The United States and China: Game of Superpowers
Remarks to the National War College Student Body
Ambassador Chas W. Freeman, Jr. (USFS, Ret.)
Senior Fellow, Watson Institute for International and Public Affairs, Brown University
February 8, 2018 Fort Lesley J. McNair, D. C.
Fifty years ago, in 1968, Richard Milhous Nixon made his second run at the presidency. No one would dispute that he was a greater statesman than political personality. But, he won. He entered office with a plan to enlist China in support of the U.S. grand strategy of containment of the Soviet Union and to see whether he could also divide Beijing from Hanoi, with which Washington was then at war.
President Nixon’s diplomatic concept was nicely complemented by that of his national security advisor. Henry Kissinger was an admirer of the diplomacy of Prince Klemens von Metternich, the foreign minister and chancellor of the Austrian Empire in the first half of the 19th century. Kissinger’s superb doctoral dissertation on the classic European balance of power analyzed how Metternich had reincorporated post-Napoleonic France into the European order and made it a force for stability rather than revolution. In the second half of his first term as president, in 1971, Nixon used Kissinger to reach out to Beijing. In 1972, he went there himself.
China was then, as it is now, a vast country with an enormous population and an awe-inspiring history. But it was beleaguered, friendless, politically perturbed, and poor. China confronted and sometimes fought the Soviet Armed Forces along its six-thousand-mile border with the USSR. The People’s Liberation Army (PLA) expected a Soviet invasion. So China positioned its nuclear weapons to strike targets on its own territory where Soviet forces might appear.
A relentless campaign of ostracism, led by the United States, had ensured that “China” was represented in the United Nations and in most international capitals by Chiang Kai-shek‘s Taipei-based government, despite its defeat in the Chinese civil war. Chinese diplomats were not accepted in polite company very much anywhere. In the Communist bloc, only Albania supported Beijing against Soviet hegemony.
China was then in the midst of the anarchic “Great Proletarian Cultural Revolution” – a national nervous breakdown that ruined tens of millions of lives and thrust the country into a decade of turmoil, bloodshed, hunger, and economic stagnation. In 1972, mainland China’s GDP was only a bit larger than that of the District of Columbia today. Its 862 million people had an annual income of around $132 (in current dollars).
In the 1970s and ‘80s, China’s isolation and weakness, not its connectedness and strength, were seen as a major threat to global security that called out for an American response. As late as the 1990s, many predicted China’s collapse or denied that the rapid progress it appeared to be making could be real.
But, by early this century, China had emerged as a world economic power with an increasingly credible ability to impose its will by force in its neighborhood, should it decide to do so. This kindled a debate about whether China’s rise would produce an inevitable contest with the United States for regional and even global hegemony. Political scientists of the “offensive realist” school theorized that the peaceful rise of a great power was impossible and that U.S. conflict with China was therefore certain. More recently, others – citing the so-called “Thucydides trap” – have argued that, while war between China and the United States may be avoidable, it is more likely than not.
Beijing’s continually growing power and an America bent on restoring itself to “greatness” are now actively testing these theses. At nominal exchange rates, China’s GDP is currently a bit short of $12 trillion. (By this measure, at $18.5 trillion, U.S. GDP is greater by half. But, in purchasing power terms, a more realistic comparison, China has a GDP of almost $25 trillion, one-third larger than the United States.) It is about to become the world’s largest consumer market. The Chinese economy is growing at twice the speed of the global economy and comprises 15.1 – 18.3 percent of world GDP, depending on how it is counted. China continues to grow three times as fast as the United States.
The fact is that, in some ways that are especially relevant to military power, China’s economy is already much larger than America’s. The United States has banking, insurance, real estate, health, marketing, entertainment, and other services sectors of unparalleled size, but China’s production of goods is now about half again greater than America’s. China accounts for a full fourth of the world’s industrial output. Last year, it contributed one-third of the growth in the global economy.
And China has become an exporter as well as an importer of technology. One in three of the world’s 262 “unicorns” (start-ups that are valued at more than $1 billion) is Chinese. About one third of the world’s patents now originate in China. It accounts for more than 40 percent of the world’s e-commerce. By 2025, China alone is expected to have a larger science, technology, engineering, and math workforce than all the countries of the Organization for Economic Co-operation and Development (OECD) put together. The size of its population and the scale of its people’s digital interactions make China uniquely suited to innovation in cybernetics, telecommunications, genetic engineering, medicine, marketing, and socio-political control.
