004 analysis for the U.S. Army War College’s Strategic Studies Institute. By contrast, “the philosophy behind go . . . is to compete for relative gain rather than seeking complete annihilation of the opponent forces.” In a wise reminder, Lai warns that “it is dangerous to play go with the chess mindset.”
LET'S MAKE A DEAL
Washington would do well to heed that warning. In the coming years, any number of flash points could produce a crisis in U.S.-Chinese relations, including further territorial disputes over the South China Sea and tensions over North Korea’s burgeoning nuclear weapons program. Since it will take at least another decade or more for China’s military capabilities to fully match those of the United States, the Chinese will be cautious and prudent about any lethal use of force against the Americans. Beijing will treat military force as a subordinate instrument in its foreign policy, which seeks not victory in battle but the achievement of national objectives. It will bolster its diplomatic and economic connections with its neighbors, deepening their dependency on China, and use economic leverage to encourage (or coerce) cooperation on other issues. Although China has traditionally viewed war as a last resort, should it conclude that long-term trend lines are no longer moving in its favor and that it is losing bargaining power, it could initiate a limited military conflict to attempt to reverse the trends.
The last time the United States faced extremely high Thucydidean risks was during the Cold War—especially during the Cuban missile crisis. Reflecting on the crisis a few months after its resolution, U.S. President John F. Kennedy identified one enduring lesson: “Above all, while defending our own vital interests, nuclear powers must avert those confrontations which bring an adversary to a choice of either a humiliating retreat or nuclear war.” In spite of Moscow’s hard-line rhetoric, Soviet Premier Nikita Khrushchev ultimately concluded that he could compromise on nuclear arms in Cuba. Likewise, Kissinger and Nixon later discovered that the Chinese ideologue Mao was quite adept at giving ground when it served China’s interests.
Xi and U.S. President Donald Trump have both made maximalist claims, especially when it comes to the South China Sea. But both are also dealmakers. The better the Trump administration understands how Beijing sees China’s role in the world and the country’s core interests, the better prepared it will be to negotiate. The problem remains psychological projection: even seasoned State Department officials too often mistakenly assume that China’s vital interests mirror those of the United States. The officials now crafting the Trump administration’s approach to China would be wise to read the ancient Chinese philosopher Sun-tzu: “If you know the enemy and know yourself, you need not fear the result of a hundred battles. If you know yourself but not the enemy, for every victory gained you will also suffer a defeat. If you know neither the enemy nor yourself, you will succumb in every battle.”
