The China Challenge

 In China, ASEAN, GDI, Energy, Environment

THE AMERCAN polit­i­cal class has final­ly come up with a bipar­ti­san policy: denounc­ing China. After three years of ful­mi­na­tion, inju­ri­ous tar­iffs, and costly Chinese retal­i­a­tion, the Trump admin­is­tra­tion announced that China will buy more prod­ucts, although no one is sure how the pledges, with Chinese caveats, will work out. Each side can rely on its own sta­tis­tics. China also agreed to improve poli­cies in a few other areas that are in its inter­est, although with many gaps. In return, the United States will, for at least awhile, hold off on more self-defeat­ing taxes on imports. This pack­age is “Phase One.” “Phase Two” is, well… to come later.

What is the result of Donald Trump’s deal-making? According to Chad Bown of the Peterson Institute for International Economics, Trump’s tar­iffs will still cover almost two-thirds of all U.S. imports from China, with an aver­age rate of 19.3 per­cent, com­pared to 3.0 per­cent before. Most of the Chinese goods are inter­me­di­ate prod­ucts, so Trump’s taxes just raise costs for American pro­duc­ers. China’s retal­ia­to­ry tar­iffs target almost 57 per­cent of U.S. exports, with an aver­age tariff of 20.5 per­cent, up from 8 per­cent pre-Trump. China, unlike the United States, has been low­er­ing tar­iffs and trade bar­ri­ers with the rest of the world.

This deal pre­tends to be a China policy. As Evan Feigenbaum of the Carnegie Endowment first point­ed out, the United States has an atti­tude toward China, not a policy. America has been wast­ing time, squan­der­ing inter­na­tion­al cap­i­tal, and fail­ing to achieve real results.

In describ­ing effec­tive diplo­ma­cy, Alexander Hamilton once coun­seled, “mild­ness in the manner, firm­ness in the thing.” “Strut is good for noth­ing,” advised America’s first prac­ti­tion­er of eco­nom­ic state­craft. Instead, Hamilton rec­om­mend­ed “combin[ing] energy with mod­er­a­tion.” Or as James Baker, my former boss at Treasury, the State Department, and the White House, would say, “Pick your shots” and “Get things done.”

A real­is­tic U.S. policy should begin with an honest account­ing of what past work with China has accom­plished. Then Americans must rec­og­nize China’s cur­rent two-track approach to the inter­na­tion­al system. To focus its efforts, Washington should iden­ti­fy the par­tic­u­lar frus­tra­tions and fears that have formed the new con­fronta­tion­al atti­tude. Finally, the United States can deter­mine how best to achieve prac­ti­cal results and strate­gic advan­tage over dif­fer­ent time­frames.

ALMOST FIFTEEN years ago, I gave a speech to the National Committee on U.S.-China Relations titled: “Whither China: From Membership to Responsibility?” The speech grew out of the first of the twenty-first-cen­tu­ry strate­gic dia­logues, which I con­duct­ed with Dai Bingguo, who rose to become China’s State Councilor for for­eign rela­tions. I was reply­ing to a sem­i­nal arti­cle in Foreign Affairs, “China’s Peaceful Rise to Great Power Status,” by Zheng Bijian, a senior advis­er to China’s lead­ers begin­ning with Deng Xiaoping.

By the time of my speech, seven U.S. pres­i­dents from both par­ties had worked for over thirty years to inte­grate a poor and eco­nom­i­cal­ly-iso­lat­ed China into the inter­na­tion­al system that America had designed and led.

China’s lead­ers and its hard-work­ing people had pur­sued an incred­i­ble mod­ern­iza­tion within an inter­na­tion­al system that had enabled China’s suc­cess. By 2005, I point­ed out, China had emerged from seclu­sion and joined the world — includ­ing the United Nations Security Council, World Trade Organization (WTO), International Monetary Fund (IMF), and World Bank. From agree­ments on ozone deple­tion to nuclear weapons, China had become a player at the table.

But having large­ly accom­plished the aim of inte­grat­ing China, the ques­tion for the United States, I explained back then, con­cerned Beijing’s con­duct: “How will China use its influ­ence?” I urged China to look beyond mem­ber­ship in the inter­na­tion­al system “to become a respon­si­ble stake­hold­er in that system.”

The speech stressed the “norms,” not just the “forms,” of inter­na­tion­al inte­gra­tion. I point­ed out that many coun­tries hoped China would pursue a “peace­ful rise,” but that none would bet their future on it. I warned that the United States would not be able to sus­tain the open inter­na­tion­al eco­nom­ic order — and domes­tic sup­port nec­es­sary for that regime — unless China coop­er­at­ed in shar­ing respon­si­bil­i­ties and using its power con­struc­tive­ly.

Some com­men­ta­tors later treat­ed my call as some kind of a con­ces­sion — though it is hard to under­stand why the United States would not have wanted China to assume more respon­si­bil­i­ties within a U.S.-led system, espe­cial­ly with the implic­it signal that the United States would be the umpire of China’s choic­es. I sus­pect that some didn’t like that I com­bined my urging of respon­si­ble action with a tone of respect for China. And my idea opened the door to Chinese views and sug­ges­tions for address­ing common chal­lenges.