China has just overtaken the United States as the world’s most prolific producer of scientific articles. Since 2007, its spending on research and development has grown at double-digit rates, and now accounts for 21 percent of the world total. By 2020, China is expected to take first place internationally. At nominal exchange rates, it will be spending only slightly more annually than the United States but, converted for purchasing power parity, its outlays should buy nearly twice as much R & D.
While most Chinese innovation is civilian in nature, there are some notable exceptions: ballistic missiles with terminal guidance to kill mobile targets like aircraft carriers, quantum communications devices, robot combatants, and hypersonic glide vehicles, for example, in addition to systems paralleling our own stealth aircraft and vessels, aerial and undersea drones, directed energy weapons and rail guns, precision-guided and electromagnetic pulse munitions, and so forth. This year, China established an agency equivalent to DARPA to coordinate further advances in military technology.
Many of the key inventions that made modernity possible – from paper to gunpowder – were made in China. No one should be surprised to see the Chinese resuming a lead position in developing the technologies that will define the human future.
The American reaction to our progressive displacement as number one by China has closely followed the offensive realist script. As a nation, we are in a whiny, belligerent frame of mind. We blame Russia for the way we vote. We blame everybody but ourselves for the mess in the Middle East and for our trade and balance of payments deficits and the deindustrialization of our job market.
We are dismissive of expertise, especially that of economists, the majority of whom tell us that our problems derive from our pathetically inadequate national savings rate, our disinvestment in our human and physical infrastructure, shortcomings in the way we retrain and find employment for workers displaced by automation, a relationship between labor and management that reacts to competition by outsourcing, rising income inequality, irrational immigration policies, the misdirection of investment by a tax code designed to protect vested interests, and gridlocked government. It’s far easier to blame foreigners in China, Mexico, Canada, Germany, Korea, or Japan for our underachievement than to reexamine and change our own policies and practices.
But successful foreigners are not the ones with the savings, trade, and investment shortfalls. We are. Insisting that foreigners do things our way might infect them with our problems. It will not fix those problems. Nor will declaring China or others “adversaries,” and hence active candidates to become enemies, do so.
If China and all our other major trading partners are in fact responsible for the socioeconomic problems in our country, we should realistically identify what they are doing that is problematic before we challenge them to do something else. To challenge China, we will need partners who agree about what the Chinese are up to and what to do about it. But interpretations of trade economics and views of China abroad differ importantly from what is being said in the alternative universe created by U.S. media babble, airhead narratives, self-interested cost-plus capitalists, bloviating congresscritters, and the political parasites who feed on all of the above in Washington.
As the late Philip K. Dick once observed, “reality is what continues to exist whether you believe in it or not.” So before we decide what challenges China’s rise presents to the United States, let us first consider what Americans’ principal disagreements with China actually are:
√ We do not agree with either China or its neighbors about where Chinese territory begins and ends. The Chinese do not concur that Americans have standing to take a position on this. This is not a trivial argument. Nations habitually mark the limits of their sovereignty with the graves of their warriors and the bones of those who have challenged them.
√ China believes it is entitled to a role in regional and global governance commensurate with its wealth and power. The United States judges that an enhanced role for China could only come at the expense of existing U.S. influence. We have not been prepared to facilitate or accommodate any such change. At the same time, we are cutting rather than increasing our investment in global and regional institutions as well as in U.S. diplomacy.
√ The United States has reluctantly accepted the reality of the People’s Republic of China but Americans do not consider the undemocratic rule of it by the Chinese Communist Party to be legitimate. Most would welcome regime change. Not a few in Congress say so. Chinese suspect that we Americans might mean what our representatives say.
The great French diplomat, Talleyrand, once remarked that “if everyone always understood, there would be no history.” Let us now briefly consider the history and emotional divisions that underlie these disagreements.
First, the issue of China’s frontiers.
China is the only great power whose territorial extent and borders are disputed by the United States. Beijing has negotiated peaceful border settlements with Moscow, Astana, Bishkek, Dushanbe, Hanoi, Islamabad, Pyongyang, Ulaanbaatar, and Vientiane on terms that most regard as having been generous to the other claimants. The Sino-Myanmar border is disturbed by ethnic conflict but undisputed. The Sino-Indian frontier is the only Chinese land border still undemarcated and is the only Chinese land border on which military face-offs currently take place. The United States now leans toward India, which looks to it for support against China.
