Misjudging China ends US policy consensus

By Robert A. Manning Source:Global Times Published: 2018/7/23 15:13:39

Illustration: Liu Rui/GT

Naïve US misjudgment of China and an unanticipated rapid Chinese economic growth combined to dissipate the long-standing bipartisan consensus underpinning US policy toward China. Yet a new consensus for US policy is slowly beginning to take shape.

Americans tend to see their economic and political systems as a universal norm - we want, if not expect, others "to be like us." As China's reform and opening-up policies launched under Deng Xiaoping in December 1978 progressed, there was an often unstated US hope and assumption that China would move in that direction.

As China's economic growth began to accelerate in the 1990s, bipartisan support for the US engagement strategy grew. This was not without a basis in reality. In China, there was debate about its economic policies, and major reform of State-owned enterprises was overseen. Moreover, China's openness to foreign investment helped build strong support for US policy in the American business community.

As China began to integrate itself into the international economic and political system, becoming one of the most astute students and members of the Bretton Woods institutions IMF/World Bank/International Finance Corporation, one mainstream theory propounded by some international relations experts was that of "liberal institutionalism."

This was the notion that as China's reforms continued, and as the country grew a large middle class and enjoyed the benefits of its participation in the liberal world order, it would accept the rules and norms of that system - even though those rules were made by the West and China had little say in them. Some argued that as its middle class grew there would be pressures on Beijing for political reform.

  Thus, the idea grew that there was a growing overlap of US and Chinese interests. This drove the US engagement policy - cooperating as widely as possible and managing differences. This US approach was sustained through five US administrations, both Democrat and Republican - from Jimmy Carter through George W. Bush.

Doubts began to appear during the Obama administration. There is a widespread consensus that China's post-2008-09 behavior disproved those US assumptions. As the worst Western financial crisis since 1930s deepened in 2008-09, there was a sense of triumphalism in Beijing. The "Washington Consensus" and free-market ideology was shattered. There was a sense that China no longer needed to bide its time, that its historical moment had arrived.

This may have been driven by the amazing pace and scope of China's economic growth during this period:  its gross domestic product (GDP) grew from $1.2 trillion in 2000 to $11.2 trillion by 2016. This new buoyancy was captured, for example, in a rare article by China's Central Bank Chief Zhou Xiaochuan, calling for the RMB to replace the US dollar as the world's main reserve currency.

Similarly, in July 2009, then Chinese president Hu Jintao delivered a speech calling for China to increase its global power and influence. Beijing began to pursue more proactive political and military actions. The growing capabilities of the PLA Navy became more evident, particularly in the South and East China Seas and China grew more assertive over its territorial claims.

China's re-emergence as a major global power advanced far more rapidly than the US anticipated - and that global institutions were prepared for. It overtook many assumptions. As the US trade deficit with China grew, US economic analysts in and out of government increasingly complained that Beijing's trade and investment policies unfairly tilted the outdated system in its favor. Established powers tend to see their reign in a straight line. The US reflects this inclination to view the post-WWII system it helped create as continuing with little change.

The new Chinese economic and political standing in the international system has, in many respects, challenged this order to adapt to new realities, not least, the shift in wealth and power from West to East.

Now, the US may be misjudging China from the other side. That is to say, as depicted in the US National Security Strategy document, which said that China is a "strategic competitor" seeking to undermine the US position in Asia and globally. This is overly simplistic.

China is an emerging great power. It has studied US global behavior carefully, and is increasingly acting as a great power, not entirely dissimilar to what the US did when it rose to prominence in the 20th century. This is one fallacy of the "liberal institutionalists." It is not necessary that China rejects all the rules and norms from which it has benefited. But, as did the US, Beijing has to reshape institutions to more accurately reflect its economic and strategic weight.

Without doubt, the strategic competition is intense, as seen in the growing trade war and near military clashes in the South China Sea. But a basis awaits significant cooperation: the world's two largest trading powers are heavily interdependent. Both rely on the same global supply chains. Both have an interest in peace and stability in areas like the Korean Peninsula and Afghanistan. And no global issues such as climate change can be addressed absent cooperation from the major powers.

The shorthand is that the formula still makes sense - cooperate where we can and manage differences - but the balance has shifted so there is less in the "cooperation basket" and more pronounced differences in the "differences basket." The challenge is to rebalance the economic relationship and develop a balance of interests and framework for strategic stability on the geopolitical side that both Washington and Beijing can live with.

The author is a Senior Fellow of the Brent Scowcroft Center for International Security at the Atlantic Council. Follow him on Twitter @RManning4.

Posted in: VIEWPOINT

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