My choice of words also led to an amus­ing irony: It turned out that the Chinese strug­gled to trans­late the term “stake­hold­er.” The uncer­tain­ty about the diplo­mat­ic impli­ca­tions of the word prompt­ed a useful debate within China about the mean­ing of the U.S. idea — and stir­ring debate is a result dear to all speech­writ­ers.

To make such a policy effec­tive, U.S. offi­cials needed to remain in close touch with devel­op­ments in China and the wider region — with the help of allies and pri­vate sector part­ners. American policy needed to work the details as well as dis­cuss strat­e­gy. We used to call this diplo­ma­cy.

TODAY’S LOGIC of con­stant con­fronta­tion with China rejects the approach I had out­lined. It rejects the idea that China can play a con­struc­tive role within the system that America con­struct­ed. It rejects the idea that China can make con­tri­bu­tions. It even rejects the idea that China can, or even would, act in ways that com­ple­ment U.S. inter­ests.

Be aware: If U.S. policy assumes China cannot do any of those things within the system America designed, then the United States will, in effect, be prod­ding China into cham­pi­oning a par­al­lel, sep­a­rate system, with very dif­fer­ent rules.

I under­stand many of today’s com­plaints, but we are at seri­ous risk of losing sight of American aims and how best to achieve them. One of the found­ing prin­ci­ples of con­stant con­fronta­tion is an assump­tion that coop­er­a­tion with China failed. This is the premise that under­pins the Trump administration’s 2017 National Security Strategy.

Let us test that assump­tion.

China was once an out­right enemy of the United States, spon­sor­ing rev­o­lu­tions, spread­ing chaos, and back­ing prox­ies, such as North Korea and North Vietnam, which were at war with America. Today, we are strate­gic com­peti­tors, but China mod­er­at­ed and mod­i­fied dan­ger­ous behav­iors as Beijing worked to take part in the U.S.-led order.

Consider the world’s most dan­ger­ous weapons. Until the late 1980s, China was the world’s lead­ing pro­lif­er­a­tor of nuclear weapons and mis­siles. Then China start­ed to adjust to global norms gov­ern­ing exports of weapons of mass destruc­tion and relat­ed tech­nolo­gies. It ceased nuclear tests in the 1990s and signed the Comprehensive Test Ban Treaty — while wait­ing for U.S. action before rat­i­fy­ing. China joined the Biological and Chemical Weapons Conventions. China now abides by the Missile Technology Control Regime as well.

Although China once had been a part­ner of Iran, it worked with the United States to sanc­tion and halt Iran’s nuclear pro­gram. Although China fought against the United States in the Korean War, it has worked with Washington to press North Korea to freeze and reverse Pyongyang’s nuclear weapons pro­gram.

Between 2000 and 2018, China sup­port­ed 182 of 190 UN Security Council res­o­lu­tions impos­ing sanc­tions on states vio­lat­ing inter­na­tion­al rules, prod­ded by vig­or­ous U.S. efforts.

China is the second-largest funder of the UN and UN peace­keep­ing mis­sions; it has deployed 2,500 peace­keep­ers, more than all the other per­ma­nent five Security Council mem­bers com­bined. As Tom Christensen detailed in his book, The China Challenge, the United States spurred China to help end the geno­cide in Darfur, Sudan — a cause I iden­ti­fied in the 2005 speech.

China is the largest con­trib­u­tor to global growth. It cut its global cur­rent account sur­plus from about 10 per­cent of gdp to around zero — mean­ing that its demand has fueled world­wide expan­sion.

For the past fif­teen years, China had been the fastest-grow­ing des­ti­na­tion for U.S. exports — until the Trump admin­is­tra­tion embraced pro­tec­tion­ism and sparked world­wide retal­i­a­tion. China no longer under­val­ues its exchange rate. It reduced reserves by about $1 tril­lion.

During the global finan­cial crisis, China had the largest and quick­est stim­u­lus to coun­ter­act what could have been anoth­er depres­sion. As former Secretary of the Treasury Hank Paulson relat­ed, when Russia alleged­ly approached China in 2008 with the idea of dump­ing dol­lars to harm the United States, China did not think this was a good idea.

Of course, many of these steps were in China’s self-inter­est, but they were help­ful to others around the world, too. That is what effec­tive eco­nom­ic inte­gra­tion has accom­plished.

When I served at the World Bank, China coop­er­at­ed close­ly with us. It made early repay­ments and con­tri­bu­tions to the Bank’s International Development Association, which funds the poor­est coun­tries. China sup­port­ed our ini­tia­tives — rang­ing from sup­port for the rule of law and fight­ing cor­rup­tion to open data sys­tems and plans for cli­mate change.

China advanced extra monies to add to the IMF’s finan­cial capac­i­ty. China’s new Asian Infrastructure Investment Bank (AIIB) has embraced global stan­dards for gov­er­nance, pro­cure­ment, and envi­ron­men­tal prac­tices; the AIIB co-finances World Bank and Asian Development Bank projects. My friends at Mercy Corps have worked with human­i­tar­i­an coun­ter­parts in China to help vic­tims of dis­as­ters.

Source: National Interest

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