In 1950, as the Korean War began, U.S. intervention effectively severed Taiwan from the rest of China. The two sides of the Taiwan Strait are still disconnected politically. The United States remains unilaterally committed to arm Taiwan and to maintain the capability to defend it if necessary.
Reunification of Taiwan with the rest of China remains a very high priority for the Chinese state. Beijing considers Washington to have violated core commitments that facilitate the peaceful management of the Taiwan issue. Each side is aware that a bloody rendezvous between the American sense of national honor and Chinese nationalism would result from mismanaging the Taiwan issue. Some judge that, having long been contained, the danger of war is now rising. There is no basis on which to assume that a war fought on Chinese-claimed territory could be limited to that territory. A Sino-American war over Taiwan could be expected quickly to escalate to the trans-Pacific level. American strikes on the Chinese homeland would be answered by strikes on ours.
Both Beijing and the democratic successors to the defeated Chinese regime in Taipei claim the Senkaku islands as part of Taiwan, and both consider them to have been illegally retained by Japan after World War II. But until the Chinese mainland and Taiwan resolve their political relationship, neither is in a position to negotiate with Tokyo on behalf of the other. In these circumstances, Chinese coast guard activities in the Senkakus are intended to underscore Beijing’s view that there is a dispute over their sovereignty, something that Tokyo officially denies. China objects to the United States position that Americans are obliged by treaty to defend Japan’s retention of the Senkakus. A conflict there would be hard to contain. Thankfully, all concerned seem determined to avoid one.
To the South, maritime features long claimed by China in the Spratly Islands began to be occupied and fortified by Malaysia, the Philippines, and Vietnam in the late 1970s and early ‘80s. China did not respond in kind until 1987. In 2010, the United States asserted an independent interest in the dispute and objected to China’s efforts to negotiate bilaterally with other claimants. U.S. intervention effectively halted the talks then ongoing between Beijing and Hanoi. Washington proposed an ill-defined “collaborative process” for resolving claims but launched no diplomacy to support such a process.
By 2010, all claimants in the Spratly Islands had seized everything there was to seize. Vietnam had established thirty-four outposts (thirty-three of them armed), Malaysia five, and the Philippines nine. China was left with seven (not counting an island Taipei has occupied in the name of “China” since the end of World War II). At this point, what matters is less who claims what than who occupies what.
China has not expanded its maritime territorial claims, which date back to at least the early 20th century. It is belatedly asserting these claims against others who have taken action to enforce their own: some also old, some new. Over the past four years, China has transformed its tenuous holdings in the South China Sea into an impressive array of artificial islands and installations from which no other claimant can hope to dislodge it. An American attempt to do so would ignite a war. No claimant against China wants that. Nor do China and the United States. The result is a stalemate. The United States disapproves of the Chinese installations in the Spratlys but has not sought to remove them. China demonstrates its displeasure with U.S. military operations near its island bastions, but has not tried to halt them.
Why the South China Sea has become the focus of Sino-American military rivalry is easy to explain but hard to understand. It is where the U.S. Navy comes face-to-face with the reality that it no longer has the seas off China to itself but must share them with the Chinese navy and coast guard. This is unwelcome evidence of a shift in the balance of power that is adverse to the United States. But the United States has no claims of our own, and the only issues at stake are symbolic and derived from our desire to remain at the apex of the regional pecking order.
The assertion that the face-off in the South China Sea is about “freedom of navigation” is political paralogia – “fake news” embedded in a misleading narrative that has been repeated so often that it is now an emotionally charged commitment. The Spratly Islands were long marked on charts as “dangerous ground” that ships should avoid. They are well off the shipping lanes. About two-thirds of the commerce that traverses the South China Sea is on its way to or from China, giving the Chinese a greater interest than anyone else in protecting rather than disrupting freedom of navigation there. Finally, the argument between Chinese and Americans over whether it is legal to conduct military operations in exclusive economic zones without the permission of the littoral state is over. China has quietly adopted the U.S. legal position.
This unsung triumph of American naval lawyering has had the unintended consequence of encouraging the PLA Navy to commence reconnaissance operations off Guam and Hawaii, with all three coasts of the continental U.S. likely in its future. China has not ceased to object to U.S. warships probing its coastal approaches and their defenses, but it now does so on political rather than legal grounds. Beijing complains that U.S. naval operations near its shores and offshore islands are provocative indications of possible hostile intent that create a bad political atmosphere that complicates bilateral cooperation. It’s not impossible to imagine that our politicians will say something similar when Chinese warships turn up off Puget Sound, San Diego, Jacksonville, Hampton Roads, Patuxent, Corpus Christi, or Guantánamo.
In the end, the most explosive issue in US-China relations has not changed. It remains the question of Taiwan’s relationship to the rest of China. For Chinese nationalists, Taiwan’s unresolved status symbolizes China’s fifty-year-long victimization by Japan and its impotence in the face of U.S. intervention to suspend fighting in the Chinese civil war and preclude a complete Communist victory in it. The continuing division of China is an inflammatory affront to Chinese pride and dignity, the affirmation of which is seen by the Chinese Communist Party as its core mission.
A second source of Sino-American differences concerns China’s and the United States’ appropriate roles in regional and global governance.
The premodern order in the Asia-Pacific was Sino-centric, with Chinese empires mostly leaving other nations alone in return for intermittent demonstrations of deference on their part. In the 16th century, European expansionism began to shake this order. In the 19th century, Europeans and Americans overthrew it.
From the first Opium War of 1839 – 1842 to the Japanese conquest of the Asia-Pacific in 1941 – 1942, Americans joined British, Dutch, French, German, Japanese, and Russian imperialists in dividing the region into colonies and carving China into spheres of influence. In 1853, Commodore Perry forced his way into Japan. Soon after, in 1854, the U.S. Navy began to patrol the Yangtze River [长江] to protect American interests in the distant Chinese interior. Our navy ended these patrols only when forced to do so by Japan in 1941.
When Japan went to war with the United States, its GDP was only one-tenth of ours. By 1945, our armed forces had overthrown Japan’s regional hegemony. This created a politico-military power vacuum, which we filled. Over the next seven decades, Americans became accustomed to both making and enforcing the rules in the Pacific, including in the East and South China Seas, with an eye to the interests of the region’s states, but without consultation with them. This unilateral U.S. administrative and police power in the Asia-Pacific is now in jeopardy.
China’s rise is the main challenge to American dominance, but it is not the only change in the Asian-Pacific pecking order that is taking place. U.S. primacy no longer reflects the realities in a region where Japan is restoring itself to greatness, and still other nations, like both Koreas, Vietnam, Indonesia, and India have grown into powerful independent economic, military, cultural, and political actors. Neither these nations nor an increasingly powerful China can be denied a role in the regulation of regional matters they see as integral to their national defense and economic prosperity. Behaving as though, in the new context, Americans can continue unilaterally to command the region will not work. Such a posture is more likely to breed regional dissatisfaction with the status quo than to buttress it.
China is now the most powerful state in the Asia-Pacific and the mainspring of the regional economy. It will not remain sidelined. But other countries, like Japan, are also becoming more assertive.
Missteps in U.S. relations with China and other nations in the Asia-Pacific could kill or impoverish lots of Americans and otherwise do immense damage to U.S. national interests. These interests begin with economics but extend to national security and global governance.
Exhibit A is the mismanagement of the rise of Imperial Japan. Over the thirty-five year period between the August 1, 1941, imposition of harsh U.S. sanctions on Japan, Japan’s desperately miscalculated December 7, 1941, response at Pearl Harbor, and the April 30, 1975, fall of Saigon, 224,000 U.S. soldiers, sailors, airmen, and marines gave their lives and almost 510,000 were seriously wounded in Asian wars. Four point nine million allied troops died and 4 million were maimed. Two point eight million troops died on the other sides of the Pacific, Korean, and Indochina wars. About 30 million civilians perished, including some by nuclear weapons, which were then a U.S. monopoly.
Differences over the location of China’s frontiers could lead to a nuclear exchange with that country. Sino-Japanese jockeying over the Senkaku Islands strikes many as an accident waiting to happen. So is the current U.S. standoff with north Korea. And then there is the mounting risk of conflict over Taiwan.
The Korean situation illustrates the perils of leaving differences with even lesser actors in the region to be frozen by deterrence and unaddressed by diplomacy. Close cooperation between Americans and Chinese, not to mention Koreans and Japanese, now seems essential to avoid another Korean war, this one involving nuclear weapons. Depending on how diplomacy unfolds, China and the United States could be on the same or on opposite sides in such a war.
Washington and Beijing both affirm that north Korea should not have nuclear weapons. We disagree about why Pyongyang is building them and how best to get rid of them. The United States is considering preventive war to accomplish this. China regards such a war as illegal, doubts its efficacy, and fears its likely regional consequences. A U.S. misstep in Korea has the potential to turn the increasingly adversarial U.S.- China relationship into one of active long-term enmity.
Military tensions aside, the long-term prosperity of the United States is very closely bound up with that of the Asia-Pacific. China is the region’s commercial center and where its supply chains converge. More American jobs (3.4 million) now depend on exports to the Asia-Pacific than to any other region. Asian-Pacific economies account for about one-third of global GDP and power most global economic growth. America’s fastest growing export markets are there. Americans have a vital interest in leveraging rising Asian-Pacific prosperity to boost our own. With the abandonment of the Trans-Pacific Partnership, deeply flawed as it may have been, we have been left with no apparent means of taking part in the region’s regulation of its economy.
Meanwhile, China claims status as an increasingly important participant, builder, and contributor to the changing international and regional orders. The United States has been weakened by fiscal anorexia, intervention fatigue, political narcissism, and unilateral diplomatic disarmament. Americans are increasingly sidelined internationally and absent from multilateral fora. Whatever China thinks about the atrophy of U.S. leadership, it is investing in global governance, not walking away from it. It is the strongest supporter of the U.N. and the principle of sovereign equality, which is the foundation of international law. China is building new institutions to operate in parallel with those created by the United States and other Western nations after World War II. So far, these affirm rather than erode the practices of the order our grandparents built.
Korea, other regime-change-related issues, and the fissures in multilateral institutions like the WTO all show that China’s differences with the United States are less about the rules we Americans helped impose on the world than about our perceived departures from these rules. As the United States claims exemption from the principles of international law and comity we once championed, China is not seeking to subvert so much as attempting to shore up the existing order. The United States is in no position to read China out of a system that is evolving in directions favorable to an enlarged Chinese contributory and management role in it.
China is intent on giving this trend a boost. Its Belt and Road Initiative (BRI) integrates all of the instruments of national power – economic, diplomatic, financial, intellectual and cultural – to promote a new 21st century geoeconomic and geopolitical order linking Asia with Europe and adjacent areas. The BRI is a true grand strategy — not military but financial, commercial, cultural, legal, and diplomatic. It aims to produce an interconnected Eurasian space within which China’s size and dynamism will naturally make it the preeminent power. There is no military answer to a grand strategy built on non-violent expansion of commerce and navigation.
Other Eurasian nations, from Portugal to Russia and Sri Lanka seek to leverage Chinese cash and construction capabilities to their benefit. The United States has criticized and boycotted the BRI but offered no alternative to it. This is an approach that defaults to Chinese leadership and ensures that Americans will not be present to exercise our own. Something can seldom be countered with nothing. Drop-outs don’t lead. Absence does nothing for one’s reputation. As we all know, if you’re not at the table, you’re on the menu.
In recent months, China has stepped forward as the conciliator of two fractious regional disputes among neighboring nations. It is engaged, so far apparently successfully, in mediating the Rohingya issue between the Myanmar Army and Bangladesh. And it has just convened the foreign ministers of Afghanistan and Pakistan in Beijing as the first step in a proposed peace process between those two countries. The United States is not part of either effort, despite our obvious and oft-stated interest in both. As an added indication of China’s likely role in the global future, the Palestinians have just asked Russia and China to replace the United States as the mediator with Israel.
The more the United States is missing in diplomatic action, the sooner China will seek to reshape existing institutions and rules to deal with emerging realities as it sees them. Its instincts in this regard are once again authoritarian, verging on totalitarian. This, more than anything else, is why it matters whether China rather a coalition of industrialized democracies that includes the United States takes the lead in crafting the rules for global governance. China’s rise should evoke more rather than less active engagement of the United States in multilateral institutions that deal with global and regional affairs. The challenge China poses cannot be managed by American parsimony or non-participation in these organizations.
The December 21, 2017, UN General Assembly vote repudiating the U.S. stand on Jerusalem was a nearly unanimous vote of no confidence in American leadership by the international community, including longstanding U.S. allies, not just a rebuke of American policies in the Middle East. Meanwhile, even as Beijing and Moscow sharpen their political and economic game, Washington is gutting its foreign affairs agencies, diplomatic service, participation in international institutions, and foreign assistance programs. This is a course of unilateral diplomatic disarmament that abandons all instruments of statecraft other than the military. It promises a further reduction in foreign deference to the United States and a concomitant rise in armed challenges to American power.
The third major source of tension in the U.S. relationship with China is cultural and ideological.
China seeks affirmation by foreigners of its self-image as a virtuous society, but, for the most part, Chinese are indifferent to how we non-Chinese govern ourselves. By contrast, Americans are convinced that only constitutional democracy on the U.S. model can confer legitimacy, that other systems of government are inherently unjust, and that it is therefore appropriate to insist on their reform or overthrow. This difference manifests itself in US-China interaction both internationally and bilaterally.
At the height of the Cold War, President John F. Kennedy advocated a set of policies premised on the realistic notion that, as he put it, “if we cannot now end our differences, at least we can help make the world safe for diversity.” This could well be a statement of the current Chinese position, with one notable exception. This is the increasing Chinese insistence that foreigners conform to the limits their government imposes at home on criticism of China’s leaders and policies.
The demand that non-Chinese, residing in their own countries, bow to censorship by the Chinese Communist Party is not just an outrage against individual freedom. It is an egregious case of interference in other nations’ internal affairs. Far from increasing respect for China abroad, such diplomatic overreach invites foreign derision and contempt.
Perhaps, as Beijing observes this, it will rein in its impulse to bully those in other nations with different values and views that inspire criticism – constructive or otherwise – of China’s foreign and domestic policies and practices. After all, after U.S. armed evangelism on behalf of democracy, feminism, and religious freedom in the Middle East turned out to be counterproductive, the current administration has pretty much abandoned our effort to impose our values on others there and elsewhere; Afghanistan excepted.
When Americans and Chinese began our current relationship, the differences of political culture and ideology between us were vastly greater than they are today. The basis for the modus vivendi we worked out set aside these differences. In the “Shanghai Communiqué,” issued at the end of President Nixon’s path-breaking visit to China in February 1972, both governments declared:
There are essential differences between China and the United States in their social systems and foreign policies. However, the two sides agreed that countries, regardless of their social systems, should conduct their relations on the principles of respect for the sovereignty and territorial integrity of all states, nonaggression against other states, noninterference in the internal affairs of other states, equality and mutual benefit, and peaceful coexistence. International disputes should be settled on this basis, without resorting to the use or threat of force. The United States and the People’s Republic of China are prepared to apply these principles to their mutual relations.
These principles are sound. Both sides have strayed from them. It would be wise to reinstate them. No relationship troubled by one side’s disrespect for the other’s values can prosper. Nothing is gained by a futile insistence that one side must conform to the views of the other. Ideological competition can be constructive when it is directed at building societies whose excellence attracts the admiration of foreigners and invites their emulation of it. It leads to violence when it is not tempered by tolerance.
The best way to make America or China great again is not to try to impede each other’s progress or tear it down. It is for each side to focus on the home front, implement the values it professes, improve the factors underlying its national competitiveness, and address its own problems before worrying about those of others.
China has a formidable list of such problems. They include environmental devastation, slowing growth, a rapidly aging population and shrinking labor force, enormous levels of industrial overproduction, accumulating local debt, a still-inadequate social safety network, and an increasingly oppressive political system. China has land borders with fourteen countries, many of them both feisty and formidably armed. It has an unfinished civil war with Taiwan and uneasy relations with fifty-five ethnic minority groups – 8 ½ percent of its population – at least two of which are in a near state of rebellion against Beijing. In short, China has its hands full. History has given Chinese a healthy apprehension about the damage war can do to their homeland. China is not in search of monsters to destroy beyond its still partially unsettled borders.
It is good news that the Trump administration no longer seeks to impose American principles of government on others. China has every reason to reciprocate the ideological truce this makes possible. The cost of courteous leadership by example is low. Its payoff can be high. There is every reason to judge that, if we return to a condition of mutual respect for our differences, the United States and China can cooperate more than we quarrel.
But quarrel we will, especially about matters affecting national well-being, like trade and investment. Such arguments between nations are normal. The trick is not to get into fights you can’t win.
In normal times, diplomats, who are specialists in the non-violent adjustment of relations between states, can manage most disputes without them spiraling out of control. But we do not live in normal times. The United States is well along in abandoning multilateralism in favor of economic nationalism. We are replacing policies that have brought prosperity to the world with untried populist theories that the great majority of professional economists believe are fundamentally unsound. We have no one – no one – with us on this internationally. In this context, if we get into a trade war – a zero-sum approach in which each side reckons that the other’s loss is its gain – with China, we are far from sure to have our way.
It is more likely that both the United States and China will lose from an economic confrontation than that either would gain. And the consequences of a deterioration in US-China economic interaction could be enormous not just for the United States and China but for the world economy. Today, exports make up about 12 percent of our economy and over 19 percent of China’s. U.S. exports to China alone represent about one percent of our GDP. China’s exports to us are about 3.5 percent of its GDP. Between us, we account for about 4 percent of world trade. We are not going to set the world trade agenda bilaterally but we are in a position to wreck it.
The EU, not the United States, is China’s largest trading partner. Half of China’s trade is with the other countries of the Asia-Pacific. A breakdown in US-China economic relations could bring trauma to them and to the globalized world economy. None of our trading partners would welcome a contraction in either the U.S. or especially the Chinese economy, which has recently played the role the U.S. economy used to play as the major driver of global economic growth. An American-organized coalition to advance the common interest of the world’s major trading countries in curbing commercially predatory Chinese behavior would have great weight. A US-initiated confrontation with China over our bilateral trade balance with it will elicit almost no sympathy or support from others.
And, let’s not forget, there would be huge opportunity costs from a major setback for US-China trade. China is the world’s fastest growing major economy. When this century began, it was our 11th largest export market. With U.S. exports of goods and services of $165 billion, it is now our third largest. By 2030, all things being equal, U.S. exports to China are expected to triple, reaching $520 billion annually. We will both lose if that doesn’t happen.
The United States may have turned its back on multilateralism, but the rest of the world has not. Japan has recovered the fumbled Trans-Pacific Partnership and is trying to run with it on its own. China’s proposed Regional Comprehensive Economic Partnership (RCEP) continues to advance. Despite U.S. efforts to strangle its dispute resolution mechanisms, the World Trade Organization (WTO) remains the focus of other nations committed to the continued liberalization of the terms of trade. The danger is that the global order of the future will be crafted without the United States or by work-arounds that bypass us. By contrast, China will not absent itself from the councils of regional and global governance.
China’s rise is a real, not imaginary, challenge to the status quo and to U.S. leadership. It is mainly economic, not military and it can be peaceful or not, as our interaction with it determines. At the moment, our approach seems based more on hubris than on a realistic measure of what we are up against. We are carrying out a series of tactical adjustments in response to changes in our trade and investment relationships with China and others in its region as these occur. The sum of such tactical adjustments does not a strategy make.
As President Nixon said in the very different circumstances of fifty years ago, the United States needs “urgently to come to grips with the reality of China.” That reality is not usefully perceived through media memes, mainstream or social, or by reference to “alternative facts.” We must latch onto trends and events that are occurring so fast that we lag in perceiving them. We can no longer live by our wallets. We will not tax ourselves to refill them. We would be unwise to try to live by our brawn, when others may be able to outmatch us on battlefields nearer to them than to us. We must learn to live by our wits.
A witless military response to the rise of China is worse than a blunder. So is an approach based on economic nationalism. These strategy-free approaches risk a potentially fatal blow to all the purposes that define Americans as a people. They will divide rather than unite us. They will separate us from our allies and friends. They risk impoverishing us. And they increase the danger of war with a nuclear great power.
It is in this context, particularly, that I lament the demise of our nation’s diplomatic service, in which I served my country for thirty years. We were never as professional as we should have been but we were not amateurs, as many of those now carrying out our functions are. We aspired to serve our country as best we could, not a political cause or party, our personal ambitions, or our pocketbooks. We went where we were sent and we made the best of every posting we had. We made contributions that were recognized as essential to the formulation and implementation of national strategy. It was an American diplomat, George Kennan, who gave our country the grand strategy of containment that brought us a bloodless victory in the Cold War.
China, more than any other country, presents a test of our national fitness to continue to enjoy a preeminent position internationally. We will not pass that test if we do not repair our national strategy deficit and rediscover diplomacy – measures short of war — to address the challenges of a rapidly changing international environment. That is what we need to do to reverse the diminishment of America and make us great again. It is not what we are doing. Once we have exhausted all the alternatives, I am confident that it will be.
A World Restored: Metternich, Castlereigh, and the Problems of Peace 1812 – 1822, Kissinger, Henry A., New York, 1